Hello, late starters!
Welcome to the another ‘episode’ of the Late Starter to FI series, where we highlight the stories of those of us who start pursuing FI in our 40s, 50s and 60s.
I love reading stories of how people discover the FIRE (Financial Independent Retire Early) concept and the steps they are taking on the FI journey.
In particular, with us late starters, I want to explore questions such as ‘are we too late?’, ‘where do we start?’, ‘what are the specific challenges starting on the FIRE journey later in life?’ and more.
My hope is that we learn from each other and support one another; that in sharing our struggles and wins, we inspire and motivate each other to persevere in the sometimes difficult journey to FI. And to know we are not alone.
If you enjoy reading these stories, please leave a comment below. And if you fit the profile (sorry, I sound like a television FBI profiler!) and would like to share your story, please email me at email@example.com or DM me at Twitter @latestarterfire, Facebook or Instagram.
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Today, we meet Sam, an early commenter on this blog. Sam lives in the UK and writes at A Simple Life, a blog about “simple ideas to help you live a more organised life”
She also writes about personal development – we both share a love of James Clear’s Atomic Habits – you can read my review here and Sam’s post on Ten Habits To Make You Rich. (Edit: Sam has pivoted into writing about organisation and productivity – this blog post is no longer available)
And now, it’s over to Sam.
A little about me
I am a 50 year old social worker living in the south western area of Great Britain, although originally I am from London. As the title of my blog suggests, I lead a fairly simple existence. I enjoy walking – my partner and I met via a Ramblers group.
When we go on holiday, our main activity tends to be hiking and there are lots of lovely places in the UK to do that. I have also discovered the joy of birdwatching, whether it’s visiting a reserve or just watching the birds in the garden. We are lucky to live in the countryside, which means that we get a good variety of birds in our garden.
Our weekends are mostly filled with activities at home such as DIY, gardening and other chores. There is an active social committee in our village, so we get to join in with various activities throughout the year, such as monthly film nights.
Discovering the FIRE community through searching for frugality on the internet
I first discovered the FIRE movement after coming across The Frugalwoods. I was looking at ways to save money and probably just typed ‘frugality’ or ‘frugal living’ into Google and discovered the writing of Elizabeth Willard-Thames aka Mrs Frugalwoods. I did her ‘Uber Frugal Month‘ course, which is free for anyone to join. It entails receiving a daily email linking to one or more of her posts. It helps you to reflect on the financial choices you have made in your life and encourages you to decide on your priorities.
As a result, I now have a card in my purse which reads ‘Pay off the Mortgage and Retire Early’. The idea is that every time I open my purse to spend money, I will see this and think twice about whether I really need what I am about to buy.
Unfortunately this was only just over a year ago and therefore I am very late to the party. It is frustrating that I didn’t discover this movement earlier, as I could have been ‘retired’ by now.
But it’s pointless thinking this way.
I am just glad that I have found it now and it has completely changed my life. The concept of financial independence gives you the lens through which to look at the world.
When I graduated from university in my twenties, I didn’t follow the traditional path of career, marriage, children, grandchildren etc. In fact, I continued to live like a student for many years. I always questioned the traditional path that everyone followed and felt that there were other ways of living.
For me, the FIRE movement is a validation of this. It makes you stop and re-evaluate your life. It questions your priorities and challenges your thinking. It gives you the choice to take an alternative path in life, one created by you.
Looking back ...
The main stumbling block in my life to amassing savings was that I didn’t actually have a full time job until I was 32 years of age. Up until that point, I had had various part time unskilled posts.
I studied psychology at university, which doesn’t qualify you for a career in that field unless you undertake a PhD following the undergraduate degree.
It wasn’t until I went back to university aged 29 to take my social work course that I was able to start earning any significant money.
Financial situation now
Although previously I wasn’t as frugal as I am now, I never got into a lot of debt. The only money I owe is on the mortgage and although there is about £73 000 outstanding, we have £362 000 of equity, as we purchased the property for £435 000 four years ago.
My savings/investments stand at just £36 000, although I will have saved approximately £6000 this year, as well as overpaying our mortgage by £7000.
Whether or not to pay off the mortgage is a point disputed within the FIRE community. For me it is psychological and will provide me with peace of mind if I choose to work part time or actually cease working altogether.
My retirement ‘fund’ is something that I am unable to share as I have a defined benefit pension, where my employer guarantees that I will receive a certain amount each year when I am retired. The actual amount is not disclosed to me.
I have several pots from different jobs. I am due to receive £10 500 from aged 65 and then a further £12 000 from aged 67, taking the total up to £22 500. This includes the state pension, which may or may not exist in 17 years’ time.
Taking steps on the FI path
Before I discovered FIRE, my savings were in an account which earned about 0.5%; effectively I was losing money. Now the majority of my money is in a stocks and shares ISA (Individual Savings Account) with Vanguard, currently earning between 9-11%.
Investing in the stock market was something I thought only rich people did. I also considered it too risky. Having learnt a lot more about it through listening to people like Paula Pant on the Afford Anything podcast, I realised that I was very stupid not to invest before now. I would strongly encourage everyone to invest in index funds, if possible through a tax free savings account like an ISA.
I have also cut my spending drastically, particularly in the area of food. I haven’t bought any clothes in over a year. And in 2019, three out of four of our holidays were staycations ie staying at home and going on day trips. I continue to try to find ways of saving money.
I have become obsessed with saving money. I consider every penny I part with. I am probably a little extreme, but I get a thrill when I look at the money in my ISA increasing every month.
Challenges on the way to FI
I find increasing my income more of a challenge. I cannot do this at work as we don’t get paid overtime. And as I work for the Civil Service, salaries are non negotiable. The only way to get a pay rise is to apply for a more senior position but I am happy doing what I do currently. Developing a side hustle is an area that I really need to work on in 2020.
Unless I can increase my income significantly then FIRE, in the traditional sense is unobtainable. A realistic and more achievable aim is to reduce my hours when I am 55.
By that time, we will have paid off a significant amount of the mortgage and can cease the overpayments and just let it run its course. Ideally I would like to be able to give up work altogether, but that isn’t going to be possible on my current path.
The big unknown in all of this is my partner, Mr Simple. He lost his job a couple of years ago and now works for himself. He has a lot of savings, but not much coming in each month as he tends to work part time and goes through quiet periods.
Our current arrangement is that I pay all of the bills including the mortgage and overpayments and he pays for the work that we are doing to the house.
There will come a point in time when all the work on the house is completed. At present the most expensive outstanding thing is a new kitchen. As he is only working part time, Mr Simple spends a lot of his days doing the DIY himself, which has saved us an enormous amount of money.
When he no longer has to pay for household improvements, he should be able to contribute to the bills and mortgage. Occasionally he talks about finding full time work, although this is likely to entail staying away from home during the week. If he did this, our financial situation would improve significantly. But I don’t think he wants to work like this for very long.
A challenge is to get Mr Simple to sit down and discuss all of this. He has always saved and invested wisely. It’s a breath of fresh air to him that I am now on board. But he is not good at discussing our goals for the future or considering a plan of action. I do however keep chipping away at him (he would call it nagging) and hopefully I can make some progress over the coming year.
Reflections on starting late on the FI journey
The obvious one is that we are not able to take advantage of ‘time in the market’. As we all know ‘timing the market’ is near impossible, but having a high savings rate over several years and putting that into an index fund, will enable you to grow a nest egg on which you can survive.
I have seventeen years before I reach the standard retirement age in the UK. Without the benefit of time, it would take drastic changes in my lifestyle to be able to stop working very much before that.
Doing some quick back of the envelope calculations, it would be possible to sell our house, buy a much smaller one and then save the money we are now paying into the mortgage.
Together with current savings, that would yield a nest egg of £385 000 in four years’ time, meaning I would have £15 000 a year to live on, if we follow the 4% rule. I could manage that, but the sticking point is that I don’t want to sell our house as one of the joys of my life is where we live.
A benefit of coming to FIRE later in life is that you can bend the 4% rule, as long as you have a pension pot, that is. If we did sell our house, the money accrued over the next four years would only have to last 12 years before I could draw on my pensions. This could give me an income of £32 000 a year. It would all be gone by the time I got my pension, but would that matter? Something to think about, maybe?
If I had my time over again, I probably wouldn’t buy such an expensive house, as the majority of our net worth is our main residence. Apart form that, I have on the whole, made fairly sensible decisions when it comes to money. Although I didn’t invest wisely, I never ran up enormous credit card debts or spent loads on handbags and shoes.
My present focus is working on my blog, which is a mixture of ideas about saving money and personal development. I would really like to help other people discover and work towards financial independence.
So much of the information on the internet is USA-centric. I want to spread the word to those in the UK about how they can take a different path and make choices about how to live their lives in the future.
Ah … I love Mrs Frugalwoods too – I did her Uber Frugal Month challenge back in July 2018. The next group challenge is in January, so sign up if you want to learn how to embrace frugality. Read her book, Meet the Frugalwoods – Achieving Financial Independence Through Simple Living and be inspired by someone who ‘walks the talk’.
Congratulations, Sam on taking concrete steps towards achieving FI – reducing your expenses, investing your savings and reducing debt. I totally agree that paying off the mortgage is psychologically freeing. It is such a good idea to carry a card in your purse to remind you of this very purpose! I am definitely stealing this idea 🙂
I look forward to following your FIRE journey. Thank you for sharing your story and giving us a glimpse of what it’s like to pursue FI, living in an English village. Once again, your story is living proof that it is never too late to start saving and investing.