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FIRE starter

595 replies

Mia85 · 14/02/2021 17:37

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.

OP posts:
FrugalFirefly · 15/02/2021 11:46

bertieb After doing a lot of research, I decided the Vanguard FTSE Global All Cap would be a good ETF to invest in for the DC, only to discover it's not available here. I'm now trying to decide between the Vanguard FTSE All-World ETF (not quite as broad coverage as the Global All Cap as it doesn't include small companies) or the LifeStrategy 80 (ideally I'd have gone for the 100, but again, it's not available here).

Still, at least we can invest in Vanguard here now; when we started investing, it wasn't available (not on the platform we use, at least) so we went with iShares instead. I used to be very envious of all the UK and US FIRE bloggers/podcasters and their Vanguard ETFs.

Dashel The DC have money from their grandparents in Premium Bonds and usually win a small amount most months so it's better than keeping it in the bank, but that's not saying much! I'd love to invest it for them but it's tricky as we're not UK residents; PB are one of the very few options we have .

Brightermornings · 15/02/2021 12:20

Wow I've never heard of fire. My circumstances are about to change due to inheritance. Whilst I will be more comfortably financially it is very bittersweet.
I will be mortgage free and have some spare which I need to decide what to do with. Also I'm thinking of paying more into my pension as it's more tax efficient.
My boss keeps telling me I'd be bored in retirement. I'm 47 and I don't disagree but I have a lot of options that 6 months ago I didn't. I actually find it all a bit scary

bertieb7 · 15/02/2021 12:29

@Dashel no, the charges are very low for that fund (0.26%). They charges are all very transparent when you buy.

Personally, I have decided not to cherry pick companies to buy shares in (aside from an employer share scheme) as don't have time to do the research and also working in financial services I have to get all sorts of approvals. Investing in index tracker funds is way less risky as it is essentially investing in the whole stock market.

@Brightermornings sorry to hear about your unforeseen circumstance, it does sound very bitter sweet but great that you are thinking about how to make it change your lifestyle long term and not just what extravagant purchases to make 😊 I think 'retirement' from main job would only be boring if you had nothing to do. If you have hobbies, side hustles and things you are passionate about then you will just be reallocating your time and it wouldn't be like you have nothing to do. I wouldn't give up my main job unless I had other things I wanted to allocate my time to instead, as agree, it wouldn't be healthy to have nothing to do at all! Finding these things is part of my FIRE goals 😀 I would never 'retire' from everything as love to keep busy!

@FrugalFirefly where do you live out of interest? I would love to live and work abroad one day as did a lot of my growing up overseas. ☺️

FrugalFirefly · 15/02/2021 13:17

bertie I'm in mainland Europe, but don't want to be too specific here. I'll PM you. Smile

caringcarer · 15/02/2021 13:29

@bertieb7, yes all 6 btl are local to me and I manage them all myself so no agents involved. I don't advertise either as AA LL let through personal recommendations and I have a waiting list. Some tenants have been with me for 8 years and 2 lots of tenants for 6 years. I keep the tenants happy by very good maintenance and quick replacement if something like a washing machine breaks, I have it replaced by following day. I only.put rents up every other year and charge a little under market value so none are ever empty unless I want to upgrade between tenants. Bought the first 15 years ago and last 2 years ago.

caringcarer · 15/02/2021 13:41

When I buy a new btl property I buy a run down house in a reasonable area. DH can put me in s new kitchen. I have a gas fitter and electrician I use who will come to me quickly as I give them a lot of work. We have walls and ceilings skimmed over and painted. I laminate all bedrooms, landings hall and tile kitchen floors. Often put all new internal doors and door handles, all rooms painted and new lights. If kept.looking good it generates more interest and my.invetztment protected. Letting houses go and slide into disrepair is worst thing to do as reasonable repairs can be written off against tax. Also anything over lower rate tax put.into pension to avoid higher tax bands. You can do as I did and use it as drawdown income for a set number of years to bridge to state pension age.

Uniqs · 15/02/2021 16:13

@Brightermornings - sorry for your loss.

Uniqs · 15/02/2021 16:20

Question re DC workplace pensions...

For arguments’ sake if you put all your salary to the value of £40k (MINUS whatever your employer contributes) into your pension one year ... How does that work exactly?

Brightermornings · 15/02/2021 16:50

@Uniqs thank you it's been a tough few months. My relative didn't inherit and made some bloody good decisions with the money he earned and I don't want to waste it. My family and I have been left in such an amazing financial position.
Hope I'm not de-railing the thread

2020BogOff · 15/02/2021 16:57

Placemarking as back later. I wish I had this information years ago. Although I am aiming for early retirement in 5-8 years it pains me that I should have started early. Back later to read the thread in detail for inspiration.

WombatChocolate · 15/02/2021 17:16

For me, it's all about enabling choices. This will probably involve early retirement in later 50s but also working very very part time ffrom 50s.

Strong saving and frugality mindset. Paid off mortgage by 40 by not having over-stretched early on and being satisfied with 3 bed semi and not moving onto more expensive property although we could have easily got the mortgage for it. Perfectly happy with the house we have.

From 40, able to save much more as no mortgage, which resulted in the freedom to choose independent schooling (in my mind, this stuff doesn't all have to about retirement but about having financial choice to do the things you want...in our case this was much sooner) plus also saved enough to to get a BTL outright.

We have the benefit of being in defined benefit pensions which although we are both in pretty average public sector jobs, will give us pensions of about £20k each year which a re index linked. Someone on another thread, said that to get such a pension from a defined contribution pot would require a pension pot of over £1m. It shows how good the defined benefit pensions are.

We will be able to take part of our pensions at 60, which remain in the old final salary schemes (which needed in 2015 but will actuall run until 2022 following the McCloud decision) and the rest at 67 under career average method, along with our full state pensions of £9k each.

We don't intend to take these pensions early as that would mean they are actuariaally reduced. Therefore we need some funding for my early retirement and to bridge the gap from 60 to 67 for myself and DH from a bit later (he likes work and wants to keep going longer) for about 3/4 years. These gaps will be bridged by my DH still working and the fact we can live off one income, along with money which can be released from a private pension (accessible from 55) and money invested in ISAs, plus a decent lump sum which will come at 60 as part of the final salary pension.

Some level of frugality has been shown by keeping cars until they are old, plenty of holidays but inexpensive ones mostly, limited amounts of DIY, not being very interested in lots of clothes or consumer gadgets and just being generally careful in terms of switching utility, shopping around for insurance, keeping a lid on the food shopping bill and having a sense of buying value rather than cheap. These frugalities have allowed some extravagances in other areas, which people with our salaries might not usually expect...we've had the independent schooli g for our children, the odd special holiday, plus bought a 2nd property which we let out and now generates a decent additional income for now and for retirement too. We have been careful and had an eye on the long view, but did also benefit from the fact we bought our first property in the late 1990s, when property was expensive but affordable with careful saving, and then have seen significant house price increase. By not trading up on a regular basis, the mortgage remained low relative to current house prices and was a big boon, that we cannot take any credit for.

Dashel · 15/02/2021 18:18

I am sorry for your loss, inheriting always seems such a sad way to get money, but I am sure that relatives would want their money used as it won’t help them.

I have been doing a fair bit of reading on this over the last few days and it seems to be the general school of thought that it’s much easier to save money by not spending it that it is to make more.

It’s also making me think about allocation of income when it comes in, in the old days, we had a large direct debit to the bill account to cover the large mortgage payment. Now I have become a lot less disciplined. I have been saving for a large bill and also buying stuff if I want it, and when that is paid, I need to work out how to split my income after the bill money is out.

Some needs to be put aside for the yearly car costs and holiday fund, but I also want to start the isa and make more pension payments. To do FIRE lifestyle properly it should be as much as possible to future planning. I will probably split the spare cash 50-50 to start with and when I have a bit saved in my spendable savings then ramp it up to 75%. Keeping the spending limit as low as possible.

nannynick · 15/02/2021 18:28

So it should not include my property value in my FI number by the sounds of it. Therefore in my mid 40's I am at Quarter FI. Got a long way to go.

@Dashel I moved my investments from Hargreaves Lansdown to Vanguard as the platform fee for Vanguard is lower... HL:0.45% Vanguard:0.15% The fund fees are on top in both cases and are approximately the same, so I reduced my overall fees by 0.3% which may not sound much but it does make a difference especially once your numbers get bigger. At some point I may look at moving to Interactive Investor as they are a fixed fee platform rather than percentage based, so make more sense for larger holdings.
The key is to get started, so if you can afford £100 per month, then start with Vanguard. If you need a platform with a lower monthly obligation then go with HL. You can always move it later.

Dashel · 15/02/2021 18:30

@WombatChocolate I think frugality does become a habit. I can’t remember when I got a new phone, I have never had a new car. I look for most things second hand or with a good discount . We don’t eat out a huge amount, but food can be a bit expensive as we have gotten into the habit of buying too much in our local co op as we are so far from a supermarket.

However I dread to think how much We have spent on holidays. One year I think it was about £12k. Since then I think we realised it was getting too much so cut down quite a bit. Now I hope we could have two weeks away with spends for under £3k and that seems extravagant. This is an area I need to be wary of as it’s my biggest weakness.

FrugalFirefly · 15/02/2021 18:56

Holidays/travel are our downfall too, but they're one thing I don't want to miss out on - I'm quite happy not to spend money on stuff but experiences are a different matter. However, we do need to look at getting value for money. We've inevitably saved a lot since the start of the pandemic; the downside is that we haven't seen my family for well over a year now.

Sorry to read of your loss, Brightermornings.

BringBiscuits · 15/02/2021 19:13

Thanks to OP for starting this thread. Really inspired to start looking after my money a bit better!
I’m 41 but only recently started regularly saving into my pension. I’m self employed and with childcare costs hadn’t felt able to do this before then but probably could have put away something if I’d tried.
We invested into a btl a few years ago with my mum and considered doing it again but I feel a bit more wary this time given that it would wipe out all savings again.
Thanks for podcast recommendations will give them a try.

WombatChocolate · 15/02/2021 19:28

With being careful with money, I think it's all to enable whatever thing you value most....that could be early retirement, or it could be Independnet education or it could be amazing holidays or whatever. Most of us won't be able to have everything, but if we know what we really value, I don't think of it as a weakness to spend the money on it.

For us, independnent education and fairly early stopping of work (but not on the scale of most FIRE devotees - I'm looking at very part time from 50 and stopping at 56, whereas FIRE devotees kften aim to finish by 40 ish) was what we were aiming for. The route to it for us is being mortgage free a good 15 years before stopping work. Everyone values different things.

firebirds · 15/02/2021 19:47

My people! Thank you for accepting FIRE-liters on this thread, OP. We aren't strictly FIRE as our goal isn't to retire early; and we aren't investing in S&S (yet...maybe?) For us it's more about the mindset - frugality and compromise to allow us to have the things that really matter now.

I'm early 30s, DH late 30s with young kids. He works FT in a job he loves that's moderately well paid - above average but I've been explicitly told on MN before that he's not well paid at all! - but requires us to live in London. I work (very) part time, again moderately well paid. We bought and aggressively paid down the mortgage on a small house in a cheap area over the last 6 years, and sold it to get a mortgage on our current place in Zone 3. Very, very small and we have adopted quite a strictly minimalist lifestyle to make this manageable.

Our 'compromises' over the past decade: I've put it in quotations because they don't really feel like compromises but I know they can seem that way looking in): extremely small home and minimalist lifestyle; no holidays / going out / new cars / general status symbols; all the usual budget shopping for food and clothing etc.

What it's 'bought us': the financial freedom for me to work very pt; I can home educate our children and I'm doing a postgraduate degree; we can live in the expensive city that makes it possible for my husband to do the job he loves; we've been able to cope without financial support from parents; and we've been able to make significant financial contributions to causes, things, and people that we value. I don't put that last bit to be braggy, but because I see it as a huge privilege that we couldn't have afforded without the FIREish mindset.

Dashel · 15/02/2021 21:36

It’s great to see so many like minded people, even though we all are doing it differently and for different reasons. Although I really wish I had started this a decade or two ago.

DH has agreed that we are both going to get a Vanguard isa with a starting contribution of £100 a month. Will sort this out this week.

I also got a pinecone survey this evening and when that clears for payment I will have £20 to withdraw which will be going towards the pension when I have enough to transfer. Increasing this is still going to be my main priority (I think)

Mia85 · 15/02/2021 21:53

I love the term 'FIRE-liter'! Yes this this thread is for anyone interested in the general FIRE approach and working towards financial independence, whatever the eventual goal.

OP posts:
Brown76 · 15/02/2021 22:06

FIRE has made a big difference to my mindset. Although I’ve always been a saver, I couldn’t afford to save much for retirement and had my head in the sand about it. It really made me reevaluate things and put in place insurance, pension contributions and investments for my children. I won’t be retiring early per-se, but I can now see a way of retiring before state pension age and knowing I have a plan has given me peace of mind.

Islandescape · 15/02/2021 22:12

It’s interesting to read about everyone’s BTLs, it was something I was considering but I’m not sure how I’d make a profit after mortgage, agency fees, repairs and tax are taken into account.

AdoraBell · 15/02/2021 22:22

My DD is interested but only started Uni, she’s 19.

I’m really place marking for ideas.
I’m 53 and not working, made redundant last June. Having lived overseas for nearly 20 years I won’t get a job now. DH should have retired when we returned but things went pear shape almost immediately.

Good luck all of you, KOKO .

AgnesWaterhouse1566 · 15/02/2021 22:51

I have certainly found that, although fairly frugal and prone to saving, my attitude to money has changed over the last year.
I'm self employed and can't work during lockdown so although I've been entitled to support my income has dropped by nearly half. However I've managed. This makes me realise that when I get back on my feet with work I've got much more opportunity to make my money work better.

whysotriggered · 16/02/2021 00:29

placemarking