The Truth about Frugalwoods and other US ‘Financial Independence’ Blogs

If you are like me, you read a number of financial independence blogs for inspiration. I admit to reading the occasional bit of Frugalwoods or Mr Money Mustache. However, the more I have read the more I have pondered whether these US blogs can bear any relevance to UK readers hoping to achieve financial independence? Today, I hope to uncover more of the truth about this for my UK readers. This is as much to put my mind at rest, as yours.

Frugalwoods say that they own a large detached homestead with land in excess of 20 acres The only equivalent I could see here in the UK is buying a VERY large country property or ex-farm, with a lot of land. I’ll plump for the farm option, as they state they have outbuildings (from their photos it is a very large barn, the size of 2-3 massive houses here in the UK), as well as woods and more. From their photos, I would estimate the main residence to be twice the size of a large UK house, although that is not unusual by US-standards. Actually here is their run down:

Frugalwoods Homestead Specs:

  • 66 acres of primarily wooded land in central Vermont, 35 minutes from Hanover, New Hampshire (where Dartmouth College and every attribute of the ‘big city’ are located)
  • A 4 bed, 2.5 bath, 2,300 square foot house, built in 1991, with two woodstoves
  • An 1,800 square foot barn/shop with a woodstove
  • One pond
  • Many streams
  • Countless apple trees, several plum trees, and a forest of sugar maples
  • Two acres of cleared “yard” with extensive garden beds

They paid $389,000 for their homestead which equates to £300,000. So now you start to see how these US financial independence blogs are laughable here in the UK. I mean, no-one but a multi-millionaire would own a piece of property that large over here! And you’d be lucky to get a normal 3-bedroom, semi-detached house where I live, on a tiny plot of land. I doubt that would even buy you a studio flat in London. They would have put around £97,000 down as a deposit.

They also have a rental property in a US City, which they paid $466,500 for and that equates to approx £360,000. They only put a £50,000 deposit down on it. So, now we’re looking at that owning around £660,000 of property but none of it is full paid for. They have 30-year mortgages (the norm is 25 years here in the UK). They are in their mid-thirties, so they’re looking at carrying that debt until they are 75. I wouldn’t want that noose around my neck until well into retirement!

You can read the reality is then that they worked solidly from University to their mid-thirties to be able to put £147,000 cash on houses. I’m not knocking that, but I expect most people in the UK would be able to sock that away as a deposit too, if they had the luxury of a well-paid job. 20 years of  2 people working full-time and saving 65% of their income, means they were only saving £7,350 a year. That’s as little as £3,675 per person. Undoubtedly achievable here, if not more- it’s just that you would never be able to buy a home or retire on that here!

The truth is that both of these properties still belong to the bank and they’re only a few years into the mortgages on each. If anything happened to prevent them from keeping up payments, they could lose both in a very short period. For example, if they couldn’t get tenants for their city house – one wonders if they would be able to cover the mortgage? They also only keep around 6 months worth of liquid cash which is a very small amount. The rest of their ‘net worth’ they have ploughed into stocks and shares. Whilst it is all very nice to base your ‘net worth’ on what the current selling price of the shares is, it’s all pie in the sky really. In 10 years the value of what they have put away could halve or worse. They are basing their ‘net worth’ on a projected rate of return of 7%, but the reality again is that if anything happened to the stock market (which I think is very likely given the volatility of world markets lately) they could lose a significant proportion of their money or the whole lot! They won’t even have the properties they live in to sell because they don’t own them. I bet you would then find they have stopped blogging and had to go back to work. Probably renting somewhere and lamenting their former choices, except they wouldn’t blog about that!

In actual fact, I think they are quite dangerous examples of how to live. Unless you like an extreme level of risk. I wrote this because I don’t want UK people to compare themselves to some unrealistic ideal. Unless you are planning to move to America, then you’d better expect to be working the rest of your life to pay off a small piece of modest UK property. I don’t think anyone lives under the illusion of early retirement here anymore! The best you used to hope for was retiring at 50, but certainly not 35!!!! You are better to pay off your mortgage before making too many other investments so that at least you have something solid that you own. I think it’s safer to pay into a pension, than invest all your money into stocks and shares.

It’s About Things That Wear In, Not Things That Wear Out.

1200px-Underground.svg

I’ve been watching a fabulous documentary series about the history of the London Underground. It’s called ‘Going Underground’ and it’s on Channel 5. I’ve long been a fan the London Underground. Since my Father and his parents hail from our fine capital city; I spent a significant portion of my time there growing up. I’ve always loved the architecture of the stations, the branding, the furniture – icons such as the subway tiles, the Underground Map and the whole ambience. My Father remembers when steam trains operated on the lines.

A man called Frank Peck re-designed Piccadilly Circus station in the 1920s. The whole ethos of his design was to create ‘flow’; a movement of people through the station. This had been sadly lacking in its Edwardian predecessor, with halting lifts and cramped ticket hall. He aimed to create a circular ticket hall, a bit like a roundabout to keep people moving. Something he later repeated in other Modernist stations he designed, such as Arnos Grove.

Within his design at Piccadilly, he chose to use elements like pillars to create a feeling of space, by giving the appearance of raising the ceiling. What really struck me was that he used materials such as brass for the pillars and ticket lobby, along with marble tiles on the walls. He wanted the station to reflect the area it was situated in (The West End), but more than this he wanted to use materials that wear in, not materials that wear out. You know that aged patina that can only come with the passage of time. I don’t see that as a faded glory, but I think it adds to something’s beauty or charm.

Even today, Piccadilly is at the back of the waiting list for refurbishment because it was built so well back in the days that it was felt it could survive the longest! That is a testament to buying once, is it not? I wonder if the same will be able to be said of today’s Underground in 100 years time? The trains that run on the line today are 1970s rolling stock and although the oldest, they are the most reliable trains on the Underground to day! Even these trains are based on an original 1930s design by guess who….Frank Pick! They were a simple design which also made them simple to repair and maintain.

Some lessons for us all on Simplicity and Minimalism from London’s own, iconic Underground! I would never have thought such secrets lay within and I can only hope that those who are taking it forward will learn from it, continuing to employ such common sense.1200px-Underground.svg

Things that have gone this week – 5

Well, I was hoping a few more items would sell on eBay this week. But only 3 things have gone – a pair of shoes, a white blouse and a red dress. This pair marks the 12th pair of shoes I have gotten rid of! 12 pairs of shoes and I don’t even notice the difference. I still have more than 12 pairs, so a few more need to go!!!

Despite this, I have also recycled a whole lot of old papers and cards. Goodness knows why I was holding onto them! I had a Birthday card from 20 years ago amongst my selection. I am hoping to give away or donate some items too this week, either to charity shops or on Freecycle. I also traded in 14 books on www.webuybooks.co.uk which was a medium sized box worth. So there is definitely a little more space here!

How to get a Year’s Breakdown Cover for £50

Did you know you can use cashback sites to bring down the cost of your breakdown cover by more than half?! This year, at the time of my renewal Topcashback was offering the best deal. So I switched provider to the RAC and got a massive £66.50 in cashback just a few months later. This means my total cost for the year amounted to £50 and this included most options, except International Travel which I don’t need. Are you overpaying for your breakdown cover?

I’m a member of TopCashback amongst other sites, and I’ve made some great savings so far on my online shopping. There are no catches, and it’s completely free to join. So, why don’t you join too? So far I have earned £470.78 cashback!

Swagbucks – April Swago is here!

Swagbucks has one more bit of April fun – it’s the return of Swago!

It’s just like bingo, but in this case you’re filling out squares as you earn points on their site for doing things you already do online. The best part is that the points you get can be used to get free gift cards to places like Amazon, or PayPal cash!

Fill up your board and then submit your pattern to get even more points – if you can fill in the whole board, you get a 300 SB bonus! Click here to sign up and get started! If you sign up through my link and earn 300 SB before the 1st of May, you’ll get a bonus 300 SB!

Things that have gone this week – 4

Welcome to my weekly update of things that have found new homes. I try to keep a flow of items in and out of my home and I am currently massively trying to downsize my wardrobe. This week, 6 items have found new homes and they are all in the category of clothing, shoes and accessories- hooray! I’m sorry about the rubbish quality of the photos, I still haven’t discovered how to pull my higher quality images from eBay. Altogether, I’ve managed to put £60 back in my bank account by selling these- so averaging £10 per item – not bad considering 4 of these were purchased second-hand for much less!

  1. Red wide elastic belt
  2. Vintage denim Laura Ashley Maxi dress
  3. Vintage Topshop Fishtail Denim Skirt
  4. Laura Ashley Boucle Tweed Jacket
  5. Dorothy Perkins Butterfly Print Maxi Dress
  6. Vintage Ravel Red Court Shoes- BNWT

Stay tuned to see what I manage to get rid of, over the next week! Chow for now and Happy Easter everyone! 🙂

Swagbucks Egg-cellent Team Challenge

Easter is bringing with it another fun team challenge to help you earn SB from Swagbucks!

For those of you who don’t know what Swagbucks is, it’s a website where you can earn cash back on everyday tasks you do online like shopping, answering surveys, discovering deals, and watching videos. You can even earn for searching the web! If you’ve never tried Swagbucks before because you didn’t know where to begin, their Team Challenges are a great way to learn the ropes!

Their latest, the “Egg-cellent” Team Challenge, begins Monday, 17 April. Here’s how you can join the challenge and the site:

1. Click here to join the challenge and be assigned to a team. Pre-registration is going on right now! If you don’t already have an account, you can sign up on this page as well.

2. Starting 17 April at 4pm GMT, in addition to earning SB you’ll contribute points to your teams total as you complete different activities on Swagbucks.

3. Check back on the page often to see the scores and what you’ve contribute so far.   All members who participate and contribute at least 400 points to their team’s total will receive a SB bonus in the form of a SB Swag Up Rebate on their next gift card! Not only that, but if you earn 300 SB before 1 May, you’ll get a 300 SB bonus (as long as you’ve signed up under me)!

Members of the 1st place team will receive a 40 SB Swag Up Rebate, members of the 2nd place team will receive a 20 SB Swag Up Rebate, members of the 3rd place team will receive a 10 SB Swag Up Rebate. Your SB Swag Up Rebate will be made available on Friday, 21 April and will expire on Sunday, 7 May at 7:59am GMT.