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.