14 years of Financial Independence in the UK, mini-retirements...and moving to Italy
A lot can change in 14 years...
Monevator reminded us on Twitter this week that it’s been 14 years since they ran three guest posts by Jacob Lund Fisker on Monevator in 2010.
Was this the first exposure of the UK to the ideas of financial independence?
The article came when Jacob was 34 (and four years into financial independence) and before he had published his book Early Retirement Extreme.
Now Financial Independence (or FIRE) is, if not a household word, then certainly a concept that far more people in the UK as well as America have heard of.
The central innovation of financial independence was the idea that the most important number in personal finance is your % savings rate.
You savings rate is the proportion of your post-tax income that you are able to stash away and invest. This determines how long it takes to get to financial freedom:
At a 50% savings rate, it takes about 17 years to go from broke to financially independent, the point where work becomes optional and you never have to work again.
Unrealistic you say? Every week I talk to people who are on this path and so I get to see what is possible.
I am not saying this is easy. Britain is not America. Frugality alone is simply not going to “cut it” in the UK / Europe. For one thing, penny-pinching introverts and scaredycats usually under-perform their career potential.
You need to get the income side up either through a well-paid professional career (aka hard work) or - better - working for yourself (also hard work!).
This is about what is possible if you can get on the right trajectory:
Back in 2010, I was turning 40 years old.
I remember where I was because I was in the office. I was in the office A LOT back then.
Back in 2010 I was completely unaware of the existence of the FIRE “movement” (if the term is justified).
I was busy, I was stressed at work. I had gone into health “overdraft” and I knew that I needed to be done by the time I was 44.
There was no science to this number other than I had just read about an investment banker who had been found dead aged 44 at his Canary Wharf desk with a heart attack. It was 7.15pm on a Friday evening. No one was surprised that he was working late on a Friday, he just seemed to be moving less than usual.
I left my job in corporate finance in 2014 after I’d tracked my spending, sorted out my asset allocation, run the numbers and figured that I probably had “enough”.
Maybe not enough to get everything I wanted…but enough to live simply and have options.
I handed my notice in about 3 months before I turned 44.
Co-incidence? Probably not.
In 2007, the book The 4 Hour Work Week by Tim Ferris popularised the idea of “mini-retirements”.
Academics and lawyers have long enjoyed the prospect of sabbatical years, where they take a year off to rest, recuperate, and re-charge their batteries.
What about software developers, IT contractors, dentists, doctors, bankers, plumbers, electricians and all the others though?
Why shouldn’t other workers / professionals be aware that this was an option?
Tim Ferriss was early…this was an idea whose time was coming.
As usual, the UK lagged behind America but the idea of financial independence was too good to ignore forever.
There was a crazy period during 2018/19 when FIRE got its moment in the UK media spotlight.
I got asked to appear in just about every newspaper and various TV / radio shows. It’s weird when you answer your mobile phone and it’s Men’s Health magazine asking if they can do an interview with you.
If you think that’s a bit shallow / lame / cringey, well...you’re not wrong.
I have to tell you that the novelty wears off and you quickly realise what an absolute clown circus the media is.
Talking of men’s health…during my 10 year sabbatical / mini-retirement, I got plenty of time to rest and recuperate and address my health.
I enjoyed my decade of idling blogging, cycling, going to the gym etc. But there is also some truth in the old saying that “The Devil Makes Work For Idle Hands”.
Work (and here I mean the right sort of work for you) provides structure, routine, meaning, purpose, challenge and a reason to get out of bed in the morning.
It so happens that today is day 604 without alcohol.
My time without alcohol has changed me in ways that I didn’t expect.
I found myself with surplus energy and this led me to take my coaching work far more seriously and - strangely enough - to want to work harder.
The thing that gave me the most lasting satisfaction was my little coaching business in which I worked to help other people to:
I realised that I wanted to work more hours! I realised that I wanted to work harder!!!!
This is the dirty little secret of financial independence: the sort of person that is able to stick to the path for years and decades is not the sort of person to sit around doing nothing when the 25x rule of thumb tells them that they have “enough”.
I recently changed the structure of all my new coaching packages to offer unlimited time to clients. The conscious aim was to make myself busy.
Thus it came to pass that I found myself working waaay more than 40 hours last week.
And yesterday I got a piece of great news from one of my coaching clients.
After 17 years hard labour working in IT in London, my 40 year old client just bought this property near Lake Garda in Italy where they plan to live with their young family.
It is an amazing place to raise children…imagine the childhood that their kids will enjoy:
The purpose of money is to be able to buy the lifestyle that you want.
This property - and, more importantly, the lifestyle that goes with it - is what 17 years of hard work can get you if you play your cards right.
What I love about this is that it was the right path for one family.
I am not saying that this is the right path for everyone else.
But you have to respect the work, the patience and the craft that went into this result.
Love to everyone
Barney
If you would like to talk about career coaching or financial coaching, you can set up an introductory call with me here.