Welcome into my workshop!
To give some context, I’d like to give a bit of an illustration of whereabouts I am on the way to financial independence. Rightly or wrongly, this is where I’m at right now.
I live in the UK (not London) and am in my mid twenties, having graduated from university last year. As a student I lived reasonably cheaply, keeping spending low but still enjoying myself (going out, trips abroad etc) living off student loans and two part time jobs. Early on as a student I started to get interested in the concept of financial independence. I dipped my toe into the water with some (very) small scale investing and a peer to peer lending platform with a view to using small amounts of money to learn about investing so that once I graduated and had a hike in my income I’d be less likely to make as many stupid mistakes with larger sums!
I now work in a professional job in the public sector, and between the relatively small investment portfolio I built up as a student and saving roughly half of my take home pay since starting full time work I’ve been able to buy a house just under a year after starting work.
The astute amongst you will note that I committed a cardinal sin of the FIRE community of having plundered my investment account to pay for the deposit on my house. I was hesitant about this, but in the end decided to use what was a relatively small portfolio (will likely overtake the original value of it again within six months) to buy a house that a) costs me less per month in mortgage payments than rent for smaller properties in similar areas and b) has allowed me to take in a lodger and generate tax free income which would have required a considerable salary increase to get the same take home pay.
For those who want numbers (I always want numbers), I currently have my take-home pay split 50/50 between two accounts: one for bills and spending; the other split again 50/50 between savings and investments. As my income increases, and once I’ve built up an emergency fund, I’ll start to push up the investment rate. I’ll also start investing the rental income, but so far it’s been paying towards furnishing the new house (I moved in with only a camp bed). As the investment pot grows I’ll be looking towards setting up some additional streams, but that’s a way off yet.
I’d love to hear from yourselves, especially other people just starting out on the path to financial independence!