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Funding Freedom - From Corporate Life to a Life of Travel

Funding Freedom

From Corporate Life to a Life of Travel

 

Copyright © 2016 OurTour.co.uk Travel Blog

All rights reserved.

 

This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review.

 

 

 

Table of Contents

 

Our Mini-Guide

Our Current Life

Our Previous Life

Our Two Year Tour

Our First Steps to Financial Independence

Our Financial Plan

Our Execution of the Plan

Our Current Financial Position

Our Challenges

Our Future Thinking

Our Thoughts on Financial Independence

References

 

[] Our Mini-Guide

This mini-guide aims to tell the story of how I, Jason Buckley, and my wife Julie re-designed our lives to enable us to stop the daily 9 to 5 of our corporate jobs, and to instead have the choice to do something else. Its purpose is to help others who are thinking about making a similar lifestyle change.

By describing it as a ‘mini-guide’, I hope you’ll understand it doesn’t make any attempt to be anything like a complete ‘how to’ guide to financial freedom, minimalism, investing or any of the other topics it touches upon. Instead it simply covers the approach we took, haphazard as it was, and provides references to more in-depth and authoritative books and blogs that we have used.

Neither Julie nor I are qualified in any way as financial advisers, so the best advice either of us can give is:

*
p<>{color:#000;}. believe in yourself

*
p<>{color:#000;}. financially educate yourself

*
p<>{color:#000;}. stay focussed on your dream

*
p<>{color:#000;}. and finally take action: work hard, and invest

Getting to the point of early Financial Freedom is hard, it took us years, but it isn’t impossible. I also hope that by breaking a taboo and talking about money, this mini-guide might encourage you, if you have a similar goal.

 

[] Our Current Life

We’re a British couple, and through choice we have no children. We’ve discussed it many times, but neither of us has felt the urge to have children, so we never have. The decision was in no-way related to our current lifestyle, although clearly it’s made it easier for us to adopt this way of living. That said there are others out there with children who have done the same as us, so don’t stop reading if you have a family, or plan to start one.

We live in the English Midlands, but have chosen to spend much of our time travelling with our dog, Charlie. At the moment we’re touring Europe and some of the countries in North Africa in our motorhome, as Charlie doesn’t like to fly. As we wander, we write a blog – ourtour.co.uk – which chronicles our time on the road. While it is a commercial blog, as in it carries some advertising, we write it for fun and to help others travel. The blog generates less than £1000 a year, so it isn’t what we use to fund our lifestyle. Almost all of our income comes from investments – boring old things – which generate cash each month or quarter, without us needing to work.

I should make it clear we think of our position as one of ‘financial independence’, not one of ‘retirement’. We do use the word ‘retirement’ sometimes, as most people understand it so it’s easier to quickly grasp. The distinction is this: our financial plan means we can live a life we enjoy, and find fulfilling, without having to work for a living. If, however, either or both of us feel the urge to work, then we can and would. We aren’t yet retired in the traditional sense.

Reading the above paragraphs back to myself, I sound much like many of the fabulous folks we’ve met on the road, who don’t work and don’t need to work. The difference being, we’re 43 years old while they’re generally a decade or two older and are drawing pensions. That’s the most ‘unusual thing’ about our financial story: the fact we got there earlier, but if you’d told me five years ago I’d be in this position now, I wouldn’t believe you.

In a sense, this mini-guide is written for that previous version of me. If I could nip back in time and hand it to me, and somehow persuade me I knew what I was talking about, the ride over these last few years would have been a much smoother one.

 

[] Our Previous Life

 

Our Home Life

We lived in a large 1950’s three bed detached house on a corner plot with a hot tub humming away in the garden. We had two cars (Ju had a company car), a camper van, a motorbike, and enough possessions to fill a shipping container or two.

We bought our house at the peak of the housing market, and as everything started to crash we found ourselves unable to sell the small bungalow we'd been living in beforehand. We took out a bridging loan, as well as the mortgage, until we could sell the bungalow. As the crash hacked tens of thousands of pounds from the value of the bungalow, we opted to rent it out instead. It wasn't an easy decision, and we were both sick with nerves initially at the thought we'd end up with rogue tenants, or no-one would want it. That was ten years ago, and we've not had a bad tenant in all of that time. It's only been empty for a single month. Luck? Possibly, although we pay around 10% of the rent each month to an experienced local management agent to find good tenants for us, and to look after the place while we are away, this may have helped our track record.

We renovated both the bungalow and the house to a good standard, rewiring, changing bathrooms and kitchens, fitting new boilers, re-plastering, changing flooring and decorating. The windows in the bungalow were replaced with new uPVC ones. At the time these changes were made for us and our comfort, although they’ve since become accidental investments.

 

Our Work Life

We both worked in various offices and industries for around 20 years. Over those years we worked our way up – Ju from a receptionist to marketing manager, me from a job as a technical writer to an IT project manager.

Our lives were pretty good, looking back. In the final few years of employment we earned above average incomes working for a multi-national energy company. Our commutes were relatively short, only about an hour or so a day, although my work required an increasing amount of international travel over the later years. Our work environments were safe, none of the physical risks my father had taken on a daily basis, working the face in British coal mines.

Perhaps due to the fact we’d no family to focus on, we focussed on work. Evenings were spent reading up on the latest developments in our fields, or on self-study for a work project or exam. As we were promoted to manage our own teams, neither of us being natural leaders, our stress levels rose. Alongside the day to day pressures, continual changes in organisation and managers pressed down on us, as they do for anyone working in a corporate environment. But the biggest problem we faced, which eventually led to the path of apathy and mild depression, was the perceived pointlessness of it all. We worked for a good company, but we just weren’t happy with our work.

 

Our Journey Starts

It was a TV programme called ‘Pay Your Mortgage Off in Two Years’ which gave us a small nudge, which eventually led to a large change. Watching the show, especially the part where the presenter spoke to the participants at the end of the two years, inspired us. Those who’d managed to erase their mortgage, or at least take a good chunk out of it, were visibly relieved, more relaxed, excited about pursuing new avenues. One guy, I recall, made designer stoves from old gas bottles, selling them for enough to clear most of the debt. His aim in life: to surf more, to do what he enjoyed.

While our aim was unclear, we had a feeling that if we could remove the burden of a mortgage, we’d create an opportunity to do something different in life. I toyed with the idea of becoming a plumber.

Ju’s always been good with money, and was already keeping a track of our monthly outgoings when we took the decision to pay off a chunk of our own mortgage. Paying off the whole thing seemed too big to contemplate.

We would do it like they did in the show, reduce our outgoings and increase out income. Our spending rate dropped massively as superfluous purchases were bypassed. The hot tub went on eBay, being taken away by some burly blokes from Devon. Two of the four push bikes went, as did two of the four computers we owned. Games consoles, a multi-gym, aquarium, a generator we’d used once, you name it, it all went. The money rolled in, but more importantly perhaps, we realised just how little our stuff was worth compared with how much we’d bought it for.

We were on a tracker mortgage when the interest rate dropped like a stone. But instead of reducing our mortgage payments, as the bank suggested each time the interest rate dropped, we overpaid. Our aim was to pay between £1500 and £2000 a month off the capital – almost double our original payments.

After a year the statement arrived and we’d almost halved the mortgage. The smallest tingle of excitement ran up my spine as I felt the first glimpse of some new kind of freedom. We continued to spend as little as possible, switching to value brands at the supermarket, every penny left in the bank at the end of the month was paid off the mortgage. We tracked the diminishing mortgage in an Excel spreadsheet, seeing the number reduce encouraged us further and by the end of the second year we enjoyed this new low-spending life, and had a mortgage statement reading: Amount Owed: £0.00.

 

Our Post-Mortgage Plan

With the mortgage gone, things sped up immediately. The pressing need to earn fell, which perhaps explains a rapid increase in dissatisfaction with work. It was all self-imposed, looking back, but the pressure became too much and I decided I needed to leave. I had a problem though: my confidence was at an all-time low. Could I really succeed outside the closeted environment I’d worked in for the past eight years? It was more than that, I felt unable to deal with work, I’d basically broken down.

Ju and I had a long talk. She wasn’t in the same hole I was, but wasn’t enjoying the team manager job she’d been coerced into. We both liked the idea of travelling. A madcap plan formed. We’d take a year out to consider where we wanted our lives to go, and would use it to travel Europe in a motorhome. We’d spent a few of our two week holidays in a campervan we owned wandering Scotland, France, Germany and Belgium over the years. But we’d never managed to get far, being tugged back by the need to be at work in two Monday’s time.

Having formulated a plan, the campervan was sold, as we knew it wasn’t suited to long term travel, and we saved like mad. The money that would have gone to pay the mortgage now flowed into the savings account. A larger motorhome was bought and fettled; although it was twenty years old it had a good service history and we loved sitting in it on the drive, imagining. The house was gradually emptied of our things, as they were stuffed into the loft, sold, given away or placed in storage.

Within a few months we had what we needed to travel for a year, and with a mixture of fear and trepidation, we quit work. We felt a sadness to be leaving friends and family, uncomfortable at the ‘To Let’ sign hung next to our garden gate, but excited at the coming change from rigid routine and a cosseted life to one of adventure.

One cloudy day in October we left. Our management agent had found tenants for the house who’d move in a week or so after we left, which would generate an income for us. Our first night was spent camping behind a pub near Milton Keynes, where we enjoyed some English grub, and I supped my last real ale for a year.

 

[] Our Two Year Tour

Our one year tour turned into a two year tour, taking in much of Europe as well as Morocco and Tunisia. The need to maintain a current MOT brought us back after a year, but we’d realised that we could live on far less than we’d expected, and we headed off again. We’d originally budgeted around £25,000 a year, but were actually spending around £13,000, all of which Ju accounted for to the penny, scribbled into notebooks and transferred into Excel spreadsheets.

While we knew that once our pot of savings was gone we would have to return to work, we’d actually made a conscious decision to increase the amount we were spending to £13,000, otherwise we felt we might be missing out on experiences – eating out, visiting attractions, taking ferries and so on.

The motorhome experience worked very well for us. We thrived on the limited resources and enjoying the flexibility this style of living offered to us. Mainland Europe, on the whole, takes a different view to motorhome living to the UK. In many countries there is no need to stay on a campsite, and some offer thousands of official free and low cost parking areas to stay on. Our budget had assumed we’d have to pay to camp every night, while we frequently found we could stay for free, for a few pounds or in return for taking a meal or buying a bottle of wine or olive oil.

 

Our Lessons on the Road

While we travelled we set up a limited company to enable us to complete some ‘digital nomad’ work. In other words, we built websites and produced promotional videos, which we could do remotely with just the odd flight to a filming location. This generated a small income, but perhaps more importantly started to get us used to the concept of running a limited company, like the need to maintain and submit accounts and returns alongside our personal tax returns.

We learned to generate passive income in the form of book sales. After struggling to find practical information on how to take a motorhome to Morocco, we wrote a book on the subject, self-publishing it on Amazon. Following that we created another book which described the experiences we had in the country, and again self-published it. These produced a small income, but again the more important aspect was perhaps the sensation of having self-generated an income, no matter how small, no-one employed us to do it.

By far the biggest impact on our financial thinking came from the people we met on the road. Far from being hippies and drop-outs, most people we met were focussed, successful people. One couple we met, not much older than us, confused us when they told us they were financially better off while travelling. They’d passive income streams which continued to flow without them working, and it cost less to live in a motorhome than a house. Wow. Their positive approach to life also made a lasting impression after decades of cynical workmates. Another lady, again around our age, explained to us how her range of holiday lets were the results of decades of careful goal setting, saving and investment. It became clear that although we’d learned and practised some of the fundamental lessons of personal finance, and were living well below our means, we’d little idea about more advanced ideas, around investing in particular.

 

Our Return

As the months ticked away, our funds had slowly dwindled. Our attempts to earn money on the road hadn’t failed, they had taught us invaluable lessons, but they weren’t creating anything like the money we needed to live. Given the choice between spending our coming years dependant on low-income work or blasting away for a few years in high income, less enjoyable work in the UK, we took the latter approach. As we headed back to the UK, we expected to be back at work until we were 50, another nine years to go.

The house and bungalow had both continued to rent with few problems while we were away. Ju ensured our travel was funded only by our savings, keeping the rental income in a separate bank account to act as a ‘get back into UK life’ fund. When we returned to the UK the tenants in our house wanted to stay there, and after two years living in a space roughly 5m by 2m it now felt too big for us anyway. Our first priority became finding somewhere to live in a competitive rental market.

We snapped up a small two bed place with space on the drive for our motorhome before it hit the market. Sitting in front of the estate agent filling out the paperwork we became very grateful for our ‘get back into UK life’ fund; with both of us being unemployed we had to pay the full six month rent in advance.

 

[] Our First Steps to Financial Independence

Once we’d gotten ourselves into a rental house, we sat on the sofa (which had itself sat in expensive storage for two years) and started to think.

*
p<>{color:#000;}. What was important to us now?

*
p<>{color:#000;}. How did we want to live?

*
p<>{color:#000;}. How long were we willing to dedicate to work we might not enjoy, in exchange for the greater financial reward?

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p<>{color:#000;}. What kind of work did we want to do in future?

Travelling and living the way we had moulded us. It was very clear we valued experiences over possessions. It was also clear we wanted to maintain our status as UK residents. Our families were located in the English Midlands, and we wanted to ensure we could be in the UK and near to them as and when we needed to in the future, so the option of moving to a low cost country like Bulgaria was reluctantly (on my part) discarded. Future access to the NHS was also important for us, for obvious reasons.

We both wanted to re-attain the freedom we’d had. It was addictive, an escape from enforced traffic jams on daily commutes, arguing over which days we could take as holiday, pointless performance reviews, dealing with negative, intractable co-workers and the endless irritations of corporate politics. But how best to regain this kind of freedom, in our early 40s, when the papers were running headlines about future Britons not being able to retire until age 70?

We started with an assessment of where we were. We calculated our net worth – the total value of everything we owned minus what we owed. Our private pensions surprised us. Although we’d both consistently contributed to them since we started our first jobs, as had our employers in most cases, we weren’t aware how much they were worth. We took them to a pensions advisor, to check if we should consolidate or change them, and he answered ‘no’, leave them as they are, they’re good pensions. They won’t generate a huge amount, roughly £15,000 in total per year in today’s money by the time we can access them all, and the earliest we could even start to use them was age 55, another 14 years away.

We started research, reading books recommended to us by fellow travellers, and finding books and blogs ourselves. The book Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter, and the www.mrmoneymustache.com blog were particular influences. Both gave real insight into how the authors had achieved early financial independence, albeit through very different means.

Most importantly of all we set ourselves a goal: to get into a position where we had enough passive income over the coming decades to fund a life of freedom without having to work.

We both understood that if we wanted to do paid work, we’d keep it open as an option at all times, especially if one of us wanted to do something which didn’t fit within our existing budget, or simply if we wanted the feeling of achievement which can come from work.

 

[] Our Financial Plan

It was clear we needed a plan to get to this lofty goal, and over a few wine-fuelled sessions, we worked out what we’d do:

*
p<>{color:#000;}. We set a goal to generate £25,000 a year in passive income – in other words income without having to work in any way. To achieve this, we opted to buy and renovate another house, or maybe two houses, and let them out, since we had a decade’s experience in this area of investing by this point. Our strategy was to ‘buy and hold’, to generate cash flow rather than to flip properties for profit, which felt like high risk and wouldn’t create enduring passive income.

*
p<>{color:#000;}. We also agreed between ourselves to dip our toe into the area of buying shares. Most ‘early retirement’ bloggers had exclusively used shares to fund their lifestyles. We’d previously both held shares as part of our employer’s share scheme, however they had fallen in value significantly and we ended up with much less than we paid in. We were wary of investing our money into one single company as a result. Our research led us to Exchange Traded Funds (ETFs) which spread our money across thousands of companies across the world. They offered a mix of low costs, liquidity, and risk which we felt might work for us, so we started to build a portfolio of ETFs. Again we have a ‘buy and hold’ strategy in this area and are still building an understanding in it.

*
p<>{color:#000;}. Ju would look for a permanent job which would give us the ability to apply for mortgages, and would provide a stable income to offset the potential instability of my contract work.

*
p<>{color:#000;}. Our plan was to get enough capital into cash-generating assets so we could live off the money they created. At the same time, we realised at some point in the future we could sell all of these assets and spend down the capital at a fairly high rate (or give it away to charity, depending on how we feel in future), since we have no children to leave money to.

*
p<>{color:#000;}. We investigated and discarded the idea of moving onto a narrowboat after a feasibility inspection of the idea. Being in a house wasn’t feeling comfortable but, after a hard financial assessment, a narrowboat, while cheaper to buy, was likely to cost us around £50,000 more than a house over a decade. Over the long term boats have historically depreciated while houses have appreciated in the UK.

*
p<>{color:#000;}. We’d ramp up the work done under the limited company, mainly through me working fixed-term contracts as an IT project manager. This would mean no job security, since the contracts were typically 3 months at a time. There was also no sick pay, no pension, no benefits, plus a need to insure ourselves and maintain and submit accounts. The risk, we assessed, was worth the return, since I could take home around double what I had as an employee doing the same job.

*
p<>{color:#000;}. We initially assumed we’d receive no state pension by the way, as a worse-case scenario. However, we’ve checked recently and without making any further contributions, we should receive a combined amount of around £11,000 a year (in today’s money) when we’re 67.

Overall this approach would, with any luck, mean we avoided the usual situation of having to adjust to a lower income at ‘traditional’ retirement age, since our income would actually increase in our 50’s with our private pensions, and then again in our 60’s when our state pensions would start to be paid.

We pulled out our old work clothes, tried to explain a two year gap on our CVs (which few recruiters were bothered about in the end), and applied for jobs. Within a few weeks we were back behind desks, and the money we needed to breathe life into our plan started to flow.

At this point we were expecting to be working for another five to nine years. That wasn’t going to happen, as it turned out.

 

[] Our Execution of the Plan

As with most plans, ours shifted around as time went on, but the goal remained fixed. Things moved quickly from the start, probably too quickly with the benefit of hindsight.

We employed an accountant who explained to us in detail how the limited company worked, what reporting we had to do and what tax implications there were. While our limited company started to generate income and Ju's salary came in, some of our living costs were still being covered by the income from the rental of the bungalow and house. As we were buying very few new things our ability to save was high. Typical advice is to aim to save 10 to 15% of take-home income, but we were closer to 90%. Financially, we were on fire.

 

Property Investments

We started to think about how to fund another buy-to-let property. Meeting with a mortgage advisor, he told us what we already knew: we’d not get a mortgage until we had years of accounts, or one of us had a permanent job. Ju had got a job covering someone’s maternity leave and as such her role could not be permanent for some time, so we decided to re-mortgage the bungalow based on its rental income.

We left about 50% equity in the bungalow, opting not to leverage ourselves too much to limit our exposure to interest rate rises. Coupled with income from our business, we pulled together enough money to buy a property for cash. Living in the English Midlands meant a house needing some work could still be bought for less than £90,000 in 2014.

The search for a property was relatively short, since we already started looking and researching the local area before we had the funds to buy. In our research we’d come across numerous stories about ways to buy properties below market value, but they seemed complex and impossible in the real world. In the end we bought an old butcher’s shop, under auction conditions but not in the auction room, and the sale went through within a month. Buying the butchers was a bit of a blur. We hadn’t a real plan what we would do with the place, but we knew it was the right place for us. The plan came later.

We knew we’d need to renovate the shop, the three bedroom house which sat behind and above it and maybe also an outbuilding sitting where there should be a small garden. To save money on rent we moved into the house behind the shop and got started on the plan.

We worked our jobs in the day, renovating at night; renting vans to shift rubbish rather than paying for skips, and doing whatever jobs we could ourselves. In a one month gap between contracts, I took the bathroom back to brick, and fitted it out again. We bought a kitchen second hand and a carpenter friend did a fantastic job of refitting it for us, with new worktops, sink and so on. We found someone who would de-gas the five chiller unit compressors and take them away, in exchange for the stainless steel meat hangers from the shop ceiling. Every penny was closely watched as we brought the place up to a good standard.

Everything we had left was covered in brick dust for weeks as an electrician replaced all the wiring. We set up a temporary kitchen in our bedroom, cooking in a microwave and washing up in the bathroom sink. Plastering, refitting wardrobes, repairing the roof, installing a wood burner, decorating… the list of jobs felt endless.

Once the shop was finished, we let it out without using an agent, after a few weeks of searching for a tenant. We chose poorly, and they left after six months. The next time we let it using an agent, a lesson learned.

As work on the house came to an end, our attention turned to the outbuilding. By this point the pressure we’d placed on ourselves had hammered us. Ju took the brunt of it, and had to quit her main job as a fog of depression settled upon her. She focussed on recovering, and project managing the outbuilding, and we learned another lesson – not to push so hard.

Ju’s brother had suggested turning the outbuilding into a room to rent to contractors who work away from home during the week. We eventually took that idea and turned it on its head a bit. We had a local architect draw up a planning permission request to convert the outbuilding into an en-suite bedroom, and attach it to the main house.

When permission came through, we engaged a local builder to renovate the outbuilding, taking it to bare walls with no roof and back to liveable standard. We then made one last attempt to get rid of more of our stuff, which was pretty painful by this point since we were down to wedding presents and much-loved tools. Finally, just under a year after we’d bought the butchers shop, we moved our remaining belongings into the outbuilding bedroom and let out the bedrooms in the house, again using our management agent. This would bring in much more in rent and would enable us to travel while still having a base in the UK.

 

Solar Investments

We bought and had two solar arrays fitted on the butcher’s and bungalow’s roofs. These generate free electricity for the tenants, and also the government pays us a Feed In Tariff (FIT) for the amount they generate. This contributes about £1000 a year to our income, which will increase with inflation and runs for 20 years from the install date. The FIT rates have since been dramatically reduced for new installs.

 

Share Investments

Before we stopped working, we ensured we had a good-sized emergency fund held in cash, which we can call upon the event of a major expense. This would cover over two year’s travel expenses in the unlikely event all other income dried up, and we couldn’t find any paid work. If we also sold our ETFs, they’d cover at least another couple of years, probably longer. If pressed I’d say we could last 5 years even if all our passive income streams dried up, without working.

 

[] Our Current Financial Position

Combining rent from the properties, the FIT payments and dividends from our ETFs, we now had an annual income of approximately £18,000 after likely costs (such as agent fees, accruals for property maintenance and gas safety checks). This only took two years in the end. Our income is split evenly between Ju and I to minimise the income tax we pay. Although we’d not hit our £25,000 target, we knew we’d see around another £15,000 added to our income in our 50’s and we now realise we could see another £11,000 added in our late 60’s when state pension kicks in. £18,000, we decided, was enough.

In today’s money, we might be earning over £40,000 a year (before income tax) by the time we’re 67. Without us having to work. Which feels nuts.

What feels even odder is the fact we’re slowly getting richer while sat at the beach. As we’ve set ourselves a budget of £15,000 a year to travel, which is more than we spent on our previous trips, this means our income exceeds our expenditure. We are still saving as we go. If housing prices increase, or the value of our ETF investments increase, and exceed inflation, then our net worth will also increase.

We’ve opted not to make voluntary NI contributions since we have stopped work, and instead we’ve self-invested any excess funds, inside ISAs as either cash or Vanguard ETFs. This keeps these funds liquid, so we can access them quickly. Any money we handed to the government in the form of NI would be locked away for over two decades, which we don’t want to happen.

 

Risks

There remains risk in our position, of course. One thing we’ve worked out over time is that there is always risk, whatever you do. If you keep all of your money in cash, there is a risk it will depreciate to nothing due to inflation outstripping interest rates. If you choose a ‘safe’ path staying in a job you are not fulfilled in, there is risk one day you’ll find you’re ill, and can no longer take the ‘less safe’ option of following a dream. There’s always risk, you can’t avoid it, only understand it.

To help us mentally manage these risks we’re treating our lifestyle as an experiment. There is no guarantee it will continue to work over the long term. We’ve also assessed the main risks and bought insurances where we can, and accepted the remaining risks in order to gain reward by doing so. We don’t gamble, everything we do is thought through, but no-one can think of everything. As stated at the start of this mini-guide, neither of us are financial experts, and we could easily have missed something vital. Time will tell.

 

[] Our Challenges

The concept of Financial Independence (FI) is simple enough: to get enough money flowing in to cover all of our living costs for the remainder of our lives. We had a number of advantages which made the practical job of achieving it much simpler: we had no children, we were born to good parents in a rich country (the UK), we had good jobs, we weren’t brought up to expect to be given things (Ju’s family moto is “Every penny’s a prisoner!”). We still had a number of challenges though:

 

Challenge 1: Understanding How Much We Needed to Live

Ju’s been tracking our spending for over a decade, so we’ve built up a detailed picture of what we’ve spent in the past. This doesn’t necessarily equate to what we’ll spend in future, if one or both of us need private medical treatment, for example, we could see high one-off or enduring costs. However, we can only foresee what we can foresee, we have a good emergency fund, have access to the NHS. We still have the option to seek out work, or find another way to earn money.

Challenge 2: Working Out if We Would Enjoy a Low Income Life

We’ve not been buying much stuff for over five years now, so we’re comfortable with this one. We’ve lived on the road for a total of two and half years, spending between £13,000 and £15,000 a year, so we have hands-on knowledge of what makes us comfortable. We’re happy.

Challenge 3: Building Confidence We Could Get to FI Early

This was a tough one, and I’m only just starting to build this confidence six months after getting to the balance point. Very few people get there in their 40s, for a whole range of reasons, which meant we had few people to discuss this with. Most workmates were progressing well through the stages of lifestyle inflation – earning more money and buying bigger houses and nicer cars. Friends with children were busy raising them, and often all or most of their money went into day to day expenses. What we were doing was, and is, more than a little whacky. In the end I relied on blogs of others who had done it to convince myself I wasn’t completely mad.

Challenge 4: Getting Rid of Our Stuff

It’s an easy thing to say, romantic even: “just sell everything and set off travelling”. Actually getting rid of most of a lifetime’s accumulated stuff was hard work. Much of it we were emotionally attached to, since it anchored us to some fun point in the past. Some of it just might be useful in the future? In the end it was a slow grind of a process, done in stages which took us years.

Challenge 5: Living in Small Spaces

The bedroom we have at home, which we call the ‘Cooler’ from the film ‘The Great Escape’, is about 6m long by 4m wide, with a small en-suite. The motorhome we live in has about 5m by 2m of living space. I’ve put this down as a challenge, but somehow it was more of a fear thing, felt in advance of making the move, than an actual physical challenge. We got used to living together in small spaces very quickly and they are much easier to keep tidy and clean.

Challenge 6: The Morality Question

Should we be off wandering the Earth doing no work when almost everyone our age will be working for another ten or twenty years? Is it fair that were living off rent and dividends while others have to work to pay rent or generate profit for their company which goes to shareholders? These are some of the moral questions I’ve wrestled with over time, and continue to ponder. We didn’t win the lottery though, or hit upon some fantastic business idea which made us a fortune, or inherit a big pot of cash. Neither of us claim benefits, nor intend to claim them, only the state pension which we’ve built up via NI contributions. We worked hard, thought about what we were doing, assessed risk and took action. Perhaps our freedom is fair reward?

Challenge 7: Lack of Investing Knowledge and Experiences

Neither of us came from a background of investing. Our friends and families did invest to some degree, but none of them were experts. We had to overcome the fear that investing was for someone else, someone who knew what they were doing, and not for normal people like us. We did this through self-education, reading blogs and books.

Challenge 8: Fear

Which brings me on to fear in general. There was great deal of fear involved in a pursuit like this, changing our lifestyles into something non-traditional. Doing something pretty much off-the-wall. We read Feel the Fear and Do It Anyway by Susan Jeffers, and took her advice.

Challenge 9: Things Might Change

Who knows what might change in future. The government could change the law around personal or state pensions, changing the way they’re taxed for example, or altering the age we can access them. There could be a huge drop in the demand for rental property in our area. We’ve taken some steps to try to reduce these kinds of risk (our net worth is spread across a couple of asset classes for example – property and shares). But in the end we’ll get hit by whatever wind blows and will need to react to it as needs be.

 

[] Our Future Thinking

 

What comes next?

At the moment we’re travelling Europe in our motorhome. As I type this we’re on the Adriatic coast of Dalmatia in Croatia. Through a meandering route we aim to get to the top of Norway this summer, travelling to that point via Finland then back down through Norway and slowly back to the UK for the autumn. After that we aim to be in Morocco for the upcoming winter. That’s the extent of our planning, and it could all change tomorrow.

We have the Cooler waiting for us at home, and have a storage space on a nearby farm to store our motorhome, so we could return to the UK whenever we need to, to be with family, look for work, volunteer, write, do whatever we feel like we need to do.

The aim was to maintain as much flexibility as possible. If necessary, we could empty the Cooler and rent out that room too to generate more funds, or we could reduce our travelling costs by driving shorter distances and staying in cheaper countries longer. Other travellers have a budget of less than £10,000 a year for a similar lifestyle.

On the other hand, we could opt to increase our spending rate, eating into some of our capital as we move through our 40s and early 50s with the knowledge our private pensions should become accessible. I doubt we’d take this option, but it’s available to us.

 

[] Our Thoughts on Financial Independence

Financial Independence (FI) means choice for us. It means we have options.

If we want to work, we can. If we don’t want to work, we can do that too. If we don’t want to sit in commuter traffic, we travel outside peak hours. If we want to take a day off, we can. If we want to live in the UK, we head back to the Cooler. If we want to live abroad, we can look into options for doing it (our friends have recently used motorhome swaps to travel Canada and New Zealand, slashing the cost massively). Without being FI, if we didn’t enjoy working for a particular individual, or we thought a project was pointless, we had little choice but to put up with it.

FI means freedom.

Neither Ju nor are I natural risk takers. We’re not financial or business wizards. We just chose to go down a different path and we’re very happy with our decision.

 

[] References

I’ve worked my way through umpteen books and websites over the past three years. These are the key ones which have made the most impact on me in terms of achieving financial freedom.

meaningfulmoney.tv – a very useful and well-presented resource to build your knowledge of all things financial, produced by Pete Matthew, a certified financial planner. I started off with this site when I decided to improve my financial knowledge, before moving onto the other sites below.

mrmoneymustache.com – a very popular and well publicised blog about a Canadian couple who made themselves financially independent at age 30, going on to start a family. Has well-written, authoritative articles from stock market investing and the safe withdrawal rate to the high cost of commuting.

theescapeartist.me – again a blog, similar to Mr Money Moustache but written from a UK perspective. Again the author is financially independent.

Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter – a very popular book which investigates the way in which poor and rich individuals think about money. It proposes that anything you own which costs you money rather than generating and income should be thought of as a liability, rather than an asset, such as the home you live in and the car you drive.

Feel the Fear and Do It Anyway by Susan Jeffers – the book to read if you feel you’re being held back by fear.

The Millionaire Next Door by Thomas J. Stanley and William D. Danko – the authors investigated how millionaires in the US behaved, how they became and stayed millionaires. They didn’t do it by winning the lottery or buying a brand new car on credit each year. The way they did it was through shrewd use of the money, and they’re a frugal lot, which we like.

The Compound Effect by Darren Hardy – this book opens your eyes as to why you should start following your financial independence dream as soon as possible.

 


Funding Freedom - From Corporate Life to a Life of Travel

I'm Jason Buckley and along with my wife Julie we have re-designed our lives to enable us to stop the daily 9 to 5 of our corporate jobs, and to instead have the choice to do something else. We have chosen to travel, and now spend several months a year away from home seeing the world. This mini guide tells the story of how we changed our lives to give ourselves freedom to travel. Its purpose is to help others who are thinking about making a similar lifestyle change.

  • Author: Jason Buckley
  • Published: 2016-04-25 12:35:09
  • Words: 7277
Funding Freedom - From Corporate Life to a Life of Travel Funding Freedom - From Corporate Life to a Life of Travel