FIRE

FIRE stands for Financial Independence / Retire Early, but it isn’t just a concept, it’s a way of living. A movement that shares its routes with anti-consumerism and minimalism. A community which thrives on helping one another and is enthralled with passionate and subversive entrepreneurs whose single goal is to maximise their happiness. The movement is full of intellectuals that understand happiness isn’t achieved by consuming products. They’ve discovered that to be happy, money is better spent on increasing time with loved ones instead of buying the ‘next best thing’ that advertisers throw their way. ...

A lot of people are quite shocked when they hear how much I save in comparison to what I spend. A lot of this is attributed to a big salary, but my expenses are still lower than most people that I know. Saving so much is partly due to my upbringing, partly due to my relationship status and partly due to my competitive nature, but a lot of my savings can be attributed to certain habits that I have instilled in myself over the years. These are habits that anyone can reinforce in themselves to increase their savings rate. ...

Consolidating your expenses has long been a tradition in British culture. It stems back to the days where a father had to barter with other families to trade off his daughter as a bride in place of cattle or arable land. The daughter would then become the property of her new husband. Their finances then become one, “What’s mine is yours.” It was the wife’s duty to raise children; it was unimaginable for them to earn money, so the joining of the household finances had to happen. Of course - in the modern world, things happen a little differently. Women are now in high paying careers all over the world, their wages have almost leveled out , or in some cases surpassed males in the workplace. Couples are on an equal playing field, so why should this age-old tradition of consolidating your finances continue when each person is as able as the other? Here are the 3 main reasons why you should be splitting your finances equally and why doing so should be the go-to de-facto for FIRE pursuers. ...

There’s a war that has been raging on in the FIRE community since the beginning. Every corner you turn, every FIRE forum you stumble upon, you’ll see people arguing for and against including your home in your FI calculations. I’ve always been in the for camp, but I’ve never fully explored the notion. So, for my benefit as well as yours, let’s deep dive into this question - Should you include your house in your net worth? ...

Why Pensions Are Awesome First things first - Pensions in the UK are absolutely bloody awesome. There’s no other country which I know of that offers tax savings as good as this. If you’re in the higher rate tax bracket, contributing to your pension via salary sacrifice would instantly save you 42% of what you deposit from 40% income tax and 2% National Insurance savings. If you throw a student loan into the mix, you can add another 9% savings onto this, saving a total of 51%! Remember, this is a guaranteed return. If this was an investment fund and it stated - “Deposit £10,000 and it will instantly turn into £15,100!” people would literally be running over their Grandma’s trying to invest, so why aren’t more people doing this? The awesomeness doesn’t even stop there. Pensions function in the same way as ISAs with their gains being completely tax-free. All that extra money you earnt from your 51% gain? It can now joyfully compound and the tax man won’t come after you for a penny. Oh, and the limit is £40,000 per year!! That’s more than double the $18,500 which Americans can contribute into their 401(k)s (their pension equivalent). Even if you weren’t a higher rate taxpayer, you would still save 41% in total as you’ll save an additional 10% with your National Insurance savings. Also, remember compound interest ? You’re getting this extra money as soon as you invest, not when you retire. That extra 51% will be merrily compounding all of the way until your retirement. This could quite literally mean the pension depositor has amassed millions more than the devout ISA only’er. This generosity is bound to be stopped at some point. There are already talks of the Government scrapping the higher rate savings in favor of a 20% flat rate across the board. You should all be making the most of this whilst you still can! ...