My First 6 Months Of Early Retirement
Updated: Jan 13, 2021
Well that went quick.
It's been 6 months since I bit the bullet, pulled the plug and popped the cork of early retirement. I left my corporate job on the 30th April 2020 after having just turned 44 and after 28 years of gainful employment.
In that time I did a lot of jobs but they can broadly be categorised into 5 main career moves:
Call Centre Operative / Manager
An odd mix I'm sure you'll agree but I didn't hate any of those jobs (all the time). I left school with almost zero qualifications and absolutely zero experience at 16. I had a passion for earning money and as soon as my parents allowed me, I got a paper round (is that still a thing? getting a newspaper delivered through your door every day), Then I got a milk round (Definitely not a thing anymore, getting fresh milk delivered to your door in the twilight hours). Then it was collecting payment for the milk in the evenings. Then there was a relentless set of side hustles from buying and selling stuff out of the "Free Ads" (before Ebay even existed) to a school tuck shop out of my backpack.
I loved having money and I wasn't afraid to work for it. Once my career started it became more about the promotions (and of course the salary increases that went with it), it always appeared to me that my boss had it easier than I did yet he got paid more. My plan?
Get promoted, get paid more, have an easier life. Simple.
I was pretty good at it too, in my 28 years of working, I only actually had to apply for 1 promotion, that was from being a call centre advisor to managing a team of call centre advisors in 2000. I did around 15 different jobs over my career and I think I only probably had 2 where the change didn't mean more money. I had a simple approach, make my boss look great, be a trusted soldier and always exceed expectations on delivery. In short, be the go to guy for someone who needs to get anything done.
Why am I telling you all this? because if you're reading this, there's a good chance you are contemplating, planning or intend to retire early to follow your dreams. There's also a good chance that if you haven't done it yet, but want to; you're worried about giving up everything you've built. Your career, your reputation, your experience and your status, oh and your salary, lets not forget the salary.
Well let me into a secret, come closer and I'll whisper.
From the second you hand in your resignation with the intention to retire early, all of those promotions, late nights, performance reviews, working weekends, office politics, endless meetings, teleconference and video conferences about who knows what and who knows why will all become irrelevant. The companies share price won't crash, there won't be a day of mourning at your resignation and within a few weeks after you'll left you'll just be a fading memory to that organisation.
Now there may be some among you who are now thinking; "Oh dear, someone is carrying some baggage!"
That could not be further from the truth, I look back on my career fondly and proudly, I don't regret it and I got to work with some brilliant minds, made some of my most epic memories and made lifelong friends along the way.
When I look back at just how much I cared about a few performance metrics and delivering budgets and achieving "Expert" status How much I prioritised that over spending time with my family or friends or working on a personal project that I've wanted to do for years. I don't recognise that me anymore.
And it's only been 6 months!
Putting all of the personal finance side of FIRE aside for a minute, I feel like I'm becoming a better human being since I retired. I'm calmer, less stressed about small things, more forgiving, more brave. I'm more connected and as a result I feel more emotionally intelligent and feel less that I have to appear academically intelligent. I don't care so much about stuff and status and I quietly smile to myself when I listen to others who do, instead of seeing it as a pissing contest which is how the old me would have reacted.
I'm simply happier and more content.
And what of all the obvious money worries of giving up an upper-middle class income?
I don't really have any yet. The household spending budget has proven to be accurate, and the investments are all performing as they should and have a bit of "fat" built in. Yes, Mrs H is still working right now and that's a great security blanket but I've done the numbers and even without her salary, we'd still be better than plan. I might even stop looking at how my ETFs are performing every ten minutes soon!
One of the most exciting financial lessons I've learned is that if you don't plan a side-hustle into your retirement plan (I recommend you don't) and your plan is solid and you spend a little time doing a little hustling, guess what?
Every single penny of profit from those side projects (post tax of course) is surplus cash. Your entire spending is already taken care of and 100% of that cash can be used on whatever you want. I of course used the first bit to build a little emergency cushion and then I threw a little extra in the investments but now we're getting to the point where we can safely spend a little on a few things we'd like with that money.
It sounds simple and sort of obvious but I didn't really think about it when we were planning all of this. Anyone can do a bit of a side-hustle in something, it's just so easy these days, and if you had the wherewithal to save enough money to retire, you definitely have the gumption to make a few extra shekels here and there. And it doesn't take much time, I have a little sideline business that only takes me a few hours a week and brings in around a third of my previous salary. Bearing in mind 70% of my salary probably went on our living costs anyway, that means we have the same surplus cash that I used to plough into our investments.
I guess what I'm saying is that the reward of waking up without an alarm clock and not having to travel to work or look at a calendar or clear my emails or "Dial-in" to that call, isn't being swapped for austerity, frugal living and watching every penny like I thought it might and had prepared myself to accept. It's actually massively easier than I thought and if I knew what I believe I know six months in, I wouldn't have waited so long and I might have took a little more risk (Bearing in mind I already took the leap R4,000,000 / $235,000 / £180,000 before my plan said I should)
Let's see if I feel the same way after 12 months.
OK, so I did make a promise I would include a table of the cause and effect on our net worth in the 6 months to today and I fully intend to honour that promise, so here is a test to see if I can include a table in a blog post (every day is a school day):
The answer was that I most certainly do not know how to embed a table in a blog post. I do however know how to take a screenshot!
Ok, let me add some context around those numbers. Spending is all household spending including everything from groceries to bills to electricity to eating out, everything. It also includes a R20,000 / $1200 / £900 allowance for personal spending (fun money) for myself and Mrs H which we split 50/50.
You will notice a fairly big influx in October, that was a nice little side-hustle cheque for work I did in June (very late payment).
So overall growth in the last 6 months has been around R1,000,000 / $60,000 / £45,000. It's better to look at that as a percentage, which is a 7.5% increase in our net worth. Remember that number, it's important.
We obviously can't ignore that Mrs H brought in a salary but I've calculated that our net worth would have still increased by around 5.2% had she not brought home the bacon. Remember that number also.
My target annual growth for our net worth is 9.5% and that breaks down like this:
Living expenses - 4%
Inflation - 4.5%
Contingency / Lifestyle Increase - 1%
Soooooo, at 6 months, with Mrs H Salary, we are tracking at 15% annual growth and without it, we're tracking at 10.2%. either way, so far so good.
Household spending has been a bit all over the place due to home renovations, which incidentally cancel out almost all of my side hustle earnings so would have been additional upside had we not renovated. However, household spending has represented 2.8% so will close the full year at 5.6% this year if it flat lines.
You're probably saying "well your spending target is 4% so you're living beyond your means", and you'd be right. This is because I retired before hit hit my FIRE number of 18,000,000 / $850,000 / £650,000 which would have allowed my spending to be 4% with no other income at all. I'm OK with that as I plan to close the gap with the side hustles and Mrs H salary and grow our net worth to the magic number.
We've already closed the gap by 25% in the first 6 months!
So there it is laid out for you to pick the bones of. I suspect this will raise more questions than it answers with those of you who are actively pursuing your FIRE journey. If you have questions, I'm happy to answer all comers. Please use the comments section so you can get broader opinions than just mine, plus you might well have the same question as somebody else so then I don't have to answer twice. You can sign-up to comment using an anonymous username if you'd prefer to protect your identity.
So in summary, I'm happier, more content, we have more money than we started with and apart from a few days consulting and a couple of little money making side projects for a couple of hours a week, my time is my own and I answer to nobody other than Mrs H (Who must always be obeyed, even when she's wrong!).
It all sounds a bit too good to be true right? That's what I'm thinking too. Could a better life actually be this easy? Has it been just sitting here waiting for me to grow a pair and make the move? Is it all going to come crashing down around our ears and I'll be back to being a wage slave in the not too distant future?
Who knows? That's starting to be part of the excitement. I'm not afraid of the unknown anymore and I'm starting to get pretty excited about our new life.
You obviously can't forget that I did start this post talking about how I knocked my block off for nearly 30 years to save up the money to do this, but it wasn't that hard, it was actually a lot fun. That's not the point though, the point is, I definitely didn't want to do it for another 20 years and I certainly didn't want to be the richest man in the graveyard, so I'm thankful and grateful that I had this opportunity, and I'm not planning to screw it up.
Keep reading and you'll find out just as soon as I do how it all turns out. There's no turning back now.
Until next time, keep living.