25 year old.. How can I retire ASAP?

capital0ne

MoneyGeoff wrote: »

You are doing very well but it's a bit mind boggling to see threads like this without the word Pension mentioned even once.

It's not surprising without the word Pension.

Two reasons - youngsters don't trust pensions when the hear about Carillion bosses spending it all, BHS non-existent pension fund and so on.

Second reason most people do not understand pensions because no one can explain them in plain English, those who do are seen as being salesmen only out to line their own pockets, again a trust issue.

People get very nervous when someone from the Government says 'We're here to help you!' In fact people get nervous when anyone with a finance background/qualification utters the same words.
Whose fault is that?

School for not including it in the curriculum, the government for allowing this to happen, fraudsters cold calling and ripping you off.

Education is the answer but how to do it I don't know.

economic

capital0ne wrote: »

It's not surprising without the word Pension.

Two reasons - youngsters don't trust pensions when the hear about Carillion bosses spending it all, BHS non-existent pension fund and so on.

Second reason most people do not understand pensions because no one can explain them in plain English, those who do are seen as being salesmen only out to line their own pockets, again a trust issue.

People get very nervous when someone from the Government says 'We're here to help you!' In fact people get nervous when anyone with a finance background/qualification utters the same words.
Whose fault is that?

School for not including it in the curriculum, the government for allowing this to happen, fraudsters cold calling and ripping you off.

Education is the answer but how to do it I don't know.

Well the first step would be to actually teach this kind of stuff in school (if its not already). I remember when i was in school (im 34), there was nothing taught about bank accounts, pensions, shares, interest rates, mortgages etc etc. All i was taught is how ot get a car loan and the costs for it.

Broken_Biscuits

Simms92 wrote: »

Apologies if this is in the wrong section, I'm just looking for the best advice for me moving forward. I'm 25, not too far from 26 and I really don't like working. I don't want to be working 8 hours a day for the rest of my life, I want to have the option to stop working and do something that's more fulfilling for me.

I do own my home, which also makes up part of my income (renting rooms). Its worth ~200k with ~130k mortgage left.

My monthly income is made up of £2350 wage and £1100 room rent income (after taxes). So £3450 total. Including all bills/mortgage (£630) and living costs, I spend around £1250 a month, leaving me with £2000 a month (slightly less if I include holidays + treats). I have been overpaying my mortgage for the last year, currently paying off the mortgage at a rate of 24k a year including overpayments. No other debts and I don't own a credit card.

Now my original plan was to keep smashing the overpayments on the house (paid off in around 5 years), but I'm now wondering if this is the right thing to do. Is there a better way I could use the spare money I have each month? Another property?

My girlfriend has a 250k property with 100k mortgage remaining. Eventually I will move in with her, but unsure what to do with my house when I do.

My goal would be to get into a position where I have £2k+ income a month with no debts and without working. As soon as possible. Any ideas?

If you genuinely earn £1100 from outside of your 40 hours a week and live off of £1250 a month then you can retire right now.

You just need to find a way to reduce spending by £150 a month. Or at worst take up a job that allows you to work 1-2 days a week that pays the shortfall from your rental income.

It’s likely , unless you have kept a budget of what truly gets spent, that you spend more than £1250 a month. Holidays and treats should be a part of your life at least occasionally!

I would suggest live a year recording spending and working out your true costs. In this time, stop paying off the mortgage and instead invest.

At 20k+ invested in a year you may find the returns from your investments help make up the shortfall you are looking for.

Lots of good suggestions here by previous posters re websites to consider on frugality and early retirement. they will have pages of information to read through about how you could retire faster by not paying off your mortgage etc.

If you decide retirement is not for you after you pulled the plug or you underestimated how happy you would be on the budget you have set... well, it’s not like you can’t return to work claiming it was just a gap year.

Best of luck whatever you do. You are in a fantastic position to make positive choices for your life.

Alexland

economic wrote: »

I wonder at what point i am actually financially independent. I guess if i were to stop working, the worse that can happen is that i eventually run out of money and so i will have to let out my home and move in back with my parents.

I was thinking about going travelling for a year, let out my flat and move my stuff back in with my parents. Net income a month from the BTL would be about £850, enough to fund my travels.

No idea I guess it depends on if you are willing to live a very frugal lifestyle and run down your assets? I have a figure in my head of requiring about £1.4m each to give up work in our 30s and maintain a good lifestyle - and we don't have that yet.

I expect a crossover point in our 40s where we are basically then just working to provide onward inheritance.

Alex

ValiantSon

economic wrote: »

Well the first step would be to actually teach this kind of stuff in school (if its not already). I remember when i was in school (im 34), there was nothing taught about bank accounts, pensions, shares, interest rates, mortgages etc etc. All i was taught is how ot get a car loan and the costs for it.

That's fine, just two slight problems:

1) Who is going to teach it? A level of expertise is needed and it would be wrong to just assume that all teachers have this.
2) When would it be taught? The curriculum is already packed full, so no time allocation exists.

economic

Alexland wrote: »

No idea I guess it depends on if you are willing to live a very frugal lifestyle and run down your assets? I have a figure in my head of requiring about £1.4m each to give up work in our 30s and maintain a good lifestyle - and we don't have that yet.

I expect a crossover point in our 40s where we are basically then just working to provide onward inheritance.

Alex

The thing is i have to consider gifts/inheritances i will receive. My parents have a fully paid of house worth 700k, savings/S&S ISA of about 600k, pension of 200k and annuity income of 12k a year. Plus they are due to receive state pension in a few years. Plus my parents will inherit assets worth around 400k themselves.

the annuity and state pension would be an income of around 32k a year post tax. That's enough for basic living expenses plus a few holidays a year. Care home costs would probably cost quite a bit but even with that it should be covered mainly by the 32k income.

So they are looking to gift to me and my sibling. As otherwise there probably would be significant IHT liability. Gifts over the next few years plus eventual inheritance would mean i probably do not need to work even now and still have a nice life (highly subjective of course but my hobbies are cheap).

I also think with technological innovation in many areas, things will get cheaper and more efficient such that there will be not as much of a need to build up wealth. But who knows when that will happen, best to always plan for the worse.

economic

ValiantSon wrote: »

That's fine, just two slight problems:

1) Who is going to teach it? A level of expertise is needed and it would be wrong to just assume that all teachers have this.
2) When would it be taught? The curriculum is already packed full, so no time allocation exists.

1) if you have teachers who can teach maths, those same teachers will be able to teach some basic personal finance stuff. personal finance does not require a lot of expertise. specially at the level you teach 16 year olds.

2) get rid of the useless stuff to make room for personal finance teaching. useless stuff like religious education. you teach personal finance at GCSE and Alevel as a compulsory course but not graded.

chockydavid1983

economic wrote: »

get rid of the useless stuff

Wow, they'd only need 1 day a week then :-)

ValiantSon

economic wrote: »

1) if you have teachers who can teach maths, those same teachers will be able to teach some basic personal finance stuff. personal finance does not require a lot of expertise. specially at the level you teach 16 year olds.

Being a mathematician doesn't mean that you are good with money. I know a lot of Maths teachers who are great mathematicians and great teachers, but they are rubbish with money. There is a level of knowledge, temperament and life experience required with managing personal finances that are not necessarily present.

economic wrote: »

2) get rid of the useless stuff to make room for personal finance teaching. useless stuff like religious education. you teach personal finance at GCSE and Alevel as a compulsory course but not graded.

What you view as useless isn't necessarily useless. I'm not going to get into a long discussion/argument about the relative merits of one subject over another, but if you think that humanities in general are useless then you have taken a very reductivist view of education. Look at the background of many high achievers and you will find that they have a liberal arts/humanities background.

If it isn't examined then the truth is that modern youth will not consider it important and will therefore not make any effort to learn. It is also technically impossible to have a GCSE or A Level that isn't examined. Furthermore, in your scenario, basic arithmetic is all that is needed, yet the demands of a GCSE or an A Level go well beyond this.

Your plan is deeply flawed, I'm afraid. Care to try again?

economic

ValiantSon wrote: »

Being a mathematician doesn't mean that you are good with money. I know a lot of Maths teachers who are great mathematicians and great teachers, but they are rubbish with money. There is a level of knowledge, temperament and life experience required with managing personal finances that are not necessarily present.



What you view as useless isn't necessarily useless. I'm not going to get into a long discussion/argument about the relative merits of one subject over another, but if you think that humanities in general are useless then you have taken a very reductivist view of education. Look at the background of many high achievers and you will find that they have a liberal arts/humanities background.

If it isn't examined then the truth is that modern youth will not consider it important and will therefore not make any effort to learn. It is also technically impossible to have a GCSE or A Level that isn't examined. Furthermore, in your scenario, basic arithmetic is all that is needed, yet the demands of a GCSE or an A Level go well beyond this.

Your plan is deeply flawed, I'm afraid. Care to try again?

This is all nonsense. Teachers can easily learn the content the night before and teach it to students. This isn't about how to be frugal or getting the best mortgage offer or whatever. This is just an introduction to how interest rates work, how mortgages work, stock and bond investments, how pensions work etc. Nothing complex, just a basic understanding.

One hour class a week for a term should be enough. a maths teacher would probably be best positioned to teach this. they would grasp the content easily and can relay that onto the kids.

As for it having to be examined, well i did a history GCSE and a geography GCSE and i have forgotten pretty much all of it. Maybe you can teach personal finance every year for a term, once a week over the course of 5 years (from age 13 to 18). So it has more of a chance of sticking.