Financial Independence update: June 2020

The beautiful but burning sun of late, interspersed with shower after shower, is probably a fair analogy for something – maybe my mixed feelings over my work situation.

But that aside, I’ve retained my high (82%) savings rate. Or if you like, 87% of take-home pay (this being higher as I have a chunk destined for childcare deducted at source). Since moving to lockdown-lite, I did wonder if my spending might make a dramatic rise but I seem to have managed to avoid it so far. I’ve not joined the long queues outside coffee shops in the weekend… So still not had a ‘real’ coffee since pre-lockdown! That’s a change for me. Before, that was a main day-to-day treat a few times a week.

In the last 4 weeks, a massive pressure has been lifted as our nursery has re-opened. We’ve enjoyed a few changes – myself having hosted a couple of socially-distanced garden gatherings with friends, Mr Firelite enjoying his third socially- distanced football session today, and Junior having seen a couple of his nursery social bubble friends in a home garden context. Each of these has been like a breath of fresh air – you know, the type when you’ve been slightly oxygen starved (!). The sense of wellbeing has been something special. And only really doable since the double-shifting (work and parenting) lifted anyhow, so we’re really grateful for the nursery’s help!

One major difference I’m noticing between us and most of those around us is we don’t have a car so we’re still pretty much restricted to locations of walkable distance. Mr Firelite took a tram to see his mum who lives alone and hasn’t been out since lockdown began. I’ve taken 1 Uber as it started throwing it down after a viewing that’s an hour walk from our house. A friend of ours is buying a car now after 3 years of not having one. We’re resisting so far. However, I’ve not seen any family since mother’s day celebration.

Our main purchases this month outside the norm are about a 300% increase in wine consumption (from a very low base, ha! For sunny days), an electric BBQ grill (on sale) and Father’s day pressies (hubby, dad). I need to sort out nursery payment still (though have over £700 built up in childcare vouchers, so that’ll help) and so from next month I expect a lower savings rate.

From buy-to-let plans back to index funds

My other main achievement this month is progress I’ve made with looking for a buy-to-let property, an aim since last October. With deposit and on-costs sorted, I’ve viewed a few properties, as restrictions on that recently lifted. What a strange time though, as estate agents and mortgage providers have been inundated! I’ll write separately on this and favourite resources so far. My sense is to ride out this still semi strange time in the housing market unless some gem comes up…which does mean I’m still looking.

Now with a property deposit and expected on-costs pretty much sorted, I plan to divert my unspent income to equity index funds from next month. My new goal is to fill my ISA allowance! Perhaps monthly contributions focused around US mostly and Europe ex UK/Japan to a lesser extent to re-balance what I have at the moment (with UK and Pacific highly represented, as I added to these when they were circa -20% at the start of lockdown). The stock markets in the US apparently accounted for 54.5% of world stocks in January this year. I’ll be aiming for 45-49%, personally.

I expect further bloating of the stock market following another easing of the quantitative by our gracious government, but what this does in the long-term is something we’ll only find out further down the line. We’re the guinea pigs of the QE generation.

Savings and accessible cash

The other thing I did was close the savings account I was complaining about last month. I bought my first premium bonds, and it looks like I wasn’t the only one with this idea! Given historic low savings interest rates, at least this gives me a (tiny) chance of winning big (equivalent annual interest of £1.4% – they U-turned on their decision to lower this rate) while enabling fast access if required. I’ll probably add to that in July, as I’ve withdrawn from a notice account that now pays 0.86%!

While I don’t have the oft-discussed designated ‘emergency fund’, I have cash savings of varying levels of accessibility – aimed for FI, but you know, to spend on any large purchases I’d like if I want to, not just in emergencies. I like that freedom. Currently my accessible funds stand at about 4.5k, but usually more when it’s not been turned into a BTL deposit!

It’s remarkable to note that my “FI stash” has increased over 10k since Feb/March, thanks to lockdown! I’ve now surpassed the amount I’d previously said I needed to technically retire on at 50 years (£108k savings), based on expenditure of 15.5k a year. I’ve come to realise that I’d prefer to go by a yearly spend of 17-18k though. Technically, I could lean FIRE at 50, which is an exciting thought. I’ll be sure to reflect on the bigger picture soon – in my mid-year reflection or my blog’s one year anniversary.

Mini share portfolio

Given my low spending, I allowed myself to stick £150 into my Freetrade account, but will return to a max of £100 in July. I relaxed my other rule only to go for individual companies and bought into the Renewables Infrastructure Group, as an ethical choice. I also bought Whitbread and SSP Group shares as both have experienced massive drops yet I hope that hotels, pubs and airport food will be on the increase. I view most of these as medium-term holds with no more than £50 in the vast majority of companies.

• GlaxoSmithKline (3 shares)
• B&M Retail (15 shares)
• Stagecoach (108 shares)
• Cineworld (79 shares)
• Alphabet (0.027 share)
• On the Beach (15 shares)
• Global Clean Energy ETF (1 share)
• Renewables Infrastructure trust (40 shares)
• Whitbread (2 shares)
• SSP Group (19 shares)
• Current value: £450 (invested: £450) <- strangely all evens out!

Reflecting on work in the midst of Covid-19 and the economic downturn

Many FIers are reflecting on the security of their work situation. The company Mr Firelite works for has announced redundancies and he’s been given the heads up that he’s safe – phew. I’ve been mulling things over when I find quieter moments and am moving away from applying for voluntary redundancy for several reasons, one being that it won’t be supported by my line manager, and student intake looks set to be even higher than usual on our degree programmes! (So compulsory redundancy less likely.) Also, my sense of control over work has increased since mid-lockdown-angst when Junior was at home combined with increased workload and accompanying back ache.

Given that a prolonged economic downturn seems inevitable, the competition for replacement part-time work is likely to be high. Plus, I’m actually enjoying learning about how to teach online now – it’s a new world with plenty of opportunity to develop transferable skills. We’re very lucky.

With Black Lives Matter on the agenda, I’m also feeling renewed vigor that higher education should be a force for good in terms of fighting all sorts of inequality and injustice this world’s filled with. As a jaded idealist, I sometimes feel cynical about the way higher education has gone, but perhaps tackling it from the inside is the (only) way to go. I know this is an FI blog, but perhaps this is one of my purposes. Perhaps Life 1.2 needs to wait.

Holidaying this summer

Something I’d be keen to hear your thoughts on. We’ve thought about taking a holiday abroad this year in one of the accepted European destinations before Firelite Junior starts school. Pretty gutted Asia is not on our radar now!

Mr Firelite says it’s our only chance really this year. I’m wary of a Covid flare-up that might void travel insurance or require quarantine on return, but am being won around slowly. We’re not excluding Wales either but that’d be a long train journey. I wouldn’t be bothered about it if I just have to think about myself, but having a child somehow gives every decision more weight. What are your thoughts? Do you have plans to go away in the UK or abroad or are you waiting it out for the foreseeable?

How have your savings gone as lockdown has lifted? Have a great month and thanks for reading!