Michelle Ives is a 27-year-old small business owner in Sydney.
She can earn anywhere between $2,000 and $20,000 a month, and saves around 80 per cent of her after-tax income.
Ives shares her personal finance story with Yahoo Finance.
How much do you earn?
As a small business owner, my earnings can vary dramatically from month to month. I’ve had slower months where I’ve barely hit the $2,000 mark and others where I’ve brought in near on $20,000.
I can take home anywhere from $80,000 to $110,000 in a financial year, which feels like such a big jump in numbers but it’s all part of the risk - and fun - of being self-employed.
How much does your mortgage cost?
My primary mortgage in Sydney costs around $50,000 per year, including council, water and utilities, and my husband and I split all of those costs 50/50.
We utilise a mortgage offset which saves us thousands in interest every year so that number would be higher if we didn’t use one of those. I’m a big fan of home loan offsets and redraw facilities for that reason.
Do you have any other ongoing expenses?
Oh yes, I have plenty of expenses related to the business, like office rent, subscriptions, insurance, travel, tech and a whole list of other things. This financial year, those totalled to over $20,000.
I think that this is probably where a good chunk of my everyday cash flow goes, but it’s largely tax-deductible and I’m grateful to be able to put the money towards building something I enjoy.
Do you have any debts? How did you pay them off?
I have no personal or consumer debt and this has been a really active choice for much of my life. I didn’t get a credit card until I was in my mid-twenties because the whole credit industry terrified me and I saw how badly it affected friends of mine.
Now, I do use a credit card for everyday purchases but I automatically put the value of the purchase into a “credit card repayment” account (from my everyday account) and the moment the bill comes in, I pay it in full.
The reason I do it is to cash out about $500 worth of supermarket gift cards every year from the points accrued. If I didn’t have this benefit, I probably wouldn’t use the card at all. Credit cards need active management - they are stressful and scary.
I do have a remaining HECS debt of $15,000. I paid off the rest through a mixture of voluntary and non-voluntary contributions since I started earning over the repayment threshold, however I’m choosing not to voluntarily contribute anymore.
I believe that the way it’s structured (indexed) means that my money is better spent on investments, like shares and super.
How often do you eat out, and how much would food cost you per week?
If you‘d asked me eight months ago, I would have said that I cooked at home about 80 per cent of the time, spending about $125 per week for two adults (breakfast, lunch and dinner), and then $70 for a weekly takeaway or a brunch or dinner with friends.
However, in all honesty the past few months have been much more than that. I’m heavily pregnant and still struggling with severe nausea and vomiting, which means cooking is really difficult and going to supermarkets and shops can be like standing in the aisles of smell hell.
So, we’ve been frequently UberEats-ing and making desperate dashes to the local IGA for things that can put together quickly. I felt really guilty at first for the cost doubling (and less to show for it) but then I realised it’s just a season and we’re doing what we can.
Do you spend money on travel?
We spent a whole heap on travel this year because we went to India and then on a two-month honeymoon around Europe, but that is not indicative of a regular year. In fact, we don’t always go on holiday every year at all.
We have a “holiday fund” and aim to have anywhere from $2,000 to $4,000 in there at any point, for either an overseas trip or more local getaways. We love to travel but it’s not a must-do-above-all-else. We’re quite content with a weekend AirBnB stay somewhere interstate if we feel the need to wanderlust, and I love scouring for great deals.
Do you put money into savings?
We sure do. 80 per cent of our after-tax incomes, in fact.
We’re both followers of the FIRE movement (Financial Independence, Retire Early) and are trying to pursue an early retirement, decades before we otherwise could.
We save a vast majority of our income and invest it into property, the stock market (mainly index funds and listed investment companies), superannuation, bonds and commodities.
We’re self-taught, although we’ve been working towards this for years since I first had my “can’t-believe-I-have-to-work-this-hard-until-I’m-70” meltdown. We’ve learnt a lot along the way.
One of those learnings is: you don’t need to be earning a bomb to be an investor. Anyone can do it well if the motivation is right - it is much more simple than many old school investing gurus would have you believe.
Secondly: there’s no deprivation involved in saving that much of your income. It is an adjustment, sure, but just like we tend to spend more when we earn more, we equally can learn to be happy on less if we simply allowed ourselves to live on less.
Do you receive any financial assistance?
What are your tips for getting by?
Financial literacy is not an overnight education. It takes consistent subscribing to platforms and outlets that raise the bar on your knowledge.
Even when it feels hopeless and like you’re so far behind everyone else (i.e “just scraping by”), by even engaging at all you are slowly sowing the seeds for better decisions, increased knowledge and overall, a better financial life.
That turns you from someone who lives pay to pay into someone with real, long-term, passive wealth. I started when I was at Uni (getting by and overwhelmed by every financial term I came across) and now, less than ten years later, I’m looking at a full retirement before I’m 35.
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