Hindsight is a wonderful thing.
As I sit here well into my mid-40s it’s all too easy to think of all the things I’ve done in my life that weren’t FI and how I could be FI now, if only I’d had this information at my fingertips when I was 20. I call these bad moves my #FI-Fails.
Being a bit of an optimist however, I also get great satisfaction when I reflect on all the great FI moves I’ve made without even knowing what FI was. I call these my #FI-Wins.
In this post I reflect on the #FI-Wins I’ve made over the decades. There was no strategy, no real intent, just something that made sense at the time. I realise now that I'm an Intuitive FI. Are you?
I now realise I was a house-hacking back in the early 1990s. After leaving home at 17 I always shared houses and flats with friends. One of my favourite times was a sharing with a 3-bedroom flat in Elwood, Victoria with my two best friends from school (and a tolerant guy called Simon). When a third friend wanted to move in, we turned the dining room into her bedroom – reducing the rent for all and giving her a home. We didn’t think this was particularly frugal, just practical.
At 24 I purchased my first house with my brother. It was in an up-and-coming area in Abbotsford, Victoria. I couldn’t afford it on my own, so going 50:50 with my brother seemed the obvious thing to do. I lived in one bedroom and we rented out the other two to friends. My brother took the rent from one bedroom, and we split the rent on the other. The result was that my mortgage repayments (after receiving half the rent from one bedroom) was way less that I would pay in rent on my own.
Three years later I desperately wanted to go travelling, so took off overseas leaving my brother to sort out the selling of the house. It took most of year, by which time any profits had been eaten away through mortgage repayments. That house we purchased in the early 1990s for $250,000 is now worth over a million. Big #FI-Fail!!!
Later in life my husband and we saw a flat in Brunswick, Melbourne that had just been done up, but was tiny (30m2), with a large courtyard garden. We thought it might be nice for us to use a night or two during the week as we both had long commutes to Melbourne CBD from our home on the Mornington Peninsula. (This concept I now know to be a #FI-Fail – it would have been cheaper to stay in a hotel).
We then turned this wee flat into an #FI-Win by renting it out on a short term basis. This was in 2004 – well before Airbnb was a kernel of an idea (it was launched in 2008). We found tenants through the Gumtree who were prepared to pay $300 a week (inc all bills). The going rate for long-term renters was $170 per week (plus bills). You don’t need a calculator to work out this was a winning strategy. An added bonus was we used the flat ourselves during the vacant period (which was frequent, as the leases were from 4 weeks to 3 months in term.
The second #FI-win was the capital gains in the 2 years we held the property. It was boom-time in Melbourne, and we sold it for about 50% more than we purchased it.
Unfortunately, we were hit with a massive capital gains bill as we sold it in a year we were both high earners (#FI-Fail). If we had waited to the next financial year - when we were both on a work break we would have paid close to zero! We live and learn….
I’ve been married now 16 years and in that time, we have purchased, lived in and sold eleven properties in Australian and the UK. A lot, I know. We’ve lived in flats, townhouses, new-builds, farm sheds, and now a beautiful, historic 150-year-old country home, complete with enormous Game of Thrones-style fireplace. We’ve made a profit on all but one property. Some of it was down to our renovations, some market uplift – most a bit of both.
The property we live in now hadn’t been occupied for 30 years. It was in pretty dire condition when we moved in during a particularly bitter UK winter. We have worked away for 2 years to bring it back to life. And we expect our efforts will be rewarded with good capital growth. A recent appraisal suggests we should make 50% on our investment. Not bad for a bit of discomfort and elbow grease.
Next post I'll look at my #FI-Wins with Mini-retirements.
I'd love to know if you too are Intuitive FI too. Comment below if you are.