Friday, 1 January 2021

Toto, I’ve a feeling we’re not in Kansas anymore and 2020 in review

Usually at this time of year I publish a year in review which covers a little of the qualitative and a lot of the quantitative.  Given the year we’ve just had, along with quantitative needs now being significantly lessened given the stage of my FIRE life I’m currently in, I feel it’s worthy to flip that weighting as it really has been a year to both remember and to forget.  Additionally and hopefully once you see the qualitative you’ll understand why it’s been a long time between blog drinks.

So let’s get the quantitative stuff out of the way.  In my purist FIRE plan I was aiming to spend the lesser of:

  • up to 2.5% of initial FIRE wealth plus investment expenses of around 0.2% uprated for inflation annually.  For 2020 that gave me a drawdown target of around £26,084 plus investment expenses.
  • up to 85% of my annual dividends.  Dividends were a car crash this year. Once the laggards make their final payments I expect them to be down around 29% year on year.  For 2020 that gave me a drawdown target of around £19,848

RIT Annual Dividends

Click to enlarge, RIT Annual Dividends

In comparison, during year 2 of FIRE, I withdraw from my wealth a total £19,022.  I met my FIRE goals but boy did it occur unconventionally.  So let’s switch to the story to explain that which is hopefully the interesting bit.

Let’s firstly recap on where we were at after 2019, my first full year of FIRE:

  • Cyprus had taught me that regular access to meaningful family and friends is really important with FIRE changing some of those dynamics.
  • I was also really wrestling with my purpose which included was the career (as opposed to the job) I left behind actually part of it.
  • We had also applied for a visa to Australia which was expected to take many months if not years to process.  While that occurred I was going to focus on becoming a ‘human being’ vs a ‘human doing’ for a while with no quick whipsawing changes.  
  • We were also struggling being back in the South East of England and concluding it was no longer home.  Loss of friends who had left because of Brexit along with the busyness and constant noise didn’t help.
  • I also had a temporary job which was absorbing about 2-3 days of my week.

With this in mind 2020 started as planned.  A little bit of job, a reinvigorated focus on my fitness and a lot of getting comfortable in my new FIRE skin.  Then a little something called COVID-19 descended upon us.  The temporary job went away and we realised that our FIRE flat (albeit a very nice flat) living arrangements were not conducive to lockdowns/quarantines/home arrest.  We longed for the space that our Cyprus living arrangements gave us but we were also conscious not to panic and continued to be.

An alternative job opportunity also appeared.  It carried some interest but I wouldn’t say purpose but where it became really interesting was that I could see the role possibly able to be done via ‘work from home’ from anywhere in the world plus also being flexible from a number of days per week perspective.  Hopefully, you can see where that is going…  So I took it on.

By mid-year the UK was Eating Out to Help Out.  We didn’t participate and just continued being.  Improving our home cooking skills, increased exercise patterns given the good weather and by now were 99% convinced the UK really wasn’t for us.

By the autumn the UK was starting to get excited by COVID-19 again.  In Australia it was a very different story.  They had gone for eradication and border closures.  This meant few flights, flight caps on what was flying, state wide limits on numbers allowed to immigrate and passenger flight cancellations right up to a few hours before flight time.  A real mess when our situation was combined with the two countries situation…  Amongst all of this our Australia visa was granted with a strict ‘must enter by’ date. It was time to decide.

On the 31 October England started its next 4 week lockdown and I could see that if we didn’t move quickly we might not make it to Australia before that must enter date passed so it was time to try and leave.  The only problem was no flight availability because of the Australia flight caps/state limits combined with a constantly changing set of rules in England to navigate through.  It was time to use some of that hard earned FIRE wealth and buy ourselves a passage to Australia:

  • Regular airline calls exposed some cancelled Flexible Business Class tickets on only a few days notice.  SOLD for the price of a very good quality family hatchback car.  The race to get ourselves ready was now on.
  • Car sold at well less than real value through a company who advertises regularly.  The problem to solve for us was time to sell not value of the car.
  • Gave notice on our rental flat in the UK while sitting on the runway at Heathrow just in case those flights were cancelled on short notice.  
  • Moving our belongings on short notice was relatively straight forward as we continue to be quite minimalist buying only what brings us true value.  That approach once again gave us huge flexibility.

Upon landing in Australia it was straight into 14 days of hotel quarantine.  The less said about it the better but in our case I do believe prisoners get better treatment and they don’t have to pay $’000’s for the privilege.

Outside of quarantine, life where we have rented (and given our short time here are already talking about settling) is currently bliss.  We might just have found paradise with an abandoned beach, a lake and plenty of forest all close by.  We also have a house with plenty of outdoor space which is costing us about 2/3 of what our South East England flat did.  COVID wise life is also quite normal because of our chosen location along with the Australian eradication policy.

We’ve also spent some time with some meaningful friends and family.  I’m also ‘working from home’ 4 days per week and where we are located has more activity/sporting clubs on our doorstep than you can poke a stick at.  So it’s now time to again stop ‘doing’ and start ‘being’ again.  Being that includes maximising the great outdoors we have available to us.

Switching back to quantitative again just to check-in on the FIRE wealth situation.  One year ago wealth was £1,438,000.  As I type this wealth is £1,497,000 made possible by investment returns of 5.4% and low wealth withdrawal helped by that part-time job. 

RIT Year on Year Change in Wealth

Click to enlarge, RIT Year on Year Change in Wealth 

For completeness my complete journey is shown in the chart below.

RIT Progress Towards Retirement and In Retirement

Click to enlarge, RIT Progress Towards Retirement and In Retirement

I’m going to sign off similarly but subtly different to how I did last year.  FIRE enables a life of adventure that those who aren’t FI just don’t even have available to them and it looks like it’s not going to stop for us for the foreseeable future.  I’m still grinning from ear to ear.

As always please do your own research.

42 comments:

  1. I am so pleased to hear an update. Long time reader. Would love to know more about the location, typical costs, how you managed to keep the job when moving countries and other details.

    What an amazing year you've had and it seems like you've found your 'home'.

    An inspiring read on New Years Day!

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    1. More to come as we settle in. One initial observation is that when compared to the UK the price of food is very expensive but at this point it's offset by the landlord paying the Council Tax rather than the tenant along with cheap fuel. I'm tracking all expenses so will be able to update on the puts and takes in detail once the data builds up a little.

      Yes, it's feeling right so far but only time will of course really tell the story.

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    2. Yes the cost of food (and beer!) here in Australia is shocking. I am generally frugal but I insist on good quality meat, fish, fruit and veg. However wine can be good value (cleanskins), petrol is dirt cheap and the beach and outback is free :D

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    3. We also choose to eat good quality stuff. Our Cyprus experience showed that with time we could bring the bill down as we learnt where to buy plus adapted our diet to suit local. I expect the same will happen here. Even with that though it's still going to be, as you say, shocking.

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  2. Hey RIT, I was beginning to worry...it's been a while. Good to hear all is well but after all the news headlines last year about the extensive bushfires, I am surprised to see you have moved to Australia. I suspect you will soon find out the real meaning of FIRE!

    But I genuinely wish you well and Happy New Year.

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    1. Happy New Year DIY.

      Yes Australia does have drought, flood and fire issues from time to time. Sometimes all at the same time... Having travelled the globe for work and also having spent time trying to find a FIRE location one thing I've learnt is that nowhere is perfect. Locations are just different and it's up to us to find the one that works best for us. Of course plenty of things that make life good are also not dependent on location at all.

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  3. Didn't you go to Australia for a few years before in the early days of your blog?

    Happy 2021, looking forward to the next update

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    1. Early in my career I was fortunate enough to have the opportunity to work in Australia. When I started the blog those memories were why I had Australia on my initial FIRE shortlist and was even investing specifically in Aus assets (splitting UK and Aus as my home investments). Early in the blog we also holidayed (location researched) in Australia. So yes I talked about it but with time the FIRE location talk shifted more towards the Med (along with the investments slowly shifting away from Aus) so it dropped off the radar for a lot of the blogs history.

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  4. I hope your new home works out well for you guys. All the best, glad to see a new RIT blog post!

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    1. Thanks Foxy. Will try and post a bit more frequently from here.

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  5. Really glad you came back to write about your situation, and pleased things are working out well for you. Might be a nice point to retire the blog - rather than being able to commit to only very sporadic updates.

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    1. I'm going to try and keep at the blogging, even if it does become sporadic, for a couple of reasons:
      - The vast majority of the FIRE blogs are pre-FIRE and the majority of them are early days. This blog is now 2 years into FIRE so there is less of this content out there hopefully helping others. Sure there are other post-FIRE blogs but for many they are the bloggers 'purpose'/job so it's not quite the same. The great blogs where it wasn't stopped posting soon after FIRE - livingafi and bravenewlife both come to mind.
      - I've found these first 2 years of FIRE far more difficult than the 9 years I spent getting to FI along with the 2 OMY's before FIRE because it's not about the numbers. It's about looking at yourself in the mirror and saying right you now have 365 days a year to do what brings you purpose. It's all on you so what are you going to do about it. Hopefully in my posts you've seen I've found that very difficult but I'm getting better at figuring it out. Maybe that's what people call decompression... I think that warts and all story could also be very relevant information for others pursuing and preparing for FIRE.

      Of course if the readership collapses then I'll stop as I don't intend to howl at the moon but while it holds up I hope I can give something back to the FIRE community.

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  6. Thought you'd fallen out of the Blogosphere.
    Please do keep posting, there's plenty writing about the journey, some talking about why they've decided the destination isn't where they want to be but not enough talking about how life is on the other side.
    Thanks for resurfacing.

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    1. Good point WakeMalcolm. A much more succinct version of what I tried to get across with my comment to Scott.

      No doubt about it I've found post FIRE a very difficult journey. I now have the golden ticket though and most definitely don't want to waste it.

      In my life so far I've found that anything worthwhile never comes easy. I'm treating my FIRE journey the same way and hopefully airing both the dirty and clean laundry on this site is useful.

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  7. Excellent to hear how you've done - exciting choices in challenging times.

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    1. Exciting is one word for it... While I 100% recommend FI and FIRE I really don't recommend moving countries during a global pandemic. It carries huge uncertainty and plenty of stress.

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  8. Great post - as usual - thank you!
    I am curious about where you are in Oz. And how you are managing to work remotely on that timezone. Any details you can share would be much appreciated! My regular trip out there has been pole-axed by covid; 14 days quarantine is going to put me off for the foreseeable.

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    1. The job I am doing is well down the food chain meaning most of my time is spent personally delivering what needs to be done. That is deliberately why I took it on:
      - the required output is 95% my knowledge (either what I know or what I can learn myself) with limited input required from anyone. That means time zones aren't so important.
      - while I'm calling it a job (not my purpose) I am gaining some satisfaction and enjoyment from what I'm doing. I'm not sure it's the long term answer but it does allow me to continue my FIRE journey without upending the entire apple cart of life again. My human being vs doing and make one change at a time concepts.
      - as I'm now FIRE I have no interest in climbing the greasy career pole. My focus is elsewhere - family, health, community,... I do the work and if I'm forgotten about after that all the better.

      For the odd call/meeting then I'm just a little flexible on my hours. Either starting a little earlier and finish a little earlier or starting a little later and finishing a little later. What I don't do is work the insane hours I used to pre-FIRE. Those days are a distant memory.

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  9. Hi RIT, congratulations on moving (escaping) to Aus! A surprising but, I believe, very sensible leap. My wife and I emigrated from the UK to AU back in 2007 and haven’t regretted a day of it. We caught the tail end of the GFC but even that was relatively minor and most people hardly noticed it. Even the pandemic has been pretty minor here in comparison (and dependent on one’s view about lockdowns of course) – very much still the Luck Country. I’ve had five good jobs since arriving and never had much difficulty finding my next gig even during the pandemic (the government has been pretty effective with the JobKeeper and JobSeeker allowances; not sure how they will pay the final bill though!)
    We went straight for permanent visas to avoid any issues later with our ages, and applied for citizenship as soon as we qualified. Both turned out to be the right moves and were very easy to do ourselves (I can’t see any value from using immigration agents).
    It didn’t take us very long to settle into the aussie lifestyle, and there aren’t very many things we wish we’d done significantly differently. Some things take a bit longer to get used to (happy, friendly staff in shops and cafes threw us for a few weeks!), and some stuff was about learning the tacit knowledge such as houses being valued by land size (because if you don’t like the house you just knock it down and build a new one!).
    You’re probably across the subtle and not so subtle differences between the UK and AU (negative gearing anyone?), but if there is anything I might help with please let me know.

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    1. Tax is quite different isn't it - dividends (franking credits) / capital gains tax are a big deal compared to the joy of the ISA.

      Good to get your Aussie Super up if its for the longer term and you are working.

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    2. Hi eddieosh, great to hear such a positive story. Thanks for sharing. If our experience is half as good as yours sounds like it's been I'll call that a success.

      We've also been taken aback by the happy friendly staff. That's something I'd forgotten about from last time.

      Hi gumbi, yes the tax situation is very different. No ISA's but franking credits I think will help a bit. There are also some other nuances around CGT for immigrants and CGT in general which might help. We've done nothing yet in terms of moving our wealth. First, we need to make sure we're staying for the long term.

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    3. Should have mentioned. Given the tax nuances between the countries (inc the double taxation agreement) and significant wealth at stake I have paid a tax specialist with experience in both UK and AU matters for advice so hopefully we'll be doing things as tax efficiently as possible. I feel that has been money very well spent already.

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    4. Moving your retirement investments over to a super fund is very easy. Just need to make sure the receiving fund is QROP compliant. We moved a few investments over ourselves without any hassle, simple forms to fill in and the Aussie super funds know the drill. On no account use a company / agent to move the funds for you, they charge a percentage (!) and add no value. I think you have 6 months to move funds over otherwise investment returns are charged at the income tax rate.

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    5. Not sure if you moved your pension back in 2007 but 'recent' rule changes mean:
      - can't move UK pension until age 55 which I'm a few years away from yet
      - to my knowledge there is only 1 retail QROPS left in Australia. When the age 55 rule came in all the normal super funds backed away from it. SMSF is an option (with the faff that goes with it) but I have a few years before I have to make any decisions.

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    6. That's a bummer about QROPS, wasn't aware of that change. We moved everything over thankfully when we arrived. Another lost freedom sadly. Overall, I found the super industry not too bad, so long as you choose a good fund provider. I'm looking forward to Vanguard's promised super fund, with the hope it will bring some much needed competition to admin costs.

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  10. Happy New Year RIT (and family). Great to hear from you again! Look forward to reading more details of your experiences/adventures. Good luck down under.

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    1. Happy New Year to you as well AlwaysLearnin and thanks for the wishes. Looking forward to sharing a little more as we experience life in this big country / small continent.

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  11. Wonderful to hear your news, RIT. Many people on Monevator threads asked after you and I couldn't help but be a little nervous about how things were going. It's a relief to know you're happy and seizing life by the scruff of the neck, and will continue to blog into the bargain! Looking forward to future instalments.

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    1. Great to hear from you TA. I'm still a very avid Monevator reader, just don't comment so much anymore as my focus is now elsewhere, and still very much look forward to your posts. I owe you guys a lot as you both certainly made a big contribution to enabling me to implement a plan that has given us what we have to day.

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  12. Good to see you back RIT, for one awful moment I thought that the dreaded C-19 had bitten you fatally. i guess it's just another reason to get to FI - and spend your life doing what you want to do when you want to do it. Having reached that stage in the last month, it's very satisfying and thought provoking. LIke others I think you should should continue to post and tell us how FI life is treating you. I don't remember your age but I thought that Oz did not allow over 40's to immigrate permanently?

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    1. Hi colinph970, given we're all below 50 and in generally good health I'd wager on coming through a COVID-19 infection. That said:
      - I've now been tested for it 3 times (you get tested twice during AU quarantine).
      - while in the UK we minimised our risk of catching it while living as well as that allowed. At times some of what the UK government was encouraging people to do seemed like it was aimed at herd immunity and transferring public funds elsewhere in the economy not stopping the spread.

      Many congratulations on your FI. It's liberating isn't it?

      To protect the innocent I don't intend to go into too much detail on our immigration status. What I will say is that we used history, a lot of documentation, AU has a multitude of visa possibilities and a lot of money to get to where we are today.

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  13. Hi RIT,
    Happy New Year and congratulations on completing your move to Australia. I remember in one of your articles you had mentioned about researching a lot of places as your long term residence. I am wondering if you are willing to share the output of your research and your notes. I can use that to match with mine to see if I have got things right or missed things that I should also be researching?

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    1. Happy New Year adsingh. Yes over the years we looked at Australia, UK, Malta, Spain, Cyprus and a little bit of Portugal. I'm sorry I don't have a clean concise document I can share but what I can say is:
      - Use your heart and not your head to pick your location. Your heart is what will be living there and that's coming from a quantitative STEM person. Once you've done that then use your head to make sure it works for you and your family - financially, housing, schools, healthcare, making friends, interests, lifestyle, etc
      - Keep the list of criteria that you will initially choose by short and then as above make sure the other stuff stacks up after you've chosen. That's because I've found that no country is a land of unicorns. They each just have different pro's and con's where we just need to make sure that our priorities match the countries strengths. If you make the list too long what I expect you'll find, certainly what I found, is that all likely countries will descend to a similar score.

      Hope that helps and please please DYOR. Moving countries is a very big decision which costs a lot and can limit your future if done in error.

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  14. Great to see you back. I echo all the posts above about missing your blogs. Hopefully you'll keep them coming.

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  15. Great to hear that you managed to make it out on the last chopper from Saigon!
    As someone who's read your blog for over a decade, you've been both illusive and illustrative - painting a picture of how you see the world and how you want it to be and what you are doing about it.
    I personally wanted to retire early within the first week of grown up work as a graduate but that was a long time ago. I'm not in the position (thanks partly to you) to be in a "work optional" stage of life and the old devils that lead to fear in my head about money have melted away.
    But still, I don't know how easy it would be to chuck everything in and move to Oz. Maybe you are from there so that makes it easier (you did work there and maybe still have the friends).
    Ironically, as well as you have saved, your investments have been a bit tame and if you'd maxed out on the mortgage and given up on the NS&I bonds and pumped it all into VWRL or worse - you'd be sailing to Oz in a massive yacht. But cancelling your lease is one thing - selling up and moving costs £10k+ too much for me to consider moving at the drop of an Akubra.
    For the rest of us, stuck in the UK - don't look back, just enjoy yourself.
    Thanks for everything.
    GFF

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    1. Hopefully not too illusive GFF as that doesn't sound good :-)

      You bring up some very interesting points:
      - Not backing the truck up on mortgage debt certainly cost me a lot of money. Back in 2016 I published a post where at that point I estimated it had cost me £95,000. I expect significantly more by now. However, by doing what we did (and as you imply) it's enabled us to widely open our eyes to emigration for what is hopefully a better life (for us) as it removed one large UK tie. So was it a mistake...
      - I've definitely been too long cr*p UK companies/government and too short US tech which again means I've left a lot of money on the table given what has transpired. That said my initial plan was looking for a real 4% annual return over the very long term and to date I'm sitting at a real 3.9% which includes the GFC and Covid so was the plan wrong given hindsight is a wonderful thing... I tried trading early on and failed dismally. Buy, hold and rebalance, while I acknowledge getting the efficient frontier wrong for what has transpired, has definitely enabled us to achieve our goals.
      - I've definitely carried too much cash and NS&I ILSC's for too long. 2 OMY's plus a false start in Cyprus have seen to that but what that boat anchor enables is a home purchase when we are ready without consideration for what Mr Market is serving up. History has shown that markets can fall and stay down for a very very long time. I decided to leave money on the table to enable us to live our life on our terms rather than Mr Markets terms.
      - I've certainly been able to save a lot more than I planned which has been a nice upside. A couple of OMY's has also been a big tailwind in hindsight. These two points are also partly why I think I'm so comfortable with the low risk approach I've taken.

      The above waffle reminds me of two quotes which I think describe my thoughts quite well:
      - "Life is what happens while you're busy making plans". Nearly everything in my initial FIRE plan has been wrong (there's a previous post that covers this in more detail) but importantly directionally it's been very right. I think what I've hopefully demonstrated is that to achieve FIRE you need a lot of things but perfection isn't one of them with me over achieving in some areas but grossly underachieving in others.
      - "If you've won the game, stop playing". The life we want to live and that we have engineered doesn't require me to knock investment returns out of the park for the long term so why sweat it. A maximum 2.5% WR gives us plenty of room to manoeuvre (I hope). It's not the cavalry I'm looking for but the infantry. My investment strategy also needs to enable me to sleep very soundly during market duress and the Covid correction had me doing that quite soundly.

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    2. Seems to me to some extent you have followed Bernstein's advice which, IMO, is best understood with reference to his full explanation (rather than the oft, IMO misquoted, "if you've won the game stop playing") as follows:

      "In other words, once the game has been won by accumulating enough safe assets to retire on, it makes little sense to keep playing it, at least with the “number”: the pile of safe assets sufficient to directly provide or indirectly purchase an adequate lifetime income stream."

      Bernstein, William J (2012-06-18). The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults) (Kindle Locations 51-52). Efficient Frontier Publications. Kindle Edition.

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  16. Hi RIT

    Happy new year, fantastic to read this long-awaited update and to hear that you and your family are safe and living the FIRE life in your chosen country and that you appear to have found an ideal WFH part-time job to keep the income ticking over.

    As mentioned before, I hope you will find the time to keep up the blog - there aren't many blogs which continued after the blogger achieved FIRE (after documenting their FIRE journey) so I will always find it interesting to read about your post-FIRE journey, particularly when it no longer becomes just about the money but of the mind also.

    Wishing all the success you deserve down under and look forward to reading all about it!

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  17. Thank you for the update. There are not many post FIRE stories out there and as more people come up to retirement without DB schemes in the future they will attract more of an audience. Everyone makes what could be seen as mistakes on this journey. Mine were a) not investing at all from 2008 to 2012 thus building up cash and b) continuing to hold 20% cash instead of bonds. Very best wishes.

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  18. You may have already covered it in your blog but I wondered if your Fire Wealth represents your own wealth or that of both of you if you are part of a couple. I'm a similar age and have acquired roughly the same Fire Wealth as yourself (which includes, pension and property).

    Now into the second day of covid home schooling a 6 year old I'm once again considering ejecting from my employment.

    I'm debt free and should be able to bridge the gap from the end of my employment to the start of my personal pensions.

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  19. Pops321 here, so glad to hear from you and like the others I was getting worried.
    You and I disagree a tad on England being a home and when you moved to Cyprus your journey wasn't working for me (not that is has anything to do with me, I guess voyeuristically I mean) but Australia is a whole different ball game.
    If we had no family in the UK (we have parents, siblings, kids and grandkids) then we would be living in Sydney or somewhere more rural just North of Sydney....so I am back onboard :)
    I can’t even begin to share my experiences and connections, memories, Cousins and Uncles we have in Sydney, Byron Bay and places in between and their lifestyles are really amazing. We have spent days in tropical forests, on farms, on yachts in the Bay and just walking in what I believe to be the most beautiful parts of the world.
    Yorkshire is almost as nice but it is a different league over there when you don't need to work.
    I have had days looking at Saturn's Rings via a telescope from Byron Bay, football in the Botanical Gardens with Sydney Hospital Staff from all over the world, Anzac Day playing 2 up with toothless Australians and fighting over winnings, swimming in the baths in Balmain, snorkelling and fishing at Moreton Island..I think it’s safe to say I get Aussie Retirement.
    Last year was a disaster for traveling really for us but I have renovated existing property stock most of the year and also done 2/3 major projects at home that were 20 years overdue.....so I will 'retire again' this year, maybe. I quite like working but it’s not employment and nicely keeps me active and a little stress but not too much. Importantly it saves me £10K a year paying others.
    I haven't drawn anything from my SIPP, the 25% lump sum will last me indefinitely because of property income. The SIPP is really a backup and probably for the kids as I try to sell houses and reduce semi passive into passive retirement.
    Stay well, chat via HPC if you wish.

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