FI Wannabe

I've seen other financial-independence (FI) wannabes on this forum, so I'm going to sneak this diary in here even though I don't have a mortgage (yet?).

My fella and I are in our early 30s and have landed our dream jobs after several years of under-employment. With some (developing) frugal skills and inspiration from sites and blogs like Early Retirement Extreme and Mr. Money Mustache, we managed to save and invest even when we weren't making very much. Now that we're both working full-time, our savings ability is way higher than it ever has been! On the other hand, our expenses have definitely increased too.

I don't know how long it will take me to be FI, so I'll need to calculate that. To do that, I need to figure out what my expenses will be like - I've tracked our outgoings for the last 3 years, but if our expenses are as high as they have been for the last year it'll take us a looong while to be FI. So, I'll also have some goals for getting expenses down, and savings goals too. It's hard for me to feel the urgency for saving when my job is great and we have no short- or medium-term goals ('freedom' feels so ambiguous some days), but I want to have the option of leaving if my job gets boring or awful, or the option of doing something wonderful that doesn't pay at all! And what better time to save than when you're enjoying what you do.

Will be back later with more plans. And confessions!
«13456789

Replies

  • zcrat41zcrat41 Forumite
    1.6K Posts
    Part of the Furniture 1,000 Posts Combo Breaker I've been Money Tipped!
    ✭✭✭
    Hi Kahra. I think there's a few people on here going for FI.
    I'm someone that loves my job and wouldn't want to retire - my granddad is still an important part of our family business at 79 and I can see that being me! However, I do like to aim for the financial security of having assets that provide an income. It makes life a lot less stressful.


    good luck on your journey, I look forwards to readin gmore.
  • edited 5 August 2016 at 2:08PM
    KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    edited 5 August 2016 at 2:08PM
    I got a great, full-time, permanent job a year ago. I bought a lot of things for work, and got into the habit of buying food/drinks on the go. Here's a breakdown of our average monthly spending for the last 12 months:

    (For 2 Adults)
    Rent and Council Tax - £266
    Gas/Water/Electricity - £83
    Transportation - £89
    Internet - £29
    Mobile Phones (2) - £18
    Renter's Insurance - £13

    Groceries/Household goods - £365
    Gym Memberships/Health - £103
    Restaurants - £153
    Entertainment/Spending Money - £57
    Other - £224 (lots of work things)

    Pets - £131
    Gifts - £71
    Electronics - £73
    Clothing - £76
    House Purchases (decor, furniture, etc.) - £141
    Travel - £371 (family in another country)

    Total Average Monthly Spend: £2263 :eek: (wow, that's WAY higher than I expected!)
    Total Average Monthly Saving: £990
    Average % Income Saved: 30%

    It's pretty embarrassing to post this, as I think of the two of us as pretty un-spendy... but the numbers don't lie. The only reason we're able to save so much is that my fella's employer subsidises our housing, and we walk/cycle/take public transit rather than own a car. As you can see, there are PLENTY of places to trim! My first categories to tackle will be the grocery/restaurant and other budgets - I have most of what I need for work now, so this should be some low-hanging fruit.

    My first goal is to save 50% of our income for the rest of the year.
  • KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    Thanks zcrat41 - I've always admired those people who love what they do for work enough to keep going forever. I totally agree about it being less stressful to have backup savings though - it makes me like my job more, knowing that I have options and am choosing to be there :)
  • edited 5 August 2016 at 2:07PM
    KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    edited 5 August 2016 at 2:07PM
    Here is what we plan to spend and save in Aug 2016:

    Rent and Council Tax - £266
    Gas/Water/Electricity - £65
    Transportation - £56
    Internet - £28
    Mobile Phones (2) - £20
    Renter's Insurance - £16

    Groceries/Household Goods - £325 (baby steps)
    Gym Memberships/Health - £132
    Restaurants - £75
    Entertainment/Spending Money - £60
    Other - £40

    Pets - £20
    Gifts - £80 (couple of birthdays)
    Electronics - £0
    Clothing - £0
    House Purchases (decor, furniture, etc.) - £25
    Travel - £200 (going away for a week, have already booked accommodation and transportation)

    Total August Budget Goal: £1408
    Total August Saving Goal: £1899
    % Income Saved Goal: 57%

    I know the grocery budget is still high, but I'm budgeting the food part of our trip in there as well - I'm trying for £40 per week for the rest of the month so that our holiday feels especially luxurious.
  • edinburgheredinburgher Forumite
    12.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Remember to include pensions in your savings totals.

    Ps. £224 for 'other' is 10% of your expenses, you need to add more detail to that category so that you know what other is. If it's food etc., you either need to get better at taking stuff to work or be honest to yourself about the fact that your 'food' line is unrealistic.

    I'm pretty bad at work spending myself, can be nearly £7 on a naughty (breakfast/coffee/lunch) day! :eek:

    Pps. You need in the region of £700,000 based on current spending.
  • KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    The worst part is that it's actually over £700k, because the housing costs are artificially low. Adjusting to full-time work has been way more wasteful than I realised! I've kept track of all my 'other' spends, so I'll note what they are going forward - this past year has been a LOT of buying things to get set up for work. Hope that's all over with!

    I'm going to have to look into the pension thing, as it's defined benefit and I don't know the value/how much my employer contributes. I'll look into it for my August savings rate.

    Thanks for the pointers - I have a lot of changes to make to get to FI!
  • KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    I have been making a serious effort on the grocery front in the last month, and it's made a huge difference - we spent £40 for the first week of August. Instead of going out to celebrate the last working day before vacation, we bought fancy ingredients and booze from Mr S. A month ago, I probably would have tossed fancy foods into the cart on any normal day of the week. The extra shop was £28, but includes things for the rest of the week. Finding that meal planning makes life easier and less expensive, and I appreciate treats more.

    Other spends this week were a book, some stationery, and cheap tickets to a show coming to £17.55 all together, and gifts at £40. Plan to hold off on going out to eat until we're actually on holiday. I also want to look into MB and other ways to make a few extra quid this month, although I'm still at the point where reducing outgoings is going to make the biggest difference.
  • edinburgheredinburgher Forumite
    12.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Kahra wrote: »
    The worst part is that it's actually over £700k, because the housing costs are artificially low. Adjusting to full-time work has been way more wasteful than I realised!

    You've good decent salaries, so you'll get there, I hadn't even clocked your super low housing costs. We manage to pay over £1k a month for mortgage + council tax on less wages and we're relatively spendy compared to most on MFW.

    Vital you get spends under control though, you're spending about the same as us, but we're renovating a mortgaged house.

    Have you done a Pareto analysis of your spending data? I.e. top 10 spends or whatever? :)
  • KahraKahra Forumite
    88 Posts
    Sixth Anniversary
    For the Pareto analysis, do you mean using the categories I have in the budget above, or individual 'spends'? Fun idea - based on the last year's averages, my top 10 are:

    Travel - £371
    Groceries/Household goods - £365
    Rent and Council Tax - £266
    Other - £224 (Pareto for this category is: work supplies, repairs, fees and memberships)
    Restaurants - £153
    House Purchases (decor, furniture, etc.) - £141
    Pets - £131
    Gym Memberships/Health - £103
    Transportation - £89
    Gas/Water/Electricity - £83

    ...not that I didn't notice it before, but our travel and total food categories are SO high and housing costs SO low. I'm not surprised at the travel, because this includes about 2 years' worth of flights paid for in the last 12 months to visit family abroad. Adding together the grocery and restaurants category means that almost a quarter of all the money we spent last year has gone down the toilet (literally!) :rotfl::eek::o
  • edinburgheredinburgher Forumite
    12.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    I meant individual spends more than 'themes' (so break categories down to their constituents, 'other' isn't meaningful in terms of analysis).

    Then re-arrange them and see what you get. It quickly becomes apparent (dumping the above into Excel), that you've got 5 themes accounting for something like 75% of your spends. Logic suggests challenging each and every one of these for the quick wins. Some things you can't change the amount (say a season ticket), but you could change the item (by switching from train to bus, for example).

    This might actually prove more useful for you than a lot of people as most folk have 'mortgage' as their typically huge immutable expense.

    Flights from the past shouldn't really be included as part of your average spends (unless they will be repeated), it skews the average.
This discussion has been closed.
Latest MSE News and Guides