I normally would put this on my paid member’s area but I think this one is too important not to share more widely given how many people will be impacted.

If you use it and are feeling generous, feel free to “buy me a hot chocolate” in the Paypal donation link in the sidebar.

When I plugged my own figures in as well as the Electric Ireland price increases and included the 600€ government credit, assuming we consume similar kw/h as the same period last year, it looks like we will need to dish out almost 1,900€ between now and April which is an additional 820€ more than we paid for the same period last year.

For reference, at a high level, between October and April last year, we used an average of 460 kw/h in electricity per month and 3,455 kw/h in gas per month. Our home is rated B2 in energy efficiency.

Our biggest estimated bill will be for the Dec-Feb period coming in at 1,074€ after the 200€ government credit for that period.

The calculator includes my own figures as reference but can easily be overwritten with your own to see what you may need to budget for the upcoming Winter. Only the orange cells need to be reviewed/updated. All others are calculations.

The idea is that you put your home up on the site, set the places and dates you’d like to go somewhere and find homes/families you’d like to swap with. If you can’t find anyone to swap with at the same time, in what they call a reciprocal exchange, the site also offers a reverse lookup feature for multi-directional swaps where you can search for people interested in coming to your city and see if they want to stay while you’re away. If that doesn’t work out, you can also gather guest points before you go by either hosting people when you are at home in a spare room or while you are away visiting friends/family or on a different paid holiday. Once you have the guest points you can then use them yourself another time without needing to organise a reciprocal exchange.

Cost

You can sign up for free until you are ready to make your first exchange. Once you are ready to do a swap or host someone there is an annual cost of 149€. This gets you unlimited exchanges, member support, assistance in case of cancellation or non-compliance and property damage coverage. You can read more about the terms and conditions of these here.

HomeExchange gifts you guest points for completing certain steps of your sign up process. When I first signed up I got 450 points as a sign-up offer, 350 points for completing my profile, 350 points for completing the description of my home and 100 points for signing up, for a total of 1,250 points. And if you sign up with this link we both get an additional 250 points.

To give you an idea of what this will get you, most homes are available for between 100 and 250 guest points per night. So 1,500 guest points will get you 6 nights of accommodation at the higher end of the scale or 15 nights at the lower end of the scale.

Guest points are decided based on the size of home, amenities and location.

If you’re looking for a family holiday in Ireland this summer, for example, you could be looking at 210€/night for a two-bedroom apartment at a family-friendly hotel or a minimum of 100€/night for a home on Airbnb. For a week that would cost you between 700€ and 1,470€ for 7 nights. If you were up for camping, it would bring the cost down to about 200€ for a week but you’d also need to dish out for the camping gear if you don’t already have that and be up for camping.

Range/Selection

We’ve had our home up since 2019 but didn’t get to use it until this month due to the pandemic. In that time we’ve had offers from people in Spain, the Netherlands, France, Ireland, Italy, Australia and Guadeloupe and that’s without even putting availability up for our home.

The platform is still growing but already has 450,000 homes in 159 countries listed.

On HomeExchange there are 263 homes in Ireland available to accommodate 2 adults and 3 kids in July with 37 of those being secondary residences, which are easier to organise an exchange for Guest Points in. Or 337 homes if you’re looking for just 2 adults. So for the 149€ sign-up and the gifted guest points, you could very likely find a week’s holiday in a fully kitted out home for a family of 5 for cheaper than the camping alternative!

Primary residences

Secondary residences

Benefits

Some of the benefits that HomeExchange offers that you don’t get through normal paid accommodation options is that you have access to family homes with all the mod cons including – depending on which you choose – kids toys, play structures, laundry facilities, a spice drawer and condiments etc which can save on both packing and cost – I don’t know about you but I find it sucks having to buy mayonnaise and spices on a 2 week holiday only to leave them behind us barely used – both on the cost and waste perspective.

If you go down the guest point route and stay with other people (often for reduced points), you also get to meet other people and get a proper insight into local culture which you wouldn’t get if you were on your own. In some cases, people also lend out their cars or drive you around.

Another benefit compared to renting out your spare room for money is that you don’t incur income tax and can typically stay in high-cost places for much much less using built-up guest points or direct swaps.

Effort

Like anything, there are pros and cons. 3 of the main cons are:

• Finding someone to exchange with can take some time
• Getting your house ready for guests before your holiday
• Cleaning your house when you get back from holiday

If you’re looking for a reciprocal exchange or even if you’re looking for a guest point exchange, it can take a bit more time and effort to find one compared to a straight booking for paid accommodation. It can typically take 10-15 requests to find someone to swap with. This effort can be really worth it for high-cost longer stay places like all of Ireland at the moment, London, San Fransisco or Paris for example but might not be worth the effort for cheaper places where you could just pay for a place and be done with it. One workaround here, as mentioned above, is the option to do a reverse lookup to find people that are interested in your home, you could have them stay for guest points and you could use those guest points in another location.

Another con is that getting your home ready for an exchange adds a bit more effort to your holiday prep. You need to have your house clean and beds made up for guests before you go on holiday if you’re doing a reciprocal exchange and then need to clean the sheets and make up the beds again when you get home. You can agree with your guests what you’d like them to do before they go, some people ask that you wash the sheets for them while others just get you to strip the beds and leave the sheets on the floor. I think I’ll just get spare guest sheets so that we don’t need to have the sheets washed and beds made up on the day/night we return home and just need to pull out our own clean sheets.

Insurance question

After reading through the terms and conditions, I’m not clear on 2 things:

• Can people who are renting use the platform (due to not having their own building cover insurance in place)
• Do I need additional non-standard home insurance to ensure full damage coverage (as one of the conditions of claiming is providing proof of home insurance and when previously discussed with my provider I was told I’d need non-standard cover to protect our home for both primary residence cover AND unknown guests while we are not here)

I have an open question with HomeExchange on this and will update this post once I hear back.

Our experience

We are hosting our first guest this week for 3 weeks. We reduced our guest points by a little less than half to “rent” out our spare room. Our guest is an 18-year-old international student here on a work experience to learn English. In exchange, we get guest points which we plan to use for our stay in France next Fall for the Rugby World Cup. Looking at Airbnb, this could save us over 2,000€ for the 2-week stay we are planning to take. Will let you know how we get on.

Another option for the site would be to work remotely for an extended period of time from another place. We’ve had an offer for example from someone in Spain to do a semester from September to June in their home while their family comes here to learn English. We weren’t up for that particular offer but may look for a similar offer next winter.

Again, if you’re thinking of giving HomeExchange a try, please use this link and get 250 extra guest points on signup.

UPDATE: Just after I signed up to the An Post credit card, I got notification that the money back program was ending in April 2021. This reduces our potential earnings but will be looking to use the KBC credit card (not mentioned in this post which earns 1% cash back on certain categories and the Avant credit card earning 1.25% cash back on certain categories). The KBC card is capped at 10€/month and Avant is capped at 12€/month. To max these both out each month you’d need to spend 1,000€/month on the KBC card and 960€/month on the Avant card on specific categories. If maxed out each month it would be a return of 204€ after 60€ stamp duty for the 2 cards.

For those reading from other countries with much better rewards programs, Ireland has very few reward programs. That said, after reading this article, I don’t feel so bad about that. Given the limited options here, this post details the best solution I could find for our spending habits.

Firstly, I should start by saying that this option should only be followed by people who pay off their credit card in full every month. The estimates below are based on our own personal spending habits and may differ based on your own circumstances. Also, we will keep bank fees low by mainly using our credits cards for all card expenditure.

You can watch the youtube version of this post here.

Feature Comparison

In this post, I will be comparing the below products. As I am not planning on incurring any interest by keeping the credit cards paid off in full every month, I am not taking credit rates or introductory balance transfer offers into account:

• AIB Platinum Card
• An Post Credit Card
• Avant Credit Card
• PTSB Explore Account
• AIB Current Account

If you’d like to compare other features of these accounts and cards do check out these helpful sites for comparison:

• Compare Current Accounts: Bonkers and CPCC
• Compare Credit Cards: Bonkers and CPCC

Credit card comparison

Bank Account Comparison

Our plan:

• Switch our bank account to an AIB current account
• Apply for the Avantcard
• Apply for the An Post Credit Card

Estimated costs:

AIB current account:

• Quarterly fee 4.50€ (18€/year)
• Direct Debits costs 5-6 /month @ 0.20€ per transaction= 13.20€/year
• ATM withdrawals 1-2/month @ 0.35€ per transaction = 5€/year
• Total annual cost: 33.25€

Credit card costs:

Stamp duty: 60€ (30€ for 2 credit cards)

I plan on paying the cards off in full every month and should not have any interest charges.

To note here, I used to transfer money to the good on a credit card in order to essentially use it as a debit card in order to keep transaction costs down which I would have incurred by using a bank card. It was also a useful approach when travelling as you could withdraw cash more cheaply from a credit card than a debit card while abroad (depending on the fees of each card). I recently discovered that this is against the terms of use of a credit card and if any money was stolen or any purchases made fraudulently while there was money to the good, you would not be protected. Good to know!

Total fees:

93.25€

Estimated rewards:

The An Post Credit Card has a money-back program where they give you 5% back on all purchases of 25€ or above at Lidl (among a few other shops) with NO cap. If you spend an average of 450€/month that would give you 270€ in cashback.

The Avantcard gives 1.25% cashback on shopping and entertainment to a max of 12€/month or 144€/year. To get this you need to spend 960€/month in these categories on the card.

Total rewards:

414€

Net result:

321€

Considerations:

Maxing out these rewards will take some effort to ensure we use the right cards at the right shops. One at Lidl and the other for everything else. We’ll need to limit our bank card use to DD payments and limited ATM withdrawals only. All other costs will be incurred on the credit cards. We will transfer our monthly costs to the card at the beginning of the month so that we never actually go into credit.

While there are some other bank accounts like KBC that offer no-fee banking, we ultimately didn’t go for them as they do not have the option to withdraw or lodge cash at a branch which we require from time to time. Also, they do not have the ability to export transactions to excel which is a pain when collating expenses for import into my expense tracking tool.

Also worth noting is that my husband and I have recently merged accounts so we only have 1 current account and 1 credit card between us. I will apply for the new credit cards on my own and then add my husband as a card holder so he can have his own card. This simplifies our strategy as all of our household spend will be on these 2 cards and through 1 current account which also helps us keep banking costs down and simplifies my expense tracking.

Other options:

PTSB Explore Account + An Post Credit Card

I also looked at using the PTSB Explore Account in combination with the An Post card. The PTSB account offers 0.10€ per transaction up to 5€/month as well as 0.02€ off per litre at Circle K (when you use your Topaz card and pay by direct debit). Last year we spent 860€ on petrol, assuming we’d only use Circle K for 50% that would come out to about 6.60€ back in the year. Over the last 12 months, we made 580 transactions excluding the Lidl ones. This would result in 58€ cashback for the year plus the 6.60€ = 64.60€. Annual fees on the account are 72€. Bringing our banking fees down to 7.40€ for the year. The PTSB options also offer cashback on Sky and SSE if you have those.

Adding in the 220€ we’d make from the An Post card for Lidl purchases would still net us 212€ for the year.

AvantCard Avantages

Other members of the group, James and Rodger, said they used Avant card and availed of their “avantages” program. Apparently, you can get 4% cashback on tesco by buying prepaid gift cards with your points, 7% off hotel bookings in expedia, 3c off per litre at Circle K etc.

I think you accumulate 1 tesco clubpoint for every 4€ spent which can then be traded in for tesco vouchers. These vouchers have higher value at other shops like: Milano’s pizza where you get 10€ for every 2.50€ in tesco vouchers. 40€ for every 10€ tesco vouchers at centreparks and 80€ for every 20€ in tesco vouchers at Irish ferries and so on.

From what I can make out 1 tesco clubpoint is worth 1 cent. If we spent 22k on this card and converted to tesco points it would amount to about 55€ in value. This would convert into about 220€ in value in the centreparks, milano’s or Irish ferries options above, then minus the 30€ stamp duty, netting 190€ for the year.

I personally don’t shop at Tesco and not planning on the other travel/restaurant-related costs until the vaccine is rolled out so I’ve put this option on the back burner for ourselves for this year. Now that we have our son, we will likely look to use the likes of centreparks and irish ferry’s at some stage but will keep this in mind for future.

I also prefer the idea of just getting cashback which I can spend anywhere so I’m not tempted to spend even more money elsewhere just because I have a discount there.

AvantCard + AIB Platinum + Revolut + An Post

Yet another member, Stephen of savvyspender.ie, found a way to double up on cashback offers between 2 cards using Revolut.

As AIB Platinum offers 0.5% on all expenses regardless of category, he loaded his AIb card into Google Pay and adds money in Revolut through the Google Pay & AIB option, effectively getting 0.5% on this “online purchase”. He then spends the money on his AvantCard and transfers the money from Revolut to pay off the AvantCard which gets him the additional 1.25% cashback on retail and entertainment categories (to a max of 12€/month).

According to the AvantCard FAQ this includes shopping and entertainment spend, including online, your shopping for groceries, in department stores, clothes & shoe shops, chemists, hardware, electrical, petrol stations, restaurants, concert tickets and public houses.

Any spend on travel, gambling or services aren’t covered by Cashback; holidays, car hire, public transport, flights, hotels, online betting, book makers, healthcare, electricity, water and gas charges.

All merchants choose how their business is classified for spend on credit cards; if they classify their business as travel or services we do not include them for Cashback rewards, for example a restaurant in a hotel, which is classified as accommodation, will not be eligible for rewards.

So for us, if we estimated our shopping and entertainment spend was just over 18k excluding about 3,500 for travel and services – that would give us the cap of 144€ from the AvantCard (to get this cap you only need to spend 960€/month on these categories or 11.5k/year) and an additional 112€ from the AIB Platinum. Then the An Post card would give us 270€ for the Lidl purchases. For a total of 526€. Minus 90€ in stamp duty for 3 credit cards and 33€ in bank fees. Earning a net of 403€!

Although this is surely a great hack, I’m not sure if I’m up for the hassle of maintaining 3 credit cards for the sake of 82€, but I wanted to include it in case someone does including my future self.

What about you? Do you have any reward card hacks? If so, please share below!

Happiness is relative

Vicki Robin, author of the New York Times bestseller Your Money or Your Life, began running finance seminars back in the 80’s. In them she would ask the audience “how much would it take to make you happy,” almost everyone, in every income bracket, said “double what I am making now”. Then, when asked to rate their happiness on a scale of 1 to 5 (scale and ratings below), there was no significant difference between the top and bottom earners. You could hear a pin drop as people realized that the person in the row ahead of them probably had the “more” they thought would make them happy—and it made no difference.

Nobel laureate and best-selling author Daniel Kahneman, in his research on money and happiness, found that beyond a certain level of sufficiency (currently about $75,000 a year in the United States), more money doesn’t buy more happiness.

Understanding this can help you to start changing your mindset around money and consumerism, in order to really cut back on spending in a sustainable way and help you to work towards financial security where you will have more freedom to spend time on the more important things in your life.

Recipe for human happiness

Below is a graphic of the main components different psychologists have found to be the recipe for human happiness.

Ask yourself, how many of these things cost any money? Certainly money can help you be more comfortable but once your basic needs are met, instead of spending money on material things, you could invest that money and spend the time it buys you on the real things that bring you happiness.

Also, have a think about your perfect day and the top 10 things you do on a weekly basis that bring you the most happiness. How many of these cost some or any money?

In the documentary Playing with FIRE, a young couple, consumed by the idea of the American dream, lived in an expensive house by the beach, drove expensive cars, had expensive things, but were so stressed and tired they had no time to do the things they loved. They took a step back and did an exercise where they asked each other to write down 10 things that brought them the most joy.

They included things like:

• Hearing their baby laugh
• Having coffee together
• Baby cuddles
• Going for a walk
• Going for a bike ride
• Enjoying a glass of wine
• Good chocolate
• Talking to parents and family
• Family dinners
• Reading to their baby

When they really looked at that list, they realised none of those things:

• included going to the beach (which they pay a premium for)
• included the cars they spend so much of their working lives paying for
• were location-dependent (they could do those things anywhere)

Ultimately, they sold their house and moved somewhere cheaper and the documentary chronicles their experiences on their path to financial independence.

What’s on your list? 

Hedonic treadmill

The hedonic treadmill explains why when you buy something, the joy you experience from that item is short-lived explained further below.

Spending on experiences vs stuff

Ever bought a big ticket luxury item say, a new car? Or even something smaller like a new phone? Did it make you feel good? That’s because your brain detects these purchases as a positive change to your life and releases a hit of dopamine, the pleasure hormone. Then did you notice how your happiness with the new item is short-lived? This is because your brain reacclimatizes it’s baseline and the next time you buy a similar item, your brain expects to feel the same sensation but since you’re expectation has increased, you don’t feel the same level of pleasure. The same thing happens with drug users chasing their first high.

As time goes on, the longer you own the item, the less happiness it brings as you need to insure it and maintain it, and not get any additional hits of dopamine for it. The more stuff you own, the unhappier and more stressed you will be.

Experiences are different

Each experience is different, bringing a new high each time, and you create memories that you can look back on and re-experience that same high.

The more you spend on experiences like travel and learning new skills, the happier and more content you will be.

Fulfillment curve

The concept of the fulfillment curve is that once you have enough necessities for our survival, enough niceties for your comforts and pleasures and even enough little “luxuries” we have everything we need. Everything outside of that is excess and actually starts to weigh you down. Taking time, effort and cost to maintain. Having more than “enough” starts to diminish your sense of fulfilment from those items.

Lifestyle inflation

Lifestyle inflation refers to an increase in spending when your income goes up. Lifestyle inflation tends to become greater every time a you get a raise and can make it difficult to get out of debt, save for retirement, or meet other big-picture financial goals.

Being aware of this can help you to avoid falling subject to this.

The way you should look at increases in income is not what other material objects can I buy, a bigger house, a nicer car but instead how much TIME in my future can I buy if I invest this instead.

Personally, we are earning more than we ever have but our expenses have stayed about the same and it has enabled us to live the lifestyle mentioned in earlier posts.

Lifestyle is really well explained by these to graphs as detailed on this post

Average Joe increases his spending with every raise meaning his savings rate never really increases and essentially means that without state aid, will never be able to retire. Extraordinary Joe keeps his expenses the same regardless how much he earns, enabling him to save and grow his spare cash through investments, allowing him to reach retirement or even financial freedom MUCH sooner.

Creating a budget that is sustainable and increases happiness

So how do you use this knowledge to crate a sustainable budget that doesn’t decrease your happiness?

Different types of expenses

First, understand that there are different types of expenses:

1. Baseline expenses (mortgage/rent, groceries, utilities etc) – bring neither happiness nor unhappiness
2. Some baseline expenses decrease happiness like insurance or unexpected maintenance costs
3. Some spending increases happiness – where something new is brought into your life – either stuff or experiences. As we’ve seen, the hit of happiness from things is temporary but much longer-lasting for experiences.

Step 1: Know where your money is going

If you don’t know exactly how much you’re spending and on what you won’t be able to identify areas to best cut back.

There are lots of tools and tricks to help with tracking expenses but it doesn’t have to be laborious. Some people like to track daily but I like to do a retrospective once every 6 months or so. This can be as simple as extracting a CSV from all your bank accounts and credit cards (though some of these only go back 4 months online), compiling them all into one worksheet in excel and categorizing each expense into a set list of main categories and sub-categories (again you could find some samples online to get you started). Once you’ve done this you can use a pivot table to sum up all the categories to really see where your money went.

Some online tools have great visual reporting and budgeting techniques and guidance. I use YNAB (You Need a Budget), Pocketsmith is another one which allows auto-syncing from your bank and credit cards. Note though that syncing your bank with a third party tool exposes you to risk and waives your protections typically covered by the bank for fraud.

Step 2: Then look at the expenses that bring neither happiness or unhappiness

For example: your baseline costs (mortgage/rent, food, utilities, insurance). Cutting down on these costs will not impact your happiness one way or the other, though they will increase your savings rate and speed up your time to financial security.

The biggest expenses in most households are food, accommodation and transport – making up 50% of household expenditure according to the latest CSO household survey in 2015.

Step 3: Next cut costs that temporarily reduce happiness

The next items to look at will be things that reduce your quality of life a little but the beauty of the hedonic treadmill is that just as new purchases temporarily increase your happiness and your baseline expectation rises to expect the same high next time, it also reduces expectations when cutting out expenses and while you will feel a temporary decrease in happiness, your happiness level returns to the lower baseline and you will not experience prolonged decrease in happiness for having cut those expenses.

Things like cooking at home instead of eating out, or buying used things instead of new are good examples.

Step 4: Next TRY to find the expenses that you THINK cannot be cut without permanently affecting your own well-being.

Try cutting them out and if your happiness baseline does not adapt then do not cut those expenses. You won’t know unless you try. You do not need to cut these out completely but even reducing the frequency could make a big impact.

They could be things like:

• Buying lunch at work
• Eating out at restaurants
• Going out with friends
• Going to live sporting, music or theatre events

Step 5: Add back in some luxuries

After cutting expenses in the other steps, you should have freed up some extra money to budget in some splurges or “fun money”. As long as the amount is less than the amount you saved by cutting in the other areas, you will still have money left over to build towards financial security but also increased your happiness, even by spending less money!

You’ll actually find, after a bit of trial and error, that you can live on quite little and actually have increased happiness without the stress of money.

Other tips for justifying expenses

Using the 4% rule, for every 100€ that you continually spend, you will need 2,500€ invested to passively cover this cost. So if you’re looking to spend 100€ on something, ask yourself how long it takes you to save 2,500€ and that is how much time you are adding to your time to financial freedom.

Another way to justify if something is worth spending on, convert costs into the time you spent to pay for it. If you’re a single person earning a salary of 50k, without applying any non-standard tax credits you take home just shy of 37k or just over 3k/month. If you want to spend 2k on a holiday that means you will have spent almost 3 weeks of your life to pay for this. If this feels worth the time you’ve exchanged for it then it’s worth it but if not, it might help you to cut back further on expenses you would have otherwise thought nothing of spending on.

Another good example is a new car: If you buy one for 30,000€ and you take home 37k/year, you’re essentially working for an entire year of your life to pay for that car.

Time to financial independence

At a high level, it’s because when I crunched the numbers on my quickest path to financial independence, the scenario where I paid off my mortgage before investing was about the same time as the scenario where I paid the mortgage down slowly and invested heavily instead.

The reason the timeline is so comparable is because once you’ve paid off your mortgage you need significantly less passive income from your investments to cover your remaining living expenses.

See the detailed analysis section at the end of this post for a demonstration of this analysis.

Reduced financial risk

While my first objective of the analysis was to find the quickest path to financial independence, the other element is that I’d like reduced financial risk to myself and my family should I lose my job or get sick, especially since we made the decision to go down to one part-time income. This may seem obvious to state but, paying off our mortgage would reduce our minimum expenses by almost 10,000€/year. As our other expenses are already quite low, once the mortgage is paid, we will almost be able to live off one minimum wage job. This reassurance in itself gives us a certain element of financial freedom even before we reach full financial independence.

Guaranteed rate of return

The other thing to consider is rate of return.

A mortgage interest rate will be at least 2-3% for most mortgages in Ireland. Even the newest mortgage provider Avant will only provide 1.95% to very select customers.

Paying down your mortgage is a guaranteed savings of that 2-3%/year.

If that money was in the stock market, you could make 20% in a given year or you could lose 20% in a given year. The average rate of return since inception of the stock market has been 10%. This is PRE tax. If you’re invested in ETFs in Ireland, take off 41% in exit taxes. This leaves 5.9% or 4% after inflation (it’s not that simple as you have compounding and reinvestment of dividends but I’m trying to keep it high level).

In my experience though I have not been so lucky.

I’ve had retirement account investments in Canada since 2013 or so, even in a tax-deferred account (like a pension) I’ve only averaged 3.7%/year or 1.7% if you take out inflation. Though I should say that performance was mostly because I was unaware of the true impact of fees and my provider for most of that time was taking 2.75% of my total investment as their annual fee! Ouch.

In Ireland, I’ve only been investing since May 2019 but so far my initial lump sum is standing at MINUS 4.96%/year after inflation AND I’m still paying taxes on dividends even though I’m at an overall loss since ETFs can’t carry losses forward.

If I’d lumped that money against my mortgage I would have reduced my mortgage payments by almost 100€/month or 1,200/year of post tax money.

Now if I’d started investing at another time where the market performed very well, this could be a very different story but for now this has been my experience and I’m happier focusing our efforts on the mortgage.

Less reliance on market performance in early retirement

The other consideration is for when we reach early retirement. If we still had a mortgage we’d need to withdraw larger amounts from our portfolio to get by. If we no longer have a mortgage, we need to withdraw less from our portfolio and therefore rely less on market performance to fund our lifestyle. This is reassuring as we don’t have to rely on something that’s out of our control to fund a large portion of our living expenses.

Psychological impact of having no mortgage

I recently watched a really interesting interview with Mr. Money Moustache (MMM) and Jesse, the founder of the budgeting software You Need a Budget (YNAB). It’s quite lengthy but has some really great and insightful nuggets in there.

One of which was the topic of paying off your mortgage or not.

MMM said that while mathematically it makes sense to take advantage of lower mortgage interest rates and invest your money in a higher-performing stock market, for him, financial freedom is about building a happy life, not about having the most money. And for him, not having a mortgage makes him feel good and so he doesn’t have a mortgage.

Jesse also made the point that while a lot of people will say “yes it makes more sense to invest than pay down your mortgage”, most people won’t actually invest and so they are neither paying down their mortgage or investing.

The other thing I’d consider here is the psychological willpower it takes to leave money invested in a market that is tanking. While mathematically it makes sense in the long term to invest alongside a low interest mortgage, you need to be really honest with yourself and know that if you saw your portfolio literally halve overnight, would you have the willpower to leave the money invested and allow for it to recover?

You may say so now but until you actually have it happen to you, you will not know how you will react. If you don’t rely on the power of time to recover, and you withdraw your money at a loss then you definitely make a loss AND still have a mortgage to pay off so you are worse off than if you’d put that money against your mortgage from day 1.

Downsides

The only downsides I can think of to this approach are:

We are tying up a lot of our portfolio in an illiquid asset, so if we did fall on hard times, although our expenses would be reduced, we’d also have less access to our money compared to if we had it invested in the stock market. We are reducing this risk by keeping a years worth of living expenses in cash and leaving our existing stocks and ETFs invested as an additional backup.

If the market did outperform our mortgage rate after taxes, we’d potentially have a lower net worth than if we had invested and paid our mortgage off slowly but our main goal is not to have the highest net worth. We are more focused on reducing financial risk and increasing lifestyle options.

As long as we have enough to get by, with a few comforts and even a few luxuries, we are happy. We are also on track to have our mortgage cleared in the next 2-3 years and so that timeframe shouldn’t make a huge impact if we miss out on the market performance during that time.

Detailed analysis

For those of you interested in the analysis comparing time to financial independence by paying off your mortgage first or not. Here it is.

Assumptions:

• 40-year-old married couple with 2 school-aged kids
• Have a mortgage with a few years paid down, 200k remaining
• No other debts and no existing investments
• Earning combined income of 100k (73k after-tax)
• Average of 40k annual expenses (see how our family spent an average of 40k in 2019 and 2020 in Cork)
• Average after tax savings/year = 33k
• Mortgage repayments 1,000/month or 12,000/year
• Mortgage interest rate 2.95% variable (allowing lump sum payments without penalty)
• ETF performance 7.91% after fees and inflation (10% average historical stock market performance, 0.19% fees, 1.9% historical 30-year inflation) – see our ETF portfolio here
• Asset allocation 100% equities/stocks 0% bonds or cash (higher risk and higher volatility but potentially higher rewards)
• Scenario 1: Pay off mortgage as quickly as possible, then invest in ETFs
• Scenario 2: Pay mortgage off slowly and invest in ETFs from day 1

Scenario 1:Pay off mortgage as quickly as possible, then invest in ETFs

Pay existing 12k/year in minimum payments + additional lump sums of 33k/year = 45k/year off 200k mortgage.

Mortgage repayment schedule

ETF investment schedule

Mortgage is paid off in year 5, freeing up 12k in expenses which can be lumped in with the 33k post tax savings for an annual investment of 45k.

Time to FI

Scenario 1 for this couple enables them to reach FI in 15 years (by age 55) starting from 0 investments at age 40. The 706k ETF portfolio allows them to safely withdraw almost 28k/year which is all they need to live as they no longer have the 12k in expenses to pay for their mortgage (40k minus 12k = 28k).

Scenario 2: Pay mortgage off slowly and invest in ETFs from day 1

Mortgage repayment schedule

ETF investment schedule

Time to FI

Scenario 2 for this couple enables them to reach FI in just over 16 years (by age 56) starting from 0 investments at age 40. The 1 million ETF portfolio allows them to safely withdraw 40k/year which is what they need to live as they still have 12k/year in mortgage repayments for an additional 8 years.

Once their mortgage is paid off by age 64, they will still have a larger portfolio and could continue to withdraw 40k/year should they choose but takes them a little over a year more than scenario 1.

Want more of this?

I recently did a presentation on something similar where I showed how a 40-year-old couple with 2 kids starting with no investments, earning a combined income of 100k/year, with a savings rate of 50%, could reach financial independence in 13 years regardless of the approach they took.

The scenarios I looked at were:

• paying off the mortgage and then investing in ETFs
• paying the mortgage slowly, maxing their pension and investing the rest in ETFs, and
• paying off the mortgage, then maxing their pension and investing any remainders in ETFs

If you’re interested in how these options weighed up against each other along with the impacts on each portfolio after 30 years of withdrawals, you can purchase tickets to the pre-recorded event for 20€ here. This gets you access to 4 hours of presentations from other Irish, European and US presenter’s perspectives.

Before I get started though, I hope everyone is staying safe and maintaining social distance as much as possible during these uncertain times. I read a scary stat that if we apply the same stats from elsewhere, 60,000 Irish will need ICU ventilators and we only have 227 in the whole country.

We need to slow the spread so that we can keep the infections to a level the hospitals can keep up with. Otherwise hospital staff will be forced to decide who lives and dies. If a 40 year old and a 30 year old are vying for the same ventilator, the 30 year old will be treated and the 40 year old will not.

We personally are staying confined to our home, leaving only to get food and go on walks around the estate. Our son is desperate to play with the neighbours but they’ve been limited to making faces at each other through the windows.

All seriousness aside, here are the items we no longer run out of.

Bathroom

In the bathroom, we no longer buy:

• Toilet roll!!!
• Floss
• Feminine hygiene products

What do we use instead?

• Handheld bidet to wash and family cloth to dry. Believe me when I say, once you try this you will hate having to use toilet roll ever again! It is so much cleaner!
  • You simply rinse off, dry off with the cloths, rinse off the cloths and hang to try before you wash your hands
  • I do still buy about 1 pack of toilet roll per year for guests.
  • If you’re really stuck for toilet roll and can’t get your hands on a bidet attachment you can use an old squirt bottle. Fill it up with water and rinse yourself off. You can use old rags to dry off and throw them in the wash with your regular laundry.
  • I got my family cloth from a Cork woman who makes them on Etsy (link included above)

• Water flosser. Comes with different heads for more than one person
• Moon cup/re-usable pads

We still buy:

• Refillable natural, SLS free, paraben free shampoo
• Unpackaged natural bars of soap. I normally buy these loose from the local health food store but see now I can purchase in bulk myself for about 2€/bar. Now that I know which scent I like I will be doing this in future
• Razors. I haven’t swapped to a safety razor yet but is in my plans. Either that or I might just get laser hair removal and be done with it.

I tried the water only method of washing my hair for about a year and finally gave up. It was fine and worked ok but was a bit too much effort to sustain.

Buying minimal products also helps to keep our shower and sink very uncluttered! No more half empty bottles and half finished soaps cluttering up the shelves.

In the bathroom shower we have 1 bottle of shampoo which we refill from bulk, 1 bar of unpackaged soap and a razor.

By the sink we have 1 bar of unpackaged natural soap.

Kitchen

In the kitchen, we no longer buy:

• Bin liners
• Dish sponges/jade cloths
• Cling film
• Aluminium foil
• Paper towel/kitchen towels
• Sparkling water

What do we use instead?

• Nothing for bin liners as all of our wet food waste is composted and we clean all of our recyclables so the only thing left in our regular bin is dry soft plastics that can’t be recycled and other clean dry non-recyclable waste. This approach also significantly reduces bin weights. In 2019 we only threw out 42kg in our black bin. The average household throws out 367kg as per a study done in 2011.
• To wash dishes and wipe surfaces we use re-usable dish cloths, steel wool and a wooden scrubber brush
• Instead of cling film we use glass Pyrex Tupperware with lids to store food. These also double as baking dishes though the plastic lids are not oven safe (whoops). I got mine in the Range in Cork as well as some in Lidl if you keep an eye out for them.
• Instead of tin foil we use a reusable silicone mat which we wash off with hot water and soap
• Instead of paper towels we use reusable dish cloths
• Instead of sparkling water bottles we got a soda stream. We do still have to refill canisters of CO2 but it lasts us about 6 months. We got the one with the glass carafe as they do not need to be replaced like the plastic ones do

Baby

Baby wise, we don’t need to buy:

• Nappies
• Wipes
• Baby food
• Nappy cream
• Baby shampoo/soaps/lotions

What do we use instead?

• Cloth nappies and elimination communication to catch pee/poo in a potty. Our son has been potty independent for poos since 6 months old. We only missed about 1 poo per month since then. Now at 18 month he does sign language to tell us when he needs to go. We are now working on trying to get him to signal for pees. We bring a portable potty and reusable insert with us when we are out an about.
  • This is the brand of nappies we went with and is the cheapest site I found that stocked them (believe me I searched!)
• Reusable cloth wipes for bums and face cloths or muslin cloths for face/body
• No baby food. We followed baby led weaning where baby eats small bits of what you eat and I’m still breastfeeding
• We are still only half way through the first tube of nappy cream that we got 1.5 years ago. With elimination communication our son doesn’t poop in his nappy which significantly reduces nappy rash. He still gets a bit red from teething so we do use it but only very rarely. We like the weleda brand as you can understand all the ingredients and are the most natural we could find
• We only wash our baby with water and a face cloth. We did buy some shampoo/lotion when we were trying to clear up an eczema outbreak but have stopped using them since we managed to get it cleared up

Out and about

Things I no longer buy for when we’re out and about are:

• Kleenex/tissues
• Water bottles

What do we use instead?

• Handkerchiefs. This may seem gross but once you use cloth nappies you kind of get over the washability of bodily fluid. Best ones I found are actually in Marks and Spencers
• Re-usable water bottle. I never leave the house without a full bottle of water. My mom got us a stainless steel one as a gift and I take it everywhere. Even in the airport, just make sure it’s empty before going through security and fill it up on the other side

Cleaning

Cleaning wise we no longer buy:

• Glass cleaner
• All-purpose cleaner
• Floor cleaner
• Wood polish
• Oven cleaner

What do we use instead?

• Micro-fibre cloth with water and squeegee to clean windows, mirrors and shower doors. This actually works amazing! This was surprisingly hard to find in shops. We managed to find one in Argos but seems to be out of stock at the moment.
• We never used all-purpose cleaner or floor cleaner. We mainly clean with water.
• I make my own wood floor polish with olive oil, vinegar, lemon essential oil and hot water. Recipe here. Works a treat
• I make my own oven cleaner with baking/bread/bi-carbonate soda and water. Make a paste, spread it on, leave it sit for at least 12 hours and wipe it off. Most effective and elbow grease free solution I have found!

The only cleaning products I still buy are:

• dishwasher tabs. We get the Winnie’s brand from Dunnes in cardboard
• laundry soap (eco-egg and e-cover refills)
• washing up liquid (e-cover refills)
• toilet bleach (though I’m trying to find less toxic alternatives for this)

I tried making my own dishwasher, laundry and dish soap for about a year and finally gave up due to ineffectiveness.

We use eco-eggs to wash the nappies but switched back to either non-bio in a cardboard box or liquid refills for laundry and refillable natural washing up liquid for dishes.

I took a few snaps of all of the things mentioned and posted them on my instagram if you want to check them out and give me a follow for the more human side of my posts! https://www.instagram.com/mrsmoneyhacker/

Cost savings

We don’t track our expenses at the line item level for groceries which is where we’d buy the majority of these items but for 2019 we spent an average of 440€/month on everything bought from a grocery store and off-license. This includes food, toiletries, alcohol and the odd tools and things you can’t resist from Lidl etc. You can see our full 12 month spend here.

The average spend for Irish households as per the 2015 survey done by the central statistics office showed the average spending for these same items was 483€/month.

Detailed breakdown from the survey below:

If you increase that by the average inflation of 1.9%/year to 2019 that comes to 530€.

A savings of 90€/month or 1,080€/year compared to the average.

Future investment savings

In order to sustain that expenditure in financial independence we need to have almost 27,000€ invested in order to draw down 4% to cover that cost.

Think about how long it would take you to save and invest 27,000€. That’s how many years you could shave off your time to financial independence if you make a few of these cost cutting changes now.

Some food for thought!

If you have any questions about how we made the switch or if you have any other suggestions please do let me know in the comments below.

*If you haven’t guessed already, this post contains some (but not all) affiliate links which give me a small commission if you purchase, at no cost to you. This helps to fund my time to keep this content free!

Some, but not all, of the below tools include affiliate links where I will get a small commission if you sign up. I only include tools I use and love so if you sign up, it will be a great support for me and the content on this blog.

Investing

Degiro – The online trading platform I use for non-pension self-directed investing (ie: my ETF portfolio). As usual do not invest money you can’t live without. Investing involves risk of loss.

Banking

Bonkers.ie – Depending on your banking habits (minimum through-put, minimum balance, number of contactless payments, number of ATM withdrawals etc), different bank accounts may suit you better. This comparison tool is handy to figure out which works out best for you.

Revolut – This is an online bank account. They are great for avoiding non-euro transaction fees (which I use for Amazon and other UK purchases) and other online purchases.

I considered using it as my main account but ruled against it for a few reasons. The biggest consideration is that I don’t think they are regulated in the same way as brick and mortar banks so if the company goes bankrupt, any money you have in the account is not protected. Smaller consideration is that there is no facility to lodge cheques (we still get the odd one, like from older relatives for wedding and baby gifts). I suppose you could use a friends bank to lodge them and have them transfer but the deposit protection thing is still an issue.

Utilities

Electricity/Gas/Broadband/Mobile/Insurance

Bonkers.ie – I use this tool to compare gas and electricity every year. It’s best if you look up your annual usage to put into the tool, an easy way to do this is to look at the “actual” readings on your first bill of the year and then look at the final bill of the year that has “actual” readings (rather than estimates). I have found the online reporting tools by various providers aren’t accurate and then retention teams quote off different figures to try and convince you into staying. I have a spreadsheet which includes standing order charges and VAT rates etc so that I can compare the full picture when being quoted various deals from retention.

This site also includes Insurance comparisons (Life, mortgage protection, serious illness and health), and broadband comparisons.

Switcher.ie – This is similar to bonkers.ie but doesn’t cover insurance or banking comparisons but does cover mobile, broadband (inc TV), and gas/electricity.

Mobile phone

We buy our phones outright and try to make them last as long as possible. This allows us to have SIM only packages. I currently use An Post (they use Vodafone’s network so I have found the coverage quite good) and pay 20€/month for 7GB and 250 minutes and texts. My husband uses Eir as he gets access to the Eir sports package on his phone (since we don’t have cable) and 30GB of data and unlimited calls and texts for 30€. These are 30 day contracts or pay as you go type deals.

There is a new company called GOMO (owned by Eir) who also offer unlimited calls, texts and data for 13€/month. 30 day rolling contract and port your number. Mixed reviews of customer service so holding off on switching to this for a bit.

TV

Netflix

Internet

We’ve been with Vodafone for a good few years as we always seem to get good deals with them. Though you need to call and ask. We upgraded to fibre this year and now pay an average of 37.5€ for 12 months. 30€ for 6 months, then 45€ thereafter.

Library

The library is an amazing resource that so often gets forgotten about. No longer just for books. When our son was born I bought a few board books and just assumed the library wouldn’t have any due to the slobbery nature of little ones but they have a great little selection. They also have printing facilities and events for teens, parents like book readings (all pre-lockdown). I also recently discovered that you can gain FREE access to magazines and publications on your phone using your library card. Download the press reader app, select your local library, enter your library card number and create a password. Access a wide range of popular magazines including Forbes, Men’s Health, Style at home, House beautiful, Highlights for kids and many more. If they don’t have a book you’re looking for, you can put in a request and they will order it in for you. They also have some digital content like DVD’s, music, audiobooks etc.

Online Shopping

Honey – A Chrome add-on which automatically searches for discount codes. You save money on purchases you were going to make anyway. You also gain points from certain websites (like booking.com) which you can exchange for vouchers for places like Amazon.

Parcel Motel – A great option for getting products off Amazon that don’t deliver to Ireland. Parcel Motel gives you a UK address and they deliver to a location near you (usually at petrol stations). Just be careful of orders which don’t group items together as you could end up paying for multiple parcel motel stays for 1 Amazon order. I’ve been burned by this before. Even though you select “group items together”, sometimes the items are coming from different warehouses and grouping is not possible. Anyway, parcel motel costs 3.95€/package so a great option if it’s something you really can’t get at home.

Mortgage

CPCC mortgage comparison – A great website for comparing mortgage rates come renewal time. They also have mortgage calculators which I use for a lot of my analysis when considering investment property costs or paying lumps off my mortgage etc.

If you apply the lump sum section it shows you how much your monthly payments will be reduced by, by the lump sum while keeping your mortgage term the same length. If you apply the extra monthly payments it shows you how many years your mortgage will be reduced by and how much less interest you will pay.

Expense Tracking

YNAB – This is the tool I use for expense tracking. It allows you to split expenses so I can easily track expenses between my husband and myself. It also allows multiple budgets for different currencies. The reports are handy too.

I used to use the desktop version which had a once off fee but now they’ve moved to a cloud based paid subscription of 84$/year (~75€). I struggled with this cost but I’ve also struggled to find an alternative that suits my needs. A way to make this easier to swallow is to convert the cost into your hourly wage and see if it will save at least that amount of time per year in maintenance as it has the auto syncing and our historical transactions from the desktop version.

That said, the only Irish bank that supports simpler imports is Ulster Bank. However, their current account fees are exorbitant, so updating does take a bit of file preparation. Apparently, Oath is on the way which is a secure method of auto-syncing with bank accounts so that feature may be coming in the new year.

Some other FIer’s use an app called Pocketsmith which has auto bank sync using the Salt Edge function. However, I haven’t figured out how to track expenses in it where I assign a certain portion to my husband and another portion to myself. You can split expenses but only into different categories and not between people as far as I can see, the reporting visuals were not as intuitive as YNAB so I ruled this one out.

Travel – Accommodation

Air B’n’B – Great site for finding cheaper accommodation. If you don’t already have an account – get 41€ off your first trip!

Booking.com – Another great accommodation site. I usually compare between both Air B’n’B and Booking.com. As mentioned above, if you use the Honey chrome-extension you can earn points which you can convert to Amazon vouchers. So far I’ve earned 40£ just by booking accommodation I would have booked anyway.

Travel – Fights

Google Flights – One of the quickest easiest ways to find flights with easy search filters for max duration, stop overs, price etc. Also really handy to explore destinations by putting in one or two starting airports and seeing where you can get to for little money. Great if you are just getting ideas of where you want to go, or where it’s cheap to get to from your airport. They also have price tracking notifications so you can be notified when prices increase or drop if you have a specific flight/date in mind.

Skyscanner – Similar to Google Flights, easy to search multiple airlines and sometimes has better prices than Google Flights.

Travel – Getting Around

Google Maps – Google Maps is great for showing how to get around a new place. It includes public transport, walking and even Uber prices and times. Street view is also a great way to explore an area before you get there.

Rome2Rio – Sometimes better at the public transport options than Google Maps. It even shows much longer journey price and booking options from country to country.

Ex-pat/Cross-border Tax Advice

ETSI – A great resource for cross border tax advice as well as other personal tax matters.

Income tax calculator

PWC tax calculator – I use this tool ALL the time for my analysis on take home after taxes based on various scenarios. It’s great as it takes into account various credits and pension contributions etc.

When

How long to save up

First, you will need to figure out how much your mini retirement will cost and how long it will take you to save up. If you are tracking your expenses or know roughly how much you spend a year then this will be a big help in your planning.

Say you will be off for 3 months and without income for 4 months (keeping in mind you will need to work for a full month before you get paid again if you are paid monthly) and you spend 40,000€/year (the average for a family in Ireland) then you will need 13,333€ to fund your cost of living if you are staying home.

If you are taking the time off to travel or start a business etc then you will also need to factor in the additional cost of living of those activities. I go into some of my tips for figuring out cost of living abroad below.

If you will be travelling and you will still have fixed expenses at home, be sure to include those. If you will be renting out your home while you are away, have a look at why we didn’t do this here.

Once you’ve figured the cost out, then figure out how much you can save per month and how many months it will take to save up that amount.

Getting work off

Once you have an idea how long it will take you to save up for your mini-retirement then you should start laying the ground work for asking for time off. There are some great tips in this post on how to make it very hard for your boss to say no to your time off.

Basically it suggests, in the months coming up to requesting your time off, work extra hard, be super helpful to your coworkers (especially if they will cover for you while you are away), mention your dream/goals for your time off in passing so they are not surprised and lay as much of the ground work for your cover while you are away so there is very little for your boss to consider. How you frame your ask for time off will make all the difference.

If you are asking for parental leave in Ireland, then this is already hard for managers to say no to since it’s a statutory leave.

Your employer can only refuse parental leave if you are not entitled to take it.

Your employer can also postpone your parental leave for up to 6 months. They must do this before the confirmation document is signed. After that, the leave cannot be postponed without further written agreement. Grounds for such a postponement include lack of cover or the fact that other employees are already on parental leave.

Normally only one postponement is allowed, but your leave may be postponed twice if the reason is seasonal variations in the volume of work.

Where

If travel is in your plans then here are some of the criteria we considered.

Flights, Weather and Distance

For us, we would be travelling in Jan/Feb and wanted to go somewhere warmer than Ireland, but also somewhere that wasn’t too far from home. As we were travelling with a smallie, we didn’t want to take a flight that was more than 4 hours total. We also wanted the cost of living to be cheaper than staying home.

From Ireland, we checked out:

We googled average temperatures in each for the months we would be there (equally important for hotter months if the weather would be unbearable).

We used google flights to check out direct flights from a specific airport and to find the best rates and dates to fly.

Cost of living

In terms of figuring out cost of living in each location we looked at a number of areas.

Accommodation

For accommodation we used sites like booking.com and Air b’n’b.

Our accommodation checklist included:

• a balcony with sunlight so that we could sit out while baby was napping and not having the hassle of leaving the house (Michael McIntyre’s skit comes to mind)
• washing machine so we could pack as little as possible (plus we use cloth nappies so definitely needed one for that)
• walking distance to Lidl or large supermarket (to help keep our costs down)
• and obviously cost, the lower the better

Keeping all that in mind I searched for the cheapest range first and then ticked off all the other boxes to get a sense of accommodation costs in each location.

Millennial Revolution also have a good travel series where they report their cost of living in each location so I also cross checked my findings with their specific location pages. You can search for a location in their search bar to see if they have a post on that location or scroll through the list here. They live quite frugally so I know their spending would be in line with ours.

Food

In terms of food costs, we had been to Tenerife so we looked at what we spent when we were there. While we felt the shopping was cheap, we actually spent quite a bit more than we thought (260€ for a week) which would be over 1,000€/month if every week was the same as that one.

For Malta and Portugal we looked at sites like Numbeo (where you compare cost of living between two cities, it gives you a percentage difference which you could apply to your typical food expenditure at home) and other blogs/vlogs.

The Our Rich Journey vlog details their living expenses in Lisbon each month since Sep 2019, so that was a good recent indicator of costs to expect.

Getting around

I mentioned how we found our flights above but in addition to Google flights you can also use skyscanner. Both have notifications you can setup to get pinged when a certain flight price has increased or decreased. If you are planning on something far in advance this feature might be of use to you.

We also took into consideration the cost of getting around once we got to where we were going. We tried to find cities or places which wouldn’t require a car rental to keep costs low.

In terms of getting from the airport, often vacation areas will offer shuttle services but usually at triple the price of public transport (though potentially half the time). We scoffed at the 60€ quoted for airport shuttle to our location but may have been short-sighted (read on below).

Google maps and Rome2Rio are other useful sites when trying to figure out routes to get places.

I also googled how to get from and to certain places and read local forums or travel sites detailing typical costs and options.

In the end, as our flight was getting in past our son’s bedtime, we decided to book a cheap airport hotel which had a place for breakfast, when we got up the next day, we popped down for breakfast and then got an uber to the train station where we got a train for the 3 of us to Portimao for 12€ (babies go free). It was about 40 minutes longer but was nice as baby got to nap on me while I read my book.

In the end it may have been much of a muchness to pay for the more expensive shuttle. For example:

• Cost of airport hotel: 50€
• Cost for breakfast for 2: 15€
• Cost for Uber to and from train station: 13€
• Cost for train: 12€

Total: 90€ minus 30€ for extra night in other location = 60€ minus say 12€ for breakfast = 48€ vs 60€ for the shuttle in half the time.

That said, maybe the train was a safer route for a baby without a car seat (although probably cancelled out by the two uber’s we got to get to the train station).

In Portugal, Uber and Kapten are cheaper and more convenient ways of getting around.

All that to say, you’ll need to take into account your added transport costs whether you use public transport, airport shuttles, taxis/ubers, or rent a car be sure to include a line item for this in your budget.

Travel insurance

If you live in the EU and have a tax number where you live, you should be eligible to apply for an EU health card. This allows you to have possibly free health cover in any EU country. We found out about this last minute and went into the office just before Christmas, we were given temporary cards straight away which last for a month and were posted the full versions once available. This doesn’t replace travel insurance and only covers necessary health care but is nice to have as a back up. Even I got one, even though I am not yet a citizen. Your partner can apply on your behalf as well so you don’t need to lug your baby in as long as they have the necessary documentation. You can read more about it here.

In terms of travel insurance, check your employer health insurance plan to see if they have an add-on where you can select travel insurance instead of additional cover for other health cover you may not use.

Visas

If you’re planning on going somewhere for longer than 3 months, make sure you can stay there for that long. Most places have a 3 month limit before you need to leave and come back again. I nearly forgot this as I have been in Ireland so long, I just assumed I could travel to Portugal for 3 or 4 months. Obviously as an EU citizen you can travel to any EU country without a visa.

Getting there

Packing

If you’re keeping costs low by traveling on budget airlines, you will need to pack light. 1 20kg checked bag costs about 50€ for the return trip, which can be hard to swallow when you’re only paying 70€ for the flight.

As we were going for 2 months with a baby, we decided to “splurge” and pay for 1 checked bag between the three of us.

Here is what we ended up bringing:

• 1 20kg checked bag
• 1 5kg small carry-on bag for baby supplies (allowed by Ryanair for free – other airlines allow 10kg though I can’t remember them weighing it)
• 1 handbag
• 1 rucksack
• 1 travel buggy

The first place we were staying had an additional baby package where we got a travel cot, high chair and baby bath for 25€ for the 32 nights so that saved us bringing any of that over.

In terms of clothes we brought 1 week’s worth for each of us and packed a variety of warm and cold clothes.

We also managed to fit all the baby nappies, wipes, creams, travel potty, nappy bags etc into the 5kg carry on bag.

House prep

Insurance

In terms of getting your house ready if you’ll be away for a longer period of time, make sure you check your home insurance for their unoccupied clause. Ours states that after 45 days your home is no longer covered for vandalism, or burst pipes. Having a family member stay for a weekend doesn’t re-start the clock either. Their definition of occupancy is 4 nights in any one week. In order to reduce this risk we gave a key to a friend who will check in every few days. We also let our neighbour know and gave them our numbers in case anything needed urgent attention. As we were leaving in winter, we also left the heating on low and turned the water off at the mains in order to significantly reduce the risk of a burst pipe.

If you’re planning to rent it out, have a look at some of the reasons we didn’t do this before making your decision.

Car

If you’ll be away for more than a few weeks, it’s also a good idea to disconnect your car battery before you go. We forgot to do this last time we went for 6 weeks and came home to a dead battery which needed to be replaced.

And that’s all the tips I can think of. Hopefully it was of some use and gives some food for thought on your next adventure should you be planning one.

I share these ideas in the hopes that it changes your perspective and help you to start living your best life now rather than pursuing full financial independence in a fury only to get to a possibly anti-climactic end.

So, what was that comment? That they never thought they would have liked living in the countryside after being in the city for so many years, but now they wouldn’t have it any other way. And that you get twice the house for the same price as the city.

My initial reaction was that I grew up in a very remote and rural area (like 40 minute drive to get your groceries) and could not see myself ever living in that setting again (though never say never). I also didn’t want a bigger house, as even the one we have now is too big with probably half of it unused on a regular basis as it is. That said, their house is absolutely sickeningly gorgeous with huge windows and sprawling country views.

Anyway, a few days later a thought occurred to me. “What kind of a house could we buy in the cheapest area of the country?” The cheapest area is currently Longford according to Daft reports. So onto Daft and down the rabbit hole I went.

First I searched for houses under 75,000€ with BER ratings of C or higher in all of Ireland. This is equity we could free up which would allow us to buy in cash and be mortgage free. Believe it or not there are some homes that match that criteria. Each one I found then led to further searches on the distance between them and our friends and family around the country as well as commute distance to nearest cities for professional level jobs.

Then out of curiosity I thought, what if once we reach FI, we sell our place in Cork and move to Longford where we could be mortgage free resulting in requiring a smaller pot of money to sustain us. I say Longford as although it is close to no one we know, it is more central to everyone. It would take under 1h 45 mins to get to Dublin Airport. It’s also under 1h 45min from most of our friends and family ranging from Galway, Mayo, Sligo, Dublin and Wicklow. Though further from our Cork gang.

Unfortunately I found a place that I absolutely love and would like to buy now. Even though it is more than twice the price of other homes in that area. This one is fully furnished, professionally designed and on a marina where you have your own berth (perfect for my kayaks!). That said, I have since managed to convince myself not to proceed with this idea since in 2016 a twister passed through there. I’m really wary of more extreme weather events happening as the climate crisis ramps up so I’d like to stay somewhere a little less exposed to the elements. Not to mention I doubt you’d get flood insurance being that close to the water!

And so on and so forth, you get the idea.

Now I’ll try to summarise the options I analysed. I’ll also include how long it would take for us to get there.

Assumptions/Caveats

I will preface this by saying that most of these timelines are from a starting point of about 25% to full FI. You can have a look and see if some of these options could move your goal posts up a few years. These are also looking at options for a family with one child so you may need to tweak things for a single person or couple without kids. However most of the concepts should still apply and may even take less time to achieve as you won’t have to account for childcare expenses etc.

I’ll also say that unless stated otherwise most of these are looking at half of our assets in tax efficient Canadian investments and the other half in tax heavy Irish domiciled ETFs and shares without the use of a pension. I only looked at the growth phase for now and have not looked at the withdrawal phase in any of these scenarios. I’ve assumed a safe withdrawal rate of 4% but safer in Ireland at 41% tax on gains and dividends would likely be 3.5%.

Traditional paths to FI

My research began with the traditional, both work until we reach FI approach, along with numerous variables thrown in.

Both work to full FI

This includes putting our son into childcare and school once he is school aged. It also includes staying in our current home both, on the path to, and after reaching FI. It also means that we’d have about 100,000€ in equity tied up in our home once we reach FI (not accounting for home price increases or decreases) – which could bring in another 4,000€ in passive income if it was invested elsewhere, but we need to live somewhere and we’d be hard pressed to find somewhere for that price at this standard in Cork if that’s where we end up wanting to stay.

Annual expenses: 50,000€ pre early childcare scheme, 46,500€ post ECCE until school, then 37,000€ once in school

Income to supplement once FI: 37,000€

Years to full FI without a pension: 8.75 years

Years to half FI without a pension where half our expenses are covered and one person can stay off or both work part-time: 3.75 years

Years to full FI WITH a pension: 6 years

Years to half FI WITH a pension where half our expenses are covered and one person can stay off or both work part-time: 2.75 years

A note about pensions: while these are definitely the most tax efficient way to invest in Ireland (once you can keep your management fees to 1% or less and you can self direct the investments to match the performance of non-pension funds) – you can only access them at 50 at the earliest if you have a private pension, meaning for me, even if I could get to my FI number much quicker using a pension, I’d need to have significant investments outside of the pension in order to draw down on those to bridge the gap of 10 to 13 years.

This complicates the draw down a bit too much for me. There are also tax implications which don’t work out for me which I will go into in another post. Not to mention, I’m not a fan of the requirement to withdraw 4% from age 61 and 5% from age 71 (and pay income tax on that sum) regardless of whether you need it or not.

Both work to full FI while renting out our spare room

I also looked at the above option where we rented out our spare room at 140€/week – side-note: It always annoyed me when listings showed weekly rates but I finally figured out why. Some months have 5 weeks so 140€*4 weeks = 560€/month or 6,720€/year but if you take 140€*52 weeks you get 7,280€ which is an additional 4 instalments! – Anyway, renting the spare room only knocked off 6 months at best so we would be sharing our living space for 8.25 years in order to be financially free 6 months sooner. For us that sacrifice is just not worth it and so we have ruled out renting our spare room.

Years to full FI without pension: 8.25

Years to full FI WITH pension: 5.75

Years to half FI WITH a pension where half our expenses are covered and one person can stay off or both work part-time: 2.5

Both work to full FI but splitting where we live to reduce expenses, not renting our home

I then looked at the idea of how long it would take to get to full FI if, once we got to a certain point, we could live for 6 months in our current home and live the remaining 6 months (winter) somewhere warmer and cheaper and preferably with better tax advantages like Portugals 10 year tax free foreign income option (for as long as that lasts). Anyway that would bring our annual expenses down from 37,000€ to 30,000€ (37k/2 = 18.5k for 6 months in Ireland, 20k/2 = 10k for 6 months abroad, 1,700€ extra for annual expenses like insurance policies which can’t be split into 6 month periods – so 18.5+10+1.7 = 30k).

This does not take into account any income we could get for renting out our current home while we were away as we wanted to first see what it would take to do that without needing to rely on rental income and being a landlord while we were away.

This would allow us to cut off a few years.

Income to supplement once FI: 30,000€

Years to full FI without pension: 7 years

Years to full FI with pension: 5 years

Both work to full FI but splitting where we live to reduce expenses AND renting our home

Then adding in the rental of our current home which we expect we could get 4,100€ for the 6 month period after tax (if rented for the full time without any vacancies or major repairs). This would bring our annual required expenses down to 26,000€.

Income to supplement once FI: 26,000€

Years to full FI without pension: 5.75 years

Years to full FI with pension: 4.25 years

This adds an additional risk variable to our income sources as it would require the income from the rental of our home, which we would need to do every 6 months months for the remainder of our early retirement. Maybe that would be doable if we were doing nothing else but it’s not a variable we personally would be comfortable with and so even though it shaves a few years off our goal, we would rather work that bit longer to not have the stress and if we did manage to rent it out that would be additional income we do not require but could use how we see fit as an added bonus.

Sell all assets and pay off existing mortgage, stay in Cork once FI

We currently have almost enough in other assets that we could pay off our mortgage in full bar one more year of savings with both of us working. I was curious to see if this option sped up or slowed down our time to FI.

This would bring our current expenses down by almost 10k so means we’d need to save 250,000€ less to cover those expenses (10,000€ times 25). It also means we could stay in our current home once we are FI.

Annual expenses with mortgage paid off: 25,000€

Income to supplement: as above

Years to full FI without renting spare room: 8.25

Years to full FI with renting spare room: 8

Sell all assets and pay off existing mortgage, move somewhere cheaper when nearing FI

If we freed up our equity once we were nearing FI and moved somewhere where we could buy a house for 80,000€ (say Longford) when we would no longer need to commute and remoteness wouldn’t matter then it shaves a few years off again.

Annual expenses with mortgage paid off: 25,000€

Income to supplement: as above

Years to full FI: 6.25

Shortcuts to financial independence

And now onto some of the less conventional options as potential shortcuts to financial independence. I typically entertain all ideas, even if the option isn’t something we’d consider at first, they often lead to other options that are somewhat related but I wouldn’t have thought of it if I hadn’t entertained the previous option. Hopefully some of these will get you thinking and if you have any other scenarios I may not have included, please do let me know!

Sell current home, buy house somewhere cheaper, one person works full-time

In my searches on Daft I managed to find a 3 bed 2 bath townhouse in an estate in the Tipperary countryside with a C2 rating for 55,000€, another house in the same estate has since popped up for 58,000€. They are nothing special but they could be made homey with minimal designer touches.

Here is one that has been done up and is on the market for 167,000€

We could sell our current home, buy one of the cheaper ones in cash and be mortgage free with added money to reinvest. This would reduce our living expenses to 25,000€/year.

This option would enable us to have one person stay home while the other could continue working a professional role full time in Limerick (a 40 minute commute) and continue working towards full FI for both of us while at the same time, reducing our current expenses and simplifying our lifestyle as one person would be home with our son and able to mind the house and cook etc.

It also means that once we are FI, we can stay in Ireland full time if we wish or spend extended periods abroad while potentially renting out our house (or leaving it vacant if we wish).

Annual expenses: 27,000€ (25k + 2k for additional commute)

Income to supplement: as above

Years to full FI: 7

Both work full time, sell home when nearing FI and move somewhere cheaper

As I didn’t overly like the idea of commuting 40 minutes or more for the next 7 years, I thought I’d look at the moving to the countryside option in another way. What if we both worked full-time and stayed in our current home, put our son in childcare and only once we were nearing FI, then free up the equity in our current home and move to the countryside then when commuting would no longer be required, but also would reduce our living expenses and time to FI.

Annual expenses once FI: 25,000€

Income to supplement: as above

Years to full FI if we buy an 80,000€ home: 5.5

Years to full FI if we buy an 60,000€ home: 5.25

Buy mobile home within commuting distance, both work and rent out our current home during the summer

I recently came across a news article where a local designer bought a mobile home to put on her parents land while she saved for a down payment. This sent me off into another research and number crunching rabbit hole.

Here is what I found.

If you’ve got a serviced site where you can put a mobile home and you don’t mind living in a small space (though some are just as big as a decent apartment, have a look at some of these modern luxury ones) – then this might be a cheaper immediate option. The added bonus with your own site is that you can get internet and laundry installed which you can’t do in a caravan holiday park.

If you don’t have a serviced site, then it probably would cost too much to buy one and get it serviced to justify this option but you could buy one in a serviced holiday park however these are only open 7 months of the year (usually Apr-Nov) and the major downside (and ultimately what has ruled this out for us) is that you can’t get internet and there are no laundry facilities in the mobile homes or at the site (at least the ones I looked at).

You can buy a 3 bed for about 20,000€ and a two bed for slightly less (though I’m not sure the quality would be like those above for that price). The annual service fees are about 2,500€.

Taking all this into consideration, I looked at the option of saving less this year and buying one of these now, both of us returning to work including the increased cost of childcare, renting out our current home while we could be at the caravan park and moving back to our home in the off-season. There is a caravan park that would be 25 minutes from my workplace and 40 minutes from my husbands.

Annual expenses: 50,000€ pre early childcare scheme, 46,500€ post ECCE until school, then 40,000€ once in school (estimated 3,000€ extra/year for additional commute costs)

Income to supplement: as above

Years to full FI: 5.5

Considerations: Though the years to full FI are short, there are a lot of moving parts, we’d need to rent our home for 6 months every year for the next 5.5 years and move between 2 homes every 6 months while both working and having our son in childcare and school. We’d also need to sacrifice having internet for 6 months and have to do our laundry at a laundromat for 6 months for the next 5 years. There is also added commute time and costs for my husband. This is not something we are prepared to sacrifice in order to shave a few years off of our goal. It would make our lives more complicated rather than simplifying which is the ultimate goal, not necessarily to be financially free as quickly as possible, though it may work for some of you which is why I included it.

Both work until nearing FI then sell home, buy mobile home in Ireland and live abroad in off-season

These headings are becoming paragraphs! Ok so while looking at the option of the caravan parks in Cork, I also considered doing the same where we stay in our current home, both of us work, put our son in childcare and continue working towards full FI but once we are nearing that goal, sell our current home and at that point buy the mobile home in Cork (or elsewhere in the country as commute would no longer be an issue). During the off season then, as we would no longer have our home in Cork, we could live abroad somewhere warmer during the winters which also reduces our living expenses and time to FI.

Annual expenses: 50,000€ pre early childcare scheme, 46,500€ post ECCE until school, then 37,000€ once in school

Income to supplement once FI: 23,000€ (10k for 6 months abroad, 13k (half of 26k) for remaining mortgage free months in Ireland

Years to full FI: 4.5

Considerations: This significantly reduces the effort while saving towards FI as we get to stay in our current home, but the offset is we put our son into childcare. It also means once we are FI, we’d be living in 2 places and moving every 6-7 months as the caravan park would only be open for 7 months. This would mean we would need to homeschool our son, but if we were both off work this is something we are considering anyway.

Both work to FI then move to caravan park in Spain year round

We personally would like to stay in Ireland for part of the year but for curiosity’s sake I looked into what you could get in Spain in terms of caravan parks. This is by no means extensive research but as an example you could get a pretty decent modern 3 bedroom caravan for 50,000€, annual site fees of 3,600€.

This particular site is 25 mins from Malaga airport which you can get to quite cheaply (as low as 50€) with direct flights (around 3 hours) from Dublin and Cork (for easy visits with friends/family) – that’s less time and less expensive for one person than it is to drive to Dublin from Cork! The site is open year round and has it’s own pool and bar/restaurant, there is a nearby village as well with standard shops you would require. This site does come with internet, though not sure about the speed. I don’t see anything about laundry either in the mobile home nor on site so that would be a tricky thing unless you could have one installed.

This option seems to be the quickest in terms of reaching full FI at a whopping 3 years at our current savings rate, at which point we’d need to sell our home and invest the rest.

Annual expenses: 18,000€ (no mortgage or rent and low cost of living in Spain)

Income to supplement: as above

Years to full FI: 3

Ways to live semi-retired now

If none of those are quick enough, here are a few options to consider by living a semi-retired life now.

Pause savings towards FI and move to caravan park in Spain where one person works part-time

Hinging off the moving to Spain option above, we could technically do that now (or within a year once we get everything organised) as we could sell our current home, buy the mobile home outright and have some to spare for re-investment. If we drew down on our existing assets we’d only need to make around 10,000€ more per year to live there year round. One or both of us could work part-time in the local village to bridge this gap while alternating who stays home with our son, or just one of us could work.

Annual expenses: 18,000€

Income to supplement: 10,000€ net

Years to full FI: Indefinitely on hold

Pause saving towards FI and live off one income until baby is in school

If you have a partner and you’ve managed to get up to a joint 50% savings rate or more then the option of living off one income (while still saving, albeit smaller amounts) could be available to you, keeping in mind that you could take home more from your partner’s income once they have use of your tax credits (if they are in the higher tax bracket) and you use the home carer credit (if you are minding a child).

For example: a married couple with one person working and the other staying home to mind a child where the person earning makes 50,000€ or more would take home about 2,600€ more than when that person was assessed as an individual or when both were working and jointly assessed. If they are in the lower tax bracket like say 40,000 or below the additional take home will be less (1,740€ additional take home for 40,000€ joint assessment).

We are lucky enough to be in a position to do that and so one option we are considering is for one of us to stay off work with our son until he is school aged, at which point we both return to work and continue saving towards FI at that point.

Our current assets would remain untouched (unless we needed to access for an emergency) and would continue compounding even though we wouldn’t be pursuing FI as aggressively.

We would stay in our current home but have also included the option of selling our home once we are nearing FI and buying somewhere cheaper (as commuting would no longer be necessary) which would lower our living expenses. This shaves 3.5 years off the end goal!

Annual expenses: 37,000€

Income to supplement: 37,000€ net (42,500€ gross)

Years to full FI staying in our current home: 10 years

Years to full FI selling our current home and buying a home in cash somewhere cheaper once nearing FI: 7.5 years

Stop saving towards full FI, one person stays off, the other works part-time

As we currently have existing assets we could draw from, we could stay in our current home, begin drawing from our existing assets and have enough to get by on one part-time income (3 days a week) or by taking on short term contracts. This means we would stop working towards full FI potentially indefinitely if this is the lifestyle we choose to pursue OR until circumstances change and we wish to return to full time work, potentially once baby is in school.

This would reduce the compounding effect of our existing assets and would take longer to reach full FI should we want to resume that but means we can take a step back now while our son is small and have an easier life with both of us being home 4 days of the week (and one full time). That being said, it might be hard to find part time work at the same level of income OR as most people will attest that do part-time, you actually still end up doing 5 days work in 3 and are only being paid for 3 so that might not be the best / most sustainable option for attaining a slower paced, less stressful life.

Annual expenses: 37,000€

Income to supplement: 30,000€ net (33,000€ gross)

Years to full FI: Unknown depending on when we’d chose to return to full time work.

Stop saving towards full FI, sell current home, buy house somewhere cheaper, one person works part-time

Hinging off the Tipperary option where we sell our current home and buy one in cash with the equity, reducing our living expenses to 25,000€ and if we both worked for one more year and saved our current savings rate, we’d have enough in assets to draw down 10,000€ in passive income. This would leave 15,000€ to supplement our current lifestyle (15,800€ gross).

This would give us options to either both work part-time locally, only one person work part-time in a professional role with a commute or even full-time in a minimum wage role locally if that suited which would bring home almost 18,000€/year (potentially with less stress and responsibility than current roles). Mr. MH often jokes that his dream job would be to stack shelves in Dunnes as he did in college so who am I to stop him following his dreams!

We also looked at the option of doing this and moving abroad for 6 months of the year where we could live more cheaply. However it only reduced expenses by another 2,000€ per year so might not be worth the hassle of trying to find jobs for 6 months at a time.

As with the previous option, this stops all savings towards full FI but allows us to live a simpler life for the moment. We could play it by ear and always have the option to return to work and continue savings should we wish to do so.

The particular location is handy as it’s closer to some family and friends and fairly close to both Cork and Limerick.

Annual expenses: 25,000€

Income to supplement: 15,000€ net (15,800€ gross)

Years to full FI: Unknown depending on when we’d chose to return to full time work.

Stop saving towards full FI, rent out current home and rent somewhere cheaper while one person works

I worked out that renting out our current home could net us 10,600€/year after an income tax rate of 6% (since only one of us would be working and only making enough to cover our expenses). If we drew down on our existing assets to further supplement our income and could find somewhere to rent for 600€/month elsewhere in the country (Longford/Sligo/Donegal seems to be the main areas where you could get a decent place for a family for this) then we’d only need to supplement our income by 26,900€ (down from 37,000€). If one of us could find a job in those areas earning 50,000€ then we could afford to work 3 days a week, or full time in a job earning 30,000€ gross and the other could stay home with our son.

The downside to this would be that we would need to be landlords from a distance. In addition, any vacant months or bigger repairs would cause us to dip further into our assets to cover the gap.

Again this is stopping our journey to FI for the moment, but doesn’t mean we couldn’t start savings towards it again once our son is in school or we choose to both return to full time work.

Annual expenses: 26,900€

Income to supplement: as above (30,000€ gross)

Years to full FI: Unknown depending on when we’d chose to return to full time work.

Summary table

And to sum that all up, here is a handy table with the years to full FI for each scenario.

And here is a summary of the semi-retirement options. They have varying levels of income that would need to be supplemented.

And that’s all I’ve come up with so far. Hopefully that has given some food for thought. Do let me know if you have any other scenarios you’d like me to run through.

Since we were/will be gone for such long periods we were weighing options on what to do with our house.

Renting your house while away has some issues

The obvious choice would be to rent it out but it’s tricky in Ireland as there is a housing crisis and new legislation has been brought in to ban short term rentals in rent pressure zones where those properties could be used by people in need of housing. So technically we are not allowed by law to rent out our home for more than 2 weeks at a time up to 90 days in total for the year (which wouldn’t work for our 2 month continuous stint). However, you ARE allowed to rent out rooms in your house without restriction, so we had posted 2 of our 3 bedrooms for rent on Daft and we managed to find someone who wanted it for the two months BUT when I rang my home insurance broker I was told they could not cover this scenario. The only thing I could do was: renew my policy as a homeowner, pay the cancellation and take out a tenant/rental policy, pay the cancellation again on our return and take out a third homeowner policy – a bit messy and they couldn’t tell me the cancellation fees as it was too far in the future.

Other dilemmas were that any rental/tenant policies I came across had a minimum 6 month lease requirement and our standard homeowner policy has a clause where you can’t leave the home unoccupied for more than 30, 45 or 60 days (depending on the policy). Now the unoccupied issue we can get around by having friends and family check in on the place or stay a night while we are away but I never did find a rental policy for less than 6 months, even though the broker was going to sell one to me saying you can just say circumstances changed and you needed to cancel the policy (not something I was willing to take a risk on) especially since our lease would have clearly stated the 2 month term.

As insurance companies can’t quote more than 30 days in advance I struggled to get answers on prices or clauses before I was up for renewal.

Once my policy was up for renewal I called again, and found a few more options. Apparently there are mid-year change teams which can make certain changes mid-year, I was told I could ring when I wanted to change to a rental policy and they could tell me then whether that’s a change allowable by the underwriter OR at that point we could do the first option of cancelling and taking out a new policy (which brings us back to the 6 month minimum lease issue). Again, too many unknowns for us to figure out if renting out the house was worth it after insurance cancellation/change fees and rental income taxes on any profits etc.

The other downside was that we would be renting out our home to strangers and we have finally gotten the home the way we like it, we have new furniture, new wood floors etc and would be a shame to have any of it damaged while we were away not to mention that fixing/replacing any of those items would completely negate any profit we would make by renting it out. Also when I put our ad up on Facebook someone messaged me a horror story saying friends of theirs rented their house to their “friends” and when they returned the locks were changed and there was nothing the gardai could do and they had a lengthy court case just to get back into their own home – a rare occurrence I’m sure but scary none-the-less.

Ultimately we decided we were willing to take the risk as we could do due diligence when selecting tenants, the couple we found had reference letters from employers and previous landlords along with ID etc and answered all of our questions satisfactorily but again it came down to the insurance issue and added cost of that as well as the hassle of getting the house rent ready, locking away valuables while getting ready to go away for Xmas and 2 months away just didn’t make sense for us this time.

Home exchanges might be the answer

In the meantime, I had come across a home exchange site (think the movie “The Holiday” with Cameron Diaz and Kate Winslet), and put our home up on there, just to see if there was anyone willing to swap for the same time frame. While I didn’t get any offers for the 2 months (what? no one wants to come to Ireland in the dead of the dark, wet winter?), I DID get offers for stays throughout next year from various locations including:

• San Diego, USA
• 6 different towns in Spain
• London, UK
• Montreal, Canada
• Victoria, Canada
• Dublin, Ireland (for a weekend)

The sites we are trying out are www.homeaway.co.uk and www,homeexchange.com

At the time I didn’t think of the insurance issue either but when I asked at my renewal they said that would be considered a non-standard policy and you would need to ring every time you were doing a home swap. Finally an option I could proceed with which ensured I was covered! The quote came in at 430€ MORE than a standard home owner policy (more than double) for the year so we had a decision to make. Would we make that value back by doing exchanges?

For the year ahead, we won’t be doing too much travel so it didn’t make sense for us this year BUT the following year we hope to travel more and so will reconsider doing that next year.

The other cool thing about the exchange site is, if you don’t mind having people stay with you, you can collect points depending on the desirability of your area. So for example we would get 230 points for each night someone stayed with us, which we could then use when we are able to travel. As you would be home, you wouldn’t need to worry about the insurance issue and could collect as many points as you wish in order to use them in the future (again you wouldn’t need to worry about the insurance issue if you were leaving your home vacant at that point instead of doing an exchange).

The other benefit is you are not exchanging money so there are no tax implications. You do not need to use the points with the people that stayed with you, you are free to use them with anyone else that uses the site. There are a lot of people that have second properties on there too so you would have those places to yourself if that’s what you preferred. You can also stay with other families for points too if you were open to that.

You can also have people mind your pets and water your plants when doing exchanges and vice versa which is also a money saver. Last year for example if we look at 1 week accommodation in Tenerife and pet sitting for 7 weeks we spent 760€ so the 430€ extra for the insurance would have been covered and then some.

As accommodation is one of the biggest expenses of a holiday, the home exchange/point exchange option might be a way to dramatically reduce your holiday expenses. I was going to say this option is limited to home owners but I guess if you were building up points and having people stay with you, you could technically do this while renting if you have a spare room or two.

The only downside to having your home on the exchange site is that you get tempted every time someone messages you. For us anyway, we have considered the exchange every time we get messaged. Especially for weekends away in Europe. Flights are cheap and we could easily pop over somewhere for a weekend, stay somewhere for free and enjoy a different culture and cuisine etc. probably for less than if we had driven up to Dublin for the weekend!

The other downside to the exchanges is that you would need to get your house guest ready at the same time you are getting ready to go away, so a lot of organisation which with a toddler is already stressful, but had I found this out while I was renting before kids I would have been all over it. I still think it would be cool to host other nationalities every now and then and get to know new people.

Anyway, while we haven’t done any exchanges yet, I thought it would be an interesting concept to share in case it is enticing for others (while saving you some time around the insurance questions – just ask for a non-standard policy team if you are planning on reciprocal exchanges).

What about you? Have you done exchanges or found any other accommodation hacks? I’d love to hear your experiences in the comments below.