We bought a $1m house!

I wrote recently about buying a house as a single parent (TL:DR – it’s really, really hard) but this week I want to share the exciting news that we are about to move in to our new home. and for lots of reasons, it’s a home worth $1 million. [note – I usually share my figures in ¬£ but it sounds better in dollars so I am doing it, just this once].

Side note: I was talking to a married friend about this and she said ‘but why do you keep saying WE bought a house? I mean, you’re doing it alone’. In mentally wrestling with this I can’t decide if it makes me feel annoyed since my family unit counts as a ‘we’ since it isn’t a pronoun that couples somehow own. Or perhaps she meant it in a kindly way to recognise the challenges. Either way, it’s the kind of comment which wastes my mental space so I share it with you here in the hope that I can then forget about it. In case it stays confusing, ‘we’ in our case means myself and my children. Plus I promised that we can get a cat, so the moggy counts too.

Yes WE can ūüėČ Photo by Marija Zaric on Unsplash

So, we bought a house! I wrote back in November about planning to do this, a post which built on three months of decision making since our landlord told us that – like many people during COVID – had decided that they wanted to move back home. It has been a long long process since then, and it has meant putting other financial goals on the backburner. Plus actually it has been stressful and knackering, but since we had to move out anyway some of this was unavoidable.

I shared this before but if you are really interested in the nuts and bolts of buying a house in Denmark you need this fantastic and very detailed guide, but below are the steps that I took as a British expat:

1. Had a browse of the market. This was the point when I realised what kind of price band we were looking at. We wanted a house with a garden, in the suburbs, with four bedrooms and some separated space (i.e. not a single storey) so that there is room to have childcare support who can stay over, and within walking distance to the train which will take us to work and school. Unfortunately this is what pretty much everyone else is looking for especially post-COVID, driving up the speed of the market and house prices. But this was a useful step as it showed me the kind of thing that was available and the amount of mortgage I would need to make it work.

2. Looked for a mortgage. In Denmark, there aren’t really mortgage brokers which means you have to do all the legwork yourself. In the end I used a broker who specialises in working with expats since, not surprisingly, all the paperwork including the surveys are all in Danish. The first calls I made to banks showed that I was eligible for a mortgage but as an expat I would need a 20% deposit – or to find, up front, about ¬£155,000. It is testament to how much I wanted to get out of paying our extortionate rent that I looked into remortgaging my UK home in order to find this deposit. I couldn’t make this work (for lots of reasons though I did find one broker who would do it, it came with conditions I didn’t want to accept) so I went to the Danish broker. They found me a mortgage with a 10% deposit (where the bank provides the 80% mortgage still but then also grants a 10% loan). In the end this was a saving grace since it made me stick to a lower overall budget. And let’s be frank, that was still a budget of $1m which makes me twitch just a little every time I think about it.

In case I didn’t mention it enough ūüėČ

3. Made some hard financial decisions. The 10% requirement means that I had to find ¬£80,000 for the deposit. I was able to do this by pulling various savings and investments. I took out almost my whole ¬£40,000 emergency fund leaving just ¬£3,000. I also pulled money from investments – with stocks and shares ISA there’s no fees or penalties to take money out, but I withdrew a lot and left ¬£12,000. I really reflected for a long time on whether this was a good idea, since it took a lot to build up those pots of money, but looking at the balance of risk I think that we stand to be better off in the long run unless a black swan event turns up. And we might have had enough of those for a while….

4. Looked for a house. Oh. My. Goodness. this was the painful bit. Being a) on a tight budget (for Copenhagen) and b) quite detail oriented, I ended up looking at 40 houses. I made offers on two, both of which were rejected – one where someone else beat us to it, and one where the survey showed it needed a new roof and the owners wouldn’t accept a lower offer based on the money needed to do that. But, after spending every weekend for months looking at houses, we finally found a house that fits the bill. Hurray!

5. Did all the paperwork and processes. This is pretty easy in Denmark thankfully – the bank also has amazing processes where they organise paying over the mortgage at the right moments which also removes the possibility of getting scammed which scared me witless when buying my UK home. You have to have home insurance in place, and a kind of insurance which protects everyone in case there is something that the house survey has missed.

6. Made my peace with the compromises. So I am not quite there with this one, but it’s coming. We had to move further out than I would have wanted, and to a slightly different part of town to where we are now (and where our friends are). We are at the top end of my ‘distance from train’ condition, ditto ‘size of garden’. But I am hopeful that once we settle in and stop comparing to where we are now, I’ll forget about these things and enjoy our new home in peace.

Getting ready for this… Photo by Markus Spiske on Unsplash

So there we go. I post on Sundays, and this time next week (all being well) we will have the new house and be sorting it out – the weekend after we will be all moved in. Wish us luck!

Budget Check In: May

May has been AMAZING weather wise – sunny and warm, beautiful blue skies and suddenly every single plant in Copenhagen has sprung into stunning lush greenness. We’ve been swimming in the sea a few times (ok, it’s still freezing but it’s refreshing and the sand is warm and it’s totally worth it). Getting into the last months at this rented house and doing a lot of decluttering, and winding down to the end of the school year. So a busy month, and one which feels a bit more positive – change is a’coming.

Hurray for May! Photo by Waldemar Brandt on Unsplash

Budget wise, it’s been better than last month but still not amazing. My daughter’s birthday is in May, and whilst I bought most of her gifts in April I paid for her party this month. Last year we did a COVID-friendly budget party at home but this year I am so crazy with work and getting ready to move that I figured I would just throw money at the problem. She had a wonderful party, and I didn’t have to clean up afterward, so it was worth it!

Item Monthly BudgetSpend May% of monthly budget
Childcare costs ¬£           1,100.00 ¬£       872.7175
Car (insurance, tax, petrol) ¬£              125.00 ¬£                –  0
Charity ¬£                 66.67 ¬£          14.8822
Eating out ¬£              120.00 ¬£       241.96202
Entertainment – subscription ¬£                 50.00 ¬£          79.37159
Entertainment ¬£              100.00 ¬£       156.19156
Kids – extra curricular ¬£              250.00 ¬£                –  0
Family ¬£                 50.00 ¬£          22.3745
Groceries ¬£              400.00 ¬£       855.33214
Holidays  ¬£              300.00 ¬£       489.59116
Insurance ¬£              200.00 ¬£                –  0
Personal care ¬£                 30.00 ¬£       185.30618
Shopping – general ¬£                 25.00 ¬£          45.58182
Shopping – gifts incl birthdays ¬£                 58.33 ¬£       951.721632
Shopping – clothes ¬£                 29.17 ¬£          72.15247
Rent and Bills ¬£           1,500.00 ¬£       1000 0
Transport ¬£                 41.67 ¬£       138.92333
Utilities ¬£              200.00 ¬£    1,559.59780
TOTALS ¬£       4,645.83 ¬£    5,886.65130

So, once again I overspent my budget BUT by much less than last month. I spent £5,886 against a budget of £4,645:

  • I realise that I have radically under-estimated gifts, parties and what not for my children’s birthdays. In my mind, I am a super frugal righteous parent, but that’s not who I am in real life. There are definitely elements of making up for the lack of family in there – they don’t get gifts from their dad or his family, and only from my mum and brother. So there’s a lot to make up for. I only get them things they will really love / use, so even though there is an element of guilt, it doesn’t feel wasteful.
  • Grocery spend continues to be way over. I need to properly focus on this, but will do so when we move to the new house and I get a bit of head-space. Currently we’re just getting by – I’ll get to it.
  • Utility bills were insane this month and will probably be terrible next month as I tie up everything we owe for this place. I had huge bills on water – where the company asked me to pay for the whole year up front even though I said I would be moving out in July, um no thanks – and also on heating. I hope the new house has cheaper bills than here, but if not, it will be worth putting some time into fixing whatever the issues are.
  • I spent again on personal care including visits to osteopath. This is something I should be able to claim back, but for now I will leave it here and balance it at the end of the quarter.
  • Finally I spent a bit more on transport due to bike issues, but I love my bike and get a huge amount of value out of it, so I will live with this.
Sea-swimming, Copenhagen style. Photo by Kevin Angels√ł on Unsplash
 Monthly saving planMay% of plan
Mortgage (UK house)  ¬£                500 ¬£              500100
Mortgage Overpayment  ¬£                500 ¬£              500100
Emergency Fund  ¬£                  100 ¬£               100100
ISA ¬£               1,250 ¬£               50040
Kids savings ¬£                   248 ¬£               248100
SIPP ¬£                   300 ¬£               300100
  ¬£   2,898.00 ¬£ 2,348.0087

So what did I save? Again I focused on getting the last of the money together for our house move in July, so I have just been putting extra into my current account to make sure the money is there for whatever comes up. No great savings news then, but at least I carried on with the usual basics which is still savings (or paying toward capital) of £ 2,348.

So this month, a very unimpressive savings rate of 20% compared to spending 80%. July will also likely be odd due to the move but in August I am going to revise the budget and properly commit to it.

How was your May? Would love to hear from you!

Budget Check In: April

Ah April! Season of – well, we’re in Denmark, so season of sunshine plus snow showers plus beautiful blossoms whilst still having to wear a scarf and gloves. Personally it has been a mixed month as well. My step dad had an accident and fell down the stairs, and whilst he’s fine apart from a beard full of stitches, it has opened up the conversations about how we are going to collectively support my parents as they move into their next phase of life. On the other hand, easing of some lockdown restrictions and a change in weather means I feel a little bit less like a rat in a cage. So overall, onwards and upwards.

The start of a new financial year – summer is on the way (sort of)! Photo by Waldemar Brandt on Unsplash

Budget wise, it’s been a mixed month. My daughter’s birthday is in May, and with the reopening of things – or at least the expectation of reopening – my thoughts have turned to booking in plans for the summer. So whilst I didn’t really overspend for April itself, I have spent a lot of money on May-July. We did have one day where the malls reopened, and we went shopping which is unusual. I felt so giddy: look at all the shops! Look at all the lovely things! What if we have to get stuck at home AGAIN and we haven’t bought knitting needles!? So we managed to spend about ¬£60 with no plan. And then we went back to avoiding malls.

Item Monthly BudgetSpend April% of monthly budget
Childcare costs ¬£           1,100.00 ¬£       572.7152
Car (insurance, tax, petrol) ¬£              125.00¬†
Charity ¬£                 66.67 ¬£          14.8822
Eating out ¬£              120.00 ¬£       167.57140
Entertainment – subscription ¬£                 50.00 ¬£          84.97170
Entertainment ¬£              100.00 ¬£          17.7318
Kids – extra curricular ¬£              250.00
Family ¬£                 50.00 ¬£       183.85368
Groceries ¬£              400.00 ¬£       736.91184
Holidays  ¬£              300.00 ¬£    2,154.87718
Insurance ¬£              200.00 ¬£       127.0064
Personal care ¬£                 30.00 ¬£       231.84773
Shopping – general ¬£                 25.00 ¬£          60.12240
Shopping – gifts / birthdays ¬£                 58.33 ¬£       301.31517
Shopping – clothes ¬£                 29.17 ¬£          30.73105
Rent and Bills ¬£           1,500.00 ¬£    1,500.00100
Transport ¬£                 41.67 ¬£          87.80211
Utilities ¬£              200.00 ¬£       193.2297
TOTALS¬†¬£¬†¬†¬†¬†¬† ¬† 4,645.83¬†¬£¬†¬†¬† 6,473.92 

So, once again I overspent my budget, spending £6,473 against a budget of £4,645:

  • The majority of the addition was holiday costs where I spent ¬£2,154, making the non-holiday total ¬£4,319 which I don’t feel too bad about. That is a LOT less than I spent last year because I wasn’t bounced into booking whatever holiday clubs were left. It covers six weeks of holiday clubs (three per child) doing a mix of swimming, football, trampoline camp and a STEM camp for my daughter which looks awesome. It also covers flights to the UK and a week’s Air BnB for me to go and spend some quality time with my friends which, let’s be honest after 14 months at home, I am desperate for. So I am pretty pleased. I will need to hire a car, and spend some other bits but that should be the bulk of the holiday spend. All in all though I definitely under budget for holidays and I will need to make a plan since I have spent the entire annual holiday budget.
  • I spent again on personal care including visits to the dentist for all of us. This is something I should be able to claim back, but for now I will leave it here and balance it at the end of the quarter. For now I have lovely clean teeth and a sticker which says ‘I was brave at the dentist’.
  • I spent about ¬£300 on gifts which is mostly for my daughter’s birthday, but included a few things for friends and family who are far away and having a hard time. I try to concentrate on being lovingly in touch with people by phone and message, but sometimes a little something in the post can make a big difference, so I am ok with spending money here.
Getting that giddy spring feeling. Photo by Alexander Schimmeck on Unsplash
 Monthly saving planApril% of plan
Mortgage (UK house)  ¬£                500 ¬£              500100
Mortgage Overpayment  ¬£                500 ¬£              500100
Emergency Fund  ¬£                  100 ¬£               100100
ISA ¬£               1,250 ¬£               50040
Kids savings ¬£                   248 ¬£               248100
SIPP ¬£                   300 ¬£               300100
  ¬£   2,898.00 ¬£ 2,348.0087

So what did I save? Again I focused on getting the last of the money together for our house move in July, so I have saved the removal costs and some extra for getting things painted etc. So there is nothing amazing in terms of savings this month but I carried on with the usual basics which is still savings (or paying toward capital) of £ 2,348.

So this month, a very unimpressive savings rate of 20% compared to spending 80%. In theory though I should be able to to save more over the coming months since those big holiday costs are paid out, so I will make a plan to do so. And head back toward more conscious spending once the thrilling spring feelings start to wear off.

How was your April? Would love to hear from you!

More Copenhagen spring beauty. Come on, you feel it too!

Budget Check In: March

Spring is springing (it’s Denmark so it seems to happen pretty late). The weather has been beautiful, the evenings getting longer, and there’s a delicious smell in the air. Budget-wise March has two close family birthdays, mothering Sunday, Easter, and school holidays. I did calculate how much I had spent half way through the month, then once again had a massive splurge in the last week. I thought about it and realised it’s because I get paid on the 23rd of the month but budget per calendar month. For some reason I can’t cope with the thought of managing the month differently so for now I am going to try and be aware of my final-week-free-for-all and see if that works.

A quarter of the way through the year already! Photo by Glen Carrie on Unsplash
Item Monthly BudgetSpend March % of monthly budget
Childcare costs ¬£           1,100.00 ¬£         1,000.6291
Car (insurance, tax, petrol) ¬£              125.00¬†0
Charity ¬£                 66.67 ¬£              28.3843
Eating out ¬£              120.00 ¬£              90.1675
Entertainment – subscription ¬£                 50.00 ¬£            118.15236
Entertainment ¬£              100.00 ¬£              50.8051
Kids – extra curricular ¬£              250.000
Family ¬£                 50.000
Groceries ¬£              400.00 ¬£            714.38179
Holidays  ¬£              300.00 ¬£            329.89 
Insurance ¬£              200.00 ¬£            169.3585
Personal care ¬£                 30.00 ¬£            248.94830
Shopping – general ¬£                 25.00 ¬£              14.8960
Shopping – gifts incl birthdays ¬£                 58.33 ¬£            251.85432
Shopping – clothes ¬£                 29.17¬†0
Rent and Bills ¬£           1,500.00 ¬£         1,771.00118
Transport ¬£                 41.67 ¬£            159.18382
Utilities ¬£              200.00 ¬£            186.1593
TOTALS ¬£       4,645.83 ¬£         5,133.74111

So how did it go? Better than February, worse than January. I spent £5,133, or 11% over budget. It could have been better, but could have been worse.

  • I absolutely beasted my grocery budget AGAIN which is infuriating. I managed to spend 180% of the monthly budget which is ridiculous. I realised I have one particular trap which is the fancy supermarket delivery service (only one place does this in Denmark and it’s way more expensive than my usual Lidl) – that added ¬£200 with no real added value.
  • I spent a lot on personal care which I had hardly budgeted for. Thanks to working from home, both my son and I have developed back and neck issues and have to go to physiotherapy. He, lucky chap, gets to go to an osteopath: I get a scary Norwegian man who shouts at me whilst I do horrendous exercises. So I spent a lot more than planned but I do get back 80% from our health insurance company which means that the ¬£250 I spent should actually be in budget when I get refunded.
  • My entertainment subscription budget doubled but it included an annual ¬£50 subscription for the Guardian newspaper. Technically I don’t get anything from this other than a sense of supporting Proper News since it’s free to read anyway – maybe I’m prepared to pay before it hides behind a paywall. Anyway, I could stop this cost but I am prepared to keep it for now, at least in solidarity.
Spring time sunshine and sakura. Photo by Arno Smit on Unsplash
 Monthly saving planMarch% of plan
Mortgage (UK house)  £                500 £              500100
Mortgage Overpayment  £                500 £              500100
Emergency Fund  £                  100 £               100100
ISA £               1,250 £               50040
Kids savings £                   248 £               248100
SIPP £                   300 £               300100
 ¬†¬£¬†¬† 2,898.00¬†¬£ 2,348.0087

And what happened with the savings? I reduced my budget on this because I was saving for the house costs – the deposit is all there but the costs like the lawyer, removal men and so on don’t come cheap and I need to be ready. So an additional ¬£2,000 went to that making a total savings of ¬£4,348.

Overall I spent 54% and saved 45% which I am very happy with, even though some of the spending lines took a bit of a kicking.

How has your March been? I’d love to hear from you!

Back to Basics Part 3: Know your numbers

So, you’ve got a good idea of what FIRE is, and what your FIRE number is; and worked out how quickly you want to get there and how soon it might be. This is the last post on going Back to Basics and explores what your journey might look like.

As with all ‘simple steps’ the pathway to FIRE depends on where you start. All the steps fall into three main categories: spend less, save and invest, and earn more. This blog will focus on working out your real income and expenses at this point in time, since this is the best place from which to build out plans to increase income, reduce spend, and work out what fabulous things you are going to do with the rest on your path to FIRE.

Simple steps to FIRE. Sometimes the view is great too. Photo by Khara Woods on Unsplash

The first and most important step is to know your numbers.

You will have looked a little at your projected costs when planning your retirement number, but the first step is to really understand what you have coming in and out.

What income do you have? For most people this is from one job, but if it isn’t this will take a bit longer to work out. Do you have other bits of money coming in – child benefit, working family tax credits, maintenance from your ex? Then what comes out pre-tax – pension, health insurance, student loan repayment, childcare vouchers?

If you are self-employed then try and work out the average of your income from previous months. You’ll need to take into account if your business is seasonal, or if you had significant up front costs in setting up your business for example, and it’s harder to project your profits / income in terms of growth. You should look to calculate your mandatory tax and national insurance if this isn’t done for you, and use your post-tax figure.

For now all you need is money you are sure of coming in, and anything that comes out pre-tax. Being clear on this means you know exactly what money you have to play with and what you might have already paid out for before it hits your account.

What do you usually spend? This needs to be a really honest view of what you spend, rather than an aspirational view where you think ‘well I keep meaning to stop smoking/buying lattes/my habit of buying clothes when doing the supermarket shop so I just won’t add that cost in and it will spur me on’. Be honest. Not only will it help you more in the long term but it also gives you spaces to win – if you do cut out a habit, you can celebrate it rather than setting yourself up to fail.

There are lots of ways to work out your spend but this is mine. For each of these costs, I have a spreadsheet which shows whether they are paid monthly/annually, by what method, and if by direct debit, when and from which account. Not everyone loves geeking out with spreadsheets – there is a simple budget planners available but whatever the approach you will need to spend some time getting your numbers together. When I was doing this I made a date night (with myself, if you are reading this and not single then do it with your partner so you are on the same page). I got some fancy tea and homemade cookies, put some music on and got down to business. (I realise that sounds dodgy. Ahem.)

Wherever you live, and however you get to and from work/life, you need to budget for both. Think of the house insurance premiums in Venice tho… Photo by Marijana Vasic on Unsplash
  1. Work out your fixed costs: This includes all the basics, which I find useful to put into categories:
    • Home: Rent/mortgage, gas, electric, water, council tax (or whatever the equivalent is where you are) and house or contents insurance. There might be more that comes in here which are fixed for you but not standard – I have boiler cover for example, others have ‘white goods’ insurance which covers washing machines and whatnot. This also might be different if you rent. The key is to make sure you capture things you pay for annually as well as monthly.
    • Transport: car tax and insurance; bus pass; bike insurance. This will depend on you but this is fixed costs so things like petrol or new tyres don’t come in here, however regular they are.
    • Debt repayments: if you have debt repayments, then the first focus will be on repaying this so you are free to throw all your income at building your FIRE stash. But for now if you do have them then they are fixed and need to be included here. Gezuntheit.
  2. Work out your essential but flexible costs: This is all the stuff which is essential but changeable.
    • Childcare: I include childcare in here partly because it changes as kids get older or you choose different kinds of provision. When you plan out your options, childcare is also something to play with since, certainly in my life, I feel an element of working to pay childcare so that my kids can be looked after whilst I work. So it’s essential but moveable in lots of different ways.
    • Health: depending on who and where you are, there might also be fixed costs here. In the UK I do wonder if we are ready for changes in healthcare costs which might be coming our way, but that’s for a different post. This could include glasses, dentist check ups, vitamins or prescriptions. Try and separate out the essentials and those things which might be optional.
    • Groceries: we all need to eat, but do we all need to eat organic chocolate almonds on a weekly basis? I suggest that here you are absolutely honest, and go back through your bank statements to see how much you actually spend. For lots of people this is a real shocker, but it’s also a place you can work saving magic.
    • Clothes: This is another one where looking at bank statements should help to work out what you spent over a year, for yourself and your family. I suggest separating these out since I have been guilty of overspending on kids’ clothes whilst telling myself I was doing no such thing because I was slopping about in 10 year old jeans. Check for a whole year so that you capture summer, school uniform, Christmas party frocks or whatever other seasonal changes you deal with.
    • Cosmetics: yes we all need some (well, probably) but this is another area which can be a few quid a month or a way of getting into debt. I did a cosmetics challenge and even though I rarely wear make up and think of myself as being pretty much a soap-and-water girl, this was an unexpected area I could make savings.
  3. Non-essentials: well, something of a mixed bag – and there are lots of things which can be mixed between essential and non-essential (even on one supermarket receipt), so be honest:
    • Gifts: again how much and how often you spend is very individual, but being clear on birthdays/Christmas or Hannukah or whatever/wedding presents and how much you usually spend in a year will help you make a plan and put any necessary boundaries in place.
    • Eating out: coffees, lunches, dinners, going down the pub. With COVID this seems like a sweetly reminiscent nod to idyllic days, but all those take away pizzas still count.
    • Holidays: holiday childcare might also go in here, depending on how optional it is. But this is all your holiday spends, from your tent to that business class upgrade.
    • Everything else. I was pretty surprised by just how much there was in here – and it’s why bank statements are your friend.
Do the hard work then get inspired – remember what it’s all for. Photo by Sergey Pesterev on Unsplash

So there you have it – you have worked out how much you spend in an average month, and on what. If you are anything like me, you might need a stiff drink (or sugar hit) at this point. But then come back and:

Get inspired for your next steps

So that’s it! You know your numbers. For me though I found that I was really comfortable having done the nerdy bit, and struggled to get onto making a budget and finding ways to cut costs. Before we go there, spend some time getting excited about what’s coming. I motivate myself by hearing from the FIRE community, and looking at photos of Kenya (ok, sometimes doing fantasy house searches) since it’s part of my ‘why‘.

I love to fall down the grocery shopping rabbit hole so beloved to FIRE. Check out Tread Lightly, Retire Early’s post on reducing the budget whilst eating better; or the FrugalWoods many posts on grocery shopping (though whilst I totally admire their choices, I don’t get the impression food is a particularly important or interesting part of their lives). I’ve previously shared Mrs Smart Money’s challenge to split a family food budget by 50%. You could also check out accounts from reducing spend over a whole year – I got Michelle McGagh’s No Spend Year and Cait Flanders’ Year of Less out of the library when such things were open but there’s lots on line. Go get your motivation on.

So, what does your spend look like, and how did it make you feel? Would love to hear from you!

Back to Basics part 1: what is FIRE?

Following a chat with a friend this weekend, I realised that I don’t have a single post on here which actually talks about the basics of FIRE. To be fair I’m quite like this in real life as well – just starting sentences wherever I had reached in my own head and assuming everyone else was there with me. As my mum once said, “it’s like your train of thought is half way out of the station and off down the track before I realised you were speaking to me”. But as with saving (see what I did there?!) it’s never too late to start a new habit, so in these next two posts I am going to outline some of the basics.

So, what is FIRE?

There is a whole movement out there, so I start with the caveat that this is my personal take. Financial Independence, Retire Early (or FIRE) is all about becoming financially free from the need to do things you don’t want to. This includes spending money on things you don’t really want or need; and for most people, means being free to give up paid employment. There are different kinds of FIRE to aim for, which relate to the extent of your freedom and whether you need an income at all, and a few main steps.

FIRE!!! And/or the kind of delightful beach-side evening you could enjoy if you didn’t have to go to work tomorrow. Photo by Nathan Lindahl on Unsplash

Where do I sign up?!

The brilliant thing about FIRE is you can start from wherever you are. All the steps are simple to work out (or there are simple versions at least).

Step One: Start with your ‘why’. This is so important, but it could be anything. You hate your job; you want to spend more time with your kids; you have an amazing idea for a world changing small business but you can’t get started with the debts and commitments you have; your dad died before he could retire and you don’t want that to be you. FIRE is simple but it’s not always easy – having a ‘why’ to come back to really matters. And it might change which is totally fine. My why is about being able to live my dream life, with my kids, and a balance of the work, environment, community and service that means to me.

Step Two: Focus first on financial stability. I don’t talk much about this here because it’s not where I am at on my journey, but getting out of debt, and making the lifestyle changes needed to ensure that you are self-funding, is the first building block. Dave Ramsey is a good place to start, with a plan designed around simple steps.

Step Three: Work out what you need. There are some basic tips on how to do this which centre around two rules: the 25% rule for calculating how much you will need, and the 4% rule for calculating how much you can take out in retirement. You only need to do one sum, though the first part takes a bit of work. You need to work out how much you will need to live off in retirement (whether that’s at 65 or ASAP). This will be different for everyone, with two big factors being whether you have children or family members to support: and your accommodation costs.

Do a rough calculation of your monthly fixed essentials – utilities, transport, accommodation and so on, remembering to factor in giving up work so whilst your commuting costs might go down, your energy bill might go up. To be fair, you could probably use your in-COVID costs for this.

Estimate what are essential but not fixed, so groceries, charitable giving, entertainment. People have these in different categories, but I work to a ‘basics’ budget which includes e.g. good internet and some money for books, movies and whatnot but not much.

Get real about what you want out of your retirement. If you want to spend it all on cruises around the Caribbean, your costs will be very different to someone who wants to potter about at home and spend some time each year visiting family in the same country. There are also lots of different kinds of FIRE, some of which aim to cover all the basic costs but assume some additional income stream to cover luxuries – for now though, just start somewhere.

An easy way to just get going is to take an estimate. WHICH did some great research into what people in the UK actually spend in retirement, and found it was less then most people imagined. They have calculations for a basic, comfortable and luxury retirement, finding that a luxurious retirement for individuals (not couples who are calculated differently) costs £30,000 per year, but this is dependent on having a paid-for house.

There are lots of different ways you could go: you get to choose. Photo by Javier Allegue Barros on Unsplash

Once you have these total costs, multiply them by 25. I worked out that I will need £30,000 Рso I should need £750,000 invested.

Step Four: calculate your net worth. Whilst it can be disheartening to feel like you need to save an unfeasibly large amount of money, hopefully, you won’t be starting from zero. Working out your net worth can take a little while the first time you do it, but recalculating it annually is easy peasy. You essentially need to work out your assets: capital on your home, cash in the bank, money invested in pensions or non-retirement funds, premium bonds, money down the back of the sofa – all of it. This might take some digging, but make those calls to find out where your old pension fund went, it’s your money after all! Then work out your debts (mortgage, student loans, other debt) and minus this from your assets. Voila! Net worth. I share my net worth annually.

Once you know your net worth you can also revisit the figure that you are aiming for since there might be other things to take into account. For example, since I have two small defined benefit pensions which will are already projected to bring in ¬£9,000 per year in retirement that means I actually need ¬£21,000 more, or ¬£525,000 saved and invested. If I add in the state pension (which frankly feels like magical thinking the way things are going, so I don’t count it – if I was closer to retirement then I would do) then I would have an additional ¬£8,970 per year and only need to save ¬£300,000. My calculations are also based on owning a home outright though, which is a massive additional aspect in terms of either saving enough to pay it off between now and retirement, or needing a lot more invested to cover your costs.

So simple you can have a little happy jump. Photo by Austin Schmid on Unsplash

And that’s steps one through four! Realistically if you are in a lot of debt, then these steps will take a while. But if you are an average person with a reasonable income, puttering along and thinking about how to get more out of life, you might have just moved into a whole new frame of mind. A quick moment to recognise that these are really hard times, and with the average British person being more in debt since COVID than ever before, this might all feel impossible. But I really believe that the tenets of the FIRE movement, some of the thinking and the simple actions to make a difference, are valuable wherever you are in your journey. More on all of these, and steps five through seven next week.

PS: If you want to find out about FIRE and get all fired up yourself, Mr Money Moustache’s ‘start here’ post is a great one. MMM is the hipster uncle of the movement (which also has grandparents, coming to that another day) and is all kinds of inspiring, though one of the reasons I started this blog was that, whilst I love his writing, he doesn’t resonate with me much.

The inequality of single parenting

It won’t surprise you to know that this isn’t the life I had planned; not the life I expected. I was raised by a single mother, and I thought I had done everything I could not to become one. Not because I didn’t love my childhood, but because I could see how hard everything was for her.

And I know how lucky I am. I write a lot in this blog about gratitude, and I really mean it. There are so many people out there who can’t have children for whatever reason and the impact this can have on their mental health and sense of self. There are so many people without the blessings I have had which result in me having a great career, good health, family and friends, the ability to provide for my children and watch them grow, and so, so much more. I am thankful every day.

But I am also exhausted. And frustrated. And sometimes I just want to scream into the dark night and I can’t even go for a beer or a run or have a chat without organising childcare and dealing with my children’s emotional needs first. During these months of home-schooling and juggling working fulltime from home, along with the usual home-and-child-admin and without the occasional respite of my mum coming to stay, I am just getting worse and worse at parenting – worse and worse at holding it all together. I’m not alone: research from the University of Oxford – and indeed common sense and even a cursory glance at social media – shows parents’ mental health has been massively impacted by this challenging period.

Sometimes I feel *this* sad and there isn’t even someone to take a photo of my back. Boo. Photo by Volkan Olmez on Unsplash

What-ifs have always been a mainstay of those 3am thought spirals. What if I had had children with someone else, and stayed together? What if I never meet anyone else? Might I meet someone if I were thinner/ prettier/ younger/ less career-motivated / didn’t move around so much? What will happen to me when my kids move out? Will we all make it until then?

I started this blog because I so rarely come across people like me in the FIRE movement. Sometimes I think it’s because we’re all just coping, all just knackered. There have been challenges to the lack of diversity in the FIRE movement and some brilliant female role models out there, and there are absolutely some single mums and single women. But the majority feels to me like couples: acres of material about getting your spouse on board; hours of podcasts of people who live off one income and save the rest, or have one parent stay home. Being a single parent sometimes feels like having fewer choices: like having the box you’re in get smaller and smaller.

We are not going to be near a beach like this on holiday but it made me feel calmer just looking at it. Beautiful but tenuous. Photo by frank mckenna on Unsplash

Today’s gripe though, is more pedestrian. It’s about how single parent family status isn’t taken into account, and how shitty it is to either make a fuss to make it fair, or swallow it down and just make yourself angry whilst everyone else gets to feel ok.

This week we booked a holiday for the February half term (free to some extent since I got a refund from a holiday booked outside of Denmark so the cost already shows up in my 2020 budget!) in a summer house not too far from here. We booked with a family we like a lot: kids are good friends, we sometimes hang out all together for dinner and board games, and the mum is someone I go for occasional mum-drinks with others from school. All sounds great. But we are three (in two bedrooms) they are four (in three bedrooms). We agreed to do a grocery shop and share costs, but my daughter basically doesn’t eat (a story for another time) whereas one of their boys and the husband really wolf food down. She sent me the bill for my share today, which is a straight 50% of the total cost of both the rental and the food. Of course I paid it without a qualm and now sit up working on my stomach ulcer.

Sigh.

Call her! you think. Make a point, she’s not a mind reader! my mother would say. But you know – we have this all. the. time. And not just with money. Last time we went on holiday with two families there was an agreement where one set of parents would relax whilst the other set would look after the kids (usually split into mums and dads, taking it in turns). But when I went to relax there were mutterings that I wasn’t doing my share of the childcare: that I was taking advantage. So I ended up on child duty for the entire time, and relaxed even less than I would have if I was at home.

So we end up not holidaying with other families, and having it be more expensive. Or indeed just swallowing the cost rather than make a fuss and having it cost the same as it does for a two-income-family-of-four.

Next week I will write a more evidence based blog about the financial inequality of single parenting (and indeed being single). But for now, thanks for being a safe space for when things get hard.

Happy New Year #2. Budgets

In preparing for 2021 I spent some more time on my budgets. I’ve written about where I underestimated my 2020 budget before, and I have added in those changes – both the unknowns (utility bills) and the real underestimation (groceries). I also spent some time thinking about what matters to us as a family and where else we could make compromises.

This led me to some interesting conclusions. One of the things I love about the FIRE movement is that you tailor it exactly to you: your own wants and needs; what you find important now and in the future; and the options you see for your coming years. For me personally, I am always juggling compromises. If I want to work, I need to have childcare and the most likely thing is that I am going to pay for it. If I want to work in my chosen field then I have to travel, and have childcare which is available overnight and for days at a time. And so on and so forth. Setting budgets though helps me to think about those compromises and priorities, and how to get a balance that works for myself and my kids. I find it really empowering because it’s taking an intentional approach to money, and matching my actions to my aspirations.

Photo by Kelly Sikkema on Unsplash

So for 2021 these are the things I am not prepared to compropmise on:

  • Childcare. We have a nanny who has been with us since my youngest was 3. With the pandemic and lockdown, I haven’t been travelling and haven’t needed overnight care etc in the way I usually do. But I still need childcare and value the care and engagement we get from our nanny, so this won’t change even though with all the additional costs (health care, insurance, travel) it’s not cheap.
  • Kids’ clubs. I was quite shocked about how much these are in Copenhagen, and I’ve gone back and forth about the right balance. Since my kids are only young once and working means I don’t have time to e.g. take them swimming every week, I have decided to keep this in but limit it two two per child. This means they get to see friends, do sports (and lots and lots of dance…) and keep broad interests whilst ensuring I am not going crazy on this budget line.
  • Holidays: I’ve kept in a decent line for this in 2021, though I hope it will be less since we have some vouchers from holidays we couldn’t take due to COVID which have rolled over to this year (well, fingers crossed that this happens and we don’t roll them over whilst staying at home FOREVER).

So what is the budget? It’s very similar to 2020’s actuals – a budget of ¬£ 4,645 per month or  ¬£ 65,618 over the year. The breakdown is planned as below – this is an average over the year where some costs are annual, and some come out in specific months etc:

 Annual PlanMonthly Budget
Childcare costs ¬£              13,200 ¬£            1,100.00
Car (insurance, tax, petrol) ¬£                1,500 ¬£               125.00
Charity ¬£                   800 ¬£                 66.67
Eating out ¬£                1,440 ¬£               120.00
Entertainment – media ¬£                   600 ¬£                 50.00
Entertainment – going out ¬£                1,200 ¬£               100.00
Kids – extra curricular ¬£                3,000 ¬£               250.00
Family ¬£                   600 ¬£                 50.00
Groceries ¬£                4,800 ¬£               400.00
Holidays  ¬£                3,600 ¬£               300.00
Insurance ¬£                2,400 ¬£               200.00
Personal care ¬£                   360 ¬£                 30.00
Shopping – general ¬£                   300 ¬£                 25.00
Shopping – gifts incl birthdays ¬£                   700 ¬£                 58.33
Shopping – clothes ¬£                   350 ¬£                 29.17
Rent and Bills ¬£              20,400 ¬£            1,700.00
Transport ¬£                   500 ¬£                 41.67
TOTAL SPEND ¬£         65,618 ¬£       4,645.83

To be honest it still feels like a lot.

However, the planned savings (shown below) mean that it would be another year where I spend 60% and save 40%. Again, this doesn’t include anything pre-tax, so money paid for health insurance, or my employer pension to which I pay around ¬£17,000 per year:

Photo by sydney Rae on Unsplash
 Annual PlanMonthly Budget
Mortgage ¬£            10,310 ¬£                    865
Mortgage Overpayment  ¬£            15,200 ¬£                1,250
 Emergency Fund  ¬£               1,200 ¬£                    100
ISA ¬£            20,000 ¬£                1,250
Kids’ savings ¬£               2,976 ¬£                    248
SIPP (private pension)  ¬£               2,400 ¬£                    300
 TOTAL SAVINGS ¬£ 41,776 ¬£    3,148

This would put me on track to finish paying off the mortgage on my UK home by the end of 2022, earlier than I had planned, and to max out my ISA as well as paying into kids’ savings and a personal pension. So even though the spending is quite high, I am definitely working toward my financial goals.

The one unknown is housing. We’ve been looking to buy a home here in Copenhagen which would suck in savings (though this would become equity) and reduce monthly outgoings. So far, we have put in an offer and lost out on one home and we have an offer under consideration this week (please cross your fingers for me!). If we can’t find something by about March I will look to rent, since we have to be out of this rented house by July.

Once the housing is exactly known I will tweak the budget. I do feel like we could save more, and will keep coming back to the budget throughout the year to see what else we can trim away. Either way, we’ll keep on enjoying the free pleasures in this life, and the knowledge that we are trying to live mindfully. What’s your plan for 2021 and how are you going to stick to it? Let me know!

A beautiful (free) day out walking in the snowy woods in what we hope will become our new neighbourhood ‚̧

Happy New Year #1. Intentions

Woohoo, it’s here! After 2020 lasting for what felt like 91 years, 2021 has rolled in.

Truthfully though, in reviewing my 2020 I feel extremely blessed by how much I managed to drive forward on most of my goals. I fully recognise and appreciate how much of this was down to luck – to being in a stable job, to having found FIRE and got myself set up with an emergency fund which took the edge of the panic, and to being in a country where the approach to managing COVID was fast and easily understood.

Photo by Annie Spratt on Unsplash

But I’m still excited about 2021 even though I absolutely hope that it is better for most people – and for humanity and for the planet. This is part one of two New Year blogs: this one covering intention setting, and the next one outlining specific FIRE goals for next year.

So where to start. A recent New York Times article suggested that people should aim small for 2021. Lots of commentators agrees that small is beautiful – in an interview with Glennon Doyle she talks about how small goals are easier to work toward, and easier to build into your life with grace ad confidence rather than creating new ways to beat yourself up about. Around 80% of people don’t stick to their New Year’s resolutions, so it’s clear that another approach is needed.

Focus on intentions before goals

So before getting to goals I want to focus on intentions. Goals are future focused, and brilliant for laying out a vision and planning how to get there. That’s a really important task, and with the small-and-kindly mantra above, it really works for me. But setting intentions are about mindfully living in the now. It’s the idea of setting out how you want to behave, to feel and to approach situations which you can come back to easily and often if you feel you’re veering away from your true north.

Photo by S O C I A L . C U T on Unsplash

Intentions are simpler to come up with than goals since they are a heartfelt statement about who is your authentic self. Who is the real and brightest version of you? How would you need to show up each and every time to be that wonderful true self? Intentions are ways of nudging yourself gently back into that space. The fact that this is the space from which you are more likely to be able to achieve your goals is also great news!

And as I’ve written about before, so much of the FIRE movement is about mindfulness and living with intention. By taking time to think about who you are and what you want, the decisions you make are part of actively engaging with every aspect of your life.

Intentions 2021

So, what are my intentions for this year? I have focused on areas where I feel that I don’t ‘live my truth’ – where I get narky, stubborn, or downright unhelpful. These are all things which make me feel worse too, and where I spend valuable time and energy stressing about how I should have done things better. I’ve written these all in the present tense so they are immediately real and actionable at any moment.

  1. I treat myself with compassion and forgiveness, gently recognising and letting go of any shame.
  2. I nourish myself and others, my community, and the planet, by proactively being an active participant.
  3. I value and am grateful for the past that got me here, but I know I don’t live there any more: I am free to move beyond my past, with love.
  4. I easily and graciously give and receive love.
  5. I take each situation and each day with openness, courage and kindness, and amplify others doing the same.
  6. I take time to be and express gratitude and to celebrate myself and others, remembering that ALL of this is a miracle.

So – what do you think, is it worth setting intentions? And if so, what are yours?

The Red Briefcase: 2020 spending review

‘It’s the most… wonderful tiiiime… of the yeeeeaaaar’ <sings>. Hannukah is just finished and we are heading into Christmas, both of which we love. And we’re up to the end of year spending review, which we are *hoping* to love.

2020 has been quite the year, hasn’t it? I am writing this whilst we are in self-isolation (again) and trying to enjoy ourselves without all the usual festive celebrations of friends, family, and going out. It is particularly hard this year since we can’t travel and it’s just the kids and I far from home. In spite of that I know we are in a much, much luckier place than others with a stable income; living in a fantastic country; and in a house big enough to play, work and study in for weeks at a time. At this time of gratitude and miracles, I am definitely counting our blessings. But this post is also about counting our income, outgoings and savings.

It hurts me to share any space with Britain’s Chancellor of the Exchequer Rishi Sunak but that red briefcase is the traditional home for the spending review going into the UK parliament. No comments here on that budget. (Photo by TOLGA AKMEN/AFP via Getty Images)

So what was the plan?

I set my plan for spending and saving back on January 21st, the first blog post here. Below is the actuals and percentages. Overall I spent around £65,000 this year, £15,000, or about one-third more than planned.

Item Monthly Annual Actual % spent
Charity  £              30  £              360  £          830.00 230%
Insurance  £            277  £           3,324  £       3,324.00 100%
Rent and utilities  £         1,500  £         18,000  £     20,098.77 112%
Childcare  £         1,000  £        12,000  £     21,939.86 183%
Groceries  £            300  £           3,600  £       6,160.68 171%
Holidays  £            300  £           3,600  £       1,910.71 53%
Transport   £            300  £           3,600  £       2,723.52 76%
Entertainment  £            200  £           2,400  £          917.20 38%
Eating out  £            175  £           2,100  £       2,006.95 96%
Family       £       2,986.73  
Shopping      £       2,090.63  
TOTAL  £         4,082  £         48,984  £     64,989.04 133%

What the reckoning showed me, once I got over feeling queasy, was as follows:

  • I radically underestimated some areas – I had no budget for shopping (clothes, gifts, personal care), for example. I also hadn’t understood some of the bills needed to be paid in Denmark (hello surprise ¬£¬†1,000 utility charge that I thought was part of the water bill!). I also spend 180% of the grocery bill, and whilst some of this is just poor planning and shopping, it is also clear that costs here are much much more than the UK given that I still shop at LIDL.
  • Whilst COVID didn’t impact my income, it meant that there were significant spends on unplanned areas such as holiday childcare when plans to have my parents come and stay (or the kids go to them in the UK) had to be put on ice – I spent 170% of childcare and holiday budgets due to these changes. Some of the grocery spend was also COVID related: at least now I have long-life milk and a lot of pasta and rice in the hold!
  • The uncomfortable truth is that I budgeted without working on a frugal plan meaning that I consistently didn’t hit targets because I have been using the budget as a guide and not as a plan. I added a budget line of ‘family’ then just added in everything which might upset the budget lines elsewhere, but of course the overall overspend is the same.

This budget also doesn’t include – money to savings, pre-tax contributions to health insurance and pensions, or the income and expenditure on my UK property. So what did I save?

Mortgage overpayments £         11,576
 Triodos ¬†¬£¬†¬†¬†¬†¬†¬†¬†¬† 11,000
Stocks and Shares ISA  £         11,673
Kids savings £           2,976
Pension (SIPP) £           2,900
 TOTAL SAVED / INVESTED £    40,126
Feel better about this bit!

So I spent 61% of my income, and saved 39%. Given the unexpected (or poorly planned) expenditures, I am really happy with that.

Celebrating with our amazing Christmas tree ūüôā

Net Worth Snapshot

Confession time – previously I was calculating my net worth at the end of March, since the UK tax year ends April 5th. This means that I have the 6 month change, and the 18 month changes, which is useful but not quite the ‘end of year review’ I had in mind. In any case, here they are. The big additions from the budgets above is the employer contribution to pension.

 Value Dec 2020Value April 2020Value April 2019
 Pensions  ¬£         163,540 ¬£         134,240 ¬£       105,675
 Savings  ¬£           83,287 ¬£           68,500 ¬£         26,000
¬†House Equity ¬£         343,000 ¬£         323,223 ¬£       304,000
 Emergency Fund  ¬£           10,000 ¬£           15,000 ¬£           3,500
 ¬†¬£¬†¬†¬†¬†¬†¬†¬†¬† 599,827¬†¬£¬†¬†¬†¬†¬†¬†¬†¬† 540,963¬†¬£¬†¬†¬†¬†¬†¬†¬† 439,175
Changes in net worth

Three of my four pensions are ‘defined benefit’ meaning that increases here come from money paid in to my current work pension (also defined benefit); and money paid in plus changes to investments on my SIPP. Over this time, my house hasn’t increased in value, so any change is mortgage capital paid off. There were a ton of challenges or mistakes this year which I tried hard to put right – I pulled money out of the S&S ISA when I panicked back in March, and put ¬£5,000 back in which has grown again with the shift in the stock market at the end of the year.

Either way this shows an increase in net worth of ¬£68,000 over six months – an average of ¬£10,600 per month, or ¬£154,000 over 18 months, a monthly average increase of ¬£8,500. That is incredible – and I know based partly on having a great salary and a lot of other privileges and benefits like having bought a home at a good time etc. But it’s something to be proud of, and to spur me on to a much tighter-budget in 2021!

How was your 2020?? And how is it making you feel as we head into planning and dreaming for the year ahead? I would love to hear from you!

Photo Credit/ Matthew Hoffman