Category Archives: Retirement – Early

Alternatives, My 'life', Retirement - Early

Five Strategies to Help You Stop Shopping

February 28, 2015 Realsociology Leave a comment

If you like this sort of thing then check out my book (only $0.99) – Early Retirement Strategies for The Average Income Earner

I’ve developed a few money saving strategies viz shopping in order to help me reduce my spending – These are as follows:

1. Only allowing myself to shop once every 6 weeks, with the exception of food shopping which I now to once a week.
2. Constructing lists of things I’m going to try and live without for 2015/16 (which I’ll review annually) and also an ‘allowed to buy in 2015’ list.
3. Only food shopping once a week (rather than buying online and dropping in twice a week) – somewhat unexpectedly this has saved me about £50 a month so far this year.
4. Trying to have more non spending than spending days in the year.
5. Keeping track of everything I spend on a daily basis in an excel spreadsheet, analysing this once a month and publishing an overall review of spending once every six months.

The point of all this is because I think it’s more conducive to overall quality of life to not work hard-consume hard, and then work for 40 years. I think it’s better to work hard for 20 years, not consume and then semi-retire at 50 and do constructive non-consumerist things, as outlined here – My early retirement strategy. Anyway – more details on my 5 strategies to help you stop shopping.

Strategy One – On only shopping once every six weeks

Once every six weeks, or thereabouts – that’s my new shopping strategy. The plan is to do one shopping trip/ online purchasing ‘binge’ on the first day of every school holiday, and the reasoning behind this is to stop compulsive shopping and be more in control of my finances. If I want something in the six week build-up, I’ll just put it on a list and then buy it on one of the 7 days I’m now allowing myself to do shopping (I’ve added one in to the end of the summer holiday, given that this is a six week period). This applies not only to shopping but also to browsing and choosing (idle surfing) so this should not only save me money, but time and exposure to advertising.

Strategy Two – Lists I’ve constructed to help me reduce my consumption

The Hold out until 2016/ 2017 list

These are things that I would normally buy because they need replacing (just due to ordinary wear and tear), but I’m trying not to for a year. The longer I can make something last the fewer of them I’ll have to buy throughout my lifetime. Instead of purchasing, I’m going to try and ‘repair put up with’ until it becomes economically irrational to do so.

Also, what I’ve just learnt from populating this list is that there’s very little I actually want/ need anyways!

Hold out until 2016

New day to day bag for work/ walking
All shoes except for running shoes.
New work trousers
New arm band for musical device
Headphones
Books (I’ve got a significant unread pile)
Ipad

Hold out until 2017 or later

All running gear except for trainers
Posh gloves
Work shoes (Docs)
Lap Top
New Winter Jacket the waterproofing on mine’s going
New Garmin Forerunner (I can’t see it lasting that much longer)

The just do without List

Things I want but I’m just going to try and live without for a longer time. These are just a list of wants I’ve had for a long time. Here I’ll try and find alternatives, or just do without. If I stumble on a windfall, I might buy these!

Replacement Polar heart rate monitor
Swanky coffee machine
Posh netting for fruit cage

The allowed to buy in 2015 allowed list

New things or replacement items I will probably allow myself to my. Most of these are already overdue

Two new pairs of Asics – £100
6 new shirts for work – £40
Pair of Jeans – £20
Trip to the dentists – £20
Trousers for Summer – £20
Fleece-top for spring/ autumn – £50
Fleece Jacket – £80
Propagator (ideally home-made) – £30?
Paint to redecorate bedroom/ hall and living room – £40
Fruit trees and bushes (*2) NB – Bought in Feb – £100
Bike servicing – £50
Flask – £10

Total = £460

Of course I will eventually buy a lot of this stuff, but an early retirement strategy works on the basis of saving NOW – this means more capital accumulation in the long term. What was it Warren Buffet said.. A dollar spent now is several dollars forgone in the future, or something along those lines.

Strategy Three – Only Food Shopping Once a week

This one was unexpected – but limiting myself to shopping in Sainsburys only once a week (instead of doing an online shop once every two-three months and then nipping in twice a week) seems to be saving me a small fortune – £50 month?!

I’ve also started cooking more cheaply, although not uber-frugally. I might even allow myself the luxury of doing a recipe post at some point. For now I’ll just give a big thumbs up to Dhal and Chapatis (how easy are they!); home made pizza; and vegetable stew (swede is compulsory) with pearl barley – three wonderfully cheap and delicious meals, which are bit of hassle to make but are just FAB!

Strategy four – Aiming for more non-spending days than spending days.

This is another strategy I just sort of stumbled on – It prevents me from that kind of idle spending which I used to do compulsively – Nipping out for coffees, or nipping to the shop for munchies – A few quid here and there a few times a week can (and has in the past) easily mount up to £40-50 a month, or £500/ year. Looked at another way, this could mount up to £20K over 40 years – Or nearly a year’s worth of earnings on the median salary, just because of ill-discipline.

This strategy also has the added bonus of making shopping days quite unique experiences. Something to actually look forward and be in conscious control of, rather than something you just passively do without really thinking about it. In fact, I’m not even sure that I’d categorise most shopping as ‘intentional action’. I think I’ll stop there, I’m starting to think hateful thoughts about shoppers, not very Buddhist!

NB – I am slightly behind – so March is going to be an uber-frugal month. I’d always planned it that way anwyays.

–

Strategy Five – Keeping track of everything I spend on a day to day basis:

I’m just at the end of month two – I published the first month here. February has actually been quite similar, despite spending £100 on fruit trees and bushes. This is good discipline, But I won’t be publishing anymore until June, just because it gives a more representative and hence valid indicator of overall spending patterns.

My 'life', Retirement - Early

Early Retirement Extreme Update 1 – January/ February 2015.

February 14, 2015 Realsociology Leave a comment

It’s now been six months since I realised I could realistically (semi-) retire by the time I’m 51, and ambitiously by 48. I’ve saved a bit of cash in that time, but TBH I’ve only just got into the swing of the early-retirement drive since the start of this year, 2015, so this isn’t so much of an update, rather a starting-point statement of where I’m at, a base from which to compare in the future.

I’ve now started (since January 3rd) to keep a record of everything I buy in various categories, with the intention that this will inspire me to spend less and save more. It worked a treat in January, but that’s probably because (a) it’s still a complete novelty and (b) I haven’t actually needed to buy anything of significant value.

At the moment my data’s only in Open Office, I might move it online laters.

January 2015 Early-Retirement Extreme Update

Reminder of Long Term Financial Goals –

Be mortgage free in 7-10 years (£138k outstanding)
Pay over £1000 a month towards the mortgage (15 year term) with a mind to either using savings or ‘trading down’ to pay off early.
Save an absolute minimum of £250/ month in additional funds (=£30K after 10 years, without accumulations). Ideally this figure will be significantly higher.
Find additional income streams to boost the above figure. Target = £20K in five years.
Save £200 a month towards a ‘land fund’ – eventually to be used to purchase a van and land on which to establish a forest garden.
Continue paying into the Teacher Pension Scheme.

January Update 1 – ‘Spending days compared to non-spending days’

I figure that I need to internalise not consuming – to this end I’ve started keeping a record of everything I buy and (roughly) how much it costs me. One of the interesting things that’s emerged is that there are several days during which I spend nothing and my non-spending days just over the 50% mark! This is now a new goal for 2015 – simply to clock up more non-spending than spending days.

January Update 2 – Total expenditure excluding mortgage = £725 pounds

NB – Transport was £000.

January Update 3 – Expenditure including mortgage

Frivolities = beer/ coffee/ subscriptions/ transport, (because I only really use transport for ents).
Necessities = council tax, services, food, ‘stuff’ (because I’m not a frivolous materialist consumer).
Property = mortgage repayments + service charge.

Ratio of expenditure to income including mortgage – 30%
Ratio of expenditure to income excluding mortgage – 71%

Summary

If I can keep this up for another 11 years, then I can basically move to full retirement – but this is premised on the following:

Having a Teacher’s pension which kicks in at 60 (most of it anyway), meaning by the time I’m 51 (or thereabouts) I’ll have enough saved to simply see me through for 9 years.
Continuing my very low consumption – After property my expenses come to around £600. I really don’t see why anyone needs to spend much more than this.

So – that’s me formerly started and outed on the ERE mission, bring it on!

New Year, New Bathroom, New Lock-In?

January 3, 2015 Realsociology Leave a comment

So I spent most of the ‘Christmas’ holiday redoing the bathroom – stemming from a leaky waste on the bath and mould growth mainly because of a broken extractor fan – It took me several days to rip out the old (partly rotted) frame under the bath, build a new one and put it back in, sort out the leak, degrout and regrout, de-seal and reseal, sand and paint (quite badly, thankfully white paint is quite forgiving), and it cost about £100 for the tools and various industrial chemical products.

Now I could celebrate the fact that I now have the whitest bathroom in the known universe, the fact that I did this extremely cheaply compared to ‘getting a man in’, and I could even celebrate my capital gains – lots more tools, some more knowledge, and a tiny bit of extra-skills. However, I don’t see it like this – I’ve come to realise that my efforts have really only been ncessary because I’m locked into what I think I’ll call a sub-optimal bathroom context:

For starters had the original housebuilders left the side panel off the bath (which is only on there for aesthetic reasons) I would have noticed the leaky waste a lot earlier, saving myself hours of ripping out the rotten frame. The waste was only loose, not cracked – so firstly I’ve been a victim of uncessary normative bathroom aesthetics.

Secondly, the mould-growth due to the fan being broken only occurs because I live in a block of flats and there are no windows I can open to allow the bathroom to air naturally. If I could afford a house, which I can’t around here, I could simply open a window and the broken extractor fan wouldn’t be as much of a problem. Thus I’m also a victim of relative poverty, albeit on a salary of £45K a year.

Thirdly, I’ve also got to thinking that the need to grout and seal stems from the fact that the bathroom is inside – A bathroom is a wet area within a dry area – This might sound like I’m stating the obvious but it’s actually quite an unnatural place for a bathroom to be – outside would make a lot more sense. It isn’t necessary to have inside bathrooms, or even private bathrooms, but I don’t really have a choice to buy a property without one, or to use collective bathrooms outside (nothing in convenient reach for me). Thus efficiency dictates that I need to use my own private bathroom – So here I am a victim of a conflation of urbanisation/ individualisation/ privatisation.

Now.. I think most people would look at the job of redoing their bathroom and feel a sense of satisfaction (a kind of meaningful agency if you like). I do sort of feel satisfied, my bathroom is now VERY white – but I’m also painfully aware that this sense of satisfaction is as thin as the layer of paint on my bathroom walls, beneath the surface of which is a bizareely sub-optimal nexus which has led me into having no choice but to spend time and money on doing up my bathroom.

What annoys me most about the above point is that I do actually want a private bathroom – even though this is not necessary – I’ve been socialised into this, the result is extremely sub-optimal, and this is a tough one to break out of.

So what’s the ultimate solution to all of this? Well long-term, once I’m done with my job, which does require me to wash every morning, I’m going do without the normative bathroom aesthetics – the bath panels, tiles, extractor fans, anti-mould paint, grout, sealant and so on, and live in a field and wash outdoors with a bucket.

After all, water falls from the sky and goes back to the earth, may as well cut out the middle men.

Update –

Having wrote this (TBH I never intended to write this, but it’s been cathartic) I find myself interested in the Sociology of bathrooms and bathing – if anyone knows of any further sources on this please do get in touch! Questions/ issues I’m interested in are…

How many times would the average homeowner redo their bathroom, how much money would they spend>? I’m more interested in spread rather than ranges.

Based on the above – what is the lock-in effect of the average bathroom? – How many months of a working life is spent paying for bathroom upgrades?

How have bathroom aesthetics evolved? Who are the main agencies at work in the social construction of bathroom aesthetics. What has status got to do with this?

How many people do their own bathrooms renovations compared to other parts of the house? I’m quite interested in this – It is more of a technical challenge in some ways than a living room or a bedroom, but then again if you cock it up you have to spend less time looking at it, so its less of a risk (plumbing aside).

Anyway, enough of bathrooms for now…

Infographics, Retirement - Early, Social Policy

Increasing Life Expectancy – It’s far from certain!

November 29, 2014 Realsociology Leave a comment

According to this eye-catching infographic from the Office for National Statistics 1/3^rd of babies born in 2013 are expected to reach 100 years of age, meaning that there will be well over 100,000 centanarians alive in the UK in 2113, which is more than 6 times the estimated 14000 alive today.

According to this scenario, the expected averarage national life-expectancy is projected to be 90.7 for men and 94.0 for women, a ten year increase compared to current (2010-12) life exptencies which are 81.7 and 82.7 years respectively.

The government has used these data (unsurprising giving that this is the ONS) to justify the rising of the state pension age, given that according to these projections people will, on average spend a third of their life in receipt of a state pension, as evidenced below (full document here)

However, this future is far from certain, and such an increase depends on a number of underlying social developments taking place – such as a reduction in the number of people smoking, an increase in medical interventions to prevent deaths from heart disease, stroke and cancer, and healthier diets and lifestyles. It is also the case that a number of other factors may serve to reduce future life-expectancy – such as the increasing cost of living in real terms driving up the number of people in poverty and the increase in inequality causing more status anxiety.

In fact if you read down the infographic, this lack of certainty is recognised as the initial figures are only the ‘principal projections’ but the low and high estimates for the number of babies born today likely to reach 100 varies from as low as 16K to as high as 259K for men and as low as 31K and as high as 271K for women.

To my mind, the real story in this data is actually the very high level of uncertainty surrounding projections in the ageing population, and the difficulties society faces planning for the future in the light of such uncertainties.

It’s unfortunate that the infographic or the government fail to highlight this, but instead focuses on the principal data in order to tell a story that might (but only might) happen.

Then again, I guess this particular manifestation of uncertainty doesn’t suit the present government’s ideological war against the public sector, whereas the message that we are all living longer serves as a plausible justification for raising the pension age and reducing the overall public sector commitment to ‘caring’ for people in their old age. It is also, of course, another effective means of punishing the poor, because the poorer you are then the earlier you die.

http://www.beyondcurrenthorizons.org.uk/review-of-longevity-trends-to-2025-and-beyond/

http://www.longevitypanel.co.uk/docs/life-expectancy-by-gender.pdf

This is a nice series of infographics from the ONS focussing on current (2010-12 figures Life Expectancy among people aged 65+, looking at such things as the very signficant gender divide that persists into the 80 and 90 years age brackets.

But what can I do?, Retirement - Early, Work

Stop buying crap you don’t need now and retire 4 years earlier!

September 24, 2014 Realsociology Leave a comment

In this post I continue my statistical critique of the ordinary life of the everyday worker-consumer. This is done through comparing a hypothetical 35 year old who earns the median salary and has average expenditure to a hypothetical construction I call the frugal-consumer who spends as little as possible without completely cutting themselves off from society. The expenditure levels of the former effectively tie them into working for a further 33 years until the current projected standard retirement age of 67-8, while the later, assuming they maintain their frugal levels of consumption, will be able to retire when they are 52-3, or 14 years earlier, or in half as much time as the average-consumer on the average wage.

Here I consider spending on Consumer Frivolities (see previous posts for other categories of expenditure).

The average-consumer spends £216.71 a month on what I call consumer frivolities, which includes unnecessary expenditure on restaurants and hotels (£73.15), furniture and furnishings (£51.48), ‘miscellaneous goods’ (£69.33), which in the ONS family spending survey mainly consists of beauty products and jewellery, and finally recreation and culture (£111.06), which for most people means the cost of purchasing audio-visual equipment and subscriptions to various services, and also includes the cost of entrance to things such as cinemas, concerts and festivals.

Over the course of one year this amounts to £3,933 and maintaining this for another 33 years will cost £129, 798, which represents 6.0 years working earning the median salary.

So what does the average person get for this £129, 798, or 6 years of toil? Most people would say it’s hard to generalise, because the consumer gets what ever they want for the money they’ve got, assuming the market can provide it. Some people will choose a house full of antiques, others a house full of gadgets, and stilll others closets full of clothes and boxes full of jewellery. Increasingly likely, though is that money will be spent not on stuff, but on experiences, such as playing the dating game, or weekends away and longer holidays, supplemented by such products as fake tan and sun cream to prevent an actual sun tan.

To many people, such consumerist experiences are the very purpose of life: the products we buy define us, mark us out, and the events we purchase play a crucial part in our weekly, monthly and yearly life-course – they are things we look forward to, and back on, the events which help to maintain and define our relationships with our friends and family and give us something to talk about at work, other than work.

I’ve managed to resist the urge to be utterly cynical about the role which consumption plays in most people’s lives, because just recently I’ve come to perceive most ordinary consumption as tragic, and in this context cynicism seems innapropriate. Those people who define themselves through their stuff become tied to it (and possibly require a bigger house in which to stuff their stuff), and for those who define themselves through their experiences, it seems to me that the way in which many people consume such events involves them not really being present because they’re too concerned with acting for the sake of sharing the experience via social media, and for me if you’re not actually present, then you’re not really even alive.

Ultimately such unnecessary consumption costs the average-consumer on the median salary 6 years of their working life. In contrast to this the frugal-consumer rejects the trivial, shallow and short-lived fake-joys of consumerism and instead engages in meaningful, productive and either free or very cheap activities when not working.

The frugal-consumer is not, however, an anti-consumer, and maintains an expenditure level on ‘consumer frivoloties’ which allow them to avoid being completely cut off from ordinary society. This is mainly because I could not, hand on heart, say that I am ever likely to cut out consuming frivoloties all together myself, cut down radically yes, cutting out altogether, highly unlikely.

The frugal-consumer spends just £60 a month on such frivolities, allowing for £20 a month on restaurants and hotels (so basically no hotel stays and one trip to a restaurant a month), £20 a month on furniture and furnishings, given that this category includes spending on basic household items such as hoovers, a further £20 for ‘miscellaneous goods’ because everyone needs a little something extra, and a whopping £30 a month for recreation and culture. This amounts to an annual expenditure of £1080 a year, a total of £35 640 over 33 years, representing a saving of £94 158 or 4.33 working years of working at the median salary compared to the average-consumer.

NB If this looks unrealistic, or even unbearable, something like the bottom fifth of the U.K. in terms of income live such a life out of necessity rather than as part of an early-retirement strategy, so it is possible.

References

http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2013-edition/index.htmlhttp://www.ons.gov.uk/ons/dcp171776_335332.pdf

But what can I do?, Retirement - Early

Your mortgage or your life?

September 13, 2014 Realsociology Leave a comment

Following on from my realisation that the average income earner could retire at 52, I’ve started to analyse the relative importance of various categories of expenditure in preventing early retirement. Here, I look at housing.

Given that housing represents the single largest life time expenditure item for most people in the U.K., getting your housing strategy correct is vitally important for early retirement. As far as I’m concerned, it is simply irrational to rent in the long term, so, if you can afford it, buying really is the only option. However, the average-consumer goes about this in the wrong way – i.e. by spreading their mortgage repayments over a relatively long, 25 year term and dragging the mortgage out even longer because of trading up to a larger property.

According to this is money, a typical first-time buyer who buys a £151,000 home with a £121,000 repayment mortgage over 25 years will pay back £212, 000, calculated at 5% interest. In my calculations I’ve been a little more optimistic, to reflect some of the better interest rates out there at the moment, and assumed an average life-time interest rate of 4%, so borrowing the same amount (£121 000) at 4% over 25 years means paying back a total of £191,600, at £638 a month or £7664 a year, which is equivalent to 9 years worth of earnings on the median-salary. Of these repayments, interest accounts for £191, 600 – £121, 000 = £70, 000, which in itself is equivalent to almost 3 years of work earning the median salary. (See endnotes 8-12)

In my frugal-consumer model (Spread sheet ) the same figure is paid back over 11 years, which means paying back a total of £149, 764, at £1135 a month or £13, 620 a year, equivalent to 7 years worth of earnings on the median salary. Compared to the average individual, the frugal-consumer saves themselves over £40, 000 or the equivalent of nearly 2 years worth of work earning the median salary.

The above scenario is actually extremely generous in its comparison – In the sense that while my 11 year pay-back model is, I think, reasonably achievable for the average income earner, my ‘average’ consumer model is in fact not realistic – If a couple chooses to ‘trade up’ to a house then their costs of housing almost double.

The Average house price is currently £264K – And if we apply the same payback-ratios as above, then a 4% mortgage over 25 years gives a total payback amount of £385K (5% gives £424K).

(NB – Many people will pay back more than this – 30 years is rapidly becoming the norm for mortgage repayment periods – In 2012, the number of mortgages with more than 30 years on the term had risen to 27.8%, up from less than 3% ten years earlier, and the longer the mortgage term, the greater the interest!

So let’s just pause…. assuming that you stay in a one or two bed flat for the rest of your life and stick to the standard mortgage term, then that will cost you £250K over the course of your lifetime, but if you want a family-home, you are looking at something in the region of £400K. Looked at in starker terms, if we take the median salary, these figures represent approximately 12 and 20 years of work respectively. If you compare the later of these to my frugal-consumer model, you lose 9 additional years working to pay for property.

To make an even starker comparison, there are several people in the UK who have built their own houses for 10 times less than these figures both in terms of money and time, it becomes clear that most of the above years are basically years spent making someone else rich – A combination of the land owner, property developer, previous owner and/ or mortgage-lender – And I think anyone who is either considering getting on the property ladder or who is currently on it needs to urgently consider some of the available, cheaper, alternatives to housing.

Or look at it this way – If you walked in to work tomorrow and your boss offered you a year, or two, or ten off on full pay, that’d be pretty nice, wouldn’t it? Or if you won £100K on the lottery, that’d be at least Facebookable. These are the types of figures radical housing alternatives can save you…..And these are the figures you throw away by being a mortgage slave.

NB – The point of this post isn’t necessarily to criticise the injustice of a system based on debt, the aim is simply to raise awareness of the extreme savings that can be made in terms of your money and your life if you just pay that damn mortgage down as quickly as possible.

References

http://www.thisismoney.co.uk/money/mortgageshome/article-1633400/Mortgage-calculator-Compare-true-cost-rates-fees.html

1. How the Average Income Earner could retire at 52

A hyperreflexive blog focussing on critical sociology, infographics, Buddhism and extreme early retirement