Onwards to freedom!

crv1963

SuperSecretSquirrel wrote: »

Thanks for posting everyone, love reading your congratulatory messages


Are we holding too much cash? Maybe. OH is very tied to cash, the fact that we are ploughing almost 2k per month into the stock market and she is ok with that is some kind of miracle. OH has always maintained that we should hold an absolute minimum of 10k in cash so she can sleep well at night. Now we have two dependents, boosting that a little seems reasonable.

Hi SSS,


My OH is also very tied to cash, keeping 12-18 expenditure as a cash reserve is her minimum when we finally do stop work, and keeping 6 months income as we work- just in case. This has recently proved for us wise as we have been hit by multiple high vet bills, currently running at around 1k per month- we didn't predict all 3 animals needing surgery in so short a space of time! As well as some car woes, so a 10k reserve sounds reasonable.


When we get the 12-18 month target most of the "immediate access money" will be cash juggled around various savers/ interest bearing current accounts, small beer in the scheme of things but at least something is better than nothing when making it work for us. Then our medium term reserve will given my OH caution be in premium bonds 12 months of outgoings worth so for us 24 k as a minimum, this also can be used if there is a market crash meaning we need to stop drawdown.


The long term funds are to be S&S ISAs and SIPPs, hopefully no need to ever draw against capital if short and medium term funds are kept at a decent level. We'll have to wait and see.

EatingTheElephant

Late to the party, but huge congratulations on being MF :T:T

edinburgher

Suspect the fact you have no mortgage and appear to live like monks has something to do with OH's risk tolerance?

Karmacat

SuperSecretSquirrel wrote: »

The eventual aim is financial independence, and we've a long way to go, so I mainly hope to avoid going off the rails! We're planning on a couple of weeks holiday, but with what will by then be a one year old and four year old in tow we're not talking anything exotic.

Sounds good to me. A nephew of mine has two children each a little younger than yours, and they've just gone to Mauritius ... I think it's crazy when the kids are that age, they're too young for specific memories, and even if you want winter sun, there are closer options! A summer holiday in the UK with kids that age is deffo the way to go, in my book

it's not very exciting, but I guess mortgage freedom, although very nice indeed, is just a big fat milestone on our journey, far from being the end game.

:j lovely!

Are we holding too much cash? Maybe. Of course a good chunk was earmarked for the mortgage, always was. We're now holding about 25k, not 40k. From memory, the annual spending diary (currently a work in progress) suggests we may spend around 16-18k a year now the mortgage is gone

Between potential perfect storm, investment opportunities and the fact that you're already putting nearly £2k a month into stocks and shares anyway, that sounds fine to me (not that I'm a whiz, far from it) ...

SuperSecretSquirrel

Thanks crv1963 and ETE

Not sure if I've misunderstood ed, but I have without a doubt been the main driving force behind the mortgage payoff and keeping our costs down, but it wouldn't have been possible without OH being on the same page We're cut from fairly similar cloth, but OH would quite happily spend a little more and save a little less. My tolerance for extremely unlikely disastrous risks outside our control e.g. redundancy/repossession when we first started this journey, is lower than that of hers, whereas her tolerance of short term fairly inconsequential risks e.g. value of pensions and ISAs dropping in the short term is far lower than mine.

Thanks KC. The thinking behind remaining in the UK has less to do with them not really benefitting from the memories (we'd still have some nice ones ourselves ) and more to do with the hassle of managing the inconvenience of travel with a small baby. I know plenty of people manage foreign holidays with tiny children, but I really don't think it's for us!

greent

Holidays with small children.... think our craziest has to be with all 4 of them back in July 2009 - DD was 11, DS1 9, DS2 3.5 - and DS3 8weeks, and weighing in at just over 6.5lb (so super tiny to look at - we had so many people ask questions). We did the South of France for 2 weeks. Thankfully, the children were mainly ok with playing around the resort pool, which also had slides etc. It was an experience

NorthernMonkey1

Just to be an argumentative git, because it's Monday...

It takes about 5 days to get money from a S&S isa, and into cash in your bank.

If you were to keep one months money as cash, (£2000) and invest the remainder (£23k) into a mixed equities fund in an S&S isa, then what eventualities are you not prepared for?

If tomorrow, there is a huge stockmarket crash, then at worst, half of the value could be lost. If you are made redundant at the same time, then you can get access to the remaining £11500 in 5 days.

Why would you need access to more than £2000 in less than 5 days? I assume you have a credit card with a high limit and ,minimal balance?

I ask because your situation is really close to mine. It always interests me when people with the same aims choose a different approach.

I keep £2000 in easy access cash, outside of my current account (which often has very little in it). I also have a couple of credit cards with >£15000 available credit. My S&S isa sits at about £21k (also no mortgage as of this month)

If I'm made redundant tomorrow, I don't need access to all of the money immediately, I just need to draw down my living expenses, at a rate of £1500 a month, from the S&S isa. If my boiler/car/other expensive thing breaks, then put it on the credit card, withdraw from the isa, and pay off next month

I can't think of any scenario which isn't covered by this arrangement, yet it still allows for the maximum to be invested, and earning interest.

SuperSecretSquirrel

I suppose it's a mindset thing NM. I've not withdrawn a penny from S&S yet, and I think the intention has always been to pay in now and only cash out a little each year after retiring. I try to avoid having the S&S factor into things like emergency fund, and certainly not for things like car replacement. In my head it's a pension, just that it's a special one that I can draw down from at say age 50 if I retire by then. I could talk myself round to withdrawing from the S&S ISA to buy an investment property, for example, as it too would essentially form part of my flexible pension. A new car, or feeding ourselves during a period of redundancy would not.

There's also the fact that in your disaster scenario you are locking in your 50% loss on at least some of your money. I'd rather risk low returns on some of our money, than crystallize a large loss. Even if over time the end result is broadly similar, I know what fits best into my comfort zone.

Finally, credit cards... I have a 0% spending card with a hefty credit limit. I'll be repaying it in full and closing the account in three months time (when the 0% period ends). Even then my credit limit across multiple cards will be about equal to our combined annual household income, and my utilisation (stooze not real debt) will be over 85%. At the moment I have about a 5% chance of qualifying for a couple of shockingly bad cards, and zero chance for the rest. The shockingly bad cards might be sufficient for our needs if paying off in full each month, but practically useless if I have a very low limit. Situation may change a little in three months time, but no idea in which direction - I'll have 12k less available to me across all cards, but my credit utilisation will shoot up by over 10% too - could go either way. This boils down to me not being able to rely on credit in the near future, so for now, at least as far as emergency funds go, cash is king

SuperSecretSquirrel

greent wrote: »

Holidays with small children.... think our craziest has to be with all 4 of them back in July 2009 - DD was 11, DS1 9, DS2 3.5 - and DS3 8weeks, and weighing in at just over 6.5lb (so super tiny to look at - we had so many people ask questions). We did the South of France for 2 weeks. Thankfully, the children were mainly ok with playing around the resort pool, which also had slides etc. It was an experience

I sometimes hear people say they need a holiday to recover from their holiday. That's exactly how I think we'd feel after a foreign holiday with our tiny children. Not a thought to savour!

South of France is actually one of the few options we'd consider right now. Not too far, and a fairly laid-back camping and enjoying the weather and the pool type affair sounds ok. The fact we could load the car(s) with all bar the kitchen sink and hop over on a ferry would also be a huge bonus. If I'm honest though, I think I we'll give it a miss this year, and pencil it in as an option for next year

edinburgher

I'll let you know SSS - taking DD to Greece in May :eek: :rotfl: