It’s time to track my Net Worth

I think I ought to start tracking my wealth more closely, in the format shown below:

Assets:

  • Cash
  • Super
  • Investments
  • Other

Total Assets:

Liabilities:

  • Credit cards
  • HECS
  • Other

Total Liabilities:

Net Worth:

Unfortunately, I don’t pay any attention to my HECS debt, and am not even sure how much of it is paid off, if any. Since I usually ignore it, I often believe I am wealthier than I really am.

A quick estimate of this HECS debt: 3.5k per semester for 5 years of Architecture school. So 10 semesters should stand me at ~$35,000. Yikes!

Stop opening up more tabs!

One of the great, but frustrating, things about having so much free time to do whatever my heart desires is that sometimes I start reading a blog, and end up in a rabbit hole that sees my Chrome window have 20 tabs open. Each tab will show me something I want to read up on, but in doing so, I then open more tabs to either research what I just read about, or because I have clicked on yet another link.

Then, several hours later, I am 5% through each of these tabs and I’m wondering how to extricate myself from this predicament while still consuming what is on each page. I have to exercise patience and willpower to not open any more tabs!

Mr Money Mustache – view money in a different light

I have started reading the Mr Money Mustache blog again. I first came across this blog a year or two ago and read a few of the key articles before getting swept into the busyness of my own life and forgetting all about it. At the time, I was struck enough by the principles of this blog that I started keeping an eye on my grocery shopping a bit more. I also started looking at how far I was from early retirement/financial independence [really far!] and started making my own excel sheet with calculations of my own on my expenditure and savings levels. I have since tightened the belt even more on my expenditure, and even started calculating what our home cooked meals cost per meal.

But it wasn’t until just a few days ago that I stumbled across MMM yet again. Unlike before, I am not bogged down by the rat race right now so I have had a lot more time to read through these blogs thoroughly. Starting from the earliest, I have gotten through several months’ worth of advice and am already looking at ways to grow my ‘mustache’ further, as he would say.

If you haven’t already, READ THIS BLOG. I wish I had read this a decade ago when I started my first job at the ripe old age of 18. It would have opened my eyes to the value of money, but in a completely different way than before.

Growing up, I was simply taught that success equals earning as much money as possible. The more you earn, the more successful you are! Right? However, success, by that definition, does not necessarily equal happiness. Which to me sounds completely wrong. Success should be defined by whether you achieve happiness and fulfillment in your life. Unfortunately, I was set up to believe that money/success would buy me a giant house and fill it with nice, expensive things which are supposed to make me happy.

What I love about this blog is that it shows a different side of the coin which is money and our endless endeavour to procure more of it. Money can be more than something you exchange for material goods and services. It can give you flexibility and freedom in life, to spend more time with your family and friends, to do work you enjoy without fear, to do what you love.

While a good chunk of advice on the blog cannot be applied to my situation, or Sydneysiders in general, there are still so many things to take away from it. For me, this blog, and other recent life affirmations, have allowed me to continually realise that there is definitely more to life than working for money. Having money can make me happier, but it can also do the opposite depending on how I view it. I don’t want to be a slave to money because of an addiction to non-essential material things. I don’t want to be sucked into an endless loop of misery caused by a misguided and unhealthy worshipping of capitalism.

Read this blog to understand that your life can be shaped differently, that careful use of money can give you freedom and flexibility, if you so want it. There is more to life, and there is more to one self, if you choose to focus on it.

Housing cost vs travel time

Include the transportation to and from work in the calculation of ‘total cost of housing’.

I have been reading the Mr Money Moustache blog again and came across something someone said in a comment. Intrigued, the following are my thoughts on it.

What does this mean?

Naturally, cost of rent closer to the city/CBD will be higher than places further out, but if you include costs of transportation to work e.g. trains, then it will provide a truer cost of housing. Also, you can include time as a separate cost and see whether you are happy to set aside 1, 2, 3 hours a day travelling to and from work.

I have never really put much thought into this before, always assuming where I am is the right place to be for me.

Right now?

Right now I am paying $155/wk ($8060/yr) on rent in a western Sydney suburb. A train fare to work in the CBD would cost about $43/wk. So in total I am paying roughly $200/wk.

Of course, this is helped greatly because Jared and I have a house mate. If the housemate left and we had this 2-br apartment to ourselves, my rent would be $265/wk instead, and $308/wk including transport to work.

A quick look on Domain.com.au shows that the cheapest 2-br apartment in Surry Hills is a minimum of $550/wk ($275/wk for me) but that is followed by listings of $650/wk then $700+. Ultimo and Darlinghurst listings start in earnest around the $650/wk mark, Pyrmont at $700/wk. And of course, these are all prices at which the listings start. I am a huge fan of the “sort by lowest price” button.

Let’s take as a hypothetical that a realistic price point is $650/wk for a 2-br apartment around the city somewhere. This means it would cost me $325/wk, plus walking or maybe a couple train stops to wherever it is I may work.

Moving to the CBD, or within walking distance, would cost even at best, or what I suspect to be a lot more than what we currently have here. Finding the right place, with enough space so Jared can work from home and we don’t want to kill each other, assuming that these places have NBN, would be really hard and probably even more expensive that the starting point of $650/wk. I also have a feeling that being much closer to all the nice little cafes and restaurants, and generally everything else the city has to offer, would induce me to spend even more money.

On the flipside, from where we are now it would take a 25-35 minute train into the city, then walking to each train station. It could easily take a full hour to get to work each way, but I am paying that price with a much lower price of housing, bigger and newer housing (you should see the size of my bedroom alone), great NBN. I love my little suburb even though it is not perfect. It is close enough to the city, while still being close to my family, relatives and friends – I am sort of in the middle. I guess I am so used to the commute that one hour each way does not phase me much, especially if most of it is spent on a train where I can read or listen to music.

Okay, so clearly I have established that a bit of a commute is more than welcome for paying less rent (travel included), for more space, for NBN, for being closer to friends and family.

What would turn the tables a little is moving somewhere with a much different scenery, like being close to the beach. Moving to the city or inner suburbs lack appeal to me because there isn’t much of a change, no huge wow factor except for a substitution of money for time. But moving to the beach? That’s a real lifestyle changer for me, even if it isn’t for everyone.

So let’s make a few more calculations.

A beach suburb requires at least a bus to get to the city. So there’s already transport costs. Rental listings start from $600/wk for Coogee and Bondi Beaches, much more for listings closer to the beach. But if I let myself move all the way to a beach suburb it would have to be closer to the beach, so let’s assume it would be in the realm of $750/wk for a decent place at either of those beaches plus travel into the city. If you’re lucky, maybe you can find work closer to where you are. Could I justify spending that much on housing? That’s $375/wk for me, almost $20,000 on housing alone. Contrast that to my current situation and it is almost double!

On one hand, it would be amazing to live close to the beach. For me personally, I find it is immensely calming to relax on the beach with our little beach tent blocking those harmful UV rays. Bring a beer or two, buy a takeaway pizza nearby, a nice book to read, and it is almost better than most holidays I can imagine.

In the last year or two I have always factored in a sum for holidays and other large expenses. I wonder if I would be willing to place that sum of money into this lifestyle instead.

The disadvantages, other than the clear money sink on rent, would be being much further away from family and friends, and still needing to travel a bit to get to work. I think this kind of lifestyle is hard to swallow right now due to the income we’re both on. [aside note: I still think like I am employed sometimes]

I would like to be on at least $75k/year salary before I was comfortable allowing myself to live this lifestyle. But who knows, that might come sooner than I think! Cross your fingers for me.