Depriving yourself whilst on the journey

When I was working at my previous place, I had a conversation with a work friend of my mine about Financial Independence. This came about because he was talking about how he had just come into a fair sum of money (£10,000) and he was not sure what to spend it on. New car?, Las Vegas? He really didn’t know what to do with it. I chimed in and said well why not invest most of it and treat yourself to something with £1,000 or something.

The conversation progressed and we spoke about it a few other times. Now at this point, I was fairly new to all of this FI business and was hooked on learning more and enjoyed talking about it more openly. I told him that with my current savings rate and a fair wind I could stop working in 23 years time at 50 and all my necessities would be met – £1000 a month with house owned. I didn’t tell him I saved over £1k a month but he could tell it was prob close to that, he was shocked… shocked that I would sacrifice so much fun, joy, entertainment for some future in 23 years time that might not even come and when it did just to live on  basics covered only. He proudly said “Live for now man, spend now while you’re still young and healthy”.

Live for now or later

This idea that I might be depriving myself wasn’t something new to me. I had heard it many times on forums and comments on certain blogs. There was a dichotomy set up of live for now OR live for later. Below are common things I have heard online, in real life and that I have come up with when thinking about it:

  • You’re only young once
  • Stop sacrificing your happiness now for future happiness that might not come or not even be what you thought it would be
  • You could lose all that money, if you spend it on doing things then you will actually get use out of it
  • Stop living your life on fast forward, why do you want to race to being older. It’s like you are racing towards the box.
  • You won’t enjoy your money as much when you’re older
  • You are restricting your life far too much
  • In short – you are depriving yourself

Am I depriving myself? Am I living my life on fast forward desperate to get to future FI. Now I think these are great questions and it’s easy to simply say no, of course not! and be done with it but there often can be some truth in the general view that you could be depriving yourself in the here and now whilst on the journey. I have certainly come to see this with myself. 

Examples of my deprived life

  • I could go on several holidays a year all around the world with many weekends away (Paris & New York even would be on the table every now and then)
  • I could own a Mercedes car, even a Porsche if I wanted instead of regular basic car
  • I could buy £200 jeans and have a full wardrobe of designer clothes but I buy from Sainsbury’s or Tesco instead
  • I could have all sorts of gold chains and expensive watches but I don’t
  • I could have a 70inch TV and buy new technology and stuff for my house almost every month. 
  • I could buy Sainsbury’s tase the difference or Tesco finest selections on all my food. I could eat like a king!

Now… the question is. Am I depriving myself without having the above? Well. The feeling of being deprived is really a personal thing for most people reading this blog. If you weren’t having all your nutritional needs and living in a cold house to save on heating then yes I would say you probably were. But, when all your basic needs are met and then some by default. Is driving a Citroen Saxo to work whilst stuck in traffic depriving yourself when compared with sitting in a Mercedes? Well I would say no and even more so if it means that by having that Mercedes you are ensuring you need to go to that job you hate forever more. I prefer the benefits of FI to those from having a Mercedes.

I eat some food brands that I really enjoy over supermarket own brands but then I have the ASDA own beans because I still enjoy them rather than a premium can that costs twice as much for no benefit as perceived by me, I see this as wasteful. If I wear jeans that look nice and last long that cost £15 instead of buying a £200 pair so I can be cool and another walking advertisement billboard is just silly. There is no REAL deprivation there. I know I could drive to work in a Modern Mercedes E Class, wear gold chains, £3000 watch with a £300 coat, £120 shoes etc and feel like I am the man… it could make me feel very high status etc but… none of this even slightly interests me and I certainly don’t feel deprived by not doing it.

If I was a multi millionaire and money was not a problem then I probably would buy a sports car, go to New York for the weekend but that would be because it wouldn’t mean I’d lose other benefits that I value more if I did so.  There’s enough things for me to do with my life and what I have now that feelings of deprivation don’t appear to me. These extras that cost significant sums of money don’t provide enough extra joy to warrant losing the benefits from working towards being FI.

When deprivation is real

As you might recall, I said earlier I believe there is some truth to this whole deprivation argument. In the early days I did make leaving my job in the far future and really looking forward to this too much of a focus that took me a little bit away from the here and now. I cut my budget a little too close to the bone and I really did hate spending money even if it gave me joy. I also put my monthly required sum when FI too low as to really give me a buffer for the unexpected and larger outgoings that do add to the enjoyment of life.

In summary, I think we can sometimes deprive ourselves when on our journey towards FI. We would do well as I am sure most do, strike a balance as best we can between missing out on some things now that cost money but bring happiness for the joy and benefits that being on the path to FI bring. We can live for now and for later, there need not be a dichotomy. I would love to hear what you all think about this, do you or have you deprived yourself at all? Thanks for reading. 

Chris@TheFIJourney

What Financial Independence means to me

When it comes to the basics of what Financial Independence (FI) is and all the different types of FI from full FIRE (Financial Independence Retire Early) to just plain old Financial Independence, I think there is ample resources elsewhere that defines this and explains things such as the Safe withdrawal rate, savings rates, and precisely at what point one becomes FI. I expect most people that frequent this site will likely already understand FI in general so this post will mostly be about what FI means to me personally and why it’s such a big goal of mine to obtain it.

Despite the above, just to clarify. I define FI as simply having enough money from passive income such as a stocks/bond portfolio that will provide a person with all his expenses taken care of in perpetuity without the need to ever work again if one chooses not too.

What FI is not

Being FI is for me not about being rich or well off in the sense of driving a Mercedes Benz, going to the finest restaurants with 6 holidays a year, shopping in New York at Christmas and going to Paris every other weekend. When I am FI, it will look on the surface very ordinary for an outside observer, I will look very average and maybe even below average as my car will remain simple and functional,  my wardrobe will consist of mostly items from Sainsbury’s or Tesco. I will go on maybe 1 holiday a year with a few weekends away in the UK at times – I will essentially be very much the same as I am now outwardly except for a few major differences that are harder to see. If I choose not to work or switch to part time, my neighbors might even feel I have fallen on hard times with me not doing the usual 9 to 5 every day. They would not suspect even for a moment, that in actuality I have hundreds of thousands in investments, own my home and with a fair wind will never need to work again for an income. I am glad about this, I don’t want to attract unneeded attention as discussed.

So to summarise for me – FI will give me the ability to live a mostly normal life activity/possession wise without the need to work which in turn will give countless sustained life benefits that are harder to see from an outside observer.

FI is an enabler

For me, FI is not the end goal or life mission as it were. It is simply a goal, a challenging long term goal and on reaching that goal the result – a sustained state of affairs and circumstances that will persist for the rest of your life. It is these enablers and circumstances that make this such a juicy, awesome goal to achieve. It is a goal that once reached will bear fruit that can be enjoyed each and every day. Not only however will this bring benefits at the point it’s reached, the journey towards FI itself provides similar enablers and plenty of fruit to gorge on along the way. 

I am now going to discuss the FI enablers that stand out for me at various stages along the journey towards FI.

Enabler 1 – The possibility of FI

I think that before I come to some of the main enablers that stand out for me along the journey is firstly what many might not appreciate as much when creating articles like this which is – the mere awareness of FI and realisation that it is possible to achieve. Knowing that you are on a path towards hopefully never needing to worry about money, or even never even needing to work again as you could retire years before the norm is quite frankly liberating. Knowing you won’t HAVE to work until you’re 70 even if it results in worsening a medical condition you have is priceless. 

Enabler 2 – Freedom from Debt 

This refers to consumer debt and not student loan (well if on the old system with no real interest) or mortgage debt. This includes things such as credit card debt, bank loans, car finance, clubs and arrears on council tax or electricity payments. When you have these debts, it feels as though you are not in control of all what you earn. You need to pay other people before you can even pay yourself. This can make anyone feel trapped in a dead end job for fear of what will happen if they lose their job even for one month and fall behind on payments. Checking the mail, or answering phone calls can bring worry if debt collectors are on your back. In being debt free, the worry and frustration that can be present can simply melt away and you can put all that extra money into things you value including the pursuit of further FI.

Enabler 3 – Expected Unexpected Outgoings Fund (emergency fund)

Now, I like having an expected unexpected outgoings fund or emergency fund if you want to call it that. This could help pay for things such as a washing machine failure, excessive car mot charge to fix problems or £300 you urgently need to help Aunt Bessie. This fund creates a buffer that gives you extra money just when you need it. This allows for flexibility and the feeling that you are not so close to financial oblivion or the need for debt if you have an unexpected outgoing. This feels goooood. Just to note, I know some prefer credit cards for this but I like cash – £1,000 Expected unexpected outgoings fund (a mouthful indeed).

Enabler 4 – Cash is King Fund

I like having cash, I really like having some cold hard cash. Screw the opportunity cost that many talk about :D.  For me, having some cash just gives such a big psychological benefit that I will take any possible hit of what it could have grown too had I invested it. I call it my income assurance plan in case I lost my job or any big expense that might obliterate my expected unexpected outgoings fund. Having it means I don’t need to touch my investments, lose some of my ISA tax wrapped funds or sell at a loss if I need the money during a bear market. It means I can change jobs easily whilst having a year or more to find another job. This makes me feel more free at work to say the right thing at the right time without any fear of me losing my job. I think it also comes from part of me not wanting to have all of my eggs in one basket and on a small level hedging against all of this investment stuff not working out although I do have strong confidence in it. My fund is £10,000.

Enabler 5 – FU Money (when Investments & Cash reach a certain size)

Now this is a thing of beauty. F*** You Money is an evolution of my Cash is King Fund. This is actually my investments themselves and includes the £10k cash as part of this.  This puts you in a wonderful place where you know you could last potentially years without work and would always have breathing room in almost all financial emergencies that might pop up. This really starts to give you a sense of freedom and affects many areas of your life for the better. I personally feel so much more relaxed at work because I know I don’t have to worry if I were to lose my job, it would just be more of a hindrance having to look for new work and get that suit dry cleaned again. The more this fund grows the more care free I become and the fact is, it makes me a better more productive worker as a result as I am a lot calmer when at work. I know I won’t have to work for ever, and when I am asked what my 5 year plan is in a annual review, I sometimes joke to myself that I could say well… I won’t have to work ever again should I choose not too in 5 years so I really don’t know! I will define this stage as £50,000+ in investments/cash.

Enabler 6 – Owning your own home or Enough income to pay for Rent

Now I know my choice doesn’t appeal to everyone and there are many that will wax lyrical about how renting is better as you can invest the difference and end up better off with more money in the long run etc and it clearly suits some people’s personality types so it’s not a right or wrong thing. I however am definitely in the owning a home camp, I own my own home now mortgage free and it feels awesome, knowing that this is my home where I am free to do as I please suits me. I have no intention of moving around and travelling the world as my family are close to where I live now and I’m happy here. Not having a large mortgage/rent expense means that I don’t need as much money to reach sustainable FI, I also don’t want to be at the whims of a landlord who could kick me out or tell me I can’t own a cat. This enabler also applies if you can afford your rent in perpetuity – knowing that you will always be able to afford 4 walls and some shelter from the elements is bliss.

Enabler 7 – Base FI

I define base FI as having enough income from passive investments to cover all essential bills and expenses. This means that I will always have a home that’s warm with electricity and the cupboards will always be stocked with food and drinks. My council tax and internet, mobile phone, home insurance, car bills will also be paid without worry. The only expenses not included will be what I will call fun money and discretionary spending (holidays/expensive one off purchases). I could still do so much for free with this wonderful thing called the internet and go out on the cheap etc. I would however want to earn a little more to see and do a few more things that do cost money so I will still aim for Full FI after this has been achieved. Whilst at this stage, work could be done part time or in stints to earn all the extra money required for a single year, I could switch to contracting a few months a year. Work would only ever be needed and felt required for those extra things in life that make it all the more sweeter.

Final Enabler – Full FI

This is the dream target, this is where not only are all your basic needs and expenses met but all those extra big purchases, discretionary money allowance are all accounted for. This is when work truly does become fully optional.

So where am I in all of this? I am on the way to Base FI. The FU money keeps building month to month which feels great. I would love to know where you all are along the FI journey and what your thoughts are on this post :). 

Chris@TheFIJourney

Keeping FI a Secret

So… my first blog post topic is going to be on whether or not you should keep FI a secret. What exactly should you tell friends, family, random people on the street and things to consider if you do. It’s worth mentioning again before I start, that the whole point of this blog is simply to share my thoughts on something and what I currently do in order to create a discussion with all of you in the comments, I certainly will never preach or say that my way is the right or only way that’s for sure. Right then on we go…

This blog – 4 Years in the making

As I mentioned in the introduction post, this blog has been in the making for the best part of 4 years. I have swung between wanting to create a site when I feel I have something to say on an FI topics and then to deciding against it because part of me wanted to remain completely anonymous in my FI pursuit. I didn’t want to bring undue attention on myself and possibly have the blog linking back to me so my work colleagues or family find out about what I’m up to. Now this is assuming that this blog to start with will become popular which I highly doubt or that I might leave it logged in somewhere and then someone will recognise that it must be me based on the similarities they spot etc. 

Why I don’t like sharing my FI pursuit

It boils down to not wanting people to know I’ve got a large amount of money. My reasons why are:

  • People being jealous and envious of my situation which I have seen first hand with others I know who have money

Continue reading “Keeping FI a Secret”

First post – Meet me!

Who am I?

Hey there! My name is Chris. Firstly as always thanks for taking the time to view my blog, it’s great to have you here. Welcome to my first real blog post, or technically the second one if you count my short introduction to the website :). 

This first blog post has been 4 years or more in the making in some ways. I have often times been tempted to make a website about Financial Independence and life in general but never quite found the time or extra motivation to do so. I was also held back by conflicting thoughts about whether I should or shouldn’t which I will talk about in a future post.

So who am I? As mentioned earlier, my name is Chris. I’m in my early 30s and work in IT as an engineer. I am an ordinary guy and in many ways I don’t differ in what I do to many of my friends and colleagues at work and in personal life. I like a few drinks now and then, play far cry, wolfenstein on my PS4, watch the walking dead and enjoy the odd trip to Amsterdam (no not to do that, before you think…).

In other ways however, I am living a separate kind of life and journey that only a couple of my close friends know about. I choose to keep it this way as from my own personal experience talking about never having to work again or having large sums of money as a result just feels like you are bragging or often makes people relate to you differently in a negative way. This of course doesn’t extend to everyone but I would rather keep it to myself and only discuss the generalities with others if they are curious. This is one of the major reasons why I wanted to create this site as it allows me to connect with others on a similar path in a more anonymous way. So… this journey is of course as most of you already know is the journey towards and through Financial Independence.

Pre FI Enlightenment

It really interests me that I remember pre FI knowledge how I looked at the future. I never even considered it a possibility to really retire early at 50 which to me was the definition of early. I thought it would take a lottery win or some huge luck to even accomplish that. I was focussed on living more in the present with retirement in the far foggy future. I thought investing was just really gambling and too complex and out of reach for me, you could literally lose all your money and it was a no go area for sure. 

Fast forward to Age 27

I came into a little bit of money during this year through bad circumstances, it wasn’t life changing money at all but was a fair amount to consider what to do with it and at the time was more than I had ever had sight of. I wanted to invest this somehow to best grow the money for the future. I began researching what investments were wise and what the likes of Martin Lewis at Moneysavingexpert thought. I eventually discovered passive index investing at the website Monevator. This website introduced me to the new world of Financial Independence. I went on to read Mr Money Moustache , Early Retirement Extreme, theFIREstarter and many other sites discussing FI. I was infatuated, besotted by it all one could say. I couldn’t get enough of it – I was addicted to checking my spreadsheets, working out my FIRE date, going through simulations, and reading more and more content on the general topic of FI.

Over the next few years, I fine tuned my budget, cut expenses where I could, increased my savings rate, created a Cash is King fund, Emergency fund and tracked my money to the penny, yes the penny! I originally had a FIRE date 23 years in the future, this changed with extra money, New bare bones FIRE goals, and more fine tuning to 18 years, 15, 12 and finally ended up at 8 years. I wanted to pull the trigger on full FIRE. I really disliked my job, hated my boss and couldn’t wait to escape the rat race.

Fast forward to now

I have since those early days continued to be fully committed to FI as a broad goal, I have however changed in some key ways in my approach and what I consider to be the end game. My trouble was for myself this is, was I was far too strict in the early days and I really was aiming for bare bones FI and treated FI as the end goal in its entirety rather than more of an enabler and something that gives you more options in the future.

I have since moved jobs and now I really enjoy what I do, I have an awesome boss and no longer hate work. That doesn’t mean I don’t like the weekends or live to work but I no longer feel like FIRE is the definite end target. I think FIRO (Financial Independence Retirement Optional) is more of a fit for me or switching to part time work maybe. I have loosened up on a target solid date for FI although I still check compound interest calculators and have a rough idea in years when I should reach some semblance of Base FI. This is currently 5 years away. 

I have also stopped for the most part feeling guilty spending money on things I value and enjoy. I love saving money on goods, I love bargains and buying in bulk things that I use and eat still but if I want a certain brand name food I love, I won’t hesitate picking it up whereas before I think I was more aware of the price. I like to think I am more balanced now in my approach and in turn I feel more comfortable, my quest for FI has almost become an auto pilot function in many respects.

This website & closing remarks

Well that’s enough about me, if you have read all of this I applaud you that’s for sure. I really hope with this website I can join in with the community and in turn perhaps write a few posts that people find interesting. At the very least, I hope it allows me to keep on the straight and narrow path by sharing my thoughts and feeling along the way.

Thanks

Chris @ The FI Journey