Blimey, it’s been a busy few weeks at Work. Work in the mornings before going into Work. Work in the evening before climbing into bed to get some rest for getting up for Work. Work at the weekends, that traditional break from Work.
I don’t mind busy periods at work, but this one is stretching out towards a month and it’s beginning to get to be a bit of a drag.
It’s periods like these that make me happy that I am on the path towards Financial Independence, one that if I stay on I can hopefully join RIT at the end in a few short years.
The upside of all the hard work is that I may have secured myself a promotion, that’s more income to be saved right there.
Coming up for two years ago I started this website. It was following a few days of binge reading Monevator and RIT and I had decided that something needed to change. Happily I am still writing and even more happily still making positive progress towards Financial Independence.
(Financial Independence being the point where work becomes optional, i.e. my investment income and growth covers my living expenses and I am free to do what I like everyday, be that carrying on with work or spending my days shouting at traffic.)
I have made my fair share of errors along the way but there were two successes, fairly early on, that have helped me to avoid imploding and reverting back to habits of old.
Setting up and investment plan and sticking to it
I’m really scraping the barrel in calling this a plan, it is pretty much…
…find the cheapest provider and the most diversified global tracker you can and throw everything you can at it and then ignore it.
I do this in both my work pension and ISA.
For a meddling fool like myself, this plan is pretty much perfect. Each and every month pension contributions are deducted straight from my salary and units automatically purchased in the available global fund. A few days later money is deducted from my current account and used to buy units in the Vanguard VWRL ETF in my ISA.
Apart from logging into the respective accounts to have a quick look at values for NetWorth calculations I have nothing to do with these funds.
I don’t worry about growth, about how much income my investments are generating, timing any purchases or tweaking my investment strategy. Buy and hold, in the most literal sense.
Sorting out my saving rate
I do bang on about it, but in the early years of accumulation it is your savings (rather than investment growth) that makes the biggest difference in the rate at which you build wealth.
Like a picky meat eater, I spent some time trimming all the fat from my spending. No more overpriced coffees at work. Packed lunches instead of daily purchases. Less eating and drinking out, more evening round at a friends with a good boardgame for company. More planning and less convenience purchases.
It takes a little while, but I found that each month I could save more and more as my spending baseline constantly reset itself. It’s not about depriving yourself, just finding a better balance. I’ve been on a snowboarding trip for the last two years but still managed a saving rate approaching 60%.
Before my expanding head pops like a patient from theme hospital or my mile high soap box topples, it is worth pointing out that a significant portion of my increasing savings rate has simply come about by stemming lifestyle inflation. Hardly rocket science, yet still seemingly so difficult for many.
I changed career a few years ago, so my income and my expenses dropped as a result. My income has rebounded as I’ve worked my way back up from a lowly graduate position (for the second time). But, like a Harold Shipman with a penchant for costs, I’ve kept my expenses under lock and key. So as my income has crept back up my costs have flatlined and my savings rate has gone up. Not a bad trick, if you can do it.
So what’s next?
It feels like it’s perhaps time to settle into autopilot on the expenses and investment side, let them do their thing and the result is hopefully inevitable Financial Independence.
There will be a little bit of maintenance from time to time, to ensure there are no expense creeps or asset allocations moving too far away from targets. But otherwise I feel my work there is done.
I’ve got my nose to the grindstone at work, a couple more promotions there would be nice before easing back a bit, perhaps to 4 days a week. Just got to keep pretending I am a one man company, consulting for my employer, and not lowly employee that I am. Seems to make me produce better work, so why not keep it up?
Again, not much to do there, other than keep at it.
The question returns, what next?
Plenty of blogs about financial independence talk about the importance of generating multiple income streams. The theory being it’s good to diversify, not only do you generate more income but you also increase your robustness in the case of unexpected shocks.
Freelance writing, landlording it up, matched betting and website income seem to pop up everywhere.
I’ve shied away from this. Free time is limited as it is, and using it just to generate yet more income seems a little soulless.
If it was just about the income I’d be far better putting in a (yet a) few more hours at work to get a promotion or doing a bit of consulting on the side. The hourly return would be much better.
With the little spare time I have I use it to do none income generating activities like;
- Taking photos
- Writing this website
To eat into those activities to do something purely for income would ultimately be depressing and completely add odds with my reasons for chasing Financial Independence (being able to spend my time as I choose).
So the trick is to find something I enjoy doing, that does actually generate an income but I can pick up and put down as I please. This means no deadlines set by someone else. No fixed hours. No boss. No horrendous hours. But ultimately no disappointment if it doesn’t generate an income, as I’m doing it purely for the enjoyment anyway.
So what would this actually look like? Lots of little self contained ideas, each generating a small income, that can be looked at in isolation and when I please.
- So maybe developing a couple of small apps, as an intellectual exercise and if they make a bit of money, then so be it.
- Trying to get a couple of short stories published somewhere, at the very least I’d get slightly better at writing but be no poorer.
- Monetise this website a bit more.
As you can see, my tiny, feeble and limited mind is struggling to generate ideas.
Hopefully more ideas will pop into my conscious as time ploughs onwards and I will have the time to implement some of them.
So, my dear Horde, any ideas?
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Normal service will resume when Work backs the fuck down 🙂