Help me reach FIRE by 40! 23 now :)

[Chazamunns]

Good day!

Before we start id like to give a bit of background on myself - I am currently 23 years old and work for a Software sales company in UK who is looking to reach FIRE as soon as possible before travelling and finally settling down with the Mrs (Engaged and together for 3 years)

Finances -
£24k PA Salary
£6-10k  PA Bonus
£12k  PA Side Hustle - Matched Betting
£6.25 Contribution to bills from Fiance

List of expenses -
Food   £200-250
Mortgage £467
Council Tax £160
Water £40
Gas and Electric £85
Petrol £120
Shares £100 (3+5 year plans @ £50pm - Set to double investment)
Credit Card £100 (2200 remaining) 0% Interest
Car Loan FD £85 (2400 remaining) 7% Interest
Car Insurance £160
Car PCP £245 (£18000 remaining - Value 12,000)
Sofa £31
WiFi £25 (Essential for side hustle)
Vodafone Wifi £15 (Essential for side hustle)
Medical Procedure £292 (£3124 remaining) 0% Interest
Gym   £20
TV Sky £16
Mobile£18

Total: £2129 PM - £25548 PA

I purchased my car on a PCP deal before I had even hear of MMM - Which is a shame. Im looking to cut down as many areas as I can.

Obviously my biggest outlay other than my mortgage is my car - I have received a settlement figure of £15,800 that I will have to pay if I want to buy the car outright - I can then sell to a private dealer for around £12.5k. Is it worth me saving for a few months to cover the cost of this and to buy a budget car outright? Obviously I would save on petrol and also the car payment.

I have around £800 - 1.2k per month left after paying everything and I am looking for the best things to do to help me on the path to FIRE.

Any help would be greatly appreciated.

Looking froward to hearing from you all :)

[Jon Bon]

Hello @Chazamunns welcome to the cult!

Ok so the good news is you are super young, practially a baby, and hitting FI by 40 should be very easy. However you have 2 different parts of a journey in front of you, one difficult and fulfilling, the other rather boring.

First you have the hard part: Clawing your way out of debt.  Obviously you need to start attacking your debt. I dont know if you have a small emergency fund set aside, but if you do you need to start pouring all or nearly all of your extra cash into your debt. Go with the highest interst rate stuff first. So you should be able to knock out that 7% car loan FD (which I dont know what FD is) in 2-3 months. The large car debt makes things a bit more complicated. I dont know how things work in the UK but you are always going to get killed selling it to a dealer. Do people do private party sales over there? Look into it, if you can walk away from the car and not lose money it is definitely worth it. Keeping it however and attacking the debt also is not a terrible option. It looks to be reasonably affordable and reasonably new? What is the interest rate on the car? and what is a PCP?

So after you hit claw your way out of debt you can move to the easy and boring part. It wont be nearly as difficult, or give you the high that paying off debt will, but its a better place to be. Basically you just sit around and watch your money grow. Its pretty boring because it can take 10-15 years, but invest a large portion of your income, dont take on debt, dont succumb to lifestyle expansion and you will wake up one day and be a millionaire. The accumulation phase is where most of the folks around here are at.

Probably expand on your case study to include.

1. Interest rate and terms of all debt
2. Define acronyms for us non-Europeans
3. Value of current assets
4. Tell us more about your income and potential income

You could also read through the case study sticky, and investment order sticky.

Again welcome, you are in the right place my friend!

[Chazamunns]

@Jon Bon

Thanks so much for the reply you are a star! :)


Ok so the good news is you are super young, practially a baby, and hitting FI by 40 should be very easy. However you have 2 different parts of a journey in front of you, one difficult and fulfilling, the other rather boring.

First you have the hard part: Clawing your way out of debt.  Obviously you need to start attacking your debt. I dont know if you have a small emergency fund set aside, but if you do you need to start pouring all or nearly all of your extra cash into your debt. Go with the highest interst rate stuff first. So you should be able to knock out that 7% car loan FD (which I dont know what FD is) FD is the name of my bank (First Direct) in 2-3 months. The large car debt makes things a bit more complicated. I dont know how things work in the UK but you are always going to get killed selling it to a dealer. Do people do private party sales over there? Look into it, if you can walk away from the car and not lose money it is definitely worth it. Keeping it however and attacking the debt also is not a terrible option. It looks to be reasonably affordable and reasonably new? I will certainly look into selling it privately - Its trying to work out if it is worth paying off early. 2015 Audi A1 - I recently got a payrise and I thought I would treat myself.. Bad decision and if I would have known about MMM I certainly wouldn't have bought it! What is the interest rate on the car? I will find out :) and what is a PCP? A PCP is a agreement where you pay a set amount per month 0 When you get to the end of the agreement you then have the option to hand the car back or pay a lump sum to keep it. There is also a clause you can trigger which is when you reach half way through the agreement you can just hand the car back - So from here I am around 2 years away from this. http://www.financingyourcar.org.uk/car-finance/personal-contract-purchase-pcp/

So after you hit claw your way out of debt you can move to the easy and boring part. It wont be nearly as difficult, or give you the high that paying off debt will, but its a better place to be. Basically you just sit around and watch your money grow. Its pretty boring because it can take 10-15 years, but invest a large portion of your income, dont take on debt, dont succumb to lifestyle expansion and you will wake up one day and be a millionaire. The accumulation phase is where most of the folks around here are at.

Probably expand on your case study to include.

1. Interest rate and terms of all debt
Mortgage 3.5% £220,000 Remaining
Car Loan FD 7% £2400 Remaining
Credit Card 0% £2200 Remaining
Medical Procedure 0% £3124 remaining
2. Define acronyms for us non-Europeans
PCP - http://www.financingyourcar.org.uk/car-finance/personal-contract-purchase-pcp
3. Value of current assets
I own 10% of my £150,000 House - No savings etc..
4. Tell us more about your income and potential income
Take home from my job is usually around the £2300 mark
Side Hustle (Match Betting usually 1000 -1500 per month
You could also read through the case study sticky, and investment order sticky.

Again welcome, you are in the right place my friend!

So in terms of moving forward it would be best to attack all debt and then focus on investing in the index funds in this order?
Car Loan FD 7% £2400 Remaining
Credit Card 0% £2200 Remaining
Medical Procedure 0% £3124 remaining

Thanks alot for your help :)

[Jon Bon]

One more point of clarification.

You have a first direct car loan for 2400 @7% and yes you should pay this first. But you also have a car PCP, aka Lease? Where did this car loan come from then? Your previous car? I see 2 car payments but only 1 car.

Also establish an emergency fund with ~ £1000 very early on in your battle with debt. Keep it somewhere that you are not tempted to spend it. I would also try and ditch the credit cards the best you can. Leave it at home if you can.

Honestly the lease is better then owning a car like that. At least you can get out of it without taking a bath and buy something reasonable. I dont know how Audi's are across the pond but here they generally have a terrible reputation after they run out of warranty. Again can't speak to where you are but the Asian manufactures are generally cheap, efficient, and very reliable. So they are great options for a used beater that you drive until the wheels fall off. Which at your age and life situation (no kids) you should do. Buy something small and cheap. I seam to remember that type of car being popular over there......