Early-retirement wannabe

Marine_life

Good morning.

I was reading a couple of articles some some of my favourite internet haunts this morning and I thought I would pop in and share a few thoughts.

The first article was this one:

http://www.mrmoneymustache.com/2013/04/25/why-should-i-be-frugal-when-im-so-rich/

Now there were a few things in that that really rang true. In the first instance I do not earn the $1 million referred to in the article but we make a decent crust. However, I can now see that I sit somewhere between Mr. Mustache and the 'type of' person referred to in the article.

How so?

Well in the first instance we have enough money that we don't really think about what we spend or at least we don't need to think too hard. That does not mean we are wasteful but it does mean that we don't have to budget. Being in that position it does mean that actually spending loses it attraction, having the latest of this or the latest of that really does not bring any joy.

I will give you an example: A few years ago seeing work colleagues talking about nice watches I got the idea into my head that I should have one. So I bought one. Not ridiculously expensive but there was no change from £3,000. Do you know where that watch is now? Sitting at the back of a cupboard in the original box. I have never worn a watch - I just don't like the feeling of having things dangling off me - so it was just an absurd example of 'keeping up with the Jonses'.

Contrast that with the other side of my personality which is the inherent scrooge. I have brought home made sandwiches to work every day for the last 25 years. And generally with the same filling (ham, cheese and pickle). I feel a great sense of satisfaction taking money out of the bank at the beginning of the month and still having the same ones in my wallet at the end of the month! You want weirder? I hate paying for 'frothy' coffee but my wife likes it so I will occasionally go to a starbucks for her benefit - in recent trips we have taken to buying one large drink rather than two small ones and sharing it. Am I taking this too far?

Anyway onto the second article which was this one:

http://www.evo.co.uk/news/evonews/289339/2013_porsche_911_turbo_revealed.html

I want it.
I want it bad.

Its absurd and in most situations will not get you from A to B any quicker than a decent diesel powered Golf.

However, and this is really my point, even though I might want the Porsche and I have coveted other things in my life, I will not buy one and will gradually dismiss the idea from my mind. Excessive expenditure is gradually becoming the thing which pushes my retirement goal further away. Is owning one of these really worth a year of my life when all it will likely do is sit on my driveway or overheat on the daily crawl to work?

Actually I like diesel Golfs or at least I will learn to like them, just as my wife has learned to like sharing a coffee with me ;-)

ozzage

Marine_life I refuse to have any sympathy for your difficult dilemmas

I guess you and the others who also follow MMM will have also seen today's post, about our own fair capital city.

http://www.mrmoneymustache.com/2013/05/02/reader-case-study-not-quite-as-easy-in-london/

mildredalien

I find MMM interesting, but there's a lot on there about early retirement for high earners (he calls them 'middle class' but with the median wage in the UK around £25k/year, his 'middle class' earners earn the equivalent of £90k/year!) and not so much for low-medium earners. I guess the principle is the same (put 50%+ of your income away) but that assumes that even living frugally you have that much disposable income.

Marine_life

ozzage wrote: »

Marine_life I refuse to have any sympathy for your difficult dilemmas

I guess you and the others who also follow MMM will have also seen today's post, about our own fair capital city.

http://www.mrmoneymustache.com/2013/05/02/reader-case-study-not-quite-as-easy-in-london/

I think a lot of what he says in there is fair comment ...but I don't agree with all of it.

In the first case I 100% agree with the comment on salary. There are lots of opportunities to increase saving rate as you move up the salary scale and many in London will have those opportunities (and in fact are there for that very reason. So why kill yourself when you are just getting started?

However, there is a ceiling on the number of really big paying positions and you have to be careful not to stagnate. I worked in London long enough to know its a young mans game and once I had escaped I had no intention of going back. Also, there has been a lot of volatility in recent years and I know (from within my own company) that you can go from earning 150 k plus to being out on your ear in a couple of weeks. Making a comeback from that is never easy and in todays world there are very few sure things which will give you a lifetime of uninterrupted income growth.

My advice to people is to be honest with yourself and your ability, know where you are in the pecking order and when you are getting close to the ceiling. Once you know you are getting close to the top, start planning your next move and / or create a niche for yourself where you become more indispensable to the organization.

ozzage

mildredalien wrote: »

I find MMM interesting, but there's a lot on there about early retirement for high earners (he calls them 'middle class' but with the median wage in the UK around £25k/year, his 'middle class' earners earn the equivalent of £90k/year!) and not so much for low-medium earners. I guess the principle is the same (put 50%+ of your income away) but that assumes that even living frugally you have that much disposable income.

I agree to an extent, but actually his approach is even more important for people on lower incomes. Most of what he writes is not REALLY about retiring early, it's about living a sensible life where you take joy and satisfaction from non-material things and reject too much consumerism.

That does, of course, have a financial pay-off. Whether that leads to a very early retirement will depend largely on your income but the principles will help massively in any case.

I find Mr Money Mustache annoyingly smug but really like his site regardless. He distils concepts down to their essence and makes things which should be obvious, obvious.

FatherAbraham

ozzage wrote: »

Marine_life I refuse to have any sympathy for your difficult dilemmas

I guess you and the others who also follow MMM will have also seen today's post, about our own fair capital city.

http://www.mrmoneymustache.com/2013/05/02/reader-case-study-not-quite-as-easy-in-london/

From that article:

- £200 pcm into an ISA in shares/funds (a tax sheltered account)
- £100 pcm into a cash savings ISA

That doesn't sound legal, or have I utterly misunderstood the ISA regs? Mustn't contribute into two ISAs simultaneously.

Warmest regards,
FA

Linton

FatherAbraham wrote: »

From that article:

- £200 pcm into an ISA in shares/funds (a tax sheltered account)
- £100 pcm into a cash savings ISA

That doesn't sound legal, or have I utterly misunderstood the ISA regs? Mustn't contribute into two ISAs simultaneously.

Warmest regards,
FA

Can do if one is an S&S ISA and the other a cash ISA. They cant be of the same type.

Marine_life

I was reading this thread:

https://forums.moneysavingexpert.com/discussion/4593247

I think this is something that the government absolutely needs to do something about - whether autoenrolement is the route to do that is another debate.

Here is the rub. Government spending on pensions is set to increase dramatically over the next 10-15 years as the baby booker generation continues to filter through. So a larger percentage of people needing state support and less people to pay those pensions. Fact.

Secondly, what about the people who are coming through the system? Looking at my own children there are increasing demands on their ability to accumulate and / or save money. Higher university fees, high house prices and declining investment returns means its going to be increasingly difficult for them to accumulate sufficient funds. I believe we are in a period where investment returns will bump along the bottom for many years. Our economies are so fragile that increasing interest rates is almost impossible to contemplte.

So where's the risk for people like me / us who are saving for retirement? There are a couple of scenarios I fear:

1. We move into a situation where state pensions are means tested - removing the benefit for those who have paid in over years. Maybe not as fanciful as it seems after all there has never been any real connection with the amount of tax and NI an individual pays versus the benefits they draw.

2. A wealth or other savings and investments tax. Impossible to exclude and I am sure the situation is Cyprus has got a lot of people thinking and worried.

Of course people will claim that the government cannot force them to put money aside for retirmement but I would argue that they absolutely can and should when there is a potential impact on those who would ostensibly have to support them!

Scary times.

cyclonebri1

I've drifted in and out of this post over the months/years but my reasons for finishing at 55 were both for health reasons and as a result of being promoted into ever more stressful areas outside my comfort zone.

I only post today as I have lost touch with most of my ex work colleagues, but yesterday had lunch with a guy I worked with for 30 years but hadn't seen since the day I left over 5 years ago.

2 people had been moved into my position over the 5 year period, both, and he was 1 of the 2 had suffered heart attacks, both being healthy previously and both citing stress as the main suspect.
Now I don't want to sound like a smart !!! or seem to be gloating at their misfortunes, but that would have been me had I not taken my options.

More a case of can I afford not to retire early than to retire early.

The guy I met yesterday always said he was going to retire at 60, he's now 61, and yes, he retired last year;)

ozzage

People need to take more responsibility, and I have no problem with the government forcing them to do it, since otherwise THEY (ie WE) have to pay.

I don't feel that spending my life working gives me any right to expect that other people will fund my retirement. I know that others don't share my view, which is why I'd like the government to do more to force them.

I'm originally from Australia, where they've had compulsory contributions for years and years. I'm fully in favour of it. It's currently a compulsory 9% employer contribution! Even that is just APPROACHING the level which will be required to fund a proper retirement and in the UK we are so far away from those numbers it's laughable.

Saying "we can't afford it" holds no weight with me. We can't afford NOT to do it!