In January 2015, at the age of 41, I set myself the goal of retiring by the age of 52, and I must say that after 3 full years of following what I call an ‘early retirement extreme (light) plan, I’m doing rather better than expected. (Partly because I hadn’t discovered the joys of either cryptocurrency or the potential of blogging back then.)
Things are going so well financially in fact, that I’m going to quit my full time teaching job this coming July* (just don’t tell the SLT before I do!) and still push for retirement before 50 (I turn 45 this year).
Time for a ‘reset’ of my original early retirement extreme goals!
Financial Goals: Targets for 2023, by age 50
- Be mortgage free, which means paying off my current £110K mortgage*
- Achieve a STABLE, diversified, passive-ish income of £1500 a month.
- Achieve a TNW (not including property wealth) of £40K*.
*Or any combination of + £40K, e.g. a £30K mortgage with a £70K wealth fund would be FINE, and maybe even more rational given the better % return on some investments relative to mortgages interest.
Goal one - be mortgage free in five years - main strategy = ‘flipping houses’.
My current mortgage is around the £110K mark, on a property which I should able to sell for @ least £250K, at which point I intend to buy just 30 miles down the road from my present location at around the £210K mark, which allowing £10K for all the buying and selling fees, leaves me with a mortgage of around £80K.
An £80K mortgage is, let’s face it, a great big pain in the ass, so my intention is simply to play the ‘Homes Under the Hammer’ game and renovate five houses over the next five years, thus turning my physical labour into £££££s. To illustrate the financial rationality of this… consider the following two scenarios - the flipping option means I save £50K over five years:
Option 1: simple: downsize to a ‘decent house’ and just pay off the mortgage over 5 years
An £80K mortgage @3% interest would mean repayments of £1500/ month over 5 years.
Option 2: ‘flipping hassle’: downsize to a wreck and ‘flip it’ for a £10K profit *5 over 5 years.
This would effectively reduce my mortgage my mortgage to £30K, given that I’d be taking off an extra £10K per year on average, which @3% interest would mean a repayments of £600/ month over 5 years.
Note: I think I’m actually being quite cautious with my estimates, then again, it does cost a lot (at least £5) to buy and sell a house).
This is the difference in the form of a bar chart, which shows (a) the huge relative cost of housing compared to every other outgoing expenditure, and (b) the drastic reduction in mortgage repayments caused by the 'flipping house strategy'.
Goal 2 - achieve a net income of £1500/ month, circa £2000/ month before tax.
Income required to achieve my ERE goals obviously depends on my outgoings, which are pretty minimalist. Taking into account option 2 above, my monthly outgoings would be approximately as follows:
- £600 - Mortgage repayments
- £150 - Council Tax
- £170 - Utilities
- £150 - Food
- £100 - Car (it’s quite new, and I don’t use it much!)
- £50 - clothes
- £60 - beer
- £40 - coffee
- £60 - stuff
- £70 - subscriptions
- £40 - books
- £1490 = total outgoings
2018 - 2023: Income sources:
My current net income from my regular workaday job as a teacher is circa £2400, but unfortunately teaching is no country for middle aged, let alone old men, and so I’m having to quit. This means I need alternative income sources.
Fortunately, this wonderful brave new-ish world of the blogosphere means that I already have an online income somewhere in the region of £1500:
- £500 - advertising revenue from main blog
- £300 - sociology resource sales
- £700 - steemit (although I would rather just let this accumulate, I COULD use it as an income source)
- £1500 = TOTAL INCOME
Taking tax* into account, I need to be earning about another £500 more, but as I see it there is considerable potential for me to boost my income further from the following sources:
- Online sociology tuition: via live web conferencing
- An online sociology A level course via UDEMY
- Training sociology teachers through various private companies
- Expanding my blog into economics and politics revision
- Examining.
- Face to face tuition.
- Improving my general steemit writing, which I could easily do if I had the time.
- Learning data analytics and doing data analysis for steemit, which seems to pay well.
- Matched Betting
- Air B and B
And maybe even a blockchain based online education exchange, based on Smart Media Tokens, maybe!
The wealth (excuse the pun) of diverse streams I can tap into (pretty much immediately after my income from my main present job ceases in September 2018) also mitigates against possible drops in my current 3 main revenue streams, having said that, I do have plans to improve my output in all of these areas, and so that should help at least maintain all of these areas, they are also currently GROWING, which bodes well.
Of course, there’s also easily (I’d say) potential to double my current income, and just pay the damn mortgage off without flipping anything.
Goal 3: Achieve a Total Net Wealth of £40 000
Yes that’s £40 thousand, nor £400 thousand. This is simply the figure that I think will give me enough of a buffer between 2023 and 2033, when my teacher’s pension kicks in…. ENOUGH meaning that I’ve got a base income of around £5K a year, or £600 a month, to add to my other income sources, which should in turn allow me near total freedom to do whatever I like.
I’ve actually already achieved this… with the following spread...
- £14K - Crypto
- £25K - Main shares fund
- £5.5K - other shares
- £6K - peer to peer
- £1K - cash - I’ve actually got more but it’s probably going to get sucked up when I move house.
- £51K = TNW excluding property wealth (and that’s without my £100 income bonds, I’m sure they’ll come up!)
And who knows where crypto's going in 2018? I maybe fully retired by June, you never know!
####Final thoughts
Thanks for reading, if you're on an early-retirement mission too, do get in touch, and if not, and you like this sort of thing, then why not upvote me and help me along!
Peace,
Karl.
Appendix - the Teachers Pension and the tax man cometh
On the Teachers’ Pension
Yes I’m quite fortunate that I’ve got a little Teacher’s Pension Pot waiting for me when I reach 60 (assuming I don’t get yet another neoliberal shaft and the age is put back) - that’ll be worth about £7K/ year at present prices (and it’s inflation adjusted), so I do have a substantial buffer waiting for me which reduces the urgency to generate wealth. Good old socialism (sort of!)
On tax
*Apologies to all the anarchists out there - yes ideally I wouldn’t pay tax, but I came to the painful conclusion in 2017 that I’m so visible online in a non-anonymous way that ‘income I must declare to the tax man.’ Let’s face it, It’s the little guy like me that’s going to be the target of a crack down on online earning, NOT the big Corporate tax avoiders, so I just had to suck this one up. And they can go back 2 decades, so there’s almost zero chance of me avoiding the net for that long.
HOWEVER, tax (or at least any significant amount of it) will be a very short-lived thing for me, because I intend to live most of the rest of my life after age 50 on <£10K a year, which is below the tax threshold in the UK, and of course if I go digital-nomad, than I’m tax free. In the grand scheme of things, this isn’t too much of a big issue.