Hi everyone,
I am new on this forum. I have been for a long time a proto-mustachian, able to save a lot (though nowhere near a proper mustachian) while still enjoying life and spending on things I like or even convenience services, but without succumbing to most marketing cravings.
Why am I only now lurking and appearing on these forums? Well, in the olden days, I had a lot of savings when renting and was enjoying a no-kid life knowing I could leave my work and have 5+ years of autonomy (much much more if reducing my lifestyle) if I didn't like my job or my boss. No need for Mustache then.
Then, for various reasons (personal and economic opportunity), I bought a house. And since then, I felt every single day of my life the shackle of the mortgage. I felt genuinely depressed. I could no longer decide on a whim to say "f**k you" and leave a job. I could no longer say to a CFO what was on my mind because I now NEEDED the job. Mr Mustache is right when he says free employees are the best, because they don't say what will save their job, they say what their jobs tells them to say.
And these shackles made me feel quite strongly how shackled I was by forced-work (by opposition to pleasing, non-forced work done for one's pleasure and development).
My sole goal in life (nearly) became to get rid of that mortgage. I have now hit the point where I can call the bank and get rid of that soul gutting feeling.
With the mortgage shackles gone, I can now clearly feel the forced-labour shackles. And they hurt my wrists. A lot. I am under 40, and realise that I still have 25-30 more years of work. That is stupidly insane.
I look at my dad who started working at 17 and still works, still HAS to work even though he is nearing 75!
I don't want a life of slavery.
Option 1 is to increase revenue: do more silly work, be more proactive, be better, stronger, faster = be even more of a slave and have less time for myself and my family. Or go the entrepreneurship road, work like a madman and *maybe* succeed in getting a one-off or stream of payments that allow us to reach freedom.
Option 2 is to try the Mustachian Way and ask for your good advice.
So my question is: can I retire soon on my savings (excluding pensions which would be a buffer), and if yes when and how? Or am I doomed to bear the shackles for another 30 years?
Life situation: 2 adults, 2 kids (<8yo). I am the only breadwinner. Live in the UK
Salary/wages: tax is taken from payroll, so my net take-home pay is currently about £43k / year. I am eligible for bonus payments, and they can range anywhere from £0 to £3k per year, so I tend to ignore them and treat them as a good news if they fall. In parallel, through my and employer contribution, about £10k per year go towards my pension fund.
Other income: no material ones, maybe £200/year in tax free interests in a ISA. If I work 23 more years, I would be eligible for social security of £5k or £6k per year.
Expenses
* mortgage: £965 /m but since I can/will repay it in the next 30 days, it will go to zero. Interest part is minimal currently as it is an offset mortgage with less than £6k net outstanding value.
* phone: £10/m for 2 mobile lines
* internet: £55 / month for unlimited download at 72Mb speed. I expect to be able to reduce this to £25/m towards end of summer or early fall as I can take advantage of a special offer then.
* electricity: £38/m just renegotiated
* gas: £56/m just renegotiated
* water: £38/m
* gas services (boiler yearly installation and emergency cover): £22/m
* council tax: £132/m
* gym: £28/m Now this one is a tricky one. I was a slob for 20+ year, then started running last year. However, I keep getting injured, and when I do, I can only do cycling or elliptical. I hate cycling and can't see myself finding the room in my house for an elliptical (and can't imagine training at 5am and waking up the house and neighbours). So I feel I am stuck with this expense, which is wasted when I am fit (why would any healthy person go to a gym instead of going outside?)
* British heritage: £7/m. Got suckered into this one... will force myself to visit a couple of castles, then will cancel at renewal.
* Groceries. Estimated about £588 per month. That's a lot. But then again, we made the choice of going primal/paleo, which means a lot of fresh vegetables rather than cheap pasta/bread/rice. Lots of nuts. Average amount of meat. Since we are not strict, we do still do the odd home made bread (without a bread machine). Everything is organic, and meat is grass fed. We don't buy washing powders or other expensive stuff, we do our own washing machine liquid with soap. Things like toilet paper in bulk from Costco. We don't know how to reduce without compromising quality. Our current best plan is to invest in a chest freezer to be able to buy meat/veg in bigger bulks and prepare home food in batches to be frozen.
* car fuel: £140/month. It's a Prius, but still has a 50/60 miles round trip commute 4 to 5 days a week.
* restaurants: £60 per month. Seems reasonable for once a month for a family of 4.
* clothing: £150 per month. Honestly, this one I don't know how to budget because we often spend months without ever spending a single penny, then suddenly both kids outgrow their clothes and hoes (even eBay is as expensive a new cloth!!) or we have to renew stuff because they crumbled to dust. This also accounts for replacing my suits when they die or changing running shoes when they get bad. I might be actually spending only £200 per year for all I know. Have started tracking in more detail this field.
* car insurance £26/m
* car repair fund: £21/m I think I spend more with annual service and the fact that those british B roads are killing my tires. I end up spending £400 on tires alone every 1 to 2 years!
* dental for 2: £50/m absolute necessity for me.
* TV licence: £12/m
* Home insurance: £29/m
* beer: £12/m I like nice British ales at £1.8 per pint
* subs (grocer, Costco, Amazon Prime): about £20 per month.
* Gifts, birthdays: £50/m. No idea how much in reality, but 2 kids, 2 adults, 4 grandparents, uncles, nieces, cousins, birthdays, Christmas, and kids being invited to birthday parties all add up.
* mandatory holidays: parents live in 2 other countries. 2 trip per year to see them (beyond skype) and make sure our kids see their grandparents while they are alive cost us about £3k per year.
* family holiday: £500 per year. Although it would be sad, this one can easily be reduced to zero.
* car payment: £256/m. My biggest sin. I admit it. I always owned 4-5 y-o cars for dirt cheap. My car fund was £100/m, allowing me to spend £6k every 5 years: But then happened to be one of the rare people on earth who had their Prius die on them. Clueless technicians. So I did the unthinkable and bought a nearly new Prius+... Vanity? Or hope to avoid technical problems?
Liabilities:
* Mortgage:: £6k made of £52k gross mortgage and £46k offset savings
* car debt: about £13k
* credit card: today about £2k, but I pay it in full when statement come out.
Assets:
* current/ easy access savings: £14k
* ISA (a tax free account in the UK, but you can only add a fixed amount to it every year): £21k, delivering 1.5% net (2.5% equivalent gross interest rate)
* pension funds: £43k, can't touch before 55 year old I think. Split bonds/stocks 35/65
* Car: £15k? Let's say £13k..
* House: £350k estimated sell value, £380 to £400k if I invest about £20k of work in it
My summary
Feels to me like at this stage, with about £25k per year of spend and £43 of guaranteed inflow, I would need £625k in bank which would take me almost 35 years. So I could retire on my cash alone... 10 year after the legal age! Sure I'd have more retirement money (the stash, the pension and the social security), but I would have wasted most of my life.....
Even reducing permanently my spending by £5k would mean I still have 21 years to get to freedom. That means retiring only a few years in advance of legal age.
I am missing a trick, and I can't get my head around it. Or it's already too late for me?
Other things to also take into consideration, I'd really want to have about £20k per kid (£40k total) set aside for them to either fund their university or go entrepreneur if they so wish. That's another saving.
The other bit is that house work. I suck at DIY. I beyond suck (even though my father s a DIY god). Should I spend £20k (which includes silly amount of labour costs) in doing up the house? On one hand, if it increases property value by twice the amount, it's still useless if I don't sell. But on the other hand, I'd enjoy a nicer house, without leaky taps and rotten but functional kitchen/bathrooms.
I could move nearer to work, but friction costs are high in the UK (stamp duty) and would take a few years to make up in petrol (remember, I have a Prius) AND would assume that I keep my job in the same company for another X years making the shackles even heavier.
Thanks in advance for your help (or your punches?)