#4 RateSetter as my Rainy Day Fund

All of the books I’ve read on the subject matter of FIRE have mentioned the importance of having a Rainy Day Fund to cover life’s ups and downs, and to be honest, that completely depleted to zero with the purchase of our new house as we put pretty much everything we had in to reduce the mortgage repayments. I’m regretting this now for many reasons but it was a decision I made before being financially aware! In fact, it makes me feel worse now that I am. (nb. i’ll be covering the mental impact of being financially aware in a future post – FYI). We’re already running into some issues on our house that are requiring unexpected expenditure and of course my wife and I both work in sales which is perhaps always a little risky in terms of job security.

Therefore, over the past few months, whilst having to split additional earnings into a house improvement savings fund (high priority as we need to sort out bedroom 3 by August (ie. nursery before bubba #2) and investments (as I’m desperate to continue this as much as possible of course), I have also been putting a little bit away each month into a Savings account called the Rainy Day fund. This is sitting in a classic Savings account with Natwest with 1.5% interest as long as I add 50 quid or more each month. My target is 3 months living costs to start with, so lets say 15,000 GBP for arguments sake.

Now… I am wise enough to know that this, over time, is devaluing with inflation being 2.5-3% year on year, and so it pains me to “lose” money in this way, but the options for Easy Access withdrawals are limited at much higher than 1.5% since to get a good interest rate you need to lock it up for a period of time which sort of makes the fund meaningless. With Ratesetter, whilst not immediate, the funds can be made available and withdrawn, typically in 24 hours which seems a pretty good deal when you’re looking at ~3% on the Rolling rate (with no withdrawal penalty) option. If you want to invest for longer, then 1 year is ~4% and 5 year at ~5% at the time of writing. Great if you want to save for something short/medium term in my eyes, and/or diversifying your investment portfolio beyond property, stocks and shares, etc without the volatility of the market. OK, so this is not risk-free – please read around for some honest assessments on the risk!

I’ve been wanting to dabble with the Ratesetter product for some time now as it seems to be the choice of many a FIRE blogger and the rates, whilst not the biggest amongst this sort of Alternative P2P lenders, seems to have a solid base with which to feel more confident about longevity and risk. I’m not here to bore you with the details of how it works – I’ll let you do your own due diligence, but I like the cut of its jib.

If you are interested in investing in this, please follow this link. For transparency, its a referral link and so we both set to gain as a result…

http://link.ratesetter.com/L2RA48J

This is the offer on the table if you invest 1000 GBP. 10% guaranteed interest on that after 1 year seems like a pretty good deal to me, right!?

I’ve invested 1500 GBP so far (10% of the way to my first goal) and I’ll be reviewing this in more detail over time and showing you the results on a monthly basis if you want to see it in action before investing.

Would love to hear your thoughts on this as a plan for Rainy Day funds as I’ve not seen this talked about on other forums, although, to be fair, I’ve not looked in great detail :). If you think its clever, yay for me, if you think its dumb, I would love to hear why, not because I want an argument, but I genuinely might need your help! 🙂

Safe.

#3 – March 2019 – State of play

OK, so the first foray into reporting on my finances for all 2 of you following me currently. I’m using a spreadsheet provided to me to track my net worth, and “Liquid Freedom”. Gotta love that phrase.

First things first, the number I pay most attention to is Excluding House. When this hits 700k-800k, I’m outta here. I’ll spare you the calculations, but essentially this should enable us to live off 3.5-4% Safe withdrawal rate, not factoring in State Pension.

It seems some way off, and it is, but with current projections, I’m hoping I can get this licked in 15 years (ie. when I’m 55). We have 24.5 years left on the mortgage, but I want to overpay that to get that done in 15 years too. We have 5 year fixed at 1.91% and do not want to overpay at this point in time since the money is better off elsewhere, but once that 5 years is up, I will look to overpay by 1k per month to shave 10 years off. Of course we do not know the conditions on interest rates in 5 years time and so if there is potential to remortgage at a similar interest rate, we would likely not overpay. Either way, the long term plan is to downsize when the kids are old enough to move out (ie. in 19-21 years time), and reclaim 150-200k on the equity to add to that 146k as it is now. The rest will need to come from saving, investing and quite probably some inheritance. Not a nice prospect, but it has to be considered as possible during the next 15 years with both parents in their mid-70’s.

The eagle-eyed amongst you will notice some orange numbers, mainly based around my wife’s pensions. This is because she has no clue how to track these numbers. After initially asking her to get online logins for all of them, she has lost the bit of paper with everything written down(!). We’re currently in a very long drawn out process of getting her to organise all of these, find out the correct numbers (not estimates) and then move them all into a SIPP so we can (hopefully) maximise the earning potential by moving into low fee, passive investments, as I had done with my Fidelity SIPP.

I’ll go into each of the below Investments over the course of this blog I’m sure. Some I like, some I’m not so sure about.

Safe.

#1 Blog 2.0

https://fudgingfinancialfreedom.finance.blog

^^^^^^^This was my first attempt at blogging on this subject, starting at the very beginning of my journey to Financial Independence in August last year (2018). My writing came to a natural close as I ran out of ideas for content. After a paltry 9 posts…useless I know. But I have a new idea, I have a fresh impetus (ie. a desperate need for a hobby and improvement in mental health) and I’ve paid for the Blogger package on WordPress so as a newly aware financial guru, I need to make sure its not a wasted £2.25 a month.

I want this blog to be an honest assessment of where I am, what I do, how I think about money, my constant battles with self-doubt and how much I hate my job, and ways I plan to change it.

My goal is financial independence and retiring early. I think…

Maybe this is driven by my dislike for my job, maybe I’m lazy, maybe retirement is not going to be all that great. Either way, it cannot hurt to be financially aware and not waste money like I used to.

A warning: this blog is going to be completely self-indulgent, but I hope entertaining, and will be a kind-of journal through my life and thinking around all things finance. I’m by no means an expert (as you will work out for yourselves) but I have learnt a few things along the way that everyone can benefit from. I’m also writing for my own sanity. You will have to read a lot about my personal struggles over the coming months and the ups and downs that come with my newfound passion for saving/investing/retiring early.

Another warning: this is not just going to be a cathartic experience, but a “side-hustle” project too. An expression you will have heard many times if you even have a modicum of experience within the FIRE movement. I will be unashamedly promoting products/services and attempt to monetise this website. However, I will only plug the things that I use personally that I genuinely believe will benefit you. If it can benefit me too, why the hell not?

Safe.

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