Post financial independence, post Brexit, what next

FIRE in Cyprus?

There are now literally hundreds of personal finance bloggers out there in cyberspace with many of them blogging about trying to reach financial independence.  Some are more extreme than others but I have now started to see a distinct pattern that separates them into at least two categories.  The first are those where reaching financial independence in just a few short years was a doddle and where life since early retirement has been a bed of roses with low spending, plenty of international travel, new cars, new homes and nothing ever going wrong.  Then there are those where stuff, including negative stuff, happens.  The journey to FIRE maybe takes determination, maybe their company gets bought out with redundancy coming relatively soon after, maybe their company simply doesn’t agree with their lifestyle choices causing a rethink or just maybe early retirement was not for them so they have returned to work.

I’ve started to call the first the blogs that are selling a life and the second the blogs that are living a life.  I’ve also pretty much stopped reading the former as they no longer resonate with me as my journey has and continues to be much more like the second type.  If you however prefer the first type then I’d suggest you move onto your next piece of Saturday reading as this post will likely disappoint.

I’m now coming up on 3 months of financial independence (FI) and the one thing I’ve been trying to leave via FIRE (financially independent retired early), work, has already become a very different place.  My workplace and the career I chose is one that is very focused on the financial top and bottom lines.  This means that it’s no secret that as soon as my job can be done by somebody else cheaper or more efficiently in the world then I won’t have a job.  It’s also one where if you perform well you can do well financially, and I have, but also one where even average performance will result in you quickly finding yourself without a job.  For me this has helped with my rapid progress to FI (of course it’s taken a number of other choices as well) but it’s come with the sword of Damocles always in full view.  3 months ago that sword was taken away and it’s made a big difference.  It’s firstly just simply removed a weight from my shoulders as out sourcing or average performance will now just result in a nice pay off, which I negotiated some time ago when I seriously looked to move on but was still a golden child, which will further bolster my wealth nicely and result in me simply sailing off into the FIRE sunshine.  Additionally, to ensure continuous success one technique I’ve used over the years is to work very hard which gives me extra time to drive the risk out of every decision I make.  The ramifications of this are pretty long days but it did help with surety of tenure.  Since FI I’ve started to take now take more risk as there are now no downsides personally.  So far this has me back to peak performance, having dipped for a few months following extra work load, but I’m also working slightly less hours and that 0.5 – 1 hour less work per day has put a spring back in my step.  It’s still not the place I’d choose to be Monday to Friday and FIRE is still very much in view but it’s a lot better post FI then pre.

Over the summer we also continued our Mediterranean early retirement research with a few weeks in the Paphos area of Cyprus.  All I can say is that for us it is a dream location although Mrs RIT still has an inkling for the Marbella area of Spain so some discussion still ensues.  So many opportunities for a more outdoor lifestyle including ocean swimming, hiking and cycling.  A much more relaxed way of life and financially my assumptions, in Euro’s, weren’t far off with the life we’d like to live likely costing EUR23k per annum.  Within our control the only negative is that I think we may have become a little greedy home wise.  Let me demonstrate with a simple example.  This is the view EUR345,000 buys you plus you’re only a few minutes walk from restaurants, Coral Bay is just a few minutes drive away and Paphos is a beautiful coast road away.

Click to enlarge, sea views from a EUR345,000 Tala, Cyprus home

In contrast this is the view that EUR295,000 buys but it comes with restaurants that are a short car journey away and Paphos is at least 20 minutes on a motorway away.

Click to enlarge, sea glimpses from a EUR295,000 Secret Valley, Cyprus home

These are definitely first world problems but the way I’m weighing them up is that the difference is a few months of work versus a potential 40 years of living in homes like that.

Outside my control we also have the fallout from the Brexit vote starting to appear including talk from Theresa May about hard Brexit.  At the point of FI our Med home purchase might have consumed 21% of my wealth.  Today, with exchange rates falling resulting in my wealth essentially going nowhere in Euro terms (ok it’s up EUR28,000 since Brexit) and a bit more home it’s already creeping to 25% of current wealth.  On top of that a hard Brexit and Med move could result in no State Pension triple lock and no free healthcare post State Pension age to name but two.

Let’s contrast that with our UK FIRE idea that includes a move from the South East.  Day to day living costs between Cyprus and the UK will of course be different.  For example ‘Council Tax’ in the UK could approach £1,800-£2,000 per annum where in Cyprus it could be as low as EUR140 but on the flip side in the UK we can use the NHS for ‘free’ while in Cyprus private healthcare would set us back EUR1,850 per annum and that will increase as we age.  On the whole while there are differences I don’t believe the total annual costs will be that different with the UK around £21,000 and Cyprus as mentioned above at about EUR23,000.

Where there was a big difference was the cost of a home.  Our UK dream consists of a self built modest low energy use oak framed home with a bit of land.  We think that will cost us circa £400,000, with the land being a significant portion of that, which at the time of calling FI would have consumed 39% of our wealth making it a no go financially swinging everything in favour of Cyprus.

Click to enlarge, Oak framed home for anyone, this one’s from Border Oak

Today, that’s a very different story given my wealth has grown £150,000 since Brexit.  All of a sudden that 39% is 36% and falling fast with new money, £ devaluation and limited inflation (for now).  Work just a little less than 12 months more and that dream is also a reality.  We’re taking it seriously enough to pull some plans together and get a level deeper cost wise.

So what’s the answer I hear you ask?  Unfortunately, we don’t yet know and it’s why I gave the switch off now warning as I started these musings.  What I do know is that I feel incredibly fortunate to have the problems I now have and if given my time again to choose to race to FI in less than 9 years or live a more consumerist conventional life I’d do exactly the same thing again.

What would you do if you were me?