It's been four years since I first started out on my mission to retire early, back in 2014, at the tender age of 40. Thanks to a combination of frugal living and hard-saving, I'm on target to retire from full-time work this July (yes, after just 4 years of saving!), and, with luck, I should be able to fully retire before I reach 50.
Initially I tracked my expenditure and savings obsessively through 2015, however, I've gone a little bit off-track with some wayward expenditure recently, and so I'm is simply an update on my progress in January 2018 in order to both get me back on track and to motivate others to join in on the 'early retirement extreme mission'.
It's standard practice among those aiming for early retirement to post their expenditure and savings stats.... the publication of which is something I've been trying to refine for a while. Here's my latest efforts broken down into the following:
- Income in different categories
- Expenditure in different categories
- The holy grail: the expenditure to savings ratio
- Total Net Wealth
Income in January 2018
** Total Income = £3540** (*approximate figures)
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Until half way through 2017 my main job was my main source of income, however, other income sources have gradually become more significant, which is partly why I've got a bit slack with recording my ERE progress.
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I'm now pretty much in a position where I can drop my main job and survive off my 'second income sources', which is precisely what I'm doing this August!
Expenditure January 2018
Total expenditure = £2160, broken down into the categories below:
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It's worth noting that by far and away the single largest area of expenditure was on my mortgage (deliberately overpaid to bring down the lifetime cost of interest payments; service charge is next, which is similarly property related.
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Savings ratio
- not including mortgage I saved 39% of my income
- if I include my mortgage as 'savings', I saved 69% of my income.
_the savings ratio is the 'holy grail' of ERE - if you can learn to live off 50% of your income, and save 50%, then you can effectively cut your years of doing paid work in half (on a conservative estimate, it should actually more because of the wonders of compound interest)
I include my mortgage payments as part of my savings as I won't need to pay this when I'm retired (by which time the mortgage will be paid off), and so as far as I'm concerned, I can effectively live off about £1K/ month or £12K a year.
Total Net Wealth
I don't include my equity in this, as I need somewhere to live. On the whole, quite a balanced portfolio I think, if a little less healthy since the recent crypto crash...
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Conclusion: how long until I can fully retire from paid work?
I'm in something of a beneficial position compared to most ERE peops: I've got a nice little teacher's pension waiting for my from 60, which will see me through just about until state retirement age at 67, possibly 68 by the time it gets there!.
Once I've paid my mortgage off and worked some Permaculture magic on my house to reduce outgoings, I'll need about £8k a year in my early retirement, which means I could retire at age 54 on what I've got.... so I've got about 9 years to go until I'm financially independent. IF I can maintain my current savings levels, and combined with the increase in wealth gains which will accelerate, my rough calculations are that I should be able to fully retire by 2022.
Although all of this might be moot because I'm quitting my full time job this coming August, and given that I'm quite happy earning money just blogging, I'm not too fussed about bringing this age forwards ATM... but I'm sure that'll happen.
Anyway, very self-indulgent post, cheers for reading.
I’ve only just found this blog thanks to @heymattsokol
I have looked at retire early extreme type of things before but I just don’t have the discipline to save such a high portion of my income. I am going for a middle road where I’m aiming for retiring at 50 ish, or at least becoming financially independent enough to work as and when I choose.
One thing to watch out for is your mortgage. Rates are increasing and you will struggle to remortgage without proof of income. I am a self employed contractor and needed to use a specialised broker.
Looking forward to more on this. Resteemed and following!
Even if you save 20% of your income you'll take out having to work post-60, which is still early!
As to the re-mortgaging - tell me about it - if I don't sell my flat (which just isn't happening right now) and then buy by September, when I quit my job, I won't be able to remortgage, although TBH I quite like the idea of being forced into a situation where I just have to buy somewhere outright with the equity I'll have in the bank... somewhere North or West that'd have to be.
Or I might even emigrate.
I’m looking at emigrating also but that a whole new set of expenses and unknowns.
I am self employed and use a contractor mortgage broker. They assess your income etc rather than just your job. I can give you details if you need them!
Wow!! Your data tracking and graph/chart quality put me to shame. This is awesome. Looks like you have a very solid handle on things and who knows, maybe Steem will keep growing and help you reach those goals even a few years earlier.
Looking forward to future updates, this is awesome @revisesociology.
Hey thanks - it's just google sheets for the graphs. I'm expexting Steem to grow hence why it's 50% of my crypto investment! Although TBH I'm glad it's <10% of my total wealth - I need more algorithmic security to convince me to invest more -to be blunt I'm not putting more in until there's an algorithmic guarantee that one Whale can't annhilate me.
I feel that. Although to be fair - Whales cant touch your holdings, they can only touch your earnings. Steemit itself could flag you 1,000 times and its not like your SP would be at any risk whatsoever. Its still a problem but more of a "post rewards may stop" risk than a "the principle of this investment is at risk"
Are those default templates for Google Sheets, or custom from you? I'm using Infogram.com right now and while slick, I'm not getting the same visual quality on my charts yet. Might just need more practice
Hi - interesting point about the Whales not being able to touch your holdings, I guess not... I actually just calculated that I make something like an 8% return just by auto-voting a select few people, really passive income that (and my next very simple blog post).
As to Google Sheets - yes - it's just the basic stuff I use... very easy, just 'insert chart' and you can download as a jpeg then just drag into your posts. You can even create Tree Maps, which I'm a big fan of. If you really want to kick it with vizuals, you want Tableau (Tableau Public is free), although for ease of use Google Sheets is great.
Congratulations!
I was so excited to see your "Early Retirement Extreme" reference. I read that book nearly a decade ago -- totally changed the way I see things. And of all places I heard about it -- a Permaculture class.
I got derailed though -- finding it a real challenge with a wife & daughter who didn't really sign up for the "extreme" part. Combine that with family health expenses, and I ultimately bailed out of fear.
It wasn't until the last couple years that I started looking seriously at what I could do ... and the idea of side income really struck me as a real possibility (I'm slow). I'm in the process of launching a couple projects & putting myself out there. Can't wait to see where it leads. Any which way, I'll take a step forward and adapt from there.
All that with a slow, steady progression with minimalism and life it good. My wife's even come a long way, which helps!
I'm happy to have found you (credit to @heymattsokol resteem). You've got a new follower!
The book is a work of sociological genius, I love its systems-approach, so well thought out, also his concept of 'applied capitalism' - I think it fits in perfectly with the Permies brigade in the US (Paul Wheaton etc.)
It's easy to get side-tracked - and harder with a family, although I'm the only person I've come across whose actually single and on the mission, most other people I follow have families, so it's doable, but as you say you need to on-board them!
Sounds like you've got the whole diversifed approach thing sorted.... what really helped me was an initial 'excellent month' when I started, which led to a good initial year.... getting an early one in helps to accumulate little wealth, then it starts accumulating by itself.
Projects worked for me, but getting them to point where they're bringing in £1K/ month has taken it out of my TBH - I'm hanging on in there until my main job ends in a few months.
Thanks for the follow, will follow back.
This was a very thoughtful breakdown! I'm interested in ERE, only I haven't found a way to convince my husband of the merits yet.
Are you suspecting an increase in blogging income once you retire this August?
I'd also like to ask you about the savings rate. When I read about ER or FI I get confused because of what people claim they are saving. Do most people with 50+ savings rates include their mortgage?
We had an income decrease last year, before that we were saving 43-45% of our income every month. We don't have a mortgage yet as we rent currently. It's a lot less now as we are in a season of low income (but a big savings account so no worries), which will hopefully end soon.
I liked that you split your savings rate up to show both percentages. When people include their mortgage, do they generally include the full amount or only what they paid extra? From my (granted fairly uneducated in this regard) perspective it makes perfect sense to include any extra payment, but the original payment not so much as it is (almost) the same as paying rent. Does that make sense?
I'm glad I found you and will look forward to following your journey and learn from you.
Hi and thanks for the comment: I think you just have to be honest with yourself when you're counting the 'savings ratio': the reason I discount my mortgage payments is that I won't be making them by the time I retire.
I think most people count mortgage repayments as expenditure rather than savings, but to my mind it's a bit misleading as they'll disappear by retirement, hence why I include both.
As to blogging income, I do expect it to increase a little, but I'm not relying on it - private tuition can easily make up the difference and bring me up to about £2K net per annum, there's a lot of desperate teenagers out there.
NB My own situation is also a bit unique, as I've got about £8K a year waiting for me when I hit 60, from my teacher's pension, which is 'only' 15 years away, something of a buffer which makes the whole quitting work thing easier. With my savings, that's only 9 years max in the gutter as a worst case scenario.
Let's hope it never gets to the gutter.
Thank you for your explanation. We have forced retirement savings here, which is good for a lot of people, but not necessarily for the ones who are interested in stewarding their resources well.
We're in our late 20s so we don't have much for retirement yet, but hopefully, we'll get there sooner rather than later.
Have you heard of people retiring early while still having a mortgage?
Congrats man! How quickly you can save up a TON of wealth once you flip that mindset is truly amazing. I mean look how far you have come the last 4 years compared to all the years previously? What a difference!
So it really is the mindset as I bet you still had as good an income before the mindset change as you have after.
I'll be retiring right behind ya, one year from now! At age 37, whoohoo! :D
(retire doesn't mean I won't work, just that I won't HAVE to because I already have enough coming in)
Yes it was a change in mindset in 2014... although to be fair the high income helped with motivation... having worked out that I need around £600/ month as bare 'survival income' (post mortgage) - putting away £600 a month kind of became my goal - a month for a month (and more with compound interest) - very motivation.
I do look at your posts BTW - you've made great progress, I wish I'd stumbled on the whole ERE thing early, but as they say up north, 'it is what it is'....
I'm with you on the whole retiring and still working thing.. they way I see it is I love writing/ blogging, which I'll still do, but when you're financially free it just takes all the publication pressure off - I'll be free to take my time and write one outstanding post a month rather than churning out one a day.
Glad to see things are still on track. I think once you quit teaching you will probably be able to easily increase your blogging and Steemit income. What else are you going to do with all your free time?
I think one thing that is bothering me about my full time job right now is it is holding me back from having the time to pursue other income streams.
Judging from what I've seen of your blog so far, you're really nailing the whole construction thing, great videos: I'd take a risk and go part-time with your main job and pursue your alts. I think it'd pay off!
I feel exactly the same thing about work - it's holding me back. My next plan is to put together a subscription service (maybe on Patreon) in which I charge students (or their parents at least) a small monthly fee ($5-$30, maybe more) in return for access to weekly or monthly video-tutorials and live-chat sessions.
With my free time - I'm going to do what you're doing! Assuming I can find some land - I've always wanted to build an eco-house.
I may take the leap this summer, we'll see how things pan out.
I like the subscription idea, good way to get reoccurring monthly income.
Well done. I love this kind of analysis. I was on track to retire at 58 until I was laid off from a well paying job in a difficult economy at 49. It delayed retirement slightly.
Well of course things may not necessarily go to plan!
Great to see the breakdown. I have plans to retire early too in about 7 years when I will be 57. I am self employed, and love what I do, so I may just work less. To be honest I feel like I am semi retired now, as I don't work too hard, and I work from home so I am very time rich
Pretty much the way I plan to do it from next year!
you will feel great when you drop the full time job, it makes such a difference. I used to work full time and work my self employed stuff in the evening, it was tough going, but I am glad I did it as I was made redundant in 2012, and had my self employed work to fall back on. I just went full time on the self employment, though as I say I don't put too much effort in!. I do need to work a bit harder though if I want to retire early, this is a work in progress!
Cheers! Am looking forward to jacking in the job - if it's not too odious working for yrself I guess there's no need to retire early!
You really do have it planned out! Congrats on reaching your goals. Retiring at 50 is something most people will never be able to do.
Fingers crossed. Quitting work might hinder that!
I've been wondering whether to sell the house and put the money into my pension fund and rent instead from the income generated.
Personally, I think rent is money down the drain. Keep the house!
I'm not so sure about that. There's a lot of upkeep and maintenance on a house. I'm wondering whether it would be better to have a more flexible asset, rather than money tied up in a property.
Well ATM I think property's at a peak (in the UK at least) so you might be better off with other investments.
Having paid £1000s every year for rent /mortgage I just look forward to having a paid off property and my biggest outgoing down to 0 - bar the roof, nothing's that expenisve surely?
Also I like the whole security/ homely thing - probably 'cos I'm a Cancerian.
Of course what you really want is a few acres of land!
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