This year, I’ve added an extra section to the foot of my passive income reports. I’m starting to simplify my investments/ life and wind some operations down…
Q1 2019 Dividend Growth Stock Sales
Nothing this quarter.
Q1 2019 Dividend Growth Stock Purchases
83 shares of Lazard (LAZ) on 03 January 2019 for 2936.15 pence per share
60 shares of Verizon (VZ) on 29 January 2019 for 4077.57 pence per share
87 shares of Comcast (CMCSA) on 01 February 2019 for 2810.33 pence per share
151 shares of Tanger Factory Outlet Centers (SKT) on 21 February 2019 for 1644.63 pence per share
76 shares of Archers Daniels Midland (ADM) on 07 March 2019 for 3216.33 pence per share
72 shares of Legget and Platt (LEG) on 07 March 2019 for 3388.47 pence per share
18 shares of Fed Ex (FDX) on 11 March 2019 for 13372.09 pence per share
42 shares of Eastman Chemical Co (EMN) on 22 March 2019 for 5839.74 pence per share
Dividend Income for Q1 2019
45 dividend payments were distributed in Q1, 2019 (an increase of 7 compared to Q4, 2019)
1332.10gbp (dividends from Q1) has accumulated in my broker account (post withholding tax and broker fees).
Hence, there’s a decrease of 122.79gbp for dividend income in Q1 (compared to Q4, 2018).
The average dividend yield is 4.5% (taken from the ranking system), a decrease of 0.75% from last quarter.
Total return from the dividend portfolio is estimated to be 11.56%, since inception (capital gain/7.06% + average yield/4.5%).
I’ve taken a screenshot straight from my H&L account, to show some transparency. Please see the bar chart below to show my progress.
Walgreens Boots Alliance (WBA) has been identified as the highest ranking stock, using the dividend ranking system.
S&U (SUS) was tied second. I have a new rule now, to make the system more robust. If that highest ranking stock has debt that is not well covered by operating cash flow, then I oust it. And that’s why S&U never made the cut.
WBA’s debt is well covered by operating cash flow (34.6% greater than 20% of total debt). As a side note, WBA’s interest payments on debt are well covered by earnings (EBIT is 9.7xcoverage) as well.
After the fall down of Kraft Heinz, I’m even more alert about the health of a company.
Also, as a rule, I never reinvest dividends into a previous high ranking stock (more than twice). Otherwise, I become too overweight.
I had around 1400gbp sitting on account (accumulated dividends), hence I deployed 700gbp into Walgreens Boots Alliance (WBA) and 700gbp into Target (TGT) which was the next highest ranking stock after S&U.
I purchased 16 shares of WBA at 4119.62 pence. And 10 shares of TGT at 6237.49 pence.
For more information on how I reinvest my dividends for maximum return, click here.
Dividend Funds Overview (Capital)
The download from my Hargreaves and Lansdowne (broker) account below shows the state of play after Q1,2019.
There’s been a capital gain of 38,324.32gbp for the dividend funds this quarter/ compared to Q4 2018 (dividend buys, dividend re-investment and good old-fashioned compounding).
Investment ISA (FAANG Fund)
There’s been a gain of 3052.70gbp/ 19.36% for the ISA/ SMT fund this quarter.
Total rental income this quarter is 42.12gbp after management, internet, contents insurance and repair fees. It’s low season.
No additional cash contributions were deployed into the Mintos fund this quarter, as I’m winding it down.
Hence I’m not keeping track now. As you can see above, it’s still making money. It will take time to exit with the longer loans as you can see below on the ‘Remaining Term (m)’ bar chart.
Up to 3 years! Will start investigating how to sell my notes on the secondary market…
For more information on Mintos and Peer to Peer Lending, click here.
I’ve been pleasantly surprised with Envestio and crowdinvesting in general. And I’ve made some generous returns (16%+) on my initial 1K (testing the waters).
However, I think it’s time to wind this operation down and plough back into the market. The fact I’m unable to auto-invest and the lack of investment projects will impact my return in the long term.
There’s been a gain of 7.39% re the SIPP this quarter. It was in the red at the end of last December.
Simplifying and Optimising My Life
Winding Down Bank Accounts
Early this quarter, I wound down my Singapore business bank account. I don’t see myself conducting business in Asia again due to lifestyle choices. And I lived out my ‘Singapore dream’, as I’ll summarise in another post.
Why Singapore banking in the first place?
1. During the great financial crisis in 2008, I had a private Irish ltd company and Irish business bank account. I was close to losing a considerable amount of money in my account, due to the poor deposit guarantee scheme at the time.
“The Irish Government has increased the amount of money it guarantees in deposit accounts from €20,000 to €100,000 in a further effort to instil confidence in the State’s banks.
Minister for Finance Brian Lenihan announced the move at a press conference today making the Republic’s limit in such deposit protection schemes one of the highest in Europe.”
It got me thinking. I want to store my money in a country where it’s never suffered a bank run. I want that warm, fuzzy feeling my money is safe and near bulletproof from recessions.
2. 99% of my business banking is fee free. This saves hundreds of euros per year.
3. The customer service is so much better. You are treated like royalty rather than a commodity.
4. The foreign exchange aspect/ functionality is structured much better. If I have a Singa/ Euro business account, then I want to pay my salary/ dividends to a Singa/ Euro personal account? Didn’t work that way for one of the UK’s wealthiest banks. These foreign business accounts never had the functionality to make outside transfers, so I was forced to wire into my Sterling business account. Hence the move to Singapore banking.
5. No, it’s not the new Swiss bank account. Tax details must be lodged with the CRS (common reporting standards). If you are that way inclined, you can bank in Cyprus or the Caribbean. I’m not really into Russian roulette.
Is Singapore banking worth it? Absolutely. The currency moved in my favour slowly during my time in Asia. After Brexit was announced, even more so. I sold close to 8 months worth of Singa dollars and bought pounds, Sterling. One of those rare opportunities.
Ultimately, I will wind down the Singapore Sterling and Euro business accounts and leave the Singapore personal multi-currency account intact. This will be my emergency fund account.
I’ve come to realise, it’s dangerous to rely on one government or one country for all your affairs. So, I’ve been spreading my wealth/ operations/ status throughout the world in the last few years.
I posted the last income report, just days before the markets took a tumble in early October. Since the end of the last quarter, the S&P 500 has declined more than 14% (measured using the ETF SPY). And the FTSE 100 has fallen 12.5% this year. This has created lots of buying opportunities.
Q4 2018 Dividend Growth Stock Sales
Nothing this quarter.
Q4 2018 Dividend Growth Stock Purchases
56 shares of Kraft Heinz (KHC) on 24 October 2018 for 4398.56 pence per share
13 shares of Broadcom (AVGO) on 08 November 2018 for 18350.97 pence per share
52 shares of Altria (MO) on 13 November 2018 for 4717.32 pence per share
20 shares of Raytheon (RTN) on 31 December 2018 for 12017.88 pence per share
Dividend Income for Q4 2018
38 dividend payments were distributed in Q4, 2018 (a decrease of 3 compared to Q3, 2018)
1454.89gbp (dividends from Q4) has accumulated in my broker account (post withholding tax and broker fees).
Hence, there’s a decrease of 346.08gbp for dividend income in Q4 (compared to Q3, 2018).
The average dividend yield is 5.25% (taken from the ranking system), an increase of 0.66% from last quarter.
Total return from the dividend portfolio is estimated to be 0.02%, since inception (capital gain/-5.23% + average yield/5.25%).
I’ve taken a screenshot straight from my H&L account, to show some transparency. Please see the bar chart below to show my progress.
5,652.20gbp of dividends were distributed in 2018.
Compared to 2017, the dividend income has increased by 2,604.26gbp. A year over year growth of 53.9%.
1. AT&T (T) 2. British American Tobacco (BATS) 3. Kraft Heinz (KHC)
However, as a rule, I never reinvest dividends into a previous high ranking stock (more than twice). Otherwise, I become too overweight. I’ve already reinvested in AT&T twice.
So, British American Tobacco is my next high ranking stock. It was tied second with Kraft Heinz. But since I hold less stock (less weight) in BATS, I therefore reinvested in BATS.
Hence, I deployed 1000gbp (just over 1000gbp in accumulated dividends sitting on account).
I purchased 39 shares of BATS at 2497.125 pence.
For more information on how I reinvest my dividends for maximum return, click here.
Dividend Funds Overview (Capital)
The download from my Hargreaves and Lansdowne (broker) account below shows the state of play after Q4,2018.
There’s been a capital loss of 14,039.181gbp for the dividend capital this quarter (dividend buys, dividend re-investment and a good sharp correction in the market).
Investment ISA (Scottish Mortgage Trust (SMT))
There’s been a loss of 4,887.76gbp/ 32.15% for the ISA/ SMT fund this quarter.
Compared to 2017, the investment ISA/ investment trust made a capital gain of 989.44gbp/ 4.01% in 2018.
Total rental income this quarter is -1446.64bp after management, internet, repair and utility fees.
Q1 = -479.58gbp
Q2 = +2542.87gbp
Q3 = +3072.76gbp
Q4 = -1446.64gbp
3,689.41gbp of rental income was received in 2018 (after management/ letting fees, repairs, communal fees and utilities).
The short term rental income has dropped 2502.74gbp this year, hence a very poor performance. The number of guests have increased, as have my prices. However, unforseen circumstances with the floor and electricity meter skewed my return.
No additional cash contributions were deployed into the Mintos fund this quarter.
The Mintos account has increased 323.35 Euros this quarter. The Net Annual Return has decreased by 0.08%.
Compared to 2017, the Mintos account made a capital gain of 1721.26e in 2018 and the net annual return has decreased by 0.07%.
Next year, I shall wind down my peer to peer lending. I’ve had a great run, but I want to simplify my FIRE fund going forward. Watch how long it takes me to exit…
For more information on Mintos and Peer to Peer Lending, click here.
The full 1000 Euros that was deployed into the Envestio crowdinvesting fund, is now fully invested in 13 investments (an extra 3 projects from last quarter).
Spread evenly at 100 euros per investment (9 are currently active).
Compared to 2017, the Envestio account made a capital gain of 99.89e in 2018.
For more information on Envestio and Crowdinvesting, click here.
There’s been a loss of 9.21% re the SIPP this quarter. I still had the Vanguard Lifestrategy 60/40 this time last year, so I won’t compare gala apples to golden delicious. However, since switching to the Vanguard Lifestrategy 80/20 in Q2 2018, I incurred my biggest loss this quarter, which is a loss of 9.21%.
After much deliberation, I decided to top up my state pension earlier this year. I already had 16 years accumulated, much to my surprise. Thank goodness for those long days behind the deli and till in Spar and all those other part-time jobs.
16 years is estimated to provide 85.22gbp per week/ 4,431.44gbp per annum. However, after talking to the state pension department, I managed to top up my missing 7 years (with the new rules, you can top up missing years by more than 6 years).
They were class III contributions for me. But, if you’re a sole trader or PAYE then you’ll only need to pay class II contributions.
So, this missing 7 years equates to 4,618gbp of missed payments. I didn’t have to pay it all at once. However, to lock in the low costs I though it was best to pay upfront.
Thus 23 years of state pension contributions is estimated to provide 114.62gbp per week/ 5960gbp per annum (index linked) for my State Pension (according to my official new State Pension Forecast). For me, this is a great deal. That’s if the rules don’t change.
To collect 5960gbp in annual payments, I would need a fund of around 150K (based on the 4% rule).
Total passive income for 2018 is 11,949.61gbp/ 13,305.36 Euros
This is an increase of 2,358.84gbp/ 2,626.59 Euros from last year and the first year I’ve broken the 5 figure passive income barrier Note: This doesn’t include the SIPP/Pension (can legally withdraw when I’m 58+). Nor, the state pension (can legally withdraw when I’m 68+).
During the latter half of 2018, I trialled Post FI life (even though I haven’t officially FIRED).
Before I delve into my experience, I drew a little inspiration from some FIREHub blogs. Hence, I want to give a shout out to Cheesy Finance and his lonely experience. Indeedably and his semi-retirement lessons. And last but not least, Young FI Guys reflection on retirement.
So, in July this year, I finished a long slog (just over one year) of a project in Germany. The last country on my 50-month fast track plan (which I plan to detail in another post). I went ‘hardcore’ and did 6 and 7 day weeks (most weeks) for the tenure of the project. I learned an important lesson. There’s a thin line between opportunity cost and burn out.
I guess what I’m saying is, it was ‘worth’ it to knacker myself.
If you’re going to go ‘all in’, I feel you have to fight for what is yours. So, after a lot of politics (because my line manager never got paid overtime) and heated debates (because other contractors from other agencies never got overtime at a special rate), I managed to negotiate double time on a Sunday and time and a half on Saturdays, on a half decent rate.
I’m not a natural born haggler by any means. But when it comes to projects, I put on a mask and negotiate for all I can get.
Because sometimes, greed is good. Otherwise, the agent is going to take their share and the path to FI is going to be a longer one.
So I basically got decent terms for myself AND for others on my team too (contractors through the same agency as myself).
Anyway, by the time I finished the German project, I already had a 12-month contract signed and sealed with an Italian agent, however, this fell through in the end. Because contracting isn’t always set in stone.
They wanted me to go to the United States, but I’m banned from working there (long story). Plus, I don’t want to do long haul projects anymore.
So…this was a blessing in disguise and forced me to carry out a dress rehearsal for FI. Sometimes you just have to trust the benevolence of the universe.
I’ve never used that word before. I’ve always taken a rest after projects, where it’s taken me 2 weeks to get back to my old self. This time though, I’m older (strangely enough). What I also didn’t mention, I did 8 months of 6 day weeks (with a 10-day break, every 8 weeks) on an Indian project, previous to the German one. Without much of a break in between projects.
So inevitably, I got burnout and it wasn’t very nice. My emotional intelligence (EQ) was all over the shop. I was going to draft a separate post on it, but I think everyone gets the gist.
Some FI’ers may identify with this?
As they push themselves to new levels of net worth, passive income and savings rates. Be kind to yourself. Or at least, negotiate decent terms if you’re going to burn yourself out.
And I’d say this is a good first stage to post FI. Take much-deserved rest/ decompress before heading off on an adventure/ starting something new. Replenish your energy levels first or you won’t be any use to anyone, or yourself.
Finding a Routine/Rhythm
After sorting my head out, it didn’t take too long to find a routine. I had enough knowledge built up from my mini-retirements to kick me off. Anyway, I like to break my day into morning, afternoon and evening routines.
Every morning was busy and productive where I implemented a health regime into my routine. So I went to the gym 3 times a week, cycled twice a week and treated myself to the thermal/ medicinal baths one morning every week. In the summer, the thermal baths are replaced with an outdoor swimming pool.
I still do these activities when I’m working. However, I have to ask myself how effective is my workout at the gym. Or, do I enjoy the gym/ cycling as much when I’ve put in a 60-70 hour week?
With regards to any other hobbies I have, I’ve put them on hold until I reach my FIRE date. Because it will involve me travelling to other countries and spending more.
The evenings consist of Internation events (social), Meetups (technical) or dating. For any other quiet evening, I’m happy to chill out with Netflix. I’ll watch Netflix in the evenings, as long as I’ve had a productive day.
As the time swept by, I found myself opting out of evening events. I got lazy and stayed in my little bubble. Being an INFJ personality, I naturally opted for a cosy sofa and Netflix. I realise I need to make more of an effort to interact and socialise on these occasions.
Just to point out, I managed to build some consistency and fulfilment to my weekends in Budapest. So, if I’m away travelling/ doing ad-hoc consultancy during the week, I have something to come back to at weekends. Which is very important.
All that stuff you can’t get done during your working hours. Well, I had enough time to blitz that. However, this is where I struggled. This was the void in my day.
Sure, I had ‘stuff’ to do but nothing defining. I had this vision of me with my high nelly bike, cycling over cobblestones and through courtyards to this ornate, old library where I live. And pounding away at a keyboard every afternoon churning out post after post.
I reckon I wanted to follow in the footsteps of Mr Jason Fieber, one of the early adopters of the FIRE scene. The first guy I followed. And an avid dividend investor like myself. I admire his consistency and passion. And most of all, his story.
I’ve learnt, I naturally like writing a couple of hours every morning (which is also part of the morning routine), or maybe one full day a week. But, not every day. It’s not me.
Even then, my writing has waned. Even stopped completely. I learned if I have something planned in the afternoon (e.g. some sort of work or purposeful thing), I will make a concerted effort to write in the morning. i.e. I have a timeline to abide by.
Hence, I’m looking for some sort of sideline to fulfil my afternoon. Whether that’s:
Study/ gaining a certification
Playing a musical instrument
Starting a lifestyle business
Learning a craft
Learning a language
That I’m not 100% on yet.
I will definitely sign up for Hungarian lessons (enough to get by), but it won’t fulfil all my afternoons.
As I’m still in the accumulation phase, I don’t want to spend that much on travel. However, not travelling this much has made me realise, I still want to incorporate travel into my FI plan.
So, short-term travel will naturally be part of my Post FI regime, it will bring focus and break up a routine when it starts to become militant or monotonous. And make those weekday afternoons more interesting.
Discovering New or Lost Loves
I’m really glad to be cooking again (as I stayed in hotels/ serviced accommodation mostly for the last 4 years). Even if I had all the money in the world, I wouldn’t eat out that much. It gets boring after a while (especially on your own) and eating rich food all the time isn’t good for you.
So, I grocery shop at the market on a Saturday morning now. That way:
I reduce my overall grocery bill
I’m buying fresh (the fruit and veg does last that bit longer than big chain supermarkets)
I love the market scene and giving back to the locals
I make breakfast, lunch and dinner six times a week and ‘dine out’ on a Saturday. Sunday is now my special day for making homemade soups and casseroles (and refrigerated in Tupperware for the week ahead). Well, Gulyas in particular.
2. Table Tennis
I now make a concerted effort to go to Table Tennis (Internations event) on a Wednesday. I used to play league table tennis in my University days and participated in competitions. I wasn’t brilliant but loved all the spin variations and would take part in topspin rallies to please the crowd.
3. Hydro and Balneotherapy (Hungarian Mineral Waters)
This used to be part of my regime after I finished a project. As in, go to some health and well-being centre (e.g. Panchakarma in India) and switch off.
Now I incorporate the thermal baths into my routine every week. And it makes all the difference. There have been studies carried out and hydro and Balneotherapy is thought to improve:
Chronic low back pain
Neck and lumbar pain
Inflammatory and metabolic indices
Like everything though, you have to go on a regular basis, not just once in a blue moon.
These 3 activities above provide ‘flow’. I get lost in the moment and switch off from the outside world.
When I finished a project in the past, I used to get this Xmas feeling.
I would stick a pin on the map, and go wherever the heck I wanted (to a certain degree). I would do my best to incorporate a snowboard or windsurfing rig/ surfboard into those plans.
It was important I had a budget on spending though. Hence, I didn’t do that Heli-boarding trip in Kamchatka (think black sandy beaches and nature at its finest) or do a windsurfing master class in the Marshall Islands. I never actually travelled on that spectrum. For me, it was crossing the threshold of financial budgets.
But I did snowboard in one of the most Northerly ski resorts in the world (Riksgranson) and witnessed Aurora Borealis. Where the tip of Norway and Sweden intersect (200km from the Arctic Circle). I remember sitting on a glacier and texting (years before social media was implemented) my friend about my adventure. He received it on a bus in Ballsbridge in Dublin, in the pissing rain.
Or deep powder boarding in Hokkaido, in Northern Japan over the Xmas period. I hired a guide to take me off-piste, through the woods and under the cable cars. I met a couple of guys from New Zealand and we ended up partying at the Shibuya crossing in Tokyo, for New Years. I met the most gorgeous Japanese girl that evening.
But I’m too old and ugly for that sort of stuff now. What I’m saying is, do your own thing…now. If you’re that way inclined.
The way I feel about travel now differs from what I felt about travel in my mid 30’s. And that differs from what I felt about travel in my late 20’s.
I’m also saying, I feel more content now. Having lived out a few ‘dreams’. Sure, they didn’t all pan out. But travel or living out something you’ve desired fulfils you. Live your dream, whether that’s staying at home or abroad. Hence, I don’t feel the need to bugger off for a long stint anymore.
So, I spent most of my FIRE dress rehearsal ‘at home’. Getting registered on the system, researching dentists and healthcare, building community, new clients, payroll systems, building relationships, viewing property, getting to know my new city and integrating myself into society in Budapest.
And Starting a FIRE Meetup to help locals, meet international mindsets and very interesting folk who are heading up startups. That’s been rewarding to me and hopefully to the locals, digital nomads and expats.
So, back to the snowboard thing. I don’t need to travel to the opposite side of the world anymore. I can catch a train from Budapest Keleti and travel to St Anton, Austria (at the Ski resort) with no change of train.
I’m most definitely a coconut. I don’t let that many people in. But when I do, they’re in for life.
Sure, I’ve met a tonne of folk in Budapest now. I’ll engage in small talk at these Internations events, shoot the breeze at these Meetups or exchange pleasantries during my dates. But there are only 3 people I truly connect with here. Where I share my deepest thoughts and desires.
And people are very important during post FI phase. The heart of everything. I’m building this up slowly because good people take time.
Losing My Identity
I guess I encountered an identity crisis during my FIRE dress rehearsal. Without jetting off to the next project to an obscure country, who am I without that?
And part of this process is changing my lifestyle. As in, not ‘living it up’ anymore. I haven’t been for a few years now. It’s alright when the client is paying for it, but as soon as they pull the plug…
Again, loneliness can be remedied by making an effort to socialise more and planning specific or tailored events. Or whatever your social or creative outlet is.
Or, just trying something. Because perfection is the enemy of progress.
So, loneliness is maybe not the problem. It’s probably laziness and getting too comfortable in my own skin.
I do miss the craic from my last project in Germany. There were no cubicles or open-plan offices (ugh, the worst). Just a crappy old Portakabin where we more or less did our own thing and had a great laugh. We were in our own little bubble. I met a good friend on that project and still keep in touch with him today.
This post FI dress rehearsal has also been a time of reflection.
The last 20% of any project is always the toughest, as in closing things out. Like the closing stages of FIRE.
I sensed that unwanted feeling, where nobody (big corporate) loves me. I wanted to be needed. By something. But big corporate is not the answer for me anymore. I’ve never really felt part of the system.
I need and want to be running towards something that serves my soul. I even feel the clients and agents know my game now. I’ve flunked a few interviews this summer/ autumn, by telling the truth and not playing the game.
But I’m tired of wearing a mask now.
We put ourselves under incredible stress to reach this milestone. The last 2.5 years have been really tough. Because I was used to ‘LITE’ mode with regards to the accumulation phase (before I discovered FIRE). However, ‘TURBO’ mode is a rollercoaster ride. With bumps, ups and lots of downs.
Doubling down on debt, working silly hours and sidelining life will take its toll on you eventually.
On the flip side, living out a few of my dreams have been incredible and I feel extremely grateful.
The problem with me, I was always searching for Nirvana. A higher high. And I found it. But then I wanted more. But as I found out by experimentation, life isn’t about temporary highs. I’ve never really taken the time out to smell the roses. I guess I’m only starting to smell the roses now. And they smell fairly sweet, albeit a few thorns.
I used the time wisely to build the start of new beginnings in Budapest. Which I’m enjoying, it’s my kind of world.
However, I now realise, there’s a bit of a hole in the afternoons. After a long spell (6 months) off work, I have some ideas on how to fill this going forward.
Short-term travel and a smidgen of long-term travel will be very welcome in my FI plans and will fill some of those afternoons. As will ad-hoc consultancy work. But I just need to find out my why…
My health and well being is much more important going forward. If any client tells me “But, we’re on the critical path”, I’ll walk or they can fire me. Fortunately, I’m in a position to do that now.
So now I will wind down slowly (as opposed to cold turkey), and opt for shorter hours as I approach FI.
Thanks for stopping by. Now I would like to hear from you in the comments:
Hows your FI journey going so far?
Are there any stumbling blocks on your path to FI?
I’m excited to post something different this time around. I decided to host an interview, after meeting an inspiring individual on one of my Meetups, who happens to lead a very interesting lifestyle.
Donny is from Taiwanese descent and was raised in Montreal, Canada. This is where he had a traditional upbringing, his own condo, a prosperous career as a programmer and a vibrant lifestyle. However, he always questioned life as an employee and was a bit of a maverick in the workplace. So much so, he got fired 5 times.
He eventually saw the light and retired at the tender age of 39. This is when he sold his own condo and embarked on a dream lifestyle, now travelling to 5 different countries per year…for the last 4 years. As Donny boasted in his recent 12min.me presentation, “I make money when I masturbate…” I like this guy already.
1. It takes a certain amount of self-awareness and drive to live this lifestyle. What is the Donny backstory including how you retired so early?
This wasn’t a planned lifestyle. Early retirement wasn’t the goal…it was an accident. All I know is how I live today – it’s all I know. I’m living the exact same way I’ve been living the last number of years. I regularly invested my savings and when my passive income reached that crosshairs moment (when my passive income was greater than my expenses), that’s when I quit my job.
I then researched what FI’ers do after they retire and researched the top 5 activities. That’s when I decided to travel because that’s what people in this game do. I Live 100% off index funds and stocks that pay me dividends.
2. How and when did you know you didn’t fit into conventional society?
When I was 25 years old, I worked on a project with somebody who was 25 years ahead of me from a professional point of view His future as an employee in a company didn’t excite me.
I grew up in a middle-class family, where my parents drummed into me; get an education, go get a job, start a family, stick at for 50 years and collect that golden watch – and life will be beautiful. That still perpetuates with my mother today. She’s always telling me to get a job. She would say things like, “My friend’s son is an accountant, and he lives in this part of town. He lives in such a lovely house with 3 bedrooms and drives a fancy car”.
Even though I’m retired and don’t have a job, she still wants me to wear a suit. She would paint a picture of what a perfect person would look like. It’s natural for people to compare and keep up with the Jones. My Mother would try and shame me into fitting that same mould. I read a really fun quote recently – ”In the eyes of average people, average is exceptional”.
And that’s what causes folk to live/ stay in a conventional life because average to them is already exceptional. As in, they’ve already made it in life…they have a house, a car, a good job. Even on Facebook, every time one of my friends posts a picture of their brand new car, congratulations is plastered all over the post.
But congratulations on what? Fitting into this conventional mould? How hard would it be to buy that car…because anyone with a pay cheque can get a car loan. This is how the financial banking system works. The unemployment rate is 5 or 10%? So, around 95% of society have a job, hence they can get a car loan and a mortgage. So, congratulations on what exactly? For being average?
I made the mistake thinking that everyone living that conventional life wanted to get out of that conventional life. But I was wrong. In fact, they are blissfully unaware of FIRE, or maybe they’re happy where they’re at?
3. What are you currently working on and could you give us a brief roadmap of how you got there?
Before I retired 4 years ago, I started reading books on retirement. I didn’t know anything about the FIRE scene back then. I don’t know what exactly influenced me, it could have been some subliminal cues I picked up on. But for me, it was just a mathematical equation – my passive income is greater than my expenses, so I don’t need to make any more money.
We’ve seen how people like Bill Gates and Warren Buffet are giving away hordes of cash because they also realised that taking billions of dollars to the grave achieves nothing. Being the richest person in the cemetery is pointless. So, they’ve kept enough for a comfortable lifestyle and given the rest away.
They also could have been an influence on my early retirement. But I’ve had folk like my mother say, “even though you have passive income covering your expenses, why not just go back to work?. Because everything extra you make at the job, could be extra you could add to your bank account”.
With regards to part-time work – for me as a programmer, I knew people who were working on video games as a side hobby, on the weekends or being part of open source projects. Because they just loved programming and hobby projects in their own free time. However, I’m not inclined that way. I don’t code unless you pay me.
For me, it was just a job. It’s a bit like being a Doctor going to a dinner party, and everyone asks, “I’ve got this pain”… and the Doctor would say, “Well, you can come to my office on Monday morning”. Well, I’ve got that Doctor’s attitude at the dinner party. I attempted to expand on my hobbies when I retired, but later found out I didn’t really care for them.
It turned out that a lot of my hobbies turned out to be stress relieving activities. It turns out that drinking on a Friday night with your buddies is not so much a hobby. It just turns out that because I was working so hard on a job I didn’t like, it made me just want to get hammered.
As a programmer, I used to go to massage therapy every month. I could literally feel the pain between my shoulders. And the massage was necessary. Now I don’t need to do that. Not to save money, but because I don’t have a pain in my shoulders anymore. So, the first thing I did when I retired, was to expand on my hobbies and the things I love doing.
So, back to the question. One of those things is reading books. I love to gain knowledge. I love exercising, which has now become a habit. There’s something the Dali Lama once said – “Humanity is strange, first people exchange their health for money than exchange their money for health”. I love meeting people and learning about their hopes and dreams. So travelling 5 countries a year helps in that respect.
4. How do You Design Your Day?
When I was working, I’d say yes to every Facebook event I was invited to. Yes to the house party, yes to the dinner invitation and yes to that movie. Maybe I was trying to escape the stress from my job? And I think we grow up thinking we have to agree to everything. If you say no, you’re just no fun.
I think it was also drummed into me from my job. My boss would say, “Can you stay late today and come in early tomorrow? If you want to be a ‘team player’ and not upset people, it was always…yes! So, throughout life, I’ve been conditioned to say yes to my teacher, my parents, my boss…and extended to my network of friends.
So, now that I finally have free time. I thought…this is mine. This is my time now. I can say no to everything. I own this time, I’m not going to waste it on things I don’t care about. I get to realise what’s more important now. For instance, if my friends invite me for a movie and coffee afterwards, I’ll skip the movie and do coffee instead. I find the coffee/chat more valuable, hence this is a more productive use of my time.
I may say no, but I’ll find an alternative that is more interesting to me. I read another quote, “If you don’t have control of your own time, then someone else does…”. So, I’m quite militant with my time and adhere to the methods I’ve read in books, that are used by Olympic athletes, coaches and CEOs. What I find strange is, the only thing we (conventional folk) put in their calendars are things like dentist and doctor appointments. But everything else is wide open for pretty much anyone else.
5. Tell us More About Where you Travel to and When You Decide to Leave?
With regards to the 5 different countries, I live in/ travel to, I have pretty much the same daily routine/ schedule for each one. So, on average I travel to 5 places each year – Hungary (autumn option), Mexico/ Taiwan (winter options), Japan (spring option) and Canada (summer option). With summer, I could use any of these options as it’s hot everywhere. I sometimes use these places as a central hub and travel to other places within each of these 5 countries. The only thing that changes for me is the background picture…kind of like a screensaver on your computer. And of course, the seasons change. I move to a different place when the season changes. But these are the only variables to my daily routine. I don’t have a stringent checklist.
6. What’s been the most difficult aspect of this whole lifestyle? As it’s not all sunshine and rainbows as we see on Instagram
As soon as I retired, I thought great…I would get to teach this to all my friends and co-workers. Because, if I got out of the rat race, then everyone else would want to get out of the rat race too? If I get to hang out at a cafe at half two in the afternoon on Mondays, then I kind of want my friends to hang out with me. So, I want to teach people how to invest their time and money to make passive income and retire early.
However, the most difficult thing was trying to find someone to share this with. As I found out, not everyone is interested. That was the mistake I made. The difficulty I had, was that thing where you have ‘expectation versus reality’. Disappointment is the gap between the two.
What I’m saying is – my expectation was, everyone wants to retire at 30. The reality is, no. Not everyone wants to retire at a young age. In fact, I find that only a tiny minority want to retire at a young age. That was a big disappointment gap. And that response (or reality) still continues to surprise me after 4 years.
So instead of teaching it, I’ve decided to be a little bit more like Warren Buffet. In other words, teach by example. Hence, I’ll keep on doing what I’m doing. I guess eventually, those who are being ‘voyeuristic’ (and looking at my facebook), will eventually realise that Donny is onto something big. The penny will drop eventually.
So, it’s only recently I decided that the model I should be going with is lead by example, rather than forcing it down peoples throats. As a side note, when the conventional ask, “What do you do?”, I simply tell them I retired 4 years ago. No beating around the bush or lying. The reaction is often, “Well, you must have got lucky”.
For most people, early retirement is luck or maybe getting a break in Google/ Facebook during the early days. There will always be haters, and the best advice is to ignore them. Or even better, prove them wrong by taking action…not words.
Loneliness or love can be another difficulty. I read a great book called Vagabonding where the author fell in love with the country and/or woman. But he found he really likes China and ended up staying there much longer than he planned. And even when he published the book, he said even to this day, he never made it to Africa. Even though it’s second on his list.
This is because he was enjoying the present moment and going with the flow. It’s less of, let’s bang off all these items on the bucket list…and more of let me enjoy the moment as it presents itself. So, what I’m saying is, if I do meet someone I genuinely connect with. It won’t be like, hey sorry lady, I’ve got to jet off to Japan in 2 weeks according to my schedule.
Also, the women I meet don’t necessarily need to be into travel but has to have the right mindset. i.e. someone who values their time and schedules it accordingly. And it’s why I schedule my time accordingly during the day, so I don’t experience loneliness or get agitated with boredom. The reality is, no one is about between 9-5, so there’s no point complaining about it. This is my time to brush up on a new language, read books, clean the apartment, take an excursion.
7. Is there any advice you could give to the readers: If you could have had someone there when you transitioned to this lifestyle…what would you have needed to hear the most?
I look at successful people such as the Bill Gates or Steve Jobs in this world. What would they do differently in their 20’s? I think it was someone like Warren Buffet that said, “If I were to lose all my money today, and start over again, I would make it all back much quicker than the first time.” The fact that I ‘accidently’ retired because of my passive income. Well, it wasn’t an accident that I received my passive income. It was an accident that I noticed that my passive incomes were equal to my expenses.
I prefer to live the way that makes me happy, rather than stick rigorously to a ‘magic number’. Remember, my passive income covers my Canadian expenses. And because my passive income equals my Canadian expenses, that’s why I retired. Hence, my dividends go much further in the lower cost of living countries. So, I’m committing geoarbitrage.
At the same time, if I fall in love in Japan, my expenses will go up. However, that would give me the motivation to make more money.
So back to the question…what would you tell your younger self? I would tell myself to concentrate more on income producing activities versus stress relieving activities i.e. watching tv, going to dinner parties etc. It’s about knowing what your values are. Let’s take, for example, Olympic winning athlete Michale Phelps. He didn’t want to retire after the Beijing Olympics, he wanted to take part in more Olympic events.
However, his Mother was urging him to live a ‘normal’ life. She was concerned he wasn’t hanging out with friends, dating girls etc. But from his perspective, he wasn’t making any sacrifices. He went ‘all in’ on what he loved. He loves being at the swimming pool. He saw the greater picture.
The difference was, their values differed. So for me, I would say to people focus on what you love. Some people make the mistake in thinking, a successful life is setting goals, fulfilling them and setting new goals. But I think what’s missing in that equation or that advice, is that your goals should align with your values. It’s easy for anyone to say, get a job, buy a house, get married, have kids. But if they don’t align with your values, then what’s the point?
8. Where Can My Readers Find You Donny?
I don’t have a blog, Instagram or Twitter account, so the best way to reach me is my Linkedin profile.
Nothing this month, although I’m aware I should have dumped the notorious Corus Entertainment (CJR.B) after it slashed its dividend. Yes, I was chasing yield.
Q3 2018 Dividend Growth Stock Purchases
1. 478 shares of Redrow (RDW) on 13 August 2018 for 517.63 pence per share.
2. 191 shares of China Construction Bank (CICHY) on 13 September 2018 for 1276.93 pence per share
It’s getting more difficult to find value amongst the S&P 500, so no chance of any bargain dividend aristocrats. However, the UK market is providing some gems. There’s a fire sale with the house building sector (e.g. Redrow) at the moment.
I thought I would also take a punt with this Chinese Bank, in the midst of the trade war with China/ US. China Construction Bank Corporation is one of the “big four” banks in the People’s Republic of China. In 2015 CCB was the 2nd largest bank in the world by market capitalization and 6th largest company in the world.
The metrics look promising, although it’s probably as far as I’ll venture with the Shanghai Exchange.
Some shareholder-friendly companies like to reward their shareholders for their loyalty, one of which (this quarter) is Green King (GNK). They decided to send all their shareholders a year’s worth of 25% discount vouchers, for using at their selected outlets. Again, I handed over to friends and family to use.
Green King also paid out 159.58gbp this quarter, so no complaints there. Although they are a little down in the dumps with regards to their share price.
Dividend Income for Q3 2018
41 dividend payments were distributed in Q3, 2018 (an increase of 4 compared to Q2, 2018)
1800.97gbp (dividends from Q3) has accumulated in my broker account (post withholding tax and broker fees).
There’s an increase of 492.65gbp for dividend income in Q3 (compared to Q2, 2018).
Average yield is 4.59% (taken from the ranking system), a decrease of 0.50% from last quarter
Total return from the dividend portfolio is estimated to be 12.59% (capital gain/8.00% + average yield/4.59%)
I’ve taken a screenshot straight from my H&L account, to show some transparency. Please see the bar chart below to show my progress.
It’s also the first time I’ve broken the 4 figure dividend monthly payment barrier (1004.51gbp…refer to September 2018 on chart).
2. British American Tobacco
3. Greene King
However, as a rule, I never reinvest dividends into a previous high ranking stock. Otherwise, I become too overweight. I’ve already reinvested in the above 3. And apart from AT&T, they are all good FTSE Index stocks.
So, the fourth highest-ranking stock for Q3, 2018 is Redrow (RDW). As I’ve never reinvested dividends into this dividend growth stock, I will deploy 1000gbp (I have 1097gbp sitting on account).
I purchased 176 shares at 567.9 pence.
For more information on how I reinvest my dividends for maximum return, click here.
Dividend Funds Overview (Capital)
The download from my Hargreaves and Lansdowne (broker) account below shows the state of play after Q3,2018 (and after the dividend reinvestment).
There’s been a capital gain of 14,039.181gbp for the dividend funds this quarter (dividend buys, dividend re-investment and good old-fashioned compounding).
Investment ISA (FAANG Fund)
There’s been a gain of 480.77gbp/ 2.28% for the ISA/ FAANG fund this quarter.
It’s the first time I’ve started to get nervous about ‘big tech’. Apart from a spike in Q2, 2018, my Scottish Mortgage quarter by quarter gains have been dropping since Q1 2017.
Now…it’s up 124.14%, but there’s definitely a slow down for this investment trust – judging by the data I gathered on my quarterly reports:
Growth of Scottish Mortgage Investment Trust (SMT)
Quarter by Quarter Growth
The psychological element is starting to creep in now. As much as, “Will I dump all my Scottish Mortgage stock?” However, I think I’ve learnt my lesson there.
And as far as my fund and share account (div stocks) and SIPP (vanguard tracker) go, I welcome a bear market with open arms. I’m just a bit apprehensive about the investment trust though, as there have been a lot of rumours recently:
“Interestingly, the indexes that performed best during the run-up also tended to fare worst during the following drawdown,” a team of strategists including Vijay Chandar said in a recent client note.
However, having another look ‘under the bonnet’, Baillie Gifford has done a good job in diversifying the portfolio by sector (and geographically). Where more non-tech now appears in the top 10.
Amazon – 10.8% (tech)
Illumina – 8.2% (life science research)
Alibaba – 6.0% (tech)
Tencent – 5.9% (tech)
Tesla – 5.1% (automotive and energy)
Baidu – 3.4% (tech)
Kering – 3.3% (luxury goods brands)
Netflix – 3.1% (media services provider)
ASML – 3.0% (photolithography systems for the semiconductor industry)
Inditex – 2.9% (world’s largest fashion retailers)
So, maybe I should stop referring to it as just a tech or FAANG fund.
The Investment Trust is also a smaller holding in my portfolio, so I’m comfortable from that perspective. So, maybe I just top slice it and hold some cash on account? Top-slicing is one such strategy. However, even though it has doubled in value, it may not necessarily be twice as expensive…as can be seen below.
Did I say it was on a discount?
No additional cash contributions were deployed into the Mintos fund this quarter.
The Mintos account has increased 428.13 Euros this quarter.
The Net Annual Return has decreased by 0.08%.
In my opinion, the reason for the decrease in net annual return is my tweaking with the loan term. I reduced the loan term from 36 months to 12 months, to enable me to have more ‘cash on account’. Hence, there is less exposure to high-interest notes.
However, I’ve now reversed this. I’ll keep the compounding machine plugging away.
For more information on Mintos and Peer to Peer Lending, click here.
The full 1000 Euros that was deployed into the Envestio crowdinvesting fund, is now fully invested in 10 investments (an extra 6 projects from last quarter).
Spread evenly at 100 euros per investment (9 are currently active).
The Envestio account has increased by 48.12 Euros.
For more information on Envestio and Crowdinvesting, click here.
Total rental income this quarter is 3072.76gbp after management, internet and repair fees.
I feel inspired to write this post after watching a Netflix Show called Black Mirror. It was one brilliant but tragic episode in particular that really hit home. It’s called ‘Nosedive’.
In my eyes, it’s about the consequences of trying to keep up appearances (inflated lifestyle) and a dependence on social media (hence, the dangers of social media).
What is This Episode Of Nosedive About?
‘Nosedive’ is a satire on acceptance, and the image of ourselves we like to portray and project to others i.e. the ‘Instagram Lifestyle’. The main character is called Lacey Pound, whose world is dominated by a ratings-based class structure system and who tries to please everyone.
Everyone in this screwed up society has an eye implant installed, which projects a rating screen where you can screen and rate people in the close vicinity (kind of like an eye web browser). It even filters out any imperfections in life (hmmm…Instagram).
It is a metaphor for seeing the world in rose-tinted spectacles.
Lacie is a lost soul desperately seeking social recognition, in a world where she thinks her value is equivalent to her social points or stars (the general public gain points or stars on meaningful interactions. As opposed to our likes/ upvotes/ downvotes on social media).
Everyone is living in this world of pretence, as they’re terrified of being ‘marked down’ (losing points or stars). Because the consequences of that are unpleasant i.e. not being accepted into the upper echelons of society.
The fake smiling, falseness, rewarding conformity and political correctness are sickening. Everything is sugar coated – at a diabetic level.
Black Mirror - The future of social media. Rating everyone in your daily interactions - YouTube
There’s a compulsive desire to impress all the time, hence false identities are adopted to impress others. At the same time, they end up losing their own identity.
Every interaction is artificial, where the general public is looking for something in return from one another. Nothing in this society is genuine.
Everyone sees everybody as an opportunity and not as a possible friendship. There’s no human good resulting in this system. No paying it forward.
Maybe this is the society we’re starting to become? a precursor to Nosedive? It’s actually so close to real life this episode, it’s quite frightening. Hence, the dangers of social media.
Is Our Society ‘Nosediving’/ Guilty of Keeping Up Appearances?
Don’t get me wrong, social media is a revolution in its own right and great for keeping up to date with friends and family.
I remember the once in a blue moon ‘ 100-pound’ phone calls to Australia back in the 1980’s when we tried to keep in touch with our relatives. Or writing lots of letters that seemed to take forever to write.
Not forgetting using it for small business.
But there is as much wrong about Social Media…
There are a number of points we can take from ‘nosedive’/ Lacie, and compare them to our own social media-obsessed society:
1. Aspiring to an Illusion
I think Lacie and some of our society are aspiring to an illusion. The happiness of being in that class or world is an illusion, as these people are no better than you or I. They just ‘appear’ to be. The sad thing is, she will never be satisfied because she doesn’t really know why that would make her happy.
And I think some of our society is like that. Always aspiring for more, thinking that an inflated lifestyle will make them feel happy. When in the long term, it won’t.
2. Made to Look An Outlier in Society
Lacie feels a bit of an outlier or made to feel abnormal because she lacks an online presence. It wasn’t long ago, I had a spat with someone. They were harping on about my Facebook ID, but I already ditched Facebook in early 2016 (at least the personal account).
When they did ‘add me’, they then discovered I had no posts or interactions from 2016 on. This caused even more of a ruckus. Then the suspicions arose, which angered me even more.
In some ways, I see their point…
Even though I despise most social media, I still get my suspicions about other people not using it. I guess I sound two-faced. I advertise a rental through a website where I’m Facebook verified. If I don’t see my potential guest having Facebook verification, sometimes it makes me apprehensive.
So, is it more dangerous to be out, than in?
But at the end of the day, I think this person is a bit of a social robot, so they got downvoted by me.
3. Playing the ‘Game’
Lacie wasn’t naturally very good at this social media ‘game’. So, in a society where the availability and the cost of things are so heavily influenced by charisma and social success, the consequences of being quite the opposite are not so good.
Unfortunately, our society has rewards for charisma that are ludicrous, and unfair if you are on the losing end of them.
And social networks like Facebook and co are programmed to enforce these charisma rules. So, it’s no respite if you’re not in with Kool and the gang. In fact, it’s a source of isolation and depression for the not so popular. Aka skulking.
4. So, What’s the Truth?
What is the real truth about social media? Are they the messages that garner the most attention or emotion? Of course not. We can’t make judgements based on emotions, it has to be real facts.
A social media dominated society encourages over emotional individuals, they play on our weaknesses.
A good colleague of mine was travelling in Dublin a few years back and caught a taxi ride from the airport into town. The taxi driver talked passionately about the state of today’s society. He summed it up in one really. Society used to look up to great actors like Marlon Brando and Katherine Hepburn.
But now a lot of young folk aspire to and follow reality TV stars. This is what society has succumbed to.
My Nosedive In Society
I guess this episode resonated with me, as I once saw myself as Lacey Pound. An absolute nightmare on Facebook (and Instagram). I was using aesthetics to gain digital attention. Got to wear the right thing, have the perfect backdrop and adopt the right pose. Someone pass the sick bucket, please.
The more validation I received, the happier I was. It eventually got me into trouble though, checking into my friend’s house and sharing my post across the globe. My friend’s wife got frantic, in case her home’s co-ordinates got into the wrong hands.
I also posted a pic at my friend’s wedding in France. The backdrop was lovely, with the classic wedding car in the foreground. But it happened to be raining at the time and the couple weren’t impressed with the timing of the shot.
And they’re correct. I wanted to keep up appearances, even if it meant p!ssing folk off.
I also spent too much time ‘checking in’ to different places and living a ‘James Bond Lifestyle’.
So, It ended up costing me time, money and getting me into ‘situations’. I started asking myself, where was all this leading to?
I stopped posting when I decided to go on the official path of FIRE and knuckle down.
I’m not against mainstream social media as per say, I use it for blogging and keep up to speed with Linkedin for relevant projects thast may arise. But I don’t use it for personal use now. But each to their own.
Dangers of Social Media & The Frightening Future
The scary thing is, China is in the midst of implementing a similar setup to what we witness in ‘Nosedive’. Ok, they’re not adopting eye implants, but their citizens are going to be controlled and monitored through their own social rating system. It’s called the ‘National Social Credit System.’
The Chinese government wants the basic structures of this Social Credit System to be in place by 2020.
The goal is raising the awareness for integrities and the level of credibility within society. It presents as a means to perfect the socialist market economy as well as strengthening and innovating governance of society. This indicates that the Chinese government views it both as a means to regulate the economy at a business level and as a tool of governance to steer the behaviour of citizens.
Classic Banksy – Strong message against government surveillance
The Chinese government aims at assessing the trustworthiness and compliance of each person. Data stems both from peoples’ own accounts, as well as their network’s activities. Website operators can mine the traces of data that we leave and derive a full social profile, including e.g. peoples’ location, friends, health records, insurance, private messages, financial situation, gaming duration, smart home statistics, preferred newspapers, shopping history, and dating behaviour.
Once implemented the system will manage the rewards, or punishments, of citizens on the basis of their economic and personal behaviour. Some types of punishments could be flight bans, exclusion from private schools, slow internet connection, exclusion from high prestige work, exclusion from hotels, registration on a public blacklist.
When the Social Credit System rolls out the final touches, it will constitute a new way of controlling both the behaviour of individuals and of businesses.
You can already see the dangers of social media.
For me, keeping up appearances comes at a price. And not just a financial one. This episode captures this exquisitely. The social message, the ethics and the philosophy make this an incredible episode.
We take for granted individuality. But it is the differences that assure human kind’s survival and not conformity as portrayed in this episode.
Our society is not quite on that level, but it’s not far behind either.
Unfortunately, a similar sort of social rating system is in the validation process in China. This is actually happening. Punishments, government surveillance and possible exclusion from high prestige work? This is when a society loses humanism. Again, the dangers of social media.
With regards to the ending of the actual episode. I don’t want to give too much away. But it’s a very liberating one…
Now I would like to hear from you in the comments:
Has keeping up appearances got you into trouble…or into debt?
Have you experienced any dark sides of social media?
What’re your thoughts on where social media is heading?
Short term lets are considered a little more lucrative, compared to their long-term counterparts. But, there is a small price to pay…
So, to answer the headline, the short answer is NO.
This isn’t necessarily an analysis of short term lets versus long term/ private lets either. More of a, how to make the short term lets work, without breaking too much of a sweat.
I’ve been managing a short term let close to ten years now, so hopefully, I can offer a little insight (to someone looking to break into this game or a refresher to seasoned owners of such property). I’m by no means an expert (otherwise I would have FIRED by now), but I’ve picked up a few pointers along the way…
Turnkey Versus Micro Manage
The only surefire way to make your short term let fully passive is to employ a ‘turn-key’ agency, to do all the heavy lifting. Where they manage everything. However, this will eat into your yield.
For me, it defeats the purpose. Unless you bought someplace with a super duper double-digit yield. Perhaps in a frontier market? Or maybe you just got a great deal, so congratulations.
Anyhow, the other alternative is doing everything yourself (with the ad-hoc help of a letting agency/ cleaner). But…at the same time, optimising your short-term rental(s), to make themas passive as possible. If you want to optimize your yield, then you have to think of your short-term rental as a microbusiness and run it like one.
Trial And Error of Rental Websites
Airbnb seems to be the default choice for the short term let market these days. However, there are many alternatives out there. So it helps to keep an open mind and shop around.
I recommend validating every key rental website, as each site offers a different angle/ market. So, find the rental website that fits your market.
The response will vary from rental site to rental site. For one site, I had guests asking for my best price (certainly not my type of customer). On another, I received strange requests. I don’t need to tell you’re listed on the wrong site when you get tumbleweed i.e. no responses.
I eventually settled on HomeAway, as they typically attract middle-class families from the UK and mainly mainland Europe. And 99% of the time I’ve had no issues. But your criteria may differ from mine.
I also use them, as they do some of the heavy lifting and ensure day to day operations run passively i.e.
They send out payment reminders
Collect payments from customers
Update your calendar (and other calendars on other websites)
Collect and return the breakage deposit
Send welcome and thank you emails
Remind customers to write a review
Any decent rental website should incorporate this type of software, to semi-automate your day to day operations and making everything a little more passive.
For short-term city lets:
Think Airbnb and Booking.com
For short-term holiday lets:
Think HomeAway, Holiday Lettings, ClickStay and Flipkey
I wouldn’t waste my time with any free rental listing sites. But Airbnb and Clickstay are free? Yes a free subscription, but you pay a commission for each booking. What I mean is cheap rental websites with a low domain authority/ no web presence.
Target Your Market
Just like your blog or web business, you can’t be everything to everyone. So, pick a niche and stick to it, preferably straight away.
I target young families and found a good fit with the HomeAway rental site. Hence I ensure safety is my number one priority for the children. And I kit the place out to keep the family entertained.
Branding Yourself And Marketing
You need a logo and tagline to give yourself an identity and differentiate yourself from the masses.
Create a video for your apartment by taking professional SLR photos/ hiring a photographer and adding a professional voiceover and background music. Hire someone on Fiverr/ Upwork to do the voiceover (if your own voice lacks a little pizzazz) and provide them with a narrative script/ storyboard.
Then give this to a video editor (or do it yourself) to finalise. This will cost considerably less than hiring a professional video promotions company.
In the early days, it’s a good idea to run some promotions such as an early bird or long stay discounts. i.e. build up the clientele and reviews.
You can also hire out a PR team by contacting your rental website marketing department. I had a young lady and her entourage stay in my apartment for a week. They got a free week’s accommodation and I received a glowing review and great publicity. A win-win for everyone.
Set up a website for your holiday home or short term let. WordPress is the go-to website for blogs and small business. However, setting up a website for your short term let is a different kettle of fish. Advertising on the big player rental websites is a relevant step.
But long-term, we want to break away from the paid solutions and the dependency we place on them.
The templates on WP suck for advertising holiday homes/ short-term rentals. But fortunately, a company called Lodgify host and supply some great looking templates and features.
Sourcing a Letting Agency/ Cleaner
The beating heart of your operation. In my opinion, the make or break of a short term let.
It’s finding that fine balance between quality of service and price. And it’s not easy. I conducted a whole host of telephone and face to face interviews for this part.
If the cleaning is not up to scratch, it can seriously damage your rating and then ranking, but more importantly – your reputation.
Second to that is the service. The service/ letting agent need to be quick off the blocks to attend to your guest’s needs.
In my opinion, what we need, are some ambitious young couple/ family with a fire in their belly to take the reigns. As opposed to a faceless corporation.
Hence, finding the perfect letting agency can make your operation close to passive. On the flip side, if the letting agent isn’t pulling their weight, the short term let can become a pain in the butt.
Out of interest…if anyone has service industry experience (although, not absolutely necessary) and fancies a lifestyle business in Eastern Cyprus, looking after apartments/ short-term rentals. Well, let me tell you…there’s a significant gap in the market there. Could be a dream lifestyle for some couple/ family?
It’s a location independent friendly place also, with regards to residency, banking and taxes etc.
Dealing With Customers And Your Advert
The faster you respond i.e. within the hour, the quicker you’ll rise to the top of the rental website rankings and improve your score. Not only that, your potential guest is more likely to book with you
Overdeliver with your customers needs and watch your 5-star ratings grow. They may even turn into repeat customers
Having reviews help, of course. In fact, 92% of travellerswant to see reviews before booking. So soliciting reviews helps both your listing and travellers so that they have a clear picture of what to expect.
Don’t fall into the trap of underpricing. Rise above this and price yourself competitively, a little more than your competitors. It’s all about perceived value.
With regards to some rental websites, you can become a premier partner if you satisfy enough of the above criteria over a long period of time. The pledge is a commitment to continually: provide great traveller experiences. Set and maintain fair, competitive, and consistent pricing.
And guests want validation or some sort of certification with their short term rental. They want that warm fuzzy feeling they’re renting a premium product which is safe and secure.
Hence, it pays to put in all this extra effort. This is where the passive bit goes out the window.
Dealing With Criticism For Your Short Term Let
You will have to deal with various encounters and issues.
Take all feedback and criticism as constructive (not personally) and ensure your letting agent deals with this immediately. As cliche as it sounds, it will make your property the best version of itself.
You won’t be able to address every single issue, otherwise, it could put you out of pocket. But incorporate the key ones. A decent letting agent will be able to advise you on this.
Again, this will take time out your day to address.
Being Threatened With the KGB and a Family on Benefits – Lessons Learnt
You put up with the odd moan and groan, it comes with the territory. Such as the lady who demanded to leave, because the view simply wasn’t good enough.
Or on a rare occasion at the beginning, a guest wanting to leave because of teething issues with the internet. That’s fair enough and on my watch.
But, be prepared for a little stress here and there though. It’s no walk in the park. We’re dealing with humans after all, and lots of them over a short period of time.
These 2 incidents/ examples below stand the test of time for myself and my nerves. Here’s how I dealt with them/ learnt from them:
I had a well-heeled family from Saint Petes stay at my short-term let in 2013. All was well during their stay until I received an email from my letting agent after their departure. The door handle was ‘broken’ and the sheets were soiled.
Hence, I contacted the couple requesting to retain a small percentage of their breakage deposit. She didn’t like that. Here is the response from that email:
“Dear Stefano! If you want to deceive me, you can leave the deposit to yourself. But know my husband, he worked for the KGB. And so I won’t leave it. If you don’t want to XXXX (very strange threat here…couldn’t quite make out what they were planning to do to me), return the deposit in full. Term to you 2 days. I hope you correctly understood.”
Sure, it was loud and clear. Needless to say, I reverse wired the retained portion of their deposit immediately and was left badly shaken for the rest of the day (and looking over my shoulder for the next few weeks). It’s not every day you get threatened by the Russians.
Here’s the kicker. My letting agent emailed back shortly afterwards…”Ahhh, it’s grand. That door handle is actually ok, just needs tightening. And those stains came out in the wash”
Lessons Learnt – Have some breathing space with the breakage deposit and post property inspection (at least a week). Never overreact and give the guests thebenefit of the doubt. You never know who you’re dealing with! So, maintain good communication with the letting agent at all times.
2. What happened in the summer of 2016, eclipsed the ‘KGB’ incident. I would have preferred to be tracked down by the FSB (Former KGB). Or maybe host a Chechen rebel leader and his family.
What happened was a slow burner that mentally tortured me over the course of 2 weeks. This family slowly chipped away at me…every single day. It started off with small demands, then I received the threatening emails. They even managed to turn my resort committee against me.
They served many threats but the one that would ultimately hurt the resort was to leave a bad review on Tripadvisor. Hence, their demands for a payout.
We are good at our jobs and smart enough to FIRE at some point in the near future/ or already. Well, this family knew how to ‘play the system’ and they were very good at it. They were dumb as a box of nails but smart at screwing people over and knowing who was who.
All sorts of demands were played out, but the bully was their pregnant teenage daughter ‘hurting her leg’ with the slats on my rental bed. Hence their demands for compensation.
I had a time difference of 9 hours, as I was working overseas. Every morning, there was a fresh ‘complaint’ to deal with. My mornings and afternoons consisted of addressing this nonsense. I eventually lined up a lawyer through my holiday rental insurance.
Then about after 2 weeks, I thought….I’ve had enough. My consultancy work was suffering and the client was picking up on it. It was really about a matter of pride now, not money.
Unfortunately, in life, some folk feel they are owed a living. They have no interest in doing an honest day’s work. Especially when the UK has a very generous social welfare system.
So, I gave them what they wanted all along. A filthy payout. Well, a fraction of what I received from their rental payment. I felt angry and went through the whole S.A.R.A model during that 2 weeks. But my work was more important. And I took a hit for the team (resort committee), as it was more important to keep the TA rating alive.
When the shameless shysters found out I would pay them a ‘little compo’, they fled in the middle of the night and left the place like a shit tip. It was the final piece of drama to this soap opera or nightmare in my eyes.
The crazy thing was, they still had a week left of their holiday unused.
But it didn’t matter. Our taxes paid for their 2-week stint away in the sun and they made a Brucie bonus out of me. In fact, they profited out of that sun holiday.
I was so relieved to get them out my apartment, my life and it didn’t hurt me financially.
Lessons Learnt – See paragraph below
How to Deter Undesirables
Why did I invite these undesirables into my property in the first place? The problem was, I had no control over this and had uncovered a loophole. I was scratching my head for a while, how to solve this, became paranoid about future bookings and had several discussions with HomeAway.
The solution is this. Decent, hardworking professionals don’t have an issue paying a bigger breakage deposit for established rentals (as I found out later on down the line…I initially thought it would put them off and lead to fewer bookings). I guess it’s like perceived value to them.
However, for scumbags, it’s a psychological deterrent. The thought of them forfeiting their deposit is too much for them. And it works a treat.
Double the breakage deposit.
It’s a bit of a grey area this.
A properties value is determined by its possible legal uses. If it can be both a domestic rental and a holiday rental then it’s value could be greater than one that is just restricted to a holiday rental.
The value of a business is a different matter entirely; the sort of business, it’s location, it’s local competition, etc., will have a bearing on its likely sale price.
Also, the value will also be determined on the basis of the sale – selling as just a property with a “potential” for holiday rental income is not the same as selling an existing trading holiday rental business, including one or more properties, as a going concern.
So, generally a Holiday Lets business could be valued at the total assets true commercial value, plus once the average of the last 2-years turnover; sometimes it can be valued at 1.5 times on the basis of taking the 1.0 times true turnover without really discounting.
Hence potentially, if a holiday apartment is worth £150k & the average of the last 2-years turnover is £6k then the asking price could be £156k.
I mentioned re treating it like a micro business. Your best to keep records of all your guest’s bookings, invoices, repair and letting agent bills etc.
Again, a good rental website will take care of this documentation automatically and make things a little passive.
So, What Does it Look Like Today? Are Short Term Lets Worth it?
So what does everything look like today, compared to 9 years ago? Should you buy into the short term let market?
I rarely hear from my guests now, as:
Everything is semi-automated with email responders, payment collection systems and review request emails
Robust FAQ page after years of ad-hoc queries
Good communication and understanding with my letting agent
All constructive criticism has been addressed and implemented accordingly
My bookings have more or less doubled since inception, due to:
Word of mouth
The increase of 4-5* reviews
Achieving premier partner status
PR trip publicity
More exposure in search engines and partner sites with HomeAway’s strong web/ media presence and ties with Expedia
Professional website with Lodgify which attracts new bookings now
So, if you’re prepared for a bit of hard graft initially, this can be achievable.
In some ways, the short term lets business is like a fund. Your efforts compound over time and you get rewarded generously. On the flip side, if you let things slide, you will not grow and prosper. Then again, there are no guarantees.
Short term lets are very much trial and error, tweaking here and tweaking there. There are many variables. Making changes until you find the right balance.
Once everything is in place, the operation can run like clockwork. Given you have the right letting agency in place and invite the right guests using pointers from above.
If you’re after a pet project after FIRE’ing, then short term lets will certainly address that.
If you’re a people person and can put up with some flack here and there, then even better.
It starts as a slow burner of an income generator but can turn almost passive after lots of time (years, rather than months) and lots of effort.
Now I would like to hear from you in the comments:
What are your thoughts and experiences on short-term rentals?
Does this income generator fit into your FIRE plans?
A select bunch of FI’ers prefer to start their new life abroad after pulling the trigger. It symbolizes new beginnings, possibly a better quality of life and perhaps the opportunity to cut down on everyday living.
I wish to share my experience with moving abroad and starting a new life (style) overseas, the why and the how. A sort of mini-guide to moving abroad and starting a new life, for those looking to make such a move.
I emphasize the word ‘style’ in brackets. Because nothing needs to be set in stone these days.
My Story And Why Yours Is The One That Matters
I’ve been living this perpetual traveller lifestyle for years now and it was everything I ever dreamed of…and more (and that’s another story, another time). But it now feels the right time to phase shift.
I also feel blessed having travelled to many countries (57 at this point and worked in 11). Not that numbers matter. I’m no expert.
However, the last couple of years have been a bit unsettling. I’ve had enough of ‘living on the road’ and the FI thing is starting to wear on me. If it wasn’t wearing me down, then I’m not saving/ trying hard enough.`
I remember driving to work around 10 years ago and listening to the radio. I was in a dwam when a frantic woman on the radio caught my attention. News reporters were covering a storm that had battered America. It could have been North Carolina.
Anyway, this distraught woman lost her home in the storm. What she said next, really struck a chord with me.
“Without a home, you don’t have an identity.”
And that’s what can happen to perpetual travellers. It happened to me the last couple of years. It doesn’t matter if you own a bunch of homes for rent, you need to live in one of them.
And that’s why I need a proper home base again.
I read most FI’ers wait untiled they’ve FIRED, before they find a new base/ make any big overseas move. Which kinda makes sense. However, I prefer to do things in reverse and validate the situation fully.
In fact, I’ve been validating different countries for the past 4 years.
I thought I needed to live near a piece of coastline with perfect side shore winds (for windsurfing). Or live across from a golf course with days filled with sunshine. Sure, I’ll integrate these things into my life, but I slowly realized I don’t need them every day.
More importantly, I’ve battened down the hatches the last few years. I became super gung-ho about this whole FI thing. That’s why I want to make that move now. I don’t want to ‘put my life on hold’ any longer. When I do reach FI, I don’t want it to be an anti-climax.
What I mean is or what I don’t want, is suddenly finding out all these things I read about a place/ the vivid pictures I had in my head didn’t live up to my expectations. That would be a nightmare.
I would rather ‘test the muse’ on my journey to FIRE. Not after the event.
But that’s only my way of doing things. Everyone’s situation is completely unique.
Finding Your Perfect Country to Live In
I remember courting this young Brazilian lady in Dublin many years back. We were sitting in one of those tea gardens along the quays when she asked, “Where would you really love to live in the world?”
I was like, well…it would have to be close to X industry because I can then serve my clients.
She then retorted, “Forget work and jobs, where would you really love to live?”
I couldn’t quite grasp the concept back then and although I had travelled extensively, I really hadn’t done a deep dive on any country.
And here’s the thing. When it comes to the crunch, it’s actually very difficult to pinpoint a country to live in. I know a good friend who emigrated to Canada many years back and started a business and a family. I know my own family (grandparents) who went to live in Australia. They knew what they wanted…
Because when it comes to up sticks, there are usually 2 reasons. Love or money.
For me though, it was neither. Fortunately, I’ve made a modest chunk of my wealth already – elsewhere. And there is no woman in sight. So, to pinpoint a new country to live in was proving more difficult than I thought.
But I do need change and stability.
Also, it’s not actually important where I’ve moved at this stage, but rather why.
Hence, I wish to give you the thought process about why I moved out my home country and why the heck I’m starting over…I say starting over, but that’s maybe too strong a phrase.
Starting Over at 40
We all crave change at some point or another. Some more than others. I remember reading these articles on the web…about the girl with the great degree, high flyer career, thriving social circle and steady relationship. Then out of the blue, she gives up everything and starts over. I can actually resonate with this now.
Not that I’m some high flyer with a perfect life. Far from it. But I know where she’s coming from
For several years, there’s always been that thought at the back of my head. That one day, I’ll return to my home city and settle down there. I always travelled back from my overseas assignments and met up with friends and stayed with family.
The perfect opportunity even arose a few years back, when I worked from home (2 weeks from home and 2 weeks on site overseas). It was the longest amount of time I had spent in the UK/ home city for years (since my Uni days). It was a great litmus test.
Just maybe I’ll enjoy working and living here?…then I can buy a house and build a new life?
It became very clear though, that this world had left me behind at some stage; I just wasn’t aware of it.
What I thought was distance created by living hundreds (if not thousands) of miles away, was actually distance created by living a totally different lifestyle and having a totally different mindset from everyone else.
It simply didn’t work anymore.
When you’ve travelled extensively, you start to develop a taste for different lifestyles…an alternative lifestyle. And experiencing random things.
What’s more, I was tired of folk asking me…why. That expels energy from you. Don’t get me wrong, a why used in the correct context is perfectly understandable, but these were all the wrong whys.
My life wasn’t up for debate. I got tired of explaining.
Since I’ve been living and working overseas, folk now ask me…how. I gain energy from that and wouldn’t have it any other way.
Do not wait until the conditions are perfect to begin. Beginning makes the conditions perfect Click To Tweet
The crazy thing was, I was living in this void. In between a world overseas and my home city. Or put another way, two lives. It didn’t feel real, I was almost too comfortable. The only way to remove this void was to choose the life I really wanted. And that was an easy choice.
There is a caveat to being a contractor who works away a lot. You can go through an identity crisis. The longer you stay away from home and the less frequent the visits, the less you associate yourself with home.
Then there’s reverse culture shock. Anyway, I digress.
The decision was more or less cemented after visiting the accountant after my 40th Birthday. I was always planning to leave the UK ‘one day’, I just needed a push. I certainly wasn’t planning to pay taxes in two countries i.e. in my home country and new country. Very soon, I was about to break the UK residency rules. I needed to leave fast and start my new life.
And on the note of taxes, I needed to find a place to protect my wealth. Somewhere that’s fair with a lower cost of living. But, finding somewhere where I can connect with was more important than anything.
Pre-Requisites for Starting a New Life
Declutter your life:
It makes life difficult, knowing you have this pile of stuff to shift from A to B. This constant weight, playing on your mind. Sell what you don’t need online and profit from it, or give it away to charity.
The things you own end up owning you. It's only after you lose everything that you're free to do anything... Click To Tweet
Shortlist some places you would like to start over and validate them.
Get professional advice about non-residency, tax, visas and citizenship. Your accountant is a good place to start.
Plan the lifestyle you desire
Best Places to Start a New Life?
Over the last few years, I’ve been putting a little checklist together. Collating mental notes along the way, gathering wisdom obtained from the living/ working abroad and jotting down experiences from visits to ad-hoc countries.
My mindset 3 years ago is vastly different from my current mindset. It’s lightyears away from 5 years ago, let alone 10 years. Travel has contributed to that immensely. I do feel I have my shit together now, I better had.
If you’re pondering over the best place to start over, you may have to perform a lot of trial and error. And travel to different countries, until one feels like a great fit.
In some ways, it’s like choosing a good partner. We all have different tastes, but ultimately attraction isn’t a choice.
According to the Global Liveability Index 2018, Vienna is the most livable country in the world to live in 2018. Here are the rest of the top 10 liveable cities in the world to live in 2018:
Therefore, when you’re thinking of moving abroad, your best bet is to shortlist a bunch of your favourite countries and then try them out. Remember, what looks good on paper/ in the latest guidebook or Global Liveability Index isn’t necessarily a good fit.
Sometimes you have to think of what you don’t want, in order to pinpoint that very thing you want. Start whittling down continents and countries.
I learned to lead with my heart, rather than my head.
To be more precise. Shortlist them with your head and validate them (trial them) with your heart.
And what works for a single person, may not necessarily work for a couple or a family.
Checklist for Moving Abroad And Starting A New Life
1. Weather and Seasons:
We’re all different. Some sun worshippers can’t do without sun 24/7.
And at the other end of the spectrum, I know folk who adapt better to a cold climate.
After working and living in Asia for 18 months, I kind of realized life isn’t necessarily all about sunshine and coconuts (although not all Asian countries have endless sunshine). But that’s just me…
For the first time ever, I realized I really love the ebb and flow of the four seasons.
What climate/ seasons work for you?
2.People and Population:
Meeting people and making friends is at the very core of my move overseas. Thankfully, there are online communities such as Internations and Meet Up that organize such events to help people connect.
I never thought the population was a significant factor. However, the more populated a place, the more chance of networking, meeting quality mindsets and new friends. Having travelled to many cities throughout the world, I feel one Million + is a nice figure to work with.
3. Island or Mainland Country:
This ties in with number 2. As a single guy, I feel I have a better chance of meeting folk living in a mainland country than living on an Island (from past experience). Sure, there are unique places like Chang Mai in Thailand that are set up for expats and digital nomads.
Also, from a travel perspective, I want to be able to jump on a train (or a plane) and have access to an array of different countries. A central base if you like.
It’s important the airfare (or train fare) is cost effective and frequent, from a practicality point of view. Otherwise, it’ll prove more difficult to visit family, friends and serve clients.
4. A Sense of Belonging/ Duration:
What you thought was your ‘dream’ destination, may not be sustainable on a long-term basis. I personally have a small handful of ‘special’ places in my heart, countries that have the wow factor.
However, having lived and worked in one of them, I realized it wouldn’t be a good fit long term. Sometimes, there’s a certain ‘heaviness’ or aura to a place and you feel compelled to leave after a certain amount of time. It’s kind of hard to explain unless you experience it.
It could be the language, the culture…who knows. It’s just a strong feeling that makes living there long-term, difficult.
This is why it’s best to validate your special place, before committing to living there. You want that sense of belonging and to feel integrated with your new country…
5. Cost of Living/ Value for Money:
I have experienced living (and holidaying) in plenty of cities/ countries. You have to weigh up the cost of living against your FIRE fund. If your goal is to FIRE early and live a good lifestyle for less, then this is a critical step in your endeavours.
I look at a place from a long-term perspective:
How much will it cost to rent? ‘Insider’ provides a nice insight, on how much it costs to rent a one bedroom apartment, in 30 leading financial centres, throughout the world. Remember, these are average rental prices (I’m not even sure if this includes utilities). Anyhoo, it makes a nice baseline guide on global rent costs.
What is the price of groceries? A website like Numbeo can help you compare the cost of living across different cities, in different countries.
Will you eventually buy a property? Hence, has there been long-term, steady growth, or is the property market a falling knife?
If you decide to buy, what are the interest rates?
How frequent and reliable is the transport system?
Transport links to the airport
Affordable healthcare and dentistry
6. Depth and Character:
I never thought of this as anything significant. However, it feels like a key attribute. I much prefer places that are steeped in history, as opposed to relatively new cities. Depends what you’re into. I want a place to tell a story. I want to feel it’s presence.
I’ve always been taken in by architecture, grandiose buildings with wide sweeping staircases, majestic archways to welcome you with cobblestones and courtyards.
Flat panel buildings don’t do it for me. But that’s just me.
Old or new?
7. Sun Holiday Destinations:
The honeymoon phase may last 2 or 3 weeks, then reality kicks in. Sun break destinations can be deceiving (I own such a property abroad, and have validated this situation by taking a mini-retirement there). They’re a wonderful option short term, but could potentially be a bit soulless and transient in the long term. Especially when the winter kicks in.
If you’re not in a holiday resort, you may well get away with this. Again, this is only my opinion. It will most probably be different for couples or families.
8. Location Independent Friendly:
Is your proposed new location FIRE-proof? i.e. location independent-friendly.
Is there a relatively simple and cost-effective visa/ registration service?
Will you get away with speaking English? If not, is the local language handy to grasp?
Are there expat/ digital nomad networks in place
Quality of WiFi
Decent dating pool
Enough points of interest, to support any hobbies etc
Are there any other foreigner disadvantages that would prevent you from living there long term?
What opportunities do these countries present? Some questions to mull over:
Is there still value/ good yield in the real estate?
How simple is it to set up a small business, and it’s associated costs and taxes?
Is it a developed, emerging or frontier market?
What is the startup scene like?
10. Visa and Residency:
No matter what your background is, you will have to register in your new country and obtain a tax ID. Assuming you’re going to stay there for more than 183 days per annum i.e. you’re not a perpetual traveller.
Research the relationship between your home country and your new proposed country by:
Relocation service agents
Probably the most important factor of all. Initially, when I went about choosing a place to live, I looked at; Malta, Andorra, Malaysia, Monaco (one must try)… the thing is, I was looking at tax rates. That’s great if you’re looking for a home for your Ltd company. I was so obsessed with territorial tax systems. There’s nothing wrong with trying to protect your wealth.
However, this is you we’re talking about. There’s nothing wrong with those places at all. In fact, they are all beautiful, amazing places in the world. However, at the end of the day, it’s where youtruly connect that matters.
Try and look beyond the tax rates and take a deep dive into the place itself. Lead with the heart…then the head.
Types of Tax System
There are three scenarios here to consider:
1. A flat taxon your worldwide income:
A true flat rate tax is a system of taxation where one tax rate is applied to all personal income with no deductions.
Typical countries – Estonia, Hungary, Romania, Russia.
2.Tax on a scaled basis/ progressive tax (dependent on earnings):
A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term “progressive” refers to the way the tax rate progresses from low to high, with the result that a taxpayer’s average tax rate is less than the person’s marginal tax rate. The term can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime.
Typical countries – UK, US, New Zeland, Australia
For a full list of progressive tax countries, go here
Katie Price is all over the tabloids again like a bad rash. According to the worldwide media, her financial affairs are an absolute disaster – having spunked most of her 45 Million net worth.
Ok, the media are probably blowing a number of things out of proportion and I haven’t even seen the woman’s company accounts.
And first of all, I don’t follow those ‘reality tv’ stars. The reality TV scene is my pet peeve. Why do we have to be subjected to this nonsense, day in and day out?
However, she has done well for herself, with regards to becoming one of the richest authors in the world (£26.9M in book sales) and setting up some successful businesses etc.
She might be (or was) a multi-millionaire, but she obviously hasn’t read, ‘The Millionaire Next Door’, by Thomas J. Stanley. Otherwise, she wouldn’t be in this predicament.
It just annoys me how brash and financially irresponsible some of these celebrities are. I just want to shake them. We can do better than that though.
Here are five budgetingtips Katie Price can learn from the FIRE (Financially Independent/ Retire Early) community:
Saving #1 – Cars
As a car enthusiast (especially of classics) and someone who does his own car maintenance, please don’t bastardize a vehicle with shocking pink. Some people think they have to make a ‘statement’.
The problem is, those sort of statements cost you money.
1. Leave the car as standard, and you’ll recoup the market value for your car.
When you modernize/ make changes to a house, it has the potential to go up in value. However, when you ‘modernize’/ customize a car, it goes down in value. I was a boy racer in my late teens and chief marshall of a hill climb (car trials) club in my early twenties – believe me.
2. There are more cost-conscious vehicles/ SUVs that are cheaper:
To run, insure, tax and maintain than her current vehicle (Range Rover Sport). Hence, she needs to choose a vehicle which is more economical. Is a Chelsea tractor a need or a want? Ok, maybe she needs an SUV as she has a farm. So, we’ll give Katie that one.
I’ve used Parkers Guide to help Katie Price source a more economical SUV:
The Dacia Duster and Hyundai Kona beat the Range Rover Sport, from all angles.
As well as the low price tag, Katie Price can save hundreds of pounds per annum if she changes SUV:
Better mileage per gallon
Petrol cars (proposed Dacia Duster and Hyundai Kona) being cheaper to run than diesel cars (her current Rangerover Sport) in the UK
Lower CO2 emissions hence reduced duty on road tax
Smaller insurance bracket
Reduced maintenance costs at dealership i.e. spare parts and cost of labour
Saving #2 – House
Miss Price has a rather large estate with 9 bedrooms, a tennis court, stables a swimming pool and 12 acres of land. From what I’ve read, she bought it in 2014, for around 1.3 Million. In fairness, she made around 700k from her last house.
1. Rent a Room Scheme (and decluttering)
Does Katie Price really need all these bedrooms though? These bedrooms are costly. Not only are bigger houses more expensive, they also come with higher council taxes (generally), outrageous heating bills and maintenance costs. What it costs for those extra bedrooms, could go towards paying down debt etc.
Simple living wouldn’t go amiss either. She can start by decluttering and freeing up those extra bedrooms, either for rent or for sale.
Katie has 5 kids, so she could at least rent out 3 of those bedrooms.
She could use the Rent a Room scheme, which is an optional scheme open to owner occupiers or tenants who let out furnished accommodation to a lodger in their main home. It allows you to earn up to £7,500 a year tax-free, or £3,750 if you’re letting jointly. You don’t have to be a homeowner to take advantage of the scheme.
I recommend Katie reads ‘Early Retirement Extreme’ by Jacob Lund Fisker. She will find out what is really costs to have those extra bedrooms and learn about simplifying her life.
2. Business Opportunity
Also, the stables and 12 acres of land could be used as a business i.e. horseriding lessons to pay for all the veterinary and associated farm animal costs.
The swimming pool looks like a cesspit i.e. never used and maintained. Hence, that should be filled in.
3. Sell and Downsize
Another option is to sell and downsize, as a bankruptcy notice was filed against the property in 2016.
The mortgage is rumoured to be in excess of one Million, with 10,000gbp per month mortgage payments. Other maintenance costs are believed to be circa 120K per annum, as she has housekeepers, gardeners, and nannies on the payroll.
Hence, selling and downsizing would be the more cost-effective option. The thing is, Katie has got her priorities wrong. She should have spent money upgrading/ maintaining her house, instead of her car.
With the house in disrepair and a challenging housing market, she may not get the price she so desperately needs this time around.
Separate her Non-Marital Assets – Non-marital assets as defined is the property considered by the courts belonging to one spouse or the other and is not subject to equitable distribution. Simply put that it is not part of the assets that will be divided in a divorce proceeding
Start Her Own Credit History – If you gift your house to the spouse during the divorce, and they default on the mortgage – then, your credit history is…well, history. It happened to a good colleague of mine and it’s impossible for him to buy a house now.
Close Joint Accounts – Examine all the joint accounts and different ways where your spouse can run up a credit card or withdraw and spend money. Freezing or closing your joint accounts can be a solution in order to keep track or keep your spouse from spending additional debt that you could be held responsible for.
It’s also rumoured Katie Price has been bankrolling her former flames i.e. paying off their credit card debt, paying them a weekly allowance or hush money.
Perhaps Katie should think of having a prenuptial agreement drafted and signed for her next husband. A good colleague of mine did exactly that. Once bitten, twice shy.
And she shouldn’t buy her spouse expensive gifts, especially depreciating assets such as high-performance cars.
It really has been a case of ‘your love or your life’ with Katie. She’s had to put up with emotional and financial turmoil with her previous partners, leading to a tumultuous life.
Katie Price needs to choose herself.
Saving #4 – Lifestyle
Katie Price is a classic example of lifestyle inflation. She lives life to the max. Which is great, to a certain extent. But she has an image problem.
She’s keeping up with the ‘modern celebrity age’. The media love her (as she’s relatable), as does Joe public (readers want to be her). She thrives on this and it’s one big vicious circle. She is a niche market, a plugin for the ‘A-listers that ordinary Joes couldn’t afford to copy or look up to.
Katie is a brand. She’s the ordinary girl, living the extraordinary life. In fairness, she has marketed herself very well.
1. Spend Less Than You Earn
But, she’s making the classic mistake. She’s spending more than she earns. She is living paycheck to paycheck.
She needs to fire up her spreadsheet and start tracking her spending and separate her needs and wants. It’s best to get off this hedonic treadmill. As the theory goes, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.
Katie Price urgently needs to read, ‘Your Money or Your Life’, by Vicki Robin. i.e how to get your financial affairs back on track, get on the crux of that fulfilment curve and start budgeting.
Saving #5 – Plastic Surgery
It’s rumoured that Katie Price has spent around a cool, half a million on plastic surgery. It’s perfectly normal to pamper yourself and improve your appearance. But this takes the biscuit.
The woman has had 8 boob jobs (and 8 bum lifts), ranging from 32B to 32GG. But not in that order. And countless other procedures.
First of all, it’s not healthy having all that surgery. It’s very traumatic on the body and mind. And those GG assets can attract all the wrong men. This could well lead to more emotional and financial disasters.
1. The Latte Factor
It’s also rumoured, she spends up to 740gbp per annum on Botox and 700gbp per annum on dermal fillers. In the financial independence community, we have something called the ‘Latte Factor’ i.e. the phenomenon whereby many small purchases add up to a significant expenditure over time.
In Katie’s world, this would be called the ‘Botox & Dermal Filler Factor’. Sure, she’s not having a surgical procedure done every day (at least I don’t think so!) But, these particular procedures soon add up over time.
Compound Calculator Courtesy of Monevator.com
If she were to invest this amount (the money spent on the two procedures annually) of money in an Index Fund, then she could retire with a nice little nest egg.
She could potentially net 64,616.54gbp over 20 years if she gives up the botox and dermal fillers (as shown in the above calculator…not including fund fees).
“Over the last 90 years, an 80/20 split i.e. the Vanguard Lifestrategy 80/20 accumulation fund, has an average annual return of 9.6%, which is roughly 6.5% after inflation” (according to the Bogleheads Forum).
I also think Katie has to work on inner issues first (her self-worth), before having any more plastic surgery.
You can clearly see where Katie Price’s Net Worth has been impacted.
The problem is, it’s all spiralled out of control. The image thing is so ingrained now, she would struggle to take up some of our ideas on board. It would destroy her current brand.
She would most likely scoff at some of the FIRE community suggestions. Can you really see her cruising around in a Dacia Duster?
Katie is a Barbie girl, living in a Barbie world. Life in plastic, it’s fantastic? She needs to stop the surgery (and funding former boyfriends) and start working on her inner self…her inner game. And invest this money back into a savings plan i.e. the index fund mentioned above.
The books mentioned above could quite possibly help the general public get their financial affairs back on track. However, I think I could be wasting my time with Katie.
Katie Price needs to think about rebranding and her next step in life. Quite simply, it’s her Money or her Life.
Now I would like to hear from you in the comments:
How should Katie Price move forward to get her life and financial affairs back on track?
Being a singleton and dating (your life partner) could potentially have severe consequences on your FIRE journey and end date. Not forgetting life beyond FIRE.
If you’re on the same page, then hunky dory, morning glory. If not, it could be a tumultuous ride.
But maybe it’s not as straightforward as that. Love is a funny old thing.
Before I dive into the present and discuss dating and FIRE, I wish to provide you with a little context with my dating background. I’ve presented all my quarterly income reports up until now…but that’s about it.
I must sound like a riot.
Hence, I wish to give you more of an insight into my earlier life and give you a bit of a chuckle.
If you wish to skip my dating life and progress to the good stuff below, just click here.
I’d also like to say, the enthusiasm and energy I exude for the FIRE movement is every bit the same I exuded for the dating game back in the day. I gave it my 100%.
‘The Game’ Era
I was never Mr popular at school, hence I never had a proper girlfriend. I was a bit of a nerd. I was performing magic tricks whilst the cool kids were at the back of the bike sheds. University was better, but I still struggled with the opposite sex. Then a few years down the line (back in 2005), a friend introduced me to ‘The Game’, by Neil Strauss.
Some may say, it was about the art of seduction (I’m sure many women will disagree) but it was about building an inner confidence. This bookchanged my life. A bold statement. But it opened up a brave new world and introduced me to new concepts and improved my personal development.
I was based in Dublin at the time and we would all go out ‘sarging’ (in the pursuit of women) on a Saturday night. Corny one-liners didn’t cut the mustard anymore, it was all about the canned opener. My repertoire was the ‘Jealous girlfriend routine’ and the ‘Best friends test’. The reaction was surprisingly good (most of the time).
First of all, I had to overcome approach anxiety. I read anything you can think of, to overcome fear (Susan Jeffers, ‘Feel the Fear and Do it Anyway’). It was baby steps, starting off with the opening of ‘two sets’, then moving onto ‘three sets’ etc. I even broke down a ‘seven set’ (7 girls in one big group) in my prime.
This is how we rolled:
Approach (come in high energy)
Canned Opener (spark her interest through a short routine)
Demonstrate Value (through storytelling and threading)
Use Neg Theory on the Target (lower her self-esteem…but don’t insult her…half way between a compliment and an insult)
Isolate the Target (naturally remove the girl you’re interested in from the set)
Kino Escalation (touch her lightly on the arm, judge scenario carefully with body language)
Kiss Close (move in for the kill)
Number Close (always get the digits)
Did this shit actually work? It did. It got us that step closer to women and we all got girlfriends/ wives out of it eventually. Seriously.
At my peak (when I had everything internalized, and honed my confidence) I was unstoppable. There was one evening in particular, when I traveled back to my home city, to meet up with friends. It was the summer of 2006.
We walked into a bar in a popular hotspot of the city, and within a few minutes (I kid you not), this girl walked up to us. She wanted to speak to me in particular. I didn’t need to use game or anything.
As I say, it was all internalized at this stage. I may have ‘negged’ her (hey, I didn’t want to look easy). Within another 5 minutes, I had to apologize to my friends and I walked out of the bar with her.
There’s a special codename mentioned in The Game for this particular interaction. It’s known as ‘Fools mate’. I’ll say no more.
We got in early. However, there were ‘lairs’ (groups of predatory men) starting to appear all over the country due to this book. Women were starting to cotton on.
We felt we had to go bigger, to stave off the competition. We ended up studying Neuro-linguistic programming, to ‘read’ girls. We ran complex routines using, ‘The Cube’. Hell, I was even reading women’s palms in pubs (I got trained up through a guide).
We would do anything to be the best in ‘our trade’ and to pursue women. And that’s the thing. It just got too weird towards the end.
It was so premeditated. I look back at all this and cringe. I’m embarrassed about it all. But I hope I’m always embarrassed by anything I’ve done 12 years earlier. I hope to be embarrassed by this post in twelve years from now. Because then I know I’m growing and changing.
After a couple of years, The Game waned. Women became immune to it and everything went back full circle.
“Fancy a drink love?”
It’s been years since I enrolled in ‘The Game’. But The Game led to several years of self-development, more partners and being a better version of myself (minus all the silly routines).
Dating and FIRE
So, back to the now. Back to reality.
How do Singletons on FIRE approach the dating world?
As an extreme example, I validated this scenario a couple of weeks back. I invited a first date to a FIRE Meetup I was hosting. For a start, I have an introverted nature. Hence, not only was I anxious about the Meetup, I had to entertain my first date during the session.
Why? On a positive note, I was demonstrating value (not in monetary terms, but taking a lead and having a healthy interest) straight off the bat. And it killed 2 birds with the one stone.
However, it felt a bit weird. Like she entered some cult. I had to Whatsapp her (from the bar) during the Meetup to explain what was going on. To reassure her everything was ok.
Secondly, it’s not really a good idea for a prospective partner to find out about your FIRE journey (not at the casual dating stage anyway), especially the income reports.
As it happens, it turned out ok. But I wouldn’t do it again.
Otherwise, how do you know if the relationship will turn out to be a transformational or transactional one? There’s a high probability for the latter…and we don’t want that.
What do I mean about transactional relationships?
“You’re a good man Stefano” – in other words, you’ll make a great substitute father for my kid
“You have honest eyes Stefano” – in other words, you’re the next mug that will pay for everything
These were real-life scenarios I encountered in my lifetime. I’ve heard them all…and that’s without them knowing about my FIRE fund.
I’ve even had two women propose to me on the first date (not at the same time though…that would be something). These were tri-lingual, highly intelligent women, with high caliber careers (and bloody gorgeous to boot). But…subconsciously I was no more than a sperm donor. It took me a while to get my head around this one for obvious reasons.
This really was a ‘love or your life’ scenario. Because love can be a selfish game. Maybe I’ll discuss more in another post…
Now that we’re on the road to FIRE (or even FIRED), we have to be careful what we tell a prospective partner in the casual dating stage.
Will they have a positive or negative effect on your journey? It sounds selfish, but we’ve spent a good chunk of our lives grafting, planning and making sacrifices to get to this stage.
As I say, it’s maybe best not to highlight too much, too soon. Otherwise, we might attract all the wrong partners, for all the wrong reasons.
What us singletons on FIRE need, are transformational relationships. What I mean is:
Both parties are interested in financial security
Both parties have a frugal mindset
Both parties prioritize having time over ‘stuff’
Both parties lifestyle and life goals should align
Your prospective life partner doesn’t necessarily need to be making lots of money/ have lots of investments. But they do need to have some financial intelligence.
The Ultimate Match? – FIRE Man and FIRE Woman
Perhaps those FIRE Meetups are subconsciously a way for FIRE singletons to find their prospective life partner?
Of course, an ideal scenario is a FIRE man and a FIRE woman hooking up. We can double up our resources and sing from the same hymn sheet. Isn’t life a dream?
But you can’t hurry love, as Phil Collins used to say. And money certainly can’t buy love (well, maybe 10 minutes of love in a South Korean Kiss Bang), as the Fab 5 used to sing. You really can’t plan for this sort of thing.
On paper, it sounds like the perfect match. Having their financial house in order is a pre-requisite, but unfortunately, it’s not everything.
We should also be looking for:
Empathy/ Emotional Availability
Warmth and Kindness
Share the same core values
Someone who values experiences over stuff
I think we have to be a bit more flexible with our requirements.
Your prospective life partner is more important than their bank account.
Potential FIRE Questions on a First Date
So, you want to get a feel for the person’s financial background. But feel uncomfortable asking directly.
“Excuse me Miss/ Sir, what’s your current Savings rate?” They’ll run a country mile.
Here are some potential FIRE questions to ask under the radar:
“What’s a typical weekend in X (his/ her city) for Y (the name of your partner)” – This could provide an insight to their spending habits and lifestyle costs.
“What’s the dream?” – A subtle way of asking what their goals are. You can gain a little insight to their future and core values in life. Is this all whimsical though? You can align their present-day chat with their dream response i.e. is their dream a realistic one…are they on course to building up to their dream?
In response to number 1. “Wonderful…what’s stopping you from reaching this dream?” – this may reveal any skeletons in the closet i.e. debt.
You could make a statement such as (only as a follow up to point number 1), “My big dream is to travel the world and retire early” This wouldn’t look too out of place or arrogant, as it’s only a dream. The key thing here is to gauge their response. Instigate how far they’re on their FIRE journey (or not).
“What would you do if you won the lottery?” – The answer to this can tell you a lot about their character and whether you’re dealing with a splurger or a saver. Maybe they have a giving/ charitable side to their nature?
“What is your ideal home?” – Perhaps a way of sussing out if they’re one for keeping up with the Jones…an inflated lifestyle. Or maybe they may reveal a minimalist side to their nature.
They don’t necessarily need to have all their ducks in a row. You’re looking for a potential partner here.
Tried and Tested
I validated these questions with another young lady recently.
One thing I would say is, you may have to spread these questions out over two dates. Otherwise, you may put your poor date under pressure. You should be in a position to make a full assessment, after these 6 questions. As a minimum, 3 of the questions may be enough.
I’ll also say, don’t jump to conclusions too quickly. My date proposed meeting at a posh bistro for lunch, in an affluent neck of the woods. My FIRE shield activated straight away and I started to have all these doubts in my head.
When I arrived at the restaurant, I discovered they had a set menu (specials) for lunch. When your one turned up, she went straight for the specials (as she had been there before).
Here’s the damage:
(2-course meal, including 1 drink) x 2 = 8.21gbp. Magic.
Be open-minded. Give your potential partner a chance.
Disadvantages of being on the FIRE journey And Dating
I haven’t FIRED yet. But sometimes my day to day living appears to be that of someone who has FIRED.
I’m a contractor, so sometimes I have a little downtime. Unfortunately, some women pick this up as being on the dole. Now I tell any prospective partner I’m working from home (even if I’m not).
Because you’re not working, and having no future plan for your career as such, it may come off as looking unambitious. Of course, it couldn’t be further from the truth. However, sometimes it’s difficult to portray this.
Hence, the FIRE thing can backfire for you if you don’t play your cards right.
FIRE Calculations And Paying for A Prospective Partner
After a play around with some FIRE figures, I calculate it’ll cost me an extra 10k per annum to look after a lady. If I keep up my traditional ways i.e. paying for more things than her. I’ve accounted for that.
And there’s not even a Louis Vuitton handbag in that calculation.
I’m a traditionalist, I’ve always paid (mostly) for a woman. Even when she insists on paying. Or am I a soft touch?
I read that some guys just double their magic number to take women into account.
Should it be 50/50 in this day and age though?
I vividly remember during ‘The Game’ days, my friend deliberately not paying for his date’s cinema ticket. This was a guy who had honed ‘neg theory’. Well, it backfired that night. What I’m saying is, there’s a thin line between paying and not paying for a partner.
I know another contractor who’s going out with a woman, because of her pension. He more or less brags about it. The ‘deal’ is, she gets to be a ‘kept woman’ and he gets to enjoy her pension when she retires in 8 years time. Hmmm. Each to their own.
I would err on the side of caution i.e. pay for more things. But not for everything. I certainly wouldn’t put my life on hold for something, that may or may not happen.
Finances Are The Number One Cause of Most Break-Ups
Asking the right questions (as seen earlier) in advance is mandatory if you wish a potentially stress-free relationship.
Divorce lawyers have nicknamed 8th January ‘Divorce Day’ as they expect to see a spike in inquiries of couples looking to break up.
The first working Monday of the year after Christmas is “a busy day,” according to Slater and Gordon, a law firm based in the UK. The legal firm says it often sees an increase in couples feeling unhappy in their relationships at this time of year when spending more time together over the festive period can cause underlying marital troubles to surface.
over a third (37 percent) of respondents said money worries are the biggest challenge to their marriage
with one in five (21 percent) blaming financial pressures on their partner.
around 16 percent had argued with their husband or wife about money in the last week
more than a quarter (26 percent) said it was the root of most of their rows.
“Although it is a happy time for many, relationships which are already showing cracks are likely to buckle under the added pressure and expense that Christmas brings,” Slater and Gordon lawyer Lorraine Harvey explained.
“Money is always a common issue and if one person feels that their partner is not pulling their weight financially or at least trying to then it can very quickly cause resentment to grow.”
FIRE Dating Website
With an ever-growing FIRE scene with continuous growth, is there a demand for a niche app or a website for FIRE lovers?
You could possibly hire a developer to set up an API to extract their brokerage metrics, along with their Facebook and LinkedIn data. However, sometimes one plus one doesn’t equal two.
Maybe there’s another way. I got talking with a young lady from Florida last week, after a meditation session. It was actually a first date with another young lady (I know, I’m a bloody nightmare), but somehow my one on one coffee date turned into a Chakra healing camp (don’t ask). Where we sat in the middle of a public park, chanting until the wee hours.
Anyhoo, this young lady from Florida was actually the matchmaker for a new start-up in the US and Canada – Tawkify (arriving in Europe in the near future). They’ve done away with algorithms that cost $$$ to tweak and raise questions whether they actually work. These algorithms are now being replaced with real human beings. Personal data concierges to be exact.
So, maybe there’s room for something like this in the FIRE community….human FIRE matchmakers. Maybe when the volume picks up?
There’s no magic formula. Women and Men are complex creatures. Personally, I don’t think any algorithm can figure out.
Everyone is becoming desensitized with this ‘swipe’ culture. I don’t think much good can come from it, certainly not a steady, long-term relationship.
Although it helps, there’s much more to a prospective life partner than their contribution towards their annual ISA/ SIPP allowance. We must look deeper, beyond their finances. But…they must have some financial savvy.
Hence, having quality communication, not long after the casual dating stage about personal finances can help alleviate unneeded stress further down the line.
Perhaps we need to build in a buffer to our FIRE fund, to account for a prospective life partner?
And love cannot be forced. As Neil Strauss (or was it David D’Angelo) put it – ‘Attraction is not a choice’.
Now I would like to hear from you in the comments:
How is the FIRE and dating scene working out for you?
Should we ‘go dutch’ with our partner, with regards to payments?
Have you come across any other challenges in this area?