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Original poster

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:
Fleurchamp · 26/04/2021 21:26

@Starface oh no, I wish! Less than half of that.

I do agree though, I do try to save into ISAs too to bridge the gap if we do want to retire early but the top up is too good to resist.

Vetyveriohohoh · 26/04/2021 21:39

I’d love to join if that’s ok?

Currently 34 and 42, aiming to retire/pivot to something more enjoyable in 15years. We missed the boat on decent house prices due to previous divorces so basically started from scratch about 7yrs ago.

Got about 45% equity in house but not overpaying mortgage at moment as rate fixed at 1.4% until 2026. We are maxing out s&s ISAs and have max premium bonds but the PBs are earmarked for renovation project next year.

I fancied perhaps a btl but I can’t make the numbers add up.

Jobs a touch risky although well paid could be difficult to find another in case of redundancy.

Really interested in learning more about crypto, I nearly bought into Bitcoin around 5 years ago and chickened out...

What am I missing? I’m definitely spending too much too

Original poster
Mia85 · 26/04/2021 22:36

Welcome to all the new people, great to have you here.

OP posts:
MissConductUS · 27/04/2021 00:24

Thank you, Mia85, and thanks for running this thread.

We paid off our mortgage partly by turning a profit on the sale of our last house and partly with a lump sum we got with a stock option exercise. Was it the mathematically optimal decision? Maybe not, but it gave us a great sense of security and confidence to invest more aggressively.

Scrolling through the thread it was fab to see all of the love for Vanguard. I've had accounts with them for over 30 years. I also saw Jack Bogle speak twice. That man did more to democratize investing and bring wealth-building opportunities to common people than anyone in history. He was roundly hated on Wall Street for that so started his own firm on his own principles. He was also a very decent, modest man. It tickles me pink to see a great American company like Vanguard do so well in the UK. Smile

Lemming20 · 27/04/2021 09:00

Thank you to everyone for the crypto advice. I didn’t realise there was an environmental issue so thank you, it won’t be for me.

Welcome to everyone new, this thread is so inspiring!

TeacupDrama · 27/04/2021 17:20

@Mia85 what about an offset mortgage once inheritance arrives so effectively mortgage is interest free so no monthly payments you then invest what you would have spent on repayments each month which will be better than the interest you are foregoing on the offset sum and then you can repay large chunks no chunks borrow it back it also acts as emergency fund too ours is with First direct but others offer them too, we technically have 4 years left I could pay it off tomorrow but choose not to as we have less income due to covid and not sure how business will pick up so don't want to leave ourselves short and having to cash in other investments etc

OneFootintheRave · 27/04/2021 17:24

Placemarking

Original poster
Mia85 · 27/04/2021 20:35

@TeacupDrama yes I'd been wondering about offset (I've a year till the current term ends so a while to think about it). It looks as if we might end up putting DC1 in private school (I realise that's not very FIRE but might end up being the right choice) so if that happens we'll need a fairly large emergency fund so that we could pay fees if things suddenly went wrong with work. I'm reluctant to keep a lot in cash so an offset might be a good way of combining emergency fund and effectively paying the mortgage off. We might have to pay an arrangement fee but otherwise it looks fairly attractive. Can you essentially keep the whole amount in there so your balance is 0? I was looking at Coventry Building Soc and they have early repayment charges, which confused me given that you can effectively repay the lot by putting it in the offset account!

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Fleurchamp · 28/04/2021 06:57

@Mia85

We use offset mortgages - precisely for the reason our DC are at private school and we need to keep a large emergency fund.

Look at them carefully - I preferred our First Direct one. It acted liked a big overdraft - once offset 100% we didn't have to do anything. No more payments went out.

Coventry, the repayment element of the mortgage continues - you can opt for the monthly DD to reduce as the interest reduces but you have to make your repayment each month. Any payments off the actual mortgage account cannot be retrieved (which is unlike FD, I think, it was the case a few years back).

Coventry isn't as flexible as FD which is a shame as our plan was to pay a lump sum of fees for each DC when they start senior school as you can get big discounts for doing this plus fees fixed at that point. We would have needed to "borrow back" some of the mortgage to do this but with Coventry it isn't possible.

monkehsee · 28/04/2021 08:57

@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.

I am very very interested in learning more about this though I'm a bit late to the party as I'm already 37 and just about to get mortgage Wink
MissConductUS · 28/04/2021 18:01

I'm not sure what an offset mortgage is, but we have a home equity line of credit (HELOC) that becomes a flexible mortgage if we draw on it. The only time we've ever used it was to partially finance a car purchase many years ago. It's a effective supplement to a cash emergency fund.

Dashel · 28/04/2021 22:42

@monkehsee it’s never too late to make better financial decisions and to think differently about how to manage your finances.

I wish I had retired at 30 but it I retire at 45, 55 or 60 it’s still an improvement on 68 and even if I retire at 68 I will have much more income than I would have done if I had done nothing

monkehsee · 29/04/2021 15:44

[quote Dashel]@monkehsee it’s never too late to make better financial decisions and to think differently about how to manage your finances.

I wish I had retired at 30 but it I retire at 45, 55 or 60 it’s still an improvement on 68 and even if I retire at 68 I will have much more income than I would have done if I had done nothing[/quote]
That is very true, my plan anyway was always to overpay as much as I can without a penalty while also saving to clear in a lump sum. I also want a decent retirement fund

MrsWombat · 29/04/2021 19:51

Well, I've learnt something new today. A throwaway comment (here or on Reddit?) made me double-check my DB pension paperwork again. The number I've been looking at (and panicking over) and including in my calculations is what my pension is currently worth should I leave now. The forecast for retirement age, which assumes I will continue with my very part time hours is a lot more healthier and something I can live with. Once the kids are older I will hopefully increase my hours and increase my contributions, and save elsewhere to bring things forward.

I've finally moved some money around, paid off the credit card, and set up the direct debit for the 3-6 months emergency fund. Project Financial Independence/Retire Early Someday is officially on the go.

chimichangaz · 29/04/2021 22:12

Brilliant news @MrsWombat and well done for also taking action.

My job this weekend is to work on moving money round, and also considering whether to keep my personal pension where it is and continue to pay a financial advisor. I see Vanguard are now offering financial planning. I need to work out what fees I'm paying as I may be better off just moving to the Vanguard Sipp, or looking at what their planning service will offer.

Jenthefredo · 29/04/2021 22:24

Hi 👋
Some amazing stories on this thread!
Re: vanguard S&S isa - I have a smallish amount (£5k)
worth it?

MissConductUS · 30/04/2021 00:42

@Jenthefredo, absolutely!

Jenthefredo · 30/04/2021 08:07

Is it easy to set up?
What would the fees be on that amount?
Thank you:)

Dyrne · 30/04/2021 08:27

@Jenthefredo I’ve only got £100 in my S&S ISA so I’d say if you’ve got £5K available (ie not needed for emergency fund or other short term goal) then go for it - we’ve all got to start somewhere!

I set it up last month, it was really easy and intuitive. It’s 0.15% for the platform fees then each fund you invest into will have its own fee on top of that. Looking around though (especially for lower amounts) I think Vanguard definitely offers the lowest fees.

Jenthefredo · 30/04/2021 08:48

Thank you very much

MrsWombat · 30/04/2021 09:20

@Jenthefredo

Hi 👋 Some amazing stories on this thread! Re: vanguard S&S isa - I have a smallish amount (£5k) worth it?
I've just moved a very small DC pension with a similar amount to a Vanguard SIPP, and is mostly in global all caps. They are predicting fees of £8 a year. After two weeks my gain is currently +£23, so I've made that back already. (It did get to -£64 at one point though Grin)
Original poster
Mia85 · 30/04/2021 09:49

Just to echo everyone else Jenthefredo because the fees are on a percentage basis and very low then it's a great place to start with relatively small amounts that you don't think you'll need for a few years. For example the LS 80 fund that it looks as if quite a few of us use has risen by just under 30% in the past year. So if you'd put £5000 in this time last year it would have returned you about £1400 for a few pounds in fees. Obviously it might fall by the same amount or more in the coming year so no guarantee but if you don't need the money it's a great place to start. Have a look at the different funds and see what would suit your approach to risk.

OP posts:
Original poster
Mia85 · 30/04/2021 10:09

NB of course the past year has been quite odd so definitely not suggesting you bank on 30% returns!

OP posts:
Original poster
Mia85 · 30/04/2021 10:16

I'm not sure what an offset mortgage is, but we have a home equity line of credit (HELOC) that becomes a flexible mortgage if we draw on it. The only time we've ever used it was to partially finance a car purchase many years ago. It's a effective supplement to a cash emergency fund.

It sounds pretty similar. Essentially you have a mortgage linked to a savings account. The savings account doesn't give you any interest, instead it offsets the mortgage amount so that you only pay interest on the difference e.g. 150K mortgage and 50K in savings means you only pay interest on 100K. The interest rates tend to be quite a bit higher than you can get elsewhere so it works best if you have a lot to offset and a good reason for wanting potential access to that money rather than just paying off the mortgage or investing it elsewhere.

The idea above of fully offsetting rather than paying of the mortgage is quite an attractive safety net for us if we go down the private school route because we'd effectively have access to enough money to pay to the end of senior school if anything catestrophic happened to jobs and other finances. If we pay the mortgage off completely we'll have to have a decent emergency fund elsewhere and that limits options with the cash so it does look at good suggestion (thanks to PP for suggesting it).

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MissConductUS · 30/04/2021 14:02

Thanks Mia85 for that explanation. It does sound similar. The HELOC is very convenient also. If we want money out of it we just transfer from the HELOC to our checking account and a payment is just a transfer the other way.

There's a good personal finance magazine in the US called Kiplinger's that I've gotten for years. There's no paywall on their website so anyone can read the content. While a lot is specific to the US regarding taxes, retirement plan rules, etc. a lot is quite general advice on investing, spending and budgeting, stock market trends, etc. When I read this article recently I thought of this thread and that some of the posters might find it (and bits of the rest of the content) enlightening.

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