Loopholes to F.I.R.E.

Firstly- this is no “get rich quick”, these are just some of the loopholes that you could use to get to your FIRE number earlier than not using them. That, of course, doesn’t mean that you have to use them- they might not work for you. Increasing your savings rate is the quickest way to FIRE- if you earn £200k but only save £1k, you are never going to retire. MrMoneyMustache has this great article here that goes into more detail- but this table shows it all:

Increase main income first

If this isn’t obvious- then you must be very early on your FIRE journey. The quickest/biggest thing you can do is to increase the income at the job you work at everyday first. This could be by learning new/more skills, doing more qualifications, or just job hopping as you move up the job ladder until you income increases. Imagine for a moment that you manage to cut your grocery bill by 20% (from £300 to £240 a month), that adds up to a saving of £720 a year. Nothing to sniff at right? Well, what if you manage to secure (a normally good- ignoring current inflation for the moment) rise of 5%? From, say, £25,000 to £26,000, you suddenly have £667 (after tax/pension) to spend, almost the saving you made on your groceries. That’s not to say you can’t do both as well.

Reduce renting/owning costs

The number one expense for everybody is housing. It’s expensive pretty much to own or rent in the UK. There are obvious exceptions to this (housing is way cheaper in the North for example), but for most its the largest bill that you will have. So, look to reduce this- live somewhere cheaper and commute (or WFH), share with friends, take in a lodger (tax free!), live with your parents (eww, but if its a means to an end). Just remember that every pound you can save here, is money you can put into investments to FIRE earlier.

Use cashback wherever possible

There are some things that you cannot avoid buying (food) and some things you just want to buy. If you aren’t getting cashback on every single purchase you are just wasting money. Sure, credit card rewards aren’t great in the UK compared to other countries- you can still get 1% generally. With introduction offers timed well (eg. before a nice holiday/large purchase) you can generally find 3-5% off for a short period (or reward limited). Use these wisely- and don’t spend just for the cashback!

There are also cashback sites like Topcashback that will pay a percentage back into your account. Which you can then later withdraw as cash (or vouchers worth 100%+ of the value). Again, don’t buy things that you weren’t already going to, but for things like broadband/mobiles/insurance etc, it’s a great way to build some extra cash. I’m up to way over £2k from using topcashback over the years.

Make your bank work for you

I don’t think that anybody really likes their bank account (maybe fintech Monzo/Tandem/Starling apart), so why are you still with them? Every year or so, various banks have switching offers to try and seduce you to move to them. With the current account switching service (CASS), its now as simple as filling out a form as you sign up to the new bank account and they will move your direct debits, the money and for at least 13 months (more like 36 months) old payments will also be forwarded to your new account. MoneySavingExpert keeps this page up to date with all the best bank accounts.

Don’t run a car

So, this is going to sound pretty crazy- but bare with me for moment. How much (per mile) do you think your car costs you? About 15p with petrol/diesel at it’s current prices? What if I told you its actually about 6x that price at about £1 per mile (if not even higher with a nice car on PCP). I’ve written in more detail about this here if you want to see the calculations. What do you do instead to get around though? Hire a car, per hour or per day, as you need it. Sure, £8 for an hour seems expensive, but you only have to do 8 miles and its cheaper to hire!. Let alone the time wasted with maintenance, mot, having to research/buy/lease a new one every x years. Cycle- apart from buying the bike, maintenance is minimal and it’s good exercise too (remember to add to your house insurance)

Reduce bills (Energy particularly)

There are some bills that are rather difficult to avoid (council tax), and others that can be avoided entirely (TV Licence- if you don’t watch live tv). Energy costs in the UK are currently 50% higher than “normal”, with prices in October likely to go even higher. If you own your own home and haven’t insulated your loft, what are you waiting for? Either DIY (£100-200) or get somebody to do it for you (£300-400) and you will save that this winter, let alone winters to come. If you can’t get solar panels, invest in companies that have solar farms (eg. Foresight Solar)- or other renewable generation. You will both get a healthy dividend and help the energy costs come down in the future (once we stop generating so much electricity from gas).

Review all your monthly bills- each £1 a month is costing you £300 that you need to have invested to offset this. Is it easier to save £1,500 or cancel something costing you £5 a month? Again, this is all a balance, if you get value from it- keep it, it’s only things that you aren’t using that you should dump. Share a spotify family account, netflix profile etc.

Use a LISA if you are on basic rate

Do read my article on pensions first- this assumes you are already are matching your employer contributions. If you have no higher rate earnings- use a LISA! Why? – well because everything in a LISA can be withdrawn tax free, and has the same uplift as a basic rate SIPP contribution as well. It also avoids the LTA limit that could be more problematic if this doesn’t get increased in the future as well.

Got any more tips? Let me know in the comments and I’ll add them to the list