julicorn's journey 3 - The House on the Hill

julicorn

Hi all! Long time, no see, at least when it comes to the diaries (I still run the mortgage free challenges, of course). 

Where do I start? This is my third diary on here, the first talking about our initial mortgage pay off journey for Mr julicorn and my first flat (bought in 2017). If you have too much time on your hands, you can read through 52 pages of that here. 

We then went through a rather tumultuous 'moving up the property ladder' process in 2022, largely documented across 47 pages here. 

And now? Mr julicorn and I are very settled in the most wonderful house on the hill (the one we bought just before Christmas in 2022, spoiler alert!). We have our allotment around 5 minutes walk away, which now spans two plots and takes up plenty of our free time. We're just on the edge of the city (far out enough for it to be quiet and peaceful, but close enough to be able to walk into town on a sunny day), and on the edge of the South Downs as well, which is lovely for walks. I work compressed hours now and have Fridays off which is absolutely wonderful, and Mr julicorn also gets the odd Friday off from work. 

So what is next, and why am I starting a new diary here? After aggressively paying down our mortgage previously, we've taken our foot off the pedal over the last few years. But this isn't technically a mortgage overpayment diary (sorry!), but rather (hopefully) a journey to financial independence. I've funded my pension quite a bit last few years, and have now run some numbers, and think that early retirement (and I mean quite early) could be on the cards for us, if we play those cards right. 
Running a diary previously was really motivating for me, and actually helped me make more money on the side (I had a whole plethora of side hustles for a while from my etsy shop to matched betting and surveys), and having financial independence / freedom as a goal to work towards means I feel like firing those up again. We've also not reigned in our spending as much as we could last couple of years, although we still use YNAB, but there's gains to be made here for sure. 

Anyway, long story short, if you'll have me back then I'd love to share this part of our journey with you all

Just some numbers: Including a final lump sum to pay off the mortgage, we'll need around £930k to 'retire'. Current figures are as follows:
Pensions: £103,311
ISAs: £65,273
Total pot: £168,584
All generally invested in global index funds as much as possible (Mr julicorn just has a NEST pension, so fund options are a little more limited in those). 
The main goal for us is to increase the money in our ISAs. I'm actually going to cut down on my pension contributions in the new year because my calculations are showing me that I'm if anything paying a bit too much into those right now, given that we'll (if all goes well) need to bridge a good number of years with the ISAs before being able to access our pensions. I know pensions would be more tax efficient, but having too much in the pensions won't be much use if we can't access them. 

Oh, and for context, Mr julicorn is already 34, I'm about to turn 34 this month. 

I'm happy to be back, and here for any questions or comments as well of course  

julicorn

This week is our return from a little holiday to Prague and Saxon Switzerland, both absolutely fantastic places it turns out! Would really love to visit them again. 

Work has been ok so far, although there's not enough projects coming in right now which is a bit stressful in and of itself. 

I did some exercise this morning, not something I've really properly gotten into the habit of doing, but I've been using the FIIT app lately and actually quite enjoying their programmes and exercises. Long may it last! 

Mr julicorn and I have started having monthly finance meetings, and we've made our YNAB budget more realistic now. This month is the first time we're trying out our new set-up, and it's already facing a couple of challenges: A trip to IKEA with friends this weekend, 3 gigs/concerts up in London, and a long weekend in Rye... oh, and my birthday I guess! We shall see how that works out   

I've also decided to include our emergency fund in the 'overall pot' value for good measure, so our current total is £181,584 out of £930k. Getting there, an overly optimistic person might say! I think I'll be a little cheeky and use the MFW and MFiT challenges moving forward to track our ISA contributions rather than overpayments, I think that will be quite helpful in terms of motivation. 

I hope you've all had a good start to the week too  

julicorn

It was the bake off yesterday, and we (as usual) had some friends over. I made twisted olive baguettes which seemed like a complete disaster halfway through the process (I ran out of the correct flour and my eclectic improvisation seemed a little too eclectic as the dough was practically crawling off my worktop), but then turned out utterly delicious. Still got a couple of those left, looking forward to lunch already!

Mr julicorn's brother is coming over this evening, he contacted us out of the blue to ask whether I still use YNAB and whether I had any finance tips to get started with. I'm actually looking forward to this way more than I should - I used to mention YNAB to everyone and their dog, and finally someone seems to be actually interested  

South_coast

Ooh, I'm so pleased you're back posting! I'm not on any of the challenges, so I'd missed you! 

I'm now re-reading your first diary again in celebration 😀🤣

julicorn

South_coast said:

Ooh, I'm so pleased you're back posting! I'm not on any of the challenges, so I'd missed you! 

I'm now re-reading your first diary again in celebration 😀🤣

I missed you too! I think I needed a bit of a breather after that complete mess that was our 2022 house purchase process, but so happy to be back!

Oh and let me know if you unearth any clangers on that one, it feels like a very long time ago now  

South_coast

Nothing yet, I'm just high off the energy and enthusiasm! 

Have you given any thought to LISAs as part of your retirement planning? I only mention as you get an "instant"* 25% uplift from the Govt on whatever you put in, so negates a lot of the "missing out on tax efficiency" feeling and it's capped at a £4k contribution each year. So a useful amount to get a guaranteed increase on, but not enough to get in the way of other plans if you're putting serious money away each year. It does come out of your overall ISA allowance each year though. You can access at 60 (at the moment!), open until you're 40 and pay in until you're 50. 

* not really instant, but it gets there soon enough 🤣

badmemory

Or pay it into a personal pension.  Pay £800 in tax man puts in £200 making £1000.  When you draw it out get £250 tax free even if the pension value doesn't increase.  So even if no change in value you get £850 out in exchange for £800 put in.

julicorn

Thank you both! The pension I have is a SIPP and I've been paying heavily into that over the last few years precisely for the tax benefits (I'm a higher rate tax payer too and my employer passes on the employer NI savings for pension contributions to me as well, so they're substantial savings), but our main issue now is that if all goes well, we'll have quite a number of years to bridge from when we can retire to when we can access our pensions. We'll therefore need a lot more money than we have right now accessible at a younger age, I.e. in ISAs or even GIAs. I'd rather be able to retire in my 40s without having utilised every possible tax benefit, rather than having to work longer and then be super rich in my 60s. 

LISA has a similar issue, we kinda need our ISA allowance for money that'll be more instantly available. I'm still thinking of opening LISAs for us before we turn 40 though, so we have the ability to pay into that down the line. I've even set the most ludicrously far out calendar reminder for that XD

South_coast

That was going to be my other suggestion, stick £1 in one now so it's open, then you've got the option in the future if you change your mind 👍

I'm favouring ISA over pension for the same reason, but the +25%, no tax on withdrawals, and "only" £4k a year, made the LISA feel like a useful additional option for me

julicorn

Thanks so much @South_coast ! I totally agree, keeping our options open is important (a journey through my diaries so far being testament to how quickly things change sometimes  

It was lovely seeing my brother in law yesterday. His mindset around money and financial position is quite different to ours, but I'm hoping YNAB will be a useful tool to him as well. 

Tonight we're going to a gig in London - it's a bit of a busy week! We have vouchers for a free itsu meal so I'll see if I can find an itsu on route to hopefully minimise our expenses a little (without compromising on a fun night out, that is). 

julicorn

I just remembered that during my heavy mortgage overpayment years, I used to track milestones in a spreadsheet, that was always really motivating too. I just set one of those up, and realised we're over 19% of our goal already - 20% is in sight! That's actually more than it's felt, gave me a bit of a boost on an afternoon of what has been a bit of a stressful work day. 
I don't normally work Fridays, but am going to have to do some work and go to a bit of an emergency meeting tomorrow after all. This doesn't tend to happen very often, but is still putting a bit of a downer on the day. Ah well, it'll be a nice weekend anyway I'm sure.