Somehow, a whole year has passed since we started blogging on A Way to Less! We’ve learnt a lot in the last 12 months and our circumstances have changed quite significantly!

Despite everything that has changed, we continue to make progress towards our FIRE numbers and keep making small improvements to our overall lifestyle.  

FIRE Progress 

Due to our ‘FIRE Trial Run‘ in Africa and having to buy a new car, we haven’t saved as much as we would have liked this year. We’ve still made significant contributions to our ISA accounts though, and the growth of our balances continues to amaze us.  

Obviously we’re well aware the markets are on an incredible run recently, so we try not to get too carried away with the exact numbers – you never know what’s around the corner! (I wrote this a couple of weeks ago – rather amusing to leave it in here!! Hope you’re all well and managing not to panic-sell) 

So far at A Way to Less, we’ve focussed entirely on the spending side of our finances, preferring to keep our savings private. We’ve been thinking about this recently and decided to give you a sneak peek of our FI funds in this yearly update! 

As we keep our finances separate we’ll detail Mr Way’s and Miss Way’s FI funds separately too. 

Mr Way 

Mr Way has been on his FIRE journey longer and therefore is slightly further ahead in FI fund accumulation. He also has the benefit of a workplace pension which Miss Way doesn’t have due to being self-employed. The pension is matched up to 4% by his employer, so this is what he contributes.  

The overall strategy so far has been to maximise ISA contributions. This is so that the money is accessible (before age 55) to meet Mr Way’s goal of early retirement. 

The table below gives a summary of Mr Way’s current ‘FI Fund’ balances. 

Account	Balance
Stocks & Shares ISA	£70,400
Workplace Pension	£17,200
SIPP	£3,800
Total	£91,400

This means Mr Way is 24.4% to FI!

Of course, these balances looked much healthier a couple of weeks ago. Mr Way had calculated he was 30.3% to FI in our New Year’s update!

Nobody knows how much further markets may dip, but we’ll be continuing to drip-feed our monthly contributions in. Over the time-frame we’re looking at, it’s bound to come back at some point.

If we can continue saving 50% plus on average, which should be achievable, Mr Way should reach FI within 10 years. This nicely coincides with his 40th Birthday! 

Mr Way also has an emergency fund of £5,000 which isn’t included here, as it will simply always be ring-fenced for emergencies. Who knows, one such event may be imminent depending how the economy reacts to the Coronavirus fallout.

House Equity

We also have around £75,000 of equity in our house between the 2 of us. We don’t include this in our ‘FI fund’ figure though. Our current spending (~£15k each per year) includes mortgage payments, but once paid off we would simply divert these extra funds into an increased holiday budget to make the most of our retirement! 

At our current rate of overpayment, we would have our mortgage paid off by around the same date as Mr Way hits FI status. We may well move to a more expensive property in the meantime, but the impact of this would have to be carefully considered! 

ISA v SIPP

Going forward, Mr Way may tilt the balance more towards pension contributions than ISA. This is down to a combination of factors.  

Reading the recent Monevator article brought the benefits of pension contributions to the forefront of our thinking.  

In addition, Mr Way is fast approaching the higher tax rate band. Anything earnt over this amount would certainly be contributed to pensions due to the tax relief (currently) available. 

As well as the above, Mr Way has recently been producing documentation to try and convince his employer to adopt a salary sacrifice pension scheme. This type of scheme brings benefits for both the employer and employee and Mr Way is hopeful his hard work may pay off soon!  

If this scheme does become available, a significant sum would be diverted through it.  

Finally, the decision has been helped by the amount already diverted into ISA accounts. The main purpose of these accounts in UK FIRE strategy is to bridge the gap between stopping work and reaching pension age. As Mr Way has a significant sum now in ISAs, he has more leeway to pad the pension accounts while the ISAs continue to grow.  

Miss Way 

Miss Way started her FIRE journey a few years after Mr Way, but is quickly catching up!! 

Over the last 12 months she has maxed her ISA allowance. Due to being partly PAYE (employed) and partly self-employed, she has partial contributions to the Teacher’s Pension Scheme. This means her situation is slightly more complicated! 

The table below gives a summary of Miss Way’s current ‘FI Fund’ balance. 

Account	Balance
Stocks & Shares ISA	£47,400
Total	£47,400

This means Miss Way is 12.6% to FI!

The above figure ignores Miss Way’s pension. The Teacher’s Pension is a defined benefit system. It is available from age 60. Unfortunately we don’t currently know how much Miss Way is eligible for so far, because their system is useless!

As we discussed in our New Year update, Miss Way is always likely to maintain some form of work, even post-FIRE. She finds the structure this provides benefits her mental health and general productivity levels. As such, she doesn’t technically need a full FI Fund in the same way as Mr Way. Considering this, she’s in a very strong position already! 

The Year Ahead 

With Baby Way coming soon, we aren’t expecting to have any large expenses (holidays, cars etc) in the coming year. This means we should be able to stick to our average spending of under £15,000 per year each.  

We’re excited to see how this plan progresses through the year ahead. In Baby Impact Assessment we detailed how our income will be affected by Miss Way going onto maternity leave and Mr Way reducing his work week to 4 days.

Overall we’re set to reduce our income by around £15,484 within the first year and a bit. After that, Miss Way will run out of maternity pay and things get a bit less clear. We need to find a balance we’re happy with between working and childcare. We aren’t quite sure how that looks yet! 

Another significant event on the horizon is our wedding! We’ve booked our venue for July 2021. There’s still a lot of planning to do, preferably before Baby Way arrives!! 

As we’ve mentioned before, we’re very lucky to have been offered significant help towards out wedding costs from both sets of parents. This, combined with our frugal approach, should mean the cost to us personally is small. We’ll continue to detail all wedding spending in our Monthly Spending Posts. This includes whether we’ve paid for each item ourselves or not! 

Other potential significant changes we’ve discussed numerous times include possibly moving house and/or working abroad. We continue to assess our options with both and will see what the future brings! 

Despite these changes, we are still expecting to hit savings rates of around 40% in the coming 12 months.  

We look forward to meeting these goals and hope we’ll be providing a positive update at this time next year!  

A Way to Less 

We really hope you continue to find value in our blog posts. We cover quite a diverse range of topics, simply based on what we’re doing/interested in at the time. Our plan is to continue documenting every penny we spend in the hope this provides an example of how you can live well for relatively little expense.  

If there are any particular topics you want us to cover more, please get in touch. We’d love to know what you find the most value in! 

Here’s to another fun year of blogging at A Way to Less!