Category: FIRE

Posted on

2019 – a year in reflection

I always think nothing much happens in my life.

Work, home and work some more.

I am also not one to set goals or track achievements – I would say I am a drifter though life, more than anything else. And I am contented and satisfied easily so I don’t push through to the next level.

But all that changed in 2019.

I discovered the FIRE movement in mid 2018 – the best thing I learned though wasn’t how to be frugal (that is important too) but to live an intentional life. After all, what is the point of saving and investing if we don’t know what it is all for?

So in January 2019, for the first time in my life I set some goals. I admit I did not do a very good job at tracking them through the year. But strangely, the fact that I made the effort to set some goals was enough to get the ball rolling.

To help me with thinking through all of this, I completed Montana Money Adventure’s Live with Intention series. In particular, answering the following 3 questions gave me clarity – What do you want to BE? What do you want to HAVE? and What do you want to DO? 

To recap, my overarching goals were to stop drifting through life and live with intention and purpose. I wanted to live a life that reflects a healthier me, mentally, physically and financially.

I was very stressed at the time, working in a demanding job with long hours. The priority was to find time each day and week to think and reflect.

So, this is my 2019 – a year in reflection.

I quit my stressful job

Spoiler alert – quitting my stressful job was the single, hands down, most significant ‘event’ in my life in 2019. And the most emotional as I felt I was letting everyone else down. But in the end, I had to choose me over everyone else.

It has been six months since I began another role with the same employer but at another site. This has singularly reduced the stress levels in my life. I am very proud that I finally took action here.

The transition took me longer than I expected. From having no time at all to having time is quite an adjustment. I was conscious of not squandering all this newly acquired free time but was equally conscious of not filling it all up with frenetic activities.

It is a work in progress – this knowing what to do with my time. I look forward to exploring this more in 2020.

I travelled and connected with family and friends

 

Travel is very important to me. It is a time where I am free to be me totally and indulge in what I enjoy most – eating good food, exploring the art and culture of a new environment. But if I am honest, travel has always been an escape from my job, a time where it is difficult for work to contact me. 

Travelling also allows me to reconnect with family and friends overseas. In 2019, this is what I focused on in my travels.

I attended the 60th anniversary of my high school in my hometown and went down memory lane with old school friends. I reconnected via WhatsApp with old boarding school mates whom I hadn’t seen for decades. Precious memories were made with my little niece on her home turf in London. Catching up with elderly relatives in South East Asia was poignant, making me realise that our time on Earth with loved ones is limited, that one day they will not be in our lives anymore.

Amongst visiting old haunts and familiar cities and towns, I managed to squeeze in visiting Prague and Budapest for the first time. I always feel fully alive when I am travelling, particularly to new places.  

Fisherman’s Bastion in Budapest at sunset

I started a veggie garden

In May, I bought a raised wicking garden bed (basically a self watering garden bed) and planted vegetables for the first time. I have always wanted a vegetable garden but ruled it out in the past as there were not any sunny spots in my garden.

When I mentioned it to my friend, she thought outside the square and suggested the front of my unit, which does get some sun exposure. And that is exactly where I situated the raised garden beds. It just goes to show that when we are open to ideas, even wacky ones such as a vegetable garden in FRONT of your house …

Through winter and spring, I harvested snow peas, lettuce, boy choy, carrots, beetroot, broccolini and cauliflower. And in summer, I planted zucchini, cucumber, eggplant, beans, tomatoes and more bok choy.

Besides quitting the stressful job, having this vegetable garden has contributed the most to my mental health. There is just something very satisfying about planting a seedling and watching it grow, then eating the fruit of your labours. The wicking bed made it easier in that I only need to replenish the water reservoir every 7 to 10 days during winter and every 4 to 5 days during summer. So really, the work has been minimal.

Summer vegetables in wicking bed

I fully funded my emergency fund

One of the first things I started doing when I first discovered the Barefoot Investor in 2018 was to build my emergency fund. In November 2018, I raided it to pay up front for solar panels installation. The government rebate (for nearly half the amount) did not arrive until April 2019.

As travelling is important to me, I have always had a Travel Fund and contribute to it weekly no matter what. I may adjust the amount up if travel is imminent or dial it down if there are more urgent priorities. But I always contribute, even if it’s $10 a week. As a consequence, my travel fund was very healthy, compared to my emergency fund.

The most adult thing I did this year was to swap my travel fund to my emergency fund ie I renamed my travel fund. I was getting a bit impatient that it was taking so long to fund 6 months of living expenses. So finally in October, I fully funded the emergency fund. The feeling of security and achievement is indescribable. I feel such a sense of relief that I can readily access this fund should anything untoward happens.

I contributed the maximum to my superannuation

In the financial year from July 2018 to June 2019, I salary sacrificed and contributed the maximum of $25000 (including employer contributions) into my superannuation (retirement account).

Since transitioning to my new role in July 2019, my pay has decreased as I no longer work so many overtime hours. This means that employer contribution to my superannuation has decreased. And if I want to achieve the maximum contribution, I therefore have to contribute more myself. It forced me to reassess whether I could afford to continue salary sacrificing.

My conclusion is that I cannot afford to stop contributing the maximum at the moment. So my take home pay has shrunk significantly as a result. I will reassess this contribution annually as I also need funds to contribute to my investments outside of super.

Savings rate

I started tracking my expenses in March 2018. So 2019 was the first full calendar year that I have been able to calculate an annual savings rate. Because I am lazy and really not a spreadsheet nerd, it is easier for me to calculate my savings rate based on my take home pay instead of gross income. (Knowing at the back of my mind that I have contributed the maximum to my superannuation)

I was aiming for a 50% savings rate but fell short at 40%. I am not too unhappy about this result, seeing that my take home pay is significantly reduced for the second 6 months of the year.

Net worth

Amazingly, my net worth increased by more than my gross annual wage, mainly due to the stellar performance of the stock market.  Investment within superannuation performed very well – not including the $25000 contribution, the return was 20%. My share portfolio outside of superannuation also grew by 19%.

The challenge is to continue to grow these investments in 2020 and beyond.

I now have a solid plan to retire at 55

What started me on the FI path was the realisation that I did not have enough to retire at the traditional age of 65. As I explained here, I now have a 3 phase plan to retire at 55, provided the stock market cooperates and nothing drastic happens in my life.

Having this plan in place gives me security and focus – I can see the light at the end of the tunnel. I just need to maintain my contributions steadfastly and fingers crossed, the stock market will do the rest.

What I didn’t do so well …

While I started the year off with an exercise regime, it soon fell to the wayside after I completed the Run for the Kids race in April. I gave myself some time off and never got back to running again for the rest of the year.

I started walking after work with my friend which was great but there were lots of times when work and family commitments interrupted our rhythm and we went off course.

Then I had a minor health scare after returning from my travels – my cholesterol was high and my liver enzymes were through the roof. I was given 3 months to ‘do something about it’ so this spurred me to get back to a healthy eating regime and walk daily.

Happily, my levels decreased significantly at the next blood test and I am given a reprieve from commencing medication. But I have to maintain a healthy diet and exercise more regularly from now on. This is a major challenge in 2020.

Final thoughts

I made huge improvements to my mental and financial health but did not do so well on my physical health.

My goal of creating time to think and reflect was met partly by my quitting the stressful job – my mental health has improved drastically as a result.

Financially, 2019 was about tracking expenses and getting some annual metrics so I can compare in later years. The increase in net worth was just a really great bonus.

How was your 2019? I would love to hear your wins and trials – please share in the comments below 

 

 

Posted on

Late starter to FI series #2 – A Simple Life

Photo by Sam Healey on Unsplash

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 info@latestarterfire.com or DM me at Twitter @latestarterfire, Facebook or Instagram.

getting started checklist

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

DOWNLOAD NOW

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you

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)

You can also connect with Sam on Twitter @asimple_life and Instagram

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.

 

What's next?

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.

Latestarterfire's comments

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.

What are your thoughts? Please leave a comment below

Where can I send your
Monthly FIRE Goals Plan?

By signing up, you’ll also be added to my newsletter

You can unsubscribe any time, I promise.