Another month and another decrease in my net worth, and from this month a reduction in my passive income.
The tenant has moved out of my BTL property so the property has gone on the market. I offered the tenant the option to buy but with all the mortgage market mess they have been unable to get a mortgage or help to buy it. So they have moved out, which I didn’t expect to happen so quickly. I expected them to ask to hang on into the new year while they found somewhere else but they have gone at the end of the tenancy term. In hindsight I should have just dropped the tenancy to a rolling contract then served notice next year. I have done the deed though and I am now having to pay out on the property with no rent coming in. It is not the best time to sell and the agent priced the property and expected it to be sold within two weeks but it has not. I think the price is too high but what do I know about the market. It has currently only had one viewing.
I am now trying to work out how long I can support the property without any income. It maybe much longer than I first forecast. I now have no rent coming in and will have to live off dividends and gains from investments. In theory I can draw an income from my investments and use that to live but with costs going up, my expenses are now much higher than originally forecast so I could be losing money while I wait for the BTL to sell. I will look to drop the selling price in the next few weeks as the market cools for Christmas. The agent said that a few months ago they would have had a queue of viewers and it would have sold within two weeks. I think this will be a long haul until the right price is found at which someone will buy. As long as it does not drop too far as I would like to cover my selling costs out of the final selling price and make a bit of a profit after taxation. There is space at the moment to achieve this but the longer the place is unsold, the less space I have until I am running a loss. This really is the wrong time of year to be selling and the economy at the moment has just sunk the ship even more. I feel somewhat worried and fearful of my future.
I may have to look at getting a job due to necessity rather than choice. I don’t really want to work again at the moment. I feel my health has improved from not working and I feel happier than I have done for years. Even with the last two years of pandemic hell. My last job was making me depressed and was not doing much for my physical health either. Everyone I talk to says how they are hating their job and how the stress and pressure is getting to them. The workplaces that were once fun, happy and enjoyable places to work are tuning toxic and aggressive.
I saw my sister the other day and she is so stressed out. She works for a care company and the funding is only given on a yearly contract basis. If the contract is ended she is out of work. The contract was renewed recently but it was touch and go. To win the contract the company had to submit a lower bid than last year and also increase the services provided. She is now doing the work of two people (the company response :”do it or find another job”) and they have also just got rid of the office space too. She now works from home and other than the work calls, sees no-one from day to day and has to pick up the bills of working from home and the extra workload with no additional pay. She is watching as others leave for other jobs or just quit due to the pressure and stress. They have even had new people start work for a few weeks and then leave due to the pressure and the toxic environment. She said she was on the verge of quitting the other month, the stress got too much. Even our mother, who has made our lives hell if we did not work, said to her to give up the job. That’s ok for our mother to say but she is unable to help my sister out financially if it had happened. Thing is my sister needs the money, she may qualify for job seekers but it would not cover her living expenses, she also lives alone and has no financial support network. When I had a good well-paying job, I could have helped but now I am living off my FI funds, I have no spare capacity to support anyone else.
She is looking for another job but there is nothing going in the area suitable. A quick look lists the following: shop staff (temp cover), warehouse pickers/packers and delivery drivers. All paying minimum wage, full-time plus additional shift hours required given the season. Her health would not enable her to do this, I must admit I don’t think I could do those jobs either I am not fit enough any more. She left a previous job due to health, the physicality of the job caused her health problems and she was advised by the doctor to change job.
I also bumped into someone I had not seen for months, I now know why. They were made redundant in March and I can see they are still suffering from the grief of losing their job. They worked for an NHS supplier so worked all through COVID and she enjoyed the job even though it was challenging. She loved the work and her work colleagues were great, the job loss came as a shock and out of the blue. I can see in her face and her voice that she is grief stricken from being made redundant. She has worked all her life and is hating being jobless. She has looked for similar work but there is none. She is struggling to cope with the loss of work and sense of purpose. She is bitter, I can understand this too. She is a similar age to me and she has lost her self worth, status and confidence. She finds that her age is a barrier to moving into something else as no-one wants a 50yo and no-one wants to train someone up. She is still living off her redundancy but it is running out so she wants something else to do and is struggling to find something. She is financially OK because her husband works and is able to cover the core expenses so she has support.
This is something that I do not have, support, I have no family who can support me and be a bank if I need financial help. no one to fall back on. I have no family inheritance to receive in the future, I am what and where I am and have to accept it. I have no support network and no job network. I am finding it very hard to motivate myself at the moment. I posted job search requests on linked-in but nothing came back. I do a bit of online work but the pay levels are very poor and less than minimum wage, plus I have to compete with global workers for the tasks that appear. I don’t qualify for benefits due to my FI funds. I have managed to do the odd dog sitting job for friends to get some cash but there is not much promise on the employment front. I am not an entrepreneur, I tried selling stuff I created online but that has not worked, no sales. I am not very good at selling myself, mainly because I have never had the confidence.
I just keep meeting more people who are losing their job. Companies are letting people go as they struggle to keep costs down so they can survive. All I can do is feel blessed that I can at least survive at the moment and enjoy doing a few things, pay my bills. heat my home and buy food.
Income
I had my last rent payment and I received a premium bond win and some dividend income. not enough to cover my actual monthly expenses but when added to the annual total, my passive income does cover my outgoings so far. I have been tracking my passive income excluding rent to see if I am ok, which I am at the moment but I am beginning to worry that I do not have enough income to cover and I will start seeing my savings being eradicated by the need to use them to cover expenses. If dividend yields drop and investments do not grow, I will start to feel the pressure.
I have to wait until the end of next year before I can access my SIPP which I could start to use as an income stream. It would be enough to replace the lost rent. I just have to wait and be patient and see where things go over the next few months.
Expenses
I have had to put the heating on now and I am now monitoring my usage. I am worried about my expenses spiralling out of control. If I start eating into my capital then I will find I have no choice but to get a job. I really do not want to go back to work. I enjoy the freedom of not working the silly hours of my last few jobs. If I was working now, I would be expected to work over Christmas as it is the peak time of year and I would have had my holiday requests rejected or reduced due to cover requirements and business necessity. It was always the case that being single I was expected to work Christmas to allow those with family to have time off. What about the single people – don’t they deserve some time off too?
I will continue to look at ways of cutting costs as I now have the BTL mortgage, council tax and utility bills to cover while I wait for the place to sell. I just hope I get a buyer in the new year.
Month End Summary
My net worth is down, I am now -12% down from last year. I am not sure I will end the year level with 2019 either! Things have recovered a little but not enough to feel more relaxed. Every month has been in the red this year, this last month has been the first hint of green, at least my bond funds seem to be recovering a little now. I am worried I am suffering from sequence of return risk and that I will run out of money in the years to come if my income does not pick up and my expenses increase.
I just need to keep plodding along and think positive thoughts. If I look at the cumulative growth, my spreadsheet is showing 10% since I started tracking my FIRE journey. So the average is still positive at the moment but seeing a double digit loss for a year is not encouraging. I am not sure if next year is going to be any better with the economic news looking so bleak and the recession lasting a long time.
The sequence of return risk scenario worries me even more so now as I try not to draw on my investments and try to give them time to recover and get them to generate passive income to match my expenses. I may not have a choice but to draw on them next year and this will mean they could never recover. I keep trying a few scenarios out and they currently show me getting me over the State Pension Age line These scenarios do not include my state pension, which I am using as a safety net to pick me up at SPA, so I may make it into retirement, health permitting. I keep seeing media leaks about the UK government raising the SPA, if they do then I will be chasing a moving finish line and may find I run out of cash before I get the opportunity to claim a state pension (if it exists then!).
Lets hope there is some positive news next month..
Happy Christmas everyone!
Sparkle Bee's Journey to FI 