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.

StaffRepFeistyClub Those sound great. I would love to do the pots one.

Joining after becoming more and more intrigued by the movement... trying to strike the dream of paid off mortgage, menhirs stashed for each child, and semi retirement to have jobs we love rather than corporate stress!! Definitely FIRElite but moving in the right direction still!

Something else I do that is towards fire-lite is to grow my own fresh herbs. I have saved a fair bit.

I avoid garden centres where I used to spend crazy money but will buy plants from Aldi/Lidl/Morrison’s. Get seeds from Wilko and grow own bedding

My FIRElite strategy so far

Up my pension contributions to the max I am comfortable with
Keep a little savings in premium bonds - easily accessible and feels 'fun'
Save hard! Most months in lockdown I left myself very very little to fritter away. I paid my savings account, paid my bills and left maybe £50 to 'me' I had no work travel / nowhere to go so it tended to go on essentials such as vitamins or face creams rubbing out completely
I think my biggest FIRElite step is starting to build a proper plan and goals so that saving feels fun!

@Mia85 wow, what a lovely thing for your Aunt to do.

If it were me I'd earmark a small but for something I'd know the Aunt would like. Eg if she liked Gardens I'd improve the garden. If she liked jewels I'd buy a nice piece. If family was her thing then do a holiday.

Then I'd overpay the max per year on my mortgage. I'd keep a mortgage as interest rates are so low. Then I'd open an isa for the year.

If any leftover I'd top up my pension to the max allowed.

If more leftover if earmark for next years ISA.

If more than that I'd have a chat with an Ifa.

For those talking about pizza I've found the ultimate in Lazy, can't even be arsed to put a takeaway on a plate. Balmoral pie. Next time you do sausages and mash cook extra. Mix sausages and beans and top with mash. I've been known to make this in the foil trays like a takeaway. Then it truly is less effort than a pizza. Shove in oven from freezer for 45 mins. Open. Eat on knee. Probably follow with a tub of Ben and Jerry's (or Aldi's as we're FI - ing!)

I’m so happy I found this thread. I’ve been doing this since I was at uni 15 years ago but very on and off. DH and I have seriously been working towards financial freedom for the past 2 years. Our aim is to buy our forever home and the 2 kids school fees (from ages 3-21) all just using investments. Our income is for bills, daily living, holidays, luxuries etc. We are 34, DD 2yo, DD 1yo.

If you can become a limited company director it will transform your savings. I am director of mine and I transfer the maximum into a SIPP every year (£40k)- becareful of the LTA. Invest in low-medium risk funds/ETFs depending on your age. I then draw a salary and dividends to the basic rate tax. DH is on PAYE which helps with getting a bigger mortgage for the house and for employment benefits eg annual leave.

Read How to Own the World by Andrew Craig as a starter. It will teach you all the basics in an enjoyable way.
Put some figures into an online compound interest calculator and your eyes will be opened- Einstein didn’t say compounding is the eighth wonder of the world for nothing!

Our plan is pay the least off on our mortgage as poss whilst interest rates are so low (I can get far higher returns from investments). By 58, we are aiming for 25% outstanding on the mortgage which will be paid off as a lump sum using the tax free lump sum from my SIPP. We then want to be working as and when we want to for our enjoyment.

We both have SS ISAs and contribute as much as possible. We dollar cost average in monthly and reinvest the dividends. If you know a little about investments, it’s not that difficult to get to £1m in about 10 years if you max out the ISA.

Also we are into crypto and really believe bitcoin will be a big store of wealth in the future. It’s still early to get in. In the evenings we trade altcoins to give us extra money for luxuries.

I come from a family with many BTLs and always used to think this was a safe and great investments. But now rental yields are approx 6% (less in the south east), I can get far higher returns in the stock market and crypto without all the hassle of being a landlord. Obviously capital growth may help though.

Inflation is being squashed down but real inflation is in the double figures. Quantative easing is making us all poorer by the day without us even knowing it. In 5 years everything will be so expensive and wages will be largely the same. Being financially free has never been more important esp for wealth to pass down to the next generation.

@Redcart21 that’s really inspiring. Are you completely self taught? I really lack confidence in finance and only have the basics straight. I’m learning a lot from this thread!

@Whereverilaymycat self taught although I have been encouraged to learn about it by parents from a young age. My dad used to subscribe to Shares magazine and I used to flick through it as a child not knowing what it all meant. He used to buy shares and BTL. I mainly do crypto, funds, shares. I’m investing for long term so have very little bonds. My risk tolerance is pretty high and I aim for high margins by making really informed decisions. You win some, lose some but on the whole should be in the green by powering yourself with knowledge

@Whereverilaymycat starting is the hardest part so well done on that! Get the book I mentioned- you will learn a ton in a very simple way

@Redcart21 thank you!

I'm watching this thread with interest. Although I have picked up a few bits I still find investing and savings confusing.
I'm recently divorced but due to financial abuse and a bad credit file including CCJs I don't plan to buy a house for at least 5 or 6 years.
I have zero debts or finance for big things like a car and no credit cards.
I will shortly have between £40000 and £60000 sitting in my bank account from the equity in my former home and I then hope to save at least £10000 per year for the next 5 years.

What would people do in this situation? I'm not on a massive salary but I have zero friends so I don't really spend much money other than rent, food and child maintenance for my 15 year old daughter

I struggle to see how people with kids can afford to retire early unless you're on massive sums. Our HH income is around 130k. And our childcare fees for 3kids are crippling. We live in London and have no debt other than a mortgage.

I pay in 20% into a pension and around 10k into various S&S isa. The next 15 years of childcare costs whether nursery or after school clubs make retiring before 60 a Pipe dream when I'm 42 already 😔

@lboogy it’s very hard with kids. Honestly I think you need to have started prior to kids. Or have family support for childcare in the younger years. However don’t underestimate the effect of compound interest. Even a small amount put away in a SS ISA can grow massively. The horror in all this is that £130k in London doesn’t really get you much

[quote Redcart21]@lboogy it’s very hard with kids. Honestly I think you need to have started prior to kids. Or have family support for childcare in the younger years. However don’t underestimate the effect of compound interest. Even a small amount put away in a SS ISA can grow massively. The horror in all this is that £130k in London doesn’t really get you much[/quote]
You're absolutely right. My biggest regret is not taking finances seriously before kids. I only started investing properly in 2019. Singh

Sounds good

Welcome Yellowshirt good to have you here. Have you looked at the flowchart above as a starting point flowchart.ukpersonal.finance ? How about your pension?

After pension the difficult thing is working out whether you want to take any risk with the money that you have. If the money is your house deposit I can see that you might be reluctant to take risks with it but at the same time it'll lose value to inflation if you are looking at 5 or so years. If you are willing to take a little risk then you'll probably get a better return (though of course it is never guaranteed). For example you could look at the popular Vanguard lifestrategy funds where you can choose your risk and get a diversified fund www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products you can open an ISA and put in a relatively small amount a month (I think it starts at £100) to test the water if you are interested but cautious about putting too much in.
For money you are keeping in savings MSE has a good list of the best current rates here though they are all woeful at the moment. Or you could try premium bonds and have a small chance of riches!

@Redcart21 do you mind me asking about buying and selling crypto? I am interested in playing with it a little to understand it better, just very small amounts at the moment. It's quite difficult to work out which platform is best without having any experience of it and some of the fees look quite high for small amounts. Also I'd be really interested in your views on how best to store it. Thanks v. much

[quote Redcart21]@lboogy it’s very hard with kids. Honestly I think you need to have started prior to kids. Or have family support for childcare in the younger years. However don’t underestimate the effect of compound interest. Even a small amount put away in a SS ISA can grow massively. The horror in all this is that £130k in London doesn’t really get you much[/quote]
I agree. But honestly prior to kids every spare penny was for house deposit then wedding. I really wasn't in a position to invest prior to starting a family.

@Mia85
Thankyou for your reply. I'll have a look at the chart. I am willing to take some risk . I have seen a few people now mention the lifestyle 80 . I am tempted to max that out each year then put the rest in premium bonds with the long term goal of buying a house in 6 years.

Do look at the other life strategy ratios and see which suits you. 80 is good for a reasonable long term but markets are so tricky to predict atm. You might feel more comfortable with lower risk if you have quite a fixed timescale. There are similar funds elsewhere but Vanguard is well established and also very cheap for lower amounts.

Oooooh can I join?

I'm 27, and my main motivation for FIRE is.....I hate working. I've never done a job I enjoyed, I hate my career, even a hobby that turned into a job became super tedious. I am very into saving, I only replace things when they're completely kaput and shop in charity shops for everything. Car is 14 years old, laptop 8 years old, phone 6 years old. Me and my husband earn about 90k between us, take home 5k and we save 2.5k a month usually. No kids but maybe one in future? We've saved a 20% 80k house deposit in 5 years which I'm really proud of, for our forever home (not interested in having huge mansion).

Recently I've got into crypto, as I stupidly used to think investing was only for Wall Street-type blokes, but I put about £10 into Bitcoin 3 years ago, and £100 into Ethereum a month ago, and since then it's gone up like mad - so I'm planning to put a significant amount in, as I think crypto is only going up and this is only the beginning in the grand scheme of things.

In terms of moneysaving methods, it's all the usual ways but also I never buy any type of insurance (not even travel), and wash my clothes a very rare amount that I can't mention on MN....

@vickyp0llard wow well done on the saving for a deposit front that really is an amazing amount in a short time frame. I hear what you say about hobby becoming tedious when it becomes a job I’ve seen it happen to two friends. I would suggest that you think about life insurance until mortgage is paid off (and building insurance) when you buy your forever home. Once you’ve got it it makes sense to protect your ability to pay for it and preserve it as an asset.

@vickyp0llard Definitely get buildings insurance, it might seem like a waste of money but you never know when you will need it, you wouldn't want to have to pay for a whole house rebuild yourselves if insurance would have covered it. Having building insurance is a condition of my mortgage so check yours when you get one. At 27 with a good income, you are very well placed for FIRE, it's much easier to achieve if you start early.

I've enjoyed reading the thread. My DH and I are more into the FI side of FIRE than RE as I don't think that will be a possibility due to my lack of pension. We have no debts, have been overpaying the mortgage for years and hope to be mortgage free in 10 years and live pretty frugally compared to most people around us who must spend a lot more. We don't spend on takeaways, haven't completely renovated the house and don't replace things all the time, we haven't really upgraded from our student lifestyles when we've had any change in income. We are trying to find a balance between planning for the future as neither of us enjoy living on a financial edge, and enjoying today as you never know what will happen. Plan is to pay off mortgage, save for pensions and the kids, and enjoy life in a low key way which doesn't cost too much money.

Thank you :) We will definitely get buildings insurance as I think it is compulsory and there's some good deals for £90 a year - and yes I wouldn't want to get flooded or burned down. But things like phone/jewellery/wedding/contents I've never bothered. We literally don't have any contents worth stealing (all the furniture is from charity, IKEA or parents old stuff), apart from work laptops which are insured by the company.

Our goal in life is also to pay off the mortgage (we're planning to overpay like crazy and hopefully get the 35 year term to 15-20), and then not have the pressure of needing a "professional" job - we could start a cafe, retrain as chefs or hairdressers, work part-time in a shop, or move to a cheap area. I'm feeling a bit down about work as it seems everyone has found something they love and want to progress in, whereas I think I just picked the wrong degree and path, so have never felt that way. Retraining is such a huge cost and a big risk (how do you even know you'll like the job you're retraining for?), so it's not possible unless you have a tonne of cash and support. I've either done minimum wage teenage stuff or the career I've been in since I graduated. I loved my hobby, but when I started a job in it, after a while it became just another job with deadlines, repetitiveness and demanding customers. It would be amazing to find that "dream career" which you love and rise to the top of, but at this point I'm not sure it exists.... work is called work for a reason - if it was so great and fulfilling, they wouldn't pay you to do it!

The way we see it, money can either buy us stuff or future freedom, so we're going for the freedom (and some brunches/holidays on the side....)

Omg. I've found my people. Off to read from the beginning.