I’ve just run the sums and I’M A MILLIONAIRE. It’s taken some getting here but I’ve done it! Woo hoo!
We came very close to hitting the 7 figures at the end of September but came up a bit short. Doing the numbers again for a personal anniversary, we’ve managed to just clear the hurdle. I didn’t think that I’d do it this early or this year but strong tailwinds on our investments have brought us to this landmark level. It’s been a long slog but I’m very very pleased. (The Lady on the other hand actually thought that we were already there and didn’t seem that impressed when I told her the good news earlier this week along with a celebratory beer).
For a bit of background; I entered the workforce in December 2005 and instantly realised that I needed to make a plan to escape it as soon as possible. I worked with miserable older men (engineering) who had little reason to be as unhappy as they seemed and they were unhappy for every little reason. Miserable Scots you might think but I didn’t see what the alternative was and I thought that I had made my bed (4 year degree plus few other options) so I’d better lie in it. Ironically, the one guy in the office who was not a gloomy sod went and died when I was on a training course; I came back to his empty desk and was told that he had a heart attack at 46. Carpe diem!
Still, I had started a good job with good prospects and a new life in a new country, the world was my oyster.
I didn’t know what it was called at the time (FIRE) but I had learnt enough about economics, finances and money that if you had investments that paid a dividend that covered your living expenses then you could be free from the hassle of finding the money to pay for living.
Live to work or work to live?
I worked out that I would need to do three things if I wanted to retire early.
- Spend less money
- Earn more money
- Invest money wisely
I must admit that I’ve not stuck religiously to all of these things over the years. But I stuck to the principles and accumulated money as time went by.
I managed to breakeven 9 months after starting work. Zero net worth (annihilating 4 years of student loans) felt good. A few years later I crossed £100,000. I’ve had the luxury of uninterrupted earning and modest spending requirements. I’ve not lived like a monk, and I think that sometimes I spend too much – but compared to many I live the life of a pauper.
My original expectations were that I would hit £1,000,000 by the time I was 40. This was based on a lot of modelling from far off. One Million was always seen as a less a destination but more as a milestone on the way to financial freedom. So hitting it at the age 38 is for me a success.
The recent post from Indeedably paints a grim picture of the ennui of striving for something for it only to lose its lustre once you’ve attained it. But for me, this is a great moment because 2020 has been a rough year for me and my family. Covid decimated our savings and net worth. Both the Lady and I have changed jobs and we have the joy/despair of raising two kids without family help. But just as my career prospects are drier than a Saudi wedding, I’ve got the comfort to say that I don’t need to work.
Think about that for a moment.
I don’t need to work for money!
The fear of running out of money that has propelled by for the last 18 years can safely be ignored. I have enough now to not be worried, stressed or anxious. If I don’t work again, that’s fine. It does raise some interesting questions which can be answered later along the lines of “what should I do?”, “what will make me happy?”, “do I want to spend my life here?”
There’s time for all that. Now, I’m just going to enjoy this milestone. It coincides with me being between projects at work – so I’m just taking some time off before I think about what I want to do next.
Where’s the Money? (I hear you ask):
- Cash – 2%
- ISAs – 15%
- Non-ISASs – 12%
- VCTs – 10%
- P2P – 5%
- Housing Equity – 5%
- SIPPS – 28%
- DB Pension – 24%
I’m still a bit pension heavy (52% of net worth) and the twin effects of salary sacrifice and deferred tax payment flatters our position. However, I think that we have a good balance between jam today and jam tomorrow.
What don’t I include in net worth:
Any possessions or household items (except my barrel of whisky and our cars), the Lady’s secret money in her home country, state pension, company money, future tax liability/rebates or goodwill.
Converting Wealth to Income
The paradox is that being in the top decile of family wealth is that with a SWR of 3%, you can only live the life of an average British family and you’ll be able to claim none of the benefits that those less fortunate than you can. I don’t want to punch down; you can only do what’s best for you in your situation and that’s what I intend to do.
Money doesn’t automatically make you a better person and by a number of measures, our social position is very low – we don’t have any important friends or high status positions in society.
At this point in life, I don’t see us either earning a lot more money. I don’t have the motivation or want to make the sacrifices that focusing on something like that requires. Likewise, the Lady doesn’t want to become a big boss and would prefer to have a job that is interesting. We both would not like to work full time, as I believe that full time is too much, especially if you have kids. I don’t see us spending a lot more either. The big costs are nursery and they’ll drop down as the kids grow. Getting rid of work related costs for me will save a lot of money and working from home is working well. The mortgage is a constant cashflow drain but we’re ok for cashflow. In many ways, if you met us you wouldn’t think that we’re rich – real millionaire next door material. But you would probably notice from our laid back smiles that we have something special going on. It might have taken years to do it but I hope that it’s worth it.