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.

Fantastic that it all came to you naturally, @WombatChocolate, that's all very encouraging to hear. I have the same target income. But I feel like I haven't been particularly fortunate with pensions, in comparison - I never had jobs with particularly generous contributions and what little I do have has lost value in the last couple of years. I've tried to make up for it with property and ETFs, but obviously less tax-efficient.

I agree that FIRE is very much counter-cultural - if everyone suddenly ditched materialism, society as we know it would grind to a halt very quickly! So far I've tried to focus on earning more rather than extreme frugality. But then I fall into the trap of working lots and then throwing money at convenience because of being stressed and time-poor. I struggle to know what the best balance is.

@LunaHeather I know what you mean. I've learnt that it's safer not to discuss money or financial planning with friends / family because we often have hugely different stances.

@LunaHeather

yellow that's interesting

I have 12k as my figure. I don't travel but the management fee for the building is part of my plan, as is the likely need for private health.

Later on, I will need to decide between insurance or just paying as and when. Obviously emergencies have to go via A&E anyway.

Insurances is one area that I “splurge” on. Whilst I will always look around for the best deal, it really is one area where I am willing not to take the best “deal” but pay more to go with established players etc. I spend an age comparing the actual cover for my insurances.

Health
Life
And all the usual

I am a single parent and I feel that it is top priority of “additional” expenditure.
And when I reach retirement age - even more so. Health concerns - I want to be seen quickly!!

Anyone in two minds re whether end goal is to retire early or maybe buy a second property?

I have a lot more than 12K coming in but I don't spend it. I am naturally frugal and do find it difficult to stop saving.
But I spend a lot each year on travel adventures and I will happily spend many thousands each year on this. I have had an expensive extension to my house for which I paid cash.
I watch what I spend very carefully but don't need to. I think it is ingrained in me now.
I am very busy but I love the option of doing nothing if I want to. I can choose which is important to me.

[quote HouseyHouse21]@LunaHeather I know what you mean. I've learnt that it's safer not to discuss money or financial planning with friends / family because we often have hugely different stances.[/quote]
This is less of a problem post lockdown but while I don't want to discuss it, it comes up naturally when you turn down doing stuff - people even saying "Oh I'll pay this time" so I ended up having to explain that I don't want to pay for a meal when I'm happy with a cheese sandwich...

I thought people would ditch materialism ages ago, which shows what I know!

I can't imagine having bought property in the 1990s, must be amazing prices.

In terms of spending and not earning, that's coming very fast for me. I have very little work now. I love my free time. As I say, I am not worried about spending savings as I don't need to leave it to anyone.

There's a thread about topping up NICs. I won't be. It feels like handing it over to the government and just hoping you get it back.

There are so many "conventions" attached to saving and investing.

Technically I don't need to be so frugal but I feel much happier paying myself.

@Chewingle nope definitely want to retire early and have time on my side. Although it won’t be as early as some Fire peeps, it will still be earlier than 68.

I am very selective about who I discuss money with. I made the mistake of telling my old boss and his boss (whom I knew really well and was close to) when I had paid my mortgage off and I think there was some resentment as she would have been earning more than I did and I think she thought I was skint because I never had takeaway or prepackaged lunches and drove an old car. So when age realised what I had been doing, it seemed to annoy her. I wasn’t bragging I just wanted to share some news, with two people who I knew would be on more money that I was.
She was one of those people who had to be better than you and I think it made her question some of her financial choices.

It seems to be the done thing to moan about being skint and be more ok to have £10k of debt than the same in savings. I don’t know if it’s people wanting to normalise their own poor financial choices?

I dont think we have any friends in the same financial position as us, so I avoid talking about money. Most of the time I’m skint in my head as I don’t keep much cash in my current account, so my available debit card balance is quite low.when I have to much money in there I feel like I should spend it, even though I don’t want to.

Unfortunately I’m still waiting for Vanguard to verify my S&S Isa so I don’t know if the direct debit set for the first will go in. DH current account is showing with his payments pending, but he didn’t have to submit bank account statement. I increased the DD to £200 but if nothing is coming out this month, I want to transfer money in so need £500 as a minimum, so I’m not yet sure how to split my salary this month. First world problem I know.

Dashel I have a thing about not overthinking things so I try not to ponder why people do anything really

But generally it is a norm to spend money. I think certain things are looked down and linked to poverty almost e.g. packing a lunch. Especially depending on what it is. I had a colleague who said I had motivated her to pack lunch and hers was artisanal bread etc!

I'd be very quiet about having no mortgage.

I've got a thread going in Philosophy that I have done wrong - my fault - about simple living. I was trying to link it up to Stoicism but just explained myself badly.

I'm still debating the stuff I could sell on ebay for £60 max. As a FIRE you'd think it would be a no brainer but I can't guarantee what life I'd want in future and I never get rid of anything if there is risk of rebuying.

I'm curious

What do posters think would be enough as a lump sum so savings, not including pension as that won't apply for ages - for retirement in my situation - no dependents, can live frugally so I aim for 12k but really 8k would be enough.

What's enough money in the bank at 45?

I too try not to talk about money in real life. It does seem to cause resentment.
So I don’t mention that I’m mortgage free (although sometimes how long people have left on mortgages does come up and if I’m asked directly, I don’t lie) but I have only told about 2 people about our buy to let property because I don’t think that will go down very well. Plus, when I first got interested in retirement planning and pensions, I excitedly talked to a couple of people about it all, but quickly stopped because mention of early retirement or methods to get there didn’t seem to go down well either...resulted in rather annoyed silences or comments about what on earth would someone do who had stopped work. And I don’t talk any more on my views about buying cars on lease or PCP schemes being so much more expensive in the long term, because so many people do it and don’t want to know about alternatives.

I’m not sure if people think I’m hard up. We’ve got one car that is 15 years old and another that is 3 years old. I guess we do have 2 cars. I’m actually happy to go for coffee or for a meal, but I will choose to have 1 course and 1 drink and not all the extras which can double the price. People might think I can’t afford it. We have plenty of holidays but most are cheap self catering and people might think we can’t afford to go abroad regularly. I’m keen on buying secondhand products such as refurbished electricals and I look out for a coupon when eating out or a bank switch. Once someone at work said to me ‘on you’re not a frugal person are you’ in a tone of ‘you haven’t got a nasty social disease have you’ and seemed to find it slightly amusing that when we were going out for a work meal that I looked online to find a 50% coupon. (Although they were happy to have a lower bill at the meal). Having the children at an independent school means lots of people are pretty well off (or at least living the lifestyle, who knows if it’s all based on debt or what their financial position really is) and so lots of spending is fairly common, it it’s felt fine for us and we don’t feel out of kilter with it all really. We know we could have a lot of the things people choose to spend on if we wanted to...we just don’t choose it, and I think the fact you have the choice makes a big difference.

I’m not a true FIRE person though, so I do splurge on some things. For me the FI a has been all about freedom to make choices, both about retirement but also sooner too. We have had independent schooling for our children as a result of our choices, rather than our salaries which wouldn’t suggest we could afford it. We do have the odd expensive holiday and we give a lot of money to charity. We won’t be retiring at 40 but mid 50s and perhaps that’s not so different to what those who were careful of our parents generation managed to do.

But I agree it’s no good talking about it unless you happen to find a kindred spirit and even then it’s all very personal and can descend into rivalry or jealousy in some way. It’s why the internet is so good for all this....you can talk openly and honestly with strangers in a way which is really helpful, agreeing and disagreeing without it having an impact on your life.

So thanks to those of you on this thread sharing your ideas, and particularly experiences if you’re a bit further along with all this. It’s nice to talk about it all and much easier than in real life.

Luna, along the same lines, I’m interested to know what people feel is a reasonable amount of savings for the point where they stop working.

So assuming there will be an income from some stream or other to fund basic daily needs, what do people want set by for funding the big one of expenses which crop up (replacement car, new boiler, big DIY project, possible holiday which isn’t budgeted for in the monthly outgoings) - what do people have which makes them feel comfortable? Do people have money set aside for funding things like a possible care home?

Wombat really interesting post

People do think we are Scrooge!

I'm actually interested in the figure people have in mind with no income for me. Pension rules change all the time. So 50 to 58 at least would be no money incoming for me.

I’d also be interested in how you balance FIRE with savings for your children. It’s another conundrum to me. Save for early retirement OR save to help my children because goodness knows what lies ahead for them

A question I prefer to ask here rather than start a new thread

If I have two cash ISAs to transfer, will I be allowed to transfer two into one with the new provider?

Another thing I can't say elsewhere

My bank log ins are driving me nuts. I used to be a rate tart so it's time to create a simpler world and close some things. So if I could transfer two expired ISAs into one product it would ditch at least one log in.

I've also cancelled an out of use credit card.

I’d also be interested in how you balance FIRE with savings for your children. It’s another conundrum to me. Save for early retirement OR save to help my children because goodness knows what lies ahead for them

It's not an either-or though, surely? If you're financially independent you're in a better position to support your children through university or whatever life throws at them.

I had about £50K saved up when I retired but I live happily out of income. I have spent my savings on travel (and taking my DCs who are grown up with me). I continue to save most of my income simply because there is nothing I want to spend it on.
I am investing in pensions for my grandchildren though because they are very small and they get the 20% tax added even though they are not tax payers. It is very tax efficient and I wish someone had done it for me.

@Effzeh

I’d also be interested in how you balance FIRE with savings for your children. It’s another conundrum to me. Save for early retirement OR save to help my children because goodness knows what lies ahead for them

It's not an either-or though, surely? If you're financially independent you're in a better position to support your children through university or whatever life throws at them.

For some it is

If I have two cash ISAs to transfer, will I be allowed to transfer two into one with the new provider?

I am pretty sure that yes you can. As long as you only pay into one provider per tax year.

For some it is

If resources are that tight, then saving towards your own financial stability should take precedence, on the basis that if you don't have the means to weather a crisis, that will take your children down anyway.

The whole point of FIRE is to maximise your financial stability as a family/couple/individual (depending on your living situation). That in turn give you choices around how you use your resources, including the choice to support your children.

Other than in a dire crisis it makes no sense to take money out of the pot for your children if you haven't secured your own financial stability first.

@LunaHeather - regards the ISAs. When you combine them - do they come below £20k? Ie the annual ISA limit?

Re care home fees. Wltt that my property £ would help out with this.

Re cash for children... I’m hoping to help out where possible, more than our own parents were able to but it will probably be less than I’d like!

@Effzeh

For some it is

If resources are that tight, then saving towards your own financial stability should take precedence, on the basis that if you don't have the means to weather a crisis, that will take your children down anyway.

The whole point of FIRE is to maximise your financial stability as a family/couple/individual (depending on your living situation). That in turn give you choices around how you use your resources, including the choice to support your children.

Other than in a dire crisis it makes no sense to take money out of the pot for your children if you haven't secured your own financial stability first.

Not what I meant

Assuming family secure

Not Saving for your children’s mortgage and / or your early retirement doesn’t mean you aren’t secure.

So the choice is focus on saving for early retirement or very significant assistance to adult children. Some will be able to do both. Some won’t. There will be a choice.
Hence my question

I assume you were talking about younger children.

I don't envisage paying towards my children's mortgages tbh. That's a whole 'nother level beyond 'financially secure'. We've supported them through university, so they're well-educated adults with degrees. At that point they can support themselves, imo.

[quote PensionsYes]@LunaHeather - regards the ISAs. When you combine them - do they come below £20k? Ie the annual ISA limit?

Re care home fees. Wltt that my property £ would help out with this.

Re cash for children... I’m hoping to help out where possible, more than our own parents were able to but it will probably be less than I’d like![/quote]
No but the annual limit doesn't apply to transfers? Just one is over 20k because of interest earned previously.

It's okay, I'll ask the provider on Monday.

Yellow that's interesting, my thing will be the exact opposite. I'm guessing your income is quite high (not asking you to tell us btw).

Luna, yes my income is quite high but I saved and invested to make it so.
And put two kids through independent schools.
The thing is...it's a mindset. I am on the spectrum so going shopping is an ordeal for me. I have to psych myself up, so being frugal is a good idea.

@Effzeh

I assume you were talking about younger children.

I don't envisage paying towards my children's mortgages tbh. That's a whole 'nother level beyond 'financially secure'. We've supported them through university, so they're well-educated adults with degrees. At that point they can support themselves, imo.

But someone could choose to channel funds in to early retirement instead in to saving for adult children!

It is a possible choice
I really can’t see how you think that there isn’t.

I’m in two minds whether to make very significant savings towards my children’s mortgages / life plans given where I think the economy will be for them OR to retire early.

Or I do both - but then accept less savings for the children or later retirement

Nothing to do with me being financially secure. I am very financially secure.