I’m 28, and can’t figure out how to start on FatFIRE – what would you do in my shoes?

From: Taz
To: FvL

Hi FvL

I’ve read your blog on and off for the past year or three. I graduated from the London School of Economics in 2017 after which I went through the hardest few years of my life mentally and ended up unemployed or in dead-end low paid jobs.

I currently work in the motor trade for Jaguar Land Rover earning £35,000 which I can save most of as I live at home.

I’m now 28 and can’t seem to figure out how to begin my FatFIRE journey, in terms of a job/career what would you do in my shoes?

Kind regards,

Taz

[details amended slightly to preserve confidentiality]

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From: FvL
To: Taz

Thanks for your question.

If you are saving a decent portion of your earnings then that is a good start.  However based on you living at home it arguably isn’t yet a long term sustainable position – because to be truly FatFIRE you will need to pay for your own housing too.

The best way to jumpstart a FatFIRE position is to create some wealth – which the most practical way of doing is by creating a business.  A business which either earns good money or which you could sell. A professional qualification could help here – for instance as an accountant or lawyer you can end up with a practice with clients, and other accountants/lawyers will pay for books of business – so buy them off you at some point.  This isn’t a quick option but it is a fairly proven way to generate a few hundred thousand pounds worth of wealth.

Another angle here is via property investment.  You can either create value by doing places up, or apply leverage to multiply your gains. Both have become much harder however and I am not convinced that the current environment or your skillset/etc (based on v limited information!) suggests property is a good way to go for you.

More generally, pay close attention to what’s around you and think laterally.  I don’t know much about the UK motor trade but are there opportunities in your space?  I presume you know more than most about cars.  Maybe there are people you know in the motor trade who go on to set up businesses – can you get involved?  Can you help?  Are there new growth industries which need your skill set – can you be ready for them?  To pick a random example – perhaps military drones need your sort of motor trade skills for instance and maybe there is room to set up a specialist supplier for the drone industry. Or is there a new funky way of doing your type of motor work – can you get ahead of the curve, train yourself, be ready when people start looking for ‘motorwork 2.0 people’.  

And meanwhile, while you are saving, make sure to invest sensibly.  If you follow my blog, and Monevator.com, and practice what we preach you will be in a sensible place.  Use ISAs.  Invest in low cost ETFs – thinks like VWRL, VUSA, IUSA, VUKE.  Reinvest dividends.  Don’t try to trade individual stocks – buy, don’t sell.  The ‘slow & steady portfolio’ on Monevator is a reasonably good thing to copy.  Or just open a Nutmeg/Moneybox/etc account and keep funnelling money into it. Try not to look at it more than once a month.

If your employer offers a matching pension arrangement (e.g. for every extra 1% you contribute, the employer will match it up to X%), be sure to consider that.

And of course, when you get a payrise, try not to let your costs rise too.  One way to think about that is to ‘reward’ yourself with an increased spending budget, but ensuring that your spending increase is smaller than your (after tax) pay rise.  For instance if you get a £2k payrise, call it £100 pcm after tax, reward yourself with say a £40 pcm increase in spending/budget.  And increase your savings by the rest – i.e. put £60pcm more into savings.  That way around a pay rise does slowly improve your lifestyle, but your savings will increase faster. Most likely that £40pcm increase in costs will beat inflation, but your savings will increase much faster, and your FIRE moment will approach much faster as a result.

Those are the thoughts that strike me.  Hopefully something here will give you something to work on.  Good luck!

Best wishes

FvL