The Great Escape
Posted: Sat Apr 16, 2016 5:42 am
I've been a regular visitor to the ERE boards for the past couple of years. Now I feel compelled to start a journal, principally for my own sanity. I've definitely made some wrong turns over the years and have zero sage advice to give to the financially smart and savvy people on here!
I’m in my late thirties. My ambition is to pull the plug on the rat race in approx. two years, around when I hit 40. This is primarily due to the increasingly toxic nature of my job, and my desire to spend more time with my family (I've young children). This journal will primarily be an attempt to stiffen my resolve for when quit time comes around!
My situation is a bit different to the norm perhaps. I've kept things deliberately vague, but the important financial and personal info is included below.
Income:
I graduated in June 2000 and have been working ever since, aside from a brief stint back at uni to complete a Masters (which I don’t regret, despite the c. EUR 15,000 tuition fees + living costs for one-year!).
For approx. 8 years I have been working abroad in developing countries (what used to be called in pre-politically correct days the "3rd World"). I'm a salaried employee. Following several pay rises I’m now earning EUR 100k p.a. net after tax on an expat package where my accommodation is also paid for. There is a performance bonus element to my pay on top of the EUR 100k, which can be up to 20% of net salary. But for the last couple of years, it’s been like getting blood from a stone, with bonuses paid up to 18 months late by the firm (unfortunately I joke not…).
In my industry (I'm not a Wall Street investment banker or silicon valley software engineer) I'm approaching the ceiling of what I could reasonably expect to earn. However, it's not such a sweet deal when I consider the stress, travel and number of hours I do. Evening & weekend working, while travelling up to 50% of my time away from the family is all unfortunately 'normal' these days. I also have a lot of autonomy and responsibility. I'm left to my own devices by head office to run the business in my region, hire and fire, deal with clients, etc. The result is I can never totally switch off, even on holidays. I am simultaneously a 'technician' (involved in client delivery) and a 'manager' (dealing with HR, finance, marketing, support functions, etc.), a combination I often find exhausting… I feel sometimes that I have all the stress of being a small business owner, but with few of the benefits as I am still an employee, and all the net profits from the business flow to the firm. Unsurprisingly, I have no time for side-income opportunities at present. There are barely any hours left once work, sleep, family-time and a bare minimum of sports for health are discounted.
The good news on the job front is that, given that head office has essentially outsourced (read: disowned) all responsibility to me, many clients think of me rather than the firm when they need services, which bodes well for future consulting opportunities.
Expenses:
In a word, low.
I do not track the household expenses, as this is really my wife’s domain. However, if I look back to my contributions to the joint household account over the past 2 years, I think EUR 10-12k per annum for my half easily covers it. This is because our children are still small and – for the moment – inexpensive, while my employer currently covers housing.
We do not record all our expenses, but my wife – while heartily sceptical of my early retirement dreams – is naturally frugal, coming predominantly from an anti-consumerist / environmental as opposed to a ‘retire-early’ perspective.
On my side I simply refuse to buy new stuff unless 110% necessary. Unfortunately I have to have a degree of respectability when it comes to my work ‘uniform’ (suits and ties). But aside from this my other clothes are all old and worn. I detest non-food shopping, love to cook, and could not give a cr*p about the latest must-have car / gadget / toy. My one extravagance in the past has been travel, but this too has been curbed in the last couple of years, through a combination of work, kids and discovery of ERE / MMM. Also, the one silver lining of so much work-related travel is that my per diem more than covers expenses when away on business.
N.B. I do not include here capital expenditure on improvements to our owned house (see “fixed assets” below).
Liquid Assets:
Here’s where things get embarrassing…
- EUR 145k cash: yep that's not a typo, just money sitting in a low interest savings account, not working…
- EUR 90k investments: in a high fee investment fund I took up with my bank. It's a conservative stocks and bonds tracker with anaemic growth - due in large part to the 1.2% p.a. annual charge and 1.2% p.a. 'establishment fee' (over the first 5 years of the investment's life) the bank takes. Unfortunately I took out this investment exactly a year before I became (*slightly*) more clued up on personal finance and the evils of high fees. I need to wait another 2 years before I can cash this investment, if I want to avoid further early withdrawal penalties!
- c. EUR 9k in a couple of current accounts, which equates to my share of our household spending for the next 9 months or so, so I'm not really counting this.
Fixed Assets:
I think I read on one journal that 'sentimentality can be costly'. That's definitely true in the case of our house. My wife and I bought our house for EUR 300k in cash with no mortgage five years ago. We each put in 50% equity. The thinking at the time, in the deep depths of the last recession, was that we wanted to put our savings into something tangible in case the banks in which our savings were held failed (not a completely fantastical proposition in 2009-10).
Since then we've added another c. EUR 50-60k in improvements. It's a picturesque country farmhouse (4 bed, lots of land, some outbuildings that could be converted into more accommodation if we wanted), in a beautiful but low-cost part of Europe. As we currently live outside Europe for work, we’ve not been residing in the house full-time. But we enjoy holidaying there every year and also spent almost 24 months combined there when my wife (who also works) took maternity leave for our two children. I managed to swing things with my job to work from the house during this time while flying off as required to see clients and keep the business going.
The local housing market is flat, so if we sold we’d be lucky to get back what we’ve paid. BUT, I’ve never viewed the house as an investment. I guess it’s a non-rational, emotional thing. For me the house is part of 'The Great Escape'. My vision – perhaps a sentimental one - is essentially to stop my current itinerant lifestyle, slow down, and plant some firm roots for the children in the countryside during their formative years. Grow our own veg., build a tree house, that sort of thing!
We have a couple of cars, one at the house, one where we live. Both are old with minimal resale value, and not worth fixing a price on. From the beginning I’ve always been a keen cyclist, and continue to cycle most of the time leaving the car for my wife (although motorists are a little less respectful of cyclists where we’re currently based than is the case in N. America or Europe!).
Debts:
Zero
Vision:
I’m adamant that I need to quit by 40. Otherwise I’m going to be yet another one of those tired, sad-looking Dads who mention in passing that they wished they’d worked less when their grown-up kids were younger. I’m also not sure that my industry is the best fit for me personality wise. As an aside, according to David Kersey, I'm an "Idealist" (Counsellor / Champion), but I reckon most of my colleagues are guardian / rationalist types. I look forward to having the time to explore other work avenues, preferably things involving real human interaction over tapping cr*p into a keyboard while gazing at a computer screen.
Plan:
I’m aiming to amass between EUR 400 – EUR450k between now and pulling the plug. This will not set my family up for life, but it will give me breathing space to figure out more sustainable working avenues, while perhaps consulting part-time. I’m only around halfway there though...
Investment opportunities where I am tax-resident are limited and high risk. I’m a complete luddite when it comes to investment strategy, and as I want to pull the plug in around two years, there’s not really much time for investments to compound in any case.
My gut tells me that if I’m going to achieve my target net worth by 40, I’m going to need to double-down on work while hopefully saving 80%+ of my take home salary and bonuses. I'll be updating every month or so to track progress.
Apologies for the monster post. Comments are very welcome!
I’m in my late thirties. My ambition is to pull the plug on the rat race in approx. two years, around when I hit 40. This is primarily due to the increasingly toxic nature of my job, and my desire to spend more time with my family (I've young children). This journal will primarily be an attempt to stiffen my resolve for when quit time comes around!
My situation is a bit different to the norm perhaps. I've kept things deliberately vague, but the important financial and personal info is included below.
Income:
I graduated in June 2000 and have been working ever since, aside from a brief stint back at uni to complete a Masters (which I don’t regret, despite the c. EUR 15,000 tuition fees + living costs for one-year!).
For approx. 8 years I have been working abroad in developing countries (what used to be called in pre-politically correct days the "3rd World"). I'm a salaried employee. Following several pay rises I’m now earning EUR 100k p.a. net after tax on an expat package where my accommodation is also paid for. There is a performance bonus element to my pay on top of the EUR 100k, which can be up to 20% of net salary. But for the last couple of years, it’s been like getting blood from a stone, with bonuses paid up to 18 months late by the firm (unfortunately I joke not…).
In my industry (I'm not a Wall Street investment banker or silicon valley software engineer) I'm approaching the ceiling of what I could reasonably expect to earn. However, it's not such a sweet deal when I consider the stress, travel and number of hours I do. Evening & weekend working, while travelling up to 50% of my time away from the family is all unfortunately 'normal' these days. I also have a lot of autonomy and responsibility. I'm left to my own devices by head office to run the business in my region, hire and fire, deal with clients, etc. The result is I can never totally switch off, even on holidays. I am simultaneously a 'technician' (involved in client delivery) and a 'manager' (dealing with HR, finance, marketing, support functions, etc.), a combination I often find exhausting… I feel sometimes that I have all the stress of being a small business owner, but with few of the benefits as I am still an employee, and all the net profits from the business flow to the firm. Unsurprisingly, I have no time for side-income opportunities at present. There are barely any hours left once work, sleep, family-time and a bare minimum of sports for health are discounted.
The good news on the job front is that, given that head office has essentially outsourced (read: disowned) all responsibility to me, many clients think of me rather than the firm when they need services, which bodes well for future consulting opportunities.
Expenses:
In a word, low.
I do not track the household expenses, as this is really my wife’s domain. However, if I look back to my contributions to the joint household account over the past 2 years, I think EUR 10-12k per annum for my half easily covers it. This is because our children are still small and – for the moment – inexpensive, while my employer currently covers housing.
We do not record all our expenses, but my wife – while heartily sceptical of my early retirement dreams – is naturally frugal, coming predominantly from an anti-consumerist / environmental as opposed to a ‘retire-early’ perspective.
On my side I simply refuse to buy new stuff unless 110% necessary. Unfortunately I have to have a degree of respectability when it comes to my work ‘uniform’ (suits and ties). But aside from this my other clothes are all old and worn. I detest non-food shopping, love to cook, and could not give a cr*p about the latest must-have car / gadget / toy. My one extravagance in the past has been travel, but this too has been curbed in the last couple of years, through a combination of work, kids and discovery of ERE / MMM. Also, the one silver lining of so much work-related travel is that my per diem more than covers expenses when away on business.
N.B. I do not include here capital expenditure on improvements to our owned house (see “fixed assets” below).
Liquid Assets:
Here’s where things get embarrassing…
- EUR 145k cash: yep that's not a typo, just money sitting in a low interest savings account, not working…
- EUR 90k investments: in a high fee investment fund I took up with my bank. It's a conservative stocks and bonds tracker with anaemic growth - due in large part to the 1.2% p.a. annual charge and 1.2% p.a. 'establishment fee' (over the first 5 years of the investment's life) the bank takes. Unfortunately I took out this investment exactly a year before I became (*slightly*) more clued up on personal finance and the evils of high fees. I need to wait another 2 years before I can cash this investment, if I want to avoid further early withdrawal penalties!
- c. EUR 9k in a couple of current accounts, which equates to my share of our household spending for the next 9 months or so, so I'm not really counting this.
Fixed Assets:
I think I read on one journal that 'sentimentality can be costly'. That's definitely true in the case of our house. My wife and I bought our house for EUR 300k in cash with no mortgage five years ago. We each put in 50% equity. The thinking at the time, in the deep depths of the last recession, was that we wanted to put our savings into something tangible in case the banks in which our savings were held failed (not a completely fantastical proposition in 2009-10).
Since then we've added another c. EUR 50-60k in improvements. It's a picturesque country farmhouse (4 bed, lots of land, some outbuildings that could be converted into more accommodation if we wanted), in a beautiful but low-cost part of Europe. As we currently live outside Europe for work, we’ve not been residing in the house full-time. But we enjoy holidaying there every year and also spent almost 24 months combined there when my wife (who also works) took maternity leave for our two children. I managed to swing things with my job to work from the house during this time while flying off as required to see clients and keep the business going.
The local housing market is flat, so if we sold we’d be lucky to get back what we’ve paid. BUT, I’ve never viewed the house as an investment. I guess it’s a non-rational, emotional thing. For me the house is part of 'The Great Escape'. My vision – perhaps a sentimental one - is essentially to stop my current itinerant lifestyle, slow down, and plant some firm roots for the children in the countryside during their formative years. Grow our own veg., build a tree house, that sort of thing!
We have a couple of cars, one at the house, one where we live. Both are old with minimal resale value, and not worth fixing a price on. From the beginning I’ve always been a keen cyclist, and continue to cycle most of the time leaving the car for my wife (although motorists are a little less respectful of cyclists where we’re currently based than is the case in N. America or Europe!).
Debts:
Zero
Vision:
I’m adamant that I need to quit by 40. Otherwise I’m going to be yet another one of those tired, sad-looking Dads who mention in passing that they wished they’d worked less when their grown-up kids were younger. I’m also not sure that my industry is the best fit for me personality wise. As an aside, according to David Kersey, I'm an "Idealist" (Counsellor / Champion), but I reckon most of my colleagues are guardian / rationalist types. I look forward to having the time to explore other work avenues, preferably things involving real human interaction over tapping cr*p into a keyboard while gazing at a computer screen.
Plan:
I’m aiming to amass between EUR 400 – EUR450k between now and pulling the plug. This will not set my family up for life, but it will give me breathing space to figure out more sustainable working avenues, while perhaps consulting part-time. I’m only around halfway there though...
Investment opportunities where I am tax-resident are limited and high risk. I’m a complete luddite when it comes to investment strategy, and as I want to pull the plug in around two years, there’s not really much time for investments to compound in any case.
My gut tells me that if I’m going to achieve my target net worth by 40, I’m going to need to double-down on work while hopefully saving 80%+ of my take home salary and bonuses. I'll be updating every month or so to track progress.
Apologies for the monster post. Comments are very welcome!