Monday, 23 December 2019

£500+ In a Matter of Minutes!

Hello fellow Fire Fans!

Wanted to share a quick post about a great money saving hack that I did recently!

One of the quickest ways to achieve FIRE is trying to save money wherever possible and then investing the difference.

Keeping this in mind I wanted to let you know how me and my wife will be using our mobile network plans completely free for 2 years as well as earning an extra £208.15!

Easy Money!

Let me go through how we did it:
  • Bought 2 new (24 month) contracts from Mobile Phones Direct at an effective monthly line rental of £3.50 each (normal line rental of £20, however ‘cashback by redemption’ saves us £16.50 a month)
  • Each contract came with a free phone: Honor 20 Lite
  • Using cashback sites Quidco and TopCashback paid us £45.00 & £46.20


Sold the phones on eBay and after fees and postage got £150.73 and £134.22
  £284.95
Cashback totals
+ £91.20
Line rental = £3.50p/m x 2 SIMs = £7.00p/m x 24 months
- £168.00
This makes an impressive
= £208.15

However, there’s more!!

Cancelled our previous tariffs of £6.14 p/m each x 2 SIMs = £12.28 p/m x 24 months
= Saving of £294.72

£208.15 + £294.72£502.87

We are therefore up by £502.87! (it only took a matter of minutes to sign up for the new contracts) and will both be using our 2 new SIMs for FREE for the next 24 months!

Not bad huh?!


There were lots of offers on Black Friday (which is when we bought these). If your mobile phone contracts are coming to an end, I’d highly recommend checking online, I’m sure there will be lots of new offers and opportunities to make some money come this Boxing day!

Finally, I’d just like to wish you all a Merry Christmas and a Happy New Year!



Sunday, 22 December 2019

Time

Hello fellow Fire Fans!

Welcome back and today I am going to get a little bit into our monthly investment amounts and this will also provide you with the length of time we are talking about for achieving our FIRE target.

As already mentioned, our approach is Slow FI at the moment and so you maybe a little shocked at the time limit we are talking about, BUT and this is a BIG BUT, down the line we do hope to be able to increase our monthly contributions and so this time limit could (and man do I really wish it will) come down!



Currently (December 2019) we are putting away £2,350 into various accounts that we will be able to withdraw from with, pretty much, quick access. (Not going to include another £100 that I pay into a personal private pension at the moment as I can only access this after reaching a certain age).

One thing to mention: we won’t be able to put away £2,350 for long, maybe another month or so, as my wife’s income will go down over the next few months (as she is on maternity leave) and she’ll only be getting Statutory Maternity Pay. According to the gov.uk website, this is currently set at £148.68 a week L.

Once these happens, I’ll do an updated post with how much we are able to invest at that time.

But for now, let’s get all the figures together:
  • Value of investments as at today: £55,529
  • Current monthly investment amount: £2,350
  • Target amount: £1m

Using a Compounding Calculator:
  • Starting amount: £55,529
  • Interest rate: 5%
  • Time to grow: 20 years (Entered 20 as an example just to see where we cross the £1m mark)
  • Contributions: £2,350 Monthly




This calculation shows me that in the 19th year we will cross the £1m mark (right towards the end of 19 years).

Told you it was gonna be Slow FI! L
  
19 years seems like a long way away. I would be 49 at the time and my wife 45. It’s not bad (better than retiring in mid to late 60’s) however it could be better!

You must remember, though, that I am being very conservative with the % return. I have only put the interest rate at 5%. As mentioned in a previous post most ‘financial experts/advisors’ say that an average amount would be 7%-8%, and I’m pretty sure I have come across figures being quoted as high as 10%-12% somewhere too!

So, 19 years I take as an absolute worst-case scenario!

Let’s have a look at the results with 7% and 9%. 
  • 7%: £1m breached in 17th year
  • 9%: £1m breached in 15th year



I’m no way going to expect 10%-12%, however in that scenario we could be FI in 13-14 years’ time! A more realistic expectation is probably 7% (17 years). However, me being conservative I will be monitoring at 5% and if we end up getting more then it would be a welcome bonus!

The other thing to factor in is the amount we are contributing. As mentioned, presently this is £2,350. This will go down in the short term due to maternity, but in the long term, we hope that this will increase due to e.g. a pay rise.

Ideally we would like to both be able to maximise our ISA allowances down the line (investing £20K each a year), but in the medium term if we can get to even investing say £2,600 a month, then this would also cut down our time period. 


£2,600 a month at 5% = 18th year

Alas, let’s keep 19 years from now as the worst-case scenario and we being 49 and 45 years of age. At these ages we would still be relatively fit to travel around the world and enjoy many more years of doing whatever we want to do!

What do you guys think? Am I being a little too conservative with my interest rate returns? How much do you guys reckon I should be able to get over the next 15 years plus? I’d be keen to know your thoughts.

See you next time!

Tuesday, 17 December 2019

The Magic Number


Hello fellow Fire Fans!

Today I will be going through our FIRE target.

As mentioned in the previous post, at the moment it is going to be Slow FI L.

But without further ado, are you ready to hear about our magic number?

Drum roll please…. 


It’s £1 Million!

Based on the 4% rule this would provide us with £40,000 a year, without ever running out of money.

If you’ve been reading about FIRE online, then I’m pretty sure you would have come across the 4% rule. If not, in a nutshell, the 4% rule is what ‘financial experts and advisers’ (yep, those types of people) recommend is a safe withdrawal rate (SWR).

It allows for a withdrawal of 4% of your investments without ever running out of your funds/principle amount. They say this, as investments in the long run tend to return between 7%-10%, I have even some places quote as high as 12% - but I’m a very conservative person (you’ll see this when I talk numbers throughout this blog) so I’m just going to assume that there’s no way I’ll get even 10% let alone 12%, in fact majority of the time when doing my own FIRE calculations, I only input returns at 5% on calculators, just to be extra sure with my target and goals!

As you would be withdrawing less than the long term returns i.e. 4% withdrawals being less than 5%, 7%, 10% returns etc. you would, as a result, never run out of money and hence be able to retire, knowing money will be coming in whether you choose to work or not! Yeah baby!

So £1 Million x 4% = £40,000. Once we reach our goal of £1m, we would be able to withdraw £40K a year and never having to worry about running out of money.

Let’s go through an example: Say for arguments sake that after achieving the £1m target, the following year we returned 6% on our investments then we would have earned £60K, however we would still have only withdrawn £40K and so would have another £20K cushion added on for following years when the markets might not be doing so well/went down.

So for us, £40K divided by 12 months would give us a monthly income of £3,333.33, which I believe would be way more than enough for us to live on (there’s me being conservative again!). In reality, I believe we wouldn’t need this much to cover our expenses plus for the fun things we’d like to buy and do, however I’d rather aim for a higher number for now and can then always adjust if needed.

When I go through our lifestyle, spending and budget in later blog posts, you’ll probably agree that we are being a little over cautious with this amount and we would not need £40K in retirement but I’d like to aim for this for now, because though we are being more cautious and frugal in our spending at the moment, once we are able to retire… we will and will want to splurge! We will probably go for new cars, have multiple holidays in a year and travel abroad a lot more so better to be conservative right!?

Would love to go to Bora Bora!

Another way to calculate your FIRE target number is with the rule of 25, where you multiply your expenses/spending by 25. e.g. if your expenses/spending would be £25K a year then £25K x 25 = £625,000, so this is what you should aim for in your investments. £30K would be £750K, £35K a year would be £875K and of course our number of £40K x 25 gives us the £1m.

So I’ve told you what me and my wife are aiming for. We believe this will provide us with an excellent life where not only will our essential costs such as household bills will be covered, but will also be able to treat ourselves with latest gadgets, cars and holidays – things which we are limiting on at the moment (though I will have to tell you something about my car in a later post!).

Do let me know in the comments what you guys think about our FIRE target and tell me about yours!

Thursday, 12 December 2019

Our Approach

Hello fellow Fire Fans!

Welcome to the first blog post. I’m sure you’ve read the introduction post regarding the topic of this blog and its objectives. If not read that first here.

The very first thing I want to write about is, our current approach to FIRE:

This will be Slow FI L. Trust me I’m more disappointed about this then you are! If you’ve been reading about FIRE online, you would be aware that there seem to be various different versions of FIRE and one of them is the slow version.

Slow FI


When I first came across FIRE, I read the countless stories and articles online about people retiring in their thirties with large amounts of savings banked and then living off the interest/dividends. This made me think, you know what? I wanna do this too! I’m going to start this straightaway and I’ll be retired in 5 years too! Yay! However, my excitement soon hit reality, when I realised that these people started very young… pretty much in their early twenties and also had very high paying jobs!

I, on the other hand, came across FIRE in my late twenties and unfortunately my income is not where I would want it to be. Since 2012, I have been consulting on a self-employed basis and my average yearly Gross income has been between £40K - £45K – some years it has dramatically increased from these figures, but then some years has been much lower. Additionally, due to the self-employed nature, I have also been through weeks and months of no income coming in as well not getting paid for any personal time off work or holidays. Woe is me! L.

My wife on the other hand is full time employed, however her professional career is at its early stages and so her salary is again not where we would want it to be.

She started working September 2016 on £21.5K,
pay increase to £24K a year later and then
changed jobs August 2018 starting at £31K

When she changed jobs she had asked her new employer for £31K and they accepted it gleefully with no negotiation (I told her to ask for £35K, but she wasn’t confident enough and thought they will expect a lot more work from her – so it’s very important to have the confidence to ask for your worth, I’ll talk more about this in a later post).

Luckily for her, she is a software developer and with the IT industry booming, we know this will continue to keep increasing especially with job hopping every few years! This should help with our Slow FI approach to hopefully become Fast FI!

So those are the 2 main reasons why we will have to be following Slow FI for at least the time being

1.       Started late so need more time for investments to grow &
2.   Our incomes aren’t high enough (yet) to be able to stash away large amounts in savings and investments

Other factors:

1.    Recently had our first baby! October 2019 we were blessed with a baby boy and we are absolutely thrilled. Naturally, though, we need to be realistic that we will experience higher costs going forward – This was a huge shock to me when we went browsing at Mothercare (shame they have closed down, but we did manage a few good deals just in time!) a few months into the pregnancy and looked at all the products that we need or the whole baby goods industry makes you think you need! Seriously it’s a money making industry. Buying pushchairs and cribs was only the start. I’m now seeing the initial ongoing costs such as baby formula milk, bottles and clothes that only fit for a few weeks! Never mind, the fact that when he gets older there will be toys that he’ll want, day care costs and who knows what else.

But I digress! Point being its obviously going to add extra expenses, but we wouldn’t have it any other way, we love him and want to be able to provide him a wonderful life.

2.     Another reason for the Slow FI is that, we also don’t want to completely miss out on life!

We would like to go out to eat now and again, go cinemas and on holidays etc. In reality, no one knows what tomorrow will bring and I don’t want to get grim here (promise you this is the only time!), but we are only on earth for a limited time, what if halfway through our FIRE goal, god forbid, there is a tragedy? Then what would have been the point of doing all this? That’s why we will not be going down the absolute extreme route of frugality – what you will see, though, is how much we are able to save and invest as well as how it’s still possible to follow FIRE and yet still enjoy and spend for the fun things in life!

We want a good quality of life but want to achieve FIRE quickly too, so something has to give hence Slow FI. The only way we can achieve it quicker would be when our incomes increase – this way we can still enjoy ourselves and save and invest more.

Phew!

Sorry for the long post!

So, now that I’ve explained how we will be approaching FIRE (Slow), and the reasons for why it will be slow, we can get into our goals!

See you in the next post!

Fire Fans Assemble!

Hello and welcome to my blog!

Let me introduce you to myself and what the topic of this blog will be… It’s all about FIRE!

Maybe you’ve come across a lot of FIRE blogs and stories across the internet or maybe you’re completely new to the movement – however I would like to share our (me and my wife’s) journey through it, from the beginning to end as we are pretty much only at the beginning of this journey.

Also, as far as I’m aware, the FIRE (Financial Independence Retire Early) movement originated from the USA, or at least the stories that I have come across have mostly been Americans, however we are seeing a rise in FIRE adopters in the UK, and hence I wanted to get involved in documenting our journey to get a British perspective and to give my fellow British audience a journey to follow and hopefully see through the end of it!

As mentioned we are still in the early days and we started this movement seriously around a year ago (October 2018). The reason why I say seriously is because we did have some savings from before (before we were aware of FIRE), however this was just due to our general lifestyle and being careful with our spending. We weren’t really investing that much… majority of our money was pretty much just sitting in our bank accounts. Since August 2018 though we have taken a more active look at our finances, made budgets and looked at investment options etc.

Grow Investments

I will write about all our initial plans as to how we came about to the realisation of wanting to achieve Financial Independence, how we are doing it, how our progress is going (Yes, we will share our real investment portfolios and finances on a regular basis!), our initial financial mistakes (Pre and Post adopting FIRE, hopefully no more of these going forward!), our total estimated time left till our target is hit and many more topics such as tips and tricks on how to invest and save money to also help and motivate you to achieving FI as well!

Finally, I want to thank you for visiting our website/blog, I hope you become a regular reader and please do share with us your thoughts, comments, ideas and questions!

P.S. I want you to know that I am in no way a professional writer or anything like that (completed my GCSE English and Literature exams nearly 15 years ago!) and so if you do come across any grammatical errors or any sections which are hard to read or follow, then please let us know and I will try to amend and thereby going forward become a better writer too!

Thank you

Sale! Sale! Sale!

Hello Fire Fans! I’m back! Sorry for the long delay since my last post – I’ve just been extremely busy since the new year with a fr...