We have a couple of winners!!

A month ago, just after this blog started, I had a giveaway organised. JL Collins, author of The Simple Path to Wealth, had very kindly given me a couple of copies of his book in Audio form to give away on the blog. All people had to do was comment on the post to be in the running.

Jaybeenz and Barb were the lucky pull-out-of-the-hat winners!

I’d like to thank Jim for his generous gift, as the knowledge that he imparts can change people’s lives. For anyone who’s feeling a bit intimidated by the jargon of investing and who feels a sinking feeling in the pit of their stomach when they think about all the stuff you think you should know but don’t – reading The Stock series on his blog is probably the best place to start. I remember finding it a couple of years ago and being so thankful he wrote it. It explains the jargon in layman’s terms and it seems to add about 27 IQ points to your brain after each article.

Then go and buy the book, so you have the information at your fingertips. Some things are US-based, but the vast majority of the information is common to both our countries. In the book, he even gives international readers a ‘head’s up’ when a chapter is just for the US, which is an uncommon gesture and is much appreciated by the rest of us in the world.

Thanks to all those who commented on the post. Back to regular programming tomorrow for Frugal Friday. Cheers!




Lessons from Literature #1 – Laura Ingalls Wilder biography.

I grew up reading the ‘Little House on the Prairie’ books by Laura Ingalls Wilder. I have a clear memory of sitting on the front porch when I was in grade 2, reading ‘Little House in the Big Woods’ and being enthralled. I worked my way through the list but got bored when she reached teenage years and I stopped reading them. Fortunately, I picked them up again once I reached high school and devoured the whole series all over again.

I have no idea how often I’ve read these books, but it would be a very large number. Last year my sister Kate scored me in the family Kris Kringle and she went with a friend to a bookshop to get something. Her friend is a reader and was suggesting this novel and that novel while Kate dithered, not knowing what  I’d like. Then she saw this biography of Laura Ingalls Wilder and said, “THIS is one Frogdancer will like!”

She was correct. I polished it off in two days. But something struck me as I was reading it. The lessons of personal finance hold true no matter which era you’re living in.

Debt was the scourge of Laura’s married life. It wasn’t until very late in her life that she and her husband, Almanzo, were financially secure. See these quotes from the book about their first farm, which they moved into at the end of ‘These Happy Golden Years’:

  • Before [Almanzo] owned a mowing machine, he had to pay threshers and hire workers to cut his hay and wheat. After selling 95 bushels of wheat and setting another 80 aside for seed, he had ” a little over $40 to live on for another year.” At a time when an unskilled labourer could expect to make over $400 a year, this was unsustainable.
  • Expecting their first child in December, the Wilders now found themselves in financial straits. Notes on the farm machinery were due, and they needed to buy coal for winter and seed for next year’s crop. It was at this moment that Almanzo revealed to his wife the debt on their new house: an additional five hundred dollars that she had not known about. That was a small fortune to them, worth over thirteen thousand dollars today. Laura was crushed by the news.

The danger of counting one’s chickens before they’re hatched is just as dangerous today as it was back then. Carrying too much debt puts people in an incredible risky place. The quote goes on to say:

  • The fact that her husband had kept this debt from her – he hadn’t wanted to bother her with it, he said – comes up again and again in Wilder’s drafts and letters. It affected her deeply, and for many years. It still rankled when she was writing her memoir, Pioneer Girl, in 1930: “I was to learn that we owed $500 on the house, which we were never able to pay until we sold the farm.” In her manuscript from several years later she was even more pointed, squarely placing the blame on her husband and saying that she had started to wonder” how much could she depend on Manly’s judgement.”

Money fights and money issues are supposed to be the biggest reasons people split up. Even though the Wilders stayed together, it’s obvious that this all put an enormous strain on their relationship.

Laura was 19 when all of this was going on. A few years later, her parents Charles and Caroline Ingalls had to make a decision.

  • …Charles Ingalls’ struggles with farming were over. In February 1892, he had sold the De Smet homestead for $1,200 and moved his family to town. The sale, however, dd not represent much of a gain; after the mortgage was subtracted from the total, he was left with $400. Like so many thousands of others, he had succeeded on paper, proving up and claiming the land. But he could not make a living as a farmer. For a man who preferred open, unpopulated spaces, it must have felt like defeat.

Decades later, their granddaughter wrote about them at this stage of their lives:

  • It may have seemed, Rose wrote later, that calamities had befallen the Ingalls at every turn, but she recalled them as sublimely content with their lot. “The truth is that they didn’t expect much in this world”, she wrote, “and they just shed thankfulness around them for what they had.”

Being content and thankful for what you have, instead of fruitlessly wishing for things that can never be, is key to living a happy life. By all means, strive for things that you want, but also notice and focus on the people and things around you. It makes you far happier, and also probably far nicer to be around!

When recessions/depressions hit, people go bananas:

  • “Ruin seems to be impending over all,” Henry Adams wrote at the beginning of the Panic of 1893…”If you owe money, pay it; if you are owed money, get it; if you can economise, do it; and if anyone can be induced to buy anything, sell it. Everyone is in a blue fit of terror and each individual thinks himself more ruined than his neighbour.”
  • He was thinking of his own social class, but no person in America would instinctively heed that counsel more closely than Laura Wilder. Over the coming years, struggling with the constraints of poverty, she would step by cautious step seize control of their circumstances. She would prove adept not merely at penny-pinching, but at finding ingenious ways to generate income, husband their minuscule resources, and protect their assets. As in the schoolyard, she would assume the role of leader, guiding the family on the long and taxing climb to security.

I love this quote. Anyone who’s been in the position of having to scrape together every penny and slowly haul the family out of the pit of poverty will find that this resonates. I’ve had my experience with it and I tip my hat to Laura and her grit and determination.

Forty years later, Laura had a similar economic situation to live through. The economy moves in cycles. This time, she showed that she had learned from her previous experiences.

  • “… the economic apocalypse was upon them. In the first week of 1933, [Laura] scraped together all the money she could find and paid off the outstanding balance on the federal farm loan on Rocky Ridge: $811.65c. This time, no matter what happened, she would not lose the farm. She was left with around $50 in cash.

I had a similar experience when I paid off our first house. I logged on one morning and realised I had $10 more in savings than I had owing on the mortgage. I knew we’d have a lean few months until I built my emergency fund back up again, but I couldn’t resist the siren call of being debt-free. Both Laura and I were looking for security for our families.

However, by 1939 the Wilders’ financial affairs had stabilised, thanks in no small part to Laura’s side hustle of writing the ‘Little House’ books.

  • While continuing to economise by writing on the backs of old letters and burning wood rather than running the furnace, [Laura] was finally achieving a sense of security. She told her daughter that she had escaped from the nightmare that once troubled her: “I haven’t gone alone down that long, dark road I used to dream of, for a long time,” she wrote. “The last time I saw it stretching ahead of me, I said in my dream,’ But I don’t have to go through those dark woods, I don’t have to go that way. ‘ And I turned away from it. We are living inside our income and I don’t have to worry about the bills.”

However, it wasn’t all fun and games. The Wilders had only one child, their daughter Rose. Over time, they fell into a bewildering financial spider’s web with loans and payments and counter-loans gradually sinking into a chaotic mess:

  • Earning a salary from the Red Cross and income as a freelancer, [Rose] made a commitment to her parents to furnish them with a payment of $500 a year, so they could retire from farm work… How badly they needed it is difficult to judge, in the absence of almost any records dealing with the Wilders’ finances. [Laura] was fifty-three, working at two paying jobs. Almanzo, with his disability, doubtless finding it increasingly arduous to plough, care for livestock and do the hundred other tasks involved in maintaining farm equipment, fields and fruit trees. Certainly they needed money, but they may not have required that much. Indeed, they pointed out to [Rose] that they had a comfortable home and plenty to eat.

I suppose it’s nice that her heart was in the right place. However, Rose’s money management skills were appallingly bad. She ranged from what seems like insane levels of expenditure when times were good to living like a pauper when the funds ran out. She’d send money to her parents, (often moaning bitterly about it in letters to friends, even though it was all her idea to do so), and then she’d borrow back money from her parents. By 1924:

  • By this point, the question of who was supporting whom was hopelessly entangled. It was becoming impossible for the Wilders or their daughter to extricate themselves, even if they wanted to.

I guess the lesson here is to not lend money to family, or go guarantor on loans. It can get very messy and can ruin what should be close family relationships. Don’t over-commit yourself financially to anything, no matter how generous you want to be. Unlike Rose, make sure your own financial house is in order before you try and help anyone else.

Thankfully, after a lifetime of struggle, both the Ingalls family and the Wilder family ended their lives in peace and security. ‘Prairie Fires’ by Caroline Fraser not only looks at Laura’s life, but Fraser broadens the focus by looking at the economic, social and political events that were happening at the time, and how all of this impacted Laura’s life. It’s a very interesting read, but it certainly makes me glad I was born here and now, and not back then. Life was a lot tougher!

Frugal Friday: Uglify your dogs for free!

Poppy and Jeff are Cavalier King Charles Spaniels, a breed originating from England where the climate is a tad colder than in Australia. Cavaliers have a proud royal history, dating back to the 1600’s when the Stuarts ruled England and were obsessed with their little spaniels.

Here’s a portrait of Charles II, who gave his name to the breed. Notice his long, luxuriant wig, so like the dogs’ ears? All of that hair, whether from wiggery or from natural means, is all very well in a climate where Santa Claus lives and something called snow happens. But here in Australia? Not so good.

Back in the days before children, when I bred and showed this breed, a long coat on a show dog was ideal. I’d brush them every day with a boar-bristle brush, wash them and condition them with almond oil to look after the shine and softness of the coat, and if their coats almost hit the ground you were the envy of all beholders. It’s against the breed standard to trim the coat, so the only time scissors went anywhere near my dogs was if I had to cut a knot or grass seed out. However, the Frogdancer home has moved on and so has my love for long locks on dogs.

Jeffrey, (the one on the left of the photo), absolutely drips with coat if he was left to his own devices. He’d survive perfectly happily for days in a blizzard if he had to. Great in the winter time, but on days where the mercury reaches 35C+/95F+, he suffers. The hair that he leaves around the house is insane, to the point where Dobby, my Roomba, gives up in disgust and goes back to his charging station to sulk. There’s no need for Jeff to have the coat, so for the last 3 years, I’ve been getting my sister Kate to clipper him.

She has mini schnauzers, so she clippers her dogs quite often. About 4 times a year I load my dogs in the car and we go down to her place and she attacks Jeff while the other dogs watch.

Look at the hair that came from him yesterday! The last time he was clipped was in the beginning of November, and this was the growth from then till now. Kate suggested that I take up spinning and make yarn to knit a jumper from all of the hair.

In this photo, you can see how long Poppy’s ears were before one was shaved. After she was spayed her coat changed and became thicker and drier, so now I just get Kate to clipper her too.

What does this cost? The last time Kate said she needed a new set of clippers, I offered to go half if she’d groom my dogs when they needed it. She agreed and I gave her $50. This was about 18 months ago.

Before I started writing this post, I googled the cost of clipping a small breed like the Cavalier if I went to a grooming salon. I nearly fell over. Maybe I would have if I wasn’t already sitting down…

If I took the kids to a grooming parlour, I’d be forking out anywhere from $60 – $100 PER DOG. Even I can do the Maths on this one. (Probably…)

2 dogs X 4 times a year = 8 clips per year@$60 to $100 = $480 to $800!! 

That’s a lot of money. I think I’ll offer to pay for the next set of clippers myself. I had no idea it cost as much as that. I’m feeling guilty now about asking Kate to pay for half the last time, considering she does all the labour. Clearly, I’m a bad sister.

Anyway, let’s do some Maths. Assuming I spent in the middle of those horrendously large figures each year, that works out to $640/year. Jeff recently went to the vet and had 10 teeth removed at a cost of $590. Essentially, getting my sister to do their grooming has covered the cost of that operation. Gotta be happy with that!

To be honest though, I’d be even happier if the short hair enhanced their appearance. Sadly, it has the opposite effect. Until a little more coat grows, their heads look too big for their bodies, their legs look like spiders’ legs and when they lie down on the floor they look like cowskin rugs.

Add gangly, ungainly and gawky to that. That short coat isn’t doing him any favours in the looks department.

Now you can tell that he realises we’re mocking him. He’s putting all his energy towards willing that coat to grow…

So the cumulative cost of insourcing the dog grooming adds up over time to be a significant amount of money.

However, this little thing of sharing the cost of the clippers is also pretty powerful. When you stop and think about it, why don’t we share the cost and the use of items that only get used every now and then? A group of neighbours could share a lawn mower and a mulcher, for example. Why does every house have a ladder? I can’t remember the last time I needed to use ours. Even kitchen things like dehydrators and preserving kits could be shared among friends. Obviously you’d have to work out what would happen with breakages etc, but I’m sure there’d be a way around it.

I wonder if anyone reading this post has tried something like this?







The single woman’s track to FI.

A few years ago, I remember looking with envy at women on staff with me who were married. Not because I wanted their husbands (!!) but because I thought that it would be so much easier to get ahead financially with 2 incomes flowing into a household. I looked back at what I’d been able to achieve over the last 10… 15…18 years while raising the four boys and working as a teacher on my own and I’d think, “If I could do all this with one wage, how much more could I have done if there was a partner working alongside me? OMG.”

It’s true… I have been able to make my teacher’s salary stretch. My parents, particularly my Dad, were frugal and kids are sponges. I learned the lessons growing up. My boys have travelled overseas with me 3 times, two of them have travelled to the US with the school band, they’ve all had extracurricular activities while growing up, all the while living in (an eventually) paid-for house in one of the best public school zones in Melbourne. They may have come from a broken home but I was damned if I was going to let it hobble them. I caught the investing bug after paying off the mortgage and started scratching together a small share portfolio. Life was good but I always assumed I’d be working until pension age, which for me is 67.

I’d look across at the multitude of female teachers my age who were able to work part-time because their husbands earned the larger wages in their households. They’d come into work talking about the lunches they’d been on, the tennis they’d played or just the simple luxury of having a morning/day/two days to Get Things Done during the week so their weekends were free to chill with their families. True, for 4 years I worked 4 days a week,  but I was working part-time because I had a side hustle that I had to attend meetings for on my day off, so I was still working. The things that my colleagues were talking about seemed to come from another world. A happier world. A cushier, easier world. I wasn’t bitter and twisted about it; after all their lives were a result of the choices they’d made when they were younger, just as mine was. However, it all seemed so different.

Then I discovered the concepts behind FIRE. It was really encouraging because I was already doing most of them.

Reduce expenses? No worries… been living like that for years! I started to smile.

Pay off debt? Done! My wages were all my own to do with as I would. Giggling now… this was looking all too easy.

Start investing in index funds? Well, I didn’t know an index fund from my own left foot, but I could learn. Hey, I already had my shares that were bubbling over nicely, so I had a teeny head start there. Laughing now, mate. Laughing.

Harness the power of compounding? Umm… crap.

I was staring down the barrel of my 50’s, so that magical 30 and 40-year compounding magical money machine was not for me. I looked over at those married people with their married incomes and their married lifestyles of married discretionary spending money and I thought, ‘It must be so EASY for them to get ahead. They must be awash with money and investments and paid-for real estate. Good on them… but how can I get there too?’

But then it occurred to me. I had a huge advantage in doing this thing on my own. Ok, I still had the kids living with me, the minimal child support I’d spasmodically received was now a distant memory so they were still mainly financially dependent on me, but it wasn’t as if the household was run by a financial committee. The Frogdancer household is more like a benevolent dictatorship, where there is only one set of hands on the financial reins. Mine.

That’s huge.

When I was getting out of debt by throwing everything I could at the mortgage, I’d listen to Dave Ramsey’s podcast on iTunes. The religion thing definitely isn’t my bag, but I’m not so bigoted that I can’t look past it. What I loved was the motivation I gained from hearing people’s debt-free screams and hearing the sound, sensible, boring steps to making it to Babystep 7… Build wealth and give generously. When he introduced the Millionaire theme hours I was rapt! Ok, most of them were people who got married and stayed married. But there were a few single women in jobs who paid comparable or less than mine who had also made it. This gave me hope that maybe I could do it too. But there was another thing about the people calling in on other sections of the podcast that I couldn’t help noticing.

It seemed like nearly every day there was someone calling in saying, “Dave, how do I get my wife/husband on board? I’m excited about getting out of debt and building a future for my family but s/he’s resisting me every step of the way.” Sometimes it would be a person ringing in and asking for advice on how to deal with a partner who has been hiding substantial debt from them, or who has a gambling problem and raking up huge debt… etc.

It wasn’t just Americans on a podcast. For years I’ve been a member of a site called Simple Savings. It’s a site that is overwhelmingly female, with the number of men who are members being less than you could count on one hand. It was a godsend to me, particularly in the years when we were incredibly hand-to-mouth when the boys were small. This is a site where I’d see frequent posts from Australian women asking about how to stop their husbands from blowing hundreds of dollars a month on fast food, boys’ toys, cigarettes and alcohol. These women were working hard to curb expenses, make their grocery money go further so they could provide extra activities or financial security for their families, only to watch seemingly helplessly as their partners spent all of the gains that the women had so painstakingly built up.

I tell you, these things started to make me feel very glad that I was single!

I may not have the lifelong romance, music playing as I rush heedlessly into my beloved’s arms every time I see him or the joy of reading poetry together in front of an open fire every night as he gives me a foot massage and hands me a single red rose… but I DO have the power of focus.

I set the rules. I decide which goals the Frogdancer finances are going to work towards. I decide which expenses are valuable and which can be cut. I’m the one doing the shopping, paying the bills and planning for the future. That’s an extremely valuable position to be in and every person who is single should relish it.

I don’t care if you have the most harmonious marriage in the world and both parties are working together towards FIRE and any other big goals you have. There’s still going to be expenses and values that each partner has that the other one doesn’t share, and so there has to be that dreaded thing…. compromise. Easier to finance this on two incomes, but when there’s only one? Single people rejoice! We don’t have to keep an expensive cable package because our partner just can’t do without sport. We don’t have to bite our tongues when our partner comes home with bags and bags of clothes that were “such a bargain” because they were “on sale”. We don’t have to smile and feign interest when our partner comes home with yet another watch, handbag or game to add to his or her collection. Our resources may be smaller, but we have total control over how those resources get deployed.

I think this is really powerful. The curse of the single person on the way to FI is that there is no one to blame but yourself if you don’t get there. That’s also the blessing. There’s no one else to blame if money gets wasted, there’s no one else to allow you to shove financial responsibility to one side while they handle it all, and there’s no one else to shelter you from the realities of finances and life in general, which weakens you. The blessing is that we’re empowered to get out there and make it happen, according to our own values and our own desires. It’s a wonderful thing, which historically has happened all too rarely for women.

Mathematically, being single certainly has an effect on how quickly a person can achieve FI. But it certainly has its advantages as well. Enjoy the journey!



Frugal Friday: The School Holidays Girls’ Lunch.

When we moved into The Best House in Melbourne a couple a years ago, I knew that our disposable income was going to be about $1.50/week. I was in the throes of getting plans through the council to develop my original property and I’d borrowed the entire amount against that house to be able to move into The Best House in Melbourne. Back in December 2015, five days before Christmas, I’d paid 750K for our new house. Settlement was at the end of March 2016. Bridging finance was 3K/month. At the time I was working 4 days a week, as I was still working my side hustle of being a Thermomix Group Leader.

The bridging finance equated to just over 70% of my takehome pay from teaching each month. I knew it was short-term pain for (hopefully) long-term gain, but in the meantime our expenses were cut to the bone. How could I still socialise without ruining the stability of our financial cashflow? Then I had a brilliant idea.

The great tradition of the School Holidays Girls’ Lunch was born.

(Apologies for the stock photo. I was going to take photos yesterday but you know what happens when the bubbly is flowing and the gossip is racing.)

Every school holidays I pick a day, a bit like a Goldilocks day. You know… not too close to the beginning of the holidays when everyone is tired; not to close to the end when everyone is racing around Getting Things Done. I pick a date that is just right!

Then I send out a group email to the women on staff. Not everyone…. we have over 150 people on staff and my house isn’t the size of a mansion. I have around 25 women on the list who all get along really comfortably with each other and so I whack the details of the date and my address and send it out. I ask if anyone can think of someone else we should invite, because we have new staff joining us all the time and I definitely don’t get around to meeting everyone new. The result is that every holiday we have a pleasant gossipy lunch without the pressure of school bells, students asking to see us during lunch and worrying about who may overhear a juicy titbit. This works really well because of a few procedures I follow and some assumptions I make.

Procedure 1: It’s a ‘Bring a Plate.’ Americans call this a “potluck”, but that always seems to me that you’re taking potluck that there’ll be anything edible! I prefer the more optimistic ‘bring a plate.’ I attach a Google doc with a column for Savoury and one for Sweet. Everyone who’s coming puts down what they want to bring.

You know how everyone has their specialities? We have eaten some amazing food at these lunches. As an added bonus, yesterday the two people who brought desserts were so pleased to be able to make them, as their families don’t eat sweets much anymore, so they were dying to break out their favourite recipes.

Procedure 2: I say that I’ll supply the champagne. I let everyone else choose the menu. I make sure to post the list a few weeks in advance, and then I don’t check it again until the day before. By then, the early starters who know EXACTLY what they want to make have made their move almost immediately after the list was emailed, while the late choosers have logged on and strategically seen where we’re running low and have selected a meal to bring. The first few times when numbers were lower, I’d see that we would probably need an extra protein dish, for example, so I’d make a lasagne, or we needed another side salad, so I’d make that. I haven’t had to do this for quite a while, as everyone now seems to naturally balance each other out. So all I have to do is make sure I have about 3 bottles of champagne. Some mineral water is also a good idea too. The Frogdancer household never runs out of wine and we always have champagne in the fridge, so this is easy.

Procedure 3: Cater for vegetarians and GF people. Even with Evan21 being a vegetarian, I’m ashamed to say that this didn’t automatically occur to me to do. However, the lovely thing about this is that it has occurred organically as the lunches have gone on. Working with each other as we do, word gets around about dietary requirements and choices. The first lunch we had, the only GF and vego/vegan options were the ones that the affected people brought for themselves, which of course meant that their lunches were pretty limited and boring compared to the rest of us. This didn’t go unnoticed by the rest of us. Now, people are actively choosing to bring items that cater to dietary requirements and they write this on the sheet. This prompts other people to think about what they’re going to bring and encourages the GF and vego people to come along because they know they’ve been warmly included. It’s a lovely development that I hadn’t foreseen.

Procedure 4: Make sure the dishwasher is empty before they arrive. I stack the dishes as we go and at the end, there’s no one feeling obligated to offer to stay and go through the drudgery of the dishes. It’s a relaxing time for everyone.

Procedure 5: Make sure there’s a plate of nibblies. There’s always one or 2 people who are running late. It’s rude to start lunch without them, but at the same time I don’t want people starting to feel a bit hangry. So if no one has nominated a dip or antipasto platter, then that’s a gap that needs to be filled. No one minds waiting a half hour for lunch if they have a glass of bubbly in one hand, a tray of nibbles nearby and fun people to catch up with.

Assumption 1: Not everyone will be able to come. People are on holidays. They have plans. They are either in Melbourne on the day or they’re not. I factor this in with the number of people on the group list and I expect that at least 50% will be otherwise committed on the day. Therefore it’s not a drama when people make their excuses. I know for a fact that once someone attends one gathering, they’ll always come to another one if they’re going to be in town. We all have a really good time and the added bonus is that there’s always a different mix of people each time.

Assumption 2: Just because people work in different departments, it doesn’t mean they won’t get along. We work in a large school of over 2,000 students, with about 7 different learning areas. Being a secondary school, we specialise in our subject areas, so there are people on staff that I’ve known for nearly 15 years but have never sat down and had a good chinwag with, because we’ve never worked together at all. We have 3 separate staff rooms where we have our desks, so people mingle there a little more, but basically a person could go years just nodding politely at certain people as they pass them in the corridors without ever knowing how much they have in common with each other.

Personally, I’ve found that having a mix of women from different faculties and staff rooms has worked brilliantly. You wouldn’t credit the fascinating conversations we’ve had with people who would normally barely cross paths at work. We’ve learned more about each other in a couple of hours than we have from years of working at the same place, and this makes going to work a more pleasant experience. It’s always more fun when you work with friends! And you know you’re onto a winner when people start asking you towards the end of term when you’re going to be sending out the email for the next lunch.

Assumption3: What’s talked about during the School Holidays Girls’ Lunch stays at the SHGL. The holidays are when you hear the juicy gossip. Not every time, but when people are feeling relaxed and they know that Big Brother isn’t watching, things get shared. It might not be personal stuff, it could be attitudes towards professional areas that are happening in the workplace, but people tend to drop the work-mask and share their real ideas and attitudes about things. It’s really interesting when it happens.

Seeing as this is Frugal Friday, it may sound as if this idea isn’t particularly ‘skinflinty’. You may be right. I could probably organise a lunch at a restaurant and my meal would cost the same as a couple of bottles of champagne. So why do I still consider it frugal?

Compare the bang for my bucks between me paying for one meal at a restaurant and me entertaining anywhere from 10 – 15 people for a meal. The atmosphere in a private home is much more relaxed than in a restaurant- people move around, they mingle, they move from the kitchen to the dining table and back again… they taste and compliment each others’ cooking and ask for recipes. Who doesn’t love to feel that they’re a great cook?!? Sharing food is a natural ice-breaker. In a restaurant, once you’re seated you’re pretty much stuck in place, so you’d better hope you’ve chosen your place well.

The lunch at home can go for as long or as short as the natural flow. There are no bored waiters hanging around, silently begging everyone to go home. Usually, these lunches go for 4 -5 hours, depending on who’s here and the conversations that happen. Some people pop in for maybe 3 hours and then leave for another engagement, but that doesn’t matter. It’s all very organic and easy. And let’s face it, once I have a glass in my hand, I like to let things just go with the flow. After all… I’m on holidays.

It also means that I give my house a good clean and I make sure that the boys clean their bathroom and toilet. Visitors are a great reason to keep things well-scrubbed!

Next holidays I’ll be overseas so I won’t be holding another gathering until winter. Still, the spreadsheet will be there, waiting to be dusted off and brought out again. It’s a very cost-effective and socially fun way to entertain and I highly recommend it.



Geoarbitrage: all the cool kids are doing it #1.

When Tim Ferriss coined the term ‘geoarbitrage’  about 10 years ago it meant outsourcing work to a cheaper region or country, usually over the internet. Nowadays it’s clear, after listening to podcasts and reading FI blogs, the term has morphed in the FIRE world into a descriptor of when a person geographically moves to an area that has a much lower cost of living.

Traditional retirees have been doing this for years… both sets of my grandparents did this in different ways after the breadwinners retired. One set moved up to the Gold Coast in the late 1960’s when the cost of living was far cheaper than Melbourne and the weather was far better. The other set stayed in Victoria, but sold their house in Murrumbeena and moved to a 1/4 acre lot in Inverloch, in Gippsland. They bought a caravan and spent 6 months of the year up in Cairns, during their beautiful winters, and then they’d drive down to Inverloch to spend time with us during Melbourne’s beautiful summers. Both sets of grandparents chased the sun but did it in ways that were gentle on the finances and offered them all a great quality of life.

Nowadays it’s becoming more common for traditional retirees to look at moving to a country that offers far more bang for the buck than simply living in Australia does. A couple of months ago I was walking the dogs and I started up a conversation with a guy who lives a couple of streets away. He spends 8 months of the year in Malaysia with his new wife and tiny child and rents out his house in Melbourne while he’s away. He loves the lifestyle, the climate and how cheaply he can live there and he only comes ‘home’ to see his adult children.

Also, a very good friend of mine is looking at giving up work in the next couple of years and has almost fully decided to up stakes and live in Thailand when he finally pulls the pin on working. He’s travelled there a fair bit, even having extensive dental work done there that was prohibitively expensive for him in Australia, and he knows he could buy a near-new apartment with a pool and aircon within a stone’s throw of the beach for what we would consider peanuts. He knows that with his investments and the pension, he would be able to enjoy a lifestyle that would be out of reach for him here. 

People in Australia also look towards Bali, but the disadvantage with beautiful Bali is that Indonesia doesn’t let foreigners buy land. You either have to buy something as a silent partner and hope like hell that they don’t walk away with your money, (which happened 2 years ago to someone I know…yikes!), or you go over there and sign a long lease on a property. I saw this ad on Facebook yesterday and thought that it was a perfect example of Geoarbitrage in action.

In today’s exchange rate, $100,000USD equals $125,140AUD. Considering that the prices of residential real estate in Australia are some of the most expensive in the world, a person could free up a lot of equity in their house by selling their million dollar property, tucking the surplus into investments and living the high life in that Balinese villa for the next 30 years. Who knows? Considering the age s/he retires and their state of health, that 30-year lease might just see them out. Bali has the schmicko hospital that was built there after the Bali bombings, the cost of living there is minuscule and family and friends are a short plane ride away. (Well, to be fair, Australia is so big and so isolated that very few places are a short plane ride away, but you get my drift.) It’s a viable strategy for those who love the tropical climate and the relaxed lifestyle that places like Bali and Thailand offer.

But what if you don’t want to move to another country to live, but at the same time you don’t want to work till you’re 70? What if you want to get your toe into the property market but price tags of 1.5 million dollars for a 3 bedroom fixer-upper in McKinnon are seriously out of your reach?

Geoarbitrage isn’t just a tool to use to inch closer to early retirement. It’s possible to utilise it for other reasons as well. I have a friend in his 30’s who really wanted to own his own home but knew that the million dollar+ price tags of Melbourne houses were always going to be beyond his reach. He decided to think outside the box and bought a lovely little house in Ballarat for less than a third of the price that he would have paid where he was originally living. For those who don’t know, Ballarat is a regional town about 120kms west of Melbourne. It’s a large city of around 110,000 people, so it has pretty much all of the amenities that you’d need … including a university that my youngest son, Evan21, will be going to for the next 3 years. My friend J is really happy with the move, with the only practical downside being his commute. He travels into the city by train, but because it’s a country-line train there are fewer services, so he really doesn’t want to miss his train! He’s already negotiated a couple of “work from home” days a week, but of course, if the commute gets too arduous, there’d be nothing stopping him from looking for a job closer to home. Flexibility is the key.

With a concept like geoarbitrage, you have to seriously weigh up what you are gaining vs what you are giving up. There’s always going to be a downside, but the thing you have to measure is whether the advantages massively outweigh the disadvantages. The decisions that people are going to make about whether or not to do it are as individual as they are. Some people are deeply rooted to a place for dearly-held emotional reasons and they wouldn’t DREAM of relocating, whereas others could quite easily sell up and move on without a backwards glance at the place they’ve left behind.  Then there are all the people who fall into the middle ground, which is probably most of us.

When I next write about this, it’ll be a post entitled, “Geoarbitrage: all the cool kids are doing it #2”, where I’ll share how I tweaked the concept to come up with a move that suited the Frogdancer family’s situation.  It was something I never expected I would ever do, but in life there’s something I’ve learned: never say never!







The 4% Rule for people who are scared of Maths.

I’m sure that I’m not alone in coming relatively late to this whole FIRE thing. Surely not everyone who latches onto this idea of financial freedom is a bright-eyed twenty or thirty-something who has all the time in the world to get their financial act together and then spend untold decades doing exactly whatever they want to do.

Some of us must surely be like me. I spent my twenties beginning my career, breeding and showing dogs as a hobby, getting married and starting a family. You know… the usual. My thirties were spent raising my boys, divorcing my husband and then re-establishing myself back into my career field. I was paying my bills, supporting my family and doing all the right things that were expected of me. I focused on becoming debt-free and paying off my mortgage, which I did just before I turned 50. I knew dimly that it wasn’t the best decision in a mathematical sense, but security was extremely important to me, so it was the right decision for me. I paid off the house.

But what then? I looked ahead and saw that unless I started getting serious about investing, I’d be doomed to confiscating mobile phones, trotting around on yard duty and marking essays until I was 70. I love teaching, but I don’t think it’d be much fun doing it in a zimmer frame. But I knew absolutely nothing about investing, aside from vague references to “blue chip shares” and seeing the 10 seconds worth of financial stock market stuff on the news every night.

I was scared. Literally scared.

I’m sure I can’t be the only person who has felt this.

I joined an investment group with the Barefoot Investor, which back then was wonderful… but has since devolved into a product that isn’t as good as it once was. But at the time it was great. I started a small share portfolio, made some very savvy friends and felt a little better. I was doing something, and action always feels better than inaction.

But then I started wondering. How much is enough? How do you know when you have enough to retire? I come from fairly long-lived stock. Two of my grandparents lived till their mid-90’s. Grandma was left in a comfortable financial situation by her husband, but my Grandad on the other side of the family ran out of money in his late 80’s and had to rely on my parents to prop him up when he needed more than the pension. He retired when he was 59 and I’m positive that he would’ve thought that he’d be fine. Looking at the two different scenarios, I know which one I’d rather be living when Old Lady Frogdancer hits 110 and is planning her next trip overseas…

But given all this, how do you know what amount of money to aim for?

Soon after joining the Barefoot Blueprint, I stumbled across the world of personal finance blogs. I’ve been blogging since 2008, but I was primarily in the crafts and permaculture world. The personal finance area was a revelation of education and paradigm-widening information.  The very first blog I found was Go Curry Cracker – in fact, I asked him in a comment what FIRE meant. Talk about coming late to the party! One of the first posts I read was about this thing called the 4% Rule. I was intrigued but didn’t fully understand, as Jeremy went into a lot of advanced graphs and Maths, which wasn’t great for someone like me who didn’t have their head around the concept and was scared of Maths. (Still am.)

Then shortly afterwards, I found the blog post that so many people reference and point to as the one that explains it all. Mr Money Mustache’s post about the shockingly simple Maths about retirement. (I’ve included a link at the end of this post.)

It blew my mind.

The 4% Rule is based on a massive mathematical study that some uni guys did in Trinity University, where they studied how many portfolios would last over a 30-year span, based on differing rates of spending over that time. They studied what would happen if people started their retirements in every year, starting from 1926 in rolling 30 year periods. They demonstrated that in a portfolio of 50% shares and 50% bonds, (which is WAY conservative), you’d end up with money still in the kitty in 96% of cases if you kept your spending to 4% of your portfolio. Many times, you would have ended up with MORE money in your portfolio than when you started. Not bad odds…

I’ve included the links with all the Maths at the bottom of the post. No way am I going to try and explain all of that when others have already done it so clearly. Plus, you know… Maths. *shudder*

But the crux of the matter is that if you take your anticipated annual spend and multiply it by 25, you get the number that you need to stash into your portfolio to be able to support yourself in retirement. I have no idea how or why it works; I think it’s magic or something. But this is the way to find your number.

Now THAT gives you something to aim for. I dare you… think of a figure you think you’d need to live on and times it by 25. That’s how much you need to have amassed in savings/investments before you should think of retiring if you want to be a self-funded retiree and not totally rely on the old-age pension. As long as I have a calculator handy, even I can do that. I can tell you, I was dancing the fandango when I realised that I finally had something concrete to aim for.

The amount of money will be large. For example, if you think you could live comfortably on 40K/year, you need a cool million.  50K? that’d be 1.25 million. 60K? 1.5 million. At first sight that’s intimidating, especially if, like me, you’re starting a little later than some.

The beauty of it is that we have a lot of control over most of it.

Here in Australia we have a pretty good system with regards to superannuation. Every employer has to pay 9.5% of your wage into a super account that YOU can choose. Most people passively go into the one that the employer selects for them, but with a bit of homework on some comparison sites, you can work out pretty quickly if this option is the best one for you. If you decide you’d prefer to have your money work harder for you in a different fund, it’s extremely easy to change.

So you already have nearly 10% of your wage going into super. You may choose to let this bubble along if you’re young and have plenty of time on your side while making other investments along the way. If, however, you’re like me on the shady side of 50, super is an excellent way to accelerate your savings for retirement. The tax advantages are huge.

I’ve had a couple of conversations lately with people who still don’t salary sacrifice. It’s scary to think of how many people there are who don’t take advantage of this excellent way to get more bang for your buck while saving for Old Lady/Man……..(insert your own name here) …’s quality of life. If you choose to salary sacrifice, every dollar of your wage that gets taken out and put into super is taken out FIRST. It’s taxed at only 15%… then the rest of your wage is then taxed at your normal amount. This means that even though you may choose to salary sacrifice $600/pay like I do, you get more money in your pay than you’d initially think. My wage didn’t drop by $600. It only dropped by $450 or so, which means that I have an ‘extra’ $150 to play with. Again, it’s some magical incomprehensible Maths thing. But without a word of a lie, every single person I’ve persuaded to start salary sacrificing comes up to me after their first payroll deduction and says something like, “I can’t believe how much money I’ve still got!” It’s true – you steel yourself for your pay to drop by the amount you’ve nominated, so it feels like you’ve received a pay rise when you get more back than you were expecting. You can put in up to 25K a year, including what your employer puts in. It’s brilliant.

We also have a HUGE amount of control over our annual expenses. After all, this is the figure that will determine the ‘times 25’ of the 4% Rule. If you have a burn to retire earlier than age 67, then if you reduce the amount you need to live on, your magic retirement goal number will be less. This is why I call myself a value-ist. I’ll spend big bucks if I have to on the things I think bring joy and value to my life, (hello $2,000 miniature wire-haired dachshund!), but I’ll either drastically reduce or eliminate the things I feel that don’t.

For example, everyone talks about the latte factor – how if you stop buying that $3.50 cup of coffee every day when you go to work you’ll save $840/year. We’ve all heard it. My sister Kate and I have vastly different attitudes to buying a daily coffee. To be frank, I think it’s a waste of money. My school actually supplies plunger coffee, tea and instant coffee for free. My attitude is, ‘Thanks very much!’ Do you know how many people in my staffroom walk up to 711 to buy a coffee every morning? Then during the day, someone will say, “I’m just popping up to AJ’s for a coffee. Anyone want one?” and the hands go up. I don’t get it. They have the common room to sit and socialise, just like in a café, and they can get their coffee for free. My sister, on the other hand, derives immense joy from her daily coffee. She loves trying out different places, the different tastes of coffee beans, the social aspect of a busy café… for her it’s an expense she feels adds a huge amount of enjoyment to her life. You’d have to prise that coffee out of her cold, dead hands before she’d give it up, so she continues to spend money on this, whereas I have almost totally eliminated it from my life.

When you get the bug for organising yourself towards retirement, one of the most useful things you can do is to track your spending. Over time, you can see where the necessary spending is and, most importantly, where the wasteful spending comes in. Then it’s a simple matter to plug the holes and bring your annual expenses down. When we become aware of those little day-to-day purchases that are so small that we disregard them at the time we make them but which can add up over time to be almost frightening… this is definitely an empowering thing to do in life. Once you’re aware, you have the choice to continue along the same path or to change. If you’re never aware; you can never have the choice.

I guess what I’m saying is that conscious frugality in the areas that suit your life is a cornerstone of the FIRE life. That’s why I’ve decided to include “Frugal Friday” into this blog.

Another way to accelerate your savings towards your magic number is to increase your income. I have no useful input with regard to getting promotions and pay rises from your job. I work in the public sector in the education field, where pay rises are automatic each year and promotions are limited in the school I’m in, so I have no real experience. But a side hustle? THAT I know about.

Sacrificing a little bit of tv watching time to bring in more dollars is the classic short-term pain for long-term gain thinking. I did this for years, searching for a solid money-making opportunity that would be worth my while. My last side hustle enabled me to pay off my house years earlier, then to save and pay cash for a 30K trip around the UK and Europe. Then I funnelled the cash I earned into investments. Was it worth my while? If you’d asked me that when I was swanning around Hampton Court Palace in a red velvet cloak, I would have laughed in your face. My side hustle was tiring and made my life much busier, but it enabled me to get out of debt which then freed up a large amount of money that I could direct into investments and an extravagant trip of a lifetime without sacrificing my savings towards super and shares. If you eliminate debt it enables you to turbocharge your path to your magic number.

IMG_0604.jpg One of the best days of my life! Thank-you, side-hustle.

A wonderful thing to keep in mind is that you have control over the magic number you aim for. Personally, I’m keeping current annual costs as low as I can, while working towards an annual figure far larger than I need to live on to survive. My magic number is designed to let Old Lady Frogdancer thrive! Therefore, my personal 4% Rule number is inflated beyond my current spending, to take into account all the travel I intend to do. This is an easy decision for me to make as I still enjoy my job and don’t mind working a few extra years to build up some more money. Someone else may be in a different position, where they hate their job and by cutting unnecessary expenses they can bring forward retirement and they can start enjoying the freedom of that lifestyle. We all have great control of our own paths – if we make conscious decisions.

I’m a big fan of the 4% Rule as it’s an easy formula to get your head around. For someone just starting to grapple with these ideas, it gives you a giant bulls-eye to aim at, which is incredibly empowering. Later, as people get closer to the time they decide to pull the pin, their investment decisions can be modified to their individual requirements. Who says you HAVE to pull out 4% every year? You may decide to go more conservative with a 3.5%, or more aggressive with a 5% rate of withdrawal. You may choose to factor in a part-pension, or to remain totally self-funded. You may want to leave a legacy to family or charity or go screaming to the finish line of life clutching your last dollar in one hand and a martini in the other. Those more detailed plans can come later, as you become more educated and you start fine-tuning your investment plans. But for broad-brushstroke planning, the 4% Rule offers as much certainty for forward planning as you’re likely to get.


Here are the two articles that sent me on this path. I’ve included the simpler one first, with the more detailed one following for those who want to go deeper into the concepts. The comments are well worth reading too, as people query and discuss things. They bring up points and debate them, which deepens the knowledge, which is a pretty good thing.

Mr Money Mustache’s post on “The Shockingly Simple Math Behind Early Retirement” is HERE.

Go Curry Cracker’s post on “What is Your Retirement Number – the 4% Rule” is HERE.