pre-resignation finance health check + 2019 end of year review

Jan27
by TFS on January 27, 2020 at 8:22 am
Posted In: TFS Updates

Will not be purchasing anything like this any time soon!

 

Good day, month and indeed new decade to you people!

 

As usual things have been quiet on here for the last few months, hopefully will pick things back up when I am sans-office job.

 

With the resignation letter submission date looming ever nearer (In fact it is most likely going to be today!!!!), plus the fact that the turn of the year has just passed, I though it prudent to snapshot an overall view of our current finances, plus spending for the previous year. This will hopefully give me some more confidence in finally pulling the trigger!

 

net worth

Let’s start with the good news which is the Net Worth report.

Since my last update in September we are now standing at:

Excluding house equity: £296,874 / +£60,932 / +25.82%

Including house equity: £390,737 / +£63,216 / +19.3%

Liquid Freedom: £175,425 / +£52,013 / +42.15%

 

For the year we are:

Excluding house equity: +£80,688 / +85.17%

Including house equity: +£115,665 / +42.05%

Liquid Freedom: +£107,819 / +57.03%

 

It probably goes without saying but I am very happy how the year has gone!

The health of our financials stands me in good stead for quitting the corporate world and giving me a long runway to becoming financially self sufficient on money I earn with personal business ventures and other side hustles.

It is probably worth breaking down the “investments” into further sub categories just so you can see where I’ve thrown some random darts over the last 12 months. Also, my “Liquid Freedom” could actually be split down into further categories because some of it is not really that liquid at all. However, it should be available to me before my pensions and SIPPs are, which is why I put it in there.

If push came to shove though, it won’t be available for putting food on the table, so I really need to break that down into 2 further sub categories.

Here we go then:

 

Locked up investments:

SIPPs: £100,000

Pensions: £21,000

Even if we never contribute another penny, with 4% real rate of interest on that this would be worth £226k when I’m 55. It’s not enough to sustain a proper retirement but not at all that bad, and obviously I am planning on still “working” and contributing to this in the next 16 years as well.

 

Mid-term investments

This means investments that are not locked up in Pensions but ones which are illiquid and may take 5 years or more to “pay out” (or fail miserably and not pay out at all), as well as ISAs, which I would rather not touch in the short term if possible.

ISAs: £27,000

RLC VCF: £15,000

Crowdcube (various): £11,500 1

House Crowd: £5,500

Brew Dog: £1,234 2

Cryptos: £1,000 (refactored down from £13,000…. haha!)

 

Cash:

£110,000

 

So there you go, we easily have 2 years worth of living expenses in cash right now, plus a boat load of other investments and a not insignificant amount in pensions.

The picture should in fact look slightly better than the figures above because one of the VCF investments has already paid out (it was just after I took this snapshot so can’t be bothered to go back and change it), so you can add £8,000 into the cash pile (but remove £2,500 from the VCF) so +£5,500 in total.

So with that we have ~£115k in cash.

I don’t like to be overconfident in anything in life, but I think we are going to be OK.

One thing I still need to do is work out how much tax I will likely have left over to claim back from this tax year, and submit another chunk into my SIPP to claim all of that back. I figure I might as well max this out this year, as it could be the last time in a few years that I actually have any tax to claim back. Hopefully I will have some taxable income in the 20/21 tax year but you never know! This may not actually end up being too much because I will have already claimed back quite a lot due to the VCF and Crowdcude investments as they are all eligible for EIS/SEIS tax relief.

 

side hustles

The eagle eyed of you may notice that there is a really big increase in Net Worth this year compared to previous years, and that is down to my side hustles going nuclear. Why do I think this is?

Necessity is the mother of invention

It’s a well known phrase, and I think around June time when I committed to the fact I would be leaving work in early 2020, it really focused my mind on what I could do to further ramp up the side hustles.

I ended up building software to automate some of my processes (Each way betting etc…) which essentially means a robot is sitting there betting for me. As usual robots beat humans with this sort of basic task in the key areas of speed, and that they never get tired, need a break or get bored and want to go and do something else. So it’s natural that this has juiced returns significantly.

It’s worked out phenomenally so far, but I am still very cognisant of the fact that this is not a long term guaranteed income. However it’s definitely served me very well in the short term and has made me more relaxed about pulling the plug on the 9-5, so I am very glad I’ve gone down that route.

It’s also been really good fun developing the software as well and given me some possible business ideas on how I might be able to commercialise it, if people are interested in this sort of thing please let me know? I know I hinted at this in my last post by the way, so sorry if that has come across as teasing. But the software is very basic at the moment and no way in a state to sell to the public, and I haven’t had time to work on it much past the MVP 3, “it works for me” type of state it’s currently in.

Anyway in last year goals post, I said I wanted to hit £40k matched betting/EWB earnings and I smashed it with at least £50k.

Sorry I can’t give you an exact figure; as well as our expenses, I also stopped tracking this on a monthly basis this year. So this is a conservative estimate based on balances in my betting accounts.

I also said I would donate at least £2k of this to charity barring any disasters, and we have been very tardy on this front and hardly donated anything throughout last year (maybe £500 in total) but we have made a further £2k donation to various charities at the start of January 2020, which I will add onto the figures of our expenses for last year below, because that is when we should have made it.

 

expenses

This is normally where bad news happens, but actually this year for some reason or another our spending didn’t go up. This is obviously quite ironic considering this is the first year for ages where we haven’t bothered tracking everything as we go month by month.

Anyway, good old money dashboard has still been faithfully chugging along in the background tracking everything for us. When I logged in the other day it had made a pretty good fist of categorising everything and for those that it got wrong or failed to tag, it’s just not worth the effort of trawling through a whole year so there are some pretty vague categories in here such as “family” which just means I had no idea what the purchase was, and also a fairly large “cash” category as well. In any case, I would imagine the total figure is pretty accurate and that is all that really matters.

For those that want a bit more in depth, I’ll break it down for you with some cute little pie charts from money dashboard below. I will not comment on, or make any excuses / justifications for any of the spending this year, it just is what it is and I’m at peace with this now 🙂

Side note: I was really impressed with how much MD has come along since last time I used it. Feels a much more polished product now and it’s easier to visually see your spending categories broken down now. Well done to the team there!

Enough waffle, here are the top line figures and some nice charts.

Total Expenses: £51,096 (vs £54,088 in 2018)

Bear in mind it’s £2k less on the chart due to the £2k charity donation we made in Jan 2020, as explained above.

 

So there you go.

Unfortunately, this year could turn out to be a lot more expensive as we are planning a few overdue upgrades to the house such as a new boiler. But we still did a fair bit last year to the house as well, so hopefully it won’t be significantly more.

 

savings rate

It’s a ball park estimate this year but here’s what I’ve gone with:

Our liquid Freedom NW went up by about £80k this year. All the “savings” contributions I’ve made to those random investments were offset by a small inheritance we received due to my Nan passing away in the middle of the year (I am not including that into the savings rate as this so obviously a one off thing, it doesn’t seem right to include it). So we can fairly safely assume that we saved 80k of our actual income.

Therefore savings rate is a simple £80k / (£51k+£80k) = 61%

 

Checking against the goal set in January last year of 45%, we beat it comfortably!

This is also the highest yearly savings rate we’ve ever accomplished, the previous best being 48% in 2015. So high fives all round at TFS towers 🙂

 

I will have a think about some goals for this year and try to write something up soon.

 

key take-aways

We have £115k in cash which is comfortably 2 years worth of living expenses for us.

Going back to one of my first posts my stated goal was this:

Retirement to me simply means being able to quit my corporate office worker job, you know, quit working for “the man”. The day I can feel comfortable enough to hand in my notice without another regular job planned – what is know as having “fuck you money” for hopefully obvious reasons – will be when I have “Retired” from the corporate treadmill and therefore retired for the purposes of the challenge on this blog.

This will be very shortly completed, and only about 1.5 years behind schedule of the original 5 year plan goal.

Bearing in mind I’ve been working part time for the large bulk of this, that’s not bad going!

One very important thing to note though is that none of it went anything like my original projections in terms of spending or life in general.

The key point here being that spreadsheets can only tell you so much and being adaptable is far far more important.

Which is of course true for life in general and not just in striving for FIRE.

 

One final point, just because I’ve met my original “goal”, this does not mean the TFS blog will be closing for business.

Realistically as I should have more time on my hands I will hopefully be writing more than ever.

You can’t get rid of me that easily!!! 🙂

 

And I will let you all know how resignation day goes down very soon!

Notes:

  1. If people are interested in this I could do a quick write up of all the companies I’ve invested in, in a separate post? ↩
  2. LOL at the 1234 figure, this was entirely unintended and due to 2 separate investments one of which was converted from $ to £, so nice little coincidence! ↩
  3. Minimum Viable Product ↩
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