Opting out in our mid-30s - can we afford it?

[newlife4]

Like many people, DH and I have had an exhausting, miserable year and we both feel completely drained.

We're considering a fresh start by selling up, moving somewhere that we can be mortgage free or have a very small mortgage (say £200-£300 a month max) and opting out of the rat race basically.

My question is - even though we'd be mortgage free or reducing it drastically, how much money do you think we would need to earn to pay for everything else (utility bills, council tax, stuff for our one DC and potentially a car)? We currently have £30k savings in the bank.

We're only in our mid 30s and are probably far too young to be considering this, but we're just so done with it all and don't want to live to work (or is it work to live - I always get it the wrong way round!) any more.

I'm just wondering whether this plan is doable or not really. Thoughts?

And personally I’d be too worried about retirement/pension to do it.

Sometimes a change is as good as a rest OP. I'd look into changing your job, hours etc before completely uprooting everything and moving to a random place. I have cut my hours by 7, and it's made SUCH a difference to my work life balance.

I'm freelance, no mortgage, early 40s, not married and no kids. Living in a large Scottish city. I would need about £1,000 a month. But I'm a bit profligate!

Sorry sent too soon - I was burnt out like you , but bored of my profession and didn’t want to continue indefinitely - just wanted to keep money coming in while I figured out what I’d rather do - you could freelance for a few years whilst you both explore other avenues

We live mortgage free in a cheap rural area, but we're much older than you. As others have said, do prioritise your pension - state as a minimum, but you do need private pensions too preferably. Old age does creep up on you, and it's here before you know it. Also as far as council tax goes, there's no such thing as a cheap area - ours is £230 per month for band E house. Then of course there's all the other utilities and food. Also running a car - we're down t one now. I think we have a comfortable lifestyle - relying on my state pension, and our work pensions. Husband isn't old enough for his state pension yet. We spend a couple of thousand a month easily and I don't consider we have an extravagant lifestyle.

Think carefully about what you want to achieve before you jump in. Once things are more normal, could a change of job or change in hours help?

Oh, and I have done it without telling anyone apart from my boyfriend that I've actually done it; when I mentioned I was thinking of it, colleagues and friends were horrified. "What will I do with the extra day off?! Why do you need an extra day off?! How will you afford it?!" Blah blah.

Do your own research and sums and come to a decision on your own is my best advice. Good luck.

I guess my thought is that this could be a good move if you could make it work.

But if the problem is an internal one ... it won't be solved by changing the external situation.

There is a mental freedom which comes with owning outright. You can be pulled into a false sense of security though and end up living fairly hand to mouth and not saving enough money long term etc.

Totally agree with this. Theoretically, I’m better off than all my similar aged friends (outright solo ownership of a modest property) but the reality of being ‘asset rich, cash poor‘ can definitely result in a lower quality of life and less opportunity to do what you want (ie no money for travel or fun stuff).

Personally, it works for me because I have various reasons to prioritise time over income (seriously ill child, for starters) but it isn’t the ‘living the dream’ scenario it can appear to be from the outside.
Bit worried about pensions etc too, so we have to keep in mind the possibility of downsizing (from family home to something much smaller) earlier than we might like.

OP the golden rule is that you should always try to have 6 months or more income in the bank in savings for a rainy day/ unemployment etc. . So my advice is you don't live off your savings, but try to live a different life with only your earnings.

You don't reveal what either of you do for jobs now.

Are you sure you can find work in a location where housing is cheap?

Is a cheap housing location somewhere you'd like to live, possibly forever, as downsizing can be a one-way street?

Have you looked at these areas? Visited them? Looked at the lifestyle and the demography?

Are there good schools for your child in those areas? Is there enough for families in these areas or are they places like Cornwall or the far north where young people have to leave to find work?

Freelance work is feast or famine- it's not always as cushy as it sounds. I've loads of friends who work freelance and it can be very stressful making ends meet each month.

It depends on your skills- what do you each do?

Living hand to mouth even in a cheap housing area can be a lot more stressful that being busy with work. It can be a fantasy you are chasing.

We are mortgage free and still spend £2.5k a month on bills/ insurance/ food/ car/ living/ stuff for kids/ childcare etc

[quote PlanDeRaccordement]@DDiva
Obviously, I meant full time work. And you prove my point- you see no rat race because most of your time is spent not working.[/quote]
Not obvious, you said all paid work.

I am simply confirming you can work and earn enough money to live without being in the rat race those jobs do exist. You said you will just move from one eat race to another.

Some friends of ours sold their London flat and bought a house outright in a village. It was near enough to a city to get work, and for kids to go to decent secondaries, have access to entertainment etc. One of them got work there and then they moved down, rented for a bit before buying. Both work part time, cycle to work etc and feel they have a much better quality of life but still pay into pensions NI etc.

Oh and I’m a FTM now but before that I used to take maternity cover contracts then take a few months off before taking the next to keep things flexible. With what you so could that be an option?

@newlife4 depending on the type of work you both do now, could you do a mix of part time salaried employment and self employed freelance work while living in a cheaper area? I did this for many years and found that it’s a good compromise of stability with a bit of freedom.

I agree with a lower level of opting out. But lower paid jobs can be stressful too.

I am early 40s and mortgage free and have been for 10 years. I'm in another country so won't quote how much my bills are as it's irrelevant.
Being mortgage free has set me free - I can do what I like and can take on as much or as little freelance work as I like.
However, there is a downside to this and that is that you can sort of end up living hand to mouth and not caring about the future because you feel like have stability because you own a property outright. You always have to keep one eye on retirement.
I have quite substantial savings too (built up over several years and a small inheritance) and this means that if anything goes wrong with the house then there's not a panic about where the money for a new boiler or roof repair is coming from.
I think you need to think hard about this. 30 K is not a lot. You just need a couple of major repairs and that is wiped out and if you're intending to use this to cover lost income while building up a freelance business you could be up shit creek pretty quickly.
When I first went mortgage free I had a couple of regular part-time jobs and then built up the freelance work. I am extremely frugal though and always have been so it depends what you're like.

I think you need to do a lot more planning and I think you need to have more than 30K in the bank before you can contemplate this.
Could you move somewhere cheaper and one of you continues to work at first while the other works part-time and starts freelancing? Then if this works the other could do the same until both are freelancing.
You also need to consider how old DC is and how their needs will change as time goes on. What would happen if you were to have another child (unplanned perhaps)? How will you pay for university if your child wants to go? What are the schools like in the area you might want to move to? Public transport - be careful with that. Lots to think about.

I think the biggest thing is how old is your child and what would be the impact on them? I don’t think your £30k is anywhere near enough to fall back on. If you look at the Fire movement they’re trying to build really big cash reserves to enable them to retire early.

I think you need to do a lot more planning and I think you need to have more than 30K in the bank before you can contemplate this.

@stschiap how much money would you want to have in the bank before making this kind of move, out of interest?

Things to think about:

Pension? (or are you expecting other taxpayers to fund this?)

Long-term illness?

Boredom? You say you're burnt out now, but maybe you're just in the wrong job.

Your skills? How adaptable or transferable are they?

Stability of your relationship.

Children? Their security, and/or that of older family members?

Experience of living outside commuterland?

My father never really had to work for a living (trust fund, investments etc). He did, however, in two very useful professions which were also things he enjoyed doing. He still stopped working for money at around the age of 50, but became really directionless, and took up fads and phases to fill in his time and keep his interest alive and his learning to continue.

Having watched this, and also seen my full-time SAHM mother lose her direction, & watch her zest for life diminished when we children all went to university, I have come to think that we all need work of some kind: work that rewards us (not just monetarily) and challenges us.

19th century Russian novels are full of aristocrats wanting something useful to do in the world. I don't really need to work for my living (said trust fund) but I do, because I like the independence , and I'm also been very privileged to have excellent health & education, and I want to make a return to my society, in some sort of way.

Maybe you just need a short sabbatical? Can you arrange with your job to take a few months out? Obviously at the moment the standard "go travelling" isn't possible, but before you sell up & drop out, you really should give it a try out, for a short time.

I think we all need a purpose in life - maybe you just haven't found yours yet?

We have done something similar (sort of by accident really as I was made redundant and we are now moving to a cheaper part of the country and so won't have a mortgage any more).

I worked out that we would really need £1000 per month, which would include some family spends and a bit of car maintenance etc. If we wanted to be able to go on holiday and do up the house we will obviously need more. I will get around this from my new job (16 hrs per week), so whatever dh earns will be a bonus. I have cut my hours and stress levels quite substantially, and he will be looking for a part time job, which will mean spending more time with the kids. We are just making sure we are mindful of paying as much as we can into our pensions and savings once we're on our feet as obviously it's not just th drop in income, I had a really good pension in my old job. I'm sure we will be much happier and not that much worse off in the grand scheme of things. X

I forgot to say we have 2 dc..

Another recommendation to look up at the FIRE movement on youtube. Our rich journey has a channel about their journey to early retirement at the age of 39 which they completed in less than 9 years- through investing mainly.

I share the dream OP. In your situation I take a year to plan. Try to live frugally and track your expenses. Save as much money as you can. Research areas, house prices and expenses (I think Zoopla has an expenditure estimate on house details). Look into your pensions and think about your futures.

I think it is easy when life is hectic to assume you only rely on convenience products through "need." Where in our case we want the occasional night off cooking and I really dont want to have to stick to a super frugal grocery budget with no treats or wine.

You haven't responded to the batter of pensions.

If you think the rat race is tough in your 30s just wait to see what it's like in your 50s.

OH and I opted to work FT in demanding and exhausting roles since leaving school but now in our 50s we are so grateful that we've paid well in our pensions so that we can consider retiring for good in a few years time whilst still getting enough to enjoy a decent lifestyle.

I would hate finding ourselves like some of our friends with the prospect of working until 67 and live of the state pension afterwards. Although their jobs were less stressful, it still added over the years and they too long for an early retirement but they can't even contemplate it.

Could you take a sabbatical for a few months and reassess then?

OP, we have sort of done what you are looking at doing. Dropped out of rat race very early on, to work freelance from home and raise our DC together. We do live very simply in comparison with our neighbours. No fancy cars or new kitchens or skiing holidays!

I looked very carefully at the area to check whether what I do would be in demand there. I saw there was a gap in the market so it was the right place to buy. We also made sure it was easy to get into the city so that if we needed to do freelance work in-house, that was an option. Very rarely done it, but a few lucrative contracts have needed frequent trips to town.
So pick your area.