Table of Contents
10 Hacks to Launch Your Financial Independence in 2020
Below I show you 10 hacks I’ve used or am considering using to further boost my Financial independence Journey in 2020.
Disclaimer: By the way these hacks are not financial advice. They are simply big ideas to get you thinking differently about your options for financial independence in 2020.
Folks, there is always a better or faster way to Financial Independence. That’s what I am passionate about, finding those systems, tools and strategies that help me to get to FI faster.
It’s what keeps me up at midnight and early in the morning to create this content to share with you.
I’m always tweaking and finding a better way to free up my time so I can spend it with loved ones during my best years!
So here are some major hacks, I’ve been implementing or considering…
1. Pay Yourself First
Could you rethink your expenses and start to pay yourself first using an Automated Investment Plan (AIP)?
An AIP does exactly what the name suggests, you set up an automatic deduction from your pay each fortnight and have that money go into an investment account.
Set up a system where this money is automatically invested on your behalf, e.g. through a broker or a managed index fund such as with Vanguard
Alternatively you could try the new CommSec Pocket Investing App.
I think this App is awesome, check out my review of the COmmSec Pocket App here. In this pot I will walk you through, step-by-step on how to register and set up your first automated investment.
Alternatively, you could do the investment manually using CommSec or ANZ eTrade platforms, scheduling a regular day and time to do this each fortnight, month or quarter.
Imagine that you are starting with a 100% savings rate. Decide how much you want to save as a %.
Next, analyse each other expense one by one and see what you can eliminate. Do this until you get to a point where you’re saving at your target rate.
For example, if you see that your car loan expense is taking $20k straight out of your pocket every year, you know this is probably a road block to your progress towards financial independence in 2020 savings rate.
"Imagine starting with a 100% savings rate, pay yourself 50% first, then work backwards!"
2. Stocks vs Mortgage
Right now, banks interest rates are at record low levels i.e. around 2.9% and falling. These are unprecedented times. Have you considered going for a better return on your investment?
For example, if you’re making extra repayments to the bank over and above the minimum mortgage repayment, could you be better off, stashing it into a market index Exchange Traded Fund (ETF) such as the Vanguard VAS 200 ETF?
Warren Buffet is known for commenting that an investor can expect on average 7% nominal rate of return over the long term (15-20) years on the stock market. Take away inflation 2% (approx) and tax 1% (approx) and you are left with 4% rate of return.
So instead of getting a return of 2.9% saving on interest (soon to be less as banks drop interest rates, you could get 4% (real rate of return) via the stock market.
Selling a house or downsizing could be a great way to speed up your way to financial independence in 2020!
3. Sell a House
If you have two houses what would it mean to sell one to pay down the loan on the other?
Would it be worth it, after taking into account Capital Gains Tax (CGT)?
Some considerations for me are, I have kids, so what if they want to go to university in these different cities where I have investment properties. If I sell now it will be a lot harder to get something later as the prices will be far higher.
In addition the tax benefits from investment properties in Australia reduce your tax liability each year by a significant amount. This can result in a nice little lump sum tax refund at the end of the year.
On the other hand $200,000 profit on a sale (after CGT) would pay a significant proportion of a remaining home loan, getting you that much closer to FI.
4. Downsize
Can you downsize your apartment or house from 3 bedrooms to 2 bedrooms?
How about from 2 bedrooms to 1 bedroom and in a cheaper suburb or a cheaper State?
For example houses in Brisbane are a cheaper than in Sydney, Melbourne or Canberra. Your dollar goes a lot further in Brisbane and you can get a nicer property for a significantly less money.
If you’re downsizing how much in repayments or rent would you save?
5. House Hack
Can you house hack? That is, could you rent out a portion of your house as an AirBnB?
Could you post an add on All Homes or Real Estate for a single room for rent in your house, or even better multiple rooms?
I have a friend who is paying down his mortgage by having three other professionals renting out a room each in his house, all paying between 175 and 200 each per week.
That’s about $28,000 per year in income he’s making to help him pay down his loan.
6. Garage Hack
Could you garage hack and rent out your car park or garage?
Spacer is an Australian App that connects people with space with those who need a cheaper alternative to traditional storage facilities.
Spacer claims that I could make up to $450 per month on renting out a space in my city.
They offer a $10,000 insurance guarantee and let you decide on the rules.
This is the definition of amazing passive income. If I had the space, i’d be on this like a dog on a bone.
7. Sell Some Stuff
A garage sale could be a great way to get an emergency fund started. An emergency fund is an important stepping stone to financial independence in 2020.
When I needed to start my emergency fund I sold my two drones and some other audio visual equipment that I was no longer using.
These combined sales raised $2,000 and so I had the beginnings of an emergency fund.
The way to do it, is to doa socktake of all the stuff you havn’t used in the last 12 months. Then get ruthless, make a decision to sell.
Then post an add on Facebook, Gumtree and Ebay and keep an eye on them.
Tweaking the adds as you go until you get the sale.
8. Car Hack
Could you car hack and rent out your car?
I use Car Next Door to bring in some extra dough. It started slow but now its going great guns, bringing a regular passive income.
See my post where I review Car Next Door Here.
9. Take a VR
If you have a back-up job/role could you take a voluntary redundancy and get t a decent pay out package?
From this you could use the money gained to kick-start a solid Emergency Fund or Freedom Fund.
10. Start a Blog
Blog writing can you earn a decent side income from advertising and affiliate marketing.
The most amazing benefit of starting a blog about something you are passionate about though is the fire in the belly. Something to get you to jump out of bed in the morning and that keeps you from going to bed at night.
For me this blog is an avenue to grow my financial independence, love what I am doing and strive for mastery in the craft.
The secondary goal is to teach the skills and science of personal financial independence to the world.
Hopefully in doing so we can help reduce the massive retirement problem facing the governments, institutions and communities of the future.
By the way starting a blog takes time to make an income, by all reports it takes about 28 to 31 months before things start to move.
So this strategy is not going to launch your financial independence in 2020, but you still need a launch pad!
Bonus Hack - Superannuation
Superannuation.
If you’re not in an industry Superfund, a Public Sector Superannuation Fund or a Defined Benefits Scheme, then its time to do your research.
Speak to an investment adviser about switching to a lower expense Industry Fund.
Two of the best are Australian Super and HostPlus. Both award winning ultra low fee Industry Super funds.
That’s all folks! I hope you liked my 10 hacks for financial independence in 2020.
