Campaign Plan 2023

New year, new stage in the campaign. Here’s my financial independence campaign plan for 2023. Onwards and upwards!

Key considerations for 2023

So the world in 2023 is a lot different to the world in 2021-2022. We’re looking at a high inflation, low-growth financial environment according to most pundits.

I’m not a pessimist, this is normal stuff for capitalism, but I’d be an idiot to think these things and not take them into account when I do my own planning.

There’s also the recent massive lifestyle change I need to consider. We now live in a high cost-of-living location. Our mortgage quotes are around 4.5% interest, even with a substantial deposit, and we’re having to take on £300k+ of debt (i.e. £13,500 of our mortgage payments are just interest on the loan…).

On the plus side, my partner and I are earning a lot of money now by mainland UK standards. Our costs and wages have scaled up together, thankfully. We don’t benefit from this now – when even your food arrives by boat, there’s an everyday cost-of-living premium – but this will give us a huge geo-arbitrage advantage when we start seeing the world on the boat plan.

Before you throw your device out of the window in disgust: I reckon that two people earning £35,000-40,000 each in Hampshire have equivalent living costs when you scale them as two people earning £60,000-70,000 each in the Channel Islands.

If you’re a mainland UK reader, divide all the numbers in this post by 2 to get a more relatable comparison, if you’re into comparisons. Otherwise, it’ll look like I dine on caviar all day, when in reality my food bill has trebled and I still eat budget meals.

Lessons from the 2022 FI Campaign Year

The most resounding point of the 2022 campaign year review was that passive income, capital gains (etc) are very real and shouldn’t be ignored, but activities where I can add value are where the biggest gains are made.

I haven’t fully bottomed out where I can make this kind of value-add yet, but it’s something I’m going to keep open to as the year continues.

1. Investing in myself

I’m earning a decent wage in a solid, dependable profession. Nothing is ever safe, but I’m feeling relatively confident about maintaining my employment this year.

This means that I’m not looking to add new directly monetizable skills this year. Instead, I’m going to put my efforts into broadening my horizons and trying to learn about a mix of things so that I can be exposed to more potential opportunities.

The way I see it: luck plays a big part in success, but it’s a probability game. You need to increase the odds in your favour. It stands to reason that you will be more likely to meet a football fan at a football game, a businessman at a business convention, or a student near a university, right? I figure that if I put myself in enough situations where opportunities for development, investment or business growth are likely to linger, the odds of me stumbling across one are higher.

Luck plays a big part in success, but it’s a probability game. You need to increase the odds in your favour.
Probably Carl Jung, might be Nassim Taleb, expertly paraphrased by SierraWhiskyMike.

Accept as many networking and hospitality events as possible

I’m not a natural networker, but I reckon with practice I could learn to be sort-of OK at it.

As I live on an island approximately five miles wide at its broadest stretch, so no on-island corporate events are actually that far away from me. Spending a couple of hours robbing free beer and talking shop isn’t a hardship if you’re still home by 2200hrs!

Importantly though, I work in corporate law. Our clients are all financiers and people who fund business ideas, or who have connections with people who have crazy business ideas or set things up. Lots of them operate investment funds and trusts. There’s a lot of capital looking for ideas and a lot of ideas that need to be bounced around in discussion. Sounds like the kind of atmosphere that might help on the financial independence campaign!

I’m going to try and maximise these chances by accepting all opportunities for networking that come up. Why not? Worst case is that I get a free coffee or beer. I like both of those!

Continue with sports

I took up archery and swimming in 2022. As both are going well, I’m going to continue them.

These will allow me to keep (reasonably) fit, at roughly the cost of a gym membership here, and I’ll also get to know more people. Swimming is less sociable than archery, but it’s a better workout and I have to keep some kind of fitness up or I’ll go mad.

Meeting people and making a few friends here are my main effort for 2023: as they should be for anyone who relocates somewhere new.

Reading this year

I think I’ve hit the peak of what I want to read on financial independence and investments, at least in book form. I’m still reading blogs that I like, but my bedtime reading is going to be a bit broader in 2023 than it has been so far.

The book I’ve started with was a Christmas gift: The World: A Family History by Simon Sebag Montefiore. It’s an accessible but rapid canter through world history, with all the scandals put back into it. I’m enjoying it so far, but I reckon it’s going to take a month to get through.

I did start Mark Carney’s book, Values. Having read through Klaus Schwab’s The Fourth Industrial Revolution, the initial vibe is that this is more of the same stuff. I’ve put it down for a bit to read The World. I guess I might pick it up later, it might make it onto a book review.

Other than those, I intend to read more fiction this year. I’m around half-way through the book series of The Witcher, which is light reading and is in stock in our local library. I reckon that my library card is going to get some serious use this year.

Side hustles?

With commutes being so short, freeing up more of my day than I ever dreamed possible, I might restart a side hustle. I still receive about £10-15 per month for those short stories I published on Amazon Kindle back in 2020, but I wonder if there’s another way I could generate a side income. I might try and tee up a writing gig using Upwork or similar and write about something I’m interested in.

Blogging is allegedly a side hustle, according to The Internet. I’m going to point out now that I haven’t made any money from this blog, even with affiliate links, and it costs me money for hosting and a web domain.

Oh, I totally would use this site for monetary gain, but all I had was Adsense and it cause so many problems without actually earning anything and all my affiliate links are to books telling you not to spend money. Genius money-making scheme this is not.

As I’m in a fortunate financial position already, side hustles are likely to be the thing I sacrifice if time gets tight. Can’t do everything, right?

2. Spending intentionally

Accommodation and furnishings

We’re buying a house this year (hopefully). We’ve deliberately bought smaller and cheaper than we can afford, so that it keeps us frugal and out of mortgage slavery. This was important to us.

“Cheap” here is just shy of £500,000. Yes, I know, I’m not happy about it either. It’s around double the cost of our last UK property, with half of the space. Our wages have grown, so the mortgage is roughly the same proportion of our take-home salaries. Basically, our extra income gets spent on keeping us here.

The plan is to be very deliberate with the way we furnish the property, so as to either buy used furniture or get the hardiest we can that is most likely to survive over time. I really don’t want to be accumulating crap and I don’t want to buy twice if I can help it.

Holidays

We’re visiting my family in February and we have a few smaller breaks lined up, but as it’s our first full year together on an island we’re probably not going to do a big holiday this year. We’re still doing stuff though:

There’s a possibility that we go sailing again this summer, which is reasonably affordable if we’re hitching a ride as crew.
I’m going to a festival with my friends from university, which I’ve already budgeted and paid for.
We might do a course or something, or go and visit more people near the end of the year.

All the same, this should be pretty cheap compared to taking a big overseas holiday and we technically live in a holiday destination, so we’re going to maximise the opportunities at home.

Going out and socialising

Recently, we’ve been spending way more than we usually would on eating out and meeting people out in town. I want to get a grip of this in 2023. That’s why I wrote that post on lifestyle creep.

The driver for this has been living with family. We’re really grateful, but it’s hard to get quality alone time living in someone else’s home.

It also makes hosting friends quite difficult, so we end up meeting in pubs.

In the long term, this is more expensive than we’re comfortable with. After we’ve moved and settled, we’re probably going to look at doing a bigger proportion of our socialising by inviting people round for dinner and/or drinks, as opposed to constantly meeting people in town. I’m sure my wallet will thank me!

3. Investing money

All asset outcomes are looking bleak and our quoted mortgage rate is around 4.5% APR. This has changed the plan for 2023 compared to previous years.

Considerations

Interest on mortgage debt will be high at 4.5%.
Markets are expected to struggle over the next year – according to JP Morgan, Morgan Stanley, Deutsche Bank and probably load of others but three links is enough.
If we own enough of the house before the boat plan, we can rent it out as an asset if/when we go.
If we never do the boat plan, we still need somewhere to live.
Putting all your eggs in one basket is a Bold Choice Indeed, so I’m not planning to do that.
ISAs and SIPPs don’t exist out here. On the plus side, we don’t do capital gains tax.
Pensions can be taken a lot earlier in the Channel Islands than mainland UK. However, the taxes are low anyway.

Outline investment strategy for 2023

In priority order, here are my investment streams for the next twelve months:

Overpay/ double-pay the mortgage.
Maximise employer pension schemes.
Automate and aim for £10,000 in general investment account.
Odds and ends: use budget surpluses for gold and bitcoin purchases.

Here’s the logic.

The mortgage interest is higher than the predicted stock market growth

Whether the stock markets increase or decrease next year is really anyone’s guess. Pundits are often wrong. However, not a single forecast predicts growth or yield in equities or bonds that’s higher than my mortgage APR.

That should be reason enough, but wait – there’s more!

If the boat plan goes ahead, the proposed home will become an investment asset later, as we will keep it and rent it out. Having reduced leverage at a time when debt is expensive seems like a good idea to generate the most (and most secure) income.

We’re looking to double-pay the mortgage… ish. The proposed rate of repayments would have us repaying around £4,500 per year from the loan capital. However, double-paying will reduce the capital debt by about £22,500 per year. That will reduce our liabilities at a time when we don’t think we’re going to see much growth from our investments.

I say “ish” because we’re actually going to set the payments at an arbitrary amount that’s around double the monthly bill, then leave it at that. The actual overpayment will compound over time as the minimum monthly payments shrink due to the debt being paid.

If you’re not maximising employer pension contributions, you should have a damn good reason

Why would you give yourself a pay cut? That’s what you’re doing if you don’t get your employer pension contributions under your employment contract.

My employer does a 5% pension match, which I qualify for from March. Understandably, I’m doing that. It works out to be a reasonable investment amount of its own accord.

Where I live, we don’t get SIPPs. Instead we get a choice of managed retirement trust schemes. I haven’t seen our scheme rules yet so I can’t give you a comparison, but it’s supposedly simultaneously worse for investment choice and fees while being better because we can draw down from age 50.

If I was in the UK, I’d still be using my workplace pension and adding to my SIPP. I was happy with my low-cost SIPP. Oh well.

I reckon I can find £800 per month for a GIA..?

My hobbies are cheap. Well, mostly cheap. I don’t have transport costs yet, as I can just walk to work and the shop. Bus routes here are pretty good. Apart from accommodation, utilities, the dog and food, most of my spending is discretionary.

I’m going to keep my Wealthify GIA as my main liquid investments vehicle. Despite all the noise about markets being in bad shape, I don’t want to have all my money tied up in a single house (!) and it’s a hassle-free way of keeping a diversified portfolio.

If you want to check out Wealthify and give them a try, use the link below and we both get some extra pennies for our investment pots if you put £250 in one for three months: https://invest.wealthify.com/refer/33247135
They do ISAs and SIPPs too, but Channel Islands customers can only have a GIA. C’est la vie. I use the adventurous portfolio, but your goals may be different to mine.

In theory, I could just build up a cash pot for later investment, but I don’t know when the markets are going to recover. Cash savings are still well below inflation, so I’m choosing to take the time to cost average units in investment funds for a few years while markets drop or stagnate.

£800 per month will be £9,600 per year. If I get some cheaper months in my budget I’ll top up the other £400.

Gold? Bitcoin? Spare money?

I don’t rely on either gold or bitcoin (or crypto) to get me to financial independence.

However, I also don’t have faith in The Market, Patron Saint of Millennial Money Experts. It’s a great tool and I use it heavily, but I’m always open to the idea that I’m wrong and I don’t believe that hope is a viable course of action.

I quite like gold because the counterparty risk is so small. If you have the gold, it’s there. You can see it, touch it, it’s a tangible thing to be owned. It doesn’t rely on any electronic services to take possession of it. Maybe that’s not too useful, but five years ago “global pandemic” wasn’t a likely event, so I’ll live with being called paranoid for wanting something that isn’t internet-dependent.

On the other hand, and largely internet-dependent, is Bitcoin. I like crypto in general because it’s a new type of asset that runs beyond borders. It may well fail, but if the Bitcoin dream is realised then it will provide much needed competition to government-controlled fiat cash systems. My assessment is that crypto and decentralised finance in general will be features of the world in 2030, albeit I suspect they will be behind-the-scenes by that point, and so I quite like investing and speculating on it.

These purchases will be funded by any surpluses saved from my budget. On a low-cost month, I reckon I might be able to put £100 to these kinds of investments. On an expensive month, probably not. As they’re not critical to campaign success, this seems like a reasonable plan.

Strengths and weaknesses of this Campaign Plan

Here’s a short summary of the strengths and weaknesses of this plan, as I see them:

Strengths	Weakenesses
Reduces opportunity cost by paying off the high-interest debt at the loss of predicted small gains elsewhere.	Predictions about low growth might be more pessimistic than reality.
Reduces liabilities in the long term.	Concentrates net worth into a single property in the short term.
Retains liquid assets in the investment account in case of emergencies.	Paying into volatile assets with anticipated low returns is counter-intuitive.
Automation of investment – when the mortgage payments and investment standing orders are set up, there’s no thought here.	Limited ability to quickly pivot to take advantage of a special situation in the markets, as funds will be committed early on.
Investment in self and spending should grow the number of people I know, opening up new opportunities and – if nothing else – having some interesting people to talk to.	No targeted plan to grow my earning potential.

Overall, I’m pretty content with my plan. It’s less exotic than the 2022 Campaign Plan, and almost two years in since the formative 2021 Campaign Plan I can see the kind of progress I’m making. The goals are now much clearer than they were in the previous years, and that’s because of the deliberate, campaign cycle approach I’ve taken to my financial independence campaign. I know what’s achievable and I now have a bit more experience of both investing and building wealth in general.

Best wishes to all of you in 2023!