How to start you own death spreadsheet in Excel – part 1

death spreadsheet overview

Grimly titled but the death spreadsheet is the most useful spreadsheet I have ever created.

I created the first version of this document back in 2014 when I felt like I was trapped in an awful job, earning quite well but job stress was out of control and I wondered if I had to tolerate this level of angst and frustration for the rest of my life.

To wrestle back some form of control, I decided to create a spreadsheet to work out exactly how much we needed to earn to live a reasonable life – for the rest of our lives. To build this spreadsheet, David and I had many conversations, over a period of time, to think about and design the type of financially independent lifestyle we would be happy with. An extravagant, luxurious one? No – not really our thing. A really nice lifestyle that includes international travel once a year, travelling within Australia, going to other capital cities, money for our hobbies/passions, time for volunteering and one home renovation project a year? Yes, definitely. I’ll take that version of financial independence any day of the week.

In 2014 we were close to paying out our mortgage, so our expenses were about to change considerably. I also knew both had good superannuation or retirement savings, so I wanted to understand, excel spreadsheet cell by cell how much we needed to earn in order to be financially independent.

And so the death spreadsheet was born. On the top line, I created a table out to David’s average life expectancy and mine (there is a little age difference 😊). Then I plotted out our expected income and expenses until we died. Fun, huh!?!

Key assumptions for the spreadsheet:

  1. Indexation of 2% for wages and our superannuation pensions (except for mine – I’ll take a flat rate)
  2. Inflation over our lifetimes (around 2%)
  3. Conservative estimated earnings on our investments at 5% over the next thirty or so years.

I created detailed expenses tabs that adjusts for this year and next when our expenditure circumstances will remain the same. In 2020 we expect to be paying for only one child in total – the other children may be living here and eating with us, but they will be largely responsible for their own expenses.

I have highlighted the current year we are in, and the year my husband’s superannuation commences ( I LOVE to see those two drawing closer together – means we are closer to financial independence).

You can see our net result bounces around a little but that’s ok – over the 12 year period, it works out about even. In my next post, I will detail how I have calculated our expenses over this period, and how I have calculated how our investments will support us in our two stage financial independence plan, paying down like an annuity.

Excel has saved my sanity! Never thought I would say that out loud to the world…..

 

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So why financial independence and how does it relate to simple living?

living area

This is a quiet nook in the corner of our newly renovated living area.  I’ll do a house tour later this year.

So why financial independence and how does that relate to simple living?

I love the fact as humans, we are constantly evolving and changing.  I have always had a really big thirst for knowledge, and when I am really interested in a topic, I emerge myself in all available material to learn and grow and connect with like-minded people.

I have found this is absolutely the case on my simple living journey.

First came the feeling over being overwhelmed. With five kids more than half time, a busy job, two kids with mental health issues and interests outside of work, I felt I was never on top of things and always running behind.  My to do list was always longer and greater than 24 hours in any day and I never truly felt like I could sit down and relax.

My health started giving way and I realised things needed to change.  So we created the year of austerity to pay down debt and not be a slave to full time employment.  We achieved this goal in 2015 after some hard work and a small inheritance.

During this time, I was also organising the whole house like crazy.  I thought if I made some sense of the physical chaos in my life, simplicity would descend upon our household like some kind of magic.  A place for everything, everything in its place.

But of course, I organised every drawer within an inch of its life, felt only marginally less overwhelmed and realised I just needed to downsize and declutter.  For a while I donated, sold and gave away stuff in my house like a possessed woman.  Gumtree, eBay, Vinnes and Buy Nothing New became my best friends.  We also renovated which provided a great opportunity to reassess a lot of clutter in our house. The downsizing was enormous – I stopped counting at 25000 items, and I forced myself to reassess all purchases, use up all cosmetics, audit the fridge, pantry and freezer……..

I found the two upsides of decluttering were:

  1. The house felt refreshed, sorted and clear of things that previously made my brain ache. I confirmed in the maximalist/minimalist debate, I’m definitely in the latter camp, although far from living out of my back pack with less then 100 items to my name.  Funnily enough, the first year of our retirement David and I have decided we will go through the house and declutter again as a first priority because we can still identify many items that need to go.
  2. We spent so much less money following a consciously commitment to this form of living and this has enabled greater savings for our FIRE plan.

Once I discovered the FIRE community and worked out we could work less I immediately amped up our savings plans and began consuming everything I could on saving, investing and planning for an early retirement. I realised the FIRE path was really one that could really support my goals of living simply and with less stress.  FIRE became the wind beneath my simplicity wings and the two goals merged into one. I reduced my working days to three a week and began living a simpler life – with a longer term financial plan.

So – in short – from overwhelm to organisation to minimalism to FIRE.  I’m sure it’s such a well-worn path. With December 2020 looming, it can sometimes be a source of overwhelm all on its own, but I am looking forward to writing about our plans for our post FIRE life and all of the hope for a peaceful life it holds. For me, financial independence and simple living are inextricably linked.  To live a simpler life I need to have a source of passive income to pursue the things I want to pursue – be fast when I want to be fast and slow when I want to be slow.

Are you on any of the paths to financial freedom or simple living? Have you been down a similar path?