In this interview we hear from Chris who tells his story of true resilience, persistence and digging his heels in when many others would have thrown the towel in during a credit crunch and circumstances beyond control. We hear about the lows and highs of property investing for rental income, Pension contributions and combining finances all whilst battling a debilitating condition which makes working a full week excruciating for Chris. With good management of money, a bit of luck and simply not giving up Chris shows us his clear plan to make backing away from the daily grind a reality and focusing on things that matter the most to him and his wife.
🔥Who are you, and how did you discover fire?🔥
I am in my mid forties happily married and have two small children (3 and 5). I work as a school principal in the Munster area. My wife works for the HSE. I became aware of FIRE a few years ago through the Limerick FIRE meetup. They held monthly meetings in the AIB Business Hub on O’Connell Street.
This then spurred me on to reading more around the topic.
My financial journey long predates any conscious knowledge of FIRE strategies or principles. The journey began in earnest when I bought my first house within two years of graduating from college and starting my teaching career.
I was motivated to buy a home as:
1) My two older brothers had worked in much more dynamic and financially lucrative fields (hotel management and investment banking). At the time I felt the need to supplement my fairly modest teaching salary to “compete” with them.
2) The media featured multiple stories and predictions that people were struggling to purchase their own homes. I thought I needed to buy then or be locked out of home ownership forever (the year was 1998)!
I bought my first home in Co. Kildare 1998 and worked a second job in a pizzeria to help cover the mortgage. I also rented rooms to friends, a great way of having drinking buddies on the spot and to split household bills!
I rented out my house fully while I lived in Australia for a year. I remember being initially terrified of what might happen to my precious home once I had handed it over to strangers but the experience of letting out the house showed me how lucrative rental property could be.
Upon my return from Australia (and moving back into my own house) I tried to buy another house as a buy-to-let but was refused a mortgage.
I did manage to buy a rental close to my home with a friend (we’ll call him “Tom”) on a 60:40 basis in 2003.
“Tom” was working in Belfast so we bought another house up there in 2004 on a 50:50 basis. He lived in the house and paid rent towards the mortgage.
The process of opening UK bank accounts and acquiring a property in Northern Ireland allowed me to buy another Belfast buy-to-let in 2005 on my own.
In 2005 I also bought an apartment in Dublin with another friend (lets called him “Darren”) on a 50:50 basis. We lived in this apartment together for several years before renting it out.
The rents received just about covered the mortgages and the properties were appreciating so my financial life was good.
Then the “credit crunch” occurred. All of my properties dropped dramatically in value. More pressingly (or depressingly!) mortgage rates increased while my rental incomes dropped. “Tom” then emigrated to New Zealand, leaving me to manage our joint Belfast home on my own and also meant my main source of help for my other house in Belfast was now gone. The rents coming in no longer covered the mortgages and other housing costs. To cap it off, my salary decreased.
A perfect storm which left me contemplating selling some or all of the properties at a loss, if it was even possible.
I decided (against the advice of anyone I spoke to) to tough things out rather than selling. I was diverting almost all of my salary to keep my mortgages afloat. This was a really painful, really tough time for me. I let out the home I was living in to increase the money coming in and I moved into a really inexpensive (= grotty!) hostel that was partly used as a homeless shelter. That’s how difficult things became.
I would estimate that upwards of 60% of my pay was used to make up the shortfall between rents received and mortgage payments.
“Digging myself out”
In 2010 I moved schools and became a principal. The rise in salary allowed me to breathe a little more.
I had about €8000 in overdrafts and credit card balances. Month on month I paid down the balance on a single account by a few hundred and then reduced the overdraft limit on that account to prevent me sliding back into further debt.
Over the course of about 3 years I managed to clear all overdrafts and close my credit card.
This was a massive relief. It still took a huge proportion of my income to keep the mortgages ticking over but at least I was seeing some progress.
My houses in the Republic of Ireland were now attracting higher rents and I no longer needed to use my salary to support them.
My houses in Belfast were still draining financially and emotionally. One house in particular needed a serious face-lift to attract decent rents.
What was a game changer for me was handing this house to a property management company. The agreement we reached was that they would themselves finance the refurbishment of the house (around £7000) and then rent the house from me at a discounted rate for 4 years. This “discounted” rate was actually higher than the rent I was getting before they got involved! So I was relieved of the emotional burden of managing the house, I got my house refurbished and I was receiving more rent.
I had arranged with the same property management company for them to take on the co-owned house also. This pointed to a brighter future but Tom had had enough! He told me that I could have his share of the property for nothing. At that point the house was in bad shape, in negative equity and the rent received was barely covering the interest payments, let alone the capital repayments (which we had paused) on the mortgage.
The management company took on the house but this time I had to finance the refurbishment up front myself but at least I was receiving market rent (minus their management fees) once that was done.
Meanwhile I had moved on as principal to a larger school which meant a welcome jump in pay.
I had also met my now wife and I was determined to bring my finances and property portfolio onto an even keel to prepare for our future. She is very good with money but was mystified as to why I was putting myself through all the hassle and worry of property investment when it evidently was working!
“She had a good point I think!”
My wife had by now her own house and most of my weekends and holidays were spent down in Munster with her.
We got engaged and starting looking more closely at our combined financial situation. At least by then I was debt free other than the mortgages although things were very tight on my side of things, they were no longer the basket case they had been for the previous 7 years or so.
We got married and combined finances. Although she is full informed and we make joint decisions around our properties, in reality I manage our rental portfolio as I have much more of an interest in it.
We bought a home together 3 years ago and then sold her house to pay down some of the mortgage on our home.
What is the backbone of your fire strategy?
We have two investment properties in Belfast and 3 in the Dublin area, in addition to our home in Munster.
Our FIRE plan is to pay down our mortgages so that the rentals will provide us with enough income to cover our living costs. I had long since been a fan (if not an exact follower of his principles) of Dave Ramsey. His concept of gazelle intensity inspired me to wage war on my debt and mortgage mountains.
Linked to that, one of our houses in Belfast is co-owned with a friend and we are in the process of buying him out for cash.
I need to work another year or two to add to my public sector pension and to clear as much mortgage debt as possible. I also invest into an AVC to mitigate against the fact that I will retire early.
Alongside that, I manage our property portfolio. The Belfast house owned with Tom is still co-owned as the attitude of UK leaders to lending to overseas investors has changed so I need to clear that mortgage with cash and then buy him out, that is my investment focus at the moment. I hope to have cleared that mortgage by early 2023.
We hope to buy more investment property in the Republic of Ireland before I retire from being a principal in the next few years.
Overall our FIRE focus is to have built up reasonable public sector pensions, have a cash positive property portfolio that has enough momentum to allow us to purchase more property every few years from profits.
In addition to using some of the rent received for daily living, I plan on picking up occasional work as a substitute teacher and as a lecturer with some of the teacher training colleges.
I have a debilitating medical condition which means working fulltime is excruciatingly painful. This is one of my reasons for FIRE. Once the house with Tom in Belfast has been transferred to our names, I can switch careers and work part time. Both of us working fulltime and having two small kids means that can be tired and irritable.
How do you plan to spend your time when you hit Financially Independence and Retired Early?
Achieving FIRE will allow me to spend more time raising my own kids (as espoused by Chad Carson, the FIRE author and broadcaster). It will also release time for me to spend more time with friends. Fulltime work, two small kids and a health condition have all contributed to me losing touch with some of my closest friends.
Since getting married we have set an emergency fund, in addition to saving in advance for college expenses, holidays and car purchases.
Achieving FIRE will allow me to spend more time raising my own kids.
It will also release time for me to spend more time with friends. Fulltime work, two small kids and a health condition have all contributed to me losing touch with some of my closest friends.
My wife, also working in the public sector, has no current plans to retire but we do plan to take a year off to travel while our children are small.
My medical condition leaves me with little energy or bandwidth to meet friends and family outside of our home. Being semi-retired would offer numerous possibilities to rebuild relationships which have been starved of time and opportunities for fun.
What are some books, podcasts or YouTube channels you recommend?
Rich Dad, Poor Dad – Robert Kiyosaki
Think and Grow Rich – Napoleon Hill