Introduction
I reached out to Derek from the website Engineer My Freedom as he accepted the invitation to complete the interview. Derek is co-host on a podcast called Dividend Talk and based in the Republic of Ireland, working towards FI. Building a portfolio that emphasises dividend generating income, Derek’s story reflects back on events of 2008 which people will relate to. The backbone to Derek’s FIRE strategy looks to the stock market.
I asked the exact same 3 key interview questions as usual and this full Q & A is below:
Who are you and how did you discover fire?
My name is Derek ,I am a 32 year old Husband with 2 boys.
I had first discovered FIRE when I returned to College as a mature student 4 years ago. I went back as a mature student full time which meant that we had to live off one income and budget our money to live on far less than we were used to.
This taught me two things:
- We were spending money as a family on stuff that we didn’t really need. (Takeaway/ Food were some of our biggest expenses). We learned to cut back while still being able to have fun and do nice things as a family.
- Having a back up plan or emergency Fund is important for life’s unexpected things.
It was during this time that I began to search for ways to save money and stumbled across Blogs such as Mr Money Mustache who wrote about FIRE.
This was Inspiring as I always though that you needed large amounts of money to start investing and began to dream of choosing to work on my own terms.
I began straight away and opened up a DEGIRO account and deposited €50 each month
What is the backbone of your fire strategy?
Being from Ireland, I found it hard in the beginning to find a strategy that suited me. We all read books that are either US based or UK based and the rules don’t apply over here. For me Pensions are out of the equation. I was left scarred from what happened to workers in an old famous factory in Waterford. I also wanted to be in control of my own destiny and not wait until I’m in my late 60s. While I do pay into a pension, it is only because my employer doubles my contribution up to a max of 5% (I pay 55 they pay 10%). I don’t actively include this in any of my FIRE calculations.
Property always seemed too high a barrier for me. I bought at the worst time possible in 2008 and I am still in negative equity. Getting access to credit is out of the question right now but I hope to get a foot on the ladder at some point. This Led in into equites and eventually to Dividend Growth Investing. I co-host a podcast on this subject called dividend talk but essentially I like to invest in companies that are “likely” to continue to grow their dividends at a higher rate than inflation. The goal is to generate enough Income to cover my monthly expenses.
My current strategy involves Investing Monthly into Dividend Growth Stocks each month and also overpaying our mortgage each month. At my current rate it will take 10 years for my Dividend income to match my current expenses and 8 years to clear my mortgage. Longer term I hope to be able to build a property portfolio.
How do you plan to spend time when you are FI, and any plans?
When I reach FI I want to chase the sun and do lots of travelling with my wife. Lucky these timelines coincide with both our kids being over 18 so we should have a little bit more free time to be able to travel. I don’t know if I could ever retire but I would certainly reduce the hours I work to suit my lifestyle at the time and just enjoy life, family and friends.
Contact
You can follow Derek or reach out to him over at https://www.engineermyfreedom.com/
Derek co-hosts the podcast at https://anchor.fm/dividend-talk
Thank you Derek!
>>I bought at the worst time possible in 2008 and I am still in negative equity.
Are you really in negative equity 12 years after you bought with 12 years of repayments or do you mean, your house is still not worth what you paid for it?
You must have seriously overpaid for the house if you are in negative equity after the recent rises and 12 years of repayments with some overpayments.
Also, were you 20 when you bought your first house?
Hi Rob,
Yes, I was 20 when I bought my first house. Unfortunately for me, I was probably too young and immature to make a decision that big, and in truth, I had no idea what I was getting into. I had more money than sense at that time and it was a rather rushed experience.
Yes, I am still in negative equity and grossly overpaid for it, Albeit it is getting close but it is still currently negative.
There are some circumstances around the mortgage that I have not aired such as a PIA but In essence, we only learned we can make overpayments recently and have only begun to make these payments in recent months.
Hi Derek
Cool story. 20 is pretty young but I’m thinking more in terms of deposit and salary. No 20 year old without parental help could get a mortgage today.
Good you stuck at it. Must have been a temptation to walk away. If you add it all up though, you’d still be better off in your position than renting for the last 12 years.
I’ll check out your podcast as stocks are something I’m into. Etfs are taxed too high so I prefer stocks.
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Great interview Derek and fair play to you, I also agree with the opinion that ETFs are taxed too high in Ireland!