I’m a 48 year old single mum living in Scotland who moved here back in 2000. The details are a bit blurry in my memory, but there was definitely a man involved. One marriage, two children and one divorce later, the man is most definitely an ex now, but the love affair with Scotland continues. This is home for me now. Divorce is hard on the finances, there’s no doubt about that. We split when the kids were tiny, so it was a long hard slog juggling childcare, working part time and paying the bills. I’ve worked in financial services for the same company since I moved up here, but not in a high paying sort of job. Five years ago I managed to manoeuvre myself into a job with that same company working full time and earning a lot more than I had been. Saying that, my salary now has only just nudged over the £30k mark, so we’re most definitely not talking big bucks here.
My main focus for a lot of years was paying as much of my mortgage off as I could. When I took out my first post-divorce mortgage back in 2006 interest rates were a lot higher than they are now. I’m lucky enough to have a base rate staff mortgage, which is great, but it does somewhat suck you in and make you very reluctant to leave. As interest rates dropped, I just kept paying the same amount to my mortgage and I loved checking my balance and seeing it coming down. I was torn about what to do with the house. We just about had enough room where we were, and if we stayed put the mortgage would have been cleared by the time I was in my mid-fifties. I really wanted more space though. I’m pretty sure my kids are going to be living far away from here when they fly the nest. Maths Boy has already applied to mostly English universities, despite my dire warnings of student debt if he goes south of the border. To be fair, his dream is studying in Cambridge, and I don’t want to be the one to rain on his parade. Coding Boy thinks his future lies over the water in America. Whatever happens, they both have really clear ideas about what they want to do with their lives and careers, and Scotland doesn’t seem to feature all that much in those dreams. So, I wanted a big enough house for them to be able to come home to stay whenever they wanted. I’ve got that now, but unfortunately I’ve also got the mortgage to go with it. I’m overpaying again, but effectively I’ve started my mortgage afresh. Even at the current low interest rates I’m going to be 62 before I’m done with it.
I’ve become a bit obsessed with FIRE blogs over the last few years. I seem to spend an inordinate amount of time reading them and feeling that I should be doing more to sort my finances. I’ve got budgets set up for everything with a corresponding spreadsheet. Don’t get me wrong, I’m most definitely not a Mr Money Moustache, but I do alright with the money I have coming in. At the end of the day you have to live a bit too. Time just seems to keep ticking away though and I don’t seem to get much closer to FIRE. I’ve come to the conclusion that rather than trimming the fat any more, what I really need to do is increase my income. That’s easier said than done though.
I go round and round in circles trying to work out what to do for the best. I know I need to get my mortgage paid off and increase my pension and passive income so that I can afford to retire at some point. I have a defined benefits pension, which unfortunately got capped when I was working part time and earning £10k less than I am now. So basically me going full time and getting a pay rise hasn’t helped my pension any.
At 60 my pension will be about £10,000 a year. I’ve worked out that without a mortgage or any work related costs I can live on about £15,000 a year. Of course I need to take inflation into account, but when I’m retired I won’t have two teenagers eating me out of house and home. I’ve got about £1500 a year coming in from dividends just now, which I reinvest. Rather foolishly though that all comes from shares in the company I work for. The plan is to change that. In 2020 and 2021 I have Share Save plans maturing, and I’ll just take the money from them and invest it in something else. Index trackers seem to be the sensible route to go down. Most of the shares I own just now are in ISA’s, so I’ll probably just leave those well alone. Any not safe from tax I’ll sell (when share prices are not quite so dire) and either pay off some more of the mortgage or put the money into index trackers. At this stage my goal is to retire at 60. Not exactly early, but much better than it could be. The dream scenario is to quit my job in my fifties, but I think that’s going to be a tough ask. The key is going to be to increase what I’m earning. I think you can only reduce your expenses so far. I definitely could cut costs, but the question is would I want to. I don’t want to look back on my life and think that I’ve not spent money on experiences that could have enhanced my life. I think that Minimalism has a lot to offer in this regards. For me it’s all about the people and experiences in my life, not about the stuff. Saying that, I really want to be financially independent and have the choice about what I want to do work wise. Having a separate source of flexible income that I could continue when I retire from the traditional 9-5 grind is the way to go. Watch this space as they say.