Hard Graft

I was reading an article over the weekend that highlighted the fact that the new ISA  limit has been increased to £20,000 a year and that this amount, if invested over 25 years at 5% growth, would make you a millionaire. That’s a nice soundbite, but the article then dug itself into a hole by pointing out just how much saving that twenty grand a year would require – £1,666 a month, every month, for twenty years. And £1,666 is the total monthly average take home pay of a full-time worker earning £27,000 a year.

In other words, for the average Briton, a shitload of cash. In fact, it’s all of their cash, so it’s just too tall an order – most Britons won’t save themselves into millionaire status. Look on the bright side though, the article went on, if you could save just £100 a month into an ISA and return 5% over twenty years then at the end of that period you’d have at your disposal a total pot of……£41,000.

Excuse me, but does anyone else find that calculation somewhat uninspiring? Saving £100 a month for twenty years – that’s seems to me a pretty big commitment and somehow I was expecting it to be rewarded better than that. But then maybe I have swallowed the blue pill when it comes to compound interest, the miracle ingredient of investing. I barely question its efficacy, I just “know” it leverages wealth in a phenomenal way. I think, however, that the examples I read of how compound interest works were somewhat more inspiring than the “£100 a month” example above.

This leads me into an area that I find tricky when discussing FIRE with myself – just how much of a middle class, relatively high-earning ambition is it? It seems that the problem here is that £100 a month is just too small an amount to invest to promote sexy, head-turning results. Maybe the sum of £500 a month should have been used – that would deliver a sum of over two hundred thousand in savings. Unfortunately, I heard someone on the radio recently state that the majority of Britons couldn’t put their hands on a hundred quid cash if you gave them the morning to do it. They just don’t have a spare hundred quid lying around, never mind five hundred. The sad and brutal reality for many people is that even saving £100 a month is a stretch and, if the “prize pot” at the end of it is forty grand, then honestly, why bother?

The FIRE ambition is stoked by “disposable income” and a lot of the blogs I read focus on the first half of that statement i.e. what are you doing with the disposable element? How are you spending your cash? Are you squandering it on daily Starbucks frappuccinos? Is spending £100 on a decent Saturday night out second nature for you? Must you have a new, or relatively new, car when a trusty ten year old Honda, or even better, a Raleigh bike, would free up oodles of cash for you?

It seems to me, however, that it’s the income side that drives and realises the FIRE ambition, and that many of the bloggers are less inclined to discuss that, myself included. Our biggest icon, Mr Money Moustache, makes no secret of the fact that both he and his wife were high earners before they “retired” from the workplace. Yes, that’s a fact, and he’s open about it, as are many of his fellow flag-wavers. The point, however, is how much of that income was saved and invested, that’s the important thing.

Well, I beg to differ. I think that it’s the income that’s the important thing and that’s a more difficult thing to address than whether or not to buy a Starbucks frappuccino tomorrow morning. I’m not saying that the FIRE blogs ignore this aspect – there’s a lot of focus on side hustles and increasing earnings – but putting your shoulder to the wheel at the workplace deserves more attention than it is given. The fastest way to increase your savings is to ask for a rise at work, or work out a way to get it, and then bank the lot of it. Or work in a pub over the weekend and bank all of that ongoing. Yes, it’s hard, it’s graft, and it will cause pressure and stress that you might rather not have, but it will work faster for you in terms of increasing your savings than just about anything else.

 

Leave My Pie Alone!

In the way I used to go bed on Christmas Eve and think “Oh Santa please be good to me!”, I went to bed last Tuesday night thinking “Oh Mr Chancellor, please be good to me!” Or, more accurately, “Oh Mr Chancellor, please don’t muck with my pensions!”

This was partly inspired by something I mentioned in my last blog, that it wasn’t so long ago that a Chancellor decided you just couldn’t retire and claim a pension at 50 any.more, you’d have to wait until you were 55. Five years onto your working life, at a stroke. If, on Wednesday, the chancellor had announced that he’d decided you now couldn’t claim any pensions until you were sixty, that would so screw up my forward plans I can’t actually bare to think about it.

If there’s one thing I increasingly focus more on than my Isas and investments, it’s me and my wife’s pensions. And you need to because, compared to Isas, pensions are a complicated, maddening, mess of regulations, tax laws, restricted stipulations, sneaky stealth moves and, to be fair, generous loopholes that drive you insane.

As my wife and I approach 55, I’m really starting to think hard about our options. I thought I had devised a simple but cunning plan to transfer some of our ISA savings into a SIPP for my wife in order to grab the twenty percent tax bonus offered by the government for doing so.

I planned maybe a fifty grand deposit to be matched by the twenty percent rebate, which was certainly worth having for making a few mouse clicks. After all, I could invest in the exact same Vanguard 60/40 Lifestyle Fund in the SIPP that I was planning in the ISA anyway.

That was Stage One of the plan. Stage Two was that she would then draw around ten grand a year from the SIPP tax free over the next five years. When she reached sixty, she could then access her NHS pensions, at her “Normal Pensionable Age” and therefore maxing the benefit over time. Ya beauty. Simple, elegant and straightforward, eh?

Not a bit of it. First restriction: it turns out my wife can’t deposit more in a SIPP than she actually earns in a year. Which is nowhere near fifty grand, more like fifteen. And she can’t deposit fifteen either, because her current work pension deposits also count toward that fifteen limit. And the fifteen includes the tax rebate too.

Okay, not as straightforward as I thought, but nothing that my ‘O” level arithmetic and a bit of research can’t handle. With some quick moves, I can deposit into the SIPP this tax year, next tax year and the tax year after that – it’s not the fifty grand total I planned, but it’s close. Except, it turns out, it’s not that simple! If she gives up work on her 55th bIrthday then she’ll only have worked eight months in that tax year, and therefore her earnings and contributions have to be adjusted down accordingly. FFS. More research, more arithmetic.

Then I have my own pension to worry about. Have you heard of the LTA? Given you’re reading a blog like this you probably will have and you better start trying to focus on whether or not it applies to you – because it probably will.

The LTA is basically the amount you can have in all your pension pots before the government taxes the excess at fifty five percent. Fifty five percent!!!! Rod Stewart emigrated to avoid tax bands like these and by no stretch of any imagination in any direction – money, hair, leggy blonde birds – am I Rod Stewart. But I am in danger of exceeding the current LTA on my pensions. Or I think I am. “Think” because about six weeks ago I wrote to Aon Hewitt asking them to give me a cash equivalent figure on the pot that will fund a defined benefit pension that I have. I’m still frigging waiting on a response, despite calling them, writing via snail mail and chewing my nails that the chancellor would reduce the limit again in the current budget.

No doubt you’d be able to claim some sort of protection against such cuts, and maybe people were given a few years to get their head around the fact that they couldn’t retire at fifty any more. It’s not the first time that the LTA has been reduced, and each time you have had an option to apply for protection on your funds against the allowance being cut again. I wonder what percentage of the population have done so? Two percent? With the rest grazing on the grass contentedly, like sheep waiting to be fleeced by HMRC.

Honestly, when I see what has happened over university tuition fees, I think the Chancellor could pretty much do what he wants on pensions if all he took notice of was the general public. If he decided to tax all pots greater than 250k at seventy percent, the general population would ask, “Yeah, but did you see Kim Kardashian on telly last night?”  The only reason he even thinks about the consequences of such moves are because The City wants more coming into their coffers rather than less. They want people in pensions so that they can rake in more on fees. Any moves that have people looking elsewhere, like putting their cash under a mattress, or even worse, putting it into those upstart P2P funds, need to be stomped on at birth. Who wants more cash from your pension pot, the Government or The City? Probably the Government wants it more but The City won’t let them have it, not in any straightforward way. Hence the labyrinth of rules and regulations you need to get your head around to protect yourself or, even worse, try and make some sensible financial moves to benefit yourself when it comes to your life savings. Oh yes, they want to encourage you to provide for yourself in the older years, but only if they can take a slice of your pie on the way through. It’s up to you to make sure that slice is as small as possible.

 

Late to the Game

I “early retired” aged 50, and still put the term in inverted commas because (a) I never really convinced myself I had retired and (b) I went back to work a year after the event, so maybe I never really did retire in the true sense of the word.  And (c) does being aged 50 really qualify as “early retired” when for many years, that was quite a common exit point from the world of work? In fact, I was really surprised to learn that the government only changed the rules to make minimum pensionable age 55 from 50 in 2010!

I reflected on this subject as I was listening to the Mad Fientist’s most recent podcast where he was interviewing Mrs ONL from the Our Next Life blog. Toward the end of the hour, Mrs ONL made this cogent observation:

….my advice is, every day of freedom that you can steal back from 65 is a win. And so even if you are retiring at 64 ½ or 62, that’s still huge. And that’s still a lot more life that you get to live on your own terms than most people will ever get to say. Or just even being able to retire on your own terms is huge.”

She also commented on something I’ve noticed about the competitive nature of Retiring Early, where you now have bloggers claiming to have attained FIRE in their twenties. Soon enough you’ll be hearing some blowhard down the pub spouting “Yes, as a foetus I implemented the 4% rule and effectively retired”. To be fair, in Britain I think that’s a long way off. Occasionally during my year out I did tentatively mention to peers that I was “retired” and half expected to get the response, “Oh, I could have done that, but I just wasn’t ready for it in my fifties”. I expected this to happen much more frequently than it did. Coming to think about it, I can only recall the one occasion where I got this response and that was from a bloke whom, if he hadn’t reacted in that way, I’d have been devastated. He’s one of these guys who, when you tell him your car had a flat tyre on the motorway, will comment, “Oh yes, did I tell you about the time I had three tyres simultaneously blow out on me on the M25, when I was doing 98 mph? In the rain? And when I pulled over, Kylie Minogue stopped to give me a hand to change the tyres?” And he’d be quite serious.

The most common response was some sort of positive rejoinder accompanied by a kind of puzzled look, as if people were wondering if you were winding them up. (Not surprising when half the time I was wondering if I was winding myself up!) Nobody really asked for any further detail, preventing me from spreading the word about passive investing, Index Trackers and the list of inspirational websites that had helped me decide that Early Retirement was the lifestyle choice I wanted to experience.

I now find myself asking what I learned from that year and what I’ll do differently as I approach – or am forced to approach – my next retirement date. The first thing I think I’ve learned is to absolutely have a structure to the days, preferably written down in a spreadsheet, of what I want to do and when I want to do it. Definitely the most difficult retirement days were when I drifted through them, nothing to do and all day to do it, when walking to the local Co-op to buy a loaf and a pint of milk seemed to be a worthwhile objective. This was particularly true in the afternoons between about one o’clock and six in the evening, when I found it hard to motivate myself to do anything. I’d generally spend a lot of that time aimlessly surfing the internet in the vain hope that I’d find a hobby or pastime to occupy myself with that might also earn me a wee bit of cash on the side – then it’d feel more “worthwhile”. But if earning money was partly what I wanted to do, then why didn’t I just get back into the kind of career I once had and (generally) really enjoyed? In the end, that’s what I did.

It’s clear to me now how much routine and structure were important to my days and it now dawns upon me how, for almost thirty years, work provided it. Work also helped define the days that you weren’t at it  – weekends were special, holidays an oasis in the desert. Before that, it was school, with your scheduled timetable, the play time bell and the ever longed for summer holidays. It’s not really a surprise, or it shouldn’t be, that when that structure vanishes and every day is like Sunday, then it’s quite a shock to the system. It’s therefore not a failure to seek a structure to replace what you’ve known for literally most of your life to that point. In fact, it’s almost a requirement that you replace the old solid routine and structure with one that’s equally robust.

So what I learned was that it doesn’t really matter how late, or early, to the game you are if you’re really not prepared for it. In fact, the more months and years you have to start laying the foundations for outside interests, hobbies and pastimes that are an alternative to work, the better it will be. Don’t make the mistake of waiting until you have time in retirement to work on all those things because, in my experience, it just ain’t as simple as that.

 

Common Sense

I liked the recent blog post from The Escape Artist that should, in my opinion, be printed in every Money section of the weekend newspapers in the country. Or better still, the mainstream papers like the Daily Mail or The Mirror but I know that’s way too much to hope for. Finance? Who’s interested, versus who’s dress showed the most cleavage at the Oscars, or whatever they were going on about on Monday?

I’m one of these strange people who read the Money section of The Sunday Times straight after I’ve covered off the columnists in the main section. The finance paper has some good columnists too – Hunter Davies and Ian Cowie, for example – but they couldn’t write as straightforwardly as TEA in order to get their point across. Hunter Davies hates all fund managers and finance companies after a disastrous experience with the Equitable Life and his personal pension. He comes from a generation where frugality was the norm and, despite being quite possibly a multi-millionaire, still rummages in neighbourhood skips to see if someone has thrown out anything of value that he could use. A man after my own heart. Ian Cowie often alludes to the attraction of passive investing, but is a bit of an “Active” dabbler himself (or seems to be, maybe it just gives him something to write about!) Meanwhile the rest of the paper buries any worthwhile information under reams of other material that suggests maybe your savings would flourish under this fund or that fund, or in property – but I never read the Home section of the Sunday Times, clearly unlike many of their readers given property is given a whole weekend supplement to itself.

I accept that this agenda is probably driven by the advertisers – i.e. the big financial institutions – and I wonder how many articles’ recommendations are basically driven by a bung? Or to court favour with some fund manager who might lead them to a better story somewhere down the line if they turn out to be the next Neil Woodford.  Or Anthony Bolton (remember him?)  The financial industry and the financial press seem to have this need to find “investing heroes”, the David Beckhams of the Stock Exchange. I kind of understand the marketing psychology behind it, but it’s pretty ephemeral as the Anthony Bolton story demonstrates. Except for Warren Buffett, of course. There is a cynical view is that he is merely the fund managing monkey that typed the works of Shakespeare, or that maybe he’s just the financial equivalent of Highlander –  there has to be The One, doesn’t there, and he’s it. But Buffett himself tells you not to do what he does, but do what he says, and what he says is that you should invest in tracking funds, not stock pickers. I’m happy to follow this sage advice.

Extreme Brain Love

Extreme Brain Love

(Saying that, however, if Merryn Somerset Webb recommended I sink a few grand into the Ecuadorian Peanut Futures Market ETF, I’d be setting up the Direct Debit tomorrow as I am, I’ll admit, madly in love with her and her brain.)

No matter how the Money supplements try, however, the Passive Investing movement is building. I hope that the eventual outcome of this will be that good fund managers will eventually charge the same fees as a tracker funds, although I’m not holding my breath. There would still be plenty of cash in the racket if they did, and I have to admit that I would be tempted to give some of my savings to someone dedicated to trying to pick winning companies and gain an investment edge. After all, we trust professionals in other areas of life and knowledge and experience are surely worth something – it’s just that in the City, they’re not worth what they’re asking. TEA’s example of how to turn a £1m investment into £450k by simply giving it to some Champagne Charlie to manage for a 2% fee should be common knowledge to every schoolkid who can sit an arithmetic O level (if they even have these any more at school.)

It’s supposed to be that common sense is not so common and, to me, tracker funds struck me as complete common sense the very first time I read about them. I think that many people would think likewise, if only they could get past the “mystique” of investments and equities. Fund managers and IFA’s need to keep that aura of complexity alive as their fees depend on it, as do the firms that they represent. Independent financial bloggers – and Warren Buffett – can rise above such concerns, so let’s keep doing our best to get the message out there.

Win!

I blogged last year that I was thinking of investing some money into Premium Bonds as I felt I had enough in equities and not enough ready cash – but I couldn’t stand the thought of cash just sitting in a bank or savings account, earning virtually nothing. Arguably Premium Bonds had the chance of earning me something.

To my delight, my numbers came up last week and I won twenty five quid! Now that’s the kind of prize I like, because it’s total treat money. It’s the kind of sum I can spend without guilt or perceived “opportunity cost” that a win of say, five hundred quid, would bring about. If I won that amount, I’d probably invest it, although possibly in a speculative punt on a single share purchase like Rolls Royce. And if I won five thousand, most of that would definitely be squirrelled away into further investments.

I once actually did win five thousand pounds, on the Littlewood’s football pools. I was young then, just married a year, and we blew it all on a fly drive holiday to California. What a fantastic experience that was. Do you realise, however, that if I’d invested that cash wisely enough to return me 10% over all those years, that five grand would now be worth £60,278.73? Well, to quote those Californian legends, Metallica, so ****ing what? I didn’t regret spending that money then, and I don’t pine over that “lost” sixty grand today (I tell myself in my most adamant, and hopefully most convincing, tone of voice!)

I do sometimes wonder about the common story on FIRE blogs about the Starbucks Latte – you know the one, that if you didn’t spend that three pounds every workday then you’d save fifteen quid a week and over seven hundred pounds every year. Well, you can’t argue with the arithmetic, but it depends on how your coffee adds to your quality of life, doesn’t it? What would you pay to brighten your day? If that Starbucks latte floats your boat, then surely three quid a day is a bargain compared to going without it? Of course, if it does nothing for you whatsoever then why in God’s name are you buying it in the first place?!

In a way, I’m glad I didn’t discover the concept of FIRE until about five years ago, because I think I might have been swayed by that Starbucks analogy had I thought about it. These days I actually have the opportunity to indulge in this habit on a daily basis because there’s a Costa Coffee in the small market town where I work. About twice a week, I leave the house early, drive to work before the traffic becomes annoying, park up, head into the near deserted coffee shop, order up my latte, download The Times to my Ipad and enjoy some quiet time before work. It’s great, and I could easily do it five times a week – except for the fact that I’m thinking “Seven hundred quid a year! On coffee!?”

So I do have some spending thresholds these days that might prevent me from spending a five hundred pound prize on myself. Twenty five quid though, that’s a totally manageable windfall, arriving without fear, guilt or loathing. That’s a bottle of seriously nice wine for Saturday night. Or two (I can’t tell the difference between wine at a tenner a bottle and wine at twenty, except psychologically). Mind you, I couldn’t drink two bottles of red these days in the same evening without totally ruining the next day. Or maybe a it’s trip to The Fisherman’s Wife in Whitby with my DOH on a quiet evening, with its view out to the sea and an effectively free fish and chips? Or it’s a few decent books on the Kindle or, even better, a hardback book to fuel retirement dreams? A Moleskin notebook would be another guilty pleasure to indulge in, without the feeling that I was being ripped off and a bit of a pseud to boot. Perhaps a more manly purchase would be this handy wee Leatherman C33 with its twenty five year warranty? I’d want to spend it on something that I might otherwise apply the twenty four hour rule to, but at this level I don’t find the challenge too difficult.  It seems to me that I’d agree with The Beatles that the best things in life are free, but the second best things aren’t really all that expensive either.

Walk Like a Man

By now, I hope you’ve all listened to, or intend to listen to, the Tim Ferriss podcast of an interview with our cult leader, Mr Money Moustache. You can tell (I thought) that common ground was sparse between them, as Ferriss has gone in writing about how early retirement would utterly bore him to death, but there were more than a few areas that they could agree upon.

If you’re a regular listener to this podcast (and can get past the first few minutes of annoying “infomercials”) you’ll know that Ferriss has a set list of questions that he likes to pose to most guests in order to stimulate some dialogue. One of the problems with this routine is that the guests now know the questions are coming and sometimes have pat answers prepared, or answers you suspect are somewhat less than genuine. Still, it’s better than “Loose Women” and generally speaking I like the approach.

One of the regular questions is “If you could erect a billboard for a month and write a message on it, what would it be?” and MMM’s answer struck a chord with me. He’d write “Just Walk”, which surprised me a bit because I’d have more expected “Just Bike” from him. But no, it was walking that triumphed for a variety of reasons that he and Ferriss went on to discuss.

I don’t want to regurgitate their praise for this simple activity but I agreed with just about all of it.I posted earlier this year about resolving to try and get a bit fitter but, in general, I can’t be arsed with serious exercise or the gym. I do enjoy walking, however, so about two weeks into January I resolved to try and hit a target of 10,000 steps a day on my Fitbit monitor. When you’re in an office almost five days a week, this takes a bit of effort – I know from experience that an average day, sitting at a desk, will result in me clocking up about 4,000 steps between breakfast and bed. Given I walk about 1,000 steps in ten minutes, I need to find an additional hour, most days, to achieve the target.

We all lead busy lives, or tell ourselves we do, but for me when it comes to exercise it’s just an eternal battle between discipline and distraction. I can find a hundred reasons not to exercise if I allow myself to, so I need to be firm with myself. I have to have a plan, or write a goal to commit to it. I can’t just vaguely tell myself I’ll get up half an hour early tomorrow and take a morning walk because, if I’m vague about it, I won’t.

And, in order to achieve my 10,000 steps, I do have to get up half an hour early and take a walk, because I’ve found with this base achieved then the rest of the day takes care of itself. Once I have the morning set done and dusted, I then tend to make sure I nip out for lunch and fit in a half hour or forty minutes at that point, and then, if necessary, pop out in the evening for a quick pint to the pub at the other end of the village to claim the rest. (No doubt this undos any calories burnt, but ye Gods, you have to live, don’t you?)

There’s other parts to the routine that I put in place to ensure that I get out the door in the morning. I have to have my gear ready and prepared for that 6am exit, including my iphone, headphones and downloaded podcasts preloaded in my jerkin pocket. If I have to end up looking for any of these items then it will throw me completely out of kilter. I also have an insulated mug sitting by the kettle so I can boil it up and then slurp a morning cuppa as I walk around the quiet village streets. Having an objective helps too, such as walking to a local shop (or BP petrol station for me) to buy a paper, a pint of milk or anything else that gives a “point” to the excursion. Actually, this really helped me at the start because I was quite self-conscious about aimlessly walking at that time of the morning. What did people think I was up to? A trainee Peeping Tom, clearly. I almost considered buying a dog.

In the same way they say “money goes to money” I’m finding “walking leads to walking”. It’s now my preferred way to go from A to B if it’s a feasible proposition. When I find myself frittering time away on an evening at a loose end, then I’ll don the headphones and head out for a stroll. I don’t mind what it’s like out, believing the Billy Connelly adage that there’s no wrong weather, just the wrong clothes.

There’s loads of side benefits too. I’m slowly losing weight despite sticking to three square meals a dayrest-hr. I’m sleeping like a log and the seeming lack of dreams probably signals that I’m not waking as often during the night. I’ve posted here the graph of my Fitbit’s tracking of my resting heart-rate since I began this campaign, an alleged indicator of improving fitness, although I was more interested to see the peaks inspired by Friday night visits to the pub (especially last Friday’s rather lengthy session!) You need a bit of excitement after all, and it’s the one downside of walking that I’ve discovered so far: my DOH tells me I’m turning into a walking bore.

 

Love in the Afternoon

Recently I’ve been thinking about addressing the “challenge” of retiring again. Reviewing my finances and my pensions – and, mostly, my health – I’m coming to the conclusion that it’s going to be daft to work full time beyond fifty five, largely because I believe that the ten years between fifty five and sixty five are going to be a lot, lot different, physically and mentally, from the ten years following on from that. And I don’t even want to think about the ten years following on from seventy five. Gather ye rosebuds while ye may, and all that, so quit the job in eighteen months, that’s my current thinking.

Okay, sounds like a plan. Mind you, I had the plan to retire at fifty, did it, had a year out and then went back to work! It will need to be different this time around. My plan needs to be improved and the devil will be in the detail. Fail to prepare, prepare to fail.

I failed to prepare the last time I retired in that I’d absolutely no plan or structure to my days and repeatedly failed to apply myself to the task of creating such. I just took the days as they came and made it up as I went along. This wasn’t a good approach, something that I’m currently changing with regards to my health and fitness and wondering if I can apply a similar system to filling my retirement days.

In the year since I’ve returned to work I’ve put on almost a stone in weight. I’m sitting at a desk for most of the day and I’m massively less active (in lots of small ways) than I was when I was retired. It shows. A couple of weeks ago I decided to “grab hold of the wheel” and change my direction with regards to my diet which, I’d read, can be five times more effective in losing you weight than any exercise programme. This is, to an extent, the story of my life. If only I could avoid the beer, the biscuits, the butter and the bread then surely my pot belly would retreat under pressure? Probably, but how many times have I resolved to do that, and lasted all of two and a half weeks? What would be different this time?

It’s early days, but what I decided to do differently this time was to create an eating plan for each week and follow it.  I kind of know the “lean” meals I need to eat, so I sat down and wrote up a menu list for breakfast, lunch and dinner that I intended to follow. So far, I’m finding this approach to be surprisingly effective in a variety of ways. I know what I need to do, it’s written down, and I’m thereby finding it relatively easy to stick to. It’s the first time I’ve ever done this and, so far. it’s working.

This has made me think. Can I apply this approach to other areas of my life? I’d admit I’m a bit resistant to this, thinking that this is an overtly “anal” thing to do that really doesn’t suit my personality type. Maybe it would suit an accountant, but not a free wheeling lion tamer like myself. I don’t want to sit down and write a schedule for my evening that chunks my time into half hourly tasks and has me thinking “Oh, eight o’clock, time to put down this book I’m enjoying and go and listen to a podcast for half an hour as I have committed to do.”

When I was retired, I had a fairly well established morning routine, and I found it really enjoyable and easy to stick to. My evenings weren’t difficult to fill either. But the afternoons were often a yawning void that saw me at a complete loose end and frittering the time away, achieving nothing. My worst retirement hours were always between midday and five in the evening and the challenge of filling those hours was something I never really got to grips with. I did think about planning an afternoon schedule, but this felt like defeat. Surely the point of retirement was to have all the time in the world at your beck and call and not some slavish devotion to a timed list? If I was going to do some scheduled work, why not get paid for it?

Why not indeed? I blogged recently that my next goal at work was a four day week. That’d be good, but an even better solution would be to work in the afternoons only. I doubt my employer, or many other employers, would be up for that. So I’ll maybe need to construct a plan for myself, and find something that I’m happy to do in the afternoons that generates some pin money too. That’s something to work on.

 

Choose Life

I’ve been catching up on a website that heretofore I haven’t really bothered with much, that of The Mad Fientist. Not so much the site itself, which I’m sure hosts great content, but I’ve been visiting to download the back catalogue of podcasts available of The Fientist interviewing various “stars” of the FIRE fraternity. I’ve already listened to quite a few of these and enjoyed them all so far.

The other night as I walked back from the library in the rain, I was listening to an episode in which the interviewees are Mr and Mrs 1500 from the “1500 Days to Freedom” website. Liberally dosed with quantities of alcohol, the interview teeters on the verge of irritation, but just gets away with it due to the undoubted, and possibly unguarded, honesty of the participants. And, from my perspective, they were discussing a subject close to my heart and experience, namely the difficulty of giving up work when you actually quite enjoy it. How refreshing to hear Mrs 1500 unequivocally state, “Early retirement is such a stupid term”, as she went on to explain how, after eight years of being a mum, she was desperate to re-enter the workplace. Mr 1500, on the other hand, and to an extent the Mad Fientist himself, told of how they could barely imagine giving up their coding jobs which, they averred, they would do for free – never mind being highly paid to do it. “I just feel I’ve got hold of a winning lottery ticket that just keeps paying out”, said Mr Fientist. “Why would I walk away from that?” Mr 1500, who actually sounded to be a bit of a workaholic, was heavily in agreement and seriously doubted his ability to walk away from his work even when he was financially more than able to.

So, are we listening to the only three people in America who like their work? I doubt it. The same I feel can be said – but isn’t said too much – here in the UK. I haven’t come across many blogs on either side of the Atlantic extolling the virtues of the office. We’re all suspicious of anyone who goes on about how much they love going to work, unless the job is one of these “dream roles” that you see on the telly which make you ask yourself why, instead of accountancy, you didn’t train to be a microbiologist in the Bahamas?

The conversation then turned to what, I think, is a much more rewarding line of enquiry, that of Financial Independence. Now, try as I might to think about how I can rain on this parade, I find it difficult to see the downside in attaining this goal. For a start, it makes the workplace a choice. If you don’t really need the money, you don’t have to stick the job, and that might make all the difference to your mindset. To be fair, I haven’t found it to make all that much difference to mine, because some days work still feels like work and there are more complex attachments to a job than just the wage packet you receive for doing it. I would admit, however, that I have a sense of security at work that I don’t think was always there before. After all, “the worst” happened to me in terms of losing my previous job which, in the midst of it, left me feeling as if it was actually the best thing that had ever happened to my career – but largely only because the severance package I received brought my FI target over the line some years before I’d expected to hit it.

One of the other subjects that Mr 1500 touched on, that I also felt in agreement with, was the attraction and satisfaction to be had in choosing to live a frugal life. The small joys to be found in going without, of not accumulating stuff, of making and mending, of making cash work for you instead of the other way around. The feeling of being in control and refusing to go along with the social pressure of keeping up with the Jones’s. (Don’t get me wrong, I also think there’s a lot of positives to be found in competing with the Jones’s, just as long as the Jones’s don’t necessarily know about it!) It’s the lifestyle that I think attracts a lot of us to these sites, reading about the Millionaires Next Door who appreciate the abundance of the world we live in, but don’t gorge themselves upon it until they’re sick.

Once you reach your chosen level of Financial Independence you can choose to retire, or not. You can take a risk and try to change jobs completely, strike out on your own, do what you feel you want to do, even if that’s to stay at the job you’re doing. The goal of retiring early was a great motivator for me, but the reality of it wasn’t quite what I expected. Maybe I shouldn’t have been that surprised, but hardly a day went by when I wasn’t working that I didn’t say a small prayer of thanks that, for me, finding a job wasn’t a financial necessity – and that’s the part of the FIRE equation that I’ll always feel there are just no downsides to.

Generation Rent

 

When I started this blog and was trying to think up a suitable clickbait title, I asked myself what subjects would middle-aged, middle class, middle British people be likely to be interested in? The trouble was I didn’t think that the title, “Sex, Health, Money, Property” had the same ring to it.

An Englishman’s home is his castle – although he’s also very interested in the slightly bigger castle just along the road. His wife, meanwhile, is interested in about ten other bigger castles in a better location than the current dump, which hasn’t even got a moat.  

I’m approaching the stage of life now where I take being classed “middle aged” as a compliment. Let’s face it, I’m heading toward the Third Age and finding I’m starting to think that, instead of needing a bigger house, more space and trying to get a foot on the next rung of the property ladder, I actually need to downsize and release some of the equity in the property.

Over the last year, my wife and I decided we’d start to look around at likely places we’d consider staying in for that “Third Age” and, somewhat to my surprise, met a number similarly aged couples doing what we were doing (it was the amount we met that was the surprise, not the fact that older middle aged couples would want to downsize their homes.). They too were selling up, releasing equity and moving on. But, what was almost more interesting, was the fact that many were selling up with nowhere to go. They intended to rent until they spotted that house of their retirement dreams and could bid for it as a cash buyer.

We were considering doing the same, because we knew from previous experience that the only thing that trumps a ridiculous over-bid on a property is a cash buyer who isn’t in a chain and can be pretty flexible on moving dates. It’s a big advantage when a desirable property pops up to not to have to say, “Oh, we’d need to sell our house first before we can buy yours”. When you’re the seller, this feels like you have two properties to sell before you can move on – theirs first, and then yours – but someone offering cash, well, it’s a done deal.

So selling and renting was our “secret strategy” that would enable us to grab that little rose-covered cottage when it came up. That’s a laugh. It began to look like we’d be up against at least half a dozen grey-haired cash buyers trying to do the same thing. So, yet again on the property front, the question of whoever had the biggest pockets would come into play.

Now I’m pondering two things (1) has this come about because there is a massive amount of rental property options out there in attractive locations which offer quite good value for money? And (2) if so, and if we find a place we like, why shouldn’t we just rent until it’s our time to move on to the Big House in the Sky?

I’m finding the latter idea growing on me. There’s a lot of advantages to renting. For a start, we’d have to jettison a lot of the sheer junk we’ve accumulated over the years (one of the things that puts me off selling the house is the thought of literally packing up.) The thought of “living light” with a lot less material possessions appeals to me. Then there’s the money freed up – I reckon selling our house will transform those bricks and mortar into a substantial wedge of wonga that I can invest. I mean, over the years, my investments have pretty consistently delivered a return of between 5% and 10%. If I could keep that up, I’d be generating an income that would more than cover any likely rental charges.

Selling up and renting also gives an element of flexibility – I often fantasise about heading to warmer climes for the winter. Santa Barbara, California, from about October through to March would be nice. It might also be a real option if I could trust and count on the investment income generated from the sale of my home. I could live six months abroad and not worry about my house going on fire, the pipes bursting and flooding the home, if squatters had moved in and so on.

We could live the next ten years like that, until we became bored with it (or became seriously worried about falling ill in America!) Then we could buy a property more appropriate for a couple heading into their seventies and beyond which, I feel, would look a lot different to any houses we’re currently considering buying.

When you start thinking about how many years you have left on the planet, never mind in a house, you inevitably have to think about eventually leaving all your possessions behind. Of course I’m talking about that other middle class property obsession, Inheritance. Well, let’s say my wife and I both live for another forty years (assuming we haven’t killed each other by that time.) My son will then be sixty two. I’m sure he’ll appreciate getting an old house at that point in his life as opposed to getting some of that inheritance now, just as he’s thinking of getting into the property market himself. Right. Surely, as a concerned parent surveying the current housing market from the perspective of a twenty year old wondering how on earth to save for a deposit, that’s a no brainer? I mean, I know I’m in a lucky position to be able to consider the options, but it’s a fact that many of us are, or will be in a similar position. Like old age, it’s a subject that needs thinking about.

Pondering these questions makes me think back to the title of my blog. When I think that I have to admit I’m no longer middle aged, maybe I should shuffle and change the title to reflect an older age priority of obsessions: Death, Property, Health, Money (and Sex, If You’re Lucky). What do you think?

Keeping It Up

I noticed a tweet from Mr Money Moustache the other week that an article about him that appeared in the New Yorker magazine was one of its “most read” in 2016. He couldn’t quite believe it, but was happy to shout about it with a #Humblebrag handle to show he was proud, if somewhat abashed (I think), with this success.

Good for him, though. He is the preeminent writer on FIRE in my opinion and must have inspired tens of thousands of people to think about the way they are living and to make changes to both their finances and lives, inspired by his example. He wasn’t my original inspiration, though. That was Jacob Fisker with his book and blog Early Retirement Extreme, which I somehow came across back in about 2010, giving me almost five years to think and plan on how to get out of the workplace a lot sooner than I’d ever previously considered.

Fisker’s book, to be fair, can be quite heavy going and almost preachy. You can tell – and he often lets you know – that he’s a pretty smart dude. So smart, in fact, that he clearly pined for more intellectual stimulation than his Early Retired life was giving him, and returned to work as a Quant in finance, or something equivalent.

I often feel I struggle to put into words exactly why I went back to work when I probably could have stayed retired. I often ask(ed) myself if I just didn’t have the imagination, motivation or smarts to keep myself occupied? So I take solace from the fact that Jacob returned to work after literally writing the book on Early Retirement. There’s something about paid work as an employee that offers something different to both self-employment and Financial Independence. One day I’m hoping to be able to begin to formulate an idea of what that might be!

If Fisker is the philosopher of FIRE, Mr Moustache is the populist preacher, but what they have in common, from a British perspective, is that their blogs are very American in both content and tone. I hankered after something that related more to my own situation and cultural background and soon found the Monevator and Simple Living in Suffolk sites which, in addition to some great content, seemed to have a much more “British” take on FIRE. (I’ve listed some of the others I regularly read on my Blogroll and Books page.)

It was through Monevator that I recently learned about the demise of my favourite UK forum on the Motley Fool UK website. This was like a blow to my heart, because it was The Fool’s original book The Motley Fool UK Investment Guide that inspired me to take control of my own finances and start investing. They taught me about Index Trackers and passive investing which, prior to that point, I’d never heard of. They wrote with such an easy style and “You can do this!” attitude that I was totally inspired to take their advice. The fact that I was latterly able to financially afford full retirement at the age of fifty, more than fifteen years after I’d picked up their book, I put totally down to the simple core advice they gave: invest regularly in tracker funds and let the markets and compound interest (and one or two other factors) do their work over time.

It seems I wasn’t the only one dismayed about the demise of the Fool’s forum because a couple of regular contributors immediately set up an alternative, The Lemon Fool. The boards there are already quite active, and I was pleased to see that one of the most popular threads on the Retirement Investing forum is about FIRE. As Mr Moustache found in the New Yorker, there is definitely a lot of interest in this subject out there.

It’s funny though – I can sit for hours browsing the Fool’s forums or the investment advice in Monevator, or tracking back through ERE and Mustachian posts, but when Ros Altman (ex Pensions Minister) tweets a link to yet another dreary, but no doubt important, article on pension issues, I quickly lose the will to live. I know that, at the moment, populism is getting a bad name, but it is the blogging “investment poplulists”, including some of my own favourites that I’ve mentioned here, that have had a big impact on my life. Here’s hoping that they continue to flourish.