Comparisons

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Before embracing it, I very nearly dismissed the whole FIRE (Financial Independence/Retire Early) concept.

The idea had piqued my interest immediately but at first glance, it seemed as if I did not fit into ‘the same mould’ as everyone pursuing FI (or having reached FI).

I looked on in dismay as I compared myself with the entrepreneurs, consultants, engineers, bankers, IT specialists and other high earners who were able to tuck away not just the equivalent of my entire salary year on year, but in some cases, multiples of my salary, for their financial freedom and early retirement. My initial thought was, ‘Crap, I can’t do this, I don’t earn enough and I’m in the wrong sort of job!’

Then I compared ages and everyone seemed so young – people in their 20s and 30s aiming (and on track) to be FI and to ‘retire early’ by 40 or by their early 40s. I was already in my mid-40s by the time I came across MMM – crap, was it all too late for an ‘old girl’ like me? (although it’s a good job I don’t look or act old 🙂 )

Another thing was that it appeared that you needed to make huge sacrifices to become FI. I mean I am and was able to cut back on my spending but I couldn’t see myself taking the extreme route and being a frugal recluse, living a cheap but not very cheerful (in my opinion) life or living like a student again.

More importantly, I didn’t want to be seen as tight-fisted by friends and family. Yeah, I know I shouldn’t care what anyone thinks.  While I don’t mind being a bit different, I do care about what the people I care about think, especially if it may affect my relationships.

So, it would have been no surprise if I had gone about my merry way, thinking FIRE was a nice idea but not for me.

Except that I continued to read about it with an open mind. Why? Because despite my initial misgivings, the whole concept really fascinated me and I couldn’t stop thinking about it!

I ran some basic numbers (on the proverbial back of a fag packet) and it dawned on me that I didn’t need to earn megabucks (no, I don’t need £1 million!) or do exactly what someone else was doing or did – I could just take certain (good) ideas and apply them to my own situation.  Yep, personal finance being what it says on the tin!

FIRE  comparisons are like comparing these two

More Comparisons

However, despite embarking on my FIRE journey, I couldn’t help but continue to compare myself to others.

People whose net worths were waaay bigger than mine after a shorter space of time, people achieving astronomically high savings rates, effortless side hustles and blogs earning income to die for. Some had already reached FI, or they were only X years away and they were only in their 30s etc.

Such comparisons were at times a little disheartening until I eventually realised that it was just  pointless comparing myself to others.  The only comparison worth taking note of is that of comparing my own progress over time.

These days, I can now look at other people’s very high net worths and mega savings rates and admire them and applaud them, without feeling bad about my own attempts and performance.

To say that I never feel any envy would be to lie, but hey, I’m only human – I just don’t dwell on the envy or allow it to become negative, I just focus on what I’m doing myself. Everyone’s situation and circumstances are different, whether it’s their background, age, stage in their lives, different countries, different jobs etc.

Numbers

Not everyone likes to share their actual numbers but I made the decision to do so when I started this blog – I just know that some readers like to see real figures (to compare with their own, I suppose, haha!).

Until around nine years ago, my net worth was a negative number due to my numerous credit card debts. I eventually paid these debts off and by the time I started my FI journey in 2014, my net worth was £74,596.

As at the end of August, it stood at £205,509.

STOP! Try not to compare my net worth with your own – we are different! 🙂

I didn’t even notice that I’d passed the £200k milestone because by itself, it doesn’t actually mean anything, it’s just a number since I’m not using it in any of my calculations. However, it’s good to compare how far I’ve come since those negative days!

[EDIT – I see from some of the comments that I need to make a clarification – my £200k race with John K is with my Future Fund, not my Net Worth. My Future Fund currently stands at £125,946]

Do you compare yourself or your savings/investments progress and how does it make you feel?

August 2017 Savings, plus Other Updates

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A month of distraction, therefore a month of higher-than-usual spending and I think some of this might overlap into next month as I used my credit card to pay for some stuff towards the end of the month.

I had family staying (again) so enjoyed some days out, quite a bit of eating out and also had some fun playing cricket in the garden with my nephew. Don’t ask me the rules though, I only know the bare minimum!

Had a weekend away at V Festival (the awesome Pink was headlining). As well as for the music and the atmosphere, I love going to festivals as they’re the only places where I think you can safely people watch (as in really people watch), ie staring at what they’re wearing (or not as the case may be!) and at their tattoos (of which a lot were on show) and nobody bats an eyelid! There’s only so much of that you can get away with on a night out in town without causing trouble!It’s a pity that the only thing available to drink was crap beer (“probably the best worst lager in the world”) but that didn’t stop me from drinking large quantities of it! My fellow festival goers were on wine, which I believe was not a great vintage vile and just got them drunk quicker – apparently, as time went by, it started to taste better!  The weather wasn’t great and although we had a few hours of sun, it was just rain later on but we were prepared!

So, how much of my net salary did I save this month?

Well, I saved 36.2%. Although still a fairly decent chunk of my salary, as expected, it’s lower than my usual figure.

My average for the year has now dropped to 46.3%. With only four months of the year left, I have a feeling I am going to struggle to hike it back up on track. My social diary is starting to fill up, I have a pretty big holiday in a couple of months time and although I will try to keep spending in between these events low, inevitably, my savings rate will continue to take a hit.

Of course, I could always sacrifice my social life just so that I could hit my goals but that’s not something I’m prepared to do right now or in the foreseeable future, if I’m honest. As and when I get close to my end goal however, I may change my tune.

The above savings includes £100 from matched betting profits and £62.81 affiliate income from OddsMonkey (thank you to all those who joined via my link – much appreciated!).

Shares and Investment Trusts

Nothing new was purchased, I just topped up existing holdings.

Current portfolio can be found here.

Future Fund 

Despite the slight wobble in the markets, with extra capital added, my Future Fund continues to grow and now stands at £125,946. Slowly plodding on towards my next big milestone!

Dividends and Other Income

Dividends received this month (which will be reinvested): Continue reading →

Three Months

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Indeed, three months have passed and I rejoiced when I received the above the other day.

YES, I’m in!!!!

It’s been so long since I’ve had to work through a probation period, I was stressing a bit over this. My friends were all saying I’d be fine but the ‘chimp‘ in my head (which hasn’t been around in a long while) kept asking, “But what if you’re not good enough?”

Anyway, all’s good for now so I can relax a little.

Impressions Update

When I started the job back in May, I wrote about my first impressions, along with some pros and cons.

I’d say that in general, things are looking more positive:

  • As mentioned previously, the benefits package is nowhere near as good as my last one but I’ve joined their DC pension now, plus their cash health plan which saves me £20 a month. I’ve also applied for a loan for my annual travel pass. Every bit counts!
  • Commuting via public transport hasn’t been too bad. Since I’m setting off earlier, the trams aren’t packed and I get a space at the park and ride car-park. I love that I’m able to read a lot (or play Pokemon Go when not reading!) and as I arrive at the office over half an hour early, I can take my time having breakfast, my first cuppa and sorting out my inbox before the working day starts. Of course, I will probably change my tune when it’s winter…Plus, I’m not sure how I’ll cope when people are coughing and sneezing around me – I’ll probably wish I was back in my car!
  • I’m a bit more organised now with my routine so only need to buy lunches once or twice a week, and can have a decent lunch for around £2 per day. So, I’ve cut down on my weekly expenses and am still enjoying the free breakfasts!
  • As I’ve been getting in the office early, my boss has said it’s ok for me to leave a little earlier on my gym nights, so I won’t be just about scraping into my classes and should be able to get more of a workout again – yay! I need it – this hasn’t been a healthy couple of months for me! Driving to the gym, I always see the traffic on the other side rammed bumper to bumper – I really don’t miss sitting in those jams on the M60!
  • I was able to work from home one day (due to a rescheduled engineer visit). However, let’s just say I don’t know what all the fuss is about, I much prefer working in the office.

Three months in and my job title has changed, standardised in line across the businesses meaning that I now have ‘Manager’ in my title. Although this doesn’t mean anything to me or change my role, I guess it looks good on my CV and my Mum will be pleased, haha!

Ooh, a bit of blue sky!

And that’s it, just a quick update. Hopefully, I’ll be able to catch up on my blog reading over the weekend.

Have a great Bank Holiday all!

Fees

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I read recently that some poor bloke’s pension fund hadn’t grown in 11 years due to the extortionate fees charged by his provider and thought I’d mention something closer to home.

My sister has been over for a visit these past couple of weeks.  Over the course of catching up, conversation turned to pensions and she mentioned that a pension plan which she was saving into on a monthly basis in Hong Kong wasn’t ‘doing anything’.

In fact, not only was it not ‘doing anything’, it was actually worth less than the capital she had put in over the last 6 or so years! I asked her how this was so, as we were in a run of bull markets and suggested that she checked the fees she was being charged. She said she didn’t have time to look at such things so I said I’d look for her, if she provided me with her latest statement.

It turns out that she is investing in various funds (I didn’t make note of the exact fund names and no longer have her statement to hand) which have an initial charge of 5%, plus ongoing fees of average 1.7%. On top of that, her ‘financial advisor’ charged her an admin fee of 2%. Ouch!  All those fees were just gobbling up any profits the funds were making!

When I told her, she was really annoyed, both at herself (for not making the time to check the fees) and at her financial advisor. To add insult to injury, upon investigation, she found that there was a big exit fee if she were to transfer this pension to another provider. Double ouch!

It looks like the only thing she can do is to switch the expensive funds into cheaper trackers/ETFs (if she is able to do so), so that’s going to be one of her first tasks when she gets back home after her holiday.

Now that she is conscious of how devastating high fees can be to investments, she will also be considering other pension providers and if she can find a cheaper one, will stop contributing to the current one and set up a new account.

My family have been investing a lot longer than I have but it looks there’s still stuff I can bring to their attention! Perhaps I’ll speak to other members of my family to make sure they too are not paying too much fees-wise.

Me and my Funds

When I first started investing, my investments were all in funds. I then switched to cheaper tracker funds. However, just over a year ago, I switched nearly all the remaining tracker funds into ETFs to reduce fees further.

The biggest fund I own now is my Vanguard Life Strategy 80% but I’ve worked out that if I switch this one into an ETF, I’m not really saving anything so I’m going to leave it as is for now.

The two providers I use for my investments (SIPP and ISA) are Hargreaves Lansdown (HL)* and AJ Bell Youinvest (AJ)*. The latter is cheaper but service and website-wise, I have to say that it’s quite a bit behind HL.  AJ has FAR more downtime for its website at weekends (how annoying when the weekend is when I have more time to check my account!) compared to HL and ‘regular investments’ don’t always happen on the day they’re supposed to happen!

On the other hand, even if occasionally late, I prefer how regular investments are made with AJ than with HL (investments are made from monies within the account, rather than direct from your bank account) so there’re pros and cons to both, which I can live with.

Anyone else changed their investments or switched providers when they found out they were being ripped off?

[*note this is not a recommendation to use these providers, I’m just saying these are the ones I’m using – as always, please do your own research or better yet, check out Monevator’s broker comparison!]