Congratulations, you’ve reached the last post for this series of “Road to FIRE”. My goal was to complete this before the new year and it looks like I’ve just squeaked under the deadline. For this post, I am just going to cover what your longer term aims might be now that you have your savings habit setup and you’re slowly building up a Stocks & Shares ISA.
That’s entirely up to you. What do you want to do?
With a six month cash buffer and no debt you now have options. You may decide that you’d like to purchase a property somewhere and want to save up for a house deposit (personal aside: avoid buying in London, it’s just stupid silly levels around here). You may decide that getting a six months buffer wasn’t too bad, so why not shoot for one year of savings?
Perhaps you’ve got your eye on a new car, a luxurious holiday somewhere or you’ve decided your job sucks and you want to train in something more interesting. Set a goal, work out the path towards it and go for it! Just avoid debt and keep your cash buffer while you’re doing it.
My own goals
Without going into too much details of my own financial life (that’ll be a later post), I am aiming for the full FIRE (Financial Independence, Retire Early) experience. I may not actually “retire” per the normal definition, but rather transition to a role that I would find more interesting on a personal level than my current work life and it will probably be far less well paying. For that, I will need to carry on my savings for at least another 6 or so years. After that I’ll be focusing more on “nice-to-have” luxuries in life but honestly nothing is set in stone.
Over the next 10 years I have until I hit 40 I have a few financial milestone goals I want to achieve (in ascending order of difficulty):
Generate enough income from my ISA to pay bills(I actually achieved this last year)
- Fill up my S&S ISA to the £20,000 limit each year
- Generate enough income from my ISA to pay council tax + bills
- Generate enough income from my ISA to pay the mortgage + CT + bills
- Pay off the mortgage entirely
- Load up my pension with the max yearly contribution (currently £40,000/year)
I also have a bunch of non-financial goals but that’s for another post. But as you can see, I’m trying to go nearly full tilt towards FIRE and that does involve a lot of focus on the financials. Don’t worry though, I still have fun with friends and family along the way – I do not live a deprived life of any sort!
No quick and easy solutions
I’ve been saving fairly aggressively since about 2013 but my salary was much much lower back then. In the past 4 years my salary has grown rather dramatically but my lifestyle costs have remained pretty low on the whole. Buying a house with my wife actually saved me money as instead of paying for a mortgage on a flat on my own, sharing a mortgage on a bigger house in London has worked out cheaper a month – go figure.
Based on my spreadsheets (I know of no self-respecting FI aspirant who doesn’t have one) I am roughly 40% of the way towards my goal of FI. I didn’t properly start reading and exploring what FIRE was until about 2017, so while that progress may seem slow to some, I am now laser focused on achieving it and I think that percentage number will increase by leaps and bounds over the coming years as I reduce my spending and increase my savings further.
My point is, there’s no fast way there. You need to do the work and stick it out. Sometimes you wonder if it’s worth it. Sometimes you just want to blow the whole lot on a crazy purchase just so you feel you’re getting something out of all this saving (…and that’s a future blog post too… *ahem*). I’m not even half way yet and I can tell you the amazing difference it has made at my own workplace. I do not get as stressed. Everything can be managed. I’ve developed somewhat of a reputation for being “unflappable”. That’s a nice reputation to have. I’m pretty sure my bosses don’t know it’s because if the work becomes too much I will just head off to greener pastures, but hey-ho…
A new year approaches
You know the cool thing about the above graph from my savings habit post? The curve looks exactly the same no matter what amount of money you wish to save, only the numbers on the left hand side (the scale) change. So when you have a financial goal, take a look at how much less time it will take to achieve it if you can nudge your savings rate to the right of the graph, if only a little.
I’m not a great fan of new year resolutions. If you need to do something, then just get on with it! However, it is the perfect time to reflect on the past year and look forward to what you want to achieve. How about yourself, what challenges will you set yourself next year?