The past three weeks have been rather difficult for me. Despite my genuine excitement at being able to ‘see the light at the end of the tunnel’ for my debts, some external forces have upset this happy FIRE ship.
On Tuesday shortly before Easter, when I arrived at my company’s office, there was a bouncer on the door and a notice saying we could not go in. Rather perturbed, myself, the Chairman and other employees didn’t really know what was going on.
I work for a small consultancy business with big ambitions, and one that has taken some big risks. Apparently, historic projects had lost some money and the company had not paid the rent in a misguided attempt to juggle cash flow. Big mistake; the landlord had kicked us out.
After several days of working from home, we were allowed back in at greatly unfavourable terms and I believe the company had to pay rent in advance.
Clearly, this caused a great deal of anxiety and stress for myself and everyone else. The kind of thoughts running through everyone’s head were did the company have enough money to pay bills? Would we be paid? Was the company going bust? They assured us it would be fine. I wasn’t convinced.
I am delighted to say that I got paid on the 30 April and I am feeling a bit better about it all. I may still look elsewhere for a job, but as I have just won my first new client, I am reluctant to pack in all that hard work. I left the security of big corporates to experience risk and reward and while I never expected to hit these lows, it is not always going to be plain sailing.
This remains an ongoing saga.
The fall out
What does this mean for my journey to financial independence? The answer to that question is threefold.
Firstly, It has somewhat knocked my confidence in what I am doing. The aggressive approach to paying off my debts effectively is pushing me to my limit. By the end of the month, I had £5 left in my account. I am refusing to spend on a credit card or take an overdraft. I made it to the end without breaking or missing any bills, but it didn’t feel great. I desperately needed the paycheck to stay afloat.
Secondly, I knew that using all my savings to pay off my debts was risky as it left no room for manoeuvre. I only have £200 in my savings which is not very much at all. I was feeling good as I was making such fine progress in paying off my debts, but it is a stark reminder to leave enough for emergencies. I had thought about this and reasoned that if something bad happened, I could use my credit card. However, my mentality has changed so much since starting FIRE that the thought of adding to my credit card and undoing the good work so far almost made me feel ill. Perhaps leaving a months salary in the bank may have been smarter and letting the process take a couple months longer might have been a better move.
Thirdly, and most importantly, the whole episode has made me more determined to succeed at FIRE. The timing of this event was particularly bad as I have taken a big risk to clear debt leaving me with no reserves, but if this happened in 12 months time, I would have a large cushion of savings and investments on which to fall back. That thought alone is motivation for me to keep going. It is the quintessential reason that I am doing this so that I don’t need to rely on my job and other people who may be inept at running a business, for my livelihood.
To conclude, it seems that in taking a risk to clear my debts, I’ve accidentally put myself in the exact position that FIRE aims to get me out of. I always viewed this phase as the most painful part of gaining FI and it has been more painful than expected for reasons both within and outside of my control. I will persevere, but perhaps with more caution until I have a significant buffer behind me.