Planning a ‘Work Optional’ Life

open book
It’s time to look at another book that I have been reading
introduction

After my posts on ‘Deep Work’ by Cal Newport, I thought that it was time to go back to a book about financial independence and early retirement. The book that I have chosen is ‘Work Optional’, by Tanja Hester. This is partly about how to financially achieve early retirement, but also a lot about shaping your life – a life that you love. There is much less focus on the author’s story than other books that I have read, which I found to be a refreshing change. Instead, it is a step-by-step guide on how to discover what makes you happy in life and work out how you can make that a reality. Tanja also gives two other options apart from total FI/RE, which are semi-retirement, where you work part-time, seasonally or in a lower stress job and a career break.

As regular readers will know, my goal is ‘partial early retirement‘ and so her suggestions fit nicely with my future life plan. Since reading the book, then re-reading it and taking some notes, I have been meaning to work through it to consider what Natalie Bacon would call my ‘future self‘. As a way of introducing you to Tanja Hester’s advice I thought that I would do this here, on ‘A Simple Life’. In that way I can share her ideas with you as well as have a think about how I can put them into practice in my life.

At the moment we all have more time at home and I think that this is a great opportunity to stop and reflect on our lives, something which I don’t think that we do often enough. We are usually on that hamster wheel, not really thinking about where we are going or even where we’d like to be going. We tread the same old path we’ve always followed and inevitably we’ll continue to get the same results, rather than mapping out a new path and starting intentionally on a road to a more fulfilling life.

house on a tropical beach
You may get bored of this after a while
define your work optional LIFE

I have heard many commentators and bloggers talk about finding a purpose in early retirement. Images of FI/RE often feature tropical beaches with the implication that you’ll be spending most of your time there when you retire. The idea of ‘escaping’ the drudgery of the 9-5 for a sandy beach may seem attractive at first, but eventually you’ll get bored and want something more fulfilling to do.

I certainly know from my own observations of my parents, who are traditionally retired, that my mother seems the happier individual of the two. She has joined many clubs and made new friends since she retired, as opposed to my father who spends much of his day watching television.

For Tanja the idea is that before focusing on the financial side, you need to work out the lifestyle part. Only then do you focus on the finances and calculate how much your ideal life is going to cost you. Once you’ve done that you will have a vision in your mind about what you’re working towards, as opposed to saving and earning just to escape your current situation.

areas to focus on

So how do you do this? Tanja suggests six different areas that you need to consider.

Four people laughing
Remember the times which made you smile
Day to day life

Think about when you are happiest. For me this is when I am outside, especially if the weather is good. It doesn’t matter if that’s in the garden, a walk along the beach or a hike in the mountains. I enjoy feeling the sun on my face and spotting the wildlife.

This area also asks you to consider your hobbies. It’s likely that you currently spend some of your free time doing things that your enjoy, but may get frustrated that work gets in the way. When your life isn’t so focused on earning money you could decide to make time for your hobbies or even take up some new ones. What would they be?

Big picture dreams

For me my dream has always been to live in France. It’s a country that I love and where I have spent many happy holidays over the years. I have been asking myself why I like France. The climate certainly plays a significant part. Being able to spend more time outside and have guaranteed sunshine is definitely a major plus point for me. That is something that cannot be guaranteed in the UK. I have been thinking of more modest ways of indulging my passion for France rather than upping sticks and leaving for the continent. So far my preference is for extended holidays in France.

Mr Simple always points out that by buying a house you limit yourself to just one area of what is a large and diverse country. For me I have always liked the idea of not having to pack to go away. Having a place where I can just turn up and everything I need is there – a whole wardrobe of clothes that I just wear in France. There’s no unpacking, no working out how to turn the cooker on or where the nearest boulangerie is because you know all that already. I can though see what he means. An alternative would be to rent a house for a month or six weeks, which if you don’t work is possible. If I am in a semi-retirement phase only two to three weeks would be doable. That would give me plenty of time to start to feel at home and get to know an area.

Whilst thinking about travel I also realised that in the winter the weather can affect my mood. We live near an airport and many retired people who live in our village take advantage of that by going away during the cold months to the Canary Islands or Cyprus. I’ve realised that I want to be one of them – to have time away, say in November and February every year in order to feel the sun on my face.

golden retriever dog
We love dogs and would have more time post-retirement to look after one
Legacy and Purpose

This is about your contribution to society. What do you want to be remembered for? Mr Simple and I have become boarders for ‘Guide Dogs for the Blind’, which means that dogs who are in training live with us for a few weeks or months. This works well if you have a job, as the dogs are taken out in the daytime to train. On a few occasions we have been asked to look after dogs who are having a break from training and this has not always been possible due to our work pattern. If we both worked less we may not have to say no in the future. There is also an option to have a puppy, which you do for a year, but I’m not sure how that would fit in with my plans for more travel. And I am sure that I would really struggle to say goodbye to the dog after he or she was part of our family for a whole year.

Self-Worth

Many of us define ourselves by our professions and once we retire this is no longer an option. Isn’t it always one of the first questions people always ask when you meet them, ‘What do you do?’, but which we know they mean, ‘What job do you do?’ I was listening to an episode of ‘The Life Coach School’ podcast about visualising your future self when the world is so uncertain due to Covid19. Brooke Castillo suggests focusing on your personal qualities such as creativity. Whatever the world throws at you these personality traits will remain. So what will make you feel good about yourself when work is no longer your main focus?

Tanja recommends thinking about what you feel best at in your work. Are there parts of your job that you could continue doing, saying in a voluntary capacity? Think transferrable skills. Think as well about what makes you feel good about yourself outside of work. My profession is social work, which involves interacting with people from all walks of life and trying to help them sort out their problems. If I didn’t work any more I am sure that I could do some volunteer work which embodies these basic principles.

Over the past few months I have developed an interest in life coaching. This has some overlap with social work, although the families that I meet through my job tend to be in quite dire situations. Those seeking life coaching usually have more middle-class backgrounds. The common factor is one of problem-solving i.e. helping people improve the quality of their lives. Without necessarily meaning to do so I have begun to use some of the principles that I have learnt from life coaching when working with families. I also find myself quoting Natalie Bacon when talking to friends or Mr Simple. How it all translates into occupying myself during semi-retirement I’m not yet sure, but it’s an area that I plan to continue to develop.

a man and a woman
Who are the important people in your life?
Central Relationships

Do you have a significant other who will be sharing your ‘Work Optional’ life with you? For me that is Mr Simple, and although I talk about working part-time and planning how that will look, he is not interested in doing this with me. He believes that action is the key, whereas I like to spend more time thinking about things before I get on to the doing part.

As well as your partner, think about other people in your life who you would like to spend more time with. Once work is not such a big part of your life you should be able to make more space for them. If they live far away maybe finally you’ll have the time to go and stay with them. I’ve mentioned this a few times before, but friendships is an area where I struggle to find like-minded individuals. I know people, but the honest truth is that many of them are acquaintances rather than friends. If any of you have suggestions about how I can work on this area I would love to hear them.

Finally within this area there is your community. I live in a lovely village and have daily contact with my neighbours. Even during this period of lockdown due to the coronavirus there are frequent Whataspp messages exchanged between our group of neighbours and everyone is supportive of each other. We don’t plan to move from here and so this will continue and maybe even become a greater part of my life when I have more time to get involved in the activities that they arrange.

Life Logistics

Think about where you want to wake up every day. For me I am happy for it to be in our current home despite wishing the sun shone here a little bit more. Our current goal is to finish renovating the house so that we can spend more time enjoying it. Do you plan to stay where you are or are you planning to travel the world once you are retired?

path through a rape field
I love being outside when the sun is shining
Conclusion

So where are we? What is my semi-retirement life going to look like? After considering each of the six areas Tanja suggests that you consider the themes that emerge across the different categories of your life. For me I think that this is the outdoors, sunshine and animals.

So now hopefully you have an idea of what is important to you and the outline of a life vision that you can work towards. You may even want to write this out or create a vision board which you can stick up or have as your screensaver. Somewhere that you will look at it every day.

Next time we’ll look at creating your money mission statement, but that’s it for now. Until next time, take care, Sam.

The Food Budget

wicker basket of vegetables
We certainly ate plenty of veg this month – the good thing is that they’re fairly cheap
one of the big three

The food budget is one of the big three spending categories that those of us who are aiming for FI/RE try to reduce. The challenge is to get a balance between still being able to eat meals that you enjoy whilst keeping your spending fairly modest.

keeping track

So that we could have a closer look at how I’m spending my money last month I kept every receipt for all of the food items that I bought. I then planned to have a look at where I was using these ingredients, but the trouble is that some of the items that I used were purchased in January and this week I bought groceries that we won’t be eating until next week or later on in March.

Problems aside, February was an average month though and has given me an idea about where my hard-earned cash is going, so let’s have a look at my spending and some meals that we ate. The amounts below are how much I personally have spent. If something seems cheap it’s because most of the items are split 50:50 with Mr Simple.

Beer in a stem glass on the beach
I have a non-alcoholic one of these every Friday, Saturday and Sunday
Treats for the weekend £13.90

Every month I purchase a few treats which we usually eat on the weekend. Although I regard them as treats, I have to say that they are fairly modest and I am certainly in no danger of blowing the food budget if I continue to buy them:

  • 15 bottles Beck’s Blue £8, so 53p per bottle. I drink one on a Friday, Saturday and Sunday night
  • Four packets salt and vinegar crisps £4 – each pack lasts me for three portions i.e. I eat one pack per weekend, so about 34p a portion
  • Hot cross buns £1.35 – a treat with a cup of tea at the weekend
  • Biscuits 55p – another occasional weekend treat

As I’ve mentioned before I make a monthly Tesco order online. Even though I have to pay £2/1.50 for the delivery, which comes out of the food budget, it saves me a lot of time and stress doing it this way. For the most part this is made up of the alcohol and crisps noted above and store cupboard, fridge and freezer items, which this month were:

a black teapot
Making tea with leaves in a pot as opposed to using tea bags saves quite a bit of money
Staples £23.89
Butter £4.50 – used in cooking and on toast if we remember to get it out to soften. Not easy in this weather and we don’t have a microwave.   Tea bags £1.50 – only used when making single cups of tea. Otherwise I use leaves in the tea pot.  
Milk £3.02 Coconut milk 1 can 45p. Not used it yet.  
Spreadable butter £3.30. It’s not cheap, but we prefer a butter-based one rather than margarine. Sunflower oil 55p – for general cooking e.g. frying my mushrooms in the morning.
Cheddar cheese £1.50. Mr Simple eats most of this, although I do use it in cooking. Loose tea 65p – lasts us for at least a month and I make at least one pot of tea a day and sometimes two.  
Juice 69p – It’s high in sugar so we only drink this on Saturday and Sunday mornings.   Tomato puree 25p  
Root ginger 37p – for curry.   Ketchup £1.15 – chose to buy a more expensive brand, but we don’t use that much.  
Garlic – 3 bulbs 24p for curry.   Greek style yogurt – £1.20 – I used to buy proper Greek yogurt, but have managed to find Greek style which doesn’t contain thickeners e.g. corn starch, just milk.
Almond milk x 3 £4.50. Much more expensive than cow’s milk. It is twice the price. Should I just drink cow juice?   Bread £2.94 – during the week we use the bread maker to make bread for toast and sandwiches. On the weekend I usually buy a baguette to go with soup at lunch time. Most months I buy strong bread flour, but we had plenty left last month.
Tinned tomatoes 84p – used in butterbean jalfrezi and curry. Cream 33p – this was to eat with an apple crumble I made.
Smoked paprika 45p   Chocolate £2.50 – on non-fast days we have a square of chocolate each after dinner. We don’t often eat dessert and it’s nice to have a small sweet treat after our meal.
peas in a sieve
Frozen peas are a great addition to lots of meals
Frozen vegetables £1.59

Spinach 75p – not used. I use it to add to dal.

Peas 31p – always good for adding to curry for some extra veg.

Sliced green beans 53p – went with stuffed mushrooms, cottage pie and with spices as a curry side dish.

buying local

Eggs £9.75 – I eat two eggs almost every day. We buy the eggs from a local farm. They aren’t as cheap as the supermarket, but it’s nice to support a small business and they are straight from the chickens. Works out at 34p a day. Not bad for a food that provides you with protein and so again not completely frugal, but it doesn’t blow the food budget.

The weekly shop is based on my menu planning and includes general fruit and vegetables as well as items I buy to make the recipes that I have chosen for that week.

veggie burge in a paper wrap
Made some great curry burgers from Jamie Oliver’s new book ‘Veg’
Items for certain meals £8.18
  • Paneer 65p to make eight bhaji burgers, a Jamie Oliver recipe where you grate the paneer and some butternut squash, then mix it with curry paste.
  • Seeded buns 35p for four buns – to put the burgers in. We also had them with wraps that I made on one occasion. The buns were an indulgence, but not that expensive.
  • Dried green lentils 58p to make stuffed mushroom wellingtons, a lentil and walnut loaf and cottage pie.
  • Walnuts for nut loaf and a mushroom and walnut pie I’ve yet to make – two packets £2. They were on special offer.
  • Tofu x 2 £2.00 – we use this a lot in fast day meals such as jerk tofu and tofu tikka masala – still have half a packet in the freezer.
  • Filo pastry 95p for the mushroom and walnut pie I’ve yet to make.
  • Blue cheese £1.00 to go in a risotto, which wasn’t actually that nice. We had some left over which we ate with leek and potato soup and bread at the weekend.
  • Fresh custard 65p – to go with apple crumble – we still have three bags of apple already peeled, cored and sliced in the freezer, which I am trying to use up.
three white onions with green stalks
A cheap staple which is the basis of most meals
Fresh Vegetables £27.03
Mushrooms 48p for stuffed mushroom wellingtons.Swede 40p – allotment cottage pie and as a side dish. I’ve found that diced boiled swede freezes well. Then just defrost it, mash it and warm it up.  
Sweet potatoes £1.44 for breakfast and soup Onions £1.16 – a good staple used in most dishes.  
Potatoes £1.64 – in soup and on the cottage pie   Mushrooms £6.14 – all for breakfast. I do seem to spend a lot on mushrooms.  
Cauliflower – 50p – cauliflower tikka masala – another recipe from Jamie Oliver’s Veg book.   Coriander £1.05 – to go on curry and a spicy soup that I made with sweet potato and a bit of butternut squash left over from last month  
Limes 30p   Lemons 45p  
Red peppers £1.39 – in Butter bean jalfrezi and the tofu tikka   Half a cucumber 23p  
Celeriac 62p – allotment cottage pie and added to the leek and potato soup   Spring onions 30p – for jerk tofu paste  
Leeks £1.50 – in soup   Salad leaves £1.71 – eaten with a frozen pizza we had to eat up, with risotto, bhaji burgers and jerk tofu steaks  
Calabrese 68p – as a side veg   Cabbage 40p – herby lentil savoy cabbage cobbler. Some left in freezer. Also shredded and cooked with grated carrot for thoran.  
Carrots 29p – allotment cottage pie and thoran. Will grate it to make salad as well.   Avocados £6.35 for breakfast. These are expensive and I do question whether I could forgo them.
bananas
A good snack when you’re out and about
Fruit £11.96
  • Grapes £3.00
  • Satsumas £4.05
  • Bananas £3.53
  • Pears 75p
  • Kiwi 63p
conclusion

There we are – my monthly food budget spending. I do feel that we don’t eat a lot of processed foods. As you can see the only ready-made foods are bread, hot cross buns and the filo pastry. Otherwise, everything is made fresh. I tend to take that for granted until I see what others are buying in the supermarket and realise that we do eat fairly healthily.

I know that we could spend less, but I think that we’ve about halved our food bill over the past year, so I don’t think we’re doing that bad. How does it compare to your food budget spending? Any ideas for where I could make cuts without living on rice and beans for the month?

Financial Goals for 2020

Flames

It’s been just over a year since I discovered the FIRE movement and fell down the rabbit-hole of endless blogs and podcasts all talking about financial independence. I watched the documentary ‘Playing with FIRE’ last night and found it so inspirational. It was thanks to an email from Monethalia, letting me know that it is free here (with the password FIRE) until 11th December. The documentary follows Scott Rieckens and his wife and daughter as they make enormous changes in order to pursue financial independence. On the way they talk to the great and the good of the FIRE world.

If like me you’re not quite brave enough to give up your job, sell your home and move half way across the country to live with your parents for four months, as the Rieckens family did, then a good place to start instead is with an annual review of your finances and a plan for what you want to do over the next 12 months.  

Reduce the mortgage by £12,000

My main aim for 2020 is to reduce our mortgage by a further £12,000. This year I have made payments totalling nearly £14,000 against our mortgage and by the end of the year we will owe about £72,000.

As we overpay by more than £500 per month the building society recalculates our monthly payment each time and decreases it. The plan is that each month Mr Simple increases the overpayment which he makes manually, therefore the total amount we pay each month remains the same. The thinking behind allowing the standard monthly payment to decrease each time is that at some point in the future, if we decide to stop overpaying and just let it run its course, the amount coming out of our account will be fairly small. At the moment the standard payment is decreasing by about £4.00 every month.

Well, that’s enough about the mortgage, let’s have a look at the other bills I expect to be paying in 2020:

Item Monthly Annual
Water £40.50 £486.00
Gas and electricity £89.78 £1077.36
Phone and broadband £18.99 £277.88
Woodland Trust £6.00 £72.00
TV Licence £11.50 £138
Council Tax £258.00 £2580.00 (ten months)
watering can
Watering the garden costs money, but we enjoy growing our own vegetables

Reduce the water bill to £31.00 per month

Our water bill went up after we had a new lawn laid and spent the very hot summer of 2018 watering it using a sprinkler. Prior to that the bill was £31.00 per month. We have a large garden, two greenhouses and a vegetable patch, so our water consumption is going to be higher than someone who lives in a flat, but I am hoping that when it’s reviewed at the end of the financial year it will go back down to the previous rate. Mr Simple has installed two water butts and we have adopted the habit of not flushing the toilet every time we spend a penny. Sorry if this sounds a bit disgusting, but it’s only me and Mr Simple and it really doesn’t bother us. According to the Money Advice Service about 30% of water used at home is due to flushing the toilet.

Gas and electricity have recently gone down thanks to Octopus and we are moving our phone line and broadband to Plusnet, so I am happy with those totals. All of the other items are fixed so there’s absolutely nothing I can do about them.

Increase my holiday spending

This year has been a fairly frugal 12 months in terms of holidays. Mr Simple hasn’t been abroad at all, but I did go to Italy with my mum in celebration of my 50th birthday. Having only gone away in the UK with Mr Simple, which meant missing our usual two weeks in France, I realise that holidays are one thing that I am happy to spend money on. My mum wants to go to Croatia next year and whilst I could stick to my frugal guns and decline, she’ll be 75 in April and so I want to take the opportunity to enjoy time with her whilst I can. It’s not that I think she going to pop her clogs any time soon, but you never know what might be around the corner. I have therefore increased my holiday budget and am going to put my annual car user’s allowance from my employer towards my holidays.

Next there’s my own bills – for some reason the house insurance comes out of this instead of the joint account, but it makes no difference as I would be paying the total amount whatever.

orange beetle car
It has 105000 on the clock, but I need to keep it going

Keep the car going

As my car is getting older it is likely to cost me more and so I have calculated increased spending in that area. It’s only a matter of time before I have to buy a new one, but fingers crossed that won’t be in 2020.

Item Monthly Annually
Car service £42.00 £500.00
Car tax £2.50 £30.00
MOT £3.75 £45.00
Recovery £5.08 £61.00
Car insurance £20.00 £230.00
House insurance £24.00 £290.00
Travel insurance £7.50 £90.00
Hair cuts £8.00 £96.00
Opticians £13.50 £162.00
Dentist £28.00 £2.30
Holidays £166.00 £2000.00 (plus £800 from travel allowance)
Physio £38.00 £455.00
WI £3.50 £42.00
Presents £25.00 £300.00
WWT membership £3.45 £41.50
Total £364.21 £4370.50

I am due to have my eyesight checked in January 2020 and may have to buy a new pair of glasses. I therefore save every month towards this eventuality. If I don’t need a new pair then the money can go into savings.

Continue paying into my ISA, but at a reduced rate

With the increasing cost of my car and the holiday expenses I can only guarantee paying £363 per month into my ISA. What doesn’t factor in my spending is the payments that I get towards the miles I drive for work. This is on top of the annual travel allowance. Although I budget spending £120 on petrol, sometimes that is covered by my travel expenses. How much I receive varies each month, but whatever I get will go into my ISA. Some months it is over £100 so would take my savings up to nearly £500. We’ll just have to see how it goes.

After deducting the above payments I have will have £450.00 to spend as follows

Item Monthly Annual
Food £140.00 £1680.00
Petrol £120.00 £1440.00
Toiletries £30.00 £360.00
Professional membership £24.10 £289.20
Phone £9.99 £119.88
Pilates £34.00 £408.00
Social £50.00 £600.00
Miscellaneous £40.00 £480.00
Total £448.09 £5377.08

Reduce the food budget

I have worked hard in 2019 to reduce our food spending, but I hope to make further progress next year. £140 also covers cleaning items and some toiletries so I don’t think it’s that bad, but I feel that I could do better. So how does this compare to your budget? Finding it hard to make savings? Why not subscribe and get my ‘Frugal Tips’ sheet as a thank you.

Ideas to Save Time and Money at Christmas

Stuffed toy reindeer sitting on a sofa

Christmas is fast approaching – that time of year when it is expected that you spend money you haven’t got to buy gifts that other people don’t need or want. I can hear the booing and calls of ‘Baa Humbug!’, but I honestly believe that this is true. I am not a religious person, but I feel that we have moved a long way from the real meaning of this time of year. There is so much pressure on us to go mad, spend lots of money and eat until we pop. But I truly believe that Christmas is optional or at least all of this excess is.

If I ruled the world I would make Christmas like the Olympics – just once every four years. I am not against the time that we are given off over the festive period, as this enables families to spend time together, but often the weather isn’t good and we all just eat too much and then slump in front of the TV for hours. I would rather have the time off when the weather is better, but as I don’t make the rules here are some ideas for moderating the excess that is shortly to come…

Just buy for the children

This is what we have done in my family for years. Once we all got jobs my mum suggested that we stopped giving presents to each other as we could all buy something for ourselves whenever we wanted to do so. I first met Mr Simple, fifteen years ago and he and his parents were still buying presents for each other. When his mother learnt that we no longer did that in my family she agreed that it was a good idea and so now they are ‘present-less’ at Christmas as well.

Keep the cost of each present to under £5 or £10

If you can’t survive the festive season without having several beautifully wrapped packages to open then keep the budget low by limiting spending on each present. There are Secret Santa schemes for several groups that I belong to and there is always a limit to cost of the gift.

Pick one adult, like Secret Santa, and buy for them

My physiotherapist mentioned this to me recently. He is part of a large sibling group, so instead of everyone buying for everyone else, they just buy a present for one of their brothers or sisters and obviously only receive one present. In this way it could be that although you get one present, it may be of more value and therefore something nicer than the several pairs of socks or smellies.

Give the money you would have spent to a charity

If you decide not to do presents, but still want to give something to someone, then give some money to your chosen charity. Find something close to your heart or maybe linked to Christmas, such as one that provides food or shelter to homeless people during this time.

Invest the money

As you won’t be spending as much money as you usually do, put the savings into a high interest savings account or even better, your ISA, in true financial independence style.

Prepare for Christmas 2020

Once the madness is over go shopping and buy cards, wrapping paper, etc. for next year as it will all be on sale at discount prices.

Share the cooking

Instead of one person taking all the responsibility for cooking, share it around and get someone to bring the starter, someone else the dessert, others mince pies, cakes, etc. Just let the host cook the main course, which will be the hardest meal to transport. There may be people who aren’t so good at cooking, but give them something simple to make, or maybe they can just bring the treats such as chocolates, crisps, nuts, etc.

So there we are, a few ways to save time and money at Christmas and hopefully make it all a bit less stressful and a bit less expensive. Whatever you’re planning to do over the festive season I hope have a lovely break.

Financial Independence – Lessons Learnt Over the Past Year

two blue chairs on the beach
You might be able to sit here every day if you achieve financial independence

It has been over a year since I discovered the financial independence/retire early movement. I have listened to so many podcasts and read hundreds of blog posts in that time. It has helped me to become familiar with many of the principles of FI/RE and for those of you new to this concept I want to introduce you to the basic tenets. This is also an opportunity for me to look back at what I have learnt over the past year and how far I have come in my FI/RE journey.

The four percent rule

Financial independence is achieved when you have saved 25x your annual spending. For example, if you could live on £10,000 a year you only need £250,000 saved. If you prefer a less frugal ‘retirement’, say on £30,000 a year, then you will need £750,000. This is based on the premise that when you stop working for money you will be able to withdraw 4% of your savings every year to live on. Despite the regular withdrawals, at a rate of only 4%, if invested wisely, your nest egg should last until you die.

Although financial independence is amazing, I arrived late to the party, so my chances of being able to save 25x my spending are about zero. Nevertheless, the principles of FI/RE have enabled me to begin to spend my money more thoughtfully and helped me learn what is important in my life.

a takeaway coffee
Not buying one of these every day can add up

Small savings can add up

This is the easy part and something that everyone can do. Unless you’re completely new to the FI/RE movement, then you will already be familiar with the usual list of things to cut out of your life e.g. cable/satellite television, gym membership, daily lattes/lunches expensive mobile phones, bottled water.

I have stopped buying so many coffees and lunches, but also cancelled some magazine subscriptions. I have also not bought any clothes in a year, having realised that I have plenty to keep me going for a while yet.

The three big wins are making savings on housing, transportation and food

These are the three areas where we all spend the majority of our money. Over the past year I have mostly been tackling our food budget. We used to do our weekly shop in Waitrose, which is one of the most expensive supermarkets in the UK. I have to admit that the quality of some of their food is better than what I now get in Tesco, but currently the savings are worth it.

woman buying bread in a market
I have worked hard on making this stress-free

Food

As well as changing where we shop I have also devoted time to meal planning and now do that once a month, along with ordering a monthly food delivery. This is one of the areas where I realised that time is more precious than money. At the beginning of 2019 I was going to two separate supermarkets each week to maximize our savings, but after a long day at work I was exhausted and found this a challenge. I was also disappointed in the quality of the fruit and veg from Lidl and we ended up wasting food as it just went straight into the compost.

Now I choose to shop only at Tesco, which is via our delivery and then weekly top ups, mainly of perishables. The delivery also means that I am not lugging heavy bags of shopping in and out of the car e.g. beer, tins, bottles of cleaning products. I feel that I have completely taken the stress out of shopping. The delivery does come with a charge of approximately £1.50, but for me it is so worth it.

white house with blue shutters
Our house is really too big for just a couple, but we don’t want to sell it

Housing

Housing is a much more difficult area as prior to discovering financial independence we spent £435,000 on a house, albeit the mortgage was only £130,000. It now stands at £73,810.70.

I don’t want to sell the house and so the only other option is to maximise our asset. This could be through AirBnB or renting out a room. The first would be my preference, but I have realise that this may be difficult when we are hosting trainee guide dogs. We love having the dogs and wouldn’t want to give this up, but I’m not sure how the organisation would feel about this. Theoretically the strangers staying in your house could steal the dog, who is worth a lot of money due to all the training hours that has been put into him/her. This eventuality seems unlikely, but it would make me anxious. I am not sure how we are going to address this and probably need to have a chat with someone from the agency.

We are then left with the option of renting out a room on a long-term basis.  At the moment I am not sure about that. Mr Simple has talked about trying to find full-time employment, which may mean staying away from home Monday to Friday. If that does happen I may consider having lodger, ideally one who is just here through the week and returns home at the weekend.

red car in a field
We need one of these, but manage with old ones

Transportation

Ideally a financially independent life is a car-free one, but if you live in a rural area as I do this is not realistic. As I’ve mentioned before I get an allowance from my employer towards the upkeep of my car as it is essential for my job. If you do need a car, then buying second hand is the way to go, which my car was when I bought it. At nine years old it is getting on a bit and costing me more money in upkeep, but it is less than buying a new car, so I am trying to keep it going.

One possibility for us is having one car. Mr Simple wasn’t enthusiastic when I mentioned this recently, but as he is home most of the time and his car sits on the drive way, I do question whether it is really necessary. He says that he needs it when he goes away to work as travelling on public transport would limit where he is able to stay overnight. I think that it’s something we need to consider. I may look at how feasible it is for me to arrange my appointments on the days that he is usually here and to be at home when he is away so that he could take my car.

hands typing on a computer
Sell clothes on Ebay or start a blog

If you can, increase your income through side hustles

There is only so much you can do to reduce your spending unless you want to live like a monk and eat rice and beans every day. Those aggressively pursuing financial independence look to earn extra money in their spare time. You could get a second job, do surveys on line or start a blog. There are lots of ideas here on the Humble Penny website. So far I haven’t made any progress in this area.

logo for Vanguard investment platform
This is where to put your money

Put all your savings in index funds with Vanguard

All that money you save from cutting back and earn from side hustles needs to be put straight into an index fund with Vanguard. The company set up by John Bogle in 1975 seems to be the favourite of the financial independence movement, as a result of its low fees. There’s no picking individual stocks, just own a part of the total stock market, invest regularly and wait. It will go up and down, but over time will gradually increase in value until you’ve got that nest egg from which you can draw your 4%.

My money’s in a Target Retirement Fund. This is part stocks, part bonds the balance of which changes as you get nearer to the year that you have selected for your retirement. Vanguard does it all for you, so the fee it slightly higher than their other funds, but it’s still very reasonable compared to an actively managed fund.

So there we are folks, the basics of the financial independence/retire early movement and my progress so far. How’s your journey going? I would love to know. Are you just starting out or are you already retired?