I started my blog at the end of July 2019 after a week of faffing about with my ‘about me’ page and opening my first index funds. What followed included glaring errors in my spreadsheet record keeping, some typical FI newbie questions (how to work out your savings rate? Are SIPPs for me?) and quite some soul searching, or navel gazing depending on your perspective. Six months on, and always in the back of my mind ‘it would be nice to work on a post tonight’ while seemingly never quite achieving it, what exactly has keeping this blog achieved?
While I’m not sure my posts make the most riveting read, journaling my progress has definitely helped me! I recommend it. I’m still on my journey to Path 1.2 and still a little hazy about the details (When? What? Small details!), but my financial strategy at least has become clearer and more goal-directed. I now even identify as being a person aiming for financial independence!
I’ve already cheekily projected January figures in my last financial update, but this is a sparkling new top-to-toe update…
|July 2019 end||Jan 2020 end||% change|
|Cash at 2-year+ fixed rates||28,200||28500|
|Equity and bond index funds (ISA)||13,000||20600|
|House equity (estimate, my share)||144,000||150,000||4.17%|
|ASSETS (stash + house)||£232,500||250,200*||7.53%|
|Work pension (incl lump sum)*||178,700*||191,800||7.32%|
|TOTAL ASSETS incl pension||£411,200||442,000||7.44%|
In short, I’m £17,700 better off in my “FI stash” than 6 months ago without making any drastic lifestyle changes, which you could view as funding a Year of Financial Freedom! Or one-and-three-quarters if you’re Saving Ninja.
Of that stash, I built the confidence to use my ISA allowance on index funds that follow the world equity and bond markets. I have 81% of those funds in equities. Those investments have grown 6.38% as of today. Just over £1k of this pot is the increase of value (though of course I know this will fluctuate). Like others, I wish I’d bought earlier… but now is always better than later, right? While I’d bought over a few lump sums (due mainly to impatience!), my goal next financial year is to set up a regular contribution. This seems easy to do but weirdly doesn’t come naturally to me at all, because I like to feel in control of my “buying”, but I know timing the market’s a fool’s game!
What amazes me is that besides the FI fund, I estimate that on paper overall I’m £31k better off than I was 6 months ago. Can that really be true?! Even if it’s slightly off on the house and pension estimations, it’s definitely food for thought how much I could build if I simply stayed in my job!
|April to July average||48.2|
If I used the proportion of pay saved
from my take home pay (after childcare
vouchers), it’s generally 1% lower.
Now to my savings rate. Each month last year, I was on average shovelling away just over half my income into savings (see table).
While I’m not unhappy with this, I thought I’d put away more, in all honesty, given that we have no housing costs. Since September, we’ve had significantly less childcare to pay (as our 30 hours free childcare came in), but this has not translated itself into a consistently higher SR! At nearly £400, childcare is still my personal single biggest monthly spend. Costs of wraparound care once school starts in September 2020 are an unknown for us – I’m hoping they’ll be lower, but not holding my breath!
My aim for 2020 is to improve on my savings rate – aiming for above 54%. I don’t really want to put a figure on it given that my spending is not just up to me (must consider the family’s needs), but clear by a few percentage points would be good! While I might achieve over 60% some months, there are often bigger spends that crop up. Just this month, we have booked a second trip away!
So, how will I increase my SR, you may ask. That’s not easy to answer, but I do have a few goals this year that will have an impact in some way on spending… Many of these are ‘nudges’ toward a better me, hopefully, but not necessarily helping my FI goals.
- Diversify my sources of protein – Likely to make things a bit more expensive, bearing in mind I’m vegetarian, though this includes different types of beans, quinoa which you can get relatively cheap these days, and good ol’ lentils if only Mr Firelite liked them!
- Take lunch into work with me more often – Likely to make things a bit cheaper. It’s just the time spent preparing food I can microwave at work, but I could combine with more supermarket bought soups and other simple meals.
- Be more mindful of where I spend more money – trying to shop local more, support family businesses, ailing town high streets, and ethical products, especially as gifts. Likely to make buying more expensive and sometimes cheaper.
- Drink more water. Just checking you’re awake! No impact on spending, one hopes.
- Take our Firelite Junior to Asia – This one’s not a ‘nudge’ but basically, go away somewhere amazing while we’re not limited to the school holiday surcharge, though we’d have to check the scale of the Wuhan virus! This will be costly, probably.
My main FI-related goal this year is to get a deposit together and buy a buy-to-let property. I am looking at flats in Liverpool as a possibility as there’s a big building boom there, but I hear that a lot of the best deals (and high yields) have long gone. While many hands-off off-plan properties are on offer, which is very attractive, I’m much less of a fan of being tied into the one management company. Anyway, I don’t really want to make up my mind about anything until I go view potential properties and their surroundings, but won’t do this until I have a deposit vaguely approaching what I need. That is, £35-40k.
Currently, I’m about half way on my deposit saving, or just over, hurrah. £20k. I’m going to try and save a deposit without having to sell any investments (previously I was gonna sell £5k), and while still contributing a modest amount to index funds. Possibly 25-33% of what I “put away”. If I decide not to take the plunge in buying a flat, then I’d still count that as a positive decision. Also, I’m thinking if I did buy, I may have it under Mr Firelite’s name too (by name only), so that getting the mortgage didn’t depend entirely on myself having a wage.
So, the elephant in the room is whether I’ll take my ‘midlife gap year’ this year! As I wrote last time, I was still decidedly undecided about it, and my feeling about it changes daily. I actually met my line manager this week and discussed my possibly leaving, eek! She asked what I’d do instead and I struggled to come up with anything coherent enough to sound sensible, goal-directed and mature. We discussed checking out our work’s policy for career breaks and I’m meeting her again next month. It was a good discussion though; for the first time I wondered whether the massive thing getting in the way of my feeling good about work is my own self-esteem. Why live with imposter syndrome when you can leave and be authentic?! But will I be happier?
After 6 months of blogging, I have got much further with my finances but inched only slightly forward in my Life 1.2 plans. That’s been more painstaking, but I have added new stuff to my CV that’s not just ‘more of the same’ while my job gives me some development opportunities. My teaching qualification was a biggie.
I do have a few other goals to help me. First, I’m going to do an intensive painting course. See if I can reignite my first love. Second, I hope to take a new interest in my charity contribution, not financially but in some other way. Third, I plan to write more researched articles for this blog designed to be helpful and may actually even publicise it a little. Meanwhile, I’m pleased with my 30-odd followers and to have found the FI online community.
Thanks for reading if you got this far!