January 2016 – Update

The end of January already, where has this month gone? It has flown by and I have been buzzing around trying to get things in order.

I have paid my tax bill for the previous tax year, so I should be OK until the next request for tax information. This tax year has been a bit of an odd one as I have not been working for 6 months of it so I will have a strange set of details to submit for this year.

I have received my new employer pension welcome pack this weekend and I have made my first payment into this new pension account. Now that means yet another employer pension account is open, I now have two paid up money purchase accounts from two previous employers that have fund values below £1000. Once the charges have eaten into them over the next few years, they will be worth nothing and will be closed. One has done well since it was frozen over a year ago (up 3%), but the other has lost 8% over the past year based on the statement I received in the post last Friday. My only choice is to find a way of consolidating them and then use that as a basis to invest more money, so I am looking into the options available for me to transfer into a SIPP. This should also gain me access to a draw down plan if I want one in later years.

I have other personal pensions and a deferred final-salary pension which I will leave untouched. So I have a minefield of pension pots spread around. I dread to think what it will be like for future generations were job security is low, therefore job moves are frequent and the auto-enrollment merrily places them into pension schemes which will have short contribution windows as employees move on. Having lots of small pots of money will make it harder to grow and manage.

Until a few years ago, I had only worked for 2 employers in my whole working life, in the past few years due to redundancies and company implosions, I have totted up another 4 employers within 3 years, so I have now worked for 6 employers during my working life. 4 employers in 3 years sounds bad to me. That makes me sound like a right job hopper but the fortunes of an employer are not that grand at the moment. (I used to know a guy who moved jobs every 3 years to gain a pay rise).

I meanwhile, have been battling with finding a local job that will pay me anything remotely near my previous salary, never mind get a salary increase. It just goes to show how the market for work is challenging and getting harder by the day. With more people looking for work, salaries are reducing as its an employers market.

I didn’t expect to work for the same employer for the whole of my working life but I did expect some job security but that seems to be pretty thin on the ground. I thought it maybe just the sector I work in but overheard a conversation in a queue the other day between two guys discussing the consultations currently going on; their company has just been bought up by a multinational and they are now looking to ‘consolidate’ the global workforce. These guys seem to think that means their orders and workbook will go abroad and their site closed and the land sold off for redevelopment – probably residential – as land next to their site is already being developed and new residential housing built. The outcome for them does sound bleak and if it happens then it will place another set of highly skilled people out of work. There are no local jobs for their skill set once this site closes so they will likely have to move or commute large distances to find any comparable work. The one guy said he had moved up to this site when the last company merger took place so has no idea where to go next, as this time the work will go abroad.

I will continue to save and be as frugal as I can so that I can work on make a permanent jump away from the worker cell. The job openings for me locally are drying up too so it will not be long before I will be in their shoes.

This month I have received a pay cheque (Whoop, whoop!!) and I have also received some dividends and had some outgoings in the form of my tax bill. My investments this month have continued to drop and I am down 2% from the start of the month and I am glad that I have moved back into a saving role rather than a withdrawing role. I intent hanging on to my current job for as long as I can and save as much as I can.

My freedom session gave me time to work on my budgets and really work at getting better at saving money. I have also broken some poor habits, I very rarely buy processed and ready meals now. When I was working I would, laziness I guess, rather than cook. Now, I actually enjoy making my meals and the last thing I want to do is buy a take-out or ready meal. I have not bought a lunch at work yet, I’ve been taking in my own! It has worked out cheaper than buying (having free tea and coffee help!) and I just need to work on the exercise part of my plan. I need to get some walks in during my lunch break and be more chilled in my attitude to work.

 

 

 

Pensions -the new tax target

Well, all I keep hearing at the moment is the talk on the government tweaking of the Pension taxation. Now, if the tax reclaim limits are going to change to a flat rate value then that will be annoying.

In previous years I have been a high rate taxpayer so have been able to claim back additional tax for my pension contributions on my tax return.  This year due to my ‘freedom session’ I have not triggered the higher rate tax threshold so will be treated as a basic taxpayer. Now if the government change the rates quickly, i.e. in the tax year 2016/2017. Then I will not be able to push some lump sums into my pension before it disappears as I should qualify as a higher rate taxpayer in the next tax year. That will be an annoy twist to my ‘freedom session’.

I have also stopped looking at the share/fund prices as the values are dropping. Once I get my first pay cheque I can look to invest in some cheaper shares and funds, while I await that I will hang on and see if the prices continue to drop, meanwhile I continue to drip feed monthly payments into my fund NISA.  I am trying to increase my dividend share portfolio and getting a good price for additional shares is my plan this year.

It will be interesting to see how this year runs. According to TEA’s FI-o-meter  I should be FI within a year. It feels like the OMY syndrome but my falling net worth means that the threshold just keeping ticking along from ” I’m there ” to ” Oh, not quite there yet ” to ” still… Oh, not quite there yet “.

My idea behind my FI fund is to enable me to be free from “having to work”, I can then work because I want to rather than because I need to. I can then look at working just for the fun of it. Yes, working for fun! What a comment…radical thinking there. It normally is only quoted by the idle rich. I am not rich by any means, just looking for independence from the work treadmill.

 

 

 

The cold snap arrives

I awoke to snow this morning, the first fall of the season. I guess it will not be the last! That put the brakes on my plan of going out for a bike ride. At least I got a good walk in yesterday, out food shopping.

I have had an enjoyable week at work, Wow…I haven’t said that about working for years! It must be just newbie syndrome..it will wear off at some point. I even found out that ‘the camp’ supplies free tea and coffee!! I have never worked anywhere where they supply you with a free stream of tea or coffee. You just go to the canteen and find tea and coffee pretty much on tap.

At all the places I have worked before, you had to either supply your own drinks and use a ‘camp’ kitchen or pay through the nose to get a hot drink either from a vending machine or from the on-site cafe/canteen/restaurant – either internally run or franchised.

With the cold weather comes the hassle of commuting as I have to use country roads to get there. I don’t have a 4×4 and will have to take it very steady to get there in one piece should the weather get worse. I have looked at hiring a 4×4, a snip at £300 per week! Working from home is not an option – although they may be persuaded possibly(?). It maybe that this is just a passing problem and I have no issue long term. I have been hearing more about my new ‘camp’ and it desperately needs to make some operational changes, they are missing their income targets, so this may not be such a great place to be long term. As long as it isn’t another sell-off and asset strip.

As well as the weather, there’s the chilly scene with the stock markets. I am glad I am back in a ‘camp’ working for a while. I can begin to save again and ride out the storm that is going on and not have to worry about seeing my freedom drawings and my investment worth be eaten away by the falling market. This is the time to be saving not drawing from the FI fund. My investment funds is now well below the ‘enough’ threshold.

The good point for this month so far has been the dividends received, I have received dividends from a few companies but didn’t realised I would get a payment from National Grid, so that has helped to increase my overall income this month. I even redeemed my online survey cash and received a nice £50 payment into my bank account. It will be nice when I receive my first payslip and see the money deposited into my account. Back to receiving an income rather than having to eat my savings pot.

I have been enjoying listening to podcasts. I listened to a mad fientist podcast and it was discussing the goals of FI. The difference between targeting FI to leave a bad job versus reaching FI to enable you to leave work for something better. I fell into the former category with my freedom last year. I didn’t have anything in mind when I left, I just wanted to leave the job. I have realised through my freedom phase that I need to work on my hobbies and other non-work activities and get to the point where I want to do those rather than work. I didn’t have enough strength in my non-work activities to keep me there, it did give me a great break from the hamster wheel and it did help me recover from either “work burnout” or “work grief” – whatever it was.

The lure of the ‘camp’ grew too strong and I’m back to earn more money and saving harder so I can aim for a better FI freedom phase in the future. I do feel refreshed from my time out and I do feel more motivated and have some freedom ideas and plans that mean the extra cash will enable me to achieve them – maybe next time the freedom will be more permanent. I have more drive to achieve the FI targets I have in mind and enjoy the journey there!

First week in a new Camp

Well, I have survived my first week in a new camp. OK, I call it a prison camp as it is work for ‘The Man’ after all but the place is actually really nice compared to my previous camp.

Maybe its the ‘newbie’ feeling but the other inmates seem friendly and open, there appears to be no hidden agendas and no office politics surfacing that is immediately obvious. The camp is very old school, with a small but busy team of people and everyone knows each other and works like a big family. Now, there could be some shake ups in the offing at the senior level soon but hopefully this will not result in an oppressive regime coming in. Its been a busy week and I haven’t really had a chance to get to know my office inmates well yet, I am one of four newbies and so we can share the experiences of being new and finding our way around and understanding the procedures and practices.

It has been a bit of a shock to the system having to get up for work but the routine, once I get into it will be great and having the novelty of clocking off at 4pm on a Friday is a new one for me!

I will be glad when I receive my first pay as my investment funds are getting quite a pounding from the market turmoil. My net worth is down about £16k this month due to the drop in the markets. That’s after receiving some dividends and misc income (online survey & topcashback payouts).

I have also received my missing pension statement and details on how to restart the policy. It now appears that to restart it I need to verify my identify so need to find a bank/accountant/solicitor to vouch for me as part of the policy restart request. Great! I work all week now so the only way I could possibly do this is by trying to find a bank that is open on Saturday that I hold an account with who may oblige in providing this ID witness verification. I don’t have any accountant/solicitor friends. All this to prevent money laundering and fraud. I am only trying to restart an existing policy. I may just leave it and just invest more in other accounts such as NISAs and individual shares. They could probably earn me more income and growth than the pension fund has and will, plus I would have easier access to the funds if I needed them.

As part of my New Year resolutions, I have started to download a set of podcasts to listen to and its great, there have been some interesting casts and I am really enjoying the switch off from mainstream news and TV. It enables me to continue to listen to some of the programs I had found while I was free from the camp. I am trying to maintain some of the freedom activities and blend them into my working life so that I get a better work/life balance and stop being the workaholic that I had been in years gone by. Its part of my goals to relax more and stop being so compliant to ‘The Man’s demands on my time. It will be interesting to review this after a few months.

In the meantime I will continue to practice my new routines and see how my finances look at the end of the month especially after I have paid my tax bill, its a nice Christmas ‘gift’ from HMRC – the letter arriving during the Christmas week detailing the tax due for payment by the end of January.

 

The start of a new year

Wow, I have been offline for the past 2 weeks enjoying the Christmas season. I will be joining the working masses next week so need to enjoy the last few days of freedom before work hours rule my day.

I had an enjoyable time with my boyfriend and between the rain (gaps in the constant rain were few!) we managed to get out of the house for cycle rides and walks. A nice 21 mile bike ride over the festive season was great. I will miss my weekday bike rides and will now be restricted to the weekends until summer arrives and longer day light hours.

One thing I have learnt from my freedom break is that I don’t get out and exercise enough and that I can get great pleasure from cooking and getting out into the countryside more. I realised I was being too much of a lazy cook  and have cut down my food spending considerably and now have a routine which means I can continue to follow this new way while back at work. Healthy food, home cooked/prepared and filling!

Dropping out of the prison camp for a while has really done me good, I have recharged my batteries and had a chance to enjoy the countryside while others have been working. I have relaxed and managed to switch-off and step away from the consumer rat-race and the other work related consumer streams that exist. Sometimes you are so encased in the operation, you cannot see the wood for the trees. Stepping away from workplace has allowed me to see it for what it is and that removing myself  from the office politics and the back stabbing has really given me a chance to recover from the oppression.

As I begin a new year, my financial situation isn’t too bad considering my non-working status for 7 months of this year, my net worth is 5% up on last year (exc. property & pensions). As others have commented, you don’t realise how much of your net worth increase is down to your savings until you don’t have the income to save. When I was earning my annual net worth increase was around 12%.

I have enjoyed cutting down on my expenses and I have identified things that I really didn’t need and have reduced my spending considerably.

The past month has seen my investments decline in value as the markets ripple downwards. That’s not good and the honey pot value has dropped below the ‘enough’ threshold again. I know I have enough to survive for a number of years (whether it is ‘enough’ to carry me to my NRA, I’m not so sure) but joining the prison camp again will enable me to replenish the pot and try to gain some additional investments that should provide for my future.

I will be joining yet another pension scheme, so I will have yet another pension pot to content with. I will need to look at consolidation as I have a number of small pots that really need to be merged to gain any decent benefit, its just the terrible costs that are incurred that disappoint. Bringing them together results in charges which demolish their value considerably and is one aspect of the pension system that really annoys me. You can easily transfer a bank account between providers FOC but a pension?!? Everyone has to take a dip into the pot and take their ‘share’ before, during or after the transfer, leaving you feeling pillaged as you look at the remainder.

Now to get myself ready for the world of work and also make sure I retain certain aspects of my activities that I have built into my day during my freedom break. Time to make my plans and set my goals…..