Blog Feed – Financial Independence Retire Early (FIRE)

Everyone says I am tight. It’s true, new clothes, holidays and cars do nothing for me but investing is another story. The idea of putting my money out to work, by owning the smallest slices of companies that then will either pay me through dividends, appreciate in value or perhaps fall is fascinating.

For me investing and pensions are cool, i’d rather have those two extra shares in Apple over those £500 Alexander McQueen trainers one of my coworkers loves to wear. Everything is a choice and I have chosen to share my journey to financial independence, I don’t know if or when i’ll get there but i’ll give it a good go.

There are many content creators out there who have achieved financial independence each with their own story to tell. When learning about how they have achieved it, I always want to know 3 things – Why, when and how.

Why – Why do all these people pursue financial freedom?

For me it clicked in August 2019 – I do not want a “normal career or life”. I cannot imagine working another 40 – 45 years and retiring in my late 60’s or even at 70. I can’t even imagine working another 10 years without a clear goal.

When – When did they start?

A lot of the stories already out there are from people who started in the years following the financial crisis of 2008-2009. They made their first purchases when the markets had just crashed, stocks were cheap as were houses and the years that have followed have been some of the best in history.

How – How do all these people do it ?

This one is usually fairly easy to work out they usually either have investments, property or are involved in crowd funding.

So what does this mean for me?

For me the motivation to start comes from a desire to be able to live life on my own terms, the how is initially passive investments (more on that later) and the when, well this one is tricky, the stock market hasn’t just tanked and property is extortionately expensive but I don’t have a crystal ball so I might as well just start now.

For me saving is natural and easy. If I don’t need it, I won’t buy it. That’s why I am able to save over 75% of my income and no, I do not earn a fortune. I just don’t spend it. I would consider myself frugal however, until I started taking this FIRE thing a little more seriously, I too was guilty of wasting money. Some simple ways I’ve managed to save a few pounds are given below.

Mobile Phones

Mobile phone contracts can cost you an arm and a leg. Your initial period ends and you continue paying the same price – how this is allowed, I do not know, but we can all easily avoid this trap. I recently moved to a sim only deal cutting my monthly bill from £45 to £8 saving £444 a year. Now I don’t mind if i do and nor should you!

Parking

Now I have the pleasure of commuting to work by train. Unfortunately, the train station is 4.5 miles away so I drive. Previously, I was spending £5.35 a day to park at the station, I only go into the office 4 days a week but this was still costing me roughly £1,000 a year. I now park on a residential road for free and walk for 10 minutes. Yes my commute is longer but i’m richer for it.

Lunches

Taking your own lunch to work can save you a small fortune. Buying lunch is a real indulgence that you can cut out. Instead of buying a sandwich from one of the many coffee shops that will cost you in the region of £4.50, make it at home or even in the office. This could save you around £700 a year, and don’t get me started on buying coffee from these establishments – the markups are insane.

Insurance

Most of us are likely to have at least two forms of insurance. In the UK, this is typically Car and Home Insurance. But did you know that you can save in the region of 14% of your insurance premium just by getting your insurance quote around three weeks before your renewal date. This saved me £48 on my car insurance.

Ditch the car

If you can walk, walk. If you can cycle, cycle. We are all now accustomed to driving, even the shortest distances. Enjoy a slower pace of life and walk to your destination. It’s simple, less stressful and far nicer. You also will no longer have to endlessly search for somewhere to park. Financially it’s free, it might take you a little longer but what are we all in such a hurry for anyway.

The Savings

These simple changes have allowed me to cut my expenses by roughly £2,200 a year. With the help of compounding over the next 20 years these small changes could add up to a nest egg worth c.£85,000 assuming a 6% return.

How have you managed to save money? Let me know in the comments below

The background

Cost cutting – Five easy ways to save money