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Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think we’ll get on just fine 🙂
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How much do you put away in your company’s Share Save Scheme?
Today I wanted to talk about ShareSave schemes, or ShareSave plans as they are often known, which are a great way to save up cash and lock it away for a few years, and potentially get a great return on your investment.
ShareSave plan 101
For those of you who are unaware what a ShareSave plan is, it generally works like this:
You get to buy shares in the company you are working for at a discount price
You make monthly contributions over a 3 or 5 year period into a savings account to buy the shares, and can only access the shares at the end of said period
When you can access the shares after 3/5 years, you don’t even have to buy them. So if the share price has dropped below what you “paid” for them, you don’t even have to buy them, and get your money back.
If the shares have gone up, or even stayed at the same price as they were when you “bought” them, you can turn a profit because you were buying at a discount price in the first place. So you can keep the shares then either sell them for a profit, or decide to keep them.
You can only invest up to a set amount and that amount does not renew each year until that particular plan matures. So for example if the limit per year is £3,600 (£300 per month), and in year 1 I put in £150 per month, and year 2 start another plan and I put in £150 per month, then in year 3 I cannot start up another plan as I am maxed out. In Year 4, I could start another plan with a max of £150 per month again, and so on.
This is obviously a great scheme because if the price drops you can just get your money back, and the only real cost is the opportunity cost of having your money tied up for 3 or 5 years, which could have been earning interest in a savings account or appreciating in other assets. Conversely, it could have also been losing you money in those other assets as well. So all in all, whether you should participate in such as scheme if your company runs is a total no brainer.
How much do you save?
The question I would like to throw out there today then dear readers, to gain your collective internet wisdom, is how much would you, or do you save in your company ShareSave scheme? I’ll give you a brief run down of my thoughts and position to get things started:
My monthly take home pay is around £2600, so I am saving the max I am allowed which is £300 per month into my companies share save plan, and I’ve chosen the 3 year plan. This doesn’t seem particularly aggressive and I am happy with that. Not least because I can’t contemplate the thought of being at my company much longer than 3 years 🙂 (needless to say if you leave the company, you cannot buy the shares any more and you just get your money back!)
The main conundrum we have is Mrs TFS’s company do a similar scheme (documents snippet pictured above) but for some reason you can save £500 a month into it and her take home is only £1200 (we have a joint account and split all costs down the middle so the actual take home is fairly irrelevant here, but even so, another £500 coming out of the remaining pot of £3500 is still quite a big chunk)
We can buy the shares for 20% of the current price, which is £4.46, compared to the trading price today of £5.54 – seems like a great deal, huh?
However £500 over 3 years is quite a lot of money to be tied up in one company, £18,000 to be precise.
Would we be shooting ourselves in the foot by tying all that money up, remaining totally undiversified in our investments?
The stock looks to have risen above current levels only 4 times in history (see graph here) and each time looks fairly brief. However there is nothing to say it may not go on a massive tear over the next 3 years.
I think the two options we have are something like this:
We could be aggressive and go in at the maximum pay in, and be sitting on a lovely wad of cash if the stock price rises, or even if it stays around the same price. This seems rather risky considering the stock being at a high price in comparison to history.
We could stagger our entry into the plan over the next few years, as I kinda explained above in the last point of the ShareSave Plan 101 section, and maybe do £200 a month for the first year, then see what the stock price does, and maybe then do £150/£150 in year 2/3, or even £200/£100. This will work in our favour if the stock drops as we can reset the share price in the second and/or third years, and hopefully still come out with a profit. (Thanks to ermine for introducing me to this strategy!)
Note: I don’t like the idea of the 5 year plans as the likelihood of staying at any company nowadays for that long seems fairly slim, so with the 3 year plans you have more change of your plan actually reaching maturity before leaving.
What do think readers!? Would you go in all guns blazing with the highest allocation of £500 a month or would you go for option two and spread the risk of the share price dropping somewhat? Or is there a third option that the financial wizards out there know about that I have not thought of?! I’d like to hear about other ShareSave plans as well as I didn’t realise the rules can be slightly different between companies, what have your experiences, positive or negative, been?
Thanks in advance, I’m looking forward to the discussions in the comments section already 🙂
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Welcome to BlogFAQ III, this time we are talking to Joe, who along with his girlfriend Fi, run the brilliant, up and coming UK based personal finance blog Budget Breakaway. Apart from one of them having a very fitting name (Fi/FI) for this type of blog, I love the fact that these two really have got their sh*t together at an early stage in life, other young people reading take note! Take it away Joe…
Give us a brief intro to yourself and your blog, and what you are trying to achieve over there?
Fi and I graduated from university at the end of last year and are now taking our first steps on the career ladder. Budget Breakaway is a place for us to keep track of our financial journey at this exciting time of our lives. Documenting our goals and sharing them with the world gives us a great incentive to achieve them!
We’re always on the lookout for ways to make money on the side away from the salary, from freelance marketing to making and selling cards. One day I’d like to see Budget Breakaway evolve as a source of inspiration for fresh graduates to show that you can find creative ways to escape the rat race and live your own life even if you’re just starting out! (I have to do this for myself first!)
How did you first get into the Personal Finance/Blogging Scene…? What was your motivation and did you have a particular “light bulb” moment?
Working in the digital marketing industry, I find myself matching up small to medium sized businesses with blogs on a daily basis. In the first few months of my role, I found myself getting sucked into the PF community and found the topic of finance all too interesting. PF bloggers seemed to be so pro-active, creative and inspiring that I wanted to dive in and join the community myself – now I’m hooked!
Your blog is somewhat different to many others in that you are teaming up with your girlfriend. How/where did you meet such a frugally minded lady?
We actually met whilst studying for our A-Levels at sixth form and were good friends. We then parted ways and went to separate universities; two years later I was setting off for a Summer in America and guess who was in the seat next to me – we find it really weird too! From there we travelled from New York and spent an amazing summer in Miami enjoying the white sand and wonderful food! We’re now sat in our flat in the midlands plotting our next adventure…
When did you realise you shared similar goals or was one of you the main driver of this idea/philosophy/lifestyle?
I think we realised shortly after starting our careers. It became clear that we couldn’t spend our time travelling, staying in exotic places and living the explorer life without getting our finances straight and finding ways to generate income away from the 9-5.
What is your current Net Worth, What are you aiming it to be in 5 years?
As of January 2014 I became debt free! This year saw my net worth reset to zero after some expensive travels and a pricey car crash! Since then I’ve been pushing to fill my emergency fund as fast as possible and currently have a personal net worth just above £2000. As for the next 5 years, my guess is as good as yours! If I can increase my monthly savings contributions by £100 per month each year I’d be looking at a personal net worth of £62,000 but only time will tell the success (or failure) of the side-hustles!
What is the number you are aiming to save up before you jet off on your travels around the world?
I can’t say I’ve ever fathomed the magic number butI think the ideal scenario would be to have an online business combined with some passive income that we could run from any country in the world. I can dream!
Your blog clearly has a big travelling theme, I am a travel nut! What are your top destinations on the list to visit on your trip?
We love the states and are planning to go back there this September to re-visit some of our favourite places in Florida. Last year we ascended Mount Teide in Tenerife which was beautiful. I’d love to spend a few months in the US travelling state to state by car. Backpacking in Australia sounds mighty attractive too!
You also seem to love a side hustle to boost your savings, what are your current side hustles you both have going on?
We do love our side hustles! In the past few months we’ve tried so many! Selling books on Amazon, setting up gigs on Fiverr, trying out Swagbucks, doing overtime projects, coaching sports and much more! More recently I’ve realised that the most profitable and worthwhile side hustles are those that are also viable business ideas. My experience lies in the marketing industry so I’ve been securing a very small client base of small businesses that can provide a nice steady flow of additional monthly income; I’m hoping to scale this exciting venture even more over the next few months! Fi is also a master crafter and has recently been setting up an Etsy shop to sell her cards, embellishments and gift tags – you can see her new blog here!
Do you have any particularly successful, (or the complete opposite!) side hustle stories you could share with us?
Ha, this one is more of a massive stroke of luck than a side hustle but I’ll divulge. When I first joined the PF scene I read a post on Money Stepperabout the likelihood of winning online giveaways; I tried the first giveaway that Graham had linked to in that post and won $200! I honestly couldn’t believe it!
What are your three biggest goals for the future in the areas of your financial life, personal life, and your blogging life?
My big goals for the next twelve months are as follows:
1. Financial – Fill my emergency fund and put a down payment on our first mortgage The help to buy scheme is a healthy option for us and there are plenty of options in our area with the scheme. No more wasted money on rent!
2. Personal – Read one book every month for a year I’m a big believer in education and personal development – to do something you have never done, you have to become someone you have never been! I’m currently reading the ‘Four Hour Work Week’ which falls in very nicely with the travelling side hustle lifestyle that I’d love to lead!
3. Blogging – Share some ideas! I’d love to create a list of attractive and alternative side-hustles that anyone can take on in their spare time – watch this space!
What are your favourite relevant blogs or websites to readers of theFIREstarter that they may not yet be aware of?
So hard to choose! I do like reading about the journeys of others on the road to FI and have recently been enjoying to the MadFientist podcastsduring my daily commute – these are great! Robbie Burns’ trading diary is a fun read even if you’re not currently trading shares yourself. I’m also a big follower of the Fast Company and other business/career magazines.
What are your favourite book(s) and film(s) and why? (leaving this open ended as it’s often hard to choose just one!)
The first three films I can think of right now: Wolf of Wall St, V for Vendetta & Equilibrium. Rich Dad, Poor Dad is a must read for anyone in PF community.
Well there you have it folks, if you have any more questions for Joe and Fi please do leave a comment! My overriding feeling reading Joe’s answers and the Budget Breakaway blog is that with their get up and go attitude they will live an exciting, adventure filled, and prosperous life. If I ever encounter any complainy-pants of the younger generation I know where to send them now! Thanks again Joe and good luck to both of you in your quest for Financial Freedom and Travelling the World!
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Update 23rd April 22:00 – (Yes that’s 1 day after I published this post) – We got a call that the vendor has been made redundant today! So everything is up in the air and we may not be moving just yet. There is a chance the guy can find another job quickly but convincing the mortgage lender will be the tough ask I think. We remain hopeful yet stoic about the situation. Anyway… what I have written below is obviously all still relevant, but I thought I would just add in this note to keep everything transparent on the blog. As I say shortly into the post… how about that (damn) property market, eh!!!!?
________
I’m starting to sound like a broken record recently but I will start off by apologising once again for lack of regular posts. The reason, as I have kinda half mentioned before here, is that we have recently “closed on a house deal” as property guru’s like to call it, so I thought a post about that was in order, seeing as this is after all a personal finance website, and buying a house is likely the biggest financial deal most folks will ever do.
So, how about that housing market, eh!?
You may be wondering what the hell has happened in between the post where I mentioned we got a flat evaluation, roughly 4 weeks ago, and now? Well let me sum it up:
Things are moving very quickly in the property market right now!!!!
I guess that much is obvious, but I reckon you’d still be very surprised at how quickly things are going right now if you put something on the market yourself. In less than a month we went from “thinking about moving” – to getting an evaluation – to putting the flat on the market – to having offers accepted on both sides. Almost unbelievable, especially considering that as first time buyers back in 2009, it took us about 3-4 months to even find anywhere we liked. To say things were “a bit slower” back then is like saying Mr T has “a mild distaste” for air travel.
How we found what we wanted so quickly
Well aside from the luck of draw in terms of what came on the market playing a part, along with the number of properties being churned right now, the main trick was to narrow down our options thus making the choices we were faced with a lot easier. We did this by imposing fairly tight criteria on what the house had to be:
Had to be within a 10 minute walk to a train station (due to my train commuting). There are 3 stations in my town, but 1 of them is much more preferable to be near due to it being more of a mainline station. TFS Towers ticked this box nicely as it is near the “best” station.
We don’t like newer build houses so all of those were out – TFS Towers is not one of those.
3 bedrooms minimum – Tick
Nice sized garden – Tick
Price between £200,000 (wishful thinking) and £250,000 – Tick, just about!
Some extra “nice to haves” were:
South facing garden – Tick
South facing roof for possible solar installation – Tick
No Major renovation work needed before moving in – Tick (Kitchen is fine, see more pics below, bathroom may need doing in the next year or two)
End of terrace or Semi-Detached – Tick
As you can see it ticked all of our boxes and them some! Compared to other houses we were looking at on Rightmove and then subsequently seeing in the flesh, there has been no comparison. I’ve even kept looking afterwards on rightmove, risking torturing myself if something better came up (I have called this game Rightmove Russian Roulette 🙂 ) but nothing so far has come close and I am getting happier and happier with our decision to put the offer in every day.
I think to sum it up, it is a fine balance of having a tight criteria, but not actually being too fussy at the end of the day if you want to execute a house move in a short period of time.
Pulling the trigger
We were not 100% on the house after we saw it for the first time, so it was quite hard to pull the trigger on putting the offer in. The thing was, we knew this house would get an offer because they had over 10 viewing on the day we saw it, and we knew how quickly things were going. We had to make a decision that night otherwise someone else would be getting this house. We mulled everything over and looked again at rightmove at similar properties, both ones that were currently on the market, and ones that had recently been sold (Tick the Sold/STC box in the search options). Again… nothing really came close; similar houses from my point of view seemed to start at around the £270,000 mark yet this one was up for £255,000. Based on the pure hard facts and the price it seemed like we had no other choice but to put in an offer. The next decision to weigh up was whether we offer the asking price or undercut. My thinking was that this house was priced to sell at the asking price, so, we offered it (£250,000 plus £5k for fixtures and fittings, this is just within the limits that are “allowed” to avoid paying the higher rate of stamp duty)
Did we get a bargain?
Well, I’m not going overboard but I would say we’ve got a pretty good deal. I will reason this by looking at a few of the other front runners we looked at:
£280k 3 Bedroom mid-terraced house – This was in tip top condition and had a big extension on the back, a cavernous kitchen, plus some nice decking in the back garden. However all of this was easily reflected in the price. Our main objections were: 1) A bit too high in the price range, we could have easily afforded the mortgage payments but it’s not all about affordability! 2) It actually felt a bit too big for just the two of us, and I could imagine the bills being unnecessarily high. 3) Mid-terrace so garden was kinda overlooked. 4) Was an 18 minute walk to the (good) station according to google maps, which was a little over my comfortable commute. (Note: I’m not worried about the length of the walk, it is just the extra ~20 minutes I would be losing from my day every day that I know would really grate on me after a while!)
£230k 4 bedroom mid terraced house – Sounds like a snip and looked great on paper but it needed a lot of work doing when we went to see it. Easily £15k worth. And this was despite a recent kitchen and bathroom overhaul, which weren’t really to our style, so that would have been wasted on us. The 4th “bedroom” was a loft conversion which wasn’t up to standard and you’d just have used it like a normal loft, i.e. to store junk. Plus it was a mid-terrace, the garden needed a lot of work (broken fence panels, etc…) plus it wasn’t near the good station, which I would put a price premium of around £10k on, both of personal value to myself and just by looking at the prices around each area.
£215k 3 bedroom mid terraced fixer upper – We wanted to look at all the options and are not afraid of some blood, sweat and tears to get the house we wanted, so went to see a fixer upper. This needed everything doing to it, windows, carpets, kitchen, bathroom, garden. Easily £25k worth of work we estimated (Maybe could be lower, but these things always tend to go over what you originally think). So we’d have ended up paying all of that out of pocket and ended up with a house that was maybe worth £240k judging by other prices, so about breaking even, but minus a lot of spare time to plan it and fix it all up. Plus we’d have to live somewhere else while doing it. Not very convenient. If I’m fixing something up and putting all that work into something, I want to be making or saving a tidy sum on it, not just 5-10k here or there.
So there you go, each to their own as they say but in our opinion TFS Towers won the race by a fair few furlongs.
Spotting Value and price Anchoring
Why do we think it was underpriced compared to others on the market? Well my dear readers, the answer was that the vendors needed a quick sale. I get the feeling that the other people viewing this house and making offers did not take this into account, and were more swayed by the initial price that the house was put on Rightmove for (£255k). This is called price anchoring, and it’s a psychological trick used by Thai market traders, amongst many, when bartering. They start at a ridiculously high price in the hope that the final price you agree on is slightly higher than it would have been if they hadn’t started the bartering so high. I think in the case of putting the offer in for TFS Towers the opposite effect was in force. Nevermind that this house was potentially worth £260k or even £265k – most people still went through the usual motions of putting an offer of £5k (or more) under the asking price. The alternative scenario of course is that we’ve been done up and smoked like a kipper and are shortly due to be eaten for breakfast by the vendors in their new McMansion they’ve moved into with our cash, but I think I’d rather believe scenario A for now, at least until further evidence arrives to the contrary 🙂
Probably the quickest flat sale in the history of the Universe?
We put the offer in on a Tuesday, to be told by the agents that we needed an offer in on the flat, with no further chain, by Saturday, yes that is 4 whole days people!!! Naturally we were hopeful yet not very confident, but ended up catching a bit of luck (or maybe it was our frantic hoovering and tidying up the night before all the viewings that did it!) and got an offer in on the lower end of our asking price on the Saturday. So we sold for £175k. Maybe we could have held out for £180k or even £185k, but the reasoning was that if this deal fell through and we ended up getting a similar house for £265k we’d be no better off, so we accepted. Done and dusted within 4 days, boom!
Mortgage Dilemmas
With the plethora of mortgage options out there it can be a right old minefield, so let’s quickly go over the figures we were working with:
Sold flat for: £175,000
£££ Left on mortgage: £106,000
Equity from sale: £69,000
Moving fees including stamp duty: £7,000
Deposit on new house (with a slight top up from our savings*): £62,500 = 25% deposit
Value of new house
*Note we are also paying the £5k for fixtures and fittings out of our savings as well as you can’t tack that onto the mortgage.
Having a 25% deposit, or 75% LTV, whatever way you want to look at it, seems to open up the door to some fairly decent rates. I even played around with the online comparison sites and put it down to 50% LTV and the rates did not really improve all that much, so I think 25% is the tipping point, so please note that down if any of you are thinking of remortgaging soon, try to get your LTV down to 75% before doing so if you can. Hopefully this will be easy enough with recent rises in value, unless you bought at the last peak (in which case, I feel for you! 🙁 ).
So after a brief forray into looking at interest only mortgages and discovering you pretty much had to be a millionaire already to get one, we were back to the standard fixed rate repayment options of:
3 Year fix @ 2.39% – Monthly payment £830
5 Year fix @ 3.09% – Monthly payment £897
10 Year fix @ 4.14% – Monthly payment £1004
The balance to strike here is between the lower rate and the safety of the fix. The 10 year one is a serious contender in my view as interest rates can only go one way right now, and in 5 years time even that could look like a bargain – check out ermines article here if you are part of my generation that has never experienced an interest rate hike.
A chilling cautionary tale indeed! However, it is one I did not heed.
We reasoned the 5 year fix was just a half way house so decided to go with the lowest rate and payment for 3 years, which is a fair amount of time to continue saving up our nest egg and see where we are after that. Compared to the 10 year fix we can save an extra £174 a month, which works out as £6,264 over the 3 years, which we can use to pay off extra principle, put towards a Buy-To-Let property deposit, or put into an ISA. I think 3 years is not enough time for interest rates to sky rocket, so I am hoping we can reassess the mortgage market when the time comes without jumping onto a hugely higher fix. Then might be the time to lock in a 10 year fix (if they are even available!). If you are interested, all those mortgages are with Yorkshire Building Society (and I have no affiliation with them, in case you were interested in that as well).
One other thing you will have to weigh up… whether to use a Mortgage advisor or not, I don’t know what your thoughts are but at £200+ to effectively search the internet for me, I think I’ll pass. Anyone got any reasons why this is complete financial buffoonery?!
Solicitors – Online Cheapo’s or Expensive recommendation?
The final piece of the jigsaw before we can exchange contracts, in a couple of weeks hopefully, is getting a solicitor to do all the conveyancing work. We went with the online cheapo quote, but this is not just being tight. In my (very limited) experience, conveyancing solicitors are really quite slow at getting on with things, and getting back to your queries, so why would I want to pay £750 for that, when I can get someone who is just as slow and pay them £350? Again, comments welcome on my logic here.
The only thing I want to make sure I avoid is a complete scam company that could put the deal at jeopardy, so a bit of due diligence on the internet weedles those ones out easily. In the end we went with a recommendation from the Money Saving Expert forum – Don’t worry, it wasn’t from a first time poster with a name like “gba27891099”, it was a regular poster with over 1000 posts, so I assumed it was a geniune recommendation. Anyway the company was Gordon Brown Law Firm and the quote was cheap. Please do not take this as a personal recommendation from myself though as we have only just sent off all the paperwork! Do your own research as always!
So that’s it! We’re done and sorted in under 4 weeks! And I get my evenings back to write some more posts for you lovely people, until we move of course, then it gets really hectic! 🙂
Here are a few more pics of the new TFS Towers for you to envy over/laugh at (delete as appropriate depending on whether you live in bedsit crack den in London or a country mansion in the Cotswolds):
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Pia-Pia-P&O (if anyone gets this reference I will send them a free bottle of wine)
Today we’ll be talking (again) about a subject that is dearly close to my heart liver, and I have a feeling that is true for many of my fellow Britons, and that subject is alcohol. Whether you like the burger and a pint deal down at Wetherspoons*, a bottle of Blue Nun, or fall into the Greygoose W**ker end of the drinking spectrum, you’ll no doubt agree that alcohol is getting more and more expensive. For years now the Booze Cruise to France has been known as a relatively easy way to get some cheap plonk, and having recently hopped over The Channel myself, I thought it would be worth taking a quick look at whether it is worth your time and effort to follow suit.
Le Booze Cruise, qu’est que c’est?
If you have no idea what I am talking about then you are probably an international reader, or at least not from the South East of England! One of my more northern colleagues at work thought I was just taking a ferry trip to get pissed when I told him I was going on a booze cruise! Just to clarify before we go on, no this is not the type of booze cruise you get sold tickets to by a greasy holiday rep when on an 18-30’s holiday!
Let me explain the theory behind the booze cruise:
French booze is generally a bit cheaper than over here. This used to be because of tax reasons before the EU was formed (I think… clarification from any older wiser readers welcome) but now there are no tax breaks, it just seems cheaper out there. I would say this is because it is closer to source but they have wines from all countries and they are all cheaper.
Around the ports (Calais in my experience, not sure about others) there are some wine warehouses that sell a great selection of wines at these discount prices, along with a small selection of beers and other alcohol. The Hypermarkets also have a bigger selection of alcohol and some of that is also cheaper – DYOR though on any spirits you may want to get before coming, as it may not be.
So in theory, you can get a very cheap ferry from Dover to Calais (for example), load the boot of your car up with booze, and drive all the way there and back and save shedloads of cash on your satisfying your alcohol needs
There is clearly a tipping point which makes the trip worthwhile and that is when the savings on your beer, wine, Jagermeister (gotta love a bomb on a sleepy Wednesday evening), and so on surpass what you have spent on ferry, fuel, and any other costs of the trip. Let’s take a quick look at the balance sheet:
Expenses
P&O Ferry ticket for one car
£28
Estimated Fuel for car**
£35
Car usage depreciation
£1
Food and Drinks for the day
£35
Total Expenses
£99
Savings
You can get really cheap and tasty beers in the Hypermarkets but they are local brands so there is no real way to compare costs to over here, so I’ll stick to comparing the wines only. Basically you can get numerous wines over there for £2 a bottle. This equates to a saving of *at least* £3 per bottle compared to standard supermarket prices, as these are midrange wines (i.e. not the complete bargain basement distilled vinegar-like stuff) that usually cost you around a fiver. If you like the fizzy stuff or are throwing a party and wanted some welcome drinks you can get Prosecco for £4 a bottle, which is a saving of around £4-5 per bottle. So to cover our costs you would have buy a minimum of:
33 Bottles of standard wine (Costing £66)
25 Bottles of Prosecco (Costing £100)
Or any combination of the above
So, I guess you could say you need to be *fairly* heavy drinkers(?!) to make this kind of trip worth it.
I guess if said that you would also say that theFIREstarter’s are heavy drinkers 🙂
I think we ended up spending around £120 on a combination of wine and beer, which over here was worth around £250, this gives us total alcohol saving of £130 and an ROI of (£130 – £99) / £99 = 31%
You could also argue that you’ve either had a fun day out*** “for free”, or else you would have to take the money you spend on the food and drink off the expenses side of things as that was part of the fun and not really a hard expense of the trip. If you were really just going for the hard savings you could just take some food and drinks you made at home and knock that cost down to about a fiver in any case.
The First Rule of Booze Club…
There are ways to optimize this even further. If you get a group of friends or family that all put in an order, you could take it in turns to do the trip. If there were 4 groups in your club all spending around £50-£100 each, there are some obvious and also a bonus benefit of this:
You only have to make 1 in 4 trips, making the other 3 pure alcohol savings with no expenses.
You are saved the hassle of making the trip 3 in 4 times (although I still think it’s fun, despite the footnote below!)
If you spend over £250 at http://www.calaiswine.co.uk/ (not an affiliate link btw) they will pay for your next crossing for you!
So you can see if you get a group of you together, who are all trustworthy to stick to their word and actually do their trip, then the cost side of things dramatically falls off a cliff and your ROI gets a huge booze-t. Spreading the costs and savings over the course of four trips you are looking at something like the following, for each group member:
Alcohol Savings = £400 (average of £100 of savings per trip, a mild estimate from our experience)
Cost of Ferry = £28 / 4 = £7 (only need to pay this on the first trip, and you would obviously get the other group members to chip in for this)
Car Transport costs = £36
Food + Drink = £35
This gives a total ROI of (£400 – £77) / £77 = 413% ROI
Con-booze-ion
The conclusions seem pretty obvious, if you drink more than about 1 bottle of wine per week (or even if you don’t actually, you can just space out your trips further!) then the Booze Cruise to France is well and truly alive and kicking as a way to save some dosh when stocking up your alcohol supplies. Just remember the tips above to maximise your ROI and don’t fall into the trap of spending money on tat while you are there!
Have any of you tried this technique? Would you give it a go if you lived in the right area? Are there any other areas of the UK (or World) where this type of technique works? Let us hear them!
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*Wetherspoons is a “budget” pub chain in the UK, for any non UK readers!
***Please note the fun aspect of this is heavily weather dependant. We did one last February in the snow and I would definitely not describe sitting in a snow covered ferry car park for 3 hours, sitting on the boat at Dover on the way home for an extra 2 hours as they wouldn’t let anyone off the boat as the port roads were gridlocked, then driving home on backroads to avoid said gridlock at 1am and finally getting home at 3am fun 🙂
Take a lesson from our bad experience and make sure you check the weather forecast before you go, book as near to the travelling time as possible, and therefore be flexible on dates!
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Financially Free by Forty – practising for an early retired life perhaps?
Happy Tuesday to you all! Today we have the second ever incarnation of the BlogFAQ feature, with none other than Huw from Financially Free by Forty. There have been more and more UK based FI blogs popping up recently (or maybe I have only just found them… either way it’s great) and a lot have been posting some great comments, Huw is one of them. I also especially like Huw’s blog as he is roughly at the same stage of life and his FI great escape attempt (i.e: pretty near the start) so it is good to read about his thoughts and strategies.
Huw has clearly put a lot of time and thought into his answers so I’d urge you to make a cuppa, set aside 10-15 minutes, and strap yourself in for the ride into the inner workings of his mind:
Give us a brief intro to yourself and your blog, and what you are trying to achieve over there?
My name’s Huw, and my blog is financiallyfreebyforty.blogspot.co.uk. I’m 31 years old, I live in the UK, and I earn a fairly modest wage (under £30,000 pa). My blog captures my weekly and monthly activity towards becoming financially free by the time I’m 40. I intend to do this by investing in reliable dividend paying stocks that have a history of growing year after year. I will then reinvest all of the income they generate. I plan on living a frugal lifestyle that will enable me to save over 50% of my monthly wage, which I intend to invest in dividend paying stock. I remain open to explore other avenues to generate passive income.
I will record all of the above on my blog, so everyone can see exactly what I earn, what I spend my money on, and what avenues I invest in. I’m an honest and open guy in ‘real life’ so it’s my natural style, but I think this transparency will help me to become more accountable for my actions, and will lead to better results. I want to show that anyone can achieve financial freedom and the blog will be direct proof of that.
I’ve only just started Dividend Growth Investing (5 months ago). I believe this is one of the unique features to my blog, as people will be able to see a full record of someone who’s just started out. It’s easy to relate to someone who earned less than £10 in one year (2013) in Dividends. If I were to become a millionaire in 10-15 yrs time, you could check in at any stage of my progress by looking through my blog and see exactly what I did.
How did you get into the FI/Blogging/Dividend Growth scene…? What was your motivation and did you have a particular “light bulb” moment? (For example, mine was stumbling across the MrMoneyMustache blog in early 2013 when searching for novelty moustaches to buy. True Fact!)
Ha ha. I can’t believe you came across the FI/Blogging/Dividend Growth scene by searching Novelty moustaches. That’s brilliant!
The ‘light bulb’ moment for me was finding the blog Dividend Growth Machine – dgmachine.blogspot.co.uk. It was the first time I came across Dividend Growth Investing (DGI). He was two and half years into his strategy, and his progress was so impressive. He went from $50,000 in March 2012 to $125,000 in November 2013 (20 months). He has a tab on ‘strategy’ where he describes what DGI is, and it just clicked with me, it made sense.
Prior to DGI, I was planning on saving cash to fund a buy to let property, which would eventually lead to a property portfolio. I was closing in on the total I was looking for to buy my first property, and I was on the look out for other income streams (preferably passive) that would help get me there. That’s when I came across Dividend Growth Machines blog.
I went from 100% property investing, to 50% Property and 50% dividend growth investing, which I maintained for 3-4 months, and just recently I decided to go 95% DGI and 5% Property. I still intend on investing in property at some stage, but I want to focus on dividends for now.
You are living a frugal life that is different to mainstream “consumers”, have you received much negativity from friends and family and how do you deal with that?
I haven’t received too much negativity to be honest. I get a lot of ‘you’re tight’ comments but nothing serious (I can totally relate to this 🙂 – TFS) . If anything, I get more credit for being the way I am. People at work still can’t believe that I’m walking just over 2 miles to work everyday in all weather when I have a car at home.
I haven’t had a lot of negativity to deal with so I haven’t thought a lot about how I would deal with it…… but I think I would just carry on regardless. I’m ginger, I wear glasses, I’m welsh (living in England), and I have a bald head – I’m used to people taking the mick out of me! When I believe in something it takes a lot for me to change my mind. I would need to be hurting people or myself for me to re-consider my strategy.
I have a sense of pride about how I can remain disciplined with different elements in my life. Whether it’s sticking to a work out routine, giving up alcohol for lent, or investing more than 50% of my wage. I like the challenge it represents, and I find it satisfying that most people can’t continue with these things on a consistent basis. I like that fact that I’m a bit different from most people!
Conversely, it’s also nice when you come across fellow frugal goers, and investors. We’re quite rare in the general public and it’s nice to share the same goals, frustrations and joys.
Switching quickly to a positive vibe (which you have deftly achieved already with your answer above!), have you had any interest from friends or family about what you are doing, and have any of them started picking up tips on investing, money saving and so forth?
My fiancé has probably been more influenced than anyone else as she has to live with me! She’s always lived very frugally since we’ve been together, but she didn’t give any consideration to investing and maximising her returns from her savings. She asked me for help not so long ago and I found she had 0.1% and 0.5% saving accounts with substantial amounts in. We consolidated all the money into the top paying saving accounts and she’s even started investing in FTSE All-share and S&P 500 index trackers. I don’t think she would have bothered without me telling her about the things I’ve been doing, and seeing the progress I’ve managed to make.
I recently had a catch up with a couple of old colleagues and the conversation got onto Sports betting. They had both spent substantial sums on funding their online accounts, and were doing so quite regularly (every month). I explained how I bet and that I’ve only funded my account once in 18 months. I told them about how I manage my bankroll. This interested them enough to ask me about how I handle savings, so I told them about all the investments I have and how they work. They’ve both asked me to spend some time with them at their houses to go through their finances. We’re yet to meet up, but I’m always happy to help people out if I can. Finances fascinate me.
What are the main things that have rubbed off, or have been easiest for them to pick up?
I’ve found the biggest influencers have been the things that are easier for people to adjust to. If you are already paying money for something, and there’s a way to pay less for getting exactly the same item, people become interested! The easy wins that tend to get attention are using cashback websites for purchases, regularly changing bill providers for insurance, electric, broadband, telephone etc and changing saving accounts to maximise returns.
My fiancé started using a monthly budget strategy I set up, as she saw the way I turned my financial situation around form being £1,000’s in debt to having £1,000’s of money in investments in just a couple of years.
Funny enough, I’ve had friends that are currently in debt, but have shown great interest in how I invest in shares due to the potential returns. They see it as a way out, but I’ve tried to influence them to clear the debts before looking into investing in shares.
What are your main methods for generating passive income?
As I’ve mentioned earlier, my main focus is Dividend Growth Investing. My next priority is investing in a cash ISA which will be used to fund my first buy to let property. I would like to eventually expand this into a property portfolio.
I currently invest cash into a regular saver account where I receive a fixed 5% (Pre-tax) return for 12 months. When the account matures, the cash will be used to invest in Shares and the cash ISA next year.
I’ve also invested in UK, US and International Index trackers. I’m only continuing to invest in the FTSE All-share tracker as it’s returning better than the cash at present, I might decide to invest more there in the future, but I’m currently using any disposable income for DGI.
I’ve invested in an income bond and an income fund, but I no longer fund these accounts. I’m also receiving monthly income from Peer-to-Peer lending, and I use the income from all of these options to fund my first 2 priorities.
What is your current Net Worth, What was it 5 years ago and what are you aiming it to be in 5 years?
Net worth 5 years ago:
Student loan = -£9,962
Money owed (Fiance) = -£500
Total = -£10,462
Net worth now:
Student loan = -£6,714
House (minus mortgage and split return with fiancé) = £38,000
Cash savings = £8,611
Investments = £9,379
Company Pension = £4,873
Total = £54,149
Net worth 5 year goal
House (minus mortgage and split return with fiancé) = £70,000
Cash savings = £10,000
Investments = £100,000+
Company Pension = £15,000
Extras = £5,000
Total = £200,000
What is your retirement “F-You Money” number, if you have this calculated already?
£400,000
I’ve based this on conservative numbers for now. If I spend £12,000 a year (£1,000 per month), and I’m receiving a 3% return on my investments I’ll need £400k to cover it.
This is a top end figure. In reality, I’m living on less than £12,000 a year and intend on reducing it further whilst recording my expenses on my blog. I believe 3% is at the lower end of what I would expect to earn on my investments, so if that number was at 4%, it would bring the number down to £300,000, and that’s a big difference!
£400,000 is the number I’m shooting for at the moment, but I think this will be adjusted closer to the time.
Do you employ any alternative investment strategies outside of the mainstream Property+ISA/SIPP/Share Trading Accounts?
Currently, I’m still receiving an income from Peer-to-Peer lending, I’m undecided on how I want to continue with that at the moment but it’s an option for me. (I would love to see a blog post on how you got on with this please! – TFS)
One future strategy is to try writing an E-book. I have such a great opportunity to try it out. My Grandad was a prisoner of war in Japan for several years, he helped build the bridge over the River Kwai. He unfortunately passed away 2 and half years ago. He was writing a story of his experience and was planning on publishing it, but never completed it. He gave my dad a copy of it, and reading what he went through is truly unbelievable! I would love to finish his work and get it out there for everyone to read. I wouldn’t care if I didn’t get a penny for doing this, I would just get so much satisfaction from completing it.
The experience I’ll gain from going through that process should help me consider this as an option for the future. I would like to own some sort of intellectual property, and it’s a bit of a dream of mine to write a book some day. The thought of helping others get out of debt and becoming financially free would be brilliant. I just need to get myself into a position where I have high credibility so people would WANT to read my story. Easy right!
I will remain open to other passive income streams, and no doubt I’ll experiment with a few on my blog.
You say on your blog: “I would like to reach a level of passive income that covers all of my expenses so I can experience all the amazing things life has to offer.” – What exactly does this entail? (Travel… etc…?)
I read Tim Ferris’s 4 Hour Work Week and found it very inspiring. I believe, like Tim, that life is precious and it’s there to be lived. There are so many things to see, people to meet, experiences to have, and I just want to take in as much as I can whilst I’m here. I believe financial independence will provide me the biggest possible gift, which is TIME.
I want to use that time to travel the world, and properly absorb cultures. I want to spend 3-6 months in the countries I visit to get the full experience of what a certain culture is like. I want to eat and cook their food, learn the language, play their sports, socialise with the people and take all the best things they have to offer to make me a better person.
When I’m not travelling, I would like to experiment with life here. I have a passion for trying new things and learning so I could see myself taking up new hobbies, developing my current skills, and helping others.
I would also enjoy just spend time with my fiancé, friends and family. Ideally, I would like to do all of the above with them to, as opposed to on my own.
You are currently engaged to be married, what does the future Mrs FFBF think of your plans? Does she also get involved in div growth investing, or any other aspects of your plans to be FI? Does she also plan to quit work and travel the World?
Mrs FFBF is very supportive about everything I do, I’m very lucky. I’ve talked her through DGI a couple of times now, and she does understand the strategy behind it, but I’m not sure she’ll get into it just yet. I think she’ll consider when I start to get nice Dividend returns and she can see it happening for real.
She doesn’t have any plans to be financially free by a set date like me, but I think she wants to join me in all of my travels and adventures. I support her in whatever her decision is, and I won’t be pushing her into doing anything.
I believe one of the best ways to motivate anyone is to lead by example. As soon as she can see the benefits to DGI, I think it will be difficult to resist trying it out.
I can’t see any mention of kids on the blog. Are they on the horizon and how do you think this might impact your plans to be financially free by forty?
We both want kids and I think this is something that will happen within the next 2 years for sure.
Maybe it’s a bit naïve, but I don’t think having kids will put a stop to my plans, if anything it will spur me on to make it. Mrs FFBF has a very similar mind set to spending than I do, if anything she’s tighter than me! So, I don’t see us spending a lot of money on ‘tat’ for the child, only must haves. My sister has 3 children and I’m sure there will be an opportunity to work together and help support each other with clothes, toys etc as well.
I’ve also seen a few blogs from people that are on the road to FI who are supporting families at the same time. It’s going to have an impact on it, but not enough to prevent me working towards my goal.
What is your number one money saving tip? (it doesn’t have to highest in terms of money saved, but just your favourite tip for any reason)
Good question! This is difficult as there are a lot of tips out there that are really beneficial.
I think my answer would be – Track ALL income and ALL expenses. Every little penny for at least an entire year.
This will provide so much information for you to take the next step. It will provide financial awareness of what you’re spending your money on and it can put it in real terms for you. For example, you’ll find out you’re spending £600 a year on Sky TV. Then you can ask the question is it worth it?
It will show you how much disposable income you have on average to spend and invest. If you continued to create that amount for 5 or 10 years what would you have? Are you happy with that amount?
I would suggest making this one of the first steps for anyone who wants to review their financial situation.
What are your three biggest goals for the future in the areas of your financial life, personal life, and your blogging life?
I love this stuff!
Financial
1. To become financially independent. To receive enough income from investments that cover all of my living and spending expenses so I can have the choice whether or not to work.
2. Own at least 1 x property to let out
3. Create a form of intellectual property that provides a passive income stream.
Personal
1. Release a book on my grandads story. (Not concerned about making money here)
2. Visit/explore a new country and a new part of the UK every year.
3. Physical – Back Squat 2 x my bodyweight (175kg). Perform 15 x consecutive Muscle ups, and run a 4:59 mile (Chin just hit the floor at that last one…!!! – TFS)
Blogging
1. Continue blogging consistently (create 100-150 posts a year) from now until I’m FI.
2. Get to 10,000 monthly page views.
3. Get invited to do some additional writing for a website/magazine/company based on the work from my blog.
What are your favourite relevant blogs or websites to readers of theFIREstarter that they may not yet be aware of?
It’s such a fantastic source of information on anything financial. Its forum is also very entertaining and useful. This website changed my life 5-6 years ago, and if you are in financial difficulty or know someone that is, this website is a must for anyone in the UK. The site has several ‘tools’ that help everyday consumers. The Megashopbot for example compares a single item across the whole of the internet, so you can find the best priced item in one place. The weekly newsletter is also very handy and I still subscribe to it today.
I stumbled across this website when researching Personal Development. Tims believes in spending time on items that provide the biggest return on investment in all aspects of life, including life itself. He’s an avid learner and developer of lifestyle design. He classes himself as a meta-learner, someone who has the ability to become very good at any given skill in the world in a very short space of time. This includes Latin Dancing, Kickboxing, Bodybuilding, gaining Strength, learning a language, playing the guitar, starting a $1m company, speed reading, sleeping, sex…….and the list goes on!
I admire the way he tries to maximise his time on earth, the ability he has to break down any task/skill and learn it in lightening quick time. He covers so many areas of life, I think anyone can find something of interest here.
Another life changing website for me. I’ve always enjoyed all facets of health and fitness. In the last 15 years of my life I’ve wanted to be a bodybuilder, power lifter, weight lifter, Marathon runner, Triathlete, gymnast, football player, and a basketball player just to name a few! Crossfit is the most comprehensive training program I’ve ever done and it’s something I will do for the rest of my life. It’s constantly varied, functional movement, performed at high intensity. It will help any ‘Regular Joe’ become an all-around athlete with gymnastics, weightlifting/powerlifting, and cardio vascular exercise.
What are your favourite book(s) and film(s) and why?
Books
I have so many! I tend to read only non-fiction books as I love to work on developing myself and learning new skills. Here are some of my favourites:
Tim Ferris – 4 hour work week – It helped me review a life long career, create passive income streams, and mini-retirements.
Tim Ferris – 4 Hour Chef – It contains Tim’s formula for learning any skill. This can be applied to anything. It also has some nice recipes. (It isn’t a cook book)
Danny Wallace – Yes Man – Very funny book. Self experimentation of a man that went an entire year saying ‘yes’ to every single request. (Imagine not saying ‘no’ to anything?)
Napoleon Hill – Unlimited Success – 52 motivational articles which hold the key to wealth, power, happiness, and good health. It suggests reading an article at least twice a week before moving onto the next one.
Dr Steve Peters – The Chimp Paradox – A mind management program for confidence, success and happiness. It helps recognise how your mind works, understand and manage emotions and thoughts.
Jonathan Haidt – The Happiness Hypothesis – He reviews contemporary psychology and traditional philosophy to reveal what truly makes us happy.
Films – Check collection
I like a film to move me in some way, to instigate some form of emotion. I like many genres, here are a few:
‘Manly’ films – Gladiator, 300, Rocky IV, Braveheart
Gangster films – Goodfellas, Casino, The Departed, Layer Cake
A thought provoking drama – Into the Wild, The Pursuit of Happiness, Seven Pounds, 21 grams
I love comedy – Anchorman (or anything with Will Ferrell in), Austin Powers, Step Brothers
Animation – Despicable Me, Up, Toy Story
Totally off topic but what are your favourite songs / bands? (I am always looking out for new stuff to listen to!)
Similar to films, I like songs that create or heighten a particular emotion for me. If I want to be calm, jacked up or I want to smile, I play music to fit that desire. Here are a few bands/songs I like:
Easy listening – Ben Howard (current favourite), Norah Jones, Melody Gardot, Jack Johnson, Bon Iver, Jose Gonzalez, Ed Sheeran, Eva Cassidy.
Dance Music – Calvin Harris, Example, Rihanna, LMFAO, The Prodigy,
Happy/Cheesy Music – Starship (We Built this city), Jermaine Stewart (We don’t have to take our clothes off), Alphabeat, Rick James (Superfreak)
Heavy Metal – Metallica, Rage Against the Machine, AC-DC, Guns and Roses, Jimi Hendrix, Foo Fighters,
Thought provoking – London Grammar, Bloc Party, Plan B, Alice in Chains
Legends – Prince, Michael Jackson, Frank Sinatra
I can’t help but like some ‘Pop crap’ too. Sometimes I just find myself dancing to One Direction (I’ve just lost so much credibility now haven’t I!)
____________
Oh and it it was all going so swimmingly until that last sentence Huw! 🙂
In all seriousness, there were some cracking answers in there and a lot of food for thought. Personally, I feel I can relate to most of what Huw thinks about life, but whether you do as well or not, I think you can agree he is a very interesting character and his blog is worth checking out! (Here is the link again in case you forgot it).
Thanks again Huw, and good luck with your quest for Financial Freedom by Forty!
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