Kipling's Journal

Where are you and where are you going?
Jin+Guice
Posts: 688
Joined: Sat Jun 30, 2018 8:15 am

Re: Kipling's Journal

Post by Jin+Guice »

Man, you have so much saved! Do you have a number in mind? Do you know what you want to do when you retire?

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

@ Jin+Guice A fair amount saved, but most of it is in pension funds so inaccessible until I am 58 (12 years from now). I have about 3 years bare-bones expenses in available funds. I need to get that up to 10 before pulling the plug. There is also the possibility of a house move on the horizon in a couple of years, which would require a large stash of cash to cope with. So, head down and saving is the focus of the next couple of years. When your top marginal tax rate is above 60%, it feels like it takes a lot of effort to save! I know that I am fortunate to be in the position of earning so much money. I know that there are reasons why the UK has a progressive tax system. But I was surprised by how much I was upset, when I had worked my socks off one year and got a £10k bonus, that that turned into £3.8k net. An interesting insight into my own psychology.

JollyScot
Posts: 92
Joined: Thu Feb 26, 2015 3:44 am

Re: Kipling's Journal

Post by JollyScot »

I know what you mean about the taxes in the UK. It seems there is a reasonably good set of systems in place if you keep what you earn below the £50,000 mark. Once you start getting above that then a pretty big portion goes away. Now that I am over the not needing to work mark taxes are sufficiently high that I would be unlikely to consider going full time or working. It is just not worth sacrificing the time I have for the portion I would take home.

My share of annual expenses £7.5k
Full time expected tax bill £80k-£90k (if labour win next election £120k-£140k depending on how my investments do :shock: )

So I would be spending 10x-15x my annual expenses on funding the system that I really don't have much time for. As such they will end up with whatever I need to pay on my investment returns, which will probably come at the lower income brackets.

The UK has some serious brakes in place if you want to build wealth by exchanging your time only. Pensions are one of the quick ones which I see you have taken advantage of well. The other (for now) is to be a business owner or investor.

Have you not been hit by that £500k cap that they introduced though.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

Assets and liabilities check 02/01/20

Assets

Property - £387,000
Saleable collections - £15,000

Pension 1 - £27,000
Pension 2 - £513,000
Pension 3 - £83,000
Pension 4 - £91,000

ISAs - £37,000
NS&I - £27,000
Cash at bank - £4,000
Loans out- £12,000
Tax refund due - £4,000 -edit to include-

Gross - £1,200,000

Liabilities

Credit card - £5,000

Net - £1,195,000

I spent £7,943 in December. £4,462 of that was on wine for future drinking, an extreme amount even for me but a lot of low-ball auction bids I had put in in advance came in good and so at least that is a project that is now largely done. £930 was a prepayment for a holiday next summer (10% cheaper if booked before year end). £558 on flat expenses including a new iron. £410 for a number of meals out (mainly pleasurable). £310 was for Christmas and birthday presents. The other £1,273 went on food costs at home (the new hob wasn't installed until shortly before Christmas); mandatory travel, and miscellaneous expenses.

I bought some more premium bonds and the stock markets ticked up so despite this level of spending I ended the month richer. Nevertheless I very much need to reflect and refocus on what is important to me. So, a separate post will follow on my efforts to meet my ERE goals for the year.
Last edited by Kipling on Tue Jan 14, 2020 4:06 am, edited 3 times in total.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

@JollyScot- the UK pensions lifetime allowance is currently £1,055,000 and is sort-of-index linked and so I am unlikely ever to trouble that. The annual pensions investment cap is £50,000 falling to £10,000 for high earners, but if you have not fully utilised your allowances in the three previous tax years, you can count back and 'top up' to the extent you have room left to do so. Having done all that I can properly to mitigate my tax liabilities by maximising SIPPs and ISA for the year I view the very large amounts of tax that I pay (circa 15 JAFILs this year) as a price that I just have to pay; the rules are the rules and as the recipient of a high income I am in the category of people about whom the populace, politicians, and the civil service are all largely unsympathetic. I can contribute, leave the country, or simply stop. I entirely respect the people who decide to leave the country. What I hope to do is stop but, to stop, first I need to stop spending it all...

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

2019 in review, and plans for 2020

Net worth - a good year (against previous year)

Assets

Property - £387,000 (390,000)
Saleable collections - £15,000 (13,000)
Pension 1 - £27,000 (13,000)
Pension 2 - £513,000 (447,000)
Pension 3 - £83,000 (84,000)
Pension 4 - £91,000 (71,000)
ISAs - £37,000 (16,000)
NS&I - £27,000 (25,000)
Cash at bank - £4,000 (0)
Loans out- £12,000 (12,000)
Tax refund due - £4,000 (0)

Gross - £1,200,000 (1,071,000)

Liabilities

Credit card - £5,000 (6,000)

Net - £1,195,000 (1,065,000)

Overall +130,000 of which more than half was capital gains and dividends on shares held in tax free accounts- a good year on the stock market now has more impact on me than saving even at high income levels

Spending - a very bad year (against budget)

• Wine 27k (8.5k) - fail - I followed a vinous interest down a rabbit hole. This was just too much.
• Holidays 12k (8k) - fail - over time I have become more philosophical about this spending, as it brought some good memories
• Food 7k (6k) - pass - this was close enough, and some small changes should enable me to reduce it a little - I spent almost 1.5k on cheese [!]
• Flat 7k (4.5k) - pass - most of this is service charge and council tax, and the service charge was up, so it's not like I did anything wrong
• Clothes 3.5 k (3.5k) - pass - maintenance of a professional wardrobe is expensive
• Club, societies, collections 4k (3k) - pass - I took on some responsibilities in relation to one of them which comes with some costs
• Tubes, trains, taxis 2.5k (3k) - pass - this is just a cost of being here in London
• Personal care 2.5k (3k) - fail - didn't have enough sessions with my personal trainer, so the underspend is not a win
• Meals and drinks out 4.5k (3k) - fail - need to just say no
• New computer etc. 0.5k (2k) - fail - really need to buy new laptop, it's visibly failing
• Misc. 2k (1.5k) - pass - I bought an antique table for more money than I should have spent but I use it every day and I like it so...

Overall 72.5k (46k)

Comparison with previous years

2013 £45,979 - lowest month's expenditure was £1,891 (October)
2014 £37,044 - lowest month's expenditure was £1,092 (February)
2015 £39,954 - lowest month's expenditure was £1,810 (February)
2016 £101,286 - lowest month's expenditure was £2,005 (February) - I refurbed my flat in this year and excluding that expenditure was about £38k
2017 £53,677 - lowest month's expenditure was £2,625 (September)
2018 £50,637 - lowest month's expenditure was £2,813 (December)
2019 £72,898 - lowest month's expenditure was £3,865 (October)

Ouch, ouch, ouch. The lifestyle inflation is real, and needs to go into reverse. 2020 budget needs to be realistic, but also lower than this year.

• Wine 8k
• Holidays 10k - will include a couple of weeks in the US
• Food 6k
• Flat 7k
• Clothes 6k - some expensive professional wardrobe purchases upcoming
• Club, societies, collections 4k
• Tubes, trains, taxis 2.5k
• Personal care 3k
• Meals and drinks out 3k
• New computer etc. 2k
• Misc. 1.5k

Total 53k

If I can come in lower than in 2017, I will award myself a pass. And, try to do better the year after.

Health and happiness and environment - pass

I ended the past year only 2 pounds lighter than I started but with much better aerobic fitness. [Thank you to the great Michael Johnson, one of the voice options on the NHS 'Couch to 5k' app; somehow, when MJ tells me that I am going to run for a set period of time, and that I can run for that set period of time, I believe him.] Target for this year - to drop 10 pounds while maintaining this new higher level of aerobic fitness. I am exercising 5-6 days a week consistently (over the past two months) now, putting this first and getting it done in the mornings. I have booked into a week-long residential boot camp in the spring to give me a further boost.

My parents are in their eighties and both are fairly alert but have some health problems. In any one year typically one of them will have an operation that incapacitates them for a period of time (weeks). I try to be a supportive child without being asked, and to provide wise counsel when I am asked. I was throughout the past year in a stable personal relationship, from which I derive pleasure, and which continues. My previous girlfriend, who I have high regard for and with whom I still spend time socially, is also in a very happy relationship with her new partner which is great. I have several, mainly separate, small groups of friends with whom I enjoy spending time centred around my hobbies. Target for this year- to continue the same.

I am not very happy at work. The work itself is fulfilling. I have had a couple of big wins in cases I have been working on, where the outcomes meaningfully and positively affect large (in one case very large) numbers of people. I am enjoying watching a couple of proteges in the firm develop and am giving them chances to shine which they are taking. But I do not like the direction my firm is going in, and I am having difficulties with my immediate management including, but not limited to, getting screwed on pay, and so since I cannot change, within the firm, either the direction or the management...

Summary

I asked myself the other day what it was I did want. In truth all I want to do is go and live in a cottage in the country with cats and books and good food and wine and occasional social visits from friends. I must remember that the purpose of work is to allow me to achieve that. Spending to alleviate my professional unhappiness retards progress towards the goal.
Last edited by Kipling on Fri May 01, 2020 5:41 am, edited 1 time in total.

ember
Posts: 15
Joined: Sat Oct 05, 2019 5:41 am
Location: London, England

Re: Kipling's Journal

Post by ember »

Hi Kipling!

Your vision of the cottage in the country with cats, books, food, wine etc sounds wonderful. Have you considered getting a hammock?

It seems to me that the only significant difference between this year's budget and last year's actual figures is the wine budget, so nail that down and you'll be well on your way. I imagine you have a fair bit of wine accumulated now?

How much do you think you will need to live on when you decide to retire? You're almost at £1.2m already - is it possible that you're almost there? ;)

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Bankai
Posts: 816
Joined: Fri Jul 25, 2014 5:28 am

Re: Kipling's Journal

Post by Bankai »

Your financial situation is really strong.

Looking at your expenses, they are likely to go down quite dramatically once you move to the cottage. You'll have collected all the wine you ever need. Travel is likely to go down since you won't need it as an escape from work. Clothes will go down dramatically. Commuting will be gone, although might be replaced by a car. You likely won't have easy access to PT so you might get a home gym instead (one-off expense). Eating out will be pretty much gone as well. Looking at what's remaining, you might go down to £25k or less without even trying - meaning you already have 50x your future annual expenses (minus cash to buy a cottage). Assuming everything into FTSE100, dividend yield alone would be £50k+ pa (at 4%+ current yield) on your 1.2m.

Are you sure you can't retire already? Are you targetting any specific number or date?

Nomad
Posts: 267
Joined: Wed May 16, 2018 5:23 pm
Location: UK

Re: Kipling's Journal

Post by Nomad »

Looking at your numbers, you have a ton of money but your spending actually went up.
So last year you were spending 4.3% of your net worth and this year it was 6% of your increased net worth.

In your field is it possible to do a career break / hiatus / sabbatical? How about renting a cottage or trying a few sequentially over the summer?

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

@ ember - a hammock also needs to go in the budget...

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

@bankai - it partly depends on how much the cottage costs. Depending on where it is, that could be anything from 300-700k. The other challenge I have is that most of my money is locked away until I am 58 (pension) so I need to build up non-pension assets to sustain me over the interim. That's emphatically the focus for 2020-2022.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

@nomad- I am acutely aware that the figures are moving the wrong way. Sabbatical/hiatus/career break not, alas, an option given what I do, although were I to move firms I might end up on gardening leave for a few months. If so, I will be in a cottage, within days, for a trial. I presume I can rent a cat too...

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

Assets and liabilities check 02/02/20

Assets

Property - £387,000
Saleable collections - £15,000

Pension 1 - £27,000
Pension 2 - £503,000
Pension 3 - £83,000
Pension 4 - £91,000

ISAs - £37,000
NS&I - £27,000
Cash at bank - £5,000
Loans out- £12,000
Tax refund due - £4,000

Gross - £1,191,000

Liabilities

Credit card - £2,000

Net - £1,189,000

I spent £7,926 in January. £2,330 of expenditure was on holidays, including £1,640 on flights for my summer trip to the US (much cheaper to book now) and £240 for flights for the holiday I am on now. Alas I worked too late (until almost 2am) the night before I was supposed to fly out, overslept and missed my flight, so had to spend an additional £283 for a new flight out... I was upset about this at the time but have now let it go. £1,514 of expenditure was on wine for future drinking. £1,432 was on annual subs. £767 on food. £604 on flat expenses, mainly service charges and cleaning. £311 on personal care, mainly some allergy testing that I've been meaning to get done for a while. £310 on clothes, mainly two new pairs of running shoes.

January is usually my most expensive month of the year because of annual expenses payable in January. In January last year I actually spent £3,382 more; so the expenditure reduction programme is kind-of-working. It ain't pretty, but it's better. So I award myself a pass.

I have for a number of years kept a record of how many steps I do a day using a step counter, and have been trying to raise my game on this. In 2019 I averaged 12,202 a day for the year (January 2019 average 11,971). In 2018 I averaged 9,676 a day for the year (January 2018 average 5,210). In this January I have kept up the exercise programme I started in November, exercising 26 days out of 31 in January and feel stronger and healthier and happier for it. I averaged 14,776 steps a day in January 2020. I'm really pleased about this.

My father had a fall at home and broke his hip. He is recovering only very slowly and is likely to be in a hospital or alternative care facility for several more weeks. While he has not directly said so (he doesn't discuss emotion directly) I think his greatest fear is that his capacity for independent living in his own home may be at an end. I am sorry about this, but even more sorry about how distressed he is about it.

The stock markets went up a lot, then went down even more, so I ended the month £6,000 poorer. Such is life. While sitting on a balcony in the sunshine I'm not going to worry about that too much.
Last edited by Kipling on Fri May 01, 2020 5:41 am, edited 1 time in total.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

Assets and liabilities check 02/03/20

Assets

Property - £411,000
Saleable collections - £15,000

Pension 1 - £24,000
Pension 2 - £483,000
Pension 3 - £83,000
Pension 4 - £91,000

ISAs - £36,000
NS&I - £27,000
Cash at bank - £10,000
Loans out- £12,000
Tax refund due - £4,000

Gross - £1,196,000

Liabilities

Credit card - £6,000

Net - £1,190,000

I spent £7,458 in February. £1,381 of expenditure was on my winter sun holiday, food and hotel. The costs of the moderately spartan health and fitness camp I am going on later this month I have included in personal care (which totalled £1,639). £197 on tubes, trains and taxis in addition to the holiday spending, trips to see my father in hospital mainly. Just £378 on food, but there are a lot of meals out in the holiday spending. £3,249 on wine for future drinking. I need to get a grip on my weakness for wine auctions, I am winning way too many of the absentee bids I leave, ideally I should win about 1 in 6, this month is was more like 1 in 2; which suggests I am bidding rather too high. £171 on new waterproofs and other kit for boot camp, all from discount stores. £157 on the flat. £145 on a couple of pleasant lunches out with old friends. I much prefer lunch out to dinner for social events. Especially if one is going back to work, no wine; and the restaurants are mainly quieter and so I can hear.

Because of being on holiday and walking lots (typically I walk for 4-5 hours a day when I am on my break in the sun) and keeping up the exercise programme both there and when I got back (exercise sessions on 21 days of 29), I averaged 17,620 steps a day in February 2020, my #3 highest ever monthly average (#1 - a month that included a 300 mile cross-country walk; #2 - when I was on gardening leave). Lost another two pounds over the month even having dived headlong into work when I got back with attendant ill effects. I have decided not to drink alcohol any more except when I am entertaining, which should shave the best part of another 1000 calories a week off so an extra pound a month. As noted above I am off to a boot camp, later in the month, for a week, and should lose a few more pounds there. Stretch goal is to be at or under 200 lbs by month end, which is the point at which I start looking fairly fit (waist less than half height etc.).

My father is now home from hospital. He is very frail and needs a good deal of daily care, much more than the family network around him can provide. Luckily the NHS is providing carers twice a day for now to assist with washing and dressing. But even so it is proving very difficult and distressing both for him and those around him.

Work has been up and down. A good big win in court which will have widespread positive impacts; and likely resolves a longstanding dispute; and also likely leads to more work from the same satisfied customer. But, some poor internal decision making from the firm about other matters is driving me away.

The stock markets went down a fair bit but have started to recover. I'm £26,000 down but a bump in my home value evens that out. I have allowed for the bump in home value because the first fully-refurbished (i.e. like mine) flat in my block has just gone on the market. Allowing for that flat's smaller size, and discounting for enthusiastic pricing, mine is still worth a fair bit more per square foot than I was reckoning.
Last edited by Kipling on Fri May 01, 2020 5:40 am, edited 1 time in total.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

Assets and liabilities check 01/04/20

Assets

Property - £369,000
Saleable collections - £15,000

Pension 1 - £22,000
Pension 2 - £412,000
Pension 3 - £83,000
Pension 4 - £91,000

ISAs - £35,000
NS&I - £30,000
Cash at bank - £10,000
Loans out - £12,000
Tax refund due - £4,000

Gross - £1,083,000

Liabilities

Credit cards - £4,000

Net - £1,079,000

I spent £3,664 in March, a welcome return to more sensible spending. I had 9 days where I spent no money at all, a recent-years record. I spent £539 on food (lots of high quality protein and fresh veg), £95 on travel (I'm walking everywhere), £245 on multiple shoe and boot repairs (because I'm walking everywhere…), and £2,338 on wine (£1,434 of that in the last week of the month- a whole bunch of bargain-basement auction bids I had put in came good so I've picked up a fair amount of quite serious wine at half retail). Flat expenses were £283. Personal care was £150 and I spent just £14 on drinks out and miscellaneous. I spent a week at a boot camp but the expenses of that were completely pre-paid including travel.

I averaged 16,494 steps a day in March, my #4 highest ever monthly average. I lost a good chunk of weight at boot camp and have managed to keep it off since, finishing the month at 202 pounds. I look and feel in much better shape and am back in trousers with a slimmer waist. My aim for April is to get down to 198 pounds.

The weather has cleared up after a long grey winter leading me to want to spend more time outside. Every day I make a shopping trip for essentials and then separately go out to exercise – a long walk, a 7.5k run (I have 'graduated' from the NHS 'Couch to 5k' app), or body weight exercises. Central London is very pleasant at the moment; much less traffic than usual, and no tourists at all, so I am not fighting my way along the pavements. The skies are very clear and the fewer people about means I can appreciate the architecture and the vistas in a way one rarely can in usual circumstances. Yesterday I watched a wonderful sunset from the top of Primrose Hill, without the usual crowd of other people capturing the moment on social media.

I am very busy with work – from home – which in truth is much more efficient than being in an open plan office. There is a heavy component of sitting and thinking in my job which needs to be done in isolation and quiet. So I am getting a lot done... the stars have aligned on a number of new litigation projects and I now have a fully-funded case load which will keep me going for the next year. A good position to be in right now.

The stock markets, especially in the UK, went down substantially, but I was hit rather less. Partly because I am not heavily invested in the FTSE indices (pensions 1&2 are 100% stocks, mainly trackers, but 80% tilted away from UK) but also because the individual stocks I do own are in long term demographic bets like healthcare (which has held up) and diversified entities like Berkshire Hathaway. Compared to where I was on 1 January I'm down 20%. Home value as expressed by recent sale prices also dropped 10%. But it all just is what it is.

I'm still a millionaire by my reckoning. I'm healthy. I am counting my blessings.

Kipling
Posts: 60
Joined: Fri Mar 17, 2017 11:10 am
Location: London

Re: Kipling's Journal

Post by Kipling »

Assets and liabilities check 01/05/20

Assets

Property - £369,000
Saleable collections - £15,000

Pension 1 - £23,000
Pension 2 - £444,000
Pension 3 - £83,000
Pension 4 - £91,000

ISAs - £37,000
NS&I - £31,000
Cash at bank - £10,000
Loans out - £12,000
Tax refund due - £4,000

Gross - £1,119,000

Liabilities

Credit cards - £3,000

Net - £1,116,000

I spent £3,749 in April, still extravagant living but not as extreme as January or February. Wine purchases were £1,650 (shifting towards stuff I will drink this year rather than in the future, as 90% of my wine is stored elsewhere and currently inaccessible). Flat expenses were £943 (including a new wine fridge to put this wine in - my flat's temperature varies too much for me to be comfortable having so much wine on hand during the warm part of the year). I spent £687 on food (lots of protein and fresh veg), £160 on hobbies, £46 on personal care and £45 on miscellaneous items. Nothing on travel. I took one taxi and one uber the whole month, both essential work-related travel which was expensed. Nothing on clothes or meals out (although the bill for one I had last month came through).

I saved £5,000 into my pension fund and £1,000 to NS&I. In truth I consider that an average 65% savings rate is the minimum I should be achieving given how fortunate I am in my income. The stock markets went up substantially, so I had one of my best ever months for increase in net worth.

April weather in London is usually pretty foul- occasional nice days interspersed with long periods of cold and rain. This year wasn't like that. Instead it was the most lovely month of fine clear sunny days - easily the finest spring I can remember. I exercised 29 days out of 30, introducing some longer runs to go with the long walks and the body weight exercises. I have even dusted off my 25lb kettle bell.

Because the weather was so good and because I was traveling almost entirely by shank's pony I averaged 18,839 steps a day in April, my #3 highest ever monthly average and the highest I have ever achieved while working the whole month. I have managed to keep off the weight I lost at boot camp last month, finishing the month at 200 pounds having hovered at 199 most of the last week. I feel in pretty good shape now. My restated aim for May is to get down to 196 pounds.

I have had one of the busier months of my professional career and have started to see the bandwidth limits of working from home. Quite a lot of the problems that I solve professionally have an iterative collaborative phase in developing the solution (after you have done the fact finding and basic legal analysis). This phase is done very efficiently in an office environment - you walk round the building to find a colleague who you think might be able to add insight but who doesn't currently look too harassed, drop a summary in front of them and say, "Can I run something by you?" This is proving extremely difficult to do in a time-efficient manner while working fully remotely. You have to select the possibly suitable people to assist entirely from memory i.e. unprompted by seeing them, check whether they are working today, reach out to see who has availability, send the document across, set up a call and then discuss the matter. It, literally, takes five times as long. It's the first time I've thought about whether something like Slack might be necessary.

Ah well. We will adapt.

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