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.

Thanks @FrugalFirefly for the links, I love reading Mr Money Mustache but the others are new to me.
However I find the MoneySavingExpert forum discussions extremely helpful too, there is a section on pensions that I have been reading a lot recently.

I like thinking of the FIRE movement as intentional choices about whether to spend OR to save, making decisions that best suit me for the long term rather than being carried away by advertising.

@Esca looking forward to hearing your story,

Hello, I have been probably doing a form of FIRE for about 8 years maybe longer. My DH is aware but as I generally look after the finances, he just goes along with it without really paying any attention! I originally came across the idea when I heard an interview with Mr Money Mustache and then moved onto Mad Fientist and now largely follow Quietly saving blog and bigger pockets money podcast to keep me motivated. I'm in my mid-40s. The mortgage has been paid off. I wouldn't say I am extreme Fire more middling Fire! I do all the usual things - meal plan, energy-efficient, borrow rather than buy and fix what I can. Depending on your goals I don't think you need to be as extreme as FIRE bloggers. I put as much spare cash in my ISA as I can but I also have a holiday fund.

whysotriggered That sounds similar to our situation, as I also deal with all our finances and DH goes along with most things I suggest.

BookWorm I'd forgotten about MSE but yes, that's a mine of information too - I've used it quite a bit recently to look into the best tracker funds for us. I'm also doing the mortgage-free challenge but like I said upthread, am wondering whether we should focus more on investing rather than paying off our mortgage.

The Escape Artist (Barney Whiter) seems to be the UK face of FIRE and I've seen him on TV a few times, but he's nothing like as well-known as Mr Money Mustache. He also seems to get interviewed on a lot of the UK-based FI/personal finance podcasts.

Talking of which, I've just discovered another personal finance podcast that seems good so far - Maven Money. Quite similar to Meaningful Money, and he's also a good friend of Pete Matthews apparently.

Dh is only 3 years older than me but getting burned out by his sector so hopes to retire in 10 years time. I have another 18 years before I get my full pension - but it is a final salary based one so worth building as much as possible. (I have 22 years done this month).

We paid off the last of the mortgage last spring, having continued to pay the original amount of repayments every time there was a reduction as interest rates fell in the last recession. And we save a lot generally, but we have spent more in recent years (still not to our full income levels - but relaxed a bit, and prices are rising).

I need to find myself a low risk but better than instant access savings option for a few years. We still have 3 years of school fees to cover for DD (although we could push for sports scholarship for her), and cost of supporting her through uni and in her sport for a while - but that should be finished before Dh retires.

So I'm mostly putting myself here to placewatch and get started, but hope to join in the chat too.

Great some new joiners! Loads of recommendations here, are any of the above women orientated money / FI podcasts?

My current debate is whether to move to the public sector for the pension, can anyone advise?

I’m currently chucking c£1k a month in my pension including employer contributions) with a forecast pot of c. £700k. Has anyone weighed up whether it worth moving to the public sector? What pay cut would I be breaking even on?

I don’t love my job but also aware I can’t just walk into a public sector job....

I just feeling in putting a lot in my pot for about an £18k pension, whereas my DH in the public sector is forecast a £45k pension despite us earning about the same now.

Sorry, millions of typos in that...

We have being doing a modified version of this. I am 66 next year and ideally would like my DH to retire at the same time as me - we need therefore to cover the gap in income this will v=create. We have a motorhome and would like to travel while we still have our health (and COVID allows)

PensionsYes Ms ZiYou did the UK FI Pod and one of the three regular podcasters on Financial Indepence Europe is female, while Quietly Saving and Monethalia are written by female bloggers. However, they're all quite young, single AFAIK (or don't mention living with a partner) and don't have DC.

Otherwise, I can only think of a couple of UK-based female FI bloggers (not podcasters, sorry, which I know is what you were asking about): Money for the Modern Girl - who was interviewed on the FI Europe podcast a while ago - and Tuppeny's FIREplace (I'm sure I've heard an interview with her too, but can't remember where now).

With a more (continental) European perspective, there was also Mrs W from What Life Could Be (they moved from Germany to Romania, but she's Scottish IIRC), but I don't think their blog is going any more. However, they do now run FIREhub.eu and have a list of European FI blogs on their website; you can filter the list to show UK-based blogs, for example. They've been interviewed on the FI Europe podcast too.

I think it very much depends on the scheme Chihuahuacat do you mind saying which area and likely scheme? Depending on your age I would be wary about whether schemes are going to change over the course of your remaining career. Certainly my DB scheme becomes significantly worse and more expensive every couple of years!

It’s a difficult comparison to make, because by definition, a defined benefit (which is what the public sector schemes are) has a set payout which isn’t directly related to the amount paid in. So for instance, in recent years in the teacher pension, the benefit has remained the same (pension accruing at 1/57 giving a defined benefit) but the % contributed by employers increased to over 23% without impacting the payout.

Essentially though, an easy way to think of it is, that in the CivikService schem pe which accrues at a rate of 1/43 now, if you earn £43k, your pension is growing by £1k per year...plus it aims always index linked, and includes death in service benefits, survivors pensions etc which always cost extra from an annuity or draw down scheme.

So, if you worked 20 years in the public sector, you’d accrue over £20k in your pension. That’s without the index linking and any pay rises being added on. A defined contribution pension pot would need to be well over £1.2m in value to get anything close to that...and probably would deliver an £18k income if it was index linked.

My DH is in the public sector....he considered moving to private sector. We tried to compare contribution rates of employers and he would make to those he and the state currently make....but that was a red herring in doing the calculations, because with defined benefit, it isn’t actually what you pay in that determines the payout (but instead yearly accrual) and you know what you will get out. In a defined contribution scheme, you know what you will put in, but the outcome is the uncertain thing. That means they are not directly comparable and to find the tipping point for salary loss and pension gain of one job against another is very difficult when looking at yearly figures and contributions.

I guess the thing to look at if you take the civil service pension, is whether in your current job, you would add £600k to your pension pot over 10 years? That’s what you’d need (and hard to know how much you need to put in for it to grow at that rate because who knows how the stock market will perform) to replicate currently, the £10k your defined benefit, career average pension would be if you earned £43k per year.

Chances are, the public sesctor pension scheme is far far superior. But, you’ve got to get the job and then do it for 10 years and you might be paid less in that job than your current one...so it’s hard to work out. But if pension boosting is your highest priority, it could well be worth it. Lots of people do it for the last 10 years of their career and find that 10 years makes up well over half of their pension income and what they e paid into over their other 30 years doesn’t generate an equal amount to that 10 years.

A lot of the Canadians on MMM talk about a Gail Vaz Oxlade, who seems to do some tv shows and talk a lot about money management, but I don’t know any more than that.

Sometimes you do big things and sometimes it’s small, there used to a post on MSE I used to post on years ago on the DFW board about what small thing have you done today, but it seems wrong to post on there when you are doing the small things because you are choosing a FIRE way of life and not because you have to do them.

I reminded DH to go through Quidco for his Screwfix order, when he had to go to Tesco for work and said do you want anything and I said no, normally we have bulging cupboards so this is huge for me. I am also cooking a mixed bean chilli in our dual pot slow cooker with small jacket potato’s in the other. Where I live isn’t on mains gas and LPG gas is more expensive to buy, so as part of keeping my food costs down, I also want to factor in the fuel costs to cook and maximise the use of the oven if I have to use it. Not that I want to calculate to the penny or anything but we love oven cooked jackets and we would put them in the oven for an hour or more and serve with beans that were microwaved so not overly fuel economical.

Slow cooker meals are something I should definitely do more often and need to find some new meals to do in them in addition to the usual curries and chilli and soups.

I did a couple of surveys this morning before work whilst watching the news so that will help add to my small overpayments pot.

I also noticed about how many Mustachers have lodgers but that got a NO from DH as opposed to a small no where I will probably be able to change is mind!

Thanks everyone re the pensions - really helpful.

I’m only 29 and using the next 5 years to save a large deposit as a down payment on the ‘forever home’ (currently in a flat) so cash is king right now.

Once we’re in, I might start actively looking at local government / civil service to see what’s out there given the pension is such a plus.

@FrugalFirefly thank you very much for your detailed responses! Lots of reading and listening for me.

@grannycake. I want to be you with the mobile home!

@Dashel I’m super impressed with your frugality. Me & DH love a slow cooker dinner.
We won’t give up meat but really enjoy lentil based meals. Getting the children on board is harder work however...

What you said about saving what you’ve already got versus figuring out how to make more money was a bit of a wake up call! I think this is the crux of our issues. We have got used to a very comfortable standard of living the last few years. How to dial that down at this stage with two children and my DH wanting to retire sooner rather than later is making my brain hurt ...

@Chihuahuacat Great you’re thinking about this age 29! I’m also eyeing civil service jobs...

Really good to have a like - minded bunch of women to discuss this with.

Thanks frugal looking forward to having a browse through them.

@PensionsYes, I think it sounds like you want a champagne lifestyle on beer money as my MIL puts it!

I can’t recall if you are ex MSE or not, but I think using their SOA (statement of affairs) template to work out where the money is going might help. Possibly then ask for ideas on cutting down specific items? Hopefully between us we will be able to provide some inspiration or ideas so that you can cut back a bit, but make it feel like you still have a quality of life. We found pre lockdown National trust membership was really good for being able to go to some lovely places but on a budget. Taking pic nics also saved us a lot of money.

How old are your dc? Not that I have kids but I have seen parents spend money on what they thought the kids wanted but all they really wanted was silly things like making a fort or baking - although often this is with younger dc. We may have some ideas between us though.

It’s harder enough persuading DH to economise though when strictly speaking it’s a want to economise than a need to economise

I promised my story -- it's not the most exciting, and I'm at the older end of MMM 'early' retirement at 51, but I am SO happy to be free, and I wouldn't be if I hadn't stumbled across the MMM forums around five years ago.

Potted history:
Married for 20 years to a financially coercive man. I had nothing to do with our money. I just knew we never had any despite affluent trappings like kids in private school and a massive house with a sea view. Nothing made sense until we split. He was gambling.

Divorced in my early 40s. Two boys to bring up with only a PT teaching job. I got very frugal very fast, and somewhere along the way, I found Dave Ramsey. For all his many faults, working my way through his baby steps meant I felt secure for the first time ever.

Dave tells you to sell everything that isn't nailed down, and to make more money. I had nothing to sell. I went as close to full-time at work as I could instead, and wrote a book per year in the summer hols for five years. That additional cash really helped, but more importantly writing became my joy. I only wished I could do it full-time, but I thought that would have to wait until retirement. As I earned more, I started piling every spare penny into my mortgage, because that seemed logical. No way would I have invested instead - too much like gambling, it seemed to me!

Then I found MMM and learned about finding your 'number' and applying the 4% rule. Once I totted up my net worth I could see I had a gap. Or did I...? (Spoiler: I didn't. All I needed to do was sell my house and live somewhere cheaper. This would free up equity to supplement my income, if needed, until my pensions kicked in.) I could be free seventeen years earlier than I ever imagined.

SEVENTEEN YEARS EARLY.

This is where I am lucky. In my divorce, I was awarded a decent chunk of my ex's pension pot, but I also had pensions of my own from my pre-children career, which I assumed were tiny. I learned the powerful influence of time on investments. Wow, those pensions had grown.

I made the jump. I took £6k redundancy, sold my house, moved somewhere cheaper, and started to really enjoy life. I write. I paint. I sketch. I take courses. I read nonsense. At some point it will stop raining and I'll get to know my new area.

I now consider myself skinny or barista FIRE because I choose to keep working, but now I only do what I love. I write a book per quarter, and that nets enough to cover my living expenses. However, if I stopped writing tomorrow, I have enough to live on until I can draw down 4% from my first pension pot in 3.5 years. That's what makes me FI.

I now love investing - what a wild ride 2020 was! I have a S&S Vanguard ISA along with a really well managed pension fund, but I also truly enjoy being frugal. I am another cheap to run veggie!

Up-thread, someone mentioned not wanting to scrimp, and maybe not enjoy life by focussing on FIRE. I promise that having control over your money (which means watching where it goes carefully for at least 4 months IMO) means you never have to scrimp in future. You'll have savings instead to spend on your hearts desire, and sinking funds, so infrequent bills don't surprise you. It's magic!

I never imagined that I'd get to this point. Sometimes I have a wobble (Moving house and leaving everything you know during a pandemic will do that to you!) but I just calculate 4% of my pension fund etc and compare it to my outgoings. Even without my royalties, the numbers work.

Not everyone can, or will want to downsize. I didn't move from the south east with millions in equity. I sold a house for £200k and moved to one that cost £140k. Because I knew my 'number', I believed that was enough to make the jump.

It worked for me, and I think this thread is really valuable because of all the different routes people are taking, for so many different reasons. It's so great to see so much intentionality. I hope you all get to live your own version of FIRE.

Wow @Esca that's fascinating! I too was an early forties divorcee, teaching and with two children. That's where our stories diverge 😁

I'm very much enjoying reading everyone's experiences and goals. I'm in the process of number crunching and coming up with a plan.

@Esca Thanks for sharing, very inspiring.

@Esca
Thanks for sharing, your life sounds just lovely! Are your boys grown now and did you factor in any financial help for them (University/House deposits etc)? It’s one area I’m uncertain about and with ours being 14 and 11.

@Esca - 17 years of your life back!
@SeasonsInTheAbyss - was wondering that too...

I’m also wondering if I should actively seek a public sector job for the pension. However, I’m unsure what happens if I were to die young (eg 70, I’m currently 43). With my DC scheme, I think pension pot would pass to my family (is this right?) whereas with a DB civil service scheme I wouldn’t have a ‘pot’ as such so not sure if anything would pass to them.

Money mage is a also good FIRE blogger @moneymagery

There is a HUGE UK FIRE community on FB :)

Join www.alpha.facebook.com/groups/FinancialIndependenceUK/?ref=share

Esca What an inspiring story, thanks for sharing it.

Seasons Yes, the DC are our major stumbling block. If it weren't for them, we'd have no issues with living very frugally now (and not feeling like we were missing out). But...

One of our DC is at private school, which is a huge expense but has made a massive difference to their life. The other wants to take six months out next year to go to school abroad, which would be an amazing opportunity for them but again, not exactly cheap. And then there's university, of course. There's no way we can afford to do all this and put 75% of our income (or anything like that) aside. Obviously we could tell them it's not an option, we can't afford it, etc. and they'd have to accept it. But we're very lucky in that we can afford it and we really don't want to deny them these opportunities. We just can't afford to do both - support the DC financially (until they're able to do so themselves) and retire at 55. It's all about priorities and is one of the reasons we're only doing 'FIRE-lite'.

Pensions It's tricky, isn't it, when everyone's used to a certain standard of living, and I often think the DC don't realise how lucky they are. All the day-to-day stuff that we don't have to think about whether we can afford or not; it's such a different experience from what I had growing up. And when you're surrounded by families who, for example, have several holidays/trips abroad every year, it would be difficult to get them to accept just one week's holiday in the country where we live - which was what I used to have at their age. (Not that that's an option for us anyway, unless I don't want to see my family.)