TheFIJourney – The FI Journey

The Most Expensive Year of my life & that’s fine…

Hey everyone, hope you are all doing well and have made the most of the festive break and had some much needed downtime for those of us still wage slaving around the Christmas tree 🎄 !

2024 – The Year of spending Money!

I did question whether I should even post this at first as in some ways I really don’t want to be posting to the internet talking about how I have spent loads of money on things I didn’t ‘NEED’ to but then again, this is a safe space with mostly fellow FI pursuit type folk and it’s no different from posting my FI stash figure which is also not something I would talk about with people I know in so called real life.

So now I know I am amongst friends, I can continue. This year without doubt has been the most expensive year of my life so far!

The return of the Gangster?

What exactly did I spend my hard earned money on – sacrificing a higher future stash amount for… what justified such a future opportunity loss?

Well I have been eating caviar at Michelin star restaurants. I have switched to top end designer clothes as it really makes me feel like I have achieved success at life. It elevates me to feeling like I exist at a higher level than people who wear clothes without high end brand names or god forbid no brand names! I have been buying all sorts of jewellery, the bigger the gold chain the better I say. I have been buying things without even thinking of discount codes or money off savings. I don’t need to save money on things after all, I can afford things at full price and this should be how you judge success. You won’t catch me scouring the internet for voucher codes anymore, I am a changed man, a better man!

Jokes aside, I have been spending an awful lot of money for me this year but not on any of that stuff…

So what have I been buying?

New Car

I’ll start with the big one…a brand new car 🚗. I had my previous car for 12 years and it was on around 130,000 miles. I had been saving for around a year to put towards a new car and I sold some investments to help with the purchase. I want this to last me until I reach FI and hopefully it will be one of my last major eye watering for me level costs barring future house work.

Florida Holiday

This was the most expensive holiday I have had to date. My partner had always wanted to go and for me it was a dream holiday. We had two weeks in Orlando and we got to see all the parks, meet Mickey Mouse, shoot guns, hold a baby alligator called Fluffy, witness a major hurricane, and even got to see a space rocket launch at the NASA Kennedy Space centre. It was simply an amazing experience from start to finish.

Phone, smart watch, PC

2024 was the year of new tech for me. I bought a new phone, smart watch and built a PC. My phone was 4 years old at the time and I haven’t had a PC in over a decade but I wanted to build one and use it for VR & normal PC games as well as many other activities. It was going to hopefully become a bit of a hobby and play thing of mine so felt it was well worth it. I bought the smart watch to compliment my new phone. I do like tech stuff after all!

Lots of weekend, overnight stays and gifting

Over the past few years, my spending on going out and stopping over on city breaks had increased but this year it really went through the roof. I have stopped in hotels away more than 10 times throughout the year and even managed to fit in a trip to Amsterdam again earlier in the year. Most of these stays were just single nights away but they certainly added up to more than in previous years.

Then finally comes the gifting category of expenses. I really have spent a lot on my partner and close family/friends this year. I have been more generous with my gifts when it comes to birthdays and occasions and also just have spent small amounts more frequently in between. I must say from my own experience that spending money on others really can be a way to buy happiness so to speak. This is not about buying just physical stuff either, it’s experiences or stuff that then creates experiences. It’s just happened without deliberate thought, it was only after recently viewing my gifts category expenditure throughout the year that I realised it’s the highest it’s ever been so it’s worth singling out here too.

When is it ok to spend big?

So when is it ok to spend as much money as I have this year? What I tend to use to determine if I should spend big on experience and purchases is the following considerations:

When spending any money under big expenses, you must ensure the following:

The item/experience provides great value/joy and is something that aligns with my values etc
The item/experience is bought as cheaply as possible given the time, conditions and research. Use discounts, deals etc.
Spending this money does not result in you depriving normal monthly disposable and giving deprivation feelings on regular spending and/or running money close to £0
Spending this money does not compromise your FI long term goals of being able to retire at 50 with £600k plus
How will you probably feel about the purchase in 1 months, 5 years, 20 years? If it’s not a clear regret or waste then that’s fine

Do I think the things I have purchased this year gel with the above? It’s a yes to me and I had given a lot of careful thought and deliberation to my bigger purchases with the above in mind.

For example, I had been thinking of getting a new car for around 18 months and waited a good year before finally purchasing the car I wanted when I had saved a decent amount towards it. I made sure to wait for the right car at the right time and even managed to save £6,000 on it via my works discount scheme. I wanted a new car as mine was getting expensive and created worry each time the MOT date came around. It had done me really well over the 12 years and I owed it nothing. I consider the new car a good investment, it’s not a Mercedes or BMW but it is a very nice car with lots of technology and I am very happy with it!

When looking at the Florida holiday purchase. This really was a dream holiday which created several months of joyful anticipation and turned out to be even better than I had hoped. It has also created memories that will last a lifetime and for me was worth every single penny.

The new phone, PC and smart watch are things that I really enjoy having. I do like some of the latest technology but whenever I get something like a new phone, I am happy to keep it for 3-5 years. This was just around the time where I would normally replace my phone but I did throw in the smart watch (only for health tracking features of course!). The PC did give me more back and forth moments on whether I really should get it though. I think in the end it did feel like a bit of a reward for reaching the half way line to FI, a major milestone and to mark 10 years of being on this FI journey. I really enjoyed building it and have not played my PS5 quite as much since I got it! It is also nice to be a bit more of a power user again – having something other than just a tablet and a phone again at last.

The last expenditure being a bunch of trips away and increased gifting are a clear yes to me and gave me no pause for thought. These trips and gifting have brought me a lot of joy this year.

I think when it comes down to it though, this year is very unlikely to be repeated at such relative extremes. A lot of these purchases have coincided with me reaching the half way line and also feeling a little bit like life is too short. This was a big reason for the Florida trip being this year instead of in the future. I did NEED a new car in my own opinion but this also still felt a little bit like a reward in terms of the car that I chose – no regrets at all though.

One of the key things for me that made these choices easier was that they did not result in any deprivation in other expenditures. I did not have to be careful with money and it would not really alter my FI within 10 years goal, this brings me nicely onto my final point and really what made me most comfortable with spending so much money.

Good enough & the gradient of success

What does £633,000 versus £671,000 really mean in the grand scheme of things if I am already happy with the general £600,000 target. If I end up with £671,000 but I have lived the next 10 years feeling deprived versus spending money on more activities and things that bring joy but as a result end up with £633,000. Will this difference really mean anything? I already am being very careful with my FI planning and with having a public pension providing a Full safety net at 68+ results in less fear of SWRs holding steady. I also already have some buffer included in my planned monthly post FI amounts so I can spend less in times of downturns should I need to.

Do I really need to care about the exact number with this in mind? Can I not loosen up a little and spend where it really improves life in the here and now? I would not have been able to spend anywhere near as much as I have this year 5 years or so ago, I have long since abandoned very lean FI numbers like some of my fellow FI UK bloggers have.

If I can achieve FI around the age of of 47-50 with my safety nets in operation, without the need to even 100% retire at that point should I not want to. Can I just be content with the general goal still being reachable and being achievable rather than being so desperate to reach it at 47 exactly to the month with an exact figure to the pound in mind?

It’s important to say and reiterate that all of my above purchases and decisions are relevant to me only and there is of course no right or wrong in what brings others joy, or what counts as feeling deprived. If you get immense joy from driving a Mercedes or never going on holidays but instead doing other things then that’s obviously great too. 😀

Love to hear your thoughts as always!

TFJ

Financial Independence in 10 Years

Hey everyone. Hope you are all doing well :).

It’s time for a new ambitious but hopefully achievable future target. My last post celebrated reaching the Base FI milestone of £250,000. This achievement had long been a dream goal of mine and actually in fact used to be my original FI target back when I was a little naive of what I really needed to consider myself as Financially independent.

The New Target – Financial Independence in 10 Years

As some may have already guessed by the blog post title… My new Target is to achieve Financial Independence within the next 10 years. So to be clear, let’s define what I need to achieve to consider myself to be Financially Independent followed with some details around the phases.

What’s required?

I require £2000 per month to be able to fund my Life at FI which is the same amount that I am using now whilst being on the building part of the journey itself.

This affords me to live a Gangster Monk lifestyle that I feel achieves a healthy balance of spending money in all the right ways to thrive without any deprivation being felt along the way. This also affords me a healthy buffer that I can use should I wish to draw less money during the bridging phase if there are any large sustained market falls etc.

How will I achieve this?

I aim to reach this £2000 per month in two separate Post FI phases. The first phase will make use of a bridging fund followed by a more guaranteed safety net of public pensions at State pension age. This will give me more confidence and peace of mind when using the bridging fund for 21 years knowing that there should be no chance of money running out in much later life.

£600,000 Portfolio in a S&S ISA (Bridging fund) – Age 47 – 68

This assumes 5% growth across the 10 years and 3% is left for the inflation difference
This assumes a 4% SWR of £24,000 Tax free giving £2,000 per month
This requires average monthly investments of £1200 over 10 years

Public Pensions (State & Public Job) – £2000 per month – Age 68+

These pensions combined provide £2000 per month after tax and are inflation linked and not reliant on the 4% SWR rule
These pensions only become available at state pension age which is currently at 68 years old for me
This assumes remaining in my current Public sector job for another 10 years
This assumes paying National Insurance contributions for another 10 years and then manually paying voluntary contributions for a further five years one year at a time to get the full state pension

The FI Journey Phases

The 10 Year Build Phase Journey

One of the parts of the Journey towards Financial Independence that sometimes gets overlooked both in terms of focus and importance is the building/accumulation phase. There can be a lot of focus on and looking forward to of the destination alone which is of course understandable. I have written about this before and in summary, I think people can want to almost rush the journey a little too much. I think this is a mistake and especially so when the timeline is a very long one.

What’s important to me is that the next 10 years are great in their own respect. I don’t want to rush towards older age nor rush towards something that is not even guaranteed to come. I want to live for now and to live for tomorrow, I want to have balance and be that Gangster Monk that I set my sights on previously! Below lists ways in which I hope to achieve this said balance and joy:

Working a job that I mostly enjoy, I will not stand for a job that gives me misery for a decade
Having enough money for life’s emergencies and for those expected unexpected outgoings
Having enough disposable income that acts as a good lubricant to enable life’s pleasures
Having money to pay for ad-hoc Big expenses such as big Holidays, regular weekends away, a new Phone or TV as and when I need them
Investing an amount that’s realistic given the previous requirements
I want to look forward to tomorrow, this weekend, this summer and the next big holiday all whilst feeling privileged to be on a path to achieve Financial Independence in my late 40s. I can look forward to this of course as well, but only whilst not being in such a desperate rush to get there.

Bridging Phase Journey

This marks the point where I will actually consider myself to be Financial Independent. I will have built up enough funds to cover £2000 for 21 years using the 4% SWR rule knowing that I can scale back some spending if I needed too. I will also have built up enough of my public pensions to provide £2000 at State pension age. I want to ensure the following during this phase:

I can continue to work if I choose to, I may carry on working until 50 which was my most recent target age for FI. I might drop to part time work or do some contracting or consulting. The main thing is that what I choose to do becomes completely optional. I might even decide to play games all day on the PlayStation 7!
Having enough money for life’s emergencies and for those expected unexpected outgoings
Having enough disposable income that acts as a good lubricant to enable life’s pleasures
Having money to pay for ad-hoc Big expenses such as big Holidays, regular weekends away, a new Phone or TV as and when I need them
There is ample buffer for peace of mind and less concern for whether 4% SWR will hold up perfectly
There is less concern of money running out in later life due to the safety net of the public pensions that are not linked to any investments and that rise with inflation.
The reality of likely inheritance money appearing at some point also lowers any fears with regards to not having enough money in older age

Public Pensions Phase Journey

When I look into the older age phase of my life. The stand out feature is that I will have a safety net of my public pensions to provide my continued £2000 a month. There is of course the good chance that I may also still have a fair amount of my bridging fund left available. I think all the previous bullet points still apply to this phase however choosing to work still is perhaps far less likely but of course is not ruled out entirely as if it didn’t feel like work, was part time and gave me joy. I could still of course do it – I just think it’s less likely.

20 Year Journey to Financial Independence – The Half way line

It struck me as I was thinking about this target in more depth that it had taken me 10 years from starting on the journey back in 2014 to reaching the £250,000 milestone. It is now possibly with some effort and another fair wind going to take a further 10 years to truly be Financial independent with this new target of mine. This would mean the entire journey from start to end would have taken 20 years. This seems quite apt and I would be absolutely thrilled if I ended up achieving Financial Independence from start to end in 20 years!

I think the main take away for myself when planning these future FI Journey phases of my life is that I want to look forward to all of them and will not race to the completion of any. We all know what comes at the end of the journey! Long live the FI Journey…

As always, thanks for reading if you got this far. I would love to know what you think of this target. Is it reasonable, am I missing anything?

TFJ

Mini Sep 2023 Update – £250,000 Base FI Reached & Covid 2 – The Reckoning!

Hey everyone, hope you are all well. I just wanted to do a quick mini update on some good news this month!

£250,000 Base FI Target Hit!!!

I unexpectedly reached £250,000 in my portfolio whilst I was away in Ireland. I did this on Saturday 16th September, a date which will hopefully stay burnt in my mind now for a long time… well I added it to my calendar in case I did forget when it happened! I was sitting on my hotel bed whilst my partner was still getting ready to go out. There I was happily doing some of my finances where I still record what I spend and I thought I would go check my balances as I had heard there was a bit of a growth spurt in some markets recently. I logged on and to my utter shock, there it was – £250,854.13 was the new total!

I had an amazing feeling of excitement and joy for at least 15 minutes where I couldn’t stop smiling and I guess I was just in a bit of disbelief too that I had reached that milestone as I kept saying to myself ‘I can’t believe it…’. It was such a major symbolic target, it was after all my original Target FI amount which I have long since abandoned but it was still no doubt a major success to me personally. It kind of secured a base FI at 4% where all my bills were paid for, for the next 20 years or so, it felt pretty major to me as I had been aiming for it for 9 years – when I first started my pursuit of FI. It had come only 9 months later than hoped for after my Project 2235 but that wasn’t bad considering the bear market we have had for a while now.

On that night, I thought I would have an extra mini celebration but I didn’t want to make it all about that achievement as we were on holiday in Ireland after all and it wasn’t about my target being hit. I knew I would need to plan something separate to actually mark it properly but it did make the night that bit better! Walking to the hotel in the heavy rain getting soaked after coming back from Bad Bobs in Temple bar at 2am couldn’t take away my frequently occurring smile! I had done it, my god I had actually gone and done it!!!

Celebration plans

So when I got back from Ireland, I planned a lovely night stay in Liverpool at a hotel with a jacuzzi hot tub (was an amazing deal), some wine and and evening of partying to mark hitting £250,000. I had to say the number again, as it just sounds amazing still. It’s odd because that’s the amount most scratch card top winnings would be and that’s what I’ve essentially got…still makes me smile widely in gratitude for where I am, still pinching myself really. This will wear off I know…I am making the most of it for now while it lasts!

Covid 2 – The Reckoning

I started to feel rough not long after I returned from Ireland and I had a really bad sore throat and weakness on the second night back. The following day I was much worse and I did a Covid test just to check which of course was positive! I am not surprised with how much it’s going round at the moment and I had of course been close to hundreds of people whilst in Dublin so it was almost inevitable I guess, you were like sardines in some pubs.

It has affected me quite badly this time and I have even had delirium and confusion in the first couple of nights. The headaches, fatigue, cough and watery eyes have been very hard to deal with at the same time. This is real man Flu territory! I have had to take three days off work even though I can work from home and I haven’t been off work in years…

You probably guessed it, I have had to cancel my celebration plans as a result and I couldn’t get the same deal for alternative dates unfortunately so I’ve had to make some slight changes but it will still happen and I will report back in my next update how it all went! I have thrown crazy golf into the mix on the day we come back as well for a bit of fun.

So, How did you mark any major milestones along the FI path, did you just have a few beers and a takeaway? A trip to Paris? Do nothing and just carry on?

Love to hear your thoughts as always. Thanks for reading!

TFJ