10 years out of the Camp: Reader Case Study

The_Good_Life_(logo_for_1975_TV_show)One of the recurring themes of The Escape Artist is that success is easier when we find the (rare) people that have demonstrated success and built a well-balanced life and then listen to them.

This sounds ridiculously obvious but The Escape Artist has observed that most people don’t do this. For some reason, people find it really hard to ask for help.  They ignore advice and the experience of others who have already achieved stuff.

The Escape Artist tries to practice what he preaches, so when I got an email from a reader who’s been out of the Prison Camp for 10 years now, I thought I’d shut the fuck up for a week and instead listen to what this more experienced reader has to say about financial independence.

On 1 September 2014 I celebrated my tenth anniversary of financial independence. Besides confirming that TEA’s advice works, I can confirm how liberating it is to seize control of life and ensure every day is my own. So how did I get here and what have been the highs and lows of life on the outside?

I am a 50 year old married man (no kids) living in the UK. I come from down-to-earth, working-class stock, was raised in a council house by my mother (my dad died when I was young) and had a bog standard education. Nothing exceptional.

My life got interesting via an opportunity when I was twenty on a year’s work experience at the head office of a large retailer. It was 1983, I was sat in front of a PC and was asked to see what I could do with these ‘new fangled’ spreadsheets. Little did I realise that I was boarding a roller coaster ride that lasted the next twenty years and led to FI.

Hang on…. isn’t this supposed to be a story about an escape from drudgery and grinding out a financial position that would allow the two fingered salute to The Man?  In my case, the road to FI was not so tortuous.  There were exciting highs like developing software, starting a company, gaining clients and floating the company. But there were also gut churning lows; cash flow shortages, a business partner quitting and no life outside of the business. There were many reasons to want to escape even though I was “successful”.

Please don’t think this story is about a dot com billionaire and therefore not relevant to others.  Reaching financial independence was not dependent on creating and selling the business. We always saved, paid down our mortgage and built up an investment portfolio from our early twenties. The sale merely accelerated the process.

The business was a minnow in an Information Technology niche so small even I couldn’t see it some days. But the business was profitable and attracted the attention of acquisitive competitors. The shareholders and I graciously accepted such flattery and overnight I went from a company founder to employee number 2938.

The following twelve months were rough. Corporate idiots made crass decisions and slowly smashed all the innovation and creativity out of my business. It took twelve months for me to realise that I was unemployable. They offered me the opportunity to leave.  They hadn’t finished the sentence before I said yes. I have said a prayer of thanks to their CEO every day ever since. Not only had he given me a good return on my investment for my business, but his disdain for me made him kick me out of the nest to enjoy life.

The bedside alarm clock went off on 1st September 2004, the first day I have ever been unemployed and I have never felt more alive. The word I use is ‘liberated’. Ten years later and I still do not take this position for granted. The exhilaration of those first days may have subsided, but the joy of being in control of my own destiny has never gone.

Have I ever regretted my decision to step out of the business world? Never. Did I ever consider going back? Yes, I very nearly did so after only six weeks of freedom. Luckily, my wife helped me see that this was “herd instinct” and I gave it more time before making a decision. It took me twelve months to understand that I could find challenges without being tied down with another full-time job.

I still believe it would be fun to build another business. But I then remind myself of customers who wanted the earth but to pay nothing for it and I weigh that against the pleasure I get from a much simpler life.

So what does a much simpler life look like. Long lie-ins, daytime TV, golf, afternoon naps? No! Like so many people in my position, I find myself overusing the phrase, “I don’t know where the time goes”. I have done more with the last ten years than the previous twenty.

There has been a vast improvement to my health and fitness, and greater time for my wife, family and friends. In addition, a large chunk of the ten years has been spent travelling and on a self build property.  Other projects have included non-exec directorships, developing a property portfolio, Solar PV installation projects as well as managing my own investments.

Whilst running the business, I was unfit and overweight. I would run up a flight of stairs and get out of breathe. Now, I run five or six miles regularly, play tennis and Racketball and most importantly I walk great distances everywhere I can.

I took up photography as a creative outlet in my new life. I booked training courses to learn the technical stuff but made the best progress when I found a mentor who I met with every month. He stretched my creative powers and helped me develop skills I never knew existed. This also opened my previously closed mind to ‘The Arts’: theatre, galleries and literary festivals.

I have developed a vegetable garden as part of living The Good Life. This lead to a new found passion for food and wine. I bought a season ticket for my local football team (something I last did when I was teenager) and followed the team home and away and across Europe.

The travelling is my wife’s passion. However, I would not trade the experiences that I have gained from our adventures and the great people we met along the way. For example, my wife and I lived like locals in New York for a month. We have also travelled widely in India, China, Brazil, the rest of the States and Europe.

The house build was an ambition that both my wife and I had on our wish list for twenty years. We wanted to design and build from scratch and I insisted on being hands-on (despite no prior construction experience). The build was completed two years ago and has been one of the most rewarding things I have ever done. I now have an efficient, bespoke home that costs next to nothing to run.

If I were to reflect on the highs and lows of the last ten years the former has outperformed the latter. FI cannot shield anyone from life’s inevitable sadness such as watching my mother suffer and die from dementia, but at least I could make myself available at her time of need. Some of the highs of FI are subtle – the bandwidth to support friends and family, the opportunity to build a unique relationship with my wife or the ability to just ‘think’.

I felt a little like a pioneer when we first embarked on this journey and there were times when the experience was a little lonely in the absence of FI buddies. It is not so much that they were trapped in the prison camp and unable to ‘come out to play’, it was more to do with being sensitive to their situation and not wanting to appear to gloat about ours. Gradually, a number of our friends have been encouraged to join the growing community of escapees in the independent state of FI.

I have a simple investment strategy. The majority of my equity portfolio is held via a diverse range of index trackers or investment trusts. I haven’t got sufficient interest in carrying out the necessary research in individual companies. The worst investments I made were recommended ‘buys’ suggested by wealth managers – an expensive lesson never to be repeated.  For this reason I have concentrated on a passive investment strategy and put my effort into making sure the asset mix is well balanced and diversified.  My asset allocation is currently 40% Residential Property, 35% Equities and 25% Fixed Income.

The cornerstone of my personal financial strategy is that I have always despised debt.  My living expenses are low and our net income is over three times our living expenses. The annual surplus is used to fund travel, the projects we choose to do, or philanthropy. My future plans include setting up a charitable foundation, to publish some of my photographic work and to start an aquaponic growing project.

In summary, in the words of Dicky Fox from the film Jerry McGuire; “I love my wife, I love my life…. I wish you my kind of success“.

I sincerely hope this is not viewed as smug or self righteous. Yes, I took the great opportunities presented to me and overshot the level of investment portfolio needed for FI as a result. However, regardless of the size of investment portfolio, the principles that TEA writes about are a sound basis for achieving this goal. I merely want to share my experience to help show it worked for me. I believe ten years of sustaining a FI lifestyle is a pretty good proof of concept

“Billybow”.

I think this story illustrates several interesting aspects of FI.  It would be easy for a reader to dismiss this story as not applicable to their job situation. I think that would be a mistake. Yes, Billybow ended up a rich entrepreneur, but he worked and saved hard, invested, took risks and embraced opportunities to achieve success…and this was far from guaranteed.

What I found most useful personally was the reminder of the temptation to go back into the Prison Camp to find routine, rather than take the scarier but more rewarding path of true freedom outside the Camp.

Its not easy to hear the story of successful FIers (they are often modest introverts and so hard to find) so thanks to Billybow for sharing. If you have a question for him, you can ask this via the comments section below.

19 comments

  1. A great story, full of inspiration.

    I can recognise a lot of similarities with me in the story: vegetable garden, property investment, love of photography and a desire to self build. The only real difference is of course I’m still in the prison camp, seeking the capital to realise a similar situation!

    It would be good to know if the asset allocation is intentional. I am heavily long residential property and have been thinking recently about what my ideal allocation is, and of course how long it will take me to get there. Was the 40% property allocation by design or just a function of the large unit size of BTL ‘trades’?

    1. Hi,

      Thanks for the comments. In answer to your question; the asset allocation is on its way to where I intend it to be!

      In 2003 just after the sale, my position was 60% Cash and 40% Equities but 20% of this equity was in one stock, the company that acquired my business. It has been a continuous job to shape the portfolio since and it was my aim to build an investment portfolio for this new phase that had a mix of property and equities – Day one, I had no idea what the allocation should be, I had to learn quick.

      The properties were bought individually since 2004 and I would buy more if I could find any that meet my criteria. My target allocation is 50% property, 35% equities and 15% fixed income ie I want to reduce the lower yielding fixed income part of my portfolio. I believe this will give good capital growth whilst delivering a decent income with acceptable levels of risk.

      I hope all goes well for you.

  2. Hi TEA,

    Great story, thank you for sharing that with us. I find these posts hugely motivating and reassuring.

    Huw

    1. Huw

      Thank you, glad you enjoyed it – nice to see you becoming a champion commenter!

      TEA

  3. This is a great story that resonates with me at many levels. I am only a year into FI and find this of great encouragement, albeit my first year has been one of richest (in the non financial sense) of my life.

    I love the following section of his story. It is as though someone else wrote my own thoughts after the sale of my business “The following twelve months were rough. Corporate idiots made crass decisions and slowly smashed all the innovation and creativity out of my business. It took twelve months for me to realise that I was unemployable. They offered me the opportunity to leave. They hadn’t finished the sentence before I said yes. I have said a prayer of thanks to their CEO every day ever since. Not only had he given me a good return on my investment for my business, but his disdain for me made him kick me out of the nest to enjoy life“.

    Priceless in every sense.

    Keep up the blogging.

    Philip

    1. Philip,

      Many thanks for the comment. In my experience, the longer you are FI, the more you enjoy it!

      I hope all continues to go well for you.

  4. Amazing! Sounds like FI has been outstandingly positive.

    Was it pretty rough during the ‘crash’ in 2007/08? Must have been tempting at this point to go back to work for the ‘Man’, at least at some level?

    How did you decide that you had enough invested to go FI? The more I read and research, it seems there a lots of theories and rules of thumb, but perhaps the best thing to do is to just go for it?

    Thanks for sharing 🙂

    Mr Z

    1. Hi Mr Z,

      The 2007/8 meltdown was more than a little scary for me. I had considerable sums invested with AIG and Northern Rock at the time, but fortunately ‘saw the writing on the wall’ and got out unscathed. But it served as a wake up call and a real lesson in risk management.

      It was tempting to consider going back into business at this point, but not for the reasons that you might think. My business had always thrived in the tough economic times but did less well when the economy was buoyant. I could see a lot of opportunities in 2008 and wondered if I should dive back in. Then I remembered past clients who wanted something for nothing, pay three months late and still moan about the excellent service.

      ‘How much is enough?’ is always going to be the pivotal question of FI. I can’t add much to TEA’s recent excellent post on this topic. However, there was little guidance on the topic ten years ago, so I built a very complicated spreadsheet in which I built a model that assumed my wife and I might live until we were one hundred, rampant inflation, low interest rates and scenarios with the aim of avoiding us being the richest people in the cemetery. Spookily, my spreadsheet proved that SWR is around 4%.

      Thanks for the comments!

      1. Hi,

        Haha, that is spooky. Adds more credence to the 4% rule though!

  5. This is one of the best stories I’ve read in a while!

    It is always extremely insightful to look into the life of someone who has been living an FI life. It is nothing short of validation to what we’re working towards.

    Question to story contributor: Understand that you’ve been living an FI life for the past 10 years. But how long did it take you to achieve it?

    Many thanks to TEA and ‘reader’ for sharing this reassuring piece.

    1. Hi Josh,

      I am delighted you enjoyed the story.

      To achieve FI, I went self-employed in 1989 as a freelance business analyst and started the software busines in 1995. It was floated in 2000 and sold in 2003. So it took 11-14 years to achieve a monetary value of FI but it took a few years longer to realise it was a good stepping off point.

  6. Great to read, very inspirational and sounds like you’ve had a very interesting life! I agree that most FI types are probably introverted hence not so many blogs about that compared to, say, people who have got themselves into a load of debt, are paying it off and deciding to shout out from the rooftops about it. It is also by nature not very conspicuous, compared to… Erm… Conspicuous consumption (obviously).

    Question: did you save and invest, pay down the mortgage always with one eye on being FI, or did you just think it was good financial sense, and then one day you realised that if you wanted to, you would no longer have to work (or that one day soon that would be possible). Did you read any books on the subject early on in life?

    Cheers!

    1. Billybow · · Reply

      Thanks for the comment.

      I am by nature a saver and had built an investment portfolio many years before I started the business – monthly purchases of a PEP (i.e. an ISA). I also paid off my mortgage as soon as I could. The acquisition simply expedited my journey to FI.

      I don’t recall reading any books on the subject of FI but I read various books about successful businessmen/women – Bill Gates, Richard Branson, Sam Walton…. because at that stage all of my thoughts were focused on how to grow the business.

      1. Thanks for the reply Billybow.

        Sounds very much like TEA’s advice of finding a guru and trying to emulate them!

  7. Awesome story, thanks to Billybow and TEA for sharing and resharing respectively.

    Also some good points in the comments, I especially like the theory of why there aren’t many FI blogs out there with people who are FI, likely introverts who are fine not having to share, where a lot of the paying off debt people do seem more extroverted. I’m working the plan to FI, still likely 12 years or so off and would like to blog about it, but am staunchly introverted and don’t know if I have the drive to do so consistently.

    1. Sundeep – Thanks for the comment. When I was in the Prison Camp I often felt like I was in solitary confinement…so one of the drivers for writing this blog is to let people in the Camp know 1) there is hope 2) there are lots of other like minded people around…if you can spot them and 3) to help connect those people.

  8. Great story Billybow and congratulations, many people aim for FI but you are living proof of it.

    Were you not on an earn out? You were fortunate to be let go early, normally buyouts are not clean

    I bet now it all seems like a long time ago to you? Do you have anything at all to do with the company you founded or its clients?

    I fancy a go at Aquaponics too, need some time and space first though. Would be interested to learn how you get on with that.

    BTS

    1. Billybow · · Reply

      BTS – thanks for taking the time to comment and your kind words. In answer to your questions:-

      I was fortunate to be able to engineer a clean break (or a perhaps it was foresight during the sale negotiations) as there was no earn out and there were no other incentives or ties to keep me at the firm. However, I understand your point BTS. Earn-outs can get very messy and it normally leads to a chalked countdown on the cell wall!

      It does seem like it all happened in another lifetime but I am still in contact with many of the old team. I now have the pleasure of seeing them purely as friends rather than colleagues/employees. I have no connections to the business or the industry and have little interest in it any longer.

      I will let you know if the Aquaponics works out. The local aquaponic supplier seems to be struggling with the concept that I only want to grow fruit and veg!

  9. Many thanks for sharing Billybow / TEA. I’ve a very similar background and path through, although perhaps less successful and certainly a few years behind. I still do the occasional freelance thing as I continue to find it an intellectual challenge (less so every passing year), your comment on being kicked out of the nest made me smile and remember that there are other less tangible aspects of working that I frankly miss. However right now, the richness of family life, lack of pointless stress/anxiety and feeling of self ownership more than compensate.

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