The 2nd question we get most often, after ‘How did you retire in your 20’s?’, is about how we afford to travel for several months every year.
The answer is quite simple and self-evident if you’ve read our post on retiring early – that is, we live off our investment income. Here’s a breakdown of our investments in rough order of their contribution to our total passive income, which is basically the budget that we live from:
We have three apartments in Melbourne, Australia which we rent out on an annual basis. They are all 2 bedroom apartments with a parking spot, and all were purchased within a few years after being built. The properties return between $6,000 and $13,000 a year in profit each, after deducting all of the expenses (mortgage interest, body corporate fees, council rates etc.) and allowing for a budget of $1,000 a year in repairs/maintenance. The range in profits is due to the varying interest rates, rental returns and repair bills – all are returning closer to the high end of that range at the moment due to low interest rates, but we don’t expect that to last forever so we know that the income from the properties may drop somewhat in the future.
Prior to having our second child, Gideon, we were running 2 apartments on AirBnB. This was very lucrative (from memory we made close to $40,000 over a few months in the summer) but is not sustainable with both parents working full-time and 2 young kids.
Avi does some financial consulting through his small business Wild Rhino Consulting and for several clients he’s picked up over the last few years that continue to require new projects every now and then. Some of the specialised work is outsourced and Avi only takes projects when we’re not travelling.
Miranda is a professional dog trainer with certifications and training in a wide variety of training areas. She has worked on everything from puppy classes, to private consultations for more serious issues, to bomb detection handler with highly trained Belgian Malinois. On a related note – we’ve also done a lot of dog-sitting when we’re in one place for long enough.
Peer-to-Peer (P2P) Lending
With yields in traditional savings accounts so low we currently have a large investment in P2P lending. The yield from these investments is blended between 5.7% and 10.4% and averages around 8.3% overall. This investment is higher risk and we try to manage that risk with our investment timelines and the other options available.
With the markets at crazy peaks right now, we’ve pulled most money out of this investment class (yes, market timing which is sacrilege we know) but we just didn’t’ feel comfortable with the current market valuations. When we invest more heavily in the stock market it is through ETFs, usually market-wide options or sometimes those focusing on higher yields that can provide a regular stream of dividends.
High-Interest Online Savings Accounts
We don’t currently keep much money in the U.S. and have most of our investment in Australia – the online savings accounts there still return close to 3% in interest, so we keep a large buffer of savings in these accounts for spending and in case of an emergency.
Miranda is working on her first book at the moment – it’s a fiction title. Avi has published 2 short eBooks as an experiment and is averaging around 10 sales a month at the moment – nothing substantial but it’s definitely a fun side-hustle. Avi’s philosophy on writing is that he will simply write a book on an area that he’s deeply interested in and wants to research anyway.
Credit Card Sign-up Bonus ‘Hacking’
We take advantage of some of the easier Bank Account and Credit Card sign-up bonuses available in most countries – these usually involve opening the account/card and using it a specified number of times in return for a cash bonus or more often frequent flyer miles – these can then be used to subsidise some of your travel costs.