It was a surreal moment when we realised we had saved $100,000, especially after living in Australia for two years without a concrete plan or the extra effort of working on side hustles like we do now. This achievement felt even more remarkable considering our relatively modest income and the fact that we had never heard of financial independence at the time.
I wanted to share this story to show that anyone can save money and to encourage you to save wisely. By doing so, you can create seed money to start your journey towards financial independence, invest in shares, or start a business—whatever you choose.
The Beginning of Our Journey
In 2010, Paul moved to Australia with the excitement of starting a new chapter in his life. He had modest savings of $5,000 and was earning AU$47,000 per year with a sponsorship visa. I joined him two years later in 2012 as a tourist, without a clear plan for work or how I would live in this new place. The only certainty was that we would navigate this adventure together.
When I arrived, I didn’t have a job lined up. Instead, I spent my first year adjusting to the new environment, studying English, and developing other skills. Despite our financial uncertainty, we were determined to make it work. Paul’s employer covered the cost of his permanent residency visa application, which meant we didn’t have to spend a fortune on visa fees. This was a huge relief and allowed us to focus on building our life together in Australia.
Starting to Manage Our Finances
Late in 2013, we realised that we needed to set up a budget and record our income and outgoings so we could visually see our cash flow and prepare to buy a house. We had never done anything like this before, and it wasn’t easy. We tried many apps and templates but ended up creating our own simple system to track our finances. The first version was very basic and minimal, and we upgraded it bit by bit.
(Edited: Now, in 2024, we have a monster spreadsheet that allows us to control every single penny but is still easy to use. :-))
Living Frugally Without Realising It
During our first year in Australia, Paul was the sole breadwinner. We didn’t have much budget for housing, so instead of living in our own place, we decided to share a house with two friends. This arrangement lasted for nine months, and it significantly reduced our living expenses. We paid half of the rent, which was $220 per week, for a spacious upstairs room with an ensuite, a private balcony, and more space than the other two bedrooms combined.
After nine months, we moved into another houseshare with a friend who was a FIFO (fly-in-fly-out) worker. This was another excellent deal as we had the house mostly to ourselves since our friend was away for two weeks at a time. We paid $300 per week in rent and stayed there for 20 months. House sharing for two and a half years helped us save a significant amount of money, which we later used as a deposit to build our first home.
Building Our First Home
We hired a builder to construct a four-bedroom, two-bathroom house, which we thought would be a good investment for resale value. Building a big family house was financially demanding, as we needed a 20% deposit to avoid paying LMI (Lender’s Mortgage Insurance). The $100,000 we had saved in two years was quickly used up, and we also spent the rest of our savings to build an investment property straight away.
Moving into our newly built home was a proud moment for us. Everything was brand new, modern, and clean. We felt like we had achieved something significant in a short amount of time. However, we were still living with our FIFO friend to save money on mortgage payments. After about a year, our friend got married and moved out, prompting us to reconsider our living situation.
Embracing Rent-vesting
We decided to rent out our new house and move into an apartment in a better location with lower rent than our mortgage payments. This strategy, known as rent-vesting, allowed us to maximise our savings while living in a convenient location. The apartment was near a train station, which made commuting easier and saved us both time and money. Perth city also offered free bus services, further reducing our transportation costs.
Living in the apartment was a revelation. We realised that we didn’t need a large house with multiple unused rooms. Our two-bedroom, one-bathroom apartment with a single car park was the perfect size for us. This downsizing allowed us to live more simply and focus on our financial goals.
Increasing Our Income
While we were moving from place to place to save money on housing, we were also focusing on increasing our income. When I found a part-time job during my studies, it allowed us to start saving more money. Paul also asked for a pay rise at work, which significantly boosted our household income.
Our saving rate increased dramatically whenever our income increased. From Paul’s initial income of $47,000, we started saving 30% of his income. When I began working part-time, our saving rate increased to 40%. Once we both became permanent residents, our combined income doubled, and our saving rate soared to 50%. The increased income allowed us to save more than double, and our bank account balance grew rapidly.
Learning From Our Mistakes
In January 2015, after spending all our savings on two properties, we found ourselves with a -$1,700 debt and no money in our bank account. It was a humbling experience and a stark reminder of the importance of financial planning. Despite this setback, we were determined to rebuild our savings and achieve our financial goals.
We already had the habit of spending less and saving more, so we quickly bounced back. Within 12 months, we managed to save another $70,000. My income had doubled since I first arrived in Australia, and we also started side hustles to accelerate our journey to financial independence. These side hustles kept us busy but didn’t compromise our comfortable and healthy lifestyle.
Looking Forward to Semi-Financial Independence
As we continue our journey, we are constantly learning how to live more simply and compactly. Our next challenge might be moving into a one-bedroom apartment, further reducing our living expenses. We are also exploring additional ways to increase our income and save more money.
Our goal is to achieve semi-financial independence by 2020. This means having enough savings and investments to work part-time or take extended breaks from work without worrying about our financial security. We are excited about this new chapter in our lives and the opportunities it will bring.
Reflecting on Our Journey
Looking back, it’s incredible to see how far we’ve come in just a few years. Moving to a new country, building our first home, and achieving significant savings were all major milestones. We’ve learnt valuable lessons along the way, including the importance of frugality, the power of saving and investing, and the benefits of living simply.
Our journey hasn’t been easy, but it has been incredibly rewarding. We’ve grown closer as a couple, learnt to communicate better, and developed a shared vision for our future. Financial independence has given us the freedom to make choices that align with our values and priorities.
Sharing Our Story
We hope our story inspires others to take control of their finances and pursue their own journey to financial independence. Whether you’re just starting out or already on your way, remember that every step forward is a step towards greater freedom and fulfilment.
We invite you to share your own stories and experiences with us. Whether you’ve achieved great success or faced struggles along the way, we believe that sharing our journeys can provide valuable insights and support for others in the FI community.
Conclusion
Saving $100,000 in two years without side hustles or a high income may seem like an impossible feat, but our story shows that it is achievable with the right mindset and strategies. By living frugally, maximising our income, and making smart financial decisions, we were able to reach this significant milestone.
As we continue on our path to financial independence, we remain committed to learning, growing, and sharing our experiences with others. We believe that financial freedom is within reach for anyone willing to make the necessary sacrifices and take control of their financial future.
Thank you for joining us on our journey. We look forward to sharing more stories, tips, and insights with you as we continue to pursue our dream of financial independence.
How is your saving or career journey going? Share your story with us, whether you have a great success story or struggles as we did!
