“The drawdown income we are trying to hit for FatFIRE is £100,000 per year which means that our FatFIRE number is £2,500,000 invested.”
We chose FatFIRE over LeanFIRE and FIRE because we didn’t want to downgrade our children’s quality of life because of our financial decisions/mistakes.
Income and Spending Targets
As it stands we have a monthly expense of around £7000. This includes big hitting items like mortgage, car payments, insurance, school fees, groceries but not many luxuries. This gives us a total of approx. £84,000 worth of fairly fixed expenses annually. Add a few thousand on top to cover luxuries (holidays, gifts, etc.) and we come to a target income of £100,000. I take home a little over that at the moment after tax (incl. bonus, excl. pension contributions).
Therefore the drawdown income we are trying to hit for FatFIRE is £100,000 per year which means that we need £2,500,000 invested (based on the x25 rule).
“Extra sources of income are allowing me to reduce my FIRE number down to £1,500,000.”
Side Hustles and Additional Income
A FatFIRE number of £2,500,000 is achievable but it will mean that I’m retiring in my mid-50’s. I don’t really want to wait another 18 years to retire. I want to get this done in my mid-40’s (originally it was 40 – but COVID-19 and IR35 has put a nail in that one).
Shaving that time off has meant that instead of investing £2,500,000 into global equity tracker ETFs (typical FIRE investment strategy), I’m increasing my revenue streams by:
- Property Investment
- Passive Income Side hustles (digital products, maybe even this blog one day)
- Active Income Side hustles (maybe Projects related to education and edTech)
Extra sources of income are allowing me to reduce my FIRE number down to £1,500,000. The side hustles are yet to be defined so they are not in the equations. So the idea is that I will reach a £100,000 a year income with:
- 4% drawdown from a Stocks and Shares portfolio with an invested amount of £500,000
- 7.5% income stream (rental profit) from a Property Portfolio with an invested amount of £1,000,000. Depends on remortgages to pull money out every few years and that property prices will increase in line with inflation.
“And all of this by the grand old age of 47…”
Back of the fag packet sketch of my FatFIRE number calculation
If you haven’t done so already, go read about our FatFIRE Journey.
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