Loose Change is a series of blog posts by members of the UK Money Bloggers and Content Creators community where they let loose on a financial issue important to them.
Perry from Stupid Is The Norm, tells us how he started his journey to Financial independence in his 50s, and exactly how he did it.
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At age 57, whilst working on minimum wage behind a bar, with no money in the bank and £10,000 of credit card debt, I decided to become wealthy, and gave myself 10 years to achieve it.
By the end of this year (and 5 years into my journey,) my unearned income will be £100,000. Want to know how I did it, then read on.
‘Deciding’ you want to be wealthy, and committing yourself to doing whatever it takes to become wealthy, are two very different things. Fortunately (or unfortunately,) by being stupid with my money all my life, I’d left myself no choice. In 10 years I would reach State Retirement Age, and evidently my current plan to wait until the universe would recognise my genius and give me a million pounds, wasn’t working.
So the first thing I needed was a goal. Something to aim at. After some weeks of deliberation, I decided that if I were sat on a luxurious sailboat moored in some Greek lagoon sipping Margaritas at sundown, and I had the cash to sustain that lifestyle, I would ‘feel’ wealthy. So I carried out my research and discovered I could by a second hand 50’ Beneteau for around £100,000, and with £200,000 in the bank, my wife and I could sail the Mediterranean like pirates. Now I needed a plan to achieve my goal.
A goal without a plan isn’t a goal at all. It’s merely a wish. A prayer. A desire. I’d learned to my cost that just wanting something wasn’t enough to manifest it. I needed a plan. More succinctly, I needed more money.
The first thing I needed to do was rid myself of that £10k in credit card debt. So, I went to the Halifax Bank and borrowed £10k and paid it off in one go. To service the credit cards I had to pay around £440pm. My new personal loan over 5 years was only £220pm. A saving of over £200. PLUS it meant the debt was repaid in 5 years. I had reached a ‘comfortable’ level of debt. I could choose to over pay the loan with the savings I’d made, but would rather save the money in the bank as an emergency fund.
The next thing I needed to do was EARN more money. (It’s easier to earn £1,000pm than save £1,000pm). I was working behind a bar from 5.30pm to 12.30am. This left me the daytime to earn more money. (If I had a daytime job, I would have worked during the evening.) I then became a cab driver during the day from 7.00am to 4.30pm, grabbed something to eat, got changed and went to work behind the bar in the evening. Two full time jobs. Guess what happened to my income? That’s right, it doubled. This I did for 3 months, before deciding to give up the bar work and work full time on the taxis.
For the next two years, I worked 80 hours a week taking only 4 days off (Christmas Day and Boxing Day both years).
It didn’t kill me. My body just adapted. It became the new norm. To achieve something remarkable you need a work/life IMBALANCE.
After 2 years I’d saved £20,000. Enough for a deposit on my first rental property. I bought a lovely 3 bed semi for £63,000. It didn’t need any work and was rented out for £550pm the next month. The mortgage was £87pm and management fees £55pm. A £400pm increase in income.
I bought another 6 months later and didn’t use any of my money. I told my best friend what I was doing and he proposed we bought one together, that he would put the £20k required into this one, and I would do the same for the next one. It made sense to me so after 2.5 years I now had 2 properties. Obviously only half the rent was mine, but it raised unearned taxes income to £600pm.
A year later and 3 years into my journey I’d saved enough for another property similar in cost and revenue to the other 2. I didn’t buy it with my friend because he couldn’t prove income for the lender. This raised unearned income to £1,000pm.
This milestone meant all my household bills were covered by unearned income meaning and reached ‘lean Financial Independence’ in 3 years whilst earning only minimum wage.
I was still working 80 hours a week saving £1,300pm from cabbing, so total savings were around £2300pm.
At this stage, I realised my original goal of wanting to save £300,000 was woefully short of what was achievable. I decided to make £1 million in the same time.
To place this in time, I had achieved this over the Covid period. Then Russia invaded Ukraine driving fuel costs up and interest rates went up 13 times. This reduced the profit from the three rental properties meaning a new strategy was required.
I decided to get into Serviced Accommodation (think of Airbnb but for contractors renting for several months at a time.) The benefits are the rents are ‘daily’ and you get paid several months up front. The downside is it takes twice the money to get into the property (because it’s a larger place,) liability for council tax, utilities and cleaning of the property falls upon the landlord.
In the 5th anniversary of my journey, I’ve just completed on my 4th property and first Serviced Accommodation (SA). It cost me £33,500 for purchase costs and £2,000 to form a Ltd Company structure to buy it through. Rent is £3,150pm, management fees £600, mortgage £350, furniture package £350pm and utilities £500. A net pre tax profit of £1,700. If I assume an 80% occupancy that comes down to around £1,000pm.
My monthly unearned income is now greater than my earned earnings become from cabbing. So after 5 years I achieved Full Financial Independence. My money is working harder than I am.
Monthly savings rate is now £3,300. That and the refinance of my third property in December should mean I have enough cash to buy another SA. At that point gross rents (from two SAs and three BTLs,) will be around £100,000. All done in five and a half years and whilst earning on my minimum wage.
Looking forward to the next five years, I expect to buy one more SA next year and more SAs for each of the remaining four years.
At that point and after 10 years, I forecast net pretax rental income to be around £16,000pm. Net worth is more difficult to estimate, due to property growth being essential and incalculable. However, if I predicted £750,000, I don’t think I’ll be far off. Starting at age 57, from working behind a bar, no savings and £10k of credit card debt.
Some takeaways:
- It’s never too late to start. I was 57.
- You don’t need a good job making lots of money. I was making minimum wage throughout.
- You don’t need to do this by yourself. If you have a friend you can trust to come with you on the journey, then that’s fine. It may even be preferable.
- If you aren’t making enough money, sooner or later you’re going to have to work harder. If you worked 4 hours a day extra Monday to Friday, you’d increase your income by 50%, get eight hours sleep a night and every weekend off. Do that for 10 years whilst investing the extra income and you’ll be a millionaire.
- It’s ok to increase the goal and adapt the plan accordingly. In the Forces we had a saying; the battle plan only survives until first contact with the enemy. Be willing to adapt whilst remaining focused upon the goal.
- Keep at it and keep moving forward. This will take time. Time is one of the three reasons people don’t become wealthy. The other two are hard work and sacrifice.
- It’s all about income. I have a friend who is an ‘on paper’ millionaire. His house is worth £600k, he has a one bed apartment left to him by his father worth £300k and a small pension. He relies on the pension and apartment for income. He can cover bills and afford a budget holiday a year. I am not a millionaire but will have £16k pm income. Which would you rather?
- I appreciate that not everyone wants to become wealthy (or at least they aren’t willing to do what is necessary to become wealthy). How about ‘freedom’ though? Does everyone want freedom? Wealth gives you freedom. Freedom to not work, freedom to go on holiday when you want, freedom to help others without concern for your own situation, freedom to buy, do or have anything you want. The more wealth you have the more freedom you have. The less wealth you have the less free you are.
- There is so much help and goodwill available to you. I’ve been amazed by the free advice and encouragement I’ve received from other investors and social media players along the way. I’m here for you.
You can continue to follow Perry’s journey via his YouTube channel.
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Articles in the Loose Change series are written by members of our community. The views do not necessarily represent those of UK Money Bloggers or other members. The articles should not be taken as financial advice.