featured image for podcast episodeTranslating FI For The UK

Translating FI For The UK
Episode 141R

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Episode Guide

Listeners gain insights into the importance of financial independence and the strategies that can be employed to achieve it. The hosts, Jonathan Mendonsa and Brad Barrett, discuss recent personal experiences highlighting the value of community and traveling, including meeting fellow financial independence seekers. They also touch upon the actionable concepts presented in the book 'Reset' by David Sawyer, focusing on developing digital skills and mindset adjustments necessary for career and financial advancement. The conversation emphasizes self-discovery and building competence to secure a more flexible and fulfilling life, exploring the implications of financial independence on personal growth and family dynamics.

Episode Timestamps

ChooseFI Episode Show Notes

Episode Summary:
The episode features insights on financial independence through personal stories and practical advice. Brad discusses his family's transformative trip to Maui, emphasizing experiential living over traditional vacations. The conversation shifts to celebrate milestones, including the arrival of Brad's new baby girl, and highlights the importance of community in the financial independence journey. The hosts explore acquiring digital skills and maintaining a growth mindset, touching upon essential tools that enhance productivity. Guest David Sawyer introduces the UK path to financial independence, revealing strategies tailored for a UK audience, focusing on investment options like ISAs and SIPs. The episode concludes with actionable takeaways, such as mastering Microsoft Excel and utilizing digital resources for financial planning.

Key Topics Discussed:

  • Maui Family Vacation

    • Brad shares his experiences during a three-week family trip to Maui, highlighting the benefits of choosing a longer, more immersive vacation style rather than a packed sightseeing schedule.

  • Celebrating Milestones

    • Welcoming Brad's new baby girl and reflecting on the joys and challenges of family life.

  • Digital Skills for Financial Independence

    • Discussion on the importance of digital skills in todayā€™s job market and their correlation with financial independence.

  • Introduction to UK Financial Independence

    • David Sawyer joins to discuss financial independence strategies for a UK audience, including investment vehicles like ISAs and SIPs.

Actionable Takeaways:

  • Master Microsoft Excel to enhance professional value.
  • Utilize Google Calendar effectively for organization.
  • Start small with digital skills and aim to accumulate valuable expertise over time.

Key Quotes:

  • "Travel freely and spend your time as you please."
  • "Allocating time to loved ones is a significant personal achievement."
  • "Competence and added value earn respect."
  • "Identify and brand your unique skills for growth."
  • "Unlock higher-paying job opportunities through skill development."

Timestamps:

  • Podcast Intro:
  • Brad discusses his family's vacation experience.
  • Celebrating milestones in personal life.
  • Importance of digital skills for financial independence.
  • David Sawyer talks about UK path to financial independence.
  • Discussing the importance of community in achieving financial goals.
  • Action item: Master Microsoft Excel.
  • Discussing ISAs and SIPs with David Sawyer.
  • Upcoming events and community updates.
  • Call to action for fundraising event at FinCon.
  • Closing remarks and episode conclusions.

Related Resources:

Discussion Questions:

  • What strategies have you discovered that resonate with your personal journey to financial independence?
  • How important do you think community is in achieving financial goals?

Action Items:

  • Share your financial independence journey with friends and family.

SEO Keywords:
financial independence, personal finance, travel rewards, digital skills, community, investment strategies, UK financial independence, goal setting, budgeting, early retirement

Tags:
ChooseFI, Maui trip, David Sawyer, financial planning, community building, personal stories, digital skills, investing, travel rewards, celebrations

Categories:
Finance, Personal Development, Lifestyle

Podcast Description:
Explore personal finance and financial independence through Brad's personal stories, actionable insights, and the role of community in shaping one's financial journey.

Email Campaign Segments:

  • Learn how to effectively budget for travel rewards and enhance your experiences!
  • Discover the importance of digital skills in achieving your financial goals.

Unlocking the Secrets to Financial Independence

Achieving financial independence isn't just about accumulating wealth; it's about crafting a life where you have the freedom to make choices that align with your values and aspirations. This article draws on insights from the ChooseFI podcast, bringing you actionable advice to help you navigate your path to financial independence.

The Power of Experiential Living

Many individuals pursue financial independence solely to retire early, but what is often overlooked is the value of experiences over material possessions. Embracing a lifestyle that prioritizes experiencesā€”like a memorable family vacationā€”can transform your outlook on life. Instead of opting for a traditional vacation, consider longer, deeper stays in unique locations.

  • Recommendation: Plan an experiential trip where you can feel like a local. When you transition from simply visiting a place to living in it, you cultivate lasting memories and connections that enrich your life.

Celebrate Your Milestones

Celebrating milestones in your financial journey is essential. Each achievement, whether big or small, deserves recognition. Whether welcoming a new family member or achieving a financial goal, these moments can significantly impact your motivation and mindset.

  • Action Step: Create a celebration ritual for your financial milestones. Share these moments with your community, as doing so can inspire others on their paths.

The Importance of Community

Your journey towards financial independence can be isolating if youā€™re navigating it alone. A strong community can provide support, encouragement, and shared insights.

  • Join local groups that focus on financial independence. Surrounding yourself with like-minded individuals can boost your commitment and offer fresh perspectives.

Embrace Digital Skills for Growth

In today's economy, having digital skills is crucial for increasing your value in the job market. Skills such as proficiency in Microsoft Excel not only enhance your productivity but also open doors to higher-paying opportunities.

  • Action Point: Start by mastering essential digital tools. Excel, Google Drive, and password managers like LastPass can streamline your work and enhance your efficiency.

Budgeting for Travel Rewards

One of the most enjoyable aspects of financial freedom is the ability to travel affordably. By leveraging travel rewards, you can significantly reduce your vacation costs without compromising the quality of your experiences.

  • Tip: Sign up for travel rewards credit cards that offer points for future flights and accommodations. Be strategic about your spending to maximize these benefits.

Investment Strategies Tailored to Your Location

For those in the UK, navigating investment can differ substantially from the US approach. Understanding local financial instruments like ISAs (Individual Savings Accounts) and SIPs (Self-Invested Personal Pensions) can help tailor your investment portfolio to your specific needs.

  • Practical Advice: Familiarize yourself with the financial products available in your region and consider consulting with a financial advisor who understands your local market.

Continuous Learning and Skill Development

Financial independence requires an ongoing commitment to learning. As the landscape of work evolves, so should your skill set.

  • Actionable Tip: Allocate time each week to develop new skills. Online courses, webinars, and local workshops can provide valuable knowledge that keeps you competitive.

Mastering Goal Setting

Set clear, actionable goals that guide your financial journey. Whether youā€™re saving for retirement, aiming to pay off debts, or planning to travel, having defined objectives will help you stay focused.

  • Method: Use SMART goalsā€”Specific, Measurable, Achievable, Relevant, Time-boundā€”to structure your financial plans. Review and adjust these goals regularly to reflect changes in your situation.

Navigating Financial Independence with Confidence

Transitioning toward financial independence involves overcoming fears of changing circumstances and uncertainties. Cultivating a growth mindset enables you to tackle challenges confidently.

  • Reflective Practice: Regularly assess your mindset and identify areas for improvement. Acknowledge the skills you bring to the table and maintain the belief that you can adapt to whatever lies ahead.

Conclusion: Your Path to Financial Independence

The journey to financial independence is a blend of strategic planning, community involvement, skill development, and celebrating your milestones. By taking actionable steps and remaining open to continuous learning, you can chart a path that not only leads to financial freedom but also enriches your life in countless ways.

To learn more about the principles of financial independence and insights from the ChooseFI community, consider diving into the resources and local groups available to support you on your journey. Embrace the opportunities ahead, and remember, the power of financial independence is within your reach.

David Sawyer comes back on to discuss the UK path to FI, and Jonathan makes a big personal announcement.

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Life Updates

Jonathan and his wife welcomed a beautiful baby girl, Rees, into the world this month. She's 7 pounds and 14 oz of joy!

Brad and his family just returned from a 20 day trip to Maui. Brad was able to connect to members of the ChooseFI Maui group through a meetup. Plus, he was invited to do a StrongFirst kettlebell workout inspired by Pavel Tsatsouline episode on the Tim Ferriss podcast with members of the group.

That's one of the cool things about travel, you just never know what experiences are coming.

While on the island, Brad joined Ellen Fisher's YouTube channel for an episode about how to become financially free. You can check out that episode here.

https://www.youtube.com/watch?v=vdZBHx0hdgM

Takeaways From David Sawyer

The reactions from this week's episode seem to be in two camps. Either you already understood why you need to work on your technical skills or you couldn't see how technology could help you take control of your life. If you are in the second camp, then you might feel trapped in your current lifestyle and stuck with high levels of stress because you know that something could easily go wrong.

David's book, RESET: How to Restart Your Life and Get F.U. Money: The Unconventional Early Retirement Plan for Midlife Careerist Who Want to be Happy, offers a road map to gaining these digital skills. You become much more valuable when you have more skills. When you learn new skills, you will also gain confidence.

When you walk around with this level of confidence that simply no one else has in life, people respect you. And it has to come from this place of knowing yourself and knowing that you do have skills, you are adding value, and frankly, they are lucky to have you.

On top of that, if you have been walking through the steps to FI, then you'll have even more confidence. You'll know that you have the ability to walk away from this job without your life falling apart.

Ultimately, any road to self discovery, any road to growth starts with you being willing to ask a question.

It never hurts to ask the questions.

Listen to the full episode with David here.

Skills To Get Started

If you aren't sure where to start but you want to improve your technology skills, then start here.

  • Learn Microsoft Excel: Learn to use formulas and present data in an efficient manner.
  • Get a Gmail account: With a Gmail account, you'll have access to free services that will come in handy.
  • Set up a Google calendar: A Google calendar is a great way to easily share your availability with others in a seamless way.
  • Use Google Drive: You can share files and collaborate with others.
  • Todoist:Ā  An efficient way to keep track of all life tasks.
  • Lastpass: A more effective and secure way to store your passwords than a notebook.

Start learning with these skills. Even if you cannot see how they will help you down the road, talent stacking should never be underestimated.

The UK Path To FI

David came on the show to outline his translation of the US path to FI.

In contrast to the US, UK investors should focus more on all world funds because the UK only represents 6% of the world market. The fund he most highly recommends is the Vanguard Life Strategy 100 until you retire. At retirement, you can switch to the Vanguard Life Strategy 80 fund. The life strategy funds have an overweighting of the UK market to guard against currency risks.

Overall, he recommends a core portfolio of six focused funds with the following break down.

  • 25% UK
  • 45% US
  • 13% European (excluding the UK)
  • 7% Japan
  • 7% emerging markets
  • 3% Pacific (excluding Japan)

If you want to further develop your portfolio, then you could also add a world small-cap fund at 5% and a world value fund at 5%. With this, you would decrease your other percentage allocations accordingly.

Roadmap

The second half of David's book, RESET, is set up to be a roadmap for UK FI. It makes the case for index investing with a 10 point investing plan aimed at people that don't know where to get started.

David recommends Vanguard and Fidelity accounts in the UK. However, you can only currently invest in ISAs (Individual Savings Accounts) in Vanguard. Vanguard does not offer the ability to invest in SIPPs (Self-Invested Personal Pension) yet, so you'll have to go with Fidelity for SIPPs for now. Vanguard is planning to offer SIPPS soon, so when they do it is a good idea to make the switch.

The two main investment accounts break down like this. With ISAs, UK investors can invest up to 20,000 each year and take the money out at any time. With SIPPs, UK investors can invest up to 40,000 each year but you cannot take it out until retirement age. SIPPS allow investors to pull out up to 25% of that tax-free at ages 55 and 57.

Recently, the UK has undergone pension reform. Instead of being forced to place your money into an annuity, you have more control. This control is changing the game for UK retirement planning.

A Case Study

Let's say a couple is 50 years old with 200,000 in the bank. Now that their kids are out of the house, they are managing to save 2,000 a month including government pension top ups. Their goal is to retire before age 65 by making up for lost time.

At this rate, it would take them 13 years to hit FI. FI would equal 855,000 pounds. With a safe withdrawal rate of 3.5%, that leads to 28,500 to spend in retirement each year. According to a recent study, a comfortable lifestyle in the UK costs 26,000 pounds per year.

A luxury lifestyle in the UK costs around 39,000 pounds per year. This luxury lifestyle in fat FIRE would call for 1,111,000 pounds saved.

Have your figure, it's not the be all and end all.

With these numbers, each household will need to figure out what their FI number is.

If this couple rented a room, then they could cash in on a 7,000 tax credit. Or if they chose to flip a home, they could walk away without paying any capital gains taxes.

Resources

Here's what David recommends:

Blogs

Books

Other resources

Although things are different, there is still valuable information in US sources.

Blogs

David recommends:

Podcasts

Books

  • Rich Dad Poor Dad
  • The Simple Path to Wealth
  • The Millionaire Next Door
  • Early Retirement Extreme
  • Your Money Or Your Life

Community Feedback

Let's hear what the community has to say!

Voicemail From Elizabeth

Elizabeth called on her 40th birthday to share how much ChooseFI has changed her family's life. They are on track to reach FI in seven years after saving $70,000 in pre-tax dollars just this year!

The community aspect of FI has been especially important to Elizabeth. She even made friends at this year's UK Chautauqua and wrote about her experience on JL Collin's blog.

Great job Elizabeth!

Shout Out To Nick

Nick posted this amazing success story in the ChooseFI Facebook group:

MONDAY MOTIVATION

This is for those of you who need a little motivation to start or renew your side hustle.

A few years ago me and my wife started a side hustle, a professional organizing business. The first year was rough. We only had a few clients and just about broke even for the year.

After our second year, we were able to pay off over $20,000 in consumer debt, freeing us from credit card interest and fees.

Now, in our third year, we just recorded our biggest month ever (July 2019) in which we made $15,000 IN ONE MONTH ????.

Side hustles, and any business for that matter, are rarely an overnight success. But, if you love what you do and are mindful of how you do it, what you can achieve will always leave you asking why you didnā€™t start sooner.

For those of you who are still on the fence about starting a side hustle, I ask: what is your side hustle idea and when will you start?

Great job Nick! Thanks for showing that overnight successes never really happen overnight. Hopefully this is the perfect motivation for someone doubting their side hustle game today. It is the perfect reminder to never give up on your financial or creative goals.

Local Group News

Two new local groups were formed this week. One in South Denver and one in Klamath Falls, Oregon. If you are in those areas, be sure to check them out.

Also, the LA local group is organizing a blogging mastermind group. Their first meeting is August 27th, check it out if you can.

Related Episodes:

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