The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Jebby on November 01, 2016, 04:26:00 PM
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About Me
- 24 year-old male, living in London, UK
- Single
- Software engineer, £35k salary, work 40 hours a week
- MEng Computer Science from University of Warwick
- Strong education and good problem solver, but inexperienced in industry - a jack of all trades, but master of none. For example, could build a fairly sophisticated web app from scratch, but would be Googling half the time and would make a tonne of poor architectural choices along the way.
- Renting an apartment in London that eats up about half of my salary. £1083 per month and has another 9 months left on the contract, though there is a break clause that can be used in 3 months.
- Paying off a mortgage on another apartment elsewhere - being paid off by a tenant. At current rate of progress, maybe about 10 years left on it. Around £60k equity in there.
- No other savings to speak of - I currently barely only scrape by each month in my current account. I’m fairly frugal on regular expenses, but occasionally blow money on meals out and dates. I don’t do any personal accounting - I’m guessing this is probably a good place to start.
What I want
- Financial freedom
- Freedom to travel around freely - I want more than 5 weeks each year to see the world
- A passive income stream that I can rely on to take breaks away from my work at will
Current thoughts
I’ve read the “inspirational” digital nomad books like Four Hour Work Week, but they don’t lend much guidance to someone who is inexperienced and starting at near ground zero. I’m in a state of analysis paralysis, often exhausted at the end of my working day and struggling to figure out how to take the first steps to transform my life. I’m open to any additional income stream, as long as it takes me one step closer to not needing a full-time job. Preferably one I can eventually automate. I am willing to work hard - I just don’t know what to work hard on.
I don’t have any expert knowledge to sell that couldn’t be found anywhere else, and I’m not sure how freelancing/contracting could be maintainable alongside a full-time job. That kind of work doesn’t run itself in the long run either.
I could start an online business on the side, but I lack any obvious domain knowledge. All I can think of is something generic like hustling on Ebay or drop shipping via Alibaba.
I would follow some of the investment advice on this site, but don’t have anything to invest right now. I’m reluctant to sell the house with the mortgage, though open-minded.
I have a few months experience of running a startup, so I have a vague idea of how hard it is to run your own business. I’m ready to take it on again.
Questions (not all necessary, any would be appreciated)
- What should be my first steps to stop being dependant on the 9-to-5 job?
- Should I be looking to utilise my software engineering skills to take the first steps?
- Any software engineers with first-hand experience of doing this?
- Should I sell the house to pay off the mortgage and use that money elsewhere?
- For someone at my age with my level of experience in my industry, should it be possible to start making the transition immediately, or do I need to learn some more first? The latter feels like procrastination.
Many thanks!
James
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Here are a few thoughts:
--Step 1 is to actually track your expenses. Once per month, sit down with your account statement and categorize all your spending. You'll probably be surprised at how much you're spending.
--I'm an Electrical Engineer doing mostly software development. Googling all the time is actually the norm for software development, especially early in your career. StackOverflow is an amazing thing.
--whether to sell or keep the rental apartment depends on 1) how much it's worth, and 2) how much rent you're getting. I'm not invested in real estate myself, but IIRC the rule of thumb is 2%--if the monthly rent is >2% of the apartment's value, then keep it. If rent is below that, you'll want to consider selling.
--exhausted at the end of the work day? So am I. One thing I've found helpful is to find something fun to do that doesn't involve spending money or sitting in front of the computer. Exercise is a good example. I have extra space in my garage that I use for woodworking.
--you're young with little assets. Now is the time to work your tail off, learn a ton, and increase your skills. Make yourself valuable, or as my brother would say, "Invest in yourself!"
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Here are a few thoughts:
--Step 1 is to actually track your expenses. Once per month, sit down with your account statement and categorize all your spending. You'll probably be surprised at how much you're spending.
--I'm an Electrical Engineer doing mostly software development. Googling all the time is actually the norm for software development, especially early in your career. StackOverflow is an amazing thing.
--whether to sell or keep the rental apartment depends on 1) how much it's worth, and 2) how much rent you're getting. I'm not invested in real estate myself, but IIRC the rule of thumb is 2%--if the monthly rent is >2% of the apartment's value, then keep it. If rent is below that, you'll want to consider selling.
--exhausted at the end of the work day? So am I. One thing I've found helpful is to find something fun to do that doesn't involve spending money or sitting in front of the computer. Exercise is a good example. I have extra space in my garage that I use for woodworking.
--you're young with little assets. Now is the time to work your tail off, learn a ton, and increase your skills. Make yourself valuable, or as my brother would say, "Invest in yourself!"
Thank you very much for replying, zolotiyeruki. If you don't mind me asking, how long have you been an engineer, and to what extent could you freely step away from your job? Furthermore, how long did it take for you to reach that situation since the beginning of your career?
About exhaustion at the end of the day, I often fear that I'm wasting my evenings when I should be developing myself in order to get out of the job that exhausts me in the first place. My job is fine, and I am still learning useful skills there - not all are applicable to self-employment though. I usually end up doing very little in the evenings due to analysis paralysis.
I purchased my house (a one bedroom apartment) for £125k. My monthly mortgage payment is currently around £520 on a variable rate. The rent I'm charging right now is £550, which is far below the 2% marker you suggest. The value of the property will have risen a little since then due to new transport links, but I may need to investigate whether it's worth holding on to.
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Here are a few thoughts:
--Step 1 is to actually track your expenses. Once per month, sit down with your account statement and categorize all your spending. You'll probably be surprised at how much you're spending.
--I'm an Electrical Engineer doing mostly software development. Googling all the time is actually the norm for software development, especially early in your career. StackOverflow is an amazing thing.
--whether to sell or keep the rental apartment depends on 1) how much it's worth, and 2) how much rent you're getting. I'm not invested in real estate myself, but IIRC the rule of thumb is 2%--if the monthly rent is >2% of the apartment's value, then keep it. If rent is below that, you'll want to consider selling.
--exhausted at the end of the work day? So am I. One thing I've found helpful is to find something fun to do that doesn't involve spending money or sitting in front of the computer. Exercise is a good example. I have extra space in my garage that I use for woodworking.
--you're young with little assets. Now is the time to work your tail off, learn a ton, and increase your skills. Make yourself valuable, or as my brother would say, "Invest in yourself!"
Thank you very much for replying, zolotiyeruki. If you don't mind me asking, how long have you been an engineer, and to what extent could you freely step away from your job? Furthermore, how long did it take for you to reach that situation since the beginning of your career?
About exhaustion at the end of the day, I often fear that I'm wasting my evenings when I should be developing myself in order to get out of the job that exhausts me in the first place. My job is fine, and I am still learning useful skills there - not all are applicable to self-employment though. I usually end up doing very little in the evenings due to analysis paralysis.
I purchased my house (a one bedroom apartment) for £125k. My monthly mortgage payment is currently around £520 on a variable rate. The rent I'm charging right now is £550, which is far below the 2% marker you suggest. The value of the property will have risen a little since then due to new transport links, but I may need to investigate whether it's worth holding on to.
I've been out of college for 11.5 years now. Spent the first six years doing engineering project management, and doing SW development since then. I'm certainly not on track to retire super duper early, but my target is to retire at 51, coincident with our youngest leaving the nest. That's all due to conscious choices on our part--kids, big house, etc.
WRT wasting time at home: I've found that lazing around at the end of the day is more of a habit than a need. If I just get off my duff and do one little thing (like doing the dishes or some small home repair), it helps me break out of the rut. I don't know about you, but I also find that I can fall into the habit of feeling tired->lazing around->getting to bed late -> hard to get up in the morning -> hard to be motivated at work-> not as productive as I want to be -> feel tired.