Early retirement is really exciting, right? Knowing where you’re going, putting plans in place, and dreaming of actually escaping the rat race in a few short years time makes you giddy with excitement?
In the first few years of this journey, I would wholeheartedly agree. There is a huge learning curve with radical, life-changing prospects driving you forwards with your quest. Unfortunately, fast-forward a few years and there comes a kind of mid-life crisis once the plan is established and there are still a few years to go.
It gets boring.
This is where I am and it can be a bit of a downer, so what can be done about it?
For context, let’s get up to speed with my financial manoeuvres to date:
Retirement plans started in 2004 when I started overpaying into my pension – partly for tax relief but also because I’d just got back from travelling and was living with my parents, who wanted me to pay a percentage of take-home salary as rent. They fully supported me reducing my take-home salary by diverting income into my pension. That summer I was introduced to Robert Kiyosaki’s “Retire Young, Retire Rich” and was sold on the idea of buy-to-let investment for rental income and capital gains. I started researching how to invest, spoke to friends and colleagues who were doing similar stuff, and went shopping for investments in earnest
In 2005, my now wife and I bought our first home. Instead of using our entire deposit, we opted for a cheaper house (with extension potential) in a less desirable town. We spent the rest of our deposit on a studio flat and, in 2006, a 5 bedroom townhouse which is rented to 5 individual tenants and needed completely refurbishing as it had been well and truly vandalised.
For the next year or so we continued to save into pensions and savings accounts, paid off the student loan, stayed out of non-mortgage debt (apart from a loan I took to renovate the townhouse which was paid off in 2010), got married in 2006 and extended our mortgage to build an extension to our main home in 2008. My employer offered tax-efficient share options on-and-off during this period too which I always took advantage of (although they’re now worth about half what I paid for them sadly. I never sold them as I didn’t need the cash, the dividends were good, and I’ve always taken a longer-term buy-and-hold approach)
The financial crisis 2007-2010 meant it became much more difficult and expensive to access buy-to-let mortgages, and the amounts required for deposits were much greater. I had managed to borrow circa 80% against the value of the 2 rental properties, but the landscape changed overnight. Having said that, I think I’d have stopped buying property at that point anyway, and I had a couple of negative experiences managing tenants, so I appointed an agent to run the rentals and moved my focus onto the stock market
I was particularly interested in the stock market during the crash, and started saving heavily into unit trusts (funds), maximising my tax-free ISA allowance. I was putting money in every month to allow me to budget and apply the principles of pound-cost-averaging, and I held firm in the belief that I was buying low
So we arrive at today. I’m saving as much as I can into pensions whilst maxing out ISA allowances for myself and Mrs FFUK every year. Apart from tweaking a few things here and there (making sure I have the best gas, electricity, insurance, etc), all I can do is keep in control of spending, and wait. Early retirement planning has become really boring – it looks after itself!!!
I guess I could mix things up a bit by starting a business, or using some funds to buy another property instead (although it would be painful having come this far to miss out on any ISA allowance). But I’ve spent 8 years getting to this position so I don’t want to do a U-turn just for the sake of variety – now is the time to have the courage of my convictions and stick to the plan. If I really can’t cope with the boredom then I can chop it all up after I retire… After all, it’s only a few (4 to 6) years away!
Anyone else in this position? How do you keep motivated, are you changing your plans, am I being too cowardly/lazy/stubborn to change what I’m doing? Always great to hear from you, keep saving!