Hello and welcome back to Mortgage Advisor on FIRE. This week I discuss safe withdrawal rates, DINK couples, and food.
Weekly Update
It’s been a cold week this week with temperatures in our apartment hovering around 12C-13C. We’ve been using tealights to warm our living room up, with the heater only used sparingly. The heater we have is 2KW, and it takes about two hours to warm the room up to a comfortable temperature. With our electric tariff that equates to £1.35 for two hours of warmth. A pack of 100 tealights from Tesco is £3.75 and they should burn for 3.5 hours. Using 25 tealights heats our living room to the same level as the heater, but costs £0.94 instead. Also, there’s something nice and relaxing about a candlelit room.
One thing I’ve been meaning to talk about for a few weeks is the food that Oana and I have been making. We’ve been experimenting with a few curries, including a chickpea and pepper one that we’ve been serving over homemade fries which is amazing. We’ve also been making a great chilli, which is our go-to meal in colder times. I’m sure our recipe isn’t exactly authentic Mexican style, but we love it. The recipe and ingredients, for those interested:
Ingredients
500g beef mince
500g pork mince
1 x can of red kidney beans in chilli sauce
1 x can of red kidney beans in water
500ml passata
2 x peppers
1 x white onion
Jalapenos
Paprika
Salt
Rice
Creme fraiche
Spring onion
Tortilla chips
Recipe
1. Dice the onion and add to a large saucepan over medium heat with a little vegetable oil. Once the onion has softened add some paprika and stir, then add the mince and cook until the meat is browned.
2. Add the chopped peppers and mix through.
3. Add the kidney beans in chilli sauce, and drain and rinse the beans in water before adding them to the pan as well.
4. Add the passata and some salt.
5. Bring to a simmer and let the mix reduce for 20-30 minutes.
6. Add chopped jalapenos and stir through with more paprika to taste..
7. Serve with rice, tortilla chips, creme fraiche, spring onion, and extra jalapenos.
Although money is a bit tight for us now that Oana is out of work, we treated ourselves to some tacos at Street Food Chef this week as well. Their tacos are great, but not as nice as the ones Pina used to do (their Al Pastor tacos are the best I’ve ever had).
Another meal we enjoy is a chorizo pasta. This is Oana’s recipe and it’s always a meal I look forward to. She chops up some chorizo, garlic, and fresh red chillis, and then cooks them in the frying pan. Once the chorizo has cooked down a bit, releasing all its oil, she adds some tomato and basil pasta sauce and lets it reduce. At the same time, she cooks some penne pasta, and then adds the pasta to the pan with the chorizo and mixes it. This is then served with salad with a balsamic vinegar dressing, as well as fresh mozzarella and spring onion. It’s amazing.
Continuing on the theme of food, we made a simple roast chicken dinner the other day but I bit down on something hard (an errant peppercorn, I think) and it appears to have chipped one of my teeth. This is particularly annoying as it was just a week or so ago that I had to drop £120 at the dentist for a check-up and polish. There are several things I hate doing not because of a phobia but simply because it’s a hassle; the dentist, haircuts, and eye exams.
Although I’m feeling better than I have for most of the last few months, I’ve had a bit of a wobble this week and have not felt great for the past couple of days. There are going to be ups and downs though, and I just need to keep going and keep doing things that bring me pleasure.
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What Am I Doing?
TV: Masterchef: The Professionals (BBC), Leave The World Behind (Netflix), Nine Days (Netflix).
Audiobook: Beyond Measure by James Vincent.
We watched Leave The World Behind after reading all the praise on social media it was getting. It was okay, but I’m not sure what all the hype was about. It felt like half a story, and like it ended halfway through. I don’t mind stories where plot threads are left hanging, but there still needs to be some sort of ending. This just felt like it had another act to go and just stopped.
Financial Update
Assets
Premium Bonds: £11,625.00.
Stocks and Shares ISA: £61,323.64.
Fuck It Fund: £10,444.74.
Pensions: £66,040.27.
Residential Property Value: £227,512.00.
BTL Property Value: £146,814.00.
Total Assets: £523,759.65.
Debts
Residential Mortgage: £174,247.55.
BTL Mortgage: £104,924.60.
Total Debts: £279,172.15.
Total Wealth: £244,587.50.
Investment Income in 2023: £7,769.04 (target £8,500).
Safe Withdrawal Rates
As I’ve been thinking about changing my FIRE approach I’ve come back to the idea of SWR. In the past, I’ve been sceptical about this concept because I didn’t feel comfortable eating into the assets I’ve accumulated. Now though, I’m starting to come around to the idea.
I’ve been looking at the process of hitting FIRE with the steps I talked about last week; Accumulation, Bridging, Private Pension, State Pension, and thinking about likely values for my different investment pots. The results are surprisingly positive.
Take my pension as an example. At the moment the fund value is approx £66,000, and I’m contributing roughly £750 per month to that pot. Assuming I continue with that level of investment for the next ten years with standard rates of return, I can expect that pot to be worth £283,500. Then, I can let it grow for a further eight years with no additional contributions and could realistically be left with a pension pot worth over £500,000 when I’m able to access it.
If, at that point, I want to proceed with a simple drawdown, then using the 4% SWR I could have an income of £20,000 just from that pot. I ran these figures through Firecalc and it seems this drawdown schedule would see my pot last for at least thirty years in 95% of the simulations it ran. I’ll copy/paste the results directly from their site here:
“Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 123 possible 30-year periods in the available data, starting with a portfolio of $500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 123 cycles. The lowest and highest portfolio balance at the end of your retirement was $-200,493 to $2,839,737, with an average at the end of $947,965. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.1%.”
It all looks positive according to those simulations, but I also need to consider the period between now and when I can access my pension. If I work for a further ten years and then stop, I’ll need a bridging fund to last for eight years. If I want £24,000 per year to live on, then I’ll need a pot worth £192,000. Running the numbers, based on my current ISA balance, regular investing over the next ten years, and standard rates of return, I could end up with a pot worth over £220,000. Again, it looks positive, but it assumes I have to work for a further ten years.
There’s so much to think about, and changing just one of the variables changes all the others.
DINKS
If you are on social media you will have probably seen the recent post where a young couple promote the benefits of being a DINK couple. The post was received about as well as I expected with many people reacting angrily. I have my thoughts on this, especially as Oana and I are a DINK couple. So, what is a DINK couple? Double income, no kids. That’s it. It’s the term for a couple who choose not to have kids.
I’m not going to criticise anyone for having kids, if it’s something they really want, are in a position to offer that child their full support, and are in a good place in their relationship. Kids should never be used to try and save a relationship.
The thing is, so many people have kids because it’s seen as the expected thing, much like the Reverend and the Makers’ lyric;
“Get born, get schooled, get job, get car,
Pay tax and find a wife.”
The very next item on the list would generally be seen as “have kids”. But why? Why is this still seen as the expected way of doing things? If people want to have kids or don’t want to have kids, just let people live their lives in the way they see fit. The reproductive decisions of another couple have nothing to do with anyone else. My two points in this whole debate are that people should do things for the right reasons, and go into parenthood with the commitment it requires.
Disclaimer
The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.
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