Hi my name is Drew. I’m 25, live in England and I have an unquenchable thirst for travel.
There, that feels better. Cathartic, like an alcoholic at their first AA meeting.
I started a new job in the latter half of 2016. It’s the kind of job to make your parents proud. A three year grad scheme with a national institution training to become a finance manager. Brill.
My partner and I were very fortunate last year as we now have a mortgage on our own home. I’ll write about that in another post. But everything aligned when we came back from travelling; it was hard work, a lot of research, supportive relatives and good ol’ luck that enabled it to happen. The upshot of this is that we pay less for our mortgage every month than we would be paying in rent for a smaller property. Absurd. Moreover, we can tell ourselves that every mortgage payment is a step closer to owning the house outright. Although, having recently reviewed how little of our payments have gone towards paying off the principal, to-date those steps have been pretty small. Boring stuff I know but it forms a fundamental part of our five year plan towards leaving our jobs and travelling the world.
Anyway, so I should be happy, right?
All that glitters isn’t Oz.
The problem with deciding to spend a year in a warm, prosperous country is that when you get home you realise how much better things could be. Not only that, but also the realisation that there is so much more out there and so many amazing and wondrous places and people to meet. I’m almost certain this is an attitude shared by the majority of people who have travelled at some point in their lives. What’s more, this is compounded by the fact that this ‘wanderlust’ attitude is not shared by those around you when you come home. They think you’ve got it out of your system; that it’s a bullet point on your checklist that’s been ticked-off, just like learning to drive, and you can settle down now and start being a ‘real’ adult: wrong.
I sit at work and I feel like an outsider. Like everyone else is living their daily routines and are oblivious to the wonders of this planet. It’s good as it reminds me what I’m working towards. And yes, it’s pretty tough at times. All I want to do is pack-up and go on another working holiday to Canada or New Zealand, maybe even teach English in South America. However, what keeps me going is our five year plan and knowing that it’ll enable us to realise our travel dreams.
Travelling with a secure future
The issue for us was that we wanted to travel but we also wanted to plan for a secure future. In this I mean that we didn’t want to be in our 40s working pay cheque to pay cheque without any real savings or equity. Also, if we want to move to Australia then one of us will need a valid vocation to qualify for a visa (this is why I’m currently training to become an accountant).
This isn’t for everyone. I know and have met people, on my travels, who save some money at home go off for a few months and then come back and start from scratch again. Others are happy to work low-skilled jobs because they have a great work/life balance and live in places like Whitsunday Islands in Australia. I would just worry too much about what happens if and when you want kids, or tire of the lifestyle. We need options and that’s why we came up with our plan.
The plan is ambitious but has grounding in reality and is achievable if we work hard.
- We plan to leave the UK in late 2022 to either first teach English in South America (most likely Chile) to submerge ourselves in the culture and learn another language.
- Or we could go straight to Oz and then plan a Chile adventure after this. Regardless, the plan is to live and work in Oz.
- We will have paid off or be near to paying off all of our mortgage. Either rent out the house and use the income to support our living; sell the house to release the cash to invest in shares or possibly buy a smaller, better-conditioned property which will be easier to let from a distance.
- I will have qualified as a Chartered Accountant with five years experience
- My partner will have completed her masters and have 4 years experience in the Law industry
- We will have £20,000+ in savings to support us whilst travelling and help start a new life in Oz.
How will we do this financially?
So this sounds like fairyland territory; expecting to generate a considerable sum of money in just 5 years.
Although we’re paying monthly mortgage repayments, most of the money is currently going on interest repayments. However, once we start making over-payments this will have a considerable effect on the outstanding balance of the mortgage.
To compound the problem I am the only one earning at the moment – with my current salary significantly lower than the 2017/18 national median average for a starting graduate position. Sounds crazy right? Impossible even? Well..
Annual salary increases are built into my contract. I’m currently on a three year training scheme so as long as I pass my accounting exams and perform well at work I will receive annual increases. Moreover, once qualified my salary will increase significantly.
Rosie is currently studying for a masters in Law. She has an amazing academic record as well as relevant and impressive work experience. Most of the jobs she is looking at are mid £20k
Clearly, this is not enough. We need to accumulate considerable savings if we want to achieve our goals.
There is hope: Rent a Room
I saw the potential of our house the first time I saw it on rightmove.co.uk. It wasn’t in the best shape but this meant we could afford it. What made it stand out was that the loft had been converted into a bedroom with an en-suite and a balcony of views over the town. Features which would attract a lodger.
However, there was a very real problem with this idea: we didn’t want to share our new house with someone else. This is something we struggled with, especially as a lot of work went into installing a new kitchen by Rosie’s dad and me – electrics, flooring, the lot. We didn’t want someone to come in and wreck the place. Also, there’s the issue of the unknown. What if they bring people back? How do you set ground rules? I also had reservations as a friend had asked about moving-in a few months before and we’d decided we didn’t want to let the room. However, things changed when we reviewed our finances and applied this to our ‘5 year plan’. When the issue was turned into a financial decision it became easier to rationalise having a lodger. I’m keen to go into detail on this in a future blog. For now, back to the plan.
Basically, with a bit of work, I brought the room up-to-scratch and we advertised it for rent. This is taking advantage of the UK government scheme for having lodger rental income up to £7500 tax-free per year.
We charge our lodger £460/month and this is inclusive of all bills etc. They arrived in mid-February so now we have a tax-free source of income to pay towards expenses. Moreover, if we rent the room for 5 years we can expect a total tax-free income in excess of £25000. This is a game changer as it brings our potential earnings after tax to a level that could feasibly pay-off the mortgage with liquid cash to travel on.
Of course, one of the ways we are hoping to achieve this is through tightening our control on expenditure.
We were spending between £50-100/week on food shops. We’d shop at Aldi and just put whatever we wanted in the basket. On top of this we would buy extra bits from a local supermarket during the week, usually between £20-50/week. We may have had a takeaway every other week which averaged out to £10/week. So we’re looking at between £80-£160/week on food alone.
Obviously this is somewhere where there is a large potential for savings. Our weekly food shop is now between £50-£60/week but this removes the need to visit Morrisons for extras. We did this by being realistic with ourselves. Rosie is an habitual snacker; I’m not much better. We go to Aldi, tell ourselves one chocolate bar will be sufficient for the week and then come a couple days later we’re down to Morrisons to get some ‘bits’. So by coming to terms with this and by adapting our budget and spending accordingly we have got rid of the need to spend extra through the week. We have cut out takeaways and now do a complete shop at Aldi. We have started to buy the cheaper brands but will still eat healthily as we both regularly get in excess of 8 portions of fruit or veg a day. It means we buy chocolate, crisps, frozen deserts, crumble, emergency £1 pizza and 50p mozzarella so we don’t end up buying a £20 Dominos – whatever we think we’ll crave in the week. It sounds crazy, maybe a little unhealthy, but it’s working for us in terms of our savings goal.
This means, according to our previous figures, minimum savings of £20/week and maximum of £100/week. Astonishingly, this works out over the 5 years to be between £5200 & £26000 of savings!!!! That’s insane! Try it yourself. Have an honest look at what you spend every week; not just your weekly shop but everything. See if there are any areas where you can make some material savings.
Another area where we can make relatively easy savings is through our energy bills. Our monthly direct debit was due to rise 46% because we had been using a lot of fuel. I managed to shop around on a comparison website (USwitch) and found a much better deal. At the same time, we reduced our usage. We lowered the overall thermostat temperature and also shortened the periods when the heating would come on (an hour in the morning and a couple hours in the evening). We’ve adapted to this with some thick socks and layers of clothes. The lodger has two eco-electric wall-mounted heaters in her room which are under her control, so she won’t go cold.
Why we will achieve this
We are going to achieve this because we are intensely driven. I appreciate that for a lot of people this is out of the question and that money isn’t an issue for others. But if you have a mortgage and a spare room, maybe you could rent it out. Maybe you are renting and have a spare room, could you sub-let one of them out? If you don’t have the option to let then get creative. Maybe you rent a studio; could you rent out your room and sleep on the couch/futon for a few months? What about downsizing and moving into shared accommodation?
To the future
It won’t be easy but hopefully we’ll be writing in 5 years time about the flight tickets we’ve just bought, about the mortgage we’ve paid off and the savings we’ve managed to accumulate. Subscribe to the blog at the bottom of this page for updates.
If you enjoyed the post, please leave a like and comment below.