Nov 302017

Life becomes interesting when theory turns to practice!

It’s one thing to have an FU-Fund, hidden away in a financial institution somewhere, purely represented as numbers on a spreadsheet. It’s quite another to actually be deep into the process of cashing it in, preparing for a period of unemployment sabbatical from January 2018.

I’m doing the calculations over and over and over, cutting back all unnecessary spend, looking into capital gains tax implications, trying to make the best decisions to ensure that the bucket of cash stretches as far as possible without sacrificing any too much quality of life. It’s too late now, the deed is done….

People ask of me “Was this planned?”

Yes and No!

I’ve known for a long time this day was coming but never knew exactly when. To be honest I was only expecting it in 6 years time, at age 55. Also, the plan, if one can so grandly call it that, was always more to gather enough in order to be able to quit permanently.

But, as an old salt knows, plans should always be drawn with a stick in the sand since the tides of life have a habit of washing them away at times.

And so it has come to pass that events at The Office have become too much for me to stomach. “I quit!” is now a reality.

The FU-Fund consists of 2 portions. The first, held in unit trusts and shares, will fund phase-1; 8 to 10 months of living. If, in that time I still haven’t found another suitable and sufficient source of income, then phase-2 will be funded by the corporate pension fund (which will be transferred to a preservation fund on resignation). There’s about another 2 years of living there. If I cannot come up with some income in that timeframe then I’m going to call myself pretty useless!

The problems are few but potentially critical:

  • The FU-Fund is also the emergency fund. And we all know that life has this nasty habit of throwing “emergencies” your way, especially when they’re not needed.
  • In order to stretch the money, all savings and investments are put on hold. This obviously impacts the final FIRE date and needs be addressed asap. It also means that the FI stash is now on its own. No added monthly boosters. Only compound interest.
  • Cashing out the corporate pension should be a last resort. We need this growing towards the final FIRE date. But, there is uncertainty about whether it will be needed or not and that’s why it’s going into a preservation fund. It maintains the benefits there but allows a single transaction to cash out before 55. Just in case!
  • I’m 49, pale and male – living in South Africa. Enough said! This is most likely the end of normal, corporate career – forever.

Not all of these are negative factors. The last is probably the incentive I need to be autonomous, to create and run my own little lifestyle business?

So, while I still have one foot in the door, hoping for some kind of “offer” to keep me working here, deep down I know it’s not worth it. The stress and misery of this particular corporate is killing me. It would be a huge mistake to stay. I need to search for new opportuniies closer to the boat.

And so, for better or worse, the plan has being put into action, not in exactly the same way as envisaged but close enough. Now it’s time to ensure that my free time is not wasted.

Feb 182017

I sometimes wonder whether everyone in the financial independence blog-o-sphere are not doing a Donald Crowhurst on us all?

Knowing human nature there are sure to be a large percentage of copy-cats blowing their own horns and exaggerating their own importance and achievement.

Even if they are all actually, truly FI, many seem to have adopted a classic flock-like follow-the-leader approach. Just the way they refer to themselves online -> names like Mr Freedom with Mrs Freedom and Junior Freedom tagging along. On the one hand I guess one always wants a little bit of anonymity, but sometimes I honestly feel there is no differentiation or uniqueness at all.

I don’t want to be another of them. Always remember the Wooly Masses Creed: Be on your guard! The flock WILL swallow you up and consume you.

Sitting where I am on the FI-road it’s sometimes quite hard to read all these “wonderful” tales of ‘very successful’ FI’ers who all happily retired from the rat race in their early 30’s and are now all living happily ever after with absolutely no cares in the world.

I don’t doubt that there are many of them out there . I also don’t doubt that it is possible for most (or most) people to achieve regardless of where they live; but lets be honest – America is not South Africa.

Here in Mr Big’s neck of the woods we don’t have the same social safety nets available to the citizens of finely tuned, working 1st world economies (despite all their own numerous challenges and failings). No useful medical aid, no social security, no strong USD, no “move to a cheaper country” if the money runs out. Nope. Over here we really are on our own.

Don’t get me wrong. I’m not throwing my hands up in despair and conceding It can never work for me here on the dark continent. All I’m saying is that this is not the USA or Europe . This is Africa and it’s a whole lot different out here.

That said, this is not Zimbabwe yet, so for now it is a free market economy, with some kind of democracy and pretty decent personal freedom. Much of what is suggested by the FI world can be taken on board and made to work here in a similar fashion. (But there does appear to be an opportunity for a South African MMM )

One of the most difficult things for me at present is the knowledge that I didn’t start this FI path much, much sooner. Sure, I’ve always saved, courtesy of my frugal-by-necessity parents, but now that I’m really close to severing these golden handcuffs I’m realising I could already have been free, had I only saved more!

Coupled to this are commitments we have made to C & B. Commitments to pay for their studies even if it means borrowing). I’ve had debt my whole life and while I have a job at least I can deal with it better than they are able. Their prospects of a standard corporate role (especially B) are almost non-existent. Starting out with a quarter of a million in student debt is not something I wish for them. (Perhaps this is our legacy to them?)

So yes, I bitch, I moan, I want out sooner rather than later, but I also want to honour these commitments. We’re fortunate that we can honour them without going upside down on our loans. We have the ability to sell up & settle and that’s more than can be said of many in this modern world.

So for a little while longer we need to remain in this ratty race, running along on the sidelines and under the radar. It’s another four years. We’ve made it this far, we can make it to the finish!

Dec 212015

Many people, should they extensively read this ‘blog (….I guess they won’t because I don’t advertise or share that it exists yet) will probably notice some level of indecision and conflict expressed in my thoughts over time.

One big theme of late is obviously the focus on the FIIRE plan. Allied to that is the whole financial thing → earning more, spending less, improving the size of the stash.

On the other side of the coin are some seemingly lavish and counter productive lifestyle choices → sailboat, Glencairn, travel costs etc.

To set the record straight, it’s not about FIRE as soon as possible at any cost. The sailing lifestyle is a hugely important part of who I am, of who I still wish to be. Same with Glencairn → it’s where we want to live !

There are many examples of extreme focus and success on the FIRE road, many of whom I regularly read and learn from. But they aren’t me! [One of my favorites that more sort of matches the kind of life I hope to live in my old age is Lloyd Kahn]

Putting the boat on hold this last 2 years has been a little extremely hard. I still have the thought that maybe it’s best to try and sell her rather than the cost of moving her down? But I won’t get R200k for her at present, not in the current economy with layoffs, stagnant wages and uncertainty. Maybe R140k, and I’m not sure I want to give her away at any price just to save the transport cost and hassle.

So what really drives the desire to stop working, especially when I admit that I’ll work again, but on my terms?

  • Time freedom – This is the big one. RE with FI means my time is all mine.
    • What about unpaid leave?
    • What about more working from home?
    • How far can I push the boundaries an still maintain my morals?
  • Location freedom
    • This is difficult in the South African engineering market. Difficult but not impossible!?
  • Income
    • Must build the stash to reach FI so that this doesn’t matter
    • Right now though it (the income) actually matters!
  • Making a difference
    • This doesn’t happen in the corporate
    • All for family but sometimes it seems they really don’t care until it’s taken away.

I could focus every cent and every moment in working and building the stash. Cruisers do this all the time. 6 to 12 months of slog in the salt mines for a few years of freedom on the ocean swell.

Isn’t that what I’m doing? No. The time frame for RE is too long to commit all of life over that period. Better to live a little more today and delay the FIRE date a further few years. Balance is king!

I could / should sell up the Isuzu [perhaps]. Why?

  • For selling:
    • Tyres cost R1400 a piece, minimum – more than double the Fiat’s fancy low profiles.
    • Even with the fuel card [me paying 40% of the pump price] – I have this gut feel that it’s a cost on par with the Fiat.
    • It’s costing me R3k pm, apart from annual maintenance costs. And then, by Aug 2017 when I have no more payment, I’ll still owe R54k on a vehicle with over 350000km on the clock. – as of 2015.12.05 I still have to pay R107169 on finance in total. So in theory I could finance another vehicle where the total finance cost equals R100k -》 not much of a vehicle that will be!
    • Lots of niggles and hiccups lately => a precursor to heavy repair bills or just par for the course wanting to own a car, any car?
    • It will scratch an itch [however temporarily]
  • Against Selling:
    • I can ill afford to spend another R100k plus on the bond right now [Fiat, B tuition, Caz tuition] – so I’d feel the need to finance another vehicle rather than pay out the bond. And I’ve sworn of any further finance deals, yet I’m borrowing to meet tuition requirements!?
    • without a 4×4 I won’t be able to do all that back-road exploring that I always do ! never do !! Could get a Jimny or could actually wait until FIRE and then reassess if this is really something I’ll actually do rather than just dream about.
    • I can’t put up that rooftop tent to sleep over on the road – like we’ll ever do that !! Same argument as above. Get when you need not 10 years before!!
    • I need want a bakkie for the DIY / Refurb plan – this is possibly one of the few reasons that actually make sense => then buy a smaller Bantam or Corsa!
    • I’ve always wasted by not sticking with a car [eg BMW, Jeep etc]. Maybe this is the good-old-car worth battling on for? i.e. I’m very good at selling an unused <whatever> but not very good at then living without the <Whatever> [bike, car, boat, hifi etc etc]
    • A smaller bakkie cannot safely transport more than 2 people. we still have the odd need to do so. Again, could probably make do with a sedan and a tow hitch to replace the bakkie.
    • I could stop using the Isuzu -> Problem is work as well as the fuel perk. While I do life this way it doesn’t make sense not to utilise it to the full.
    • What does the Isuzu actually cost me per year to maintain and run? It’s still far from the cost needed to purchase another vehicle [or is it?]. Experience has taught me you always loose 3 to 4x more when you try and get rid off your old cars. It’s just not worth it….financially or emotionally.

What of the corruption and rot within South Africa? I could chuck it all in and emigrate but, with the sorry state of my small bucket of Rands, I’d pretty much be guaranteed of having to start from the bottom and work for the rest of my life. That may not be something I’m ready to do, no matter how bad things get here. However, I guess there’s a line somewhere – Zimbabwe, Syria, who knows? Trouble is, once that line is crossed it’s too late and has left behind zero [or very little] financial reserves. Is it worth have a part of the diversification plan target this “fear”?

Obviously, while many of these (and other) thoughts are buzzing my brain, they are brought to the fore when reading about a FIRE-individual selling off his car to save the costs. Makes you rethink and replan. One has to be careful though – this could also just be another form of keeping up with the Joneses, albeit a better FIRE-Jones than the average Consumer-Jones. While there are many similarities, no-one has our exact life, no-one has our exact challenges and no-one has our exact preferences. While some hats may fit better than others, none of them are a perfect, custom fit.

So, if I decide to keep the Isuzu or not, it’s a decision I need to make based on my particular life. Sure, I can take on board what others have done and why [that’s why I like ‘Blogs that actually reveal the detail, warts and all – because all those glossy “facebook-style” life-is-always-good blurbs are actually useless! ]

At this stage, I don’t know. My gut tells me sell but I also know I have a very poor track record wrt cars so on the other hand it may be best to stick it out – at least until it’s paid and I can re-evaluate knowing actual costs for UCT by that stage.

Pay down bond or invest?

  • I’m sure I’ve read and logged this article before but it’s time for a reread –
  • Bottom line … theres no right or wrong. For us its a balancing act between having no debt and between financing additional rentals. A balancing act to fund kids educations and cars, not because we must but because we choose to. For me its a sliding scale. R1M is too much so more must go to killing debt rather than investing. As it comes down the relative amounts should change.

We do however need to very carefully consider additional borrowing for a Glencairn garage or an Ocean Blue relocation. A very careful consideration indeed for this is evil consumer lifestyle debt!

Why would I even be having this thought?

  • Lots of recent debt spending on consumer items [cars boat and education]
  • The belief I need to diversify FIRE income streams -> thus more rental income.
  • The need to fast-track FIRE as best possible.
  • Also remember….we wouldn’t be sitting up at R1M without the detour down the Z3 road ….. !

So, back to the Isuzu Sell/Keep debate – I think it’s a keep for now because:

  • The debt level at over R1M [and more UCT to come] is unbearably high. The next 2 years are almost certain to see it rise to around R1.3M or even R1.4M.
  • So another car would entail another hire purchase deal – which I promised myself I never want to do again.
  • So may as well stick out the current one at least until 2017 and the decision to fund R54k residual or terminate. [Yet another reminder that a moment’s weakness will haunt you for many years down the line still]
  • We also need to work at reducing the bond because the overdraft facility is our buffer, our 3-6 month cash stash in case the worst happens. Right now that stash is sufficient but wit UCT fees looming it’s going to dwindle fast.

No more major changes or financial hiccups!! UCT first and then let’s see.

Apr 022015
What does a man need — really need? A few pounds of food each day, heat and shelter, six feet to lie down in — and some form of working activity that will yield a sense of accomplishment. That’s all — in the material sense, and we know it. But we are brainwashed by our economic system until we end up in a tomb beneath a pyramid of time payments, mortgages, preposterous gadgetry, playthings that divert our attention for the sheer idiocy of the charade. The years thunder by, The dreams of youth grow dim where they lie caked in dust on the shelves of patience. Before we know it, the tomb is sealed. Where, then, lies the answer? In choice.
Which shall it be: bankruptcy of purse or bankruptcy of life?” – STERLING HAYDEN
“What will you do if you quit the corporate gig?” is a question I’m often asked. The sentiment is that without “work” one will be bored to tears. The world doesn’t understand and classifies work very narrowly, as sitting behind a desk being paid with money. That’s only one form of work. There are plenty of other useful, challenging things one can turn to [paid or not] that very easily replace the world of “work”. Mr Hayden cracks the nut with his “some form of working activity that will yield a sense of accomplishment.
Anyhow, as a start I’ll spend more time visiting the beach for sunrise !
Glencairn Beach, 2 Apr 2015

Glencairn Beach, 2 Apr 2015

Jan 122015

Listening to one of the young ladies at lunch yesterday in a discussion about how she typically has work commitments during the weekends. “To be honest I get bored if I don’t have something to do” and so it’s OK, justified to herself.

Man. That is so far from where my mind is at these days.

Firstly, It means you don’t have a life outside work. The fact that you have nothing to do if you’re not working means you really haven’t a life, haven’t spent the time to understand yourself and find activities you feel are worth your energy. Secondly, you’ve made a pact with the devil to actually not use the spare to explore and discover, thus locking yourself into an endless cycle.

Work! Damn it. It’s easy to get used to the money but is it worth it?

I’m looking at this week and trying to find an evening when a visit to the boat would be possible. Nothing. Early morning meetings, late afternoon returns from site visits. The job has consumed my week before it’s even begun.

Mmmm! Keep working the plan!!

Dec 082014

Assets are there for one purpose and one purpose only – utility. They are there to provide income, to provide shelter, to provide for life. An asset un-maintained is an opportunity wasted.

An often overlooked asset is earnings ability. Stepping off the corporate treadmill is a choice that could drastically affect this asset, a conscious choice to trade the income for a better quality of life?

The real question at the moment is how best to utilise the “salary” asset. A second rental house? There is risk – risk of debt but more so, risk of not feeling the ability to step out. But maybe, if managed correctly, if purchased well below resale value, if “guaranteed” rental income covers the bond, then just maybe it’s a risk worth taking at this stage?

Lets see if they accept a ridiculously low offer….!? Is this a con?

Our strategy of dealing with this has evolved over the years into 2 basic areas: i) limiting Our spend & ii) developing self-sufficiency. We’re not in the same league as extreme preppers but can certainly see value in some of their philosophies.

The big question for me is how to still further decrease our dependancy on the system? There are risks everywhere but I feel the risk of economic bank failure greater than corrupt politics. To have all ones eggs in the markets is perhaps too risky at this point in world history?

To be honest, we have achieved some measure of success in isolating ourselves. The bike is a good example, a tool that buys me time in this horrendous traffic. As with all things though, it isn’t without risk. It’s just simply that, for me, the risk is worth taking for the added time freedom it brings me. and by careful riding I’m feeling the risk reduced and manageable.

On the financial front I currently have the luxury of the “earnings asset”. I’m wary of using it to it’s full extent by going into more debt for another rental. The top three perceived risks being i] more debt will restrict my freedom; ii] don’t have the heart for tenant hassles & iii] dont want to continue my coupling to the Shitty of Joburg. But, as with the bike risk there are ways of mitigating, reducing to acceptable levels, the risk.

Not all debt is bad, especially for a rental. If we stick to the plan, buy low, keep the rnovation costs low, we’ll have an asset we can either sell if life turns too hard or that will give us an inflation linked income, decoupled from the financial markets and the banking world. In addition, if S gets her way, our anchor tenant will be quite reliable because she controls it. Plus, B’s future digs are sorted. There are some negatives but the longer-term advantagae seem to far outweigh all else.

Maybe another rental house is not such a bad proposition? It’s just a pity that it seems so contrary to the plan to ditch Jhb and head for the ocean !? It does however provide some positive options, that of keeping the current earnings potential [both S and myself] and providing B some sort of ongoing step into life.

By all means, plan, but don’t behave as if the plan is set in stone. Agility is key.

Nov 232014
Zee 3

Zee 3

Mid-life clarity or a stumbling block, a delay in the dream? Life is never that straight forward. If I apply that logic everywhere then I should sell up everything, Ocean Blue included, all in an attempt to fasttrack the dream. But what of today? Even by doing that, it’s not a question of a month or two. More like a year or two. And that’s a long time to live without the boat, a long time to live in sacrifice in preparation for living tomorrow?

Chatting to an old sailing acquaintance yesterday has once again emphasised the need to live well today. Not at the expense of tomorrow’s dreams but certainly with the understanding that life doesn’t always go as planned. He and his wife had the dream home in Glencairn but a stroke a while back left her unable to manage the stairs and so that dream is ended.

Chatting with S, we can’t risk that. The time is now! Live well and enjoy life today, make the transition to Glencairn sooner rather than later. I’d rather take the plunge and risk running out of money down the line that risk having never lived the life there due to sickness or death or unforeseen circumstance.

Looking at those in the world around me, lives snuffed out, dreams curtailed by illness ..!? No, that’s not a risk I’m willing to take at this stage of my life. It’s time to go while I still have some life in my bones!

Jul 142014

It’s hard sometimes to not fall for the “compare yourself to the world” yardstick. It’s hard to ride through the kind of sustained universal wobbly that we’ve had the last 2 weeks.

When I look at a peer, someone who basically started out same time as myself, who has amassed a rental portfolio of 10 properties already, its hard to think that I haven’t but one and even that is on the verge of closure.

I mean, how can he be so “successful” in that arena while I struggle so much?

I’m reminded of the need to not compare oneself to another, especially when there is no real understanding of all the factors that make up the person’s life. The rental portfolio is but one aspect of life, an isolated feature that doesn’t make any sense out of context with the rest of that person’s stuff. In addition, how much freedom has this person given up? How much debt is there lurking in the background?

The expensive life-style, private schools etc. The bigger the burn, the more income is necessary. The corporate politicking, the daily grind, travel away from home etc etc. Do I want that in my life?

Right here, right now – A well lit, cosy home. Food in my belly. Enough financial buffer to know I’m OK even if we should choose not to chase more.

That’s key. How much is enough? Time to branch out and live life differently. Time to live, rather than work. Time to throw caution to the wind and take a calculated step toward a future we both keenly desire.

You can never tell anything from the man’s car, his outward visible-to-the-world lifestyle. The only thing you can tell from these is how much he spends. And even then you cannot tell whether he’s spending his own money or is up to his eyeballs in life-sucking debt.

No matter what our status in life, no matter what our financial worth, we all have been allocated a finite amount of time on this planet. Time that once gone we never get back, no matter how much cash we have in the bank. So when he’s at the office every day until 7pm, in Europe on business for 2 weeks at a time, I’ll still prefer being home to watch the sun set, spending my weekends on the yacht, working toward the plan, even if my plan is much more modest than his.

Is he happier than I? Don’t know. Don’t actually care.

What has he achieved? Nothing that grabs my heartstrings. What does he do and experience in the world that doesn’t take wealth and spending? Nothing that I can see.

So besides that, maybe his rental investment strategy bears study. Not because he is the best, but certainly because he seems to be functioning better in this specific arena than I am (and because I feel the need to diversify our income streams for ER)

I’ll be keeping the current cars, even if they require time and money. Until the spreadsheet proves otherwise it’s cheaper to repair and maintain than buy again (and it’s really greener as well)

Jun 092014

Two things I hear coming up time and again when the early retirement discussion is on the table:

  • are you sure you’ll not run out of money?
  • what will you do with yourself?

Behind those thoughts are really the individual fears of so many of us, those of “I’m afraid I won’t have enough money” and “I’m afraid I’ll be bored having to plan and run my own life”.

It’s not that they aren’t valid concerns. They definitely are. But I get the sense that they come from a place of fear rather than a place of logic and knowing.

First thing I ask is “Have you done the calculations?” The answer is always “No”. So, if you haven’t done the sums, then it’s pure fear of the unknown right? By not doing the sums, the thinking, the serious work of planning, you will always be trapped in the fear.

I’m not saying that I have no fear. I most definitely do. No matter how detailed the plan, life always throws a curve-ball from the places we least expect. But, that’s no reason to give up on a dream. By planning, doing the sums, reading case studies, you validate the goal and analyse the risk. You put backup plans in place, like knowing and wanting to still work [just not the same way you do today in the corporate]. You analyse the burn rate, minimal, desired and flush, you do your homework.

All of this doesn’t guarantee you zero risk, but what it does do is help you realise that big dreams are definitely achievable. All you have to do is compromise a little today [without giving up any quality of life I believe] to make the dream of tomorrow happen…..

Roll on 2017/2018 !!

One thing that has hit home hard of late is the fragile shortness of life. Ill relatives and friends, deaths in the family, life is short and when you hit your mid-forties, wow, it really starts to hit home. No longer having the fitness, strength and stamina of the eighteen-year-old who still inhabits your mind is challenging, thought provoking, scary.

Another five years is still a long time, another ten almost unfathomable! Too long to be unhappy. Too long to not stay healthy.

My sailing heros are almost always simple-living minimalists. While I love them for their sailing and cruising lifestyles, a deeper chord underpins the hero-worship. They are masters of compromise, of simple living, not for the sake of living simply, but for the sake of achieving what matters most to them. Shining lights in the “anything is possible” dream.

It’s difficult to saty focussed on the dream when it’s so far in the future [5 years seems to be that to me at this stage of life]

Apr 202014

Much of the old-school, and in that I include the majority of the modern corporate workforce, understand only full-time employment or full-on traditional retirement. You work for ‘the man’ until 65 and then you hope for the best living off whatever assets you’ve managed to accumulate in your corporate pension and your personal savings.

It’s one way of doing things I suppose and there are certainly many examples of people who are successfully living comfortable lives in their later years having followed this path. But, if you read the popular press, not many people have enough stashed away by the time they are put out to pasture to continue with the standard of living they had while earning a full-time salary.

In part I think the system plays on the individuals lack of knowledge, fear and greed. The fact that the future is uncertain and unpredictable fuels this and the common, overiding belief that a person should put their back to the grindstone and suck it up, endeveaouring to earn the max before the inevitable happens.

The major problem with this approach is a parallel, overwhelming dissatisfaction with the status quo. This unhappiness in the job leads to excessive cosumer spending [read debt] and everything in the system is geared to keeping people [consumers] on the treadmill. The compensation for this soulless, drudgery is a new car each 3-4 years and that kills the dream so self-sufficiency.

But, to be honest, I can’t do another 20 years of this. It’s killing me!

So the goal is semi-retirement which, if we’re honest, is the only way to live another 30-40 years of your life  after full-time employment/work. Basically the premise is that you have some income generating assets that provide you annual income. Perhaps not 100% of your needs but enough to take the edge off having to work a 40-60hr week for a living. This you then supplement with income from working but work with a difference – this is part-time or flexible work that doesn’t tie you down to a desk, a specific ‘must-do’ routine, a cubicle prison. You are freeing yourself up to not have to work for maximum pay, to not have to take the first assignment that comes along.

Chatting to S and we’re agreed – she has been semi-retired [according to the above definition] for many years now. Her income generating asset has been my income. She works from home, she works damn hard, but she is also free to do as she likes. This is our common goal. No more Jhb treadmill. Here’s looking to a life of more flexibility and time.