FIRE starter

[Mia85]

This is a thread for discussing FIRE (Financial Independence Retire Early) and supporting each other in planning for the future.

For anyone new to FIRE, the idea is that you live significantly below your income and invest the surplus, usually in low cost funds. The aim is to amass enough that you can live off the returns. At that point you are finanically independent and you are free to spend your time as you wish (which might include working if you want to do that).

There's a huge amount on the internet about it. Lots of news stories e.g. here and here One of the main gurus of the movement is Mr Money Mustache and his website is a good starting point www.mrmoneymustache.com

A lot of the FIRE discussion out there seems to be very US based and/or men in their 20s with no kids trying to retire extremely young so I though it'd be great to talk here and hopefully find likeminded people.

Sorry this is not related

Is anyone else finding the constant changes to online banking really frustrating? I just failed to get the confirmation phone call from one - just to check a balance - because the computer is too old.

There's not much point being online for a good rate and then the system upgrades to the point you need a new computer!

@LionLily unfortunately I can’t read the flowchart would you be able to post a link to it or the name of the website. I’ve found this thread fascinating to read. Very fortunate as I have a good NHS pension to look forward too but as we live fairly frugally anyway I’m wondering if we could save a buffer to bridge the gap between retiring a couple of years early and drawing pension. Can’t sell up and travel the world - perils of having kids quite late

The freedom aspect of FIRE appeals and I want to be in a position to retire by 55. However, I think some of the push to retire really early isn’t that compatible with children. Eg if aiming for retiring at 45 and have a child at 30, you’d be needing to work lots and be frugal during the years of high childcare costs and at a point where most people would want to enjoy their children. I could see timings working better for those who have children 40 plus but even then I’m not fully convinced.

@Gassylady I'm not 100% but it looks very similar to the flowchart on Reddit, there's a UK Personal Finance subreddit that's very useful.

That’s great I’ve found it thank you

@Dustyhedge

The freedom aspect of FIRE appeals and I want to be in a position to retire by 55. However, I think some of the push to retire really early isn’t that compatible with children. Eg if aiming for retiring at 45 and have a child at 30, you’d be needing to work lots and be frugal during the years of high childcare costs and at a point where most people would want to enjoy their children. I could see timings working better for those who have children 40 plus but even then I’m not fully convinced.

I don't think FIRE is realistic for most people! We are very lucky to FIRE imho.

"We" meaning people on this thread.

@Dustyhedge

The freedom aspect of FIRE appeals and I want to be in a position to retire by 55. However, I think some of the push to retire really early isn’t that compatible with children. Eg if aiming for retiring at 45 and have a child at 30, you’d be needing to work lots and be frugal during the years of high childcare costs and at a point where most people would want to enjoy their children. I could see timings working better for those who have children 40 plus but even then I’m not fully convinced.

In any event, one of the primary appeals of retirement is freedom to travel and do things entirely on your terms etc

If you retire and still have dependent children... you’re more of a SAHM than a retiree!

Hi all,

Just checking in mid ish month. My Vanguard account is still not open. I’m still waiting for my account to be verified. I have sent all the bank statement, so I just need to be patient. The trouble is have no patience at all.

The surveys are continuing and I’m looking at starting a website to see if I can bring in some extra funds that way.

I think I’m just frustrated at how long it takes to get a pay cheque and then how quickly it’s allocated and then there is a limited amount that can be done other than don’t spend any money that you don’t need to.

I registered on the MMM forum and am reading the diaries, partly for inspiration to keep on track and partly for some tips and partly to do something FIRE related and pass the time.

Payday and premium bonds results day seems so long in the future

Dashed, I haven't registered on MMM but read all the posts and case studies. It definitely helps to keep you on track.
I am naturally frugal and I find a lot of like minded people on there. And they are encouraging.

Hurray! So happy to join you. Love the FIRE movement, as much for the focus on intentionality, valuing what you have and how you spend it, and reducing waste as much as the money bit.

I focused on paying down mortgage, and started a S&S ISA five years ago on the back of no savings. Now I'm really focused on saving as much as I can (whilst having a life) and planning the next phase. I don't want to / won't be able to RE but I'd love to have the flexibility to be self employed and manage my own time that lean FIREi offers.

I'm a single parent and find some of the FIRE community irrelevant (live off one income! Oh, I already do...) but love this blog by a British fellow single mum: https://brilliantladieshandbagclub.com/

I also really loved Dave Sawyer's book Reset (podcast intro: https://www.choosefi.com/reset-your-life-with-david-sawyer/) since he translates a lot of the American stuff to the UK. I used his comprehensive guidance to set up my S&S ISA with Fidelity and found it super helpful.

Looking forward to hanging out here

@SeasonsInTheAbyss
Be careful about the pension recycling rules if putting money into a SIPP within the years of receiving a tax free lump sum from a defined benefit pension scheme. You could get stung by nasty tax rates. Look up the details - it applies to years before and after the lump sum. You shouldn't trigger the MPAA until you withdraw from the SIPP though.

I am following with interest. I have been learning about investments and personally finance since I had children. Money used to scare me. Learning about it has been very empowering.

I treat the FIRE concepts lightly. I definitely agree about having cake now as well as later. I have figured I don't need to work full time again, and I'd rather have the time now (so arguably already partially retired?). I will retire more fully from 60, mainly because I want a more flexible life not tied to rigid employment, so DH and I can have fun. But I might work a bit in a self-employed more flexible way. He is a bit older than me, and will partially retire from 60, and maybe even fully retire before state pension age. We'll see when we get a bit closer. I will probably take quite a flexible attitude, as life has a wa of throwing curveballs and taking me in different directions. I might even go full time again if something comes up that I fancy - we will see. We both fairly enjoy our work, which is helpful too.

@riae I wouldn't be too despondent. There are two sides of the same coin - I think living frugally is more than half the battle. I also think with things like pensions putting in small amounts over a long time really adds up.

During my 20's I had a job where my employer made good contributions and matched mine up to 8%. My first boss there sat me down on the first day and told me to put the maximum in. So I did. I worked there for 9 years and looking at the statement I contributed £12k of my own money but with the tax relief and employer contributions plus the gains in the market that pot is now £80k. It wasn't even aggressively invested.

The biggest mistake I made was I then moved to a job with no pension. I didn't contribute at all to a pension for 6 years. Instead we paid off the mortgage. Even if I had carried on paying in £50 a month I would have an additional £10k + in there by now, I imagine, and the mortgage would still have been paid off early. Once the mortgage was paid off I started looking into pensions and then I went on maternity leave etc - it is harder catching up. I have been aggressively shovelling money into my pension (about £10k a year for 5 years) but that pot is still not quite at £80k yet.

We have just taken on a mortgage for our new house. Rates are so low I do not intend to overpay at the moment. I am still going to contribute to my pension, LISA and S&S ISA but not as much. We could cash in our ISAs if we needed to pay down the mortgage if rates jump up at the end of our 5yr fixed rate. Additionally, we are taking out an offset mortgage so we can offset our rainy day fund - this is quite large as our DC go to private school and so we keep 2yrs fees in reserve plus we pay a year in advance to get a discount and then save the fees each month so by August we have 3yrs saved. Plus we have a year's expenses saved in case of redundancy.

I realise we are fortunate and I am not really able to talk about it IRL. We have a good income but save a lot. We drive an old car and the house we are moving out of is modest. I think we have surprised some friends with our move, I think they assumed we couldn't afford it as we do not live the life of wealthy people (except for the school fees which really aren't my idea, that is all DH's and the biggest spanner in the works of FIRE).

Fleurchamp me too: I had 10 years of no pension contributions when I was self-employed and trying to fit work around being a single mum. At 35 I only had two years of contributions paid in from my whole working life! So pensions have been one of the reasons I've chosen my last two jobs, to try and claw some of those missing years back. I also have a small SIPP that I pay into each month just to keep up momentum.

The thing is, you can only start from where you are. No point spending too long regretting the past (unless it helps you e.g. plan for your childs financial future). Everyone lives with some regrets (financial and otherwise). And growth in understanding of personal finance takes time, but is valuable for a lifetime.

For example, @riae @fleurchamp we overpaid hard until we were in a position to leverage to the mortgage we wanted to get the house we wanted. And then we got to a point where tax incentives made it massively more sensible to save in a SIPP (with a view that this will pay off the mortgage eventually) than overpay. But we aren't planning on retiring earlier than 60 really, so access to the SIPP will kick in by then.

I guess one thing, riae, like @fleurchamp says, is that having a lower wage means being used to less, so you need less to sustain your lifestyle. Quite a few of the FI blogs discuss this advantage.

Also (and I don't know much about this but Martin Lewis and friends do) look at how pensions and savings affect eg pension credits in the future, if this is likely to apply to you. It can be quite frustrating to feel punished for saving. But you might be able to use e.g. a SIPP to bridge between an earlier retirement and state pension age. So you would retire early but not age 40 type early. Or you could use it to reduce your hours and slide into retirement. It is so individual, figuring out how best to play it.

The other advantage of a lower salary is that you might end up with what comes out of your SIPP not being taxed at all, which means you are a straight 20% up, even before any growth.

It is soooooo worth understanding the savings vehicles of SIPPs, ISAs and Lisa's and their relative advantages and disadvantages, the tax and withdrawal implications are key to good planning.

Starface please can you recommend some FI or FIRE blogs or websites. I follow MMM but don't know of any others.
Thanks

I sometimes look at the FIREUK reddit site. A lot of the posts are from high earning single men in their 20s so it is very different from the demographic on this thread but they do have some useful pages including a weekly round up of FIRE blogs www.reddit.com/r/FIREUK/comments/m3obty/weekly_fireuk_blog_posts/ so you might want to use that as a starting point.

Yellowspanner, in terms of blogs etc I like:

Financial Independence Europe which has lots of good non-US examples https://financial-independence.eu/

Mrs Smart Money is in Ireland and has lots of interesting ideas about simple approaches and stuff to do work household spending https://mrssmartmoney.com/

There's a financial independence UK Facebook group (can't link without it showing my FB details!) which is really active and has people from just starting out through to FIRE.

Someone already mentioned Paula Pant and 'Afford Anything' - love her down to earth approach.

And sorry I can't do links

So glad I've found this thread! Just spent an hour reading all 319 posts....

I first heard about FIRE about 3 years ago. I'm single, with a 19yo DS who lives with me. I divorced his dad about 9 years ago, we really didn't manage our finances well (especially him...we paid off over £20k of debt he secretly accumulated while we were together) and I had to start again with a 23 year mortgage. Since learning about FIRE I've moved house in the last few months and paid £30k off my mortgage which is now down to 9 years and £82k. I'm currently renovating and hoping I can save a chunk of the remaining £28k or so I still have from the sale of my house. I also have about £8k savings plus a 6 month emergency fund.

I'm 55 and the plan is to 'retire' by 60 at the very latest, with my mortgage fully paid off - owning my home is very important to me. I have around £300k in a pension (I transferred my DB pension to a SIPP about 5 years ago), £50k in the LGPS scheme (deferred) and am paying into my 'new' employers generous pension (USS) - been in it for about 18 months.

The attraction for me is time freedom and flexibility rather than retiring - I would give up my paid job and concentrate on my side hustle of a blog.

I've read Reset by David sawyer and loved it. I've just discovered Mama Furfur on YouTube so I am watching her videos too.

I'm scared of investing....like a pp said it feels like gambling! Even though I've got my pensions, because I don't actively manage them I don't think about it as gambling!

One thing I'm looking at now is changing my budgeting app - I've used YNAB for years but they hiked the price massively about a year or so ago ($84) and I'm not sure I get that much benefit from it. Can anyone recommend any good free budgeting apps? I heard Money Dashboard is good?

Really inspiring to see how all of you are doing. It's encouraged me to keep going. I think having support in the form of a thread is helpful as you definitely go through ups and downs. When I first started I went all in, turning off lights, lowering the heat, doing my own DIY, never buying store coffee, walking rather than using the bus etc But since then I realised that I needed to find a balance, as was getting a bit obsessed with it all!

Chimichangaz I love Reset!** I used his guide to investing to set up my S&S ISA and SIPP allocations and feel really confident in managing it. If course it can go down but I'm happy with the balance and was very happy he did all the hard work And congrats on your pension pot, that's pretty healthy if you've no accommodation payments.

Thanks to those who have posted about relevant blogs and other sites.
I am already fired but am still interested.
Good luck to all those who are still working towards your goals. For me the incentive was simple...time freedom. The time and flexibility to do what I want to do which is to grow my own food and look after my bees.

@Zorra thank you! I wish I could say it was a great move on my part but it was a simple decision when I was in my 20's to start paying into a pension.....thank god I did.

I try and educate my DS regularly about the FIRE movement so he can start off on the right foot. Hopefully as soon as he's earning a bit more he'll start contributing

And I really need to sort myself out and set up a regular contribution to an investment. Do you think it's better to pay extra on the mortgage or contribute to my pension? Intellectually I know the pension contribution is better - tax relief- and even contributing to an investment but I still get scared that it will go down whereas paying off the mortgage is a concrete action!

@chimichangaz I think head would say pension for me - at 55 you can access the money now and you will have tax credit added. It depends on the interest rate on the mortgage though, if it is high then it might be worth doing both?

Our back up plan is to use our pensions to pay off our mortgage - but that is about 15 years away for us and who knows what the rules will be then. You could open your own SIPP and invest in low risk assets.
We complete on our house purchase this week - eeeek, I just hope this doesn't turn out to be the worst financial move ever.

@chimichangaz Why not split it? More in the pension now as interest rates are low but if that changes, switch it to more towards the mortgage.