Project 2235 April 2020 Update – Coronavirus Pandemic

I truly hope all of you are keeping as safe as you can and that you are weathering the storm of this pandemic and lockdown as well as you can. This first update post certainly will have different content to what I was expecting that’s for sure. There is a large contrast between December to February that I now know as the living life as normal months where as March has been a very different kind of month for sure. We will of course get through this, life will eventually return back to what we recognise as normal I am sure, it just might take a while.

So just to remind everyone, back in November I put forward a plan called Operation 2235. In summary, the plan entailed the following:

  • Reach a portfolio of £250,000 (Base FI) by December 2022 whilst I was still 35 years old (hence the name Operation 2235)
  • Achieved by investing £1500 a month over 3 years (£54,000 total) – With an assumed fair sail wind of 5% (2% real interest minus inflation)
  • Do the above without depriving myself whilst still being able to weather some expected unexpected outgoings

December to February Update (living life as normal)

The Plan

Ever since writing my original post about this plan, it has given me a real strong sense of purpose and direction even though I had a similar not so concrete plan in mind for a long time, writing it down online and sharing with you all somehow made it more meaningful I guess. It really does boil down to the same regular theme that has ran through many of my posts here which is:

Move towards FI without depriving the here and now in ways that matter and without having life on fast forward until you reach it, make sure to enjoy this part of The FI Journey just as much

Money & Investing

I invested £1500 every month as planned which always makes me feel good when I do it. Ever since getting my recent promotion, this figure has really been a sweet spot as I think any further promotions and/or money increases will go to other activities and purchases and not to my investing. 

When it comes to monthly expenditures – December was a fairly expensive month with it being the Christmas period and a multiple birthday month.  I spent a fair amount of money on going out and buying gifts with Christmas costing me around £600. I pulled some money out of my Big Expenses fund as I always do for December due to it usually being my most expensive month of the year. I ended up £6 from my budget for December which I added to my Expected Unexpected outgoings fund.

January turned out to be a much more expensive month than is usual for a typical January for me as I usually tighten the purse strings so to speak. I went to London for a long weekend trip and also went out to Birmingham a couple times for nights out. I also had food out a good few times more than normal. I ended up being £50 down from a budget perspective which meant I had to record a January deficit charge from my Big expenses fund (oh the humanity…)

The expenditure upward trend continued in February. I had to pay for a few annual renewals that I still haven’t included on my regular yearly bills monthly outgoing such as Amazon Prime, PlayStation Plus. I spent a lot of money on gifts for people in February as well which pushed my monthly deficit to £118 which I again took from my Big expenses fund. This was however something that I had intended this fund to be used for over the 3 years of this plan so this was not a worry.

Life

I had a really good end to last year in December. The month seemed full of activities and there was a nice relatively quiet rundown at work towards Christmas without too much pressure. I always like December as work always tends to be quite project wise and I get into a reflective mode in general and what with multiple birthdays, German market trips, many festive drinks and the like – there’s a lot to enjoy and look forward to.

January turned out to be very similar to December in activity terms, I started the month off with a lovely multi day trip to London which despite coronavirus being known of, it didn’t feel like it was going to be anywhere near as big as it has since become to me at least so that was enjoyed to the full without any fear – a few pub crawls around London with my partner was fun indeed.. This was followed with a very productive couple of weeks at work where the previous quiet December was soon left behind with huge projects and very tight deadlines coming out of the no where. Despite being very busy at work, it felt very rewarding as what we was helping to deliver would really help patients at our hospital and the quality of care they would receive.

February was much quieter that the previous two months. Work was steady and going out was less frequent although we did go to a couple of live bands in town which was cool. A couple of take aways and beers at home on a Friday was the most exciting things I got up to really. I started to follow the events of the coronavirus much more closely mid month and I think I wasn’t going out so much as a result. I must admit I bought forward my bulk buying of beans, peas, cashew nuts etc that I do every couple months just in case before any restrictions were put in place. I am very glad I did this for the beans as I have a can a day…:D

March Update (During Coronavirus lockdown & Crash)


Money & Investing – The global financial crash – £27,000 Loss :O

Well, I knew that at some point I would experience a market decline that would wipe out tens of thousands of my portfolio. I prepared for that psychologically in part by not having all my eggs in one basket – By choosing to invest 40% in bonds along with some large cash buffers and owning my own home which would I hoped, make the loss not feel as big should it were to occur. By having enough cash to last over a year, I hoped I would not need to sell during a big decline if I were to lose my job at a similar time which would make me feel like I hadn’t truly lost the money invested in a sense. None of this however can be tested until such a decline would occur. How would I react?

At first I didn’t really react much to the declines I read about on the BBC news. I never checked my portfolio and I carried on as normal. I was more concerned about the virus and the impact it was having. It was only after several days of declines that my curiosity took the better of me and I logged in. I was £27,000 down. I experienced a small twinge in my stomach for sure but I was fine really.  My thoughts about the situation from a market perspective was, this year might end up written off for sure but things would return to normal. The markets will rise again and all will be well. I was more concerned about the human impact this was having on families and how we were all being affected pretty much at the same time.

I must admit that I was impressed with how I handled the loss. It would be interesting to know how much of that was because it seemed to be affecting us all with this being linked to the pandemic and also that I wasn’t chasing a solid set date for FI as much anymore. Nevertheless, it was a good test of my nerve. I made no sells and invested as normal the £1500 for March at the end of February. I also took advantage of the decline and sold part of the fund that was not in my ISA wrapper and put this back into my ISA to fill up the £20,000 allowance slightly earlier than I originally planned to.

My expenses for March was fairly high. I ended up £35 down which I took from my big expenses fund as usual for any monthly deficits. Most of this expenditure come from having a few more take aways than normal and also buying a fair bit of food and gifts for some relatives to help out.

Gratitude

Since losing the £27,000 this has now gone to around £18,000 at the time of writing but even when this was at its worse I still felt grateful for being on the path to FI and had no regrets about my pursuit of it. This has led to the following benefits which help in this situation which gives me immense gratitude:

  • I have a years supply of money to pay for all my bills if had no income
  • I own my own home so at least I know my home is all paid for regardless
  • My expenses are very low, I don’t need a huge amount of money each month to get by for essentials

Life – Unprecedented times

It’s been a very interesting March that’s for sure. This lockdown really has changed the shape of my activities as it has for most. I enjoy going out for a drink and dance on the weekend. This has been annoying to lose but the fact is it’s the simple joys and freedoms that I have missed. Just being able to pop in to see my dad, friends and other relatives to have a cuppa. Being able to go for a random drive, give my gran a hug etc.

I have been able to work from home for the past couple of weeks with having to go into the office 1 day per week on a rota which I am actually grateful for. It’s been interesting to experience working from home on the regular as it’s let me find out if I would like to in general when doing the same job I do now. I must say that there are benefits and negatives like with most things. I enjoy being able to stay up later at night as don’t need to get up so early, no commute etc and can wear jeans. I really do miss the human interaction though and speed of asking things in person. It really does make life easier and gets you up and about. It’s shown me that for me there is indeed a social element to working I miss when at home remote working. We have lots of banter in my office which I know not everyone gets to experience.

As always, thanks for reading my post. I’d like to know how you all have dealt with the situation we find us all in and especially how the large losses have affected you as for most of us, this will be the first huge decline we have experienced.

Chris – TheFIJourney 

The Evolution of your FIRE Pursuit

I thought it would be interesting to talk about my own changing attitude towards my FIRE pursuit and that it would also be great to learn about yours as well. After all, That’s one of the main reasons for me creating this blog: to share and to learn during the FI journey.

So first off – don’t worry. I haven’t changed my attitude to be anti FIRE… I don’t believe it can’t be done now, it’s crazy, that it’s best to spend it all now – you could be dead tomorrow etc… I have however as alluded to in other posts changed my focus slightly and the specifics of the goal/target has changed. So firstly, let’s start with what hasn’t changed.

  • I am fully committed towards reaching Financial Independence. For me being Financial independent is simply the ability to no longer NEED to earn an income for all my basic needs in life. This includes having a home, paying all essential bills and also having a small amount of discretionary weekly money for small treats.
  • I still aim for the next few years at least to have a savings rate of above 50% of my post tax salary (Currently sitting at 58%)
  • I still aim to reach a £250,000 FI Fund within the next 3 years (Project 2235)

So what’s changed?

I think if I was to sum it up – the strictness of my original approach and ultimate goals has changed. I will now talk about the specific areas I think best highlight these changes and how the evolution of FIRE is occurring for me personally.

The ERE Approach & Depriving yourself


During my early FIRE years, I courted the Early Retirement Extreme movement as it were. I think this was of course mainly due to me trying to speed up the time it would take for me to FIRE. I wasn’t happy with having to wait what I originally had down as 23 years to FIRE. I cut back on so much when it come to my expenses and took seriously even the ideas of not owning a car, biking to work etc. As I discussed in my post on depriving yourself, I really took a good hard look at whether I was perhaps depriving myself with my strict pursuit of FI.

Firstly, I know the feeling of being deprived and judging whether something is or isn’t depriving yourself is a very personal thing. I would never say something is or isn’t as any universal law as each to their own but for me I certainly felt I was depriving myself of some joy and quality of life with how strict I was being. For example I couldn’t give up the benefits of owning a car. I love being able to just drive to and from friends, go to work that’s far away if the job is enjoyable. It would be a huge sacrifice to me if I didn’t have a car.

I now completely spend money guilt free, even large amounts of money on things that will bring me great value and joy. I recently bought a new 4K 65INCH LG OLED TV with a PS4 Pro. Doing that would have left me so conflicted in the past but I made the decision to buy those after a lengthy period of consideration, research and waiting for the right price. I spend more money now on going out to eat and drink at least once per week as I get a lot of joy out of those activities. I no longer think, I should of perhaps invested the difference etc. I make the decision based on the joy to stuff ratio so to speak. I happily spend money to go on multi day trips around the UK and trips to Amsterdam etc as this brings me great joy also. This for me is a big and healthy change as I already invest so much each month…

With this said, I am still very careful with my money. I still buy 20 lots of Branston baked beans (4xcans) when on offer. I still look for deals all over the place and withhold spending money on so many things that my peers spend on without even thinking. I still track money spent to the penny in my spreadsheets and I never waste my money so to speak.

Escape the Rat Race (FI or FIRE?)

I have written before about what I think makes a job good. I went from having a job I really disliked to a job that I now really enjoy. This really has helped change my attitude towards wanting to stop working entirely. I know that not everyone can find a job they enjoy but it is certainly possible to find one. I can no longer see myself retiring at 35 being able to afford the bare essentials in perpetuity. I think if I can keep my current job and things don’t drastically change which I know is of course possible, I wouldn’t want to stop before turning 40 at least. The benefits of FI on its own would be far enough for me as I already feel at this point that I choose to work and that will only get stronger the closer I get to and ultimately when I reach FI. 

The main reason for not wanting to fully FIRE is that work really doesn’t feel like work to me in my current job and I’ve been here 3 years nearly now so I don’t think it’s the honeymoon period either. There’s always things that are annoying, but the good far outweighs the bad. I also think being so far along the FI journey no doubt has helped hugely with this work sentiment as knowing you don’t have to do a job into your 60s or that you could last decades without working right now really takes away a lot of the negatives.

Cast Iron 4% Rule (The FI Fundamentals)

In my years since learning about the the FI movement and the whole concept of being able to live off your money in almost perpetuity if you take 4% of your pot + inflation going forward for multiple decades. I have sold the idea to a few of my friends very passionately. At least 3 of them as a result now invest monthly as do I and are working towards this goal albeit at differing speeds and levels of commitment. 

Setting aside whether 3.5% or 3% is actually the best bet for the future let’s just consider the belief that if you invest in a mix of bonds and stocks, reach a certain amount and then you can withdraw from that without ever having to work again. How much I believe that this is a sure fire thing (pun not intended) has gone from being around 99% perhaps to 90%. This is important because it has changed the degree to which I am willing to put so much on the line to pull the trigger. I like the analogy I heard the once about playing Russian roulette. I will gladly play Russian roulette knowing that there would be 1 bullet in the gun but 9 chances of FI going as planned as long as the bullet would be a strong rubber bullet that would no doubt hurt me but at least not kill me…

This cautious part of me that doesn’t want to put everything on the line for this goal is one of the reasons I own my own home and still have cash in the bank. A lot of people within the FI movement have suggested to me that I should sell my home, invest the money and rent instead to maximise my investing and reach FI quicker. That I should get rid of most of my Cash is King fund and invest this as well. If I truly believe in FI, then why wouldn’t I has been said? I think my answer is exactly that I do believe in FI through investing but not to such a degree I will risk my home and all my cash and put absolutely everything into it so to speak. I still don’t want all my eggs in one basket. I feel very similar to Mr Money Moustache when talks about having several layers of so called protection in case things didn’t go to plan and that he is a slight wuss by some accounts on that front. I use the 4% rule as a general gage of how long my money will last but that is protected with the additional expectation of Inheritances, private and public Pensions not being included in the totals and additionally no hard wish to never earn money again. 

All of this aside, I still fundamentally believe we are investing in humanity and that this will work in the long run. I am investing huge amounts of money every month, I just don’t want to risk completely wiping myself out if I am wrong that’s all.

Static FI Target & Rushing towards FI

My initial FI target when I first got into the movement was £250,000 so that I could live off £10,000 a year. This is still a target of mine with my recent Project 2235 post. This however it not a static target at which point I will pull the trigger on FI. This is just my short term target to get me to that barebones FI achievement. This will feel great no doubt but will not be the end of the story. When I get to this, I will reassess to see if I will then pull back on my savings rate and spend some money on doing up my house inside or buying a new car, pay for a wedding, or go on a world cruise etc. Who knows… I am no longer religiously sticking to a pull FIRE trigger amount or date.

This leads me onto the most important part of my FI pursuit evolution. I am no longer in such a dam rush to reach full FI and/or FIRE. My most important goal is to enjoy the next 3 years and not solely to get to my 3 year goal of £250,000 as quickly as possible in a way that slightly deprives every day living (Similar to only living for the weekend so to speak). This is still a big goal of mine which I am working very hard to achieve and I will still be investing £1500 a month to help achieve this, Its just that I am no longer as desperate anymore to get to the finish line so fast…

I can’t help but think this change in priority or perhaps more urgency is because I am already living through so many of the benefits of FI right now that I am so far down the path, I think if I was to get to £250,000 tomorrow, it wouldn’t make me that much more happy than I am now, and that feels epic…

Thanks very much for reading my article. I’d love to know if your pursuit of FIRE has changed at all or even if it’s more or less identical at the end to how you envisioned it at the start.

Chris @ TheFIJourney

My 3 Year £250,000 Target – Operation 2235

Intro

Hope everyone’s doing well. I have had a few busy months lately and have been focusing quite heavily on side hustles and then back to some career development by pursuing some new certifications in my field. I will do a general update discussing some of this as my next post during a Christmas review most likely :).

Operation 2235 – Intro

Back to Operation 2235… I had to give it a name like that to make it sound cool. It should be considered pretty cool on its own though I know but still there it is…

So there I was reviewing my finances a week or so ago and entering some costs as it were – I still track to the penny and record it against categories such as Going out, Gifts, Food etc. I updated my current portfolio total which I do once a month and it got me going yet again to an online compound interest calculator – oh boy have I visited that site a lot over the years. I put in 5 years in months and 5% as the interest (not 8% accounting for 5% real growth with inflation taken away) and I noticed that my current total was £161,000 and with my recently new monthly investment of £1500 (increase from £1160) I would be on track to hit £250,000 in 3 years time when counting the money I have in my Cash is King fund. This would coincide with me still being 35 years old at this point. 2022 – 35 years old (Operation 2235 :D)

Many years ago when I first started getting into FI, I dreamed of getting to £250,000 (saying Quarter of a million sounds so much better…) which I considered Base bare bones FI giving me the £833 monthly figure at 4% SWR, this would pay for all my current bills and basic outgoings as fortunately I am mortgage free. I dreamed of getting to this figure before I was 40 but originally it was going to take me until 50.. this has since fell due to a good dose of luck and increasing my monthly investments with a couple of promotions along the way.

The Plan

In order to hit my target of the quarter of a million. I need a nice sail wind that I won’t be able to control such as the 2% real growth for 3 years with no bears showing their face. Who knows if this will happen what with what’s going on politically and with the long bull run we have had. Life itself will have to go as I plan also when it comes to my job, health and such and I only mention these things as I am very aware that I can only control so much and even if the wind turns against me, I will still consider this plan a success if I manage to pull off the below;

  • Invest £54000 over the next 3 years (£1500 a month)

  • Do the above without depriving myself whilst still being able to weather some expected unexpected outgoings

Is it Achievable?

Is this target I have set myself achievable? I would certainly say it is yes. The key thing for me that will determine this is that the £1500 monthly figure itself is realistic given the realities of life and my increasing expenditures lately.

With that in mind when I look at this target I have looked at 3 areas financially that I need to ensure are strong. There are of course many other factors such as ensuring I keep my job, working hard etc but financially my main instruments used in this success are as follows:

Expected Unexpected Outgoings Fund

I have always had a £1000 cash expected unexpected fund that I use to make sure my monthly investment amounts are safer from being meddled with due to any number of issues propping up. I currently fund this in terms of replacing it every year so that should I spend the lot, by the next April I will have a fresh £1000 ready. This is done from normal cash monthly interest, the 2 months of council tax I don’t pay and 2 yearly payments I receive for doing a task for family members. Every year for the last 5 years, something has come up using some or most of this money. Whether it’s a large vets bill or to replace a boiler, fridge etc or fix my car. This has always helped me out so this fund for me is a big first defence of not touching that £1500 monthly investment

Big expenses Fund

The next major pillar to the success of this plan is that when it comes to big expenses such as buying that new iPad, new 4K TV, PS5 or yearly trips to Amsterdam and Liverpool etc. I can pay for these things without it impacting the investing. This fund which has been sourced from side hustles (mostly MB) stands at around £7k and will be there to use for these next 3 years. This is a huge relief for me as it means I can still do the things I want to do without yet again impacting this plan.

Non depriving Discretionary spend 

Now for me, this is probably one of the most critical parts of this plan. One of the most important parts of all this for me is that this is a financial plan and goal which of course impacts so many areas of my life. Despite this however, I don’t want to spend 3 years not doing the things I want to do such as having drinks on a Friday, going out for a meal once a week, buying that game or book when I want them or going out on day trips etc. I am still very very careful with my money and I always look for deals and buying food in bulk as an example but I will not compromise on quality of life when there are things that for me really bring great joy. 

For these reasons, I have set a weekly discretionary spend that for me should be enough. It’s slightly higher than I am used to but not much more. This is in part because I have been spending more money on buying gifts for people and going out in the last few months and I don’t want that to stop.

In Closing

I will provide updates on how I am getting along with this £250,000 challenge from now on every quarter at least. I would love to know your thoughts on this and if you could share any of your financial plans however large or small.

Chris @ TheFIJourney