With our investments taking shape, I feel like we can take our foot off the financial accelerator.
While we’re still in an accumulation phase of sorts (we’re still saving money, even if we’ve finished buying investable assets), it doesn’t feel fully comfortable spending money on things like holidays. We feel a tinge of guilt (that money could have been invested!), maybe even regret (we could’ve gone later!) for that sort of spending.
But we know that we need to break out of the frugal mindset in the long run. After all, the reason why we’re doing all of this frugal living now is to live a fuller life down the track where we don’t need to save, save, save.
However, there was one pragmatic reason why we were happy to go ahead with an extravagance like a holiday (and if it wasn’t for Covid, this year’s holiday would have been a return to New Zealand, and spending even more money).
It feels utterly bizarre that a 3% upwards swing in our portfolio is now worth some $50,000. That’s more than half of my pre-tax salary without lifting a finger. That’s also half the inheritance my wife Ellie received in 2019. Basically: it’s not an insignificant amount of money.
And on a rare day on the markets, that sort of swing happens in one day.
However, to reach our goal of early retirement, we’re looking to rely on passive income — not capital growth. In our case that’s passive income from rent and more importantly from share dividends. And if you looked at our income in 2022, you’ll see that our dividend income has definitely grown.
In fact, looking at the sums now, it’s now clear that Ellie and I have actually gained a third partner our relationship: our passive income buddy.
At the risk of being takers in this relationship, we feel like we’re at a stage where passive income is able to do some of the financial heavy lifting for us.
It’s this extra income that’s allowing us a little bit of extra financial freedom, while also continuing to…