Saturday 14 January 2017

I’m now ready to FIRE

To be able to successfully FIRE I think two things need to occur:
  1. You need to be financially ready; and
  2. You need to be mentally ready.
If you’ve planned well then the first one is easy to recognise and watch for as you can simply see how far away from your number you are during the accrual period.  Then it’s no more complicated than one day you’ve passed that threshold and you know you’re done.  I’ve had this one done and dusted for a while now.  I can also confirm I had no trouble recognising it.

Since calling financial independence I’ve continued to grow my wealth and if I’m honest it’s now starting to feel a bit like I’m keeping score at best and it’s my precious at worst.  Since having enough I’ve added a further £113,000 and when measured in the currency that matters to me I’ve added EUR82,000.  It’s time to start spending it and the reason I haven’t is because I haven’t been mentally ready.

My wealth continues to grow
Click to enlarge, My wealth continues to grow

I’ve found that the mental readiness piece is more difficult to recognise as at least for me I didn’t know I was actually ready until I’d actually passed the threshold.  Let me demonstrate by using a few recent examples.  When I became financially ready I put on a wry smile, did a mini fist pump and we had a very small family celebration.  Then on Monday morning my alarm went off at the crack of dawn and I went back to doing what I’d always done.  I did that right up until just before Christmas.

Over the last few weeks I’ve now noticed a distinct change in my thinking.  My work objectives for the year have been made clear to me and they frankly just look ludicrous and impossible.  I know that they are certainly far tougher than last year but I also know that for many years they have been getting tougher and I’ve still achieved them.  I suspect it’s actually not that they are ludicrous and impossible but that I’m now not willing to make the sacrifices that I know it will take to meet them.  Instead I know I want to expend energy on a move to the Med, increasing my fitness levels and learning a new language.

Additionally, like any workplace you’re working with team members, colleagues plus bosses and in my case in the main they’re not friends.  Over recent weeks some of my bosses (yes I have multiple) have made numerous comments where I’ve thought to myself that they are out of line, inaccurate and unwarranted.  Thinking back they’ve always been there but I’ve been so focused on the financial independence prize that they’ve just slid off me like water off a ducks back.  They now don’t.  I’m not yet replying and actually I don’t think I will as it will make absolutely no difference to what’s important to me.  What I think it does show though is that I’m now done with this workplace.

So I think on top of financial readiness I’m now also mentally ready to FIRE.  The plan from here is to work until my next bonus is paid (I already know that the objectives are achieved so it just seems foolish not to collect the prize) then resign provided Mr Market doesn't through a curve ball between now and then.  I also have a reasonable notice period.  That combined should see me FIRE’d in late summer.  I already can’t wait.

As always DYOR.  


  1. Congratulations.

  2. Congratulations! As someone who reached his FIRE target a while ago, I think it reduces your capacity to put up with s**t you shouldn't have to. Whether that's getting up early on a freezing cold morning, nodding politely while someone less able than yourself but higher up the pecking order talks bull or doing work you consider futile, if the option is doing whatever you want, it becomes a lot easier to walk away when you know you don't need the money.

    I notice you mentioned the importance of your net worth in Euros. Are you still thinking of Cyprus, or the UK, for your geographical arbitrage?

    1. I agree 100% with what you say and this "...nodding politely while someone less able than yourself but higher up the pecking order talks bull..." particularly rings true right now.

      Having now had time to work through the UK vs Med thing post Brexit we're back on for the Med. In hindsight the Herefordshire thing was a bit of a post Brexit fight or flight thing. We're also done with the South East of England. It was an unnecessary panic financially and our hearts just aren't in it at this stage of our lives (I'm not saying that might not change in future years). We're looking for a few new experiences and a new language/culture is going to give us some of that.

      We're really down to two fairly specific locations:
      - Cyprus and specifically between Kouklia and Coral Bay; and
      - Spain between Marbella and Estepona.
      One more trip early this year just to make sure will seal the deal.

      I'm sure there are many other beautiful parts we've missed but if you try and find them all then I think we could run the risk of analysis paralysis. Instead we're thinking let's do it and then if in X years we develop an affinity for somewhere else we're still well young enough to go for it.

    2. Hi, Have to agree 100% with all the above.

      I would be interested to see how much tax/social costs you think will be charged in Spain on your expected income.From what I have seen it does not look very good? Tim from France

    3. Congratulations! Even though you're not anticipating the Basic State Pension being especially relevant, hopefully you'll be retiring in the new tax year after you've clocked up sufficient NI for that years' accrual.

      Gong from five days to zero days is a big jump after a lifetime of work. Did you ever consider working four days...three days and gliding to retirement over a period of months or was that not on the cards?

      Anyhow, keep us informed about how it all goes with the house hunting etc!

    4. Hi Tim

      In Spain I believe:
      - I'll crudely lose circa 20% in tax.
      - I should be ok from a wealth tax perspective as pensions and your home are outside scope against a EUR700k limit.
      - Social costs wise I'll take private healthcare initially but if we convert to the Convenio Especiale idc I'll be looking at EUR60 per month per person (<65 years of age).

      It's certainly not trivial.

      In Cyprus by playing the non-domicile card tax should approach 0% for the first 17 years. We'll of course have private healthcare costs but the costs are not ridiculously high. For example as a 44 year old my annual costs would be EUR990 for what looks like a decent policy. That can then be reduced if an excess is accepted.

      Do you agree with the Spain numbers?

    5. Hi Willy

      Thanks for highlighting. I should have mentioned the new/partial tax year which will help me maximise savings (tax refund) while also giving another year of NI contributions (I'll pay voluntary NI when I FIRE as an insurance policy). That's certainly been in my planning.

      In my planning I didn't really plan around part time in my current career. I actually thought my job would be outsourced and I think that is still likely at some time in the future. I have however considered volunteer or even different work and will definitely do some of that if the opportunity arises for something enjoyable.

    6. Yes, the Spanish tax take is around what I have read. I guess similar to here in France but not income tax but all social charges. Does it give Cyprus the edge or not enough to worry about, guess house prices and property taxes are all in the mix as well! Good Luck, Tim

    7. After tax I think both Spain and Cyprus will carry similar total costs. Spain (Marbella is expensive for Spain) will also mean a smaller home for similar house budget. So as a % of wealth we'll end up drawing less in Cyprus reducing sequence of returns risk but I already think I might be OTT for both options.

      More to this lark than money though. Spain for example would give us better access to extended family and friends although Cyprus would give more budget for visiting. Also better access to Europe for exploration/travel. I also think the beaches of Spain are nicer but both have equally intriguing mountains etc. Maybe a bit more 'security' in Spain also - after all Cyprus is still an occupied country with a green zone. I think Spanish might also be a more useful language than Greek - would help South American travel for example. Spain also gives access to public healthcare for a fee which might come in useful if we 'hard Brexit' and I'm still there as a pensioner.

    8. I'm very tempted by Cyprus. Given the current unification negotiations and Brexit, I'm sitting on the sidelines. But if the Greeks and Turks find a solution, I think Cyprus could have a good future ahead of it, in part due to its offshore energy resources but also its location and the unused land and underdeveloped North.

    9. Have a look at Rhodes (Greece) as well. It's a beautiful island west of Cyprus, 100-120k population.
      The airport has good connections to support the tourists in the summer. This is where I'm from and looks like a good place to fire... Personal bias? :)

  3. I'm also about to FIRE and, whilst it's something I've been working toward for a few years, the final push on both (1) and (2) have been made for me due to redundancy (which was not unexpected.) It certainly removes the possibility of one-more-year syndrome! One question on a point mentioned above regarding NI contributions - anyone know offhand how much you need to pay in a year get a qualifying year in state pension? I'll be working for about one week in the new financial year, so suspect I may be a little short.

    1. I believe if you're in a single (an important point) job (so Class 1 NI is relevant) then you'd need to have earned £5,824 in the current tax year, which is the LEL (Lower Earnings Limit), to qualify. This is what I'm using as a basis for that statement That said I'll be certainly checking my NI record afterwards to ensure I'm credited in my partial year.

      Once you're FIRE'd then your looking at Class 3 payments if you don't already have enough qualifying years. They're currently £14.10 a week.

      Good luck with FIRE. I hope the redundancy gave you a financial boost that you weren't needing.

    2. Thanks for that. With annual bonus, holidy pay, etc. I should actually be over that threshold so looks like I've got the year covered without any additional cost. I will check my record though to make sure.
      The financial boost from the redundancy has accelerated my plans - I'd have been looking at another 12-18 months otherwise.

  4. Hi RIT,

    Congratulations! As you say I think the mental side is far tougher to achieve - giving up the common conception that a job is required, and filling your time with something other than performance reviews etc. requires people to actually think a little :)

    Completely sensible to wait for the next bonus - why wouldn't you!

  5. Congratulations, here still 6 years to go...

  6. Interesting that you think you'll make decisions based on the market not throwing a curve ball in the next 6 months. What happens if the market crashes in 1 or 2 years etc. Don't you have to have a confidence that your savings are not riding a short term peak? If you draw an averaging line in your stash growth you'd be crossing your accumulated wealth milestone amount in 1-2 years time.

    It's something that nags at me when I think about the decision point.

    1. All my back testing research tells me that providing the future is no worse than the worst historical sequence of returns I will have a '100% success rate'. Of course history is not a predictor of the future but given my crystal ball is broken it's all I have.

      That said I also think that it is foolish to make any decision without the latest information to hand which means any events in the next 6 months will go into the final FIRE decision.

      If the market then crashes in 1-2 years I'll look at what that means for sequence of returns which may mean I'd possibly also wind back discretionary spend a little. If it's really bad I might have to do something even more extreme but it has to be worse than what history has already served us up. The difference is that I'm in a different life stage and I'm then making decisions based on that new life.

  7. Congratulations to our RIT author. To our other readers, if you're financially independent then one sign of being mentally/emotionally ready is that you're bored with work. One thing though: work is a big part of our lives. What will you replace it with? Retirement is NOT one long holiday, you might like to think of charity work, your children or rebuilding a manor house for long term meaning.
    Regards to all,

    1. I have a few plans for things I intend doing when I FIRE. These are non-work, leisure, activities and although they could take up a lot of my time I don't know if that will hold through all seasons, or for year after year, so after a while I'll probably need to consider other activities. I also wouldn't rule out undertaking paid employment at some point in the future, although I think I'd like it to be part-time, and completeley different from what I do now.

  8. Congratulations, I FIREd before being mentally ready, and was a lost soul for months. Now back in work doing a 3 month contract, and suffering the same way as you with bosses comments. The whole experience has been a massive learning curve.
    3 weeks to go and 2nd time I know I need to put some structure and goals in my life
    to give me focus, similarly to you getting Fitter and learning Spanish.
    Nothing teaches you like experience. Dave

  9. So herefords off! back to cyprus or spain, what happened to malta?

    man this is entertaining!

    i can't wait til the funny work stories start to trickle in..

    please don't leave the cubicle without having a few quality bust-ups to report back to your readership..

  10. @RIT Even after your house purchase you should still have best part of a million so fingers cross it'll keep increasing despite finishing with your job. I know exactly what you mean with the comments part...

    Really happy for you but hope this doesn't mean you'll stop blogging! Maybe you could so what Jim from SHMD does and tell us about your experiences after FIRE?

  11. The sequence of returns issue is one reason I'm planning to only drawdown on dividends from my ETF and investment trust portfolio, together with maintaining a 12-24 month cash buffer.

    And on the binary FIRE decision I see temporary contracts as an alternative to fully retiring (much later) in binary fashion or the other alternative of part time paid work. Say from 3 to 6 months (max)of the year, perhaps in the grim months of winter or just whenever an opportunity arises and you fancy it.
    RIT and rest of you FIREees do you have skillsets that suit temp contract work?
    And looking forward to some form of literal or figurative FU to The Man when you finally hand in your notice.

  12. Congratulations RIT. The focus is almost always on money when it comes to retiring but it's very much a mental thing too. Look forward to how things progress into the summer!

  13. Hi Congratulations. I spent about three years calming down after my retirement, including a period when I did a few months full-time work. Madness. Now fully relaxed. My dear wife had a place in western Spain when I married her, which is where I spend less than 183 days per year (especially in the winter)in order to avoid Wealth tax. Have you looked at the Non-Habitual Tax Visa in Portugal. 10 years tax free. When my dearly beloved gives up work, I think Portugal will be the place to retire to for me. I lived in Malta for a year, great place but really humid in July /August, would be its an island! Regarding the comments on the bosses in corporate life, I wish I had read Rich Dad, Poor Dad(1979) a few years earlier than I did. Best of Luck

  14. Hi, we have a house 20 minutes from Gibraltar and 20 minutes to Estepona, the advantage of this part of the Costa del Sol is that it is cooler than Malaga/Marbella in the summer, there are quite a few English for social life while learning Spanish, and if you did decide to work a bit you may find opportunities in Gibraltar. My advice would be to rent for a year first. The other option is Portugal, especially good for Tax reasons I understand and if within relative easy access to Lisbon a vibrant capital city and good for employment should you change your mind over FIRE.

  15. Great post RIT, I also really liked your one in a similar vein on The Lemon Fool forum, very thought provoking. I'm still 'digging the tunnel' as we say at work and finding a lot of inspiration from you guys in the FIRE community.

  16. 'Since calling financial independence I’ve continued to grow my wealth and if I’m honest it’s now starting to feel a bit like I’m keeping score at best and it’s my precious at worst.'

    It seems you have reached escape velocity and have managed to catapult yourself into the space of freedom. I am working on the mental side as well but more on being comfortable coping with being in the prison camp for a significant more number of years.

  17. I achieved 2, well before I achieved 1. Still find it difficult to hear people need to 'work' to create meaning and purpose to what is a very short time on this planet.
    So many mountains, rivers, countries, challenges. Happy to have a little job as and when but my purpose will not be paid employment.
    Guess I am lucky because my 'no working' is a physically active DIY'er, gardener, surfer and footballer. Not much time to sit in an office anymore.