Saturday 10 March 2018

When the Stars Align

It’s not always sunny on The Med
The past few months have seen me pass through my annual work performance review, my annual salary review and a new HR initiative which seems to have been designed to suppress salaries (read suppress the salaries of the highest performers).  The results of all that for me were that despite my strong work ethic (first into the office, last out of the office and 60-70 hour work weeks) and strong results (but which fell short of very ambitious/impossible? objectives) I managed to receive the worst performance review since I entered the world of work which nicely dove tailed into an annual salary increase well below inflation.

This most definitely doesn’t fit into my Saving Hard by Earning More strategy, which in the past has resulted in healthy earnings increases.  I’m not sure what objective the company were trying to achieve but my interpretation is that it’s now time to move on.  Normally, that would have been a new job in a new company for more reward but this time around that’s not necessary as I now have another option – FIRE.  The stars really are aligning nicely.

RIT earnings improvement since saving hard by earning more
Click to enlarge, RIT earnings improvement since saving hard by earning more

On the topic of FIRE my One More Year, after a slow and frustrating start that now seems to be passing quickly and without a worry in the world.  Financial plans between now and a summer FIRE are also synchronising nicely:
  • collect one more bonus;
  • maximise my pension contributions to just below the tapered annual allowance for 2018/19;
  • which if my annualised returns continue as they have since starting on this journey should see me nicely just on the underside of the Pension Lifetime Allowance (LTA) by age 55; and
  • then use that bonus (plus some salary) to fill my and Mrs RIT’s 2018/19 ISA allowances of £20,000.
Then it’s time to depart these shores for sunnier climes.  The stars really are aligning nicely here as well with the only fly in the ointment being that we still have not finalised our location plans.  What we do know is it’s not going to be the Balearic Islands.  A winter visit enabled us to explore, research and talk to many people who call that part of the world home.  There were many Pro’s which include views to die for:
The beautiful Es Vedra, Ibiza
Click to enlarge, The beautiful Es Vedra, Ibiza

white sandy beaches to walk along and swim in:
The beautiful Es Cavallet Beach, Ibiza
Click to enlarge, The beautiful Es Cavallet Beach, Ibiza

and hidden coves to stumble upon.
Click to enlarge, Just one of several coves we stumbled on

Like anywhere there were also Negatives and for us the critical one was the life of the island.  Our intention is a place we can call home 365 days of the year and we just didn’t see that.  In winter the place just closes down and that includes a lot of very empty towns and villages.  Then in the summer many of the locals seem to jet off somewhere in the world and subsequently rent out their homes to tourists for obscene amounts of money.  The government seems to be trying to slow it down by requiring a touristic licence before you holiday rent your apartment/home but even with this it still seems extensive.  That is an environment we don’t want and one which doesn’t seem conducive to the type of community we’re looking for.

So it’s now down to the Costa del Sol, Spain or Paphos, Cyprus...


  1. What happened to Malta again?

    1. We still have a soft spot for Malta and maybe one day we might be lucky enough to call it home. We love the history and architecture. We could spend years walking through the historic streets/paths of the historic towns/countryside.

      For our next step though Malta fell out of the running a few years ago now. Compared to either Spain or Cyprus we believe our standard of living would be considerably worse. House prices are one thing. Since 2007 they are up a long way where Cyprus and Spain aren't. We now would likely only get a modest House of Character which would have very limited outside space. We also definitely wouldn't get sea views unless we opted for a small apartment.

      Another concern is 'island fever'. It's a small place even when compared to Cyprus.

      It's also a pretty crowded place and having lived in expensive and crowded London for many years we've had enough of 'bijou'.

      So Malta really fell out at a macro level. With Spain and Cyprus we're now at a detailed level of analysis with Cyprus currently a nose in front. A bit more time to think about what's right though...

    2. Hi, property prices have definitely skyrocketed in Malta. An apartment with sea views would cost around EUR200k in the North, but you could get it at a lower price in the South part of the island.
      Cyprus does sound good though ;) good luck

  2. Glad it is all coming together nicely RIT.

    There is definitely a bit of Brexit opportunism working its way through the city. With passporting rights likely to be lost and a sizeable number of jobs moving across the channel, many sites are expecting the market to soon be flooded with talented folks looking for work.

    Consequently there is pressure to exploit the opportunity to reduce their cost base, chasing off expensive incumbents in anticipation of being able to find almost as talented newcomers willing to do the job from a much lower starting salary. The same pattern occurred after the dotcom bust and again after 2008, is part of the game.

    So it may be that you’re more outspoken, less politick, in the exit lounge, or just a bigger pain in their backside than previously... or it may have nothing to do with you personally at all, aside from the fact you’re expensive.

    Food for thought.

    1. Interesting thoughts Slow Dad. I know that I definitely now speak more freely (but am still professional) and I also know that I am far less stressed with both having an impact on how I respond. Changes in outward behaviour because of this weren't raised as an issue though - in fact the 'improvement opportunities' highlighted were pretty trivial.

  3. With a poor performance review and FIRE around the corner, can you engineer a redundancy package rather than leaving empty handed? Financial Samurai has some good ideas on that.

    What QROPS pension transfer solution are you looking at to reduce tax when you move?

    1. I wouldn't say it was a poor review. A better term is probably an 'average' review however I expect a 'top 10%' review to go with 'top 10%' performance.

      I would never 'Engineer My Layoff' as per Financial Samurai's book. I am just not built that way. They will get my best efforts until my very last day of work.

      I'm not looking to do a QROPS. If it's Spain I'll just suck it up and pay the circa 20% tax at age 55. If it's Cyprus they have a very favourable situation where it can either be taxed as income or be taxed at 5% after a small tax free amount.

    2. If the redundancy engineering doesn't appeal, you could play the 'resignation-if-no-payrise-to-x' card (rather than just 'resignation') as a shot to nothing. If the result was positive enough then it may be worth a bit longer in the job, if not, then nothing lost?

  4. Funny you should discuss your performance review. I had the exact same experience last year. Worked my ass off (probably the most productive year I have ever had) but yet my bonus was cut in half. Whole thing left me so disgusted. I would have walked out, but for the fact I am still just under half way towards my goal of financial independence.

    1. Did the situation recover this year or is it still halved?

  5. Bonuses are just that though, a bonus, not something to be counted or relied upon and not something determined just by an individuals in/outputs, there are plenty of factors that determine this for an employer.

    1. I agree with this but...

      When your employer has a record year on the top line and the bottom line AND when a significant portion of that is the result of your (and your teams) outputs in both that year and previous years AND nothing significant is called out on your behaviours then it's a little difficult to stomach.

      I do know the 'main' issue highlighted on the behaviours side and in most companies it would be considered a positive so I'm also struggling to see how that could have impacted me considerably.

  6. I’d see this as a negative for Cyprus, but I had School age children:

    1. If that's all we have to worry about then I think we're good to go IMHO. I read much worse in the UK however like in Cyprus it's 'reported' and I don't know how 'real' it all is.

      I can name a real UK school issue that I am aware of though. A friend of mine didn't have a school to take their child to for some time because of over subscription. Give me anti-atheist teaching in religious education classes any day of the week compared to that.

  7. Maybe the company has picked up your more 'relaxed' approach to work since you hit mathematical FI? I thought you'd said on this blog that you've not put in quite the same level of relentless commitment as previously?

    Regarding your destination, could it be the classic INTJ weakness coming into play here where you don't want to leap until everything is 100% planned and certain? (which of course it will never be). Wouldn't it be better to go and rent somewhere for 6-12 months and see how you find it? It's surely quite hard at your age, and when you've never been "retired" before, to be sure where you want be living for the rest of your life without trying the lifestyle out first.

  8. I've had the same experience - one year of hard working and a rubbish review, one year of hardly working and a good review. Even worse, the company tried to make it as scientific as possible in determining your bonus/review but it never involved discussing with me - always more senior people in the company and coming to a consensus on that.
    New company - everyone gets the same bonus - much easier (that's for all of our offices in Europe which is around 200-300 people). Less backstabbing and more cooperation.

    My plan in the previous company sadly was the wait for the knife to fall and get the redundancy - that did the trick with a year's salary, an extra year's Final Salary pension and even a pro-rata bonus for the time I'd be out. Overall, good but not worth working in hell all those years. :)

  9. Hi RIT

    Sorry to hear that you didn't get the performance review you expected or deserved - it is just as well that FIRE is just round the corner for you. This may have been asked (and answered by you) before but do you think they'd try to persuade you to stay when you hand your notice in?

    Looking forward to seeing which of those locations you choose to settle down in.

  10. Fantastic; just the right motivation for drawing a line under your 'one more year' period. Strangely enough, I see myself slipping into the second OMY, so not sure what's gone wrong there!

  11. Dear RIT. Our situations and background seem very similar after keeping up with your blog more recently. It will be interesting to see when you pull the early retirement trigger with your employer. While I’m at a similar stage to you I’m not quite as organised with what I want to do next and am apprehensive of losing the social aspect to work. Look forward to how your next few months plan out.

  12. Dear RIT,

    Have you ever thought about living in Southeast Asian countries such as Thailand for a year or two to enjoy the beach and the benefits brought about by the low living costs there? This can save you a fortune and allow better re-investment in your current portfolio. Just some food for thought.


  13. That's so disappointing that you didn't get the review and bonus you were expecting, it sucks. But I agree it does sound like time to be making changes, and actually enjoying the funds you've built up.

    I'd echo what the others have said, you'll never find the perfect place to move to. It seems like you are getting into analysis paralysis, and wanting to analyse each location to death, rather than putting things in storage, packing a bag and trying them out before committing to buying. With the brexit malarly, now is the time to move.

    Here's a call to action: How long is your notice period and when are you handing it in?

  14. Hi RIT, this post strongly resonated with me and the wife. The "Annual Review" process was one of the big reasons I left the world of employment. Funnily enough, I always got "good" reviews but rarely "exceptional" ones. But since I've quit I've been offered jobs by a number of my old bosses at various firms (I've not taken up any of them as I don't want to be an employee ever again).

    I think that's because, like you, I get things done. I just can't be dealing with the political nonsense of these review processes. I suspect (but please correct my ignorance) that your review this year just feels worse because your mindset has changed - you see very clearly through their nonsense and aren't even trying to "play the game".

    I've seen above that you aren't keen on the "engineer your own layoff" thing by Financial Samurai. That is also how I felt. For one, that kinda thing doesn't really work in the UK where employee protections are much stronger. It's also for the same reasons as you, I'm a professional and take pride in everything I do. I worked hard up till my last day.

    One thing that came off the back of that, is that I still do some freelance work for my old team. They didn't want me to go. And I still get to keep my "hand in" whilst enjoying the freedom of doing what I want. Maybe when it comes to pulling the trigger this is something you might want to consider?

  15. Frustrating, isn't it, RIT?

    I've had good or exceptional reviews - but office politics and being a remote worker plays a part in limiting progress beyond middle management. I don't have the visibility or contact time with some senior peeps.

    Now, just as it looks like they may be creating a more senior position in my area - I've decided to jump fields, teams and go part-time. Being FI, like you, has made me less willing to play the game.

  16. Engineering your exit doesn't have to entail lowering your standard of work so your employer pays you to leave.

    If there are cuts in the pipeline, a few words with key people could bump your name to the top of the list and save others from redundancy.

    You could negotiate remote, part time work for a period of time.

    There are many options available.

    Tax rules in other EU countries varies. I was reading a little about Spanish Portfolio Bonds. From what I read, you have to pay tax on growth of investments outside their approved schemes.

  17. RIT,
    I think you have made a good decision re the Balearics, as I suggested earlier. Personally I could only rent not buy on Cyprus, it's had troubles in the past that could resurface. You could have to walk away from your 300k home. Costa Del Sol has potential but if you want year round consistency it's not too late to consider the Canary Islands.

  18. Sounds like the stars are aligning and destiny is giving you a nudge in the direction of the Med :)
    As a proud Mediterranean girl I second your choice of retirement destination. The sun might not always shine in the Med, but it does so (very) often ;) the food is good and life is slower. Great place to unwind and enjoy the benefits of FI. Good luck ��

  19. Hi RIT - a very late post - not sure if you are releasing another one this w-e.

    As you know - I am not averse to being a bit confrontational. You probably don't want to hear this - and/or disagree profoundly with the suggestion . May I put it to you that you have actually already moved on from your current work - and whether you like it or not - I think it is highly likely that this has affected what people at your work are perceiving about you . Not that your actual productivity , effectiveness , skills and decision making may have been affected - but your demeanour , comments you make , things ( like comments ) you pick up on and which you ignore , asking after your colleagues well being etc - quips/puns / jokes etc etc ( maybe you don't go in for those )

    The last few years at my work we introduced 360" appraisals - so everyone was notified that so and so's appraisal was approaching and asking as many as possible to submit their inputs . This type of appraisal may pick up a trend or a theme from different work personnel about something that has subtely changed - something that you might well not be aware of - and may even confidently deny that is was true . It would be hardly surprising if you were not giving off certain vibes about the imminent changes in your life.

    I was also thinking about your overrall financial position . With you not being a house owner the proportion of your wealth that is in equities ( either directly or via your pension )or in cash or cash equivalents ( eg your ILSC's ) is very high .

    In your position I might try to work on a "stress test " of your financial situation- eg allowing for a decline of 10% in equity prices and a further depreciation of the £ ( which is likely as /when Brexit goes ahead ) Obviously a £ depreciation will effect UK equities with UK sourced earnings but will benefit overseas holdings or those UK companies with mainly foreign earnings. I think you have quite a high UK exposure but maybe a lot of that is in companies with high overseas earnings.

    However your cash and cash equivalents are going to suffer the full effect of a sterling depreciation as and when you convert to euro's - or if your evetual pension payments are in sterling they will be worth that much less in euro's.

    I know I could work out some of this from all the data you have provided in the past - but I am sure you could achieve such a stress test more effecively and reliably than I could.

    What do you think about the stress test ides ? Is it a question you want to know the answer to ? Clearly - if you don't want to know the answer - or knowing the answer is not going to make any real difference - then don't bother asking the Q !!

    Best of luck stringvest

  20. Hi RIT,
    I can understand that frustration - at least, unlike others, you are in the position of being able to walk away if you want and not have to suck it up!
    Good luck!

  21. Hi RIT _ Love your idea of escaping overseas for retirement. My only question is how you have factored your kids into this? In terms of them having a high standard of schooling and the same life opportunities which the UK (not withstanding its downsides) would offer them over some of the places you have looked at? Thanks