This last month or two I’ve been playing around with my spreadsheets, looking at savings rates, net worth, investing and the like. I’ve input my savings, pension balances, and bank balances for the last 5 years, along with mortgage balances and house values and this is what I’ve come up with:
It’s pretty, right? So the blue line is all my assets – my house values (I have two), my pension balance, my bank account balances and investment and savings accounts. The red line is my total debt – I have two mortgages and I owe my parents quite a lot – they helped me buy my first house and I’m paying them back month by month (I count myself lucky every day for this, not everyone has this leg up – maybe I’ll write a post about this sometime). The green line, probably the most important line, is the difference between the two and is effectively my net worth.
That’s right, five years ago I had nothing. Not in financial terms anyway. I was 27 and I had a car, a laptop, a TV, an extensive music and film collection, the usual stuff, but nothing to my name really, no savings or anything like that. If you’ve read the ‘About’ section of this blog or my first post with a bit of my background you’ll know it was about that time that I first read ‘Rich Dad, Poor Dad’ and discovered the whole FIRE (Financial Independence, Retire Early) scene. Since then I’ve slowly but surely grown my wealth and this month I reckon my net worth is about £170k. Still a long way to go until I can comfortably retire, but not too bad either.
I’ve run projections using fairly conservative assumptions (eg salary increasing by 2% a year, investments and house values increasing by 5% a year, etc) and I believe if I continue on my current trajectory I should get to a net worth of £1m by the time I’m 40, at which point I should be able to start thinking about retiring. At the very least I’ll be able to cut down my hours at work – I hope to have children by that point so it would be awesome to be able to just work say 6 hours a day, 9am to 3pm and then I can still drop the kids off at school and pick them up when they finish.
An obsession with FIRE?
July was a really busy month for me. I went to a festival the first weekend, a stag do the second weekend, a wedding the third weekend, and this weekend I went down to Portsmouth to see my sister and my baby nephew who are doing really well. I’ve spent a lot of money – on drinks, eating out, hotels, petrol and so on – but I don’t regret any of it and I’ve still posted a fairly healthy savings rate.
One thing I noticed was that I found myself wanting to shout about financial independence a number of times. Any time a friend said anything to do with finance I had a sudden urge to talking about Mr Money Mustache (MMM), or leveraging mortgages, or being frugal. Maybe they’d bought a new house, or a new car say, and the FIRE buzzer started going round in my head. Don’t buy such an expensive car, I would think. Buy a cheap second hand car like I did. Don’t buy such a big house, I would think. Buy a modest house and get a second rental property.
I didn’t say these things of course. I have learnt over the last few years that talking about FIRE to someone who hasn’t shown any interest will likely result in them thinking (a) I’m weird, (b) I’m crazy, (c) I’m boring, (d) I’m selfish, or (e) all of the above. It’s just not worth the hassle. When I mentioned MMM to a woman I work with she thought the whole thing was very amusing but far too hard for someone like her to consider, and then she’d make jokes very loudly in the office and introduce me to new people as ‘the early retiree’. I did manage to convince her not to buy a car on lease at £600 a month – she instead bought one on lease for £200 a month. Still not great but a small victory I suppose.
On the other hand, I’m learning to spot the signs of someone who is open to the concept of FIRE and might actually take it seriously. I mentioned to a workmate this week that I’d maxed out my pension contributions (26% of my salary if you’re interested), and he asked me how to do the same. He then told me he’d been keeping all of his spending in a spreadsheet and had been doing so since 2009. I immediately thought of the book ‘Your Money or Your Life‘ by Vicki Robin and Joe Dominguez and pointed out that he’d already fulfilled 2 of the 9 steps in the book. I sent him the link but I didn’t start babbling on about FIRE. Small steps and all that.
The thing is, I find myself checking the blogosphere every couple of hours to see if any new posts have been added, and I find myself thinking about FIRE even when the topic of conversation isn’t at all related. Do I have an obsession? The fact that I’m even writing a blog post would suggest maybe I do. All this reminds of:
That time I went vegetarian
So, I’m a vegetarian.
I became a vegetarian back in May 2008. I also went vegan for a little while, maybe 6 months or so before I caved in to cheese (I found out the other day cheese has an addictive substance in it – this is not surprising to me). These days it seems quite acceptable to be vegetarian and no one bats an eyelid really. I tend to keep it to myself though – I don’t go round trying to convince other people of my views. People always ask though when they find out: ‘Why are you a vegetarian?’ I’ve experimented with different answers over the years but these days I just say something along the lines of ‘I think it’s wrong to kill animals’ and leave it at that. Most people accept that and we all move on.
When I first went vegetarian though I wanted to shout it from the rooftops. I wanted everyone to understand why I was vegetarian and why they should be too. It’s important for the environment, I’d say, reeling off some statistic as I did so. It’s better for your health, and it’s cheaper, I’d say when the topic of conversation moved to talking about diets. I’d talk about factory farm conditions and the fact that 95% of chickens in this country never see the light of day and live their entire lives in cramped, hot conditions.
It never made any difference of course. People just resented me I think. Or perhaps they just thought I was a bit eccentric. Or a bit of both. I remember the day I said I could make a lasagne with quorn mince and people wouldn’t know the difference and everyone laughed at me. I just think they couldn’t open their minds, they couldn’t get beyond the celebrity TV chefs that tell them all the best food is made with meat. It was easier to laugh at me then to question their own beliefs or the way they lived their lives.
And you know what? FIRE is no different. Read through some of the comments here, and here, and you’ll see what I mean. Admittedly those articles (and that TV program) weren’t great and didn’t really do justice to the concept of FIRE. But to see the backlash was quite disheartening. You just have to shrug your shoulders really. You can’t help everyone, especially if they don’t want to be helped. At least animals won’t be tortured/murdered in this case. People are only harming themselves.
But that’s all by the by really. The main point I wanted to make here is that obsessions fade until they just become a natural part of your life. I’ve been vegetarian for 9 years now and there’s no way I’ll eat meat again, but I don’t think about it constantly the way I did in the early months and years. I’ll still happily talk to people about it if they’re truly interested but I don’t waste my time trying to convince someone who doesn’t want to be convinced.
And I’m fairly sure FIRE will be the same. Saving hard, investing wisely, buying only what makes me happy, these principles will just become a natural part of my life that I don’t have to think about, and don’t feel the urge to shout about. When I retire young, or cut my hours at work, or when people find out I have enough income from investments that I don’t need to work, I’ll tell them how I did it if they seem truly interested but not otherwise.
One of my managers once said to me he respected the fact that I was vegetarian and also that I didn’t talk about it. I thought this was an odd thing to say. He went on, saying I was a role model and by going about it in such a ‘zen’ manner (his words) that he was intrigued and wanted to know more. That he considered me a ‘normal’ who is doing something ‘abnormal’ and that made him more interested than if I was some hippy seeking attention (not that all hippies are seeking attention but you know what I mean).
There is a passage in the LivingAFI.com blog where he tells his manager he doesn’t need to be there, he doesn’t want to work overtime, and he could retire if he wanted to. The balance of power shifts as his manager realises his subordinate isn’t worried about losing his job, and afterwards there is a new respect and equality between them. Needless to say I love LivingAFI’s blog and this post is a highlight. I would like to be in that position one day, able to reveal this sort of unusual information, the kind of information that would make someone do a double take. You have how much invested? You could retire if you wanted?
Yes, I am obsessed with FIRE. It’s good to get that off my chest. It’s probably a quirk in my character that I get obsessed with things in this way – I’ve seen the same trait in my brother so it could be genetic. But I don’t think it’s a bad thing. I’ve since examined the whole FIRE concept inside out, taking on board the good ideas, rejecting the things I don’t like and I believe I’ve found my own way of approaching it.
I’m also quite aware that this obsession will eventually fade away. That doesn’t mean I won’t be committed to FIRE, quite the opposite in fact. It just means it will become so much a part of my life that I don’t even need to think about it. It will become another facet of my identity, who I am. And I suppose hopefully I’ll be a role model – that day when I declare my early retirement people in the office, my friends and family, they’ll sit up and be shaken out of their daily slumber. Maybe they’ll examine their own lives and make changes of their own. Or perhaps not – their loss if so!