Laid off and laid back, the benefits of financial freedom

This blog post was originally written in November 2014 for our sister website – The Money Muppet. We set that site up in January 2014 as we embarked on our journey to financial freedom. The Money Muppet site no loner exists, so we’ve incorporated our financial journey into our travel blog.

A couple of months ago the contract I was working on came to an end at short notice, and I found myself jobless. Several years ago, this situation would have seen me panicking, big style. We had a detached house, a hefty mortgage, hot tub, motorbike, car, motorhome, TV package, smartphones, a gym, you name it. Although my wife Julie’s salary would cover most of this stuff, I still panicked whenever the possibility of redundancy raised its head. Perhaps partly out of my association of self-worth to job (this I no longer have), but mostly out of abject fear of financial ruin.

Ju’s salary wouldn’t cover all of our expenses, and should we both lose our jobs, we would very quickly be in big trouble. TV news announcements about global economic meltdown or some corporate laying off thousands of folks would increase my heart rate. Announcements of reorganisations at work, which we knew would lead to lay-offs, had me feeling physically sick for months. It wasn’t much fun, it caused me some significant health issues eventually.

So, upon telling co-workers my contract was up, the usual response was one of uncomfortable pity, then the questions about what was I going to do would come up. I’d explain I wasn’t sure, but I didn’t feel too worried, although I wasn’t sure why.

Our aim for financial freedom started to generate passive income for us some time ago, when we rented out a property we couldn’t sell. As we’ve adopted a strategy, and consequently ramped up our efforts over the past years, the level of income has slowly but inexorably gone up. At the same time, a couple of years of living penny to penny has driven down our costs to around £15k a year (I’ll do a breakdown another time, it would be lower but for all the beer I drink).

As I chatted with folks at the office, they’d let on something about their own situation. Typically folks had about a month’s worth of expenses in their emergency fund maybe two, then they were in trouble. Jesus. A month? Their faces looked ashen, like mine used to, even though I’d been in a far better position, even back then. One lass was neck-deep in credit card debt. The subject was quickly changed and I’d leave, deep in thought.

Back at my desk, I sat down with a spreadsheet and worked out how long we could live for, using the passive income we had currently coming in, plus the money we had in the bank and shares. I stared at the result, then tried again. I emailed it over to Ju (she manages our monthly budget) to check. Yep, the numbers look right, although neither of us could believe it. Even if we both lost our contracts and couldn’t find any work whatsoever, we could survive with our current standard of living for years, maybe even a decade. A decade. Whoa. I could have cried.

Most of our assets are in pensions and a couple of rental houses, so even once the cash and shares were gone, we’d still be OK. In fact we might even be able to last it out long enough to start cash withdrawal from our pensions at 55.

I don’t write this to gloat. We partly ended up in this situation through luck, partly through purpose, and our lifestyle certainly isn’t for everyone. I write this to give encouragement to any of you starting out on the path to financial freedom. The point is, you don’t have to get fully financially free to start getting massive personal benefits. The sensation of having this safety net is wonderfully liberating (this is an understatement), and it’s only going to get better the closer we get to our goal.

I’ve since picked up a new contract (I almost got 3 different ones, the economy seems pretty buoyant in the UK for IT workers at the moment). We’re back on the hunt for the holy grail of full financial freedom.

Cheers, Jay

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