Author Topic: Case Study: Can I FIRE faster without sacrificing quality of life?  (Read 4871 times)

dreams_and_discoveries

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Life Situation: I'm in London (British Citizen, no other passports), 35, single, no kids. Making good money now, aspiring to FIRE in 2021, then travel the world. After that I'd love to use my life to volunteer with causes I care about, read more, hike more, enjoy the culture of London and perhaps study towards a PhD. As you can see, I have a lot of middle-class extravagances that make my life both easy and enjoyable. However, I'd love to get to freedom from the treadmill quicker.

Gross Salary/Wages: This can vary as I'm freelance, last tax years was impressively 100k plus 40k pension (some of this was earned in previous tax year.)

Pre-tax deductions: Only just under 1k comes off automatically

Other Ordinary Income: None, just my main gig. This is one of the areas I want to focus on.

Qualified Dividends & Long Term Capital Gains: Just building up my taxable portfolio now, no significant values here- I'm keeping as much in tax exempt ISA's as possible.

Rental Income, Actual Expenses, and Depreciation: None

Adjusted Gross Income: As you can see, just my main income from the day job.

Taxes: Federal, state/local, and FICA.  Will pay around 25k total this year in taxes, may go up to 29k next year with increasing taxes on dividends.


Current expenses: Have kept these to 30k annually in the last few years.

Annual Spends are
  • Mortgage - 9.8k
  • Council Tax  - 1.5k 
  • Gas/Electric/Water - 1.5k
  • Car/Home Insurance -500   
  • Home & Garden Maintenance -1.4k
  • Gardener - 900
  • Cleaner - 1.8k
  • Internet - 550
  • Travel - 5.5k
  • Fitness - 800
  • Clothes - 500
  • Theatre - 1k
  • Other Entertainment/Pressies/Study - 700
  • Pets - 600
  • Eating/Drinking Out - 900
  • Food/Household - 1.3k
  • Car/Petrol - 200

Trying to max out my pension 40k a year, my ISA 15k year then putting the rest in a taxable account.

Expected ER expenses: Budgeting for 35k until mortgage is paid off, then 25k.  Could be less as I'm likely to travel to very low cost of living places, and will likely indulge in some side hustles when I've got free time and not paying 40% tax.

Assets:
  • Home  - 382k
  • Investments - 69k
  • Pension - 114k
  • Cash- 26k

Liabilities:
  • Mortgage - 151k
  • Taxes - 6k

Specific Question(s): So, it would be great to hear others thoughts and opinions on what they'd do in my situation. I know I should expand my incomes, so I'm not reliant on one source.

I'm close to looking for a lodger, as I do have 2 spare rooms in my house. This has always been my backup I'm skint option, but I've reluctant to pursue as I've gotten a bit too comfortable living alone.

I'd love another side income, but the tax regime isn't too kind with the 40% rate, it really puts me off spending lots of time and coming out with a tiny amount. I could put small amounts through my company, and I probably should read up on this option and see what the criteria are.

And as I really want to travel when FIRE, I'm looking into TEFL. There should be loads of opportunities in London, however the market looks really saturated - I'd need to have a good niche.


MonkeyJenga

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #1 on: March 20, 2016, 08:16:36 AM »
Why don't you take your time looking for a reliable lodger? You can afford to be picky. If you start people on a month-to-month basis, or a longer agreement with a 1-month trial period, that will give you an out if you really can't stand it. You might be pleasantly surprised, though.

How would you be living when you travel? Hostels, couchsurfing, shared rooms, private houses? Will you have a personal cleaner, a gardener, a gym membership, new clothes? I would think about everything you "give up" when you travel, and then consider why you enjoy traveling so much if you don't have those expenses.

dreams_and_discoveries

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #2 on: March 20, 2016, 11:22:17 AM »
Thanks MonkeyJenga, some good advice there. I'm penning a quirky lodger ad that will appeal to the right people and leave the others clicking next. Not too worried about getting stuck with the wrong person, as lodgers here basically have no rights, and can be asked to leave immediately. If I get the right person, I'll be very happy.

I do admit lots of my expenses are timesavers to make life easier for me, and make working ridiculous hours worth it. I've costed some of them, and worked out it's better to pay for these services than take time off work and do it myself. I could do them at the weekends, but then I'd burn out quicker, need to take time off. And I like to think it means I am doing a little for the local economy.

On the travel thing, I'll have the cash to live well and won't be on a typical backpacker budget -  I don't mind the odd shared room, but that won't be the norm - I'm thinking slow travel and weekly/monthly rentals and private rooms. I don't think I need these luxuries, they are more a sweetener to make the corporate drudgery seem worthwhile if that makes sense?

MonkeyJenga

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #3 on: March 22, 2016, 09:36:16 PM »
Nice, good luck with the ad!

On the travel thing, I'll have the cash to live well and won't be on a typical backpacker budget -  I don't mind the odd shared room, but that won't be the norm - I'm thinking slow travel and weekly/monthly rentals and private rooms. I don't think I need these luxuries, they are more a sweetener to make the corporate drudgery seem worthwhile if that makes sense?

Sure, it makes sense. It's sort of a sensible trap - treat yourself to rewards that require money so you can get through corporate drudgery, and those rewards force you to spend more time in said corporate drudgery. It's up to you to decide whether it's worth X months/years working to pay for those luxuries. I'm certainly not going to make the decision for you. (I can try, but you won't listen! This is the problem with other people having free will.)

I should add that you obviously don't have super-lavish spending to begin with, and you're doing better than the vast majority of people out there. There are simply certain categories that could be slashed if you were motivated enough. For example, going to clothing swaps and thrift stores, getting home workout equipment, or accepting lower standards of cleanliness/garden beauty.

The time-saving expenses - will those continue to be farmed out when you retire? I'm curious what you think your retirement budget is going to consist of. More travel, sure. Will you keep farming out the time-saving expenses?  Will you rent out your place while traveling?

Metric Mouse

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #4 on: March 22, 2016, 11:46:32 PM »
Could you cut the gardener and the house cleaner? That'd be 2.5 K per year, or almost 20K over the next five years. It would also lower your stache needs by 62K, or almost a year of savings...

Roots&Wings

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #5 on: March 23, 2016, 06:02:45 AM »
If you're in London, would Airbnb or temporary visitor lodging perhaps be an option instead? I'm in a similar situation with rooms I could rent out, though a bit hesitant about a long-term roommate (unless I could find one who works total opposite hours and is basically never home when I am!) and considering short-term.

I hear you on the convenience items like gardener and cleaner, though could potentially contribute to fitness. If they save your sanity and let you have a life outside of long working hours, then that's likely a good call to keep. Cleaning though can be an easy few minutes here and there if you work out a routine. Clothes seem high to me, but overall looks like you're in good shape.

dreams_and_discoveries

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #6 on: March 23, 2016, 09:19:04 AM »
Thanks guys for the feedback and ideas... you've all given me things to think about. Have the lodger advert out there, let's see what comes in.

If you're in London, would Airbnb or temporary visitor lodging perhaps be an option instead? I'm in a similar situation with rooms I could rent out, though a bit hesitant about a long-term roommate (unless I could find one who works total opposite hours and is basically never home when I am!) and considering short-term.

I hear you on the convenience items like gardener and cleaner, though could potentially contribute to fitness. If they save your sanity and let you have a life outside of long working hours, then that's likely a good call to keep. Cleaning though can be an easy few minutes here and there if you work out a routine. Clothes seem high to me, but overall looks like you're in good shape.

Yeah, I do rent it out on AirBnB, as I'm quite far from central London I don't get too many tourists. Love the idea of someone who works opposite hours :).  I didn't even think clothes were that high ... you have me thinking now.

Could you cut the gardener and the house cleaner? That'd be 2.5 K per year, or almost 20K over the next five years. It would also lower your stache needs by 62K, or almost a year of savings...

These are definitely convenience spends, that won't be here when I'm not out of the house at least 13 hours each day.


Sure, it makes sense. It's sort of a sensible trap - treat yourself to rewards that require money so you can get through corporate drudgery, and those rewards force you to spend more time in said corporate drudgery. It's up to you to decide whether it's worth X months/years working to pay for those luxuries. I'm certainly not going to make the decision for you. (I can try, but you won't listen! This is the problem with other people having free will.)

I should add that you obviously don't have super-lavish spending to begin with, and you're doing better than the vast majority of people out there. There are simply certain categories that could be slashed if you were motivated enough. For example, going to clothing swaps and thrift stores, getting home workout equipment, or accepting lower standards of cleanliness/garden beauty.

The time-saving expenses - will those continue to be farmed out when you retire? I'm curious what you think your retirement budget is going to consist of. More travel, sure. Will you keep farming out the time-saving expenses?  Will you rent out your place while traveling?

I agree it's a trap - I balance it against time off work -when I had a perm job, I had 25 days holidays, last year I took 13 days. I could take the additional time off and do the chores, but it seems cost effective to work & outsource these tasks I don't enjoy. When I retire and have free time, I'd in-source them again.

Yes - when I travel I plan to de-clutter, then rent out the house.  I can rent the house for about 1.4k each month, against the mortgage of 850 there is enough margin for agent fees, tax and covering small voids. 


mozar

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #7 on: March 23, 2016, 07:28:51 PM »
Quote
Love the idea of someone who works opposite hours :)

Someone who works opposite hours might keep you up when you are sleeping, unless you have excellent sound insulation.

dreams_and_discoveries

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #8 on: March 24, 2016, 01:28:02 AM »
Someone who works opposite hours might keep you up when you are sleeping, unless you have excellent sound insulation.

Maybe not then....

Roots&Wings

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #9 on: March 24, 2016, 07:09:08 AM »
Thanks guys for the feedback and ideas... you've all given me things to think about. Have the lodger advert out there, let's see what comes in.

Wow, you are fast! Good luck with the roommate search.

And "opposite hours" meaning optimized so that the other person isn't home or making noise when you are (e.g. night shift worker who's gone from 9pm-7am if you work normal day time hours). If you work from home, it would be a bit different. That's my dream roommate anyway :)

dreams_and_discoveries

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #10 on: March 31, 2016, 07:18:07 AM »
Mini-update: have had three responses on the room, two were no-gos due to smoking/text speak, but one actually looks promising. He works shifts, has loads of cool hobbies and is out a lot..... I've invited him for a look around, let's see how it goes.


Roots&Wings

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #11 on: March 31, 2016, 10:53:15 AM »
Nice! Hope it works out. Are you doing a weekly rate and trial period or monthly or something else?

dreams_and_discoveries

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Re: Case Study: Can I FIRE faster without sacrificing quality of life?
« Reply #12 on: April 09, 2016, 03:28:12 AM »
Well I have an update on the lodger situation - had three responses to the ad, two were no go's but one looked promising.

He came round for a look this morning, and we really got on, so from next month I will have a lodger. And an extra 550 a month.

We seem to have a love for the outdoors in common, he works shifts and seems very quiet and respectful. We discussed schedules and 'house rules' and we're just going to see how it works out on a month to month basis.