Let me just put it out there. At time of writing, it is December. Teenagers 1 & 2 and I have left winter behind for a couple of weeks and are soaking up the sun some place far away from the UK. This may not be typical of something you would read on a blog promoting early retirement. But this is a marathon not a sprint and surviving the corporate grind for the next few years depends on time away to recuperate.
I realise that my life now may be a long way from your reality. If you are in debt, or just starting out or just about managing, I am not trying to sound unsympathetic.
The Lowest Rung
The truth is I have not experienced real poverty, but I did start at the bottom. I have always had a safe place to sleep even if for many years it was a single room in a shared house, or being put-up by my future in-laws. I have always had something to eat even if it was an endless loop of beans on toast and fried egg sandwiches.
Being poor was not how I earned my stripes although I come from a working class background which offered no silver spoon. I graduated university (then polytechnic) in 1993 with a small amount of debt by today’s standards. My first job was as Commercial Trainee at a truck company – a position I soon discovered to be the lowest paid in the entire organisation. Although I was embarrassed at the pittance I was being paid, the job came with study days at a local college and a fully funded route to becoming a qualified accountant. So I took it and I stuck it out, even as I cried into my cereal every morning at the thought of another soul-sucking day, photocopying and answering phones.
When I was young and starting out, every pound of my salary was needed just to live and pay the bills. I lived as most people do – day to day, month to month, pay check to pay check. There was nothing left to save but I did doggedly repay my student loans every month until they were gone.
It is a cruel fact of life that money is hardest to come by when you need it the most. In those early years, pay rises which were way above average and sound large in percentage terms, were small in £ value. A 10% pay rise when you earn £10k is significantly less in £ value than the 5% given to the Chief Exec on multi-six figures. £1k does not in itself fund an early retirement, but with the magic of compounding, every future increase was worth more because of that first one.
You Can Invest Even When You Have Nothing
Living hand to mouth and unable to save, instead I invested in myself. While my friends socialised, I studied. Most evenings and every weekend – four years later to emerge with my qualification and a determination that I could do anything I set my mind to. I wanted a better life and I was on the road to getting one.
Without the need to constantly study I channelled my efforts into my career and moved steadily up the ladder. If a company did not pay me competitively, I moved on, taking a decent jump in salary every few years. Complacency was never for me and despite being an extreme introvert, sometimes crippled by shyness, I would never hold myself back from asking for what I was worth and not accepting less.
The Trade of Time for Money
My career in finance has spanned over twenty years and although I will always be a true introvert, my shyness is now covered by a quiet confidence in my expertise. Employers know that experience carries a price which they are willing to pay. The trade off is that a high salary demands a level of commitment that many would refuse to give. The multi-national corporation that pays my salary, owns my time 24/7, forty-eight weeks a year. I frequently take calls at 10pm at night followed the next day with calls at 6am. I am expected to work weekends if necessary to meet a deadline. Family commitments (except for emergencies) come second place to corporate needs. Holding down a high level job in a corporate environment means making huge sacrifices in your personal life and many fall by the wayside, unwilling to continue the trade of time and pressure for money.
The Light at the End of the Tunnel
But it is not all doom and gloom. In particular over the last five years I have been able to increase my savings rate far beyond the level it has reached before, which has shaved years off my working life. It is easy to save large sums if you have a high salary and haven’t let lifestyle inflation eat it all. It may not be possible to save every month when on a low salary, but I know from experience that with determination, ambition and a willingness to invest in yourself, you can get yourself to a better paying job and then continue to climb the ladder, one step at a time.
I am a few short years away from financial independence, probably at what’s known as Lean FI stage. I follow the FI principles of spend less than you earn and invest the difference, but I am not hardcore. I am prepared to work a little bit longer in order to afford a few luxuries. The key thing is that I understand the trade-off I am making when I book a beach holiday in December and I have decided it is worth it.
There are many paths along this road to financial independence and we can all find the one that suits us best. Let’s not judge each other’s choices but seek only to educate, inform and share our learnings.