So now that I feel like I have a vague grasp of the numbers, I thought that I would try applying them to our lives in South Africa.
Step 1: (Brutally) Look at our expenses
This is where Husband’s teacher’s salary went on a typical month for the both us last year (because I really did keep Excel spreadsheets!):
Salary: R18 817
Tax and other deductions: R2724 Unavoidable
Medical aid (entry level): R3211 Unavoidable bare minimum
Rent: R5300 A VERY cheap deal for a lovely two bedroom cottage
Lights and water: R500 Could have reduced a bit…
Car payment: R2048 Entry level car. Unavoidable.
Car insurance: R854 Unavoidable
In terms of cars, the formal public transport in South Africa is almost non-existent, which means that you have to have a car. And given that we both worked, and at different jobs with different hours, we had to have two cars. We bought one second-hand car outright but couldn’t afford to do that with a second car (second-hand cars are VERY expensive in South Africa) and so we had to get one on credit.
Petrol: R1754 Unavoidable.
The petrol is simply Husband’s petrol because my petrol was a business expense.
Total spent: R16 391 (87%)
“Surplus”: R2426 (13%)
The percentages of spending vs surplus are not awesome. But as you can see, dear Reader, there is almost no room to cut down. Knowing what I have learnt since starting the Brat Experiment I imagine that we probably could have shopped around for better deals initially. But my fellow South Africans will know that this takes significant resolve and patience as the inefficiency, personal time and high jumps required for seemingly simple tasks (e.g. change of address, renewing your passport, getting a landline for internet etc) is mind-boggling. I shudder to think of the emotional-sanity price of changing deals mid-swing…
I was self-employed in a new business, which meant that I never knew how much money would come in each month so Husband paid for all the routine expenses and my money was used for bonus “luxuries” (i.e. food, internet, cell phones and any anything else). On a typical month these were:
Two cell phones: R627
Total spent: R4397
The real bugger with being self-employed was that if I didn’t work I didn’t earn. Which is fine until we want to have children and I need to take maternity leave. This means that the initial financial implications of having a child are:
- the medical fees not paid for by our entry level medical aid
- all the baby equipment (although I don’t think this would be much as we would do it South African style: hand-me-downs, second-hand things etc as much as possible)
- the loss of my potential earnings (and so having to stop our internet and cell phone contracts and eating less or more cheaply)
Taken all together, we would be living on a financial cliff with NO buffer and NO room for anything to go wrong i.e. financial hell. You can see, dear Reader, why we felt we had to change things before we had kids.
But anyway, I digress. The point of this post is to apply early retirement numbers to our lives in South Africa. So: ultimately the minimum (I haven’t counted anything extra in spending like medication, haircuts, the occasional clothes shopping, presents, alcohol, holidays/travel etc) total spending of our household per month was: R20 788. Step 1 complete.
Step 2: Work out what we need to retire (A rough guesttimation)
Spending per month = R 20 788
Therefore spending per year = R 249 456
So applying the magic number (5%) for South Africa means that our minimum retirement amount is our spending per year X 20: R4 989 120. Step 2 complete.
Step 3: How long it will take us to get there
This is of course based on our savings rate… which you have already seen was not awesome… And for a long time we genuinely felt that it was impossible for us to save anything… Until we wanted to go on holiday to Italy.