Katie Donegan was only 35 when she decided to stop working for good. Her husband, Alan, five years her senior, made the same decision around the same time. Now aged 40 and 45, this British couple He has a fortune of two million pounds (around 2,277,180 euros) and are dedicated to traveling the world and offering courses on how to achieve financial independence, collects Daily mail. His story has become an example of the FIRE (Financial Independence, Retire Early) movement, which promotes early retirement through extreme savings and long-term investments.
The couple met in 2005 during a volunteer project in Costa Rica. From the start, they both shared a cautious view of money. After they started dating, they made an unusual decision: moving in with Alan’s mother to accumulate enough money for a down payment on a house. For four years they saved heavily and in 2010 they managed to raise £42,000 to put aside money to buy a two-bedroom flat.
three years later They got married in a DIY wedding (Do It Yourself), which cost £12,000 – a figure well below the average British budget – and with which they were able to celebrate their day with 180 guests without compromising their accounts. This austere lifestyle is the starting point of a financial philosophy which, over the years, will become much more ambitious.
Katie received an annual salary of £58,000 and Alan received an income of £63,000. But they were not satisfied with their salaries. To maximize his income, Alan started his own business in 2008 and Katie took the plunge to become self-employed, which ended up multiplying her income. This decision, risky but calculated, was essential: months after leaving his job, his income had increased considerably.
While they had already saved 291,000 pounds, they decided to speed up the process with extreme savings measures: “We didn’t turn on the heat, we didn’t eat at the restaurant and we used coupons “We focused on maximizing the difference between what we earned and what we spent,” Katie sums up.
The big turning point came in 2015, when they discovered the FIRE movement. Inspired by their principles, they set a goal: reach one million pounds invested in just three years. A goal that, while it seemed excessive even to them, began to take shape through a combination of drastic cuts and an aggressive revenue generation strategy.
The method they followed to get there is based on classic pillars of FIRE: increase the margin between income and expenses; invest this margin in cheap and global funds; and focus on reaching a wealth goal (not an age) so you can stop working.
By 2018, the couple had accumulated £898,000 and decided to invest it all in Low-cost global index funds, primarily from Vanguard. The total complicity between the two was fundamental. “In the afternoons we would take long walks to talk about taxes, investing and financial independence,” Katie recalls.
The couple divided their strategy into several stages. First, stabilize yourself with an emergency fund and avoid high-interest debt. Next, create a margin between income and expenses: They recorded every euro spent and analyzed whether it provided real value.. Small, sustained actions over time have had a huge impact: just by eating lunch at work and avoiding eating out, they managed to generate £40,000 in profit over ten years, thanks to the investment of these savings.
So, in April 2019, they reached the magic number: income 25 times higher than their annual expenses. This is the threshold that many FIRE followers consider sufficient to opt out, based on the appeal “4% rule”which states that it is possible to live indefinitely by withdrawing this percentage of the investment.
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