How We Fund Our Lifestyle – Retired at 43

Rock the ruined Kasbah

The question’s always there, usually unspoken, but always playing behind the eyes: “how on Earth do you afford to do that?” You see, we’ve engineered a lifestyle for ourselves which, at the age of 43, doesn’t include needing to work for a living. This sometimes puts us in a position where we need to explain how we’re able to spend ten or so months of the coming years travelling, which does, even to me, even now, sound implausible for folks in their 40’s.

For the full story on how we retired so early, The Non-Treprenuers is available now on Amazon.

43 is, of course, much earlier than most of us here in the UK ‘retire’, although we don’t consider ourselves retired – we’ve just removed the need to HAVE to work for a living. We will continue to work, but as and when we want to, and doing something which excites us – it will be on our terms. Also, we didn’t want to be reliant on ‘digital nomad’ type work – which means effectively working as a freelancer while you travel – perhaps writing articles for magazines. Neither of us wanted that kind of instability – we wanted a solid plan which should ensure we stay fed until we’re 90 or more.

At the moment we’re filling the great expanse of time freed up (by not commuting and being in an office 50 hours a week) with travel. With our pooch Charlie, the two of us plan to spend the next year or two (at least) wandering Europe and North Africa in a motorhome called Zagan. Odd name, yes. It’s the town in Poland adjacent to Stalag Luft III – the Great Escape camp (a bit of tongue-in-cheek humour there). We also have a small part of a house in the UK which we can use as and when we need it, which we call ‘the Cooler’ – again from the Great Escape! After those two years – who knows – whatever we do – we’ll want to do it.

So, how did we get ourselves in this position? Here’s how:

• We both worked full time for around 18 to 20 years. Ju worked in marketing and I was in IT. Both of our careers paid highly compared with the UK average, and we continually retrained ourselves (often outside work hours) to enable us to take on more challenging jobs. We’ve decided not to have children, re-assessing this as our friends started and expanded their families, always coming to the same conclusion it wasn’t for us.
• We succumbed to ‘lifestyle inflation’ as our careers developed, ending up with a three bed detached house, with a garage, gym, outside hot tub, two cars, a motorbike and so on. We never went mad though, and always lived below our means, using the excess to pay off our mortgage early. We’d also hung onto a small bungalow which I had before we met (Ju had a flat which we sold to get a deposit for the house), and have rented it out for the past 10 years.
• When my career forced a break (stress was slowly crushing me), fortunately we’d paid off the house mortgage. We both quit our jobs and took off for a year in a 20 year old motorhome, renting out the detached house as well as the bungalow. By tracking every single cent spent, we got a handle on how to live an exciting (for us) but inexpensive life, and stretched the funds allocated to one year’s travel out to two years. We also built up confidence that remote rentals would work when managed through experienced local agents.
• On returning to the UK we focused heavily on getting financially educated and financially free. The house and bungalow have been managed by the same agent for years, and they had permission to deal with problems quickly while we were away, keeping our tenants safe and comfortable. This also meant the income was almost 100% passive – it just turned up in our bank while we sat on a beach somewhere. This massively excited us both as if we could expand just a little we could generate enough passive income to meet all of our living costs (roughly £15,000 a year), removing the need to work.
• We pulled a plan together to get another property which we’d rent out. This needed maximum cash as quickly as possible, so I worked freelance, which meant high risk of having no work, especially if I became ill, but potentially high reward. Lady luck smiled, and plenty of work came our way. Ju got a full time job to give us some stability. With some re-jigging of finances we bought the 3rd property for cash under auction conditions, moved out of rental accommodation and moved in.
• We renovated the 3rd house (while we lived in it – not ideal – thick brick dust in your sandwiches, hair, everywhere, no kitchen for weeks…) which had once been a butchers shop, meat storage and accommodation. With planning permission we turned an outhouse into an ensuite bedroom/living area for us. We kept the shop and renovated it along with the rest of the house. As the shop and house are physically not connected by a door, this has left us with a shop and rooms we rent out in the house, along with the bungalow and other house, with only a relatively small mortgage. All of the property remains managed through agents.
• We also investigated shares and now have a portfolio of Vanguard Passive Index ETFs in ISAs, which pay out dividends every quarter, we have two solar PV arrays mounted on two of the house roofs, which generate monthly income through Feed In Tariff payments, and we have a range of other smaller passive income streams.
• Finally we have a reasonable sum invested in a series of personal pensions acquired over the years in which we worked. We can’t touch these until at least age 55, but they should mean our income will actually go up ‘in retirement’, rather than the traditional fall in income we’re told to expect.
• Our assumption is also that we’ll die penniless, so we’ll need to ensure we sell everything we have and spend the released capital in good time before the scythe-wielding black-clad man comes a calling. Again this will ramp up the money available for us to spend in our latter years.

Along the way we sold most everything we owned, and no longer have the space to buy and store more stuff – we became accidental minimalists. We haven’t had live TV in over 4 years (this freed up a lot of time to work on the house and to research). We track every pound spent. Neither of us smoke. We don’t buy labels. We discuss and consider each purchase, sometimes for months. We eat out, which we love, but we do it infrequently to keep it special and keep cost down. We NEVER buy Costa Coffee :-). While traveling, we typically find free or low cost places to stay in our motorhome – very easy in much of mainland Europe.

So that’s it. No inheritance, no early access to pensions, no benefits, lottery win, no other windfalls. We earned money, we pushed ourselves doing jobs we found stretching (often too stretching), we slowly built up an understanding of risks in investing and invested. We aggressively cut our costs and altered the way we saw ownership of stuff. If we’d started out with the plan to retire early when our careers began, we’d have probably done it by age 35, or earlier.

There is, of course, a chance our plan won’t work, and that we’ll have to return to do work which we might not want to do. We both accept this. Our plan has numerous safeguards around property void periods, damage and repairs, interest rate rises, high inflation, housing or stock market crashes and so on. Not everything can be foreseen though, and our view here is it will have been one hell of an experience learning what we’ve learned. Our skills and outlook will remain whatever happens, and with a positive attitude we’ll soon be back in the same position of independence.

Please note: I’m not a financial advisor! I’m quite the opposite. The only thing I would advise is that you educate yourself financially, believe in yourself as you swim against the tide, and work out what best to do with your money to meet your needs. Please don’t act on anything in this post without doing your own research. If you are considering going down the Early Financial Independence path, all I can say is go for it – the feeling of being here is quite wonderful.

Some places you might want to start:

• Mr Money Moustache – massively popular blog of a Canadian couple living in the US with a son who retired at 30
• The Escape Artist – a sort of UK version of the Mr Money Moustache blog – lots of fun, interesting articles
• Meaningful Money – Pete’s videos explaining basic financial concepts were priceless to me
• Rich Dad Poor Dad – Robert Kiyosaki’s blog and associated with the book of the same name
• The Chris Williams Catalyst to an Extraordinary Life – a blog post I wrote about an inspirational friend

We also put this video together just at the point we reached financial independence:

Thanks, Jason