This isn’t SavingNinja’s 2nd thought experiment but it is the 2nd one I’ve taken part in and neatly follows on from the first one I did.
Here’s the scenario:
You wake up one rainy morning and after checking on your accounts, you find out that you have been wiped out by a cyber-criminal! You’ve lost all of the money and assets that you’ve ever owned and can’t get them back. What will you do?
Not actual depiction of a cyber-criminal
The assumption here is that a hacker will overnight siphon off everything in my accounts, by which I mean all the cash sitting in my current accounts, savings accounts, cash ISA and premium bonds account. Also, the investments in my S&S ISA and my SIPPs will have mysteriously disappeared (unlikely for the SIPPs, seeing as they can’t be accessed til I’m 55 but humour me!). Shockingly, my DB pension is also gone and there’s a mini-meltdown in the US as it was part of a global pension pot and not only my pension was targeted!
Even the cash I have in my betting and exchange accounts has been hoovered up! Contacting said providers prove futile, the money has disappeared into the ether. I don’t have any cash around the house (around £20 change in moneyboxes and at the time of writing, £12.58 in my purse).
I will assume however that the hacker hasn’t managed to persuade HR to fire me overnight, so I’m still employed, that I will still have my rental property and I will still have a roof over my head.
So not quite starting from absolutely zero, but still a bloody nightmare scenario.
What to Do?
The first thing I would do would be (in no particular order) to panic, swear a lot, beat myself up about how I should have changed my online passwords more often and then drown my sorrows in vast quantities of alcohol.
I would probably spend hours trying to find out if anything could be done about recovering my DB pension since there will be over half a million other people in the same situation.
Once I’ve calmed down a little, I would tell my family (though not my parents or my grandmother – don’t want them worrying needlessly) and probably a couple of my close friends. My message however will be that despite what’s happened, I’m alright, because I know they will want to help me. I would probably get a short term cash loan from the family, to cover expenses until I get paid.
What Next?
It won’t just be the fact that I’ve lost all that I’ve saved up, but I’ve lost the ticket to achieving financial independence, retiring early and retiring comfortably.
With my FIRE plan down the pan (heh!), I would need to draw up my new plan, which would be probably be to ensure that I end up retiring comfortably at normal retirement age.
What would I do differently ?
I would set up an emergency fund first and foremost. I would then see about building up my pension/SIPP investments again, more so than in my ISAs. Seeing as I won’t need the money until later in life, I may as well take advantage of tax relief.
I have a feeling that I would be a lot more frugal, verging on the extreme side as I try to claw my way back to a comfortable financial situation. In desperation, I might even cross the line and become stingy and penny-pinching, although I hope not!
One thing I would probably do would be to go back to my strict budgeting, which I haven’t done since I was eyeballs deep in credit card debt. It’s no fun logging every penny spent.
Perhaps I would consider looking for a better paid job but more likely, I would certainly spend my spare time just hustling and looking for more money. And yes, I’ll be scouting out for coupons!
More time spent matched betting (even consider multi-accounting which I don’t do now) and I would dial down on my social life but not completely as my friends are important to me.
I’ll still put money aside to travel to see my family once a year – that’s one thing I wouldn’t ever change.
And finally, I will just get my head down and be a worker bee to earn a steady salary.
Miserable yet…?
This all seems to point to me leading an extremely focused but not very happy life, being obsessed with trying to build up what I lost.
Yet if I think about it, there are a lot of people who are in this situation, where they do not have savings for their future and yet they are happily going about their lives.
I think due to the fact that I had saved up and then lost it all, it’s possible probable that I would become quite obsessed about it all, which doesn’t sound good at all.
Plus I would need to get my head around working until my mid-60s, something which I was quite happy to do before I discovered and planned for FIRE. I really shouldn’t have taken that FIREÂ Red Pill, which made me see the light!
I would hope that I would still be able to enjoy my life and my work but knowing me, I think it would take a while before I could get over something like this.
Gosh, that’s gone a bit dreary and bleak, hasn’t it?
Anyway, below is SavingNinja’s take on the thought experiment and as and when I see other bloggers taking part, I’ll add below:
- SavingNinja
- Ditch The Cave
- in-deed-a-bly
- Finance Your Fire
- Merely Curious
- Fire v London
- Gentleman’s Family Finances
- Young FI Guy
- What Life Could Be
- A Simple Life
- Fretful Finance
- DrFIRE
What would you do if this happened to you?
If getting cleaned out like this meant “early” retirement was off the table, would you really venture down the frugal route?
Entirely self-funding your retirement was necessary when you were stepping out of the rat race before state pension age, but now you’re going the full distance that is no longer required.
I suspect under such circumstances many of us would choose to live sensibly, but fully. We’d come to view the state pension as a pillar of our retirement funding rather than a nice bonus. If we’re (statistically speakiong) already well past the half way point in our lives, there would be a real risk of delaying gratification until we’re too old to truly enjoy it (e.g. medical/mobility issues, prohibitive travel insurance costs, etc).
I wonder whether many people wouldn’t just conclude that FIRE is a young person’s game. Interesting thought that.
“would you really venture down the frugal route?”
Hi indeedably
Am pretty certain that I would. The psychological impact of me losing not only what I’ve saved up for FIRE these past few years, but also losing the pension I paid into for 20 years would be too much for me not to go down the extreme frugal route. I’ve always viewed the state pension as one of my pillars, not a bonus, but the main pillar was the guaranteed income of my DB pension, supported by my FIRE pot.
No cash on hand to anticipate on these kind of situations (or a more common event, where there is a temp outage of cashless systems)?
I think I woudl personally sell off my record collection, which should give me a good start in building up a portfolio.
Nice read…
Hi Berry
Yes, plenty of stuff I could sell too and I reckon I’d be a lot more ruthless in clearing things out.
I’m beginning to think I need more cash around the house, eg under the mattress!
Ahh, I’m sorry to invoke such an upsetting response. Mine went quite similar to yours, I ended up thinking that I would simply work extra hard and get extra burnt out due to the fact that I lost it all. I was quite hoping that when properly analysed, I’d decide to take an easier path through life, maybe working part-time until I was very old and not thinking about retirement. But, like yourself I don’t think that’s my personality, I know I’d go down the other route!
Awesome post Weenie, thanks for taking part again! They’re both in symbiosis together – win it all and lose it all!
Hey, no need to apologise SN, I agreed to take part in this thought experiment! 🙂
But as I mentioned in my comment against your post, we’re similar in that we’d probably be even more determined to try and claw back what was lost.
It’s interesting how having seen the promise of FI something like this would feel worse isn’t it? In some ways it’s not the money per se, it’s the loss of hopes and dreams. While money and things can be replaced I think the emotional side is more painful and harder to rebuild.
I wonder if that’s what’s behind the dark places the experiment took you? As you point out, what you would be facing is what normal looks like for the majority of the population. I think something like 1 in 4 people have no savings at all and average savings are around £10,000. Even if you lost everything I think that you would quickly be in a better place than most!
Hi Caveman
Loss of hopes and dreams for definite and with me being older than most people aiming for FIRE, I would not have the time to start from the beginning again, so it’s the loss of time.
True, despite losing everything, I would be able to get myself in a better place than many but it would take extra grit and determination.
I think I’d do similar and just knuckle right down, I would probably look for a new higher paying job and therefore end up working full time again. Which is a depressing thought… It’s true! Haha!
On the bright side, it makes you truly grateful for what you do have and what you’ve saved and built, right?
Hi TFS
Yes, now that you’ve tasted the extra freedom provided by part-time working, going back to the norm of full time working would be a tough one for you and your family.
But yes it does absolutely make me really grateful for what I’ve achieved so far, even more so I think!
OH DEAR!!!!
I Fire’d 12 years ago no job to fall back on! I am still 7 years away from State pension age, I live in France, I have 2 teenagers to feed!
I would simply claim all the benefits I could until my state pension comes through and live of them. I would try and get some cash in hand jobs to help pay some bills. I would just say it was society paying me back for what was stolen.
Is that too simplistic????
Hi timbo
In your position, then I’d probably do the same and go for all the benefits going too. Having Fire’d so long ago (nice one!), it would be hard to go back into the workforce. Part time work might be the way to go.
Hey Weenie,
Gosh this thought experiment is quite a tough one to contemplate. Just reading the scenario put me in a cold sweat!
I think I would double down on my side hustles and possibly come up with a new retirement plan that involved downsizing in the future to release equity from the house.
The positive side of this thought experiment is making us realise how far we have already come… how fortunate we are to be a good percentage of the way through our FIRE investing journeys. Sometimes the thought of having it all taken away makes us appreciate what we have 🙂
Corinna
Hi Corinna
I know! Although just a thought experiment, the sense of loss felt very real as I was writing my post!
And on the flip side, it has really made me appreciate what has been achieved so far – it’s not just numbers on a spreadsheet, it’s freedom and choice that has been built (and in this case) lost!
This thought experiment is a tough one! With cyber crime on the increase I can see the temptation to put cash under the mattress. Or perhaps invest in precious metals and stones by virtue of actual physical jewellery?!
Scary thought, am off to double check my cyber security
Hi Tuppenny
Well, this has made me consider perhaps holding a bit more cash (under the proverbial mattress!) – not sure I’d go down the commodities route, with metals and stones though. Funnily enough, I’ve just changed some of my online passwords!
Imagine waking up like this…
I think I would take an extra job, stay with my parents or family and live in a van or so to accumulate wealth easily. In my situation I would still go to work as the standard scenario and be “grateful” for this backup system. The monkey would leave his cage less but also enjoy his life to the fullest.
When you don’t have money you are poor and isolated and depressed and so on… It’s a cycle that never stops and you can get there because of things that happened outside your control. When you can’t drink beers with your friends, go to support your home team etc, that would be the most unpleasant thing for me. You can always take care of your cashflow. I would also be a bit more frugal, spend more on things I like and less on things I don’t need.
It’s a nice way to think a bit more about this.
Thanks for the post Weenie!
Hey TYM
Agree that we are fortunate to have a backup plan as not everyone would be in a position to have one.
Being more frugal would definitely be something I would do, although probably for short-term only.
Thanks for reading!
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Ah, the copious amounts of alcohol. Can’t believe I missed that as a first port of call. I can just imagine how galling it would be to end up having to retire along with all the people that lived normal “spendypants” lives. Thank god this scenario is only theoretical. Or at least, if something this catastrophic happens it will be happening to everyone and it’s time to stock up on the tinned goods and ammo.
Funny I hadn’t considered the ‘galling’ aspect but now that you mention it….
Very grateful that this is all theoretical but it has got me thinking about preparing for an ‘apocalypse situation’ – cash would be useless then if the whole of society is in meltdown, so yeah, tinned goods and ammo….
Another great experiment! I like your thought process around this and I think I too would want to hold your cash!
Hi LMF
I am seriously thinking about holding more cash!, but it doesn’t sit well with my investment strategy! Think I might need to tweak it!
Hi, interesting blog – I found this really got under my skin. Like you say above it’s the thought of the freedom/ choices that have been slowly, painstakingly planned disappearing.
I’d have to bite the bullet and actually kick the job into overdrive. I’ve generally taken a path of least resistance on the job front, but I’d have to grit my teeth and force my way up the greasy pole. It would be a miserable few years but would accelerate the cash inflow
Hi Mark
Exactly, it’s the freedom/choice which has taken time to work to which has gone and not being a spring chicken, not having the time to really rebuild it.
I think I too would live with being miserable for a few years to build the funds back up again, although perhaps I’d be so driven that I wouldn’t even see that I was miserable!
Thanks for stopping by!
A very interesting experiment – Did read this last week but forgot to comment! I would probably go down the route of being super frugal to try and get back on track (never give up attitude springs to mind!) – I think I would be physically sick if this all happened over night!
PS – Have you tried out Freetrade App for the stocks and shares trading?
Hi Jase
Interesting to read that you too would likely go down the super frugal route – I guess we should be grateful that we could choose to do that and that we don’t have to do that now.
PS – I’m on the waiting list for the Android version of the Freetrade App, so will be using it for my next ISA. Can’t wait! Are you already using it?
Fascinating thought experiment, it seems most people would fall in to the loss aversion idea and just go on to panic and to try and to get back to where the fell. You see stories about millionaires who lost it and got it back. I think you aim for your vision. Just like rich dad poor dad you only aim as high as you believe you can go. If you had FIRE and lost it you would want to get it back but if you didn’t know FIRE existed you have no rush to reach it.
Hi Mike
Definitely a case of loss aversion going on and that’s a great way of putting it, aiming for your vision. FIRE is a lofty vision and if I didn’t know it existed, highly unlikely I would have aimed for it.
This post brings back all the anxiety from when I DID lose everything 9 years ago. I lost my health and career, then my marriage broke down. I quickly found there were no assets left after divorce (only debts of around 350k plus ongoing solicitor costs) and barely held onto my house. I was a chronically sick (still am) single parent with no ability to work. I have never been spendy (although it was revealed that my ex definitely was) but even so, I turned super frugal out of necessity.
I met who became my new hubby the year later. He also lost everything with a divorce, including his home. He was homeless at the time. Things were very bleak and there were many sleepless nights. Thankfully, I love to learn. I learnt super frugal ways, right down to making my own cleaning products! Later, I learnt about passive income streams after a failed few years trying to be self employed (sadly I’m too sick even for this). I’m happy to say that nearly a decade on hubby and I are in a better position than either of us were before our divorces. We are committed to FI. The retire early bit has happened for me after being medically retired at 32 against my wishes. Hopefully hubby can retire in about 7 years when he’s 56. I really need a carer more these days so it’s important to us. We are mainly doing this by frugal living and small investments as our income is low. I always think that if we can get to FI in under 20 years on a single low income then most people are able to greatly increase their financial positions. I don’t feel deprived, in fact I feel more secure as I know we can get by on less. As for health, don’t underestimate its value. I’ve more than regained my finances but not my health. That’s where your real wealth lies.
Hi Cath
Wow, thanks for sharing but I’m sorry it’s brought back some bad memories for you.
It’s fantastic to hear that despite all those obstacles, you were able to turn your life around and can be committed to FI.
Being frugal does not mean being deprived but deprivation is different to everyone – I see some of it as ‘state of mind’ – I’m not ultra-frugal but I know a few of my friends think I’m ‘suffering’ by not going out splurge-shopping!
I am very grateful to be currently blessed with good health and will continue to try to look after myself to stay that way and hope I’m not unlucky.
Thank you for stopping by and sharing your story and good luck with your FI journey!