Hi there accounting fans! Are you familiar with the FIRE (Financial Independence, Retire Early) Movement? For just a bit of background – the FIRE movement came about as part of a drive towards financial independence via increased savings and increased earnings. Also it has a pretty cool acronym.
The FIRE movement is quite big in the USA and has in recent years made its way to the shores of NZ and other countries around the world.
Today I have with me Milan Kruger from www.firelife.co.nz who is one of the champions of the FIRE movement here in NZ. He is an entrepreneur and FIRE aficionado and he is here today to share with all of us some of his tips towards achieving financial independence!!
Hi Milan, thanks for joining us here – what would you say are some of the struggles that you have faced as an entrepreneur, especially in light of the COVID-19 crisis?
So I have started and failed at quite a couple of businesses, by no stretch am I calling myself a ‘successful’ business man, I will say this that I think it’s important to have something on the side and in my case it is building an app with my best friend. It has been tough because we are a new business and trying to work with other businesses have been… interesting to say the least. Everyone is just trying to keep their doors open and no one wants any extra services.
Hey, what matters is that you are out there doing something! What does ‘Financial Independence, Retire Early’ (FIRE) mean to you, and what does your FIRE look like?
This is one of my favorite questions on earth, because it is both very narrow and very broad at the same time. For me FIRE is the power to choose. I can choose what I work on and do what makes me happy. Alongside that I believe it is very important to work on something that helps people. I am not FIRE just yet but my main goal with the blog is showing people week by week what that looks like to get there and what I am doing to get there. To break it down, my wife, Peanut (our unborn baby’s nickname) and myself are investing everything we can to get our investments to a stage that they give us enough money to live on as dividends. This obviously comes at quite the price, smaller apartment, knowing where every dime goes etc. I will say this though, if you are keen to start living more frugally you realize you don’t miss buying ‘stuff’. That’s the short answer Sam!
Well, living on a small income has certainly taught me that there are many things in life I don’t really need! How has your business/side hustle contributed to your FIRE plan? How do you get it to align with your personal financial goals?
So with any business or side hustle the way I approach it is to work on something on the side and once it eventually takes off, who knows where it could take me? I think it is important to keep the 9 – 5 and do a great job for whomever you work for. You can truly become FIRE through your 9 – 5 job and building a business isn’t for everybody. The idea of a side hustle or entrepreneurship in the last couple of years has become attractive to a lot of people. When in reality it is a very hard slog with no guaranteed results. That sounds super doom and gloom but I think people can with a bit of frugality and some basic sound investment knowledge get to FIRE for themselves even through a traditional 9 – 5 job.
I think that’s a really important message there. There is nothing wrong with a 9-5 job at all! In your blog, you call yourself a conservative investor. Can you explain what that means and what you feel about people who try to ‘time’ the market?
I definitely consider myself a conservative investor because well I hate losing… Now if you talk to anyone who knows even a little bit about the stock market you will realize that it isn’t that risky if you understand how it works and what you are investing in. In fact I would go as far as saying that not investing is more risky. Why would you say that? Well the opportunity cost of not investing is massive. The best interest rate that I know of will give you 2.5% on your money every year… That is nothing compared to an average gain of 7% for the S&P 500 (An american index fund). On top of that investing has been made so much easier with SAAS apps like Sharesies. The second part to becoming a conservative investor would be to have an iron mind when it comes to investing. How you get to this is by ensuring that you have the knowledge to back up your decisions. That means reading books, asking people who know what they are talking about etc etc. That way when the tough times come (like we are in now with the coronavirus) you have the strategy in place to not make emotional decisions that will cost you later on.
As with everything, financial independence needs to be approached with a clear mind! What are some budgeting tips and financial hacks that you have used to help you meet your FIRE goals?
I am a practical man and I will give you some practical tips on how we are doing this.
- Know your baseline – Your baseline is the number you need for you and your family to survive. That means you need x amount of dollars to live and enjoy life. This takes a bit of soul searching, do you really need to live in a 3 bedroom house when you can hardly keep up with the mortgage payments? Know what you need to live, that includes money for dates as well but the key is to know your numbers.
- Invest the rest – Invest the rest means invest in assets that in the long run will allow you to be financially independent or your assets make enough money to sustain you. This I think will look slightly different for everyone. For us we are investing in the stock market with a proven strategy that we know we will win. On current projections we should get there in about 15 years.
Thats it really. No need to over complicate it, I really do think that is it.
Wow, thanks so much for joining us Milan. You’ve got a really great story and I’m sure the advice you’ve shared will help many of us in our journey towards Financial Independence! So I’ve heard you mention that you are planning a course for anyone who is interested in building up their FIRE plan? Would you like to talk more about that?
Yes! Definitely! Back when I first started out on my FIRE journey, I had to struggle and learn about the ins and outs of investing and I made a few stumbles along the way. Now that I am in a better position than I was before – I want to share that knowledge with others, so I have created this course called ‘Invest Like a Millionaire‘ for anyone who is super keen to learn more about investing. It is a really simple course with some easy, no-nonsense advice and best of all, NO SILVER BULLET SOLUTIONS! I’m still constructing the course, but if you are interested, please fill in your details at the link below: