FI Wannabe

Kahra

I joined the 'Save 12k in 2017' challenge, and there was some discussion on there as to whether or not pension contributions should be included. I think yes, absolutely! As long as you're vested (unlike me!), that's your money, and you are saving it. I think I may be biased, though, because pretty much everything I save is for income generation/retirement.

Anywhoo, it got me thinking about my pension contributions. I don't count these in my savings because I'm not vested... but also because I don't know how to count them. I have a defined benefit plan (woohoo!) so I'm not sure how to count the contributions vs benefits. I'm not going to worry about it until I'm vested in summer 2017.

So I've been tracking my spending/saving/investing totals on the Mad FIentist's Lab, and it shows that we have 16 years and 9 months until financial independence if we continue to save and spend the same amount - and that's using our employer-subsidised housing numbers, so it would be longer. However, that doesn't include any employer or state pension income, which would not be insignificant if we worked for 17 more years! Ah well, a lot can happen in 17 years, from job changes to pension policy changes, so I won't get too hung up on the details just yet.

Kahra

We decided to go crazy with our investing this month, and rather than purchase more funds, we're buying a bond with a company whose alcoholic products we enjoy. Risky, yes, but I know I do my part to keep them in business! Next month I'll get back on the passive investing bandwagon.

I think we've finished Christmas shopping, and we've been cooking and baking and celebrating a lot this month. So far, I don't think we've spent a whole lot, but I usually say that for the first third of the month. The middle third I completely ignore, and the last third is usually damage control.

I have some un-MSE habits that need to be put on the chopping block in 2017. I want to start the year in a good place financially, and that means only spoiling our family when we visit, not ourselves!

Kahra

I was reading a thread on the MMM forum about a fun way of tracking one's progress to FI.

First of all, figure out how much you spend per day (or will spend per day in retirement) by dividing your annual expenses by 365. For the two of us, we've spent £72.21 per day in the last year (ouch).

If you assume a 4% withdrawal rate, divide your daily expenses by 0.04.
For us: £72.21/0.04 = £1805.27

For every £1805.27 we save, we've paid for one day's expenses every year, forever, entirely from investment income. No job required

Kahra

Have been enjoying a day lounging at home, occasionally doing a few dishes and hanging up a load of laundry. I'm getting to that nostalgic time of year where I think about the progress we've made in the last 12 months, and I'm so grateful for my wonderful family, stable job, and generally good health.

In my general house puttering, I found a book token gift card that I won earlier in the year and had never used. I popped online and ordered myself a book I'd been eyeing for literally years, but was too expensive to justify (even used!). I had a peek on eb@y for another I'd wanted for just as long, and found it for half the cheapest price I'd ever seen, so I ordered it for myself too.

Baked a tray of cookies to take into work tomorrow. House smells divine!

ani*fan

Kahra wrote: »

For every £1805.27 we save, we've paid for one day's expenses every year, forever, entirely from investment income. No job required

I love this! What a motivating way to look at things.

Kahra

It'd be more motivating if the number wasn't quite so big , so I need to work harder on that one!

I feel like I've been out to more Christmas parties and social events than I can shake a stick at, but we've still only spent £50 on meals out this month. We've had people over at ours more, and found some really good deals on nice booze to take as gifts. Last night we went to this amazing Chinese buffet that was only £7 per person, and considering a burger at a pub around here costs about £13, I was super happy :T

Only a couple more shifts at work before the holidays :j:j:j We're trying to eat all the perishables before we leave, so may have some weird meal combos. Oh! There's an Aldi opening near us next spring, and I'm really excited about what that'll do to our food budget!

jodles16

Hi Kahra, to be honest I have heard different things about the different P2P, lendingstre... are one that I see a lot of so have considered! This is one area I feel I have no knowledge in!

You are doing so well! Love the way to work out retirement income, I think I would be horrified by out daily spending!haha.

Enjoy the strange food combos, well done on keeping spending costs down!

Jodles

Kahra

Hiya Jodles! I haven't heard of lendingstre..., I tried googling but it didn't look like a P2P?

I know I have a much higher risk tolerance than most, and I think that's the biggest consideration with P2P. If you can get 5% on a regular saver with a bank, that's WAY better than 5% from P2P because it's so much less risky - you'll probably get your money back even if the bank collapses because of FSCS insurance (although if that happens you might have bigger worries). If the P2P company collapses, you'll likely not get anything. On top of which, the person or company you lend money to may not pay you back. But with the higher risk comes higher returns, plus it can be pretty fun to read up on what you're lending to *puts on nerd glasses*. So yeah, choosing the level of risk you're comfortable with is the hard part, and it's intimidating the first time you do something (I procrastinated for YEARS before buying my first shares, for example), but it's quite easy to do once you've decided to give it a go and created an account.

Martin's updated his P2P article, and the 3 platforms he talks about are the ones that have been around the longest - http://www.moneysavingexpert.com/savings/peer-to-peer-lending

Good luck with the night shifts - bet you won't be upset to put those behind you!

Madcatgirl

Hiya - I've enjoyed reading through your diary. We're also looking for FI, although using btl to generate passive income.

I've started doing a small bit of investing in a Charles Stanley ISA as well for the past few months, although my main focus is paying off our home mortgage. I've not had any dividends payment yet - any ideas when these are paid?!

I've been thinking about p2p as well, but have gone for the 5% savings route instead

Kahra

Hi Madcatgirl, great to hear from someone else who's interested in FI! I've thought about btl, and may ask you some questions about it in the future

Dividends just depend on what you're invested in - I've got a bond fund that pays monthly, and the rest of my funds pay quarterly. I've held others that have an annual distribution, and some don't pay a dividend at all. Also, if you've set your account to automatically re-invest dividends, you might not notice when they come about.

One of my financial goals this year is to open a 5% regular saver! So many investment ideas, not enough money to do them all