# Financial Independence in Ireland- Positive vibes only!



## Ndiddy (24 Jul 2020)

How to be financially responsible is a bit like discussing how to lose weight, everyone knows the basics of what you need to do but following through with actions is another matter. What are financial hacks that bring the average Irish resident to FI over the course of time?

I have been reading up on Mr. Money Moustache and listening to podcasts like Choose FI and Afford Anything and sometimes it’s a bit discouraging to hear about all the US hacks that don’t apply here. I used to read about incredible savings rates like 50%, 60% and think how impossible it would be for the average income earner, however at this point in my life I am seeing some of the positive snowball effects of following a financial plan even on low/average salaries.

We do have some advantages in Ireland. If you have a private sector defined contribution plan you might be able to access at age 50. Education and medical bills won’t bankrupt you like in the US. Travel to other countries ( pre and post COVID) doesn’t have to be a once in a lifetime event. Most people would get more than the 2 weeks annual leave like in the US and there are paid or protected leaves like maternity, illness, parental etc. Low property taxes.

Of course, this list is for people who don’t have debt ….what are some ideas on how to get to financial independence and plan for any financial pitfalls?

-buy less house than the bank says you can borrow and pay it back faster than agreed if you can.
-have mortgage protection and life insurance if you have dependents.
-live below your means ( but not in deprivation) instead of within your means. Within your means is just breaking even.
-work towards maxing out AVCs
-buy cars you can afford in cash. If you have 40k, great buy a new car. If you can save 5-10k, buy a reliable used car. ( actually except for a house, most things should be bought when you have the cash, when you can actually afford it)
-automate all your savings/pension contributions and then work out a budget based on the remaining funds. So if you spend down to zero each month, you don’t have to feel too guilty as you still have money for emergencies and long term goals.
-is travel hacking like in the US possible from an Irish perspective? I don’t think so…

Instead of poking holes ( unless its constructive!), what are some other ideas to get to FI?


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## jpd (24 Jul 2020)

All very good - nothing to add. 

There is nothing new to the secret of FI, as Mr Micawber said
_Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. 
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery_


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## Steven Barrett (24 Jul 2020)

Don't sweat the small things, it's the big expenses that make a difference. 

Buying a €3 cup of coffee every working day for 40 years will cost you €28,800.

Buying a €500,000 house instead of a €750,000 house over that same period will save you €178,500 in interest payments. 


Steven
www.bluewaterfp.ie


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## Lucius Lamb (24 Jul 2020)

Cheap property is one factor that seems to make FI possible in many parts of America. Covid-19 could make FI more attainable in Ireland too if it allows more of us to work from home permanently. Why buy in Dublin or commuter counties when you could live/work much more cheaply somewhere else while earning the same money? The Dublin price premium makes FI a pipe dream for those in the capital but it's probably a realistic goal in other parts of Ireland.


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## 50andOut (24 Jul 2020)

Agree with the point ndiddy, although there's also a large amount of luck needed on timing for this to be successful. Buying your house in 2008 vs 2009 for example. The markets for the last 10 years returning on average something like 8-10%. (dont quote me just a rough guess).

I would add:

1. Managing expenses - Ensure you are on top of your regular expenses and search annually for the best options available- car insurance, Gas Electricity, mobile phones, internet, TV. etc

2. The other side of the coin is to focus on increasing what you earn - whether through upskilling a progressive career or else find a side hustle to generate additional €€ (both easier said than done).  Obviously the key is the spend less than you earn - but spend creep is easy as you earn more, there's always something to spend it on. so focus on the necessities, and as soon as you increase in income, throw that first to AVC, Savings, mortgage etc before you increase expenditure,


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## jim (24 Jul 2020)

Nothing new really to add...

1. Maximise income (salary, rental income, etc)
2. Minimise expense (live well within means, dont splurge)
2. Max out avc, as much as possible.
3. Pay as much as possible as early as possible off mortgage.
4. If after 2, 3 and 4 there is still money left over each month, put it into best rate savings available.

All tricky in their own right but if followed will lead to FI at earliest possible stage in life.


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## Gordon Gekko (24 Jul 2020)

There is a balance to be struck between striving to obtain financial independence and enjoying oneself.

I don’t believe in Lidl baked beans as a means to retire early.

The key is to be smart with the pennies (e.g. shop around for utilities), and to be smart with the pounds (e.g. make AVCs, don’t overborrow, etc).

There is also a lot to be said for letting your investments do some of the hard work; far too many people invest unwisely (e.g. too much cash or bonds, chopping and changing in response to markets, etc).


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## jim (24 Jul 2020)

There is of course a trade off to minimising expenses and that of course is you will need to compromise on certain things. Its personal choice as to how much you compromise.

If you can do all of the steps above and be happy, youre sorted.


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## Romulan (24 Jul 2020)

Start with a spreadsheet, laying out your incoming and outgoings.

Its amazing how seeing figures in B&W can help.
Pick your top expense, figure how how you can reduce it then move to the next one and so on.

REVOLUT is great for managing all the small expenses, transfer a set sum and away you go!

I started the OTS (One True Spreadsheet) in 2000 to track money.

Still using it despite all the slagging from family.


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## Steven Barrett (24 Jul 2020)

Index link your savings. Even if you start out small, increase it each year, you won't notice it. Over time it will be significant.


Steven
www.bluewaterfp.ie


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## Ndiddy (24 Jul 2020)

What does it mean to index link your savings?


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## Cloudd (24 Jul 2020)

I'd imagine SBarrett is referring to ETF's or likely a pension fund linked with some kind of Global Equity Fund.

I'm on the second one myself. 37 now and started getting my head around my own finances at 32/33 with an eye on the FI industry, seeing as I barely had a penny to my name then even though I had earned reasonably well in my 20s. I like to think I 'lived' much of it away. But I don't beat myself up about it.

I've massively adjusted my outgoings (aggressively saving for a good deposit for Dublin property) and I'm there.
Zero debt.
My view is keep on the right side of compounding/interest rates and you can't go wrong.

I actively read as much of this stuff as possible and it keeps me in check every time I come close to any impulse comes along to spend.


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## Gordon Gekko (24 Jul 2020)

No, it means saving a fixed amount means saving less over time because of inflation.

By increasing the amount you save, at least in line with inflation, you protect yourself against that.


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## mtk (24 Jul 2020)

Avoid debt except mortgages 
You need Some luck
Avoid waste cigarettes, alcohol , fast food ,
Stay healthy as best you can ( exercise eat well,  stay slim get massages hair done etc) 
Get a qualification
Look for value . 
Avoid buying to keep up with “Jones“
Be the best you that you can be


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## Lucius Lamb (24 Jul 2020)

Cloudd said:


> I've massively adjusted my outgoings (aggressively saving for a good deposit for Dublin property) and I'm there.



Just because you've saved enough to buy in Dublin doesn't mean you should. FI orthodoxy seems to suggest buying where property is cheaper, so that your money goes towards building a financial stash rather than putting a roof over your head.


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## Cloudd (24 Jul 2020)

Lucius Lamb said:


> Just because you've saved enough to buy in Dublin doesn't mean you should. FI orthodoxy seems to suggest buying where property is cheaper, so that your money goes towards building a financial stash rather than putting a roof over your head.



I agree. I'm from the mid-west and only living in Dublin 4.5 years, so very much aware of the difference in the real estate landscape. Many of my friends are on course to be mortgage-free by their mid-late 40s there.


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## SPC100 (25 Jul 2020)

One key thing is to not increase your spend as your salary increases.

Pay yourself first I.e.
Have savings automated. I.e. after your salary arrives in, savings go out.

When you get salary increase, increase your savings by most of your salary increase.


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## SPC100 (25 Jul 2020)

Using Pension (and access from 50 as you mentioned) and rent a room are the main Irish hacks imo.


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## SPC100 (25 Jul 2020)

Don't have debt (other than mortg).

Don't buy new cars.

Focus on optimising your largest annual spend, e.g. best mortgage rate.

When you want something expensive, just wait a little while before you purchase and see if you actually still want and need it.


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## SPC100 (25 Jul 2020)

As others mention don't push yourself to where you feel you are being starved or sacrificing life. You could die tomorrow and have only one life.


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## SPC100 (25 Jul 2020)

Become handy. If you can solve problems/do some basic carpentry, plumbing, maintenance you can reduce costs while being useful and sense if satisfaction.


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## DublinHead54 (25 Jul 2020)

1. Monthly Spreadsheet Tracking savings (cash), investments, pension, debt etc. It is a great way to monitor that you remain on track.
2. Don't increase your spend as your salary increases.
3. Do sweat the small things to a certain extent, and use apps like Revolut to maintain daily spend. 
4. Pay down debt quicker.
5. Keep upskilling or looking for side hustles


I lived in the US and was fascinated by the FI movement, but I did find that often people had a lump sum to begin with that let them buy properties etc to get them going. Whilst Ireland doesn't have some of the benefits in the US, as pointed out our AVCs, low medical and property taxes etc are better.


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## fistophobia (25 Jul 2020)

High savings rate is the key. If you can save 80% for 5 years, you can take next 20 years off. Ignoring inflation, and investment returns. Look up ERE, its for honours students only.


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## 50andOut (27 Jul 2020)

fistophobia said:


> High savings rate is the key. If you can save 80% for 5 years, you can take next 20 years off. Ignoring inflation, and investment returns. Look up ERE, its for honours students only.



This statement is too vague to be meaningful for me and so I do not get this at all.  80% of what - Gross income/net income? What about AVCs/Co. Contr? is that included in the savings figure. Taking off the next 20 years with no understanding of the income vs expense fluctuations from year 1 to 25 - perhaps you could do a simple calculation for the non honours students amongst us?

I haven't looked up ERE yet - have you any references/links for this? be interested to look into

tnx
50+O


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## PGF2016 (27 Jul 2020)

50andOut said:


> This statement is too vague to be meaningful for me and so I do not get this at all.  80% of what - Gross income/net income? What about AVCs/Co. Contr? is that included in the savings figure. Taking off the next 20 years with no understanding of the income vs expense fluctuations from year 1 to 25 - perhaps you could do a simple calculation for the non honours students amongst us?
> 
> I haven't looked up ERE yet - have you any references/links for this? be interested to look into
> 
> ...


Google early retirement extreme. 

It is extreme. Not for the masses.


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## 50andOut (27 Jul 2020)

PGF2016 said:


> Google early retirement extreme.
> 
> It is extreme. Not for the masses.



thanks - searching for ERE on google, goes to info on some dis-functioning body parts  lol

The extreme nature whilst might make interesting reading, as you say is not for the masses - as mentioned earlier, plan ahead but don;t miss out on living for now...


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## fistophobia (28 Jul 2020)

__





						Early Retirement Extreme Wiki
					






					wiki.earlyretirementextreme.com


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## Jim2007 (31 Jul 2020)

Lucius Lamb said:


> Cheap property is one factor that seems to make FI possible in many parts of America.



And yet the average US household reaches retirement age with a net worth of about $22k...


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## Lucius Lamb (31 Jul 2020)

Suppose those who achieve FI are anything but average


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