Most of the original financial independence blogs have long gone the way of final salary pension schemes. But stalwart Monevator commenter Ermine’s Simple Living in Somerset has been standing strong since 2010 – albeit with cross-country and domain name moves – and so is nearly as ancient as we are. Known for his iconoclastic views on property, compound interest, and retirement, and for his inimitable rants at modernity, I’m delighted to have Ermine pull up a chair to give us the bigger picture.
A place by the FIRE
Hello! How do you feel about taking stock of your financial life today?
Odd one out! I started very late. No Slow And Steady progression here. And there’s little learning value in this tale, because it’s from half a working lifetime ago.
My story begins in 2009, when I saw a bat signal go up over the smoking wreckage of the Global Financial Crisis (GFC).
How old are you?
When I started the journey 15 years ago I was in my very late forties, so you guys can do the maths! Mrs Ermine is ten years younger, and is of independent means in her own right. I speak solely on my behalf and on my numbers. Not as a couple.
We’ve been married for nearly 13 years, though we were together a little before then.
Do you have any dependents?
No, child-free by choice. Both sets of parents have passed.
Where do you live and what’s it like there?
In a town in rural Somerset. The nearest city is Bristol. We were drawn westwards by the closer proximity to the hills and prehistoric sites of the west. Plus it is easier to join the motorway network from here than it was in Suffolk. This matters when you are retired. Travel is often a larger part of what you do.
Housing is cheaper than where there are well-paid jobs. Though Londoners do seem to get out and they are lifting prices – as well as improving the restaurants!
When do you consider you achieved Financial Independence and why?
Technically in 2012, but it was a fragile FI.
My job went bad as a result of HR consultants targeting older employees to save money. Yet I had more than 10 years to bridge from when I started in 2009 to my being able to draw the company pension.
It took me three years to get out. Looking back, if I were air traffic control I would not clear my younger self for take off. But hindsight shows that while you wouldn’t file the flight plan, tailwinds came my way.
Low stock market valuations in the GFC helped. Then in 2016 Osborne changed the pension regime so you could take a SIPP at 55 without buying an annuity. That meant I could convert defined contribution (DC) AVC1 pension savings into a SIPP and burn that to the ground – mainly under the personal allowance – over eight years, preserving my defined benefit (DB) pension.
Like this the DB pension was reduced by the fewer years accrued but not through drawing early.
Combining my redundancy, the profits from a maxed-out Sharesave 2009, and the SIPP, I was able to fully fund my ISA across the gap to the DB pension and to live off the non-ISA funds over seven years.
Why did you retire?
In 2009 the GFC was in full swing. American consultants were engaged to reduce costs. They installed a new broom at the top. My own boss said my utilisation was down after a project was canned. He threatened me with moving me to the bench and a performance improvement plan (PIP)2. I applied for other internal jobs, but hardly anything was happening due to the credit crunch.
Late in March 2009, two weeks after I saw that bat signal, my boss called me in and said he was putting me on a PIP. I figured I had a year maybe before they could force me out.
Using salary sacrifice into AVCs as a higher-rate taxpayer, for every £58 net I gave up I’d accumulate £100. Most retail investors were scared witless by the stock market during the GFC. But I figured that I could eat a lot of loss if 42% were underwritten by HMRC.
I filled 2008/9’s ISA – split cash and shares – and told the company to salary sacrifice a significant lump of the salary before the tax year-end. And then to do the same in the next tax year.
This must have all been a tremendous mindset shift?
Well, once that boss showed me I was out of options I saw that I was a supplicant. It was about power, and I wanted out of the trap. Financial Independence (FI) and Retiring Early (RE) would free me.
I could not un-see the worm at the bottom of the glass I’d ignored all my working life – first through necessity, then through complacency. If you need to work you are owned.
How did this go down at the office?
I passed through another six months of intimidation. Then three months off sick with stress.
I recall a phone call at home from one odious higher punk who started off telling me times were hard, but he had a great offer for me.
Three month’s gardening leave – no redundancy.
I asked him clearly: “Are you threatening me?”
He concluded the call and I never heard from him again.
I got a telephone recording coil soon after. Things like that should be taken down in evidence and used against this sort of lowlife. Apparently it’s called constructive dismissal.
Then the internal job I had applied for using a legacy skill for back of house video networks for the London 2012 Olympics came through. My ex-boss tried to hide it so he could hang my pelt to his score of people offed, but that division had money and they went up the chain to override him.
I was shepherded and shielded from the intimidatory Success Factors performance management system by two line managers who needed their project delivered on time. I saved them a lot of money from errors and price gouging. On my last day I was in London resolving a problematic optical trunk.
How did the shift affect your lifestyle outside of work?
I effectively left the middle class soon after that meeting with my boss in 2009. I lived on a little over minimum wage, decanting the rest of my gross salary into AVCs, my Employees Savings Investment Plan (ESIP), and net into Sharesave.
The power of a desperate old git on a decent wedge saving full bore should not be discounted. The depths of winter sometimes hold an invincible summer if you look hard enough.
I’d lost a lot to negative equity buying my first house at the 1989/90 market high. Where most generally consider houses a money tree, I see a Hellmouth that devours every third generation’s leveraged dreams. I wanted free of leverage before the Hellmouth opened again, and so I paid down my mortgage to all but £1,000 – 20 years after stupidly signing for my first.
Living on a shade over minimum wage is a lot easier when you’re paying just £5 a month as a mortgage. After that, nobody was going to foreclose me like I saw happen to neighbours in the 1990s.
How did Mrs Ermine’s financial independence affect your own decision to get out?
It didn’t at all because it wasn’t the case in 2009. It took her until just after the pandemic to get there…
Assets: Perma frosty
What is your current net worth?
My investible assets are a bit shy of £1m, to which could be added the net present value of the income flow of my DB pension, which would take it over £1m if rated at 16x the net annual payout. (This is how HMRC used to qualify the lifetime allowance.)
What makes up your net worth? Any mortgages?
No debt or mortgages. I pay my credit cards in full as they fall due.
As for assets:
- ISA: Approximately £400,000 spread over three accounts
- General Investing Account (GIA): £300,000
- SIPP: £5,000
- Premium bonds: £50,000
- Index-linked Saving Certificates: £20,000
- Cash, various accounts: Over £200,000
Some of my cash is deposited via Mrs Ermine since she doesn’t pay tax on cash interest. The deal is she takes the interest and spends it on spas and nice things and I get to access the cash should I need it – perhaps on the A.I. crash that’s yet to come!
I’ve tried to shift to a Permanent Portfolio spread of assets. That means far too much cash, in my view. But valuations are high – and Harry Browne3 would still give me stick for my over-heavy equity allocation.
My GIA holds a lot of gold in ETF form.
I hold no bonds because I view the DB pension as very bond-like. My bond allocation is in the Permanent Portfolio ballpark if my pension is valued at 16x net.
What’s your main residence like?
Three-bed detached house, owned outright. I’ve heard too much of other people’s kids and dogs and TVs through party walls, and Mrs Ermine wanted more garden.
Do you consider your home an asset, an investment, or something else?
After my rotten experience early in life with residential property, I consider it neither an asset nor investment. And it does not appear in my listing of net worth, because I have seen property value disappear like summer rain.
My home has use value but I am not clever enough to tally it in financial terms.
Earning: Salaryman
What was your old job?
Technician, BBC studio engineer, Electronics research engineer, software design, optical transmission network design, leading an international research team – that sort of thing.
I switched companies in my twenties to go up the value chain. Internal promotions after that.
What was your annual income?
The Bank of England inflation calculator tells me it was about £70,000 in today’s money.
How did your career and salary progress over the years?
I earned about three times as much in real terms at the end of my career relative to my first real job.
Why did you not change job in 2009?
Ah, you confident young high-flyer, you! There weren’t equivalent paying jobs nearby at that time. I would have had to go to London or Cambridge. Or eat a significant loss in salary.
Your options close down at nearly-50. Also the GFC was a terrible time to look for a job because money had seized up.
Once I had taken the first nervous breakdown the die was cast. Long empty days when nothing works, nothing makes sense, there is no point. You fall back for weeks and hope the fire restarts.
I retained some intellectual capacity but I struggled to maintain drive. Once the mainspring is broken, it can never be made whole against the cause of the break. You can patch it up, and it sorta works. Then it flashes over in erratic ways reminiscent of the original issue.
All this limited my employment options. Also, I remembered what happened so some of my colleagues in that age group. I was better off flinging my residual resources to become free of the hamster wheel than jumping to a slower one where freedom would be further away.
I declined part-time for the same reason.
Did you learn anything about growing your career and income you wished you’d known earlier?
Again, I was never one of your high-flyers. Most salary wins come from changing firms. I didn’t do that after 30, though I rose a few levels up the greasy pole.
Do you have any sources of income besides your main job?
I had a small multimedia operation that did web design, when there was money to be made in that. Pin money – something to learn the ropes.
Why did you never go into contracting?
I’ve been a full-time employee all my working life. I’m an introvert who hates hustle. I didn’t know how, and I didn’t want to do it.
Many people make a success of contracting and good luck to them. It’s not me. And it still suffers from the worm of the power balance in a different way. I would still be selling my time for money.
Did pursuing FIRE get in the way of your career?
I guess it drew it short – that’s retiring early for you! But I was burned out anyway.
Saving: Just don’t do debt
What is your annual spending? How has this changed over time?
Mine is probably £30,000, including half the bills. It’s up of late. People near to me have had health challenges so it has been a spendy year as a result.
Spending rose when the floor of the DB pension came online. Before that there was a splurge on the house move, which I write-off. The leanest years were 2009 to 2016.
Do you stick to a budget or otherwise structure your spending?
No. The ‘don’t borrow money’ principle was good enough while I was earning. If you’re borrowing then you’re overspending. Simples.
From 1998 I used the software Quicken to add my numbers up. I looked in the rear view mirror every month. Was my net worth falling or growing? I tried to adjust course as I went along to stop it falling.
That was okay when I didn’t hold investments, but the variation in market valuations would turn that into insane noise month to month.
What percentage of your gross income did you save over the years?
Not much until I decided I wanted to retire early, quickly. Then it shot up to 60-70% depending on how you compute salary sacrifice.
I also have the defined benefit pension which is deferred pay. So there is an argument I was saving from when I was 29.
I’m living proof that the old saw about Sensible Susan who saves from 21 to 30 and then stops to let compounding carry her to 65 is not universal. She does not beat out all Johnny-Come-Latelys.
What’s the secret to saving more money?
Two rules, inherited from my parents. Don’t borrow money other than for a house. And when I replace a car, I start saving for the next one, in a savings account. I’ve never bought a new car. I buy them cash and run them a long time.
Also, you must want freedom more than you want the consumer doodads, holidays, and services you give up to get it. Start with Wilkins Micawber
At the bottom end, earning more is probably the way. But I started on the FI/RE track when my earning power was fairly well-defined.
Do you have any hints about spending less?
Don’t live in London unless you earn loadsamoney. I grew up in London and went to university and began work there. I had a decent career progression but it didn’t compound due to the high cost of living.
London’s a great place to be young in, but some of the attraction palled as I got older. I recall one fateful late-1980’s lunchtime in the BBC Broadcasting House bar. Surrounded by people yammering on about how much their houses had gone up, I sank pints of ESB, trying to drown out knowing that in the evening I was going to get on my bike and cycle along the Westway and then up to Hanger Lane to go back to my rented Ealing bedsit with a Belling-Lee pie heater and a meter that ate 50p coins.
I started looking for work outside London the next day.
Nowadays spending less means getting the attention economy out of your face. Don’t view the world mainly through a smartphone screen.
Also, if a great idea involving you spending money comes to you unsolicited, bin it. Doubly so if it is an investment idea. If you didn’t seek it out then you can live without it.
How has your spending and saving changed in retirement?
Someone who runs across a bridge that falls behind them never yearns to run back over it.
In the early years after retiring, I earned sporadically. About £15,000 over seven years.
I did not trust these earnings. All I did was either invest it or give it away so that it would not trap me into working. If I was going to throw my lot in with ratty intermittent income then it’d be in the stock market.
For me FI without RE is valueless. All of us are running out of time 24 hours every day. I can think of better ways to use those hours than working.
In Healing the Soul through Creativity, Jungian writer David Rosen postulates that in times of a crisis the impasse can be resolved by ‘egocide’. That is, destroying the old form of the persona – part of the ego that presents its face to the world – that no longer serves, or is maladaptive to the changed situation.
I’ve seen many people retire from professional jobs, only to suffer a loss of identity and meaning. I was spared this existential crisis because I surrendered my work persona in 30 minutes with my boss in 2009.
In my 40s I saw some colleagues in their late 40s and 50s manifest stress in cardiovascular problems. Strokes, heart attacks. These people looked fit to me – runners, cyclists and walkers. By my early-50s I’d already stood by several little mounds of earth summing up the life and times of a colleague.
It seems men4 lose resilience to stress in that final decade before retirement.
You can’t buy health – or maybe I did by getting out of the workforce ahead of time.
I’d put on a lot of weight through stress and excessive drinking. As an early retiree I shook that off. I’m not yet the weight I was at 21 but I’ve covered three quarters of the distance!
Any other tips on a successful transition?
We had a community farm at the time – a passion of Mrs Ermine’s. I gained a non-financial return because I was doing things with other people.
That softened the transition from work. For men work can be a large part of their social life.
Having said that I’m going to Suffolk to celebrate one colleague’s 70th and then to drink beer with some other guys from work. It doesn’t all have to disappear, but it will probably thin out.
Do you have any passions or hobbies or vices that eat up your income?
Photography and tools – what is now called ‘maker’ stuff.
A camper van to see interesting and out of the way places.
I guess travel should be added. But I’ve done much less international travel than my working self foresaw as I’ve grown to detest the increasing aggravation of air travel.
FIRE dreams are made of this: Callanish Stones on the Isle of Lewis, by Ermine.
Investing: Actively passive
What kind of investor are you?
In the Dotcom boom and bust I was the classic active retail muppet that Pete Comley talks about in Monkey With a Pin. I burned about £7,000 – £13,000 in today’s money – perpetrating every stupid mistake you can make and then some. Churn, chasing momentum, technical analysis, the lot.
In hindsight I was too emotionally invested in the result. Concentrating on what I wanted and not listening to the song the market sang. I was looking for a way to get out from under the negative equity in my mortgage. And I had a tendency to overthink things that persists today.
The gap between the Dotcom bust and 2009 helped me gain perspective. I brought my mortgage down by overpaying the residential property Hellmouth until it was sated.
When the student is ready the master appears. I came across The Investor, the investing ju-jitsu tutor that is our host here. He was more useful to me in the early days when he dared talk active investing. Sometimes I just read between the lines and used Monevator as a tip sheet which the small print explicitly tells you not to do. (I am Ermine, I answer to none, not even TI!)
This gradually piloted my embryonic ISA through the GFC wreckage, at that time focusing of getting income because that was what I was trying to replace.
I worked out that my AVCs should be as global as possible. For me that was a 50-50 split between Global and the FTSE 100. As opposed to 100% FTSE100 or money market funds, the other options.
So you were making tactical allocations decisions?
Yes, and I stayed unashamedly active in the early days. I was too old and too poor to get from there to here any other way. Having said that, part of the reason my job went bad was the GFC, which improved valuations. That was pure situational luck, for good and bad.
The post-GFC lift was very kind to neophyte investors because of the benign starting valuations. But as the market stabilised, it got more boring. I read Lars and he gave me a decent place to park equity funds, so I am also a passive investor. I retained the high yield portfolio – but didn’t add more – as income was important to me.
Retail investors must keep the faith. If you jump on a fast horse that you can’t stay on, it will not end well.
Ten years later I was faced with a mortal threat – Covid – which was a higher risk for my age group. The economic clouds darkened as fear possessed the world, and I shorted parts of my ISA, then letting go as it started to race back faster than any bear market I’ve seen. I was eventually buying VWRL in the GIA opened with the proceeds.
That all helped me catch up with VWRL on the networth chart below
Everyone says that market timing does not work but it served me twice. Of course you should not infer the general from the particular. It could be pure luck.
The problem with timing is that the only measurable signal is valuation, but you must listen to sentiment too, without losing yourself to it.
The opportunities are rare. The vast majority of the time, you are best sitting in a global ETF like VWRL. If you can follow TA and Do Not F’ing Sell when all around you are losing their heads, you will generally be all right in three to five years’ time.
Provided you don’t become a forced seller. For example, if you lose your job. My GFC experience shows there is a positive correlation between the market and job security. In a crash they fall together.
I don’t think we’ve had anyone explicitly sing the praises of market timing before.
Through experience I’ve learned that I had zero company selection advantage. I am a retail schmo who has never worked in finance.
But I learned to listen to the heartbeat of the market. The Investor gently taught us that by sharing his thinking – and the uncertainty in it, something finance pundits very rarely do.
I learned the sound of collective capitulation in the GFC. I was a dispassionate observer with what I thought was a stable job, and no skin in the game. That helped me to hear – sort of – when to short Covid and when to stop. And my ISA built up in the bull run removed some of the emotion from shorting by being a counterweight.
In theory if you short assets you own, you lock the price in. I had participated in the collective capitulation of the Dotcom crash so I knew what it felt like. But the bat signal showed me how to think differently about a crash. You can’t fight that feeling but you can choose your reaction to it. Run towards fire.
As Warren Buffet said, the “economic clouds darken and the skies rain gold” only for fleeting weeks or months, about every ten years. I have only got one self-defined timing strike at that to my name. It could be sheer luck. There are only one and a half data points5. Most of the time I hold and let capitalism do its work.
As I say, I’ve shifted away from 100% equities towards Harry Browne’s Permanent Portfolio multi-asset spread. Another truism from Warren Buffett about the bright sparks behind LTCM: “But to make money they didn’t have and didn’t need, they risked what they did have and did need.”
I am not a multigenerational endowment fund. De-risk when you have enough. You will give up return, but you will sleep easier.
What was your best investment?
Buying gold in stages before 2016, on the principle that Brits would not commit economic hara-kiri by voting Brexit but if they did I wanted to preserve GBP assets until I could work out which way was up. And then buying more before the recent run-up to try to get to Harry Browne’s Permanent Portfolio split.
That was again situational luck not skill. I was diversifying as I had reached enough, and US valuations give me the creeps. I’ve already been through one tech ‘it’s all different now’ in the Dotcom bust.
In terms of pounds gained, it would be buying the Vanguard World Tracker ETF (ticker: VWRL) across many years. I’ve never sold it other than in the GIA, swapping for HSBC’s HMWO equivalent to harvest capital gains6.
Shorting bits of my ISA in Covid gave me a valuable lift to catch up with VWRL on the net worth chart despite my spending over seven years. But there’s no one investment associated with that.
Any notable mistakes?
I thought the US was overvalued coming out the GFC. It was but it was also exceptional, so I gave up some return. Luckily the GFC was broad and deep enough that you didn’t have to be right with what you bought, you just had to make yourself buy. I’ve course corrected the ISA into VWRL as time has passed.
I made lots of mistakes in the Dotcom boom and bust but apprentices must pay their dues.
Buying a house in 1990 was the biggest financial fail of my life. It blighted a decade
What has been your overall return, as best you can tell?
Below is my net worth chart from Excel:
The chart shows my inflation-adjusted net worth7 – blue line – rescaled to 2023 and normalised to ‘1.0’ in 2023.
This includes my spending across the seven years when I had virtually no income from earnings.
The run up from 2009 shows the power of Saving Hard as well as investment gain. The fillip in 2012 was the redundancy money, and Sharesave coming onto my books.
The other two lines are also inflation-adjusted.
Yellow is what would have happened if I’d taken all I had in cash and flung it all into VWRL in 2012 when I left work and sat on it, living on the dividends and thin air.
Green is where I’d be if I stuffed all the 2012 net worth into cash under the mattress on retirement and slept on it, spending nothing.
A lot of my GFC gain was in my AVC/SIPP, which I ran down between 2012 and 2019. This is all gone now. But it contributed to my ongoing net worth, as part of it went into the ISA.
So I can’t tell you the overall return – hence the indirect net worth approach. This rolls all of the gains up, depreciated by my spending when I wasn’t earning from 2012-2019. And income returned from end November 2019 when I started drawing my DB pension, which roughly balances my spending.
It’s sampled every year at the end of March to be close to the end of the tax year. Nominal net worth is derived from Quicken which marks investments to market about every two weeks. VWRL is not total return, though you can’t live or die on its 1.5% yield. Some net worth went off my books moving from a semi to a detached house in 2017. I do not have a line for house value, so my part of the difference will appear as a net worth loss. That’s easily enough to wipe out about £15,000 earned in total between leaving work and drawing the pension.
Note I inherited some money after the Covid short. This and any gifts I made from it have been excluded from the chart. It is included in the assets above, less the outgoing gifts. It’s a notable change but doesn’t dominate the total, which is mainly the fossil record of my human capital, amplified by the market after it faded to zero in 2012.
The catchup is partly shorting in Covid, but mostly drawing my DB pension from late-2019 stopped my spending denting returns.
We should remember that this is a bull run very long in the tooth. Not all of this is real.
How much are you able to fill your ISA and pension contributions?
Fully, since 2009 – ISA and SIPP via AVCs. It’s easier now to fill a SIPP as a non-earner when you can only put in £3,600 a year.
To what extent did tax incentives and shelters influence your strategy?
They dominated until 2019. I still use them fully and will do for several years hence. I have a much shorter run due to the late start.
How often do you check or tweak your portfolio or other investments?
I automatically download stock prices and update Quicken, say once every two weeks, and only look at the change in net worth.
I change things with events – Reeves’ reversal of the tax wisdom of income in the ISA and cap gain in the GIA caused shuffling between ISA and GIA.
Wealth: Managing with money
How have you kept hold of so much money?
Spend less than you earn! For most of my career my plan was quite pedestrian. Work until 60 and retire in the normal way. Then in 2009 I had to grab hold of the big red ejector handle and pull that sucker.
On retiring I’d earned all the money I would ever earn. It was uncomfortable in my 50s to slowly surrender net worth over years. You see that suck-out in the net worth graph. I had the benefit of the lift out of the GFC but that starts to fade after 2015.
I did not know what the future held and hindsight shows I underspent. Perhaps by a lot. But I won back eight years of my life that I didn’t watch the world go by through the office window.
Free time is the ultimate consumer good. They’re not making any more of it for you. I saw ancient stones, played, and learned. Those things you planned as to do as a kid when you grew up – before you signed up for a job and a 25-year mortgage to make sure you stayed there.
Which is more important, saving or investing, and why?
Initially, saving. Three years from a standing start to outta there makes compounding irrelevant. You need ten to 20 years accumulation for compounding to show.
I do see it now, after 15 years. It’s one reason why in real terms my net worth hasn’t reached the inflection point of starting to turn down.
Was financial freedom a goal with a timeline?
I saw I had three years to clear the workplace. If I could have done it in one or two years I’d have gone for it. I sliced and diced Excel spreadsheets every which way but I could never bring that number down.
Eventually I had to take my chance. 2012 was the year partly due to how much more workplace I could stand, and partly the natural cutoff of the last project.
Did anything get in your way?
The GFC. Its winter face was the shattering of my career. But the summer face was the broad reduction in valuations – a benign environment for me to re-enter the fray with a pilot leading the way while I shook out some of my excess muppetry left over from the Dotcom days.
Are you still growing your pot?
I’ve never drawn from the ISA. I front-ran it with the old AVCs as a SIPP, and drew the DB pension six months shy of the normal retirement age of 60 when the SIPP ran out.
Then pandemic hit. The DB pension covered my needs and wants in the pandemic, and a while after.
I shorted some of my ISA, but I left much of the ISA itself to its own devices. Most of it came good. I built up a GIA balance with the cash from shorting.
Some time after that I inherited some money from my mother. (It did not involve paying inheritance tax!) I gave half of it away to improve a rotten situation for someone and since then I have used more to improve people’s lives a bit. I didn’t need it – by then it was reasonably clear I was FI.
The residual amount leftover increased my risk tolerance. It’s one reason why I have twice the amount of equity allocation at today’s nosebleed valuations than the PP dictates.
Do you have any further financial goals?
I’d like to clear £1m in investible assets!
On spending I just about clear the 4% safe withdrawal rate (SWR), ignoring both the DB pension and the State pension, which is still a while off. I’m probably FI with the pensions providing a floor
I’m not looking to hit it out of the park. My lease on life is well past its halfway point. I’m lucky enough to have good health, but I have seen infirmity steal other lives. So I want to appreciate having enough and to share some of the good fortune.
What would you say to Monevator readers pursuing financial freedom?
The halfway part of the journey is the toughest. So much resource committed, not much to show for it.
Keep on keeping on – but moderation in all things. You’re only young once, and the things you regret when you look back are often the things you didn’t do.
Life is a dance between opportunity and threat. If you’re going to YOLO every day or borrow more and more money then you’re probably overspending. But if you’re stuck in your counting house not going out with your mates then perhaps look for more balance.
In general financial freedom is a marathon, though in my case it was a sprint.
In the weeds
When did you first start thinking seriously about money and investing?
Late in life. I thought I’d got it about right: I worked to live, not lived to work.
I was okay with what I was doing and pursued interests outside work. (Though a project with an ex-girlfriend took us touring the States for a while, and the problems of not having enough holiday leave started to make itself felt.)
I was an average guy in a reasonable paying job with a decent work-life balance. I dallied with the market in the run-up to the Dotcom crash, making all the usual mistakes. The education was cheap, there are some things you cannot learn any other way. I packed it in after that – other than doing Sharesave.
Then some unknown pundit quoth thusly, “If not now, when” and two weeks later I found my back against the wall and figured it was worth a long shot
Did any particular individuals inspire you to become financially free?
Two, in quick succession.
One was that ex-boss with the PIP – ably abetted by the odious gardening leave git.
The other was your good self, keying up your dark transmission over the wreckage of the GFC.
I heard “if not now, when?” and decided in 30 minutes it was now.
Can you recommend your favourite resources for anyone chasing FIRE?
Other than Monevator, I can’t think of any. Many of the ones I followed have gone. I started my journey half a working lifetime ago.
Post-GFC, FIRE aspirants believed we could achieve FIRE by saving hard through frugality and investing into the stock market at valuations that could support a 5% SWR.
But today’s market is not that gentle one blowing wind beneath our wings. The frugalistas were run out of town as SWRs dropped with valuations drifting up.
FatFIRE became the in-thing, because fewer ordinary folk could take the falling SWRs.
What is your attitude towards charity and inheritance?
Be no King Tut. Don’t be buried with your gold. You really can’t take it with you.
Give the money to people that matter to you while you are still alive. It also helps with IHT, plus you get to see it in action.
One caveat: give without let or hindrance. If you don’t want to see it spaffed away then choose the character of your recipients well. Then let them live by the light of their own lamps.
What will your finances ideally look like towards the end of your life?
I’m older than some of your FIRE-Side subjects but I haven’t given this much thought.
Yes, I will live higher on the hog. I will monitor the net worth chart. I’m not averse to throwing it over the wall to an adviser at a later stage.
An age gap means I would expect Mrs Ermine to inherit anything left over. That makes this easier for me.
At the end of your life when you look back it won’t about the money you made or lost but about the people whose lives you touched.
Despite how much we differ on key fundamentals – property as an asset, the wisdom of fully retiring, the utility of compounding – I always learn from Ermine’s writing and this interview was no different. Long may it continue! Please add your thoughts in the comments. Remember that while Ermine is more battle-hardened than most of our FIRE-side chatters, baring your life takes guts and so please keep your feedback constructive. Personal attacks of any sort will be deleted. Read our other FIRE case studies.
- Additional Voluntary Contributions – AVCs – were DC pension savings associated with a defined benefit scheme. Readers can safely translate this as SIPP. There are some details that only make sense in connection with a DB scheme but I did not use that facility. Salary sacrificing into this meant that even for basic rate tax I got £100 for every £68 I gave up – a still useful gain of 47%. [↩]
- I have since learned that this is a standard modus operandi for professional service firms trying to constructively dismiss or kick people out without paying redundancy. But it was new to me. [↩]
- Harry Brown came up with the Permanent Portfolio. [↩]
- I worked in an engineering facility, these tended to skew very heavily male. [↩]
- The GFC is the first data point but only counts half because I happened to start there, I did not choose the time of battle. But I did start investing [↩]
- I did functionally short VWRL in Covid using an index as a proxy. Purists may regard that as selling. I’ve sold it and HMWO in the GIA to re-buy VWRL in the ISA but that’s no net change. [↩]
- Inflation adjustment uses data from the Bank of England inflation calculator. I asked it what would £10 in any given year cost in 2023. I then modify my net worth value number for that year by the appropriate Bank of England figure to reference it to 2023. [↩]
I enjoyed that, and as always, I needed a dictionary, so got extra benefit.
Thanks Ermine
Thank you for this great lesson-filled read, Ermine. Much of it chimes with me – I started later and it was being sacked after my first career that I decided I would ensure I could never be deleted again. Although less than frugal, our relative-to -income lean-spend regime eventually got us to a position where we now struggle to drop a chunk on long-haul holidays or upgrade our wheels.
One puzzle: “Then in 2006 Osborne changed the pension regime so you could take a SIPP at 55 without buying an annuity.” I recall having no choice but to buy an annuity in 2013 only to be mightily miffed when Osborne, Chancellor since 2010, took the biscuit with the pension freedoms the following Spring. It turned out that the RPI annuity has been a boon, so I no longer regret it as I did then.
Favourite quote: “De-risk when you have enough. You will give up return, but you will sleep easier.” I really had to force myself to do this ten years into a seemingly endless period when there was a new all-time high every single year – even in the worst years. But it is really good advice when there’s more sand in the bottom of the yearglass than the top.
Thanks again.
Great interview, it’s inspirational to read about about reaching FIRE without either earning mega-bucks or living on soup from the age of 21.
The most valuable thing I have learned, and I think it’s implicit in your interview, is knowing when you have enough. I suspect a lot more people in their 50s could step off the treadmill if they realised they had enough and were prepared to jump
An eerily resonant tale, from Suffolk native gone west (although not quite as far west) through 90s negative equity to late fire sprinter. I only wish I’d stayed a bit longer in local authority to add a bit of DB into the mix! Thank you, @Ermine, for such an inspiring and relatable story.
@Onedrew oops, my bad and apologies to our host. What I should have said was 2016 . It was trailed a little bit before being enacted, I had to open a HL SIPP in double-quick time in March 2014 and get some cash into it.
An enjoyable read.
Thanks
Ermine and TI.
Thank you. Fantastic to read the inside story on a UK FIRE legend!
@Onedrew @ermine — Eek! Thanks @Onedrew. My fault too as I subbed this draft twice, and while I’m not super-clued-in as to the pension regulation landscape I did know George Osborne wasn’t the chancellor then! *blush*
I’ve amended the copy above but unfortunately the email has gone out. Apologies for any confusion.
Great read.
And even after the many [often protracted, and always enjoyable and informative – from my POV] chats we have had over at SLS I learned a good few things too.
Would be interesting to hear how it feels for you to be the guest author for once?
I’m sure I have uttered something like this before, but in spite of all the shXt going down from 2009 until you jumped ship, you clearly did also have a guardian angel or two quietly routing for you. Yin and yang really might just be a thang?
I am intrigued that you seem to imply that you manage your household finances as two largely separate entities* – is this correct and does that present additional opportunities/challenges? IIRC, most UK PF related stats are compiled at a household level rather than an individual; albeit [income] tax is largely conducted at the individual level – though it was not always thus and is still not in the US.
OOI, real [@ermine definition] NW roughly doubling from 2012 to 2024 gives a bit over 5.5%PA real – but you spent from your Pot (more [half?] house, living expenses until DB started, etc) so I suspect this is a minimum figure.
@TI:
Bravo, another great fireside chat – and, as you said, a delight to read.
*and by @TI’s definition of NW you would therefore only have to include around half of the value of your home .. somewhat tricky/problematic!!
I’ve been reading Ermine’s blog pretty much as long as Monevator, so getting on for 15 years now I think, and both were key to getting my head around my own finances. Ermine and I have several commonalities- we’re near the same age (I’m maybe 3 or 4 years older), have similar education and background, went to the same college in London, and ended up in STEM careers, though in my case in academia. Like Ermine seemed to, I basically toddled along happily in my career without busting my ass on it, and coped with a major midlifer – in my case a divorce, in his the “housing Hellmouth” – until the chill winds of change set me scuttling around for an exit like a pine marten in the glovebox of a mini (to attmept an Erminism). Ermine’s polemics against The System and The Man – how he framed them precisely I don’t recall but the message rang true: the organisation employing you ultimately has no interest in your wealth and well-being- duh! I know! Crazy stuff! But in the Old Days we were brought up trusting they did! These sentiments were echoed to a degree in some of Monevator’s FIRE content and it all helped me develop – late in my career as in Ermine’s case – a basis for managing and planning my long term finances and making life-changing decisions confidently. There was even an echo of Ermine when I noted in my retirement do Jung’s contention that “We cannot live the afternoon of life according to the programme of life’s morning, for what was great in the morning will be little at evening, and what in the morning was true will at evening have become a lie.” Be warned young ‘uns! Alongside these insignts the next most impactful was probably Monevator’s critique of financial advisors https://monevator.com/financial-advisors-swindlers-and-leeches/ – that post alone saved me thousands – one reason I don’t mind paying for the full-fat service from Monevator.
Still work to do though. I’m way too heavy on equities for an old chap, going by traditional guidelines – though I have fairly good DB and state pensions and like Ermine I tend to factor these into the operation of my portfolio finances. So maybe a 85% equity slice still makes sense for me. Dunno. Hoping Monevator or Ermine will enlighten me further in the years ahead.
Such a great read. Thank you for sharing.
I used to follow Ermine a lot about 10-15 years ago (sorry for the last decade but life gets in the way).
Graduated in 2012 so I began life in the GFC and have to say Ermine’s life approach has been an influence on mine as it does suit my mentality.
It’s a great approach and a well needed antidote to the get stressed, work till you die and get angry at everyone in the world approach. Maybe over generalizing there but a bit more Ermine in everyone would go a long way.
Glad to see things are going well.
Nothing to add to this great read except thanks Ermine!
Thanks for sharing, I’ve been a blog reader for a good while, nice to hear some additional details. You manage a lot of cash, is that a mix of savings accounts or do you use money market type funds for part of that?
Was aware of a lot of the story but always good to read it again. Inter alia the thing that leaps out for me is that you can’t have the perfect plan for pulling the trigger but usually with enough cards in the hand you’ll do ok.
I suspect if down on his uppers @ermine could have turned his muzzle toward being some sort of niche life coach for certain types of weary yet still curious mid-lifers (I badge myself fully as this).
Excellent read, or part read, always have to revisit Ermine’s posts. Likewise, some excellent questions.
There are numerous other members who I would love to have the ‘red book’ treatment i.e. Zx, Al Cam, XXD09, Weenie etc.
Well done,
Lee.
Just what we have come to expect from Ermine. A great life story and read as always. Always enjoy his pearls of wisdom in his posts (as well as the rants of course) 0n Monevator and SLS.
As a bit older git myself also without any kids by choice, my traits/thinking concurs remarkably similarly. I also like a rant/complain about anything particularly that annoys me – which is a fair amount these days. I’m a dyed in the wool introvert also (as well as a curmudgeon who likes to do things only his own way).
I hate working for the “man” – so apart from a few early years of my working life, I never did – worked for myself, just couldn’t do it and can’t stand the “greasy pole” so never got on it. (All that BS is utterly beyond me.)
Similarly I can’t abide any credit/borrowing (and didn’t even for my house that I paid cash and own outright. It took me until about 40 though).
I’d like more foreign travel but also loathe the hassle with air travel and airports. As Ermine would say – they’re a “clusterf*ck waiting to happen.”
And these comments are so very true – “Late in life. I thought I’d got it about right: I worked to live, not lived to work” and … “For me FI without RE is valueless. All of us are running out of time 24 hours every day. I can think of better ways to use those hours than working. In my 40s I saw some colleagues in their late 40s and 50s manifest stress in cardiovascular problems. Strokes, heart attacks.”
I’ve seen this so many times – and now myself as I’ve gotten some darned health issues and slung my hook with any working – so pointless carrying on working yourself into an even earlier grave. I don’t want to be the richest man in the graveyard – I’d rather be the poorest but had more time on the earth, rather than under it, to do my own thing. As Ermine said “You can’t buy health” (although you could buy healthcare but a bit late usually by that stage).
Agree on this as well: “Nowadays spending less means getting the attention economy out of your face. Don’t view the world mainly through a smartphone screen.” (Exactly, although I thought they were called “fondleslabs” these days!!)
But seriously, BRAVO to a great guy – and exceptionally brave for getting involved with one of these interrogations (not something I could envisage doing) – especially with Ermine been a kinda “known celeb” due to SLS (even if anonymous to most of us).
Many thanks. Keep up your good work Ermine, all the best to you Sir.
A great and resonant piece, thanks. I remember the 1989/90 housing crash…what joy. 15% rates of interest leading up to it and then the price crash & negative equity afterwards with a forced sale. It’d be 18 years before we owned a house again. We got to FIRE in the end though.
Interesting that you’ve used shorting in your ISA as a way to maintain portfolio equilibrium. I’m leary of gold so this could be an option; can you expand on the ease or otherwise of doing that.
Hi @ermine,
Thank you for a very interesting fire-side chat. I have now learned a lot more about your history than I had picked up from your blog (probably me not paying enough attention). Your experiences certainly explain your antipathy to the corporate world and ‘the man’. It sounds horrible, and I am sure it was.
I have been made redundant a couple of times and also had to fire people or make them redundant several times. So much depends on the approach taken by the person applying the boot. Empathy is everything.
The first time I was made redundant, my CEO called me in and laid out the situation we were in as a company and what the likely strategy and tactics would be for the next few years. Did I really want to work through that in the hope of a better tomorrow, or did I want to make a clean break and do something else? The logic was clear: this was not going to be a place I would enjoy working in for the foreseeable future. He then capped it by saying, “By the way – I am taking redundancy next month. Do you want me to write your terms or my successor?”. Case closed!
The second time, there was less empathy and understanding, but at least there was politeness. No criticism of my work, just a recognition that the job I was doing would no longer exist. I interviewed for another job there but did not succeed. Again, I could see the reasons for the decision they made.
In both cases, it was not the idea that they didn’t need me anymore. I could cope with that. The irritating thing was looking at the people they thought they did need and thinking – really? My consolation was that those people may have lasted a couple more years than me but then were ditched anyway.
These things have to be done from time to time, and it is always stressful, but there is no excuse for being an arsehole about it.
What your story, and the stories of the other contributors, shows is the enormous range of journeys through life that end up in FI and RE. Perhaps that is the most important message of hope for the ambitious, the frustrated, the stressed, and all those wishing for a different life. You can’t always get what you want, but a reasonable facsimile is often available. You don’t need inherited wealth and/or a highly paid job or a win on the lottery. And it’s never too late to start.
Thank you for sharing @Ermine. You have such a unique voice!
This case study strongly resonated with me. I had a front row seat to the GFC and watched the credit markets seize within an investment bank (ultimately sold to secure its future). I was made redundant in 2009. I somehow secured a new role at a broker despite a savaged employment landscape. However, despite being a blue-blood firm, I resigned within 6 months because of misogyny, bullying and cowboy tactics.
I had the ability to walk, because I basically bought my home with cash sourced from London money and share gains earned in my mid twenties.
I had a six year sabbatical and travelled to different countries. I ultimately chose a new career in a field few people ever gain access too …
I retired last year at a similar age as you. It was earlier than expected but my trauma bank was fill (terrorist incident, etc).
@TI helped with an offhand comment about how his investing/debt perspective differs because he is single. I built my own deaccumulation spreadsheet and it showed me unequivocally that I will keep getting wealthier despite retiring early. Like you, I’m so grateful for the ability to recognise ‘enough’ and that I also possess the means with which to furnish my own internal ‘hinterland’ (your other terrific concept)!!
So far, it’s ocean swims, brown skin, lunches, reading, etc etc. My friends are workaholics, so weekends are more social than week days!
Finally, I’ve been so surprised to observe my spending is 30% under expectation. I’m not frugal …. I hate tacky over consumption, but I buy high quality food/clothing/everything. I think a happy life is less expensive than people think from the vantage point of work! It has proven to be for me (and you, too it seems)!
Great story thanks for sharing it.
Glad I’m not the only one who needs a dictionary when reading ermine’s posts …. a great way of expanding my vocabulary!
@all thank you for the kind words! Some specifics (as well as the correction for the A-day/2016 changes goof!) :
@Andy P #3 > knowing when you have enough
That is a tough one indeed. It’s not as if the amber and red lights hadn’t been flashing in the guys from the office who suffered the slings and arrows in their late 40s and 50s. If you look at the norm of death rate by age we are talking 13 in a thousand 45-60, say one in a hundred. I knew, to talk to rather than knew of, about 8 go down. I am an introvert, I didn’t know 800 people at work.
@AlCam #9 > you clearly did also have a guardian angel or two quietly routing for you
Absolutely. Grace >> muppetry across the period, it was a weak hand, and I really should have watched my back more. The signs were in the wind for several years. The Firm was a great place to work gone wrong, I heard one berk of division head say we were going to become a fast follower several years before.
> two largely separate entities*
It’s partly from our previous relationship histories, we split regular static running along the lines of things like power and IT and food and supplies. Things like house repairs and replacing stuff that fails in service we split 50:50 as and when they happen.
The extra house cost was (my share) 50k, I did have to float another 10k SDLT on owning two houses because of the cross-country move but I reclaimed that from HMRC when the old house was sold.
@Ian Edward Holliday #10 your Mini will need a big glovebox for that pine marten. They’re large cat sized 😉 I do think that the philosophy of retirement/second half of life isn’t brought out as much as it perhaps should be. Jung’s view on the second half of life also applies to those who choose to stick with FI rather than RE, the expression will of course be different.
@Larsen #14 > is that a mix of savings accounts or do you use money market type funds for part of that?
I use Raisin, to save filling a gazillion account applications, I believe you get FSCS protection per account as long as they are different institutions. It’s simplistic and I’m sure I could do better. I really struggle to get excited about cash. There is further FSCS diversification due to a lot being lodged with Mrs Ermine who does similar, obviously it’s depreciated by inflation but it goes to a good cause IMO 😉
@AS #17 while you can’t easily buy health lost, you can buy it through lifestyle. The obvious one here is beware of stress, most specifically stress about non-actionable situations. I don’t think it’s overly controversial to say that stress hormones not used in physical activity impair health, retiring early (and possibly FI, though only if you use the FI in times of need) reduces that.
The extra time an early retiree has helps with lifestyle in many ways – eating well, some exercise, the extra money means you can eat better.
@Brooksy #18 > 15% rates of interest leading up to it and then the price crash & negative equity afterwards with a forced sale.
I just managed to avoid a forced sale, but it took many years to pay that down, and I didn’t move until than. It’s given be a visceral loathing for Britain’s favourite asset class ever since. I don’t care what TI says, and I can grasp the intellectual case of his discourse, but house equity has no line in networth IMO. Usufruct yes, productive asset no, unless a BTL.
> Interesting that you’ve used shorting in your ISA as a way to maintain portfolio equilibrium. I’m leary of gold so this could be an option; can you expand on the ease or otherwise of doing that.
For the love of God, don’t 😉 I am still not sure whether that was luck not judgement. FWIW I used IG index, the cost of carry is very high and not intuitively obvious. Real Men use Interactive Brokers and the like – those that The Accumulator listed as
in the recently updated list of platforms (compare brokers tab up top).
I did have some experience of shorting because I shorted the last Sharesave I had coming up to retirement. It was bought in the depths of the GFC and had risen a lot, I wanted to lock that rise in. As it was it rose more, and so I paid IG for the short, I was fine with that. Insurance always comes at a cost.
Shorting is hazardous, expensive and probably unwise to do for longer than six months. There definitely be dragons.
@London a long time ago #20
I’m sorry to hear about your experience, that sounds really rough! Totally agree that
I never really bottomed out why. Sure, some spending is compensating/decompressing from the work experience in the week, but I couldn’t quite make that all add up.
@Simon #1 and Kwaker #21 > dictionary
Sorry about that! Select and right click search works for me on a PC 😉
On the topic of why do you spend less, I have wondered whether absent Fat- FIREees who absolutely want to maintain lifestyle, the act of RE does trigger a change in wants i.e. the real want is to be off the treadmill* and having time to take inventory of “stuff” drives a desire not to accumulate more of it?
*And off topic but as good a place to say it I’ve noticed a recent trend in a few guests on Dan Haylett’s generally commendable Humans vs Retirement podcast to punt variants of a retirement “purpose” that is excessively structured. Sounds a lot like creating another less well remunerated treadmill to me in some respects.
This feels like the FIRE equivalent of Sir Richard Burton appearing on Parkinson.
I am soo grateful to Ermine for his blog, which has been a source of inspiration and thought for the last 11 years, since I discovered the FIRE movement in 2014. I am glad to hear that native English speakers also need a dictionary to understand fully his posts. I have been an introvert all my life, so any kind of work took its toll, but having prepared for FI made me easy to kill my former professional self and jump to freedom as soon as i could. Your Jungian take on the nature of getting old has been a revelation to me.
In any case all the best to you and congratulations to Monevator for an excellent interview.
Hi @ermine,
My favorite two bloggers rolled into one, excellent!
Your story shares a lot of similarity to mine so I can relate to it greatly. I retired fairly late from a career mainly in commercial STEM research greatly effected by the GFC, also bought a house in late 1989, suffered from negative equity and 15% mortgage rates! Saved hard, paid the mortgage off just after my 50th birthday, a good move mentally. I am a much leaner FIRE than you but it is manageable. Your comments about looking after your health are spot on, I had a stroke 18 months into my retirement which I have largely recovered from but it focuses the mind and I will never enter the workplace again. Now enjoy my time doing what I want when I want to, my needs are not expensive and never have been.
Great read really enjoyable seeing more of the man behind the mustelid mask
Thanks for this FIRE-side chat. I thought I knew pretty well all that there was to know about the ermine story having been an avid reader of SLS as well as Monevator for years. But this chat has revealed even more, particularly the separate finances with Mrs Ermine, and the slow and painful extraction from the workplace. It was heartening to read that at least your final project was one for which your undoubted skills were valued.
Great to hear your story, @ermine. I’m particularly impressed how you managed to turn three years’ worth of savings (from a then-salary of around £50k) into nigh on £1m. You’ll be the poster boy for active investing at this rate.
By the way, all these references to dictionaries reminds me, Al Cam and ermine, it’s root for, not route for. Tut. 🙂
Great read ermine, thanks for providing the origin story of our favourite mustelid and a peek behind the curtain of how you became the loveable curmudgeon we regularly turn to for a amusing diatribe or good old fashioned rant!
Blimey! Like some others above I either identify with or sympathise with so much of what you have written. Except that I’m in my late 40s and started saving about 75% of my salary two or three years ago after locking horns with my manager over how I was being treated (the higher ups sympathised but didn’t do anything useful about it – I thought it would all end in a constructive dismissal employment tribunal – then I found a way to resign and get another job (what I do is rather specialised so I initially felt very trapped), but the urge to jump ship has continued to plague me ever since this experience). I purchased a property in 2006 close to its peak in value and just before the GFC, and would be lucky to break even in nominal terms if I sold it right now.
I also love a bit of timing the market – or rather I like to wait for a correction before adding new money. I’m finding Trading 212 quite useful for that right now as you can instantly transfer money from their cash ISA (4.9% interest) to a S+S ISA when ready to invest.
Anyway, it’s really very heartening to hear that you are living a good life now, and that it’s possible to get out of a miserable work situation if one is really determined. I hope you continue to live a long and healthy life in the country with minimal neighbour noise and lots of lovely introvert hobbies to keep you happy!
Oh, and, love the little graph – nice touch!
Very educational and inspiring for someone who has been reading SLIS for as long as I can remember.
Ermine was dealt maybe a worse hand than I have – but I was on a PIP around the same time with a crisis at work.
We all have our furrow to plough.
Great article, thank you.
You’ve taken me back in time to being a few years in my big 4 career as a naive grad where some teams started disappearing in 2008/2009. I can still remember being called by my manager to get the news that some lovely colleagues had been made redundant. And the penny dropped that…it could have been me. I grew up a bit that day.
I admire how you made the decision in 30 minutes to change your entire mindset. An inspiring story and thank you.
Wonderful – a bit of Ermine, one of my favourite writers, to read and ponder and enjoy the turn of phrase. And then, added bonus, a (second) proof of life from Indeedably, another very favourite writer (on hiatus only I hope), in the comments. Makes a decent day much better.
The first investment I made was my first motorbike. Owning personal transport gave me a much bigger choice of jobs in my university vacations.
The money for the ‘bike came mainly from saving what I’d earned in my school summer holiday jobs.
Of course those of you who travel on the subsidised London tube probably don’t need to think of such things.
Is that general topic underplayed on financial blogs i.e. how to save money to let you spend money to help you earn more money?
Great story and a great read
Very different from my own path to financial independence via a profession that had its own special way of working
Managed to sustain my interest from qualifying to retirement at 57 -22 years ago-when I had had enough
How the posters here all handled their own finances has been a great education to me with their very different and individual life styles – do seem to be mainly STEM types- but finance and doing ourselves is the universal common factor
xxd09
It was great to read Ermine’s story in full having followed the SLIS blog for some years. I’m of similar age and we probably started and ended working around the same time, and I had Quicken too, and lost money in the tech bust. I started earlier as a home owner and was investing earlier, but it was the market recovery post 2009 that really powered my portfolio and allowed me to bail out.
“I’m living proof that the old saw about Sensible Susan who saves from 21 to 30 and then stops to let compounding carry her to 65 is not universal. She does not beat out all Johnny-Come-Latelys.”
I often wonder if harping on about this adage does more harm than good? I can’t say for sure but it certainly is disheartening to hear that old refrain trotted out to kids like a stern talking-to, complete with finger-wag. I feel it may cause people who don’t learn about this until they are older to just throw in the towel and scream YOLO in resignation. If more people heard stories like this one they could achieve more.
For 4 years we were living on one low income while I was a SAHM to our two kids. I went back to work on contract for awhile and then got a full-time job when the youngest was 5. We saved the little bit we could – maxing out the company retirement match and throwing $80 a month in the kid’s education funds – along with all of the money they got from relatives for birthdays and Christmas. It was not a lot of savings for people in their late 30s by all measurements of success (or at least according to the fancy charts financial advisors like to scare people with). It wasn’t until I started working that we could ramp up the savings and I would never give up those four years at home with the kids for extra money in the bank. Even though we lived very frugally and close to the edge it was an incredible gift to have been able to do it.
I would say that almost all of our wealth was accumulated in the past 5 years: we paid off our house (I am in my late 40s), stuffed our retirement accounts to play catch-up and also maxed out our kids education accounts. I ended up having to medically retire so we have income until I am 65 via my insurance and I also have a small pension & benefits for life. Our family of 4 (we have two teens) can easily live on my income so we have done a bit of extra spending on things we enjoy but we are solidly either FI or Coast Fire depending on how you look at it.
The narrative should not focus on what has been missed out on but instead focus on how much better off people would be if they had at least some money saved by the time they retired. Even $100000 is still $333 more a month than you would have had if you YOLO’d it up.
While we saved what we could given our other priorities, there comes a time where you can stay living as cheaply as you did and see your income increase as you get further along in your career. So you can add a few more luxuries in and save a pile in that situation.
The FI blog crossover we’ve been waiting for! Ermalien Vs Predinvestor – whoever wins, we all profit.
I’ve only been following ermine for the last 6 or so years, after following a link from this blog. Like a west country Jonathan Clements, his despatches have always been reflective, a little melancholy, but always useful and sometimes incredibly funny.
Thanks for opening up about your journey, and am sure you’ll hit that £1m milestone and that it will be both satisfying and completely meaningless to your day to day. Cheers.
I think I’ve read Simple Living In Somerset three times now in full from start to finish. Along with MMM & Monevator these three sites have had the most influence on my approach to personal finance. I was scared to invest, just a leaf in the wind, as the threat of redundancy and role deterioration swept me around against my will. Where Monevator has especially helped me with the “how” SLIS is brilliant for the “why”.
I always venture back to SLIS whenever I feel consumerism or elaborate spending rear its ugly head. It swiftly sees me regain that hunger for why I am striving so hard for FI. Since finding these three sites I’ve spent just over £84k. That doesn’t sound great until I realise that’s seven years worth of expenses. I guess I’ve made my own exit from the middle class, as Ermine so wonderfully puts it.
From his opening post “How I plan to retire early” the tone is really set. There’s a sort of desperation that comes through. Perhaps that’s too negative a word. There is certainly evidence of a strong desire, total commitment and strong mindedness to see it through. I can completely relate to that and as I approach my 50’s I can feel how the stress and strain of the corporate world takes considerably more out of me that it used to.
It was great to read Ermine’s story in the setting of a Monevator FIRE-side chat. I appreciate they must take a great deal of effort on both sides to compile. Thank you.
I’m torn between finding something less stressful and very part-time to see me through, versus full-on RE. Monevator and SLIS help provide me with a balanced view of both sides. Perhaps I need to start that fourth lap of SLIS to guide me on this one!
I wonder if there are some universal truths in this worth paying heed to:
1. Many of us will encounter a workplace disruption in their 40s/50s. It might be as well to plan for that. I too experienced a period of work turmoil in my mid 40s where things did not look great. Thankfully, I’d done some of the ground work, but I still remember running the numbers and thinking can I make FIRE work at £8K/year for the next decade? (I could, but it would have been tough). Like Ermine, I survived that first go around and within a few years was in a far better position. It involved a few years of living off less than minimum wage though. Somehow, I’m still at the same place having gone PT, changed careers – having more fun than ever, developed the hinterland and now in comfortable FI territory.
2. If you are male, working in a sedentary high stress job consider your 40s as moving into extra time – and plan accordingly. I also had a stress induced health crisis in my late 40s (not cardio related thankfully – but I know more blokes than I should do that have had heart issues). It could have easily have finished me. Again, I reduced my hours still further and doubled down on the fitness regime – including turning a hobby into a nice little side gig where I get paid to keep fit while instructing others.
Thanks for sharing your story @Ermine and to @TI also – I enjoyed the read and I’m also another long time follower of the blog. Your exit from the workplace sounds like a tough and nasty one and those things can take their toll on you – that final project was a good win. I found these sorts of things with management nastiness in the endgame up to retirement can sour what was an otherwise enjoyable long career at a place. I worked a long career as a software coder and never wanted to go into management as I enjoyed the hands-on tech side of things. The manager stuff often seemed like endless mind games amongst themselves and I found that dealing with some managers as a grizzled experienced tech could be problematic.
The mention of Success Factors sent a chill up my spine! It was a much hated system they used for a while where I worked. Me and my other half also run separate finances, it doesn’t seem that common on here?
Re Quicken which seems to be mentioned here a few times
A easy to use financial computer program is almost a necessity to a successful independent investor
I have used Quicken 2004 continually from a few years pre retirement up till now
I use a standalone second hand computer running XP with a second hand laptop as backup
Simply filling in my fund prices once a week (admittedly 3 funds only) lets me know my investment portfolio value
I don’t think I could have managed without this tool-for day to day and overall financial management it’s hard to beat-even my financially uninterested wife understands it
xxd09
What a fantastic FIRE side chat with the FI and RE master himself 🙂 A real privilege to read. Bravo.
I’ve been enjoying SLIS since first linking to it via Monevator many years ago in the Suffolk days and continue to enjoy it greatly in the post-2018 Somerset era. I have fond memories of reading about the Ermine’s battles with TV licencing in 2014 and greatly enjoy all the current stuff – especially the latest on US market dominance (World Trackers in Name Only).
What a nightmare with the GFC and redundancy threats.
On the other hand @Ermine you got the bat signal right that I failed to act on.
I’d made the strategic error of tactical asset allocation in 2008 after Bear Stearns went down and bailed out of equities. I was too paralysed by fear to get back in during 2009 and 2010 and then, as the Eurozone crisis hit, I was hoping for a bigger pull back to re-enter the market. I only actually got back in – and swallowed the paper opportunity cost of my market timing folly – in 2013.
Nearly to the day of @TI’s bat signal to buy, right at the nadir for prices in March 2009, I was sat opposite a colleague at work who was short the market with SG covered put warrants. As the Dow made 6,500, the S&P dipped under 700, and the FTSE 100 had a dalliance with 3,500, I remember asking him “what next”, to which he confidently replied, “down again my good fellow”.
He couldn’t have been more wrong, and I just wish that I’d trusted my instincts, and (like you did) had listened to the bat signal buy call here on Monevator, and gotten out of cash and back into shares right then and there. Cest la vie.
Very interesting that you’re going the Harry Browne route.
@Ermine – really enjoyable read! You seem to have taken to the RE part with gusto and never looked back. Did you ever have a wobble and think about returning to work?
Something I don’t understand, you have a DB pension which more or less covers your spend (at a basic level) yet you also have investible assets near £1m. Why so much?
You hated work, wanted out, so saved as much as poss, yet knew you’d have the DB at age 60 – the £1m pot suggests you saved too much?
I FIREd a fair bit younger than you, like you have no desire to work, no offspring, my DB (still a few years away) matches my budget and I have enough in my pot to get me there plus a little extra for safety, but nowhere near £1m.
It was pleasure reading your story ermine. Thank you for sharing and TI for publishing it for us. Although I was largely unaffected by the GFC (being a fondleslab lovin’ millennial!), it’s always educational to read about the lived experience of fellow travellers who are a bit ahead of me in the investing journey. And as someone working in the STEM field, I can now see what’s coming from the The Man in the next 10 years or so.
Like a few other commenters I’m a regular reader of SLIS (from the Suffolk incarnation) and it’s one of the few RSS feeds I have bookmarked along with Monevator. The long posts about investing and life in general often introduce me to new concepts and books (e.g. William Gibson). Keep up the good work.
@old_eyes #19 – you’ve summed up the issues well –
Above all else, stay at the controls and search for options, if nothing else to slow the fall!
@BBBobbins #23 Perhaps some of the reduced costs are also that as time goes by is that you aren’t doing the legwork of establishing a household, which is perhaps more a thing of the first half of life, as well as raising children, another costly aspect of the first half of life for parents.
We spend more on eating out, and per item of travel than we used to, but stuff tends to be maintenance and replacement of failures. Not entirely, I probably spend too much on tools and toys than is seemly!
@Roberto #25 IMO there’s much to commend Jung for introverts crossing the path to the second half of life. There are as many ways of living well as there are people doing it, but he at least points to some of the deeper questions to ask.
@Curlew #21 > active investing
This story is 15 years old (from the 2009 start) The Bank of England tells me £10 at the start is worth about £16 now. Plus GFC. The Shiller CAPE of the SPX was 15 on Jan 1 2009. It’s 38 now. The stock market that was flat on its back, but the GFC was why I needed to start. To the seed capital has to be added the 1yr pay redundancy which was tax-free because I spread the tax-free excess payment over two years and put the rest into the AVC. There’s also a Sharesave that gained about a year’s gross salary because: started in the GFC a month after Monevator’s bat-signal. Tax-free because I ran it out under the more generous CGT allowance of those days over several years.
I can take credit for acting on TI’s hefty kick up the backside but for little else. That was situational, though it also helped that I had no sunk losses. Desperation, not hot hands 😉 I was FI well before my mother died, the inheritance flatters the numbers, which is why I took it out of the NW chart to try and pick out my own story. However, the extra cash raised my risk tolerance in 2022/3 when it so happened you could get VWRL at a steal, well, until that AI bust comes for us 😉
@Post Morbius #38 > I feel it may cause people who don’t learn about this until they are older to just throw in the towel and scream YOLO in resignation.
I came very close to surrendering in the three year bridge to getting out, precisely because of hearing this shibboleth repeated in the PF space again and again and again. I have critiqued the much vaunted magic of compound interest strongly in the past for that reason. Hindsight shows the low valuations of the GFC were a strong updraft, so I have softened the position. People knew the genuine advantages of starting early, but it can easily rob those that didn’t do this of hope in their hour of need if they think it is the only way.
@never give up #40
Chapeau for that low spend! It’s heartening to know that the frugal flag is still flying in parts of the FI space, to built the stash, as MMM puts it!
> There’s a sort of desperation that comes through. Perhaps that’s too negative a word.
It’s a fair call – it was desperation!
@G #41 > Many of us will encounter a workplace disruption in their 40s/50s.
and
> If you are male, working in a sedentary high stress job consider your 40s as moving into extra time – and plan accordingly.
Those two hazards are big ones, and for some people are killers – literally. Say the typical white collar working life is ~21 to 60, 40 is the midway point. All things being equal there should be as many under 40 are over 40 in your office, and if the upper end thins out, that carries interesting and useful information about the career arc in that workplace.
@xxd09 #43 > Quicken 2004
That’s the one. I can run mine on Win11 rather than XP by simply copying the \quicken install directory into (in my case) D:\QUICKENW\qw.exe. It gripes on startup to update, which is long gone, but other than that perfectly serviceable. I use R to update prices and then (from the portfolio page) go file -> import -> import prices from the csv file. I’ve moved the program a couple of times that way. I think the likes of Moneydance are the modern way to do that, or all sorts of cloud options. But I don’t do cloud in anything that needs to have a future.
@Delta Hedge #44 Commiserations on that bat signal! TI got it pretty much on the nose. Your colleague suffered the pathology that scares me with shorting, and he was a professional I infer. It’s easier of you short stuff you own elsewhere, but you have to be prepared to drop that short like a hot potato and then *stay out* in the noisy rattle. I didn’t get that right, but right enough. Could I do it again? No idea, definitely squeaky bum time. After that I thought why am I doing this to myself, and that is when I concluded I need to dial down the overall risk tolerance. I am not a young fellow half may age looking to hit it out of the park 😉
@The Accumulator #45 > Did you ever have a wobble and think about returning to work?
Yes, for about 24 hours until a ghost of 2009 paid a visit 😉 The temptation was not because I got bored or needed purpose, it was fear of inflation. I am still afraid of inflation, but the market lift since then has alleviated some of these fears, and 2020 was edgy for all sorts of other reasons.
@Scott #46 > yet knew you’d have the DB at age 60 – the £1m pot suggests you saved too much?
That’s a fair critique, but I didn’t know that. When I started in 2009, I did not know that I would be able to break out the AVCs to front run the DB pension, as enabled by Osborne in 2016.My target was to save, reduce costs and stall for time burning my non pension savings to the ground. Then draw the DB pension early, and fling the AVCs (which were a way of not taking the tax-free 25% from the DB part) into the stock market to compensate for the double impairment of the DB pension due to a loss of 8 years accrual plus the actuarial reduction. DB pensions are generally predicated on you dying at 80 so they are actuarially reduced ~5% each year you draw early.
I would have needed that top-up to make ends meet. After the GFC everyone was scared as hell of the markets and thought the lightning would strike again. Fearful people make bad calls, it came as a surprise to me to discover that my human capital was all lost, holed below the waterline. I tried to fail safe, and that was hard against that macro and micro background. My younger self was more skint than I am now. I still got eight years seeing the world not through the office window.
The valuation of the S&P is 38 now, more than twice as much as in the GFC. That nearly £1M ain’t real by any sane definition. Perhaps £680k on the long-term average mean CAPE of 26 since 1990, although Harry Browne has reduced the hit I would take from that suckout.
@all Thank you for your kind words and food for thought. Retirees should always try to learn, and to listen to different angles. And many thanks to TI for kindly hosting my take on FI/RE!
A wonderful and truly inspiring read Ermine – it was interesting to hear from someone with an income profile that more closely matched that of my own.
Both myself and Mrs GT are telling ‘the Man’ where to go this year and are in an enviable position of both having good DB pensions. However, we’re still having to bridge a 10-year gap before the State Pension kicks in and we’re doing this with a mixture of cash ISAs, S&S ISAs and an AVC annuity.
Some of that which you wrote resonated. There’s too many of my colleagues in too poor health to enjoy retirement and a good number having to keep working because they can’t afford not to. When I’ve told people about our plans they ask, ‘Why are you both retiring so young’ – I reply ‘Because we can!’
I’m sorry to say that owls eat ermine. But ermine is the Monevator mascot as far as I’m concerned.
#48: “Shiller CAPE of the SPX was 15 on Jan 1 2009. It’s 38 now”: but the “e” in the CAPE in Jan 2009 still included the inflated accounting of earnings in 1999 and 2000, thereby depressing the ratio, e.g. Time Warner wrote off $99 billion in AOL goodwill in 2002 and then there was Enron and WorldCom. The earnings’ numbers weren’t real then. They’re more credible now.
@ermine – Intriguing and thought-provoking story. I can relate to some of your struggles and feelings, especially towards ‘The Man’. The desire to flee, and not look back. I remember the realisation, making the decision, and swiftly putting a plan in place. It was only a few years later that the first part of the plan was successfully actioned (as per my Fire-side chat in Feb 2023 – domestic geo-arbitrage made it possible, and a follow-up chat in Jan 2024).
One of the towering legends of the FIRE space. A mostly familiar story for a long time reader of SLIS (almost since it started I think) but always something new to learn. Cheers to ermine for providing a unique, sometimes isolated voice in a (at least in the past) frothy blogscape. And of course to Monevator for the chat.
Great interview, I read it twice. Thank you, Ermine.
Interesting comments, too.
“The power of a desperate old git on a decent wedge saving full bore should not be discounted.”
Truer words were never spoken 🙂
A great fireside chat from Ermine, who I can honestly say changed my life. I had worked for the very same ‘Firm’ for many years and by 2014 I was working in a stressful tech support role for a similar IT/Telecomms company. I think I came across his blog from a mention on the old Motley Fool and his writings immediately struck a chord. Maybe not in a financial sense but more about the need to escape the madness of modern management, the stress, the ‘system’ and ‘the man’. It gave me the impetus to downshift my career, move 200 miles to a more rural location and coast into a possible RE situation. The job was still an IT role but one I could do with my eyes closed and absolutely no stress (but on reduced income). In fact, I enjoyed my last 2 or 3 years as I landed a contract doing the same role with the same company for more money and no HR ‘performance management’ boll****. I coasted in to RE in my late fifties (is that RE ?) and have had no regrets at all. Finances were a bit tight but I had the cushion of the ‘Firm’s’ DB scheme (with another DB scheme to mature shortly). Looking back, I dare say that had I not come across Ermine’s blog, and this site as well, my life would have panned out quite differently. I’d probably still be working for the same awful company, living in the town where I grew up and stressed to death in a job I didn’t enjoy. I raise a glass to you !
PS. Does anyone else find it strange that it’s always the workers who get blamed for the poor productivity and the state of the nation, never the dreadful management that many of us have had to suffer from in our careers and have brought down many a fine company.
Love the reference to Jung who seems massively underappreciated (maybe because his work is more impenetrable than say Freud who he eventually fell out with).
Perhaps your experience with your firm was your own descent into hell and FIRE your resurrection? The acronym FIRE / fire is so rich in symbolism itself you have to wonder if there is a Jungian archetype doing its work here also. Entry to Eden is guarded with a flaming sword.
Uncontrolled growth is cancer. Accepting death as a part of life is no easy task but you are made a hero for recognising it (Campbell’s hero journey). One of my favourite Jung quotes is ““no tree can grow to Heaven unless it’s roots reach down to Hell.”
Please don’t misunderstand this as anything but an attempt to be helpful – the tone of the responses suggest that you’re yet to forgive your former bosses. You’ll know Jung has a lot to say on this and you could think about the resentment (to the extent it still exists) as just another part of yourself to kill to be reborn.
Wow, Ermine on the fireside chat. Well I never!
Sorry to hear of the three months off with stress, I hadn’t clocked that detail previously.
I was put through a PIP and a subsequent settlement agreement after a decade at a startup and can concur it’s very, very unpleasant. I can relate to the breaking of the mainspring. This all happened for me right at the same time as COVID kicked off, early 2020. A disastrous foray into fintech followed by a capitulation back into govt research. It’s been a tumultuous five years. Funny thing is, I think someone looking from the outside in might conclude I was doing alright. The projects,people, budgets I’m managing now are bigger and more complex than ever. But inside something has definitely snapped and doesn’t seem up for being glued back into place. I think I seem to have many of the Ermine characteristics, whilst being wary of the wider worlds acceptance of them..
It’s good to hear of more people giving the Man the middle finger @Jake @Nimbus 😉
@Rhino #57 > inside something has definitely snapped and doesn’t seem up for being glued back into place.
My younger self used to believe that Time washes away all injuries, but I suspect my younger self simply had a relatively charmed time. There is light and dark in any life lived well, and as you get older you see more Life.
Our host introduced us to a benefits of work being eustress. In a charmed working life, maybe yes. Character is often formed in the crucible of adversity. But there is always a point of no return, once passed it casts a long shadow. I don’t know if it is possible to discharge these since I am not a mental health expert. From what I have seen in myself and others you can sometimes find better coping mechanisms, but the moving finger writes, and will not unwrite.
@platformer #56 > the tone of the responses suggest that you’re yet to forgive your former bosses.
While I would cross the road to avoid them I don’t think I drag the resentment still. It’s a possibility of course, and there are resonances that still echo. I feel okay about The Firm now, obviously a sadness at the shadow of its former innovative self. But you could apply that to any number of Britain’s erstwhile engineering behemoths, we chose a different route as a country than say Germany. Since the 1980s we make money out of money through finance and we have been very good at that, who am I to say this was the wrong thing for the UK even it didn’t play to my strengths
The Firm did give me twenty years of interesting occupation, a decent amount of international travel, taught me to speak in public despite being an introvert and many other good things. The markets have been kind enough to me to compensate for all the money I didn’t earn, and I saw eight years of the world outside the office window, that’s a tenth of a lifetime, or more. My gratitude journal has more pages in it than my journal of grouses and grizzles 😉
Great to see you featured on here Ermine! Great read as expected and it was good to learn even more about your back story. Having 1 million prior to the DB & State pension kicking in is superb. I am sure that helps you sleep all the more easier if you think much of the current valuations across the board are a bit high. TFJ
Congratulations on arriving Ermine.
Again, love these fireside chats, and thanks to Ermine for a really good read. I started reading your blog back at the start of my foray into personal finance in 2016 and have really enjoyed your posts. You have a different voice to many of the other blogs (most of which seem to have passed away), which I really appreciate. Looking forward to many more posts to come!
Loved this, thanks for sharing, Ermine and thanks @Monevator for persuading him to do the interview! I’ve been reading SLIS for almost as long as Monevator!
Your talk of the GFC brought back vivid memories for me – no I wasn’t invested but I was up to my eyeballs still in consumer (credit card) debt. I was also recovering from the end of a long term relationship and my job was at risk – those were dark days indeed. My job was ultimately saved but that wake up call put me on track to improve my finances. Five years later, with all debts cleared, I came across the concept of FIRE for the first time.
“I get to access the cash should I need it – perhaps on the A.I. crash that’s yet to come!”
I’m reading this on 28th Jan and there has been a big drop, due to the challenging threat of Deepseek from China – did you go shopping? 🙂
A belated thank you to both Ermine and Monevator for this. I find these FIREside chats so inspiring, and this one is perhaps the most inspiring so far. Hearing how Ermine survived his own crisis before escaping the proverbial Shawshank reminds me of those lines from Alan Bennett: “The best moments in reading are when you come across something – a thought, a feeling, a way of looking at things – that you’d thought special, particular to you. And here it is, set down by someone else, a person you’ve never met… And it’s as if a hand has come out, and taken yours.” There is hope for us all in dark times. Right, back to my tunnel with my rock hammer…