Finances, Goals, Midlife gap year

Financial Update: December & year end

Happy new year to all my readers and passers by. I hope those of you on your financial independence (FI) journey have celebrated your achievements this year. Although I’ve been a bit quieter than I wanted to be of late, I’ve noticed some people dropping by over the Christmas period, which has been appreciated! Anyway, I thought it was about time I did my monthly update, plus reflect on how 2019 went for me FI-wise.

Image result for stones into sea

So anyway, December was a month in which I worked only half the month and spent a lot on Christmas presents, Christmas treats and holidaying in Spain! It was pretty indulgent really for the Firelites. And to think I get paid a salary during that whole time! How fortunate we are. While not every spend was a wise one, most of them were much enjoyed and I’m reminded that a change is as good as a rest.

In all, my savings rate for December was lower than anticipated. in my previous blog post, I’d set my aim for 53%, but it ended up being 46%. My lowest since records began. 🙂 Not really what I wanted, but hey ho, we’ve had Christmas, spends and excursions during a week away, plus we also paid for another all inclusive holiday which will now be in about 5 weeks’ time! Not as bargainous as the December trip, but an opportunity to escape winter, take my mum to her first resort-type holiday ever, and have some babysitting thrown in! So, all in all, 46% isn’t looking so bad (though with a January hangover).

Besides that, my index funds have gone up a little and I got £317 annual interest on a fixed rate cash ISA. I wish I hadn’t gone for a 5-year fixed rate cash ISA last year, but that came before I considered index funds and read about the FI path! It would otherwise be handy buy-to-let deposit money right now, but hey ho, it just so happens to be handy for the next paragraph! 🙂

(January 2020 forecast)DecemberNovemberOctoberSeptember
Cash accounts(48190)464004530043700£42100
Cash at 2-year+ fixed rates28200285002820028200£28200
Equity index funds (ISA)(16000)158001550015000£15000
Bond index fund (ISA)40004000400040004000
Peer lending3200320032003200£3200
FI stash (excluding own house & work pension) (100,000)97900960009400092500
Savings rate: (including my contribution to workplace pension)(56%)46%65%57%62%

Reaching the elusive 100k!

I decided to put in my forecast January saving into the table above (i.e. including savings from December’s pay), because one of my original aims was to reach an FI stash of £100k by the end of the year! This aim had been based on the old way I was keeping records (which wold put the Jan forecast December’s savings). So, if I manage to live on the £300 or so I currently have sitting in my current account for the rest of the month, then I’ve broken the £100k barrier!!! With about fifty quid to spare no less.

Looking back over 2019 since starting this blog…

Let’s have a quick look. From August (July end?) to December end, I’ve put away £9100 outside of my work pension (which I now put about £4.5k pa into now, just to give an idea). Not bad at all. I also bought my first index funds. I bought 19k worth (including a bond fund) within an ISA and it’s now worth just over £20k, with a total 6.25% rate of return. I am also finding the confidence to truly consider diversifying into property, as part of a plan for generating an income in our old-old age, not so much for ‘early’ retirement.

Looking at my updated total assets, including the ‘caveats’ of having defined benefit and defined contribution pensions (and the assumptions that come with that), I seem to have (I say reluctantly as this relies on going into my pension at 67, not 57 as planned) broken the (gulp) half a million barrier!!! Or 63k short of that if I claim from 57 years (which is the current plan, but in reality, I will leave this as late as possible). Without my prized private pension, I am still not far off quarter a mill. Of course, we always need somewhere to live. So, it’s my FI stash that’s important for the purposes of FI. I’m estimating I can release £55k from downsizing/moving out of the city to a town, which would make my full FI stash (or bridging fund) around £153k.

*Estimate of how much our house is worth based on the Zoopla estimate and ‘verified’ by checking out similar houses on our road sold in the last few years (and we added a 4m extension to the house), then divided by two for my share.
**Work pension is mainly comprised of a final salary (i.e. defined benefit) pension, so the calculation is based not on a concrete ‘value’ on my April 2019 statement then modelled on a retirement date of 57 years, then multiplied by 20 on the (lowest estimate) assumption I’ll live 20 years from the date of retirement. Clearly there are a number of assumptions here (e.g. Doesn’t take into account increases with inflation in the years following 57 years, or if I take the retirement fund later).

Preparing for Life 1.2. and FIRE

I must admit I am a little disappointed in myself for not keeping up the “prepping for Life 1.2″ pages on this blog (Life 1.2 being the year out). I was a bit ambitious really, what with working a tonne and being a mum too. One thing I did discover is that I definitely want to do something around writing as well as something that gets me a bit more active. I also asked for some arty bits and bobs for Christmas from family as I hope to do a weekend intensive painting course. Aside from the five ideas I mentioned on those pages, I worked on a couple of things in my work to potentially open up new opportunities (for bits of paid and/or unpaid work) – one was a teaching qualification, and now I’m doing an online Coursera course, which has been enjoyable. The very idea of FI spurred me on to work hard on these. I’m also spending my own work funds on my personal (professional) development rather than immediately work-related stuff (that helps my ‘career’), and I’ve been trying to diversify my CV, trying to grow more a breadth of experience and skill than build just on what I know, which is very specialist.

As I’ll be reaching 6 months of blogging on the 30 January, it’s now a good time to re-evaluate my plans both for FI and for the ‘midlife gap year’. I can’t believe I’ve been writing this blog almost 6 months now. This might just be my next post. Lucky you!

For someone whose blog hangs on the tagline of a ‘midlife gap year’ and despite what I’ve written above, I have been wondering a helluva lot whether quitting my job this coming September is the best thing for me. One day I feel almost sure I can hack another year, especially as it’ll really help set me up for early retirement and for my vague property plans, then the next I am plotting my resignation letter! Once it’s done, I will be able to lead a healthier lifestyle and wonder why I didn’t do it much sooner! Maybe. 🙂

Destination, Indecision, Path, Traveling
How many ways to do FI?

So, I guess my point is that this has led me to a kind of inertia. I have been reading a couple of property books meanwhile but essentially I decided not to make any decisions at this point. I was boring Mr Firelite (probably) and it was taking up a lot of headspace. It was good to enjoy or holiday and Christmas not focusing too much on finances, lol. Anyway, now it’s the new year… I better at least check out how much notice I need to give if I did leave in September, and think again what it is I really want to do in my year out… and what I can still gain while in my job. Strategising the independence bit…

What are your FI plans this year? Anyone else planning some time out within an overarching FI plan?

2 thoughts on “Financial Update: December & year end”

  1. Hi Firelite

    Your comments on my blog made me realise that I haven’t caught up totally on your blog!

    Great results anyway and you’ve got your next holiday booked already –
    sweet! I’ve just booked my flight for next holiday in a couple of months’ time.

    Oh and congrats on breaking the £100k barrier! The first £100k is apparently the hardest, it gets easier after that (so I’m told!).

    Good luck with your decision (or not) to hand in your notice and commence life 1.2!

    Liked by 1 person

  2. Thanks for your lovely comment, Weenie! It would be great getting my next 100k hehe, but going the buy-to-let direction may put a little (or significant!) dent in the FI pot. We’ll see…

    Like

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