Achieving a big financial goal is hard. Paying off the mortgage, securing financial independence, retiring early – or at all…

When a plan demands discipline over a decade or more, how do you stop yourself going off the rails?

Doing it on auto-pilot is one way: you resign yourself to a multi-decade slog that becomes its own analgesic.

But even then, you’re throwing everything at it and have precious little to show for your sacrifices. No fit bod to parade on the beach. No medals. Nothing to post on Instagram.

How can you make your progress tangible enough to stop your goal going the way of so many diets, exercise regimes, and plans to change the world?

My answer is to lash myself to the mast with a sailor’s knot of mind-tricks:

• Checkpoints – artfully arranged to regularly boost morale.

• Redefine the goal – like a government target that shape-shifts for benign reasons rather than to ‘hoodwink the electorate’.

• Sharing your secret – declare your intentions to the people you care about failing in front of.

• Write your own story – a grand tale that convinces you that you’re doing something worthwhile.

• Future-gazing – indulge your dream just enough to follow it.

Here’s some tips on using these tricks to get over the hump.

Checkpoints

Split and lap times help athletes to pace themselves and measure their progress.

It’s the same for us.

• Splits show you how far you’ve come at each waypoint on your journey so far. For example, you may have £10,000 invested after one year, £25,000 invested after two years, and so on.

• Lap times measure your progress from one waypoint to the next. For example, you put away £10,000 in year one, and then grow your pot by another £15,000 in year two.

You’re likely to gain a bigger psychological boost from lap times when you start out – your initial progress can seem dazzling if you’ve not saved or invested before.

As for splits, to make these effective at the beginning you should measure your progress from your start point and not your end point.

“I’ve socked away more money than I’ve ever saved before in my life,” works much better than “I’ve saved 5% towards my overall goal,” while “Wow, we’ve doubled our stash in our second year,” is much more life-affirming than “We’ve still got 90% of the way to go.”

The higher your savings rate and the more you invest, the more likely it is you’ll be able to rocket out of the gate and clear the hurdles when momentum slows.

Try flipping your view between percentages and figures. I was thrilled to accumulate my first four-figure sum. Later, you’ll earn a high five when you hit five-figures. Then, somehow, a five-figure portfolio becomes routine… until six-figures is around the corner. Did you ever think you’d see the day? I thought only debts came in six-figures.

Later you’ll only rub your eyes when your number is reporting mid-six figures. And then high six-, and then…

Use the halfway line as your initial lure. Everything speeds up once you’re past halfway. You’re on the downhill section and the grind turns into your countdown towards the finish.

Around that point it’s better to measure your progress against what’s left to do.

Halfway becomes one-third, melts into 25% then only 10% to go. Switch between percentages, fractions, and figures. Or picture the remainder as a pie, a mountain path, an escape tunnel reaching the surface… whatever doses you with dopamine.

Every year of a 10-year plan theoretically contributes 10% to the total – but your fourth year from the finish could knock 25% off your number, the next year could be worth 33%.

Granted, investment returns will also push you back and propel you forward.

But I’m talking about visualising the journey here, not the precise outcome. That’s subject to events beyond our control.

How many checkpoints?

I set my checkpoints close enough together to give me a regular shot in the arm, but far enough apart that I don’t numb myself to the rate of progress.

The higher your savings rate and the less susceptible you are to desensitisation, the more checkpoints you can have.

My brain enjoys two overlapping sets of checkpoints.

Row 1: “Come on Accumulator!”

My first row of juicy carrots is planted four months apart.

I look at how much I’ve put away every April, August, and December. Note I’m only looking at savings here, not my total stash. The market has often knocked me back over these short three-month periods, so I try not to look at my overall portfolio value.

Early on, your savings rate is likely to swamp any market noise. Later, you’ll have to rationalise the downturns by consoling yourself with buying on the cheap self-talk.

Why don’t I check my portfolio quarterly, like I do with our Slow & Steady model portfolio?

Because it’s less hassle to do it tri-annually, the progress bar is fuller, and I get enough quarterly BS in my day job.

Row 2: So far-y, so-goody

I have a second row of carrots that I nibble on a six-monthly basis – in May and November.

That’s when I compare our net worth (including our portfolio’s total value) to the same point 12-months previously.

These checkpoints anchor to the anniversary on which we first started down this road.

The point of checkpoints

The two row system works for me because each tunes into a different wavelength.

The triannual check provides a steady beat. Meanwhile our savings rate is high enough that we nearly always register some progress against the same position a year ago. (Although admittedly it helps that we’ve been investing through a raging bull market.)

What’s more, the two rows of carrots give me five data-points that tickle the brain in different ways. I even maintain mental Chinese walls between them by logging the numbers on separate spreadsheets.

You can view your progress through a third lens by stretching your scale across the years.

This one – like so many of my best ideas – I got from Stalin.

Uncle Joe liked five-year plans. My regime uses three-year plans.

Anything beyond three years seems like forever to me. But the potential for transformation within that timeline is almost magical to my mind. When Mrs Accumulator and I are running on empty, we compare our progress against where we were three years ago. The difference is always astonishing, and the sacrifice feels worth it.

We tell ourselves we can review things again in three years. Maybe we’ll make different choices if it’s not working?

Three years later, it’s always working. (I know, I know – past results are no guarantee of future performance.)

My system might not be right for you. So invent your own checkpoints – as many as needed to reliably shoot a positive jolt through your brain circuitry. Balance your need for pep talks to get you through the funk against your need to see meaningful progress.

(If you’re checking weekly or six times daily then you have a problem!)

Redefine what you’ve achieved

Your efforts create your progress, but you can be creative about what progress looks like. While my final destination is complete financial independence, it helps to celebrate the smaller milestones along the way.

For example, you could take comfort from achieving any of the following:

• “We’ve got an emergency fund that’ll see us alright for the next three years if we’re scrap-heaped at work.”

• “I’ve got enough in ISAs to take the next year off!”

• “My SIPP could now fund retirement from age 68 – if you include the State Pension.”

• “My SIPP could now fund retirement from age 68 – even if you don’t include the State Pension.”

• “We’ve got enough to fund our essentials for the rest of our lives, but not yet the luxuries.”

• “We can FIRE if we reduce our annual budget by £3,000 a year.”

• “My stash allows me to sack off full-time work and go part-time at X hours per week.”

• “We can FIRE1 if I give up foreign travel / horse racing / crystal meth.”

• “We’ve got enough for one of us to be financially independent. If I died tomorrow then my partner would have enough to live on. Mental note: must check the brake cables.”

And so on.

Allow your ego to take a bow – as long as it doesn’t endanger the overall mission – and bask for a moment in how much you’ve achieved, even though there is still some way to go.

Redefine what you need to achieve

Keep learning, and you may become happier about living off a smaller amount.

Perhaps you started out thinking you needed a million, or that you wanted to live off your dividends.

But later you might learn enough about sustainable withdrawal rate (SWR) strategies to be comfortable with a different balance of risk.

Maybe you decide a higher SWR is appropriate for your situation. Or maybe you’ll come to model the State Pension as part of future cashflows, rather than dismissing it as an abstract concept that won’t ever figure in your life.

Perhaps you’ll learn how to live on less, or finesse your understanding of the tax system or annuities, or you’ll downgrade your desire to leave an inheritance?

Pulling on such levers can change the game.

Sharing the secret

I’ve let a few people into my inner FI circle – not to mention the Monevator readership.

I don’t want to let myself down in front of the people I’ve told.

Nobody else, bar Mrs Accumulator, has any skin in our game. They wouldn’t care if I failed. But their knowledge of the plan makes failure less palatable to me.

Pride, eh? Not normally a virtue but you can make it work for you.

Writing your own story

You against the world. You against ‘the man’. You fighting for freedom, for change, for a better future.

Inching towards a number on a spreadsheet probably won’t sustain you for long. But setting your struggle within a meaningful narrative is the backdrop to all human endeavours, even mine.

Make sense of your pain by telling yourself why you’re doing it:

• You’re on a grand adventure.
• You’re doing something really hard that few will – or even can – do. (True!)
• You’re gonna be a secret millionaire.
• You’ll be happy.
• You’ll be secure.
• You’ll spend more time with those who matter most.
• You’ll pursue your true calling and never do anything just for the money again.
• You’ll evangelise for a better way of life.
• You’re prepping for the fall of civilisation.
• You’ll live a better life aligned to your values.

Perhaps this sounds flippant but I really believe it. Do it right and the road to financial independence can catapult you up Maslow’s heirachy.

Financial independence isn’t the end of all your troubles obviously. It doesn’t solve anything for some, but others have flourished.

Future-gazing

Every now and then, maybe once a year, Mrs Accumulator and I will talk about our hopes for our financially independent future.

We’re much older in that world – much older than we ever pictured. But it’s a happy place, and for a few moments we can draw some energy from that future timeline to power our present day. Optimism is human fuel.

Take it steady,

The Accumulator

1. Financial Independence, Retire Early. [↩]

What caught my eye this week.

A friend of mine used to nag me to teach him how to invest. Every time I’d (more or less) say just have an emergency fund, mildly overpay your mortgage, and put the rest into an all-in-one passive fund.

But my friend wanted to know how to “really” invest.

In the end I agreed on one condition: they’d have to pay me every week for lessons that would go on for several months. These lessons would start from ground zero. And we wouldn’t even get to what he wanted – stock picking insights – until we’d gone through hours about cash, bonds, inflation, risk and rewards, indices, and so on.

Feeling sure the next message I’d receive would be a request for a suitable one-shot tracker, I put my feet up – only to be hear a ping moments later with a one-word reply.

“Deal.”

Now there’s a lot I could write about my subsequent experience of face-to-face teaching, but we’ll save most of that for another day. Suffice to say I didn’t charge – it was only a bluff – and I even got some Monevator materials from it. My friend generously gave me a gift voucher at the end of it all.

And about halfway through, I started looking forward to these lessons.

It’s true that if you want to understand something, it’s a great idea to try to teach it to someone. (Sometimes called the Feynman Technique, I learned this week from Monevator.) Maybe I also liked the sound of my own voice. I started wondering if I had a knack. Perhaps I could make a new side hustle out of it – should I de-cloak and provide Monevator-themed investing workshops in London?

Don’t worry, you didn’t miss the invite. About three-quarters into this experience something happened that put me right off teaching – and indeed made me wonder (again) if people can really be taught much at all.

Copa, Copa-bananas

I arrived for week 16 or 17 as usual only for my friend to bound up to me with a “hah!”

Long story short, they told me that they’d just received the latest report from their active Latin American fund, and it had returned (something like) 30%.

So there! See, I’d kept saying use passive funds, but here was an active fund they’d selected before they’d even had these lessons, and it was up 30%! So active funds could be amazing! Sure index funds were all very well, but why not find more winners like this?

A thousand sighs.

You see, we’d been through everything that shouldn’t have made this conversation possible.

I’d never said active funds couldn’t deliver good returns. I said they tended in aggregate to lag the market return.

I’d never said you couldn’t be lucky. On the contrary I said luck can happen to anyone, and that it can be very misleading when it does.

I’d stressed the need to think in terms of the whole portfolio, and over the long-term. How was his overall actively-tilted portfolio doing? Not how was one fund up some particular year.

But most of all, I’d noted again and again the need to compare any returns to a benchmark.

It was great to hear his fund was up, I said, but how did it compare to the benchmark?

My friend didn’t know. My friend hadn’t thought to check. My friend thought I was expressing sour grapes.

A thousand and one sighs.

And don’t let me teach your kids.

Benchmark pressing

US writer Sanjib Saha tackled this subject well in a post for Humble Dollar this week:

It baffles me that people often favor stock-picking over index funds – and yet they fail to measure their portfolio’s performance against a proper benchmark.

I’m not talking about those who buy a few individual stocks for entertainment or education. For them, it’s a worthwhile pastime and the stakes are low.

But there are others who ignore the evidence and arguments against active management, and devote serious money to picking stocks and timing the market in hopes they’ll earn market-beating returns. This group includes a number of people I know—folks I otherwise admire for their intelligence, critical thinking and self-awareness.

These acquaintances are do-it-yourself investors who actively manage their investment accounts, and they do so with confidence. I’ve probed a little to find out what lies behind this confidence.

My conclusion: Improper benchmarking is a common cause. In other words, many think their strategy has played out well, but—in reality—their investments have lagged behind an appropriate market benchmark.

If you’re an active investor trying to beat the market, I think you should unitize your portfolio. This will enable you to track and compare your returns exactly as professional funds do.

But will you? Who knows… 😉

Have a great weekend!

[continue reading…]

David Sawyer didn’t read the small print. Having written a guest post for us a year ago after publishing his debut financial independence bestseller, RESET, we’ve harassed him into writing a follow-up. You know, like The Godfather 2. Only with (slightly) fewer flashbacks.

These days it’s all about the data. Or so they tell us. But what part-time author has time to get into all that?

When you finish writing a book, the last thing you want to do is work on the manuscript full-time for another six months before it’s ready to publish. And the very last thing you want to do is spend aeons writing the index and doing the Notes section. Many don’t bother.

However, I’m glad I did with my own book, RESET – albeit 511 footnotes over 28 pages was perhaps taking it too far.

Tracking reader curiousity

Of the thousand-odd messages I’ve received from readers post-publication, one common thread has emerged.

“Thanks for all the references, Dave, they’ll keep me going for months.”

People like knowing where your thinking comes from and finding sources of further reading.

It’s proved handy for me, too – or at the least intriguing.

I employed short URLs to make it easy for paperback readers to type in the links, which means I can track how many people click each one.

Which brings me to that data and the other reason I’m glad I included a Notes section.

Around 6,500 people have clicked the 500-plus links in RESET’s Notes. That gives us a unique insight into the UK financial independence seekers’ hive mind.

Click for more: The top ten references in RESET

RESET is aimed at people aged 35-60 who are stuck in a bit of a rut and looking to reset their lives halfway through.

It’s a UK take on US financial independence. Although some topics might not seem core to financial independence (such as decluttering or going digital to future-proof your career), I’ve found the majority of the book’s readers are drawn from the FIRE1 community.

So, with this lengthy preamble over, let’s look at the top ten most popular links – ranked by click volume – and reflect on what it tells us about the UK’s FIRE enthusiasts.

(After that I’ll throw the data overboard and outline the top ten things I’ve discovered about the FIRE community since writing my book. And in between there’s a special intermission, so look out for that!)

1. Candid Money’s ‘How long?’ investment calculator

An online calculator where you can plug in figures to find out when you can retire/reach financial independence.

Purpose, values, vision, decluttering your home, mind, and technology are all topics covered in RESET. But when it comes down to it, the primary concerns of most mid-lifers is: “When can I stop working. When can I put my feet up? When does day-to-day reality not include 9-5?” This is no surprise.

2. How rich are you?

An article looking at how rich you are compared to everyone else living in the UK.

We’re human. We want to know where we fit in the world. And we often measure our success – our rank in the pecking order – by how much money we earn. In his excellent book Status Anxiety, Alain de Botton writes: “…the hunger for status, like all appetites, can have its uses: spurring us to do justice to our talents, encouraging excellence, restraining us from harmful eccentricities and cementing members of a society around a common value system. But, like all appetites, its excesses can also kill.”

3. Pakt

An expensive life/travel bag produced by The Minimalists.

People like the idea of owning one bag for all needs. It’s the holy grail of travel. We chase efficiency, and will pay a bit extra for something endorsed by the kings of minimalism.

4. Osprey Porter 65 travel duffel

A less expensive and more durable travel bag produced by Osprey.

Err, people really like the idea of one-bag-for-all-needs. This is the one I use. Seriously, I’m scratching my head here! I’m all for minimalism and use this bag a helluva lot, but why it and Pakt come out ahead of other links in RESET, I don’t know.

5. How much will you need to retire?

Which? magazine’s annual reader survey to find out how much annual income after tax the average UK couple need to retire on.

FIRE is a lot of things to a lot of people. But boiled down to its essence, you need a firm grasp of your numbers. This link is popular because it’s a shortcut to the in-depth planning and future-gazing one would have to do with one’s partner to come up with an annual retirement spending figure for yourself. Which? magazine is a trusted and reputable source and the fact it has surveyed 6,000 of its members makes the research robust and believable. (You can complement with this data with the recent study by Loughborough University.)

6. Tim Ferriss’s Five-Bullet Friday

A weekly newsletter by all-round self-help guru, podcaster, and author Tim Ferriss.

We’re all searching for something, and followers of the financial independence movement more than most. Tim Ferriss is an anomaly. Through hard work, dedication, and being in at the ground level when blogs and podcasts were becoming a thing, Tim Ferriss has grown his email list subscribers to more than a million. He’s an anomaly because there are tens of thousands of people trying to become the new Tim Ferriss, working their socks off, but only he has succeeded. Every Friday he issues his Five Bullet Friday newsletter, sharing what’s on his mind. I seem to remember first reading about the Osprey bag here. Ferriss gets the world’s best thinkers on his podcast, notably including Mr. Money Mustache, Marie Kondo, and Walter Isaacson.

7. Blogs don’t tell the full FI story

A blog post written by US blogger and author Tanja Hester exploring how US FI bloggers make money from their activities.

Many people who read RESET are already familiar with FIRE. Others are exploring the concept for the first time. Either way, if it grabs you, if you start viewing the world differently, or even if it just gives you a conceptual framework on which to pin information you already understand, it’s only natural you want to pick holes in it. After all, we’re only human, eh? This blog post scrapes the surface of an interesting topic that divides FIRE bloggers, podcasters, and authors on both sides of the Atlantic. There are scores of people in the US who make a tidy living out of FI-blogging, what with product referral fees, affiliate advertising on their blogs, books, appearance fees, coaching practices, and so on. Fewer do so in the UK – and none, as far as I know, fully fund their lifestyle off the back of it. I don’t object one bit to people making money from their creative work. But I do think people have a right to ask whether they’re preaching mung beans on air but eating caviar off it.

8. Global Rich List

A website where you can type in your annual after-tax income and see where that places you in the global rich list.

Back to that status anxiety again. We want to see where we rank, and it’s a nice and surprising feeling (for those living in the UK) when we find out.

9. The Feynman technique

A technique to enhance learning, named after Richard Feynman: once you learn something, explain it to someone else. This helps you retain the information.

Seekers of information apparently revere Nobel prize-winning physicists. Have you read Surely You’re Joking, Mr Feynman!? A great man, clearly, but also an arrogant bore. Or an alternative explanation would be that people find it difficult to remember information, and Feynman’s technique is one I use, usually on the kids, or unsuspecting friends over a pint of Brewdog’s Elvis Juice.

10. Emotional value headline analyser

If you do any kind of writing and want to make a snappy heading/title/email subject line, this tool rates how emotionally appealing it is.

People love a good tool and like communicating well. Everybody writes these days, and this tool is useful. It’s also intriguing. Imagine if you could write an important title in ten different ways and then pick the one that’ll work best.

Intermission

How are we all faring? In need of a pause that refreshes? A cup of tea? A comfort break?

Suspecting as much, I’ve smuggled in an excerpt below from my new audiobook version of RESET. It’s eight minutes long and is taken from Chapter 21: Financial Independence and F.U.Money.

And yes, that’s me narrating!

[Note from The Investor: If you’re reading via email and no SoundCloud player is visible above, you can listen to it by visiting this post on the Monevator website.]

Conclusion

And back to our story – and to the conclusion. What, in a nutshell, do those 6,500 clicks really tell us about RESET and UK FIRE? What does the data reveal?

Well, aside from a couple of outliers (travel bags!), there’s a fair bit of crossover with the Monevator post I wrote at the turn of the year, which was also about tools.

People love tools and it seems that even we FIRE enthusiasts can’t resist using them to compare our lot with others’.

Data, schmata?

Perhaps data can only take us so far in understanding the needs and wants of FIRE pursuers in the UK, why they read books like RESET, and what the UK FIRE community looks like as we reach the tail end of 2019?

In the last part of this post then, I’ll list 10 observations from someone who 15 months ago knew no one in the UK FIRE community but has immersed himself in it ever since.

These observations reflect my own experience. They’re also based mainly on the thousand-plus conversations I’ve had with RESET readers – in person, through LinkedIn, on Facebook and most of all via email, where people feel most comfortable sharing what they really think.

1. Investing is simple, but you have to learn such a lot of information to make it so. Investing knowledge among the UK populace is still woeful.
2. The single most important quick win for anyone living on these isles is to max out their employer match and intentionally pick which fund/s their workplace defined contribution scheme invests in. Then consolidate the rest of their funds into one SIPP, and, again, invest the money intentionally. Despite all the information out there, the amount of people who’ve thanked me for giving them a process and detailed step-by-step instructions to “sort their big money” is unbelievable.
3. People in the FIRE community are bright, knowledgeable, adaptable, and open to new ideas.
4. While not mainstream as yet, FIRE is now definitely a recognised thing, as the smattering of UK national newspaper and broadcast coverage over the past 15 months attests. There are around 20 decent bloggers, a (European, but based in the UK) podcast, a handful of extremely active Facebook groups (most notably ChooseFI London, Financial Independence London and Financial Independence UK) and regular meetups across the UK (not just in London).
5. Most FIRE enthusiasts are different from the norm, and dissatisfied with what society/media/advertising holds up as success. Some have just discovered FIRE but many RESET readers I chat with are a fair way along the journey and are just looking for a bit of reassurance that they’re on the right path and haven’t missed anything.
6. Financial independence can be a solitary pursuit – there’s all those spreadsheets for one thing! In Quiet, Susan Cain reports that two-thirds of the populace are extroverts, one-third introverts – but I believe you can reverse this for followers of financial independence.
7. There’s a swathe of FIRE enthusiasts living in the UK who follow all the American blogs and have read all the American books but haven’t connected with the UK FIRE movement. As a bare minimum they should follow Monevator, The Escape Artist, join the Facebook groups mentioned above, and read or listen to my book.
8. Of the 1,000-plus messages I’ve received, three words stand out: resonate, connection, vision. FIRE enthusiasts want to be connected with others, they want people to articulate the way they are feeling, and they want a clear holistic path of how to change their lot. The messages I remember are the ones that connected with me: the guy contacting me through LinkedIn while at Center Parcs with his kids, the woman who’d stayed at the same place on Loch Coruisk in Skye where I’d bivvied-down with my brother-in-law 20 years ago, and the many people who spend some of their year in one of those white towns in Andalusia (the vision my family is aiming for). In this yearning for connection we are no different from other members of the human race. Yet if there’s one thing the past 15 months have taught me it’s that making online, email, face-to-face, phone, and Skype connections with like-minded people is far better than lurking in the background. You learn more and it’s fun, too.
9. Financial advisers/planners are not to be avoided at all costs. There are exceedingly good ones out there. Some, such as Pete Matthew and Andy Hart at Maven Money, have covered FIRE extensively on their podcasts in 2019.
10. My final observation is this. The more books, podcasts, blogs, seminars, coaches, meetups that spring up this side of the pond, the better. Compared to the FIRE community’s size in America, we’re a barnacle on a whale’s nether regions.

The more people put their heads above the parapet and share their brand of FIRE, the more others will find stories and life experiences that resonate with them – and so the more UK folk will pursue financial independence.

David Sawyer (47 this month) is a United Nations award-winning PR man and author, who has written several posts for Monevator. He lives in Glasgow with his wife, Rachel, young kids (Zak and Jude) and pet – Hamsterdam. RESET: How to Restart Your Life and Get F.U. Money is priced £0.99 for the Kindle version this month only. If you buy the Kindle version you can also get David’s newly published audiobook at just £3.492.  AND THERE’S MORE! David is giving away 10 copies of his new audiobook to Monevator readers who can answer the following question: David’s pet is named after a European city. What is the name of the city and what sort of animal is his pet? Email your answers to dave@zudepr.co.uk (subject line “Monevator Competition”) by midday Friday 22 November – stating whether you’re from the UK or overseas – and he’ll be in touch if you’ve won. Or perhaps even if you’ve lost? A maverick, is David.

1. Financial Independence Retire Early. [↩]
2. Full price £22.89 [↩]