For many, retiring early and travelling the world is a fantasy, but for 40-year-old Katie Donegan and her husband Alan, 45, it's a reality.
The couple retired when Katie, from Uxbridge, was just 35 after becoming financially independent by building up a £2million fortune investment portfolio.
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“We're worth £2million and are both retired, but we don't own anything that requires a key,” Katie said. The Sun“That means no house and no auto.”
Now they spend their time to travel the world and teach others how to achieve their financial goals.
Katie's journey from a childhood in Uxbridge to a retired, world-travelling millionaire at 40 is inspiring.
“When I was growing up, there wasn't much money for luxury.
“We didn't eat out much or expensive vacation and I went to the local high school.”
“But I've always loved saving. Nothing made me happier than seeing my piggy bank fill up.”
“I met Alan during a volunteer project in Costa Rica from 2005.
“Funny and smart, he had a great energy and shared my belief that it is better to save for something you really want.”
Start saving
Back in the UK, after graduating from university, Katie moved in with Alan and his mother.
“We wanted to save money for our own place,” she said.
“I was earning £28,500 as an actuary and Alan was self-employed teaching presentation skills to other companies.
“We could have spent quite a bit of money, but we decided to be very frugal.
“Instead of eating out and going on vacation, we ate packed lunches and spent time with friends at home.
“We bought a second hand one Škoda. Our biggest priority was to save every penny we could.”
This meant that by 2010 the couple had saved a £42,000 deposit for a £167,650 two-bedroom apartment in Basingstoke.
“We still spent money on things that were really important to us, but we didn't spend a cent on maintaining contact with other people.
“In July 2013 we organised a wedding ourselves and chose a function room rather than a flashy venue, so we were able to celebrate with 180 guests for £12,000.
“At the end of 2014 I was earning £58,000 and Alan was earning about £63,000. We had a very good income but refused to waste any of it.
“Friends and family thought it was a bit strange that we hadn't done up our apartment. Someone asked us when we were going to buy a 'real' house and a car, or take a long vacation, but we didn't see the point.”
Discover the FIRE movement
Then in 2015, Katie read a blog about something called FIRE.
“It stands for Financial Independence, Early Retire,” she explained.
“You do it by creating as big a gap as possible between what you earn and what you spend. It just made sense to both of us.
“Ultimately, we could retire early and live off the money we generate from our funds.”
The couple set themselves an ambitious goal: to raise £1 million in investments within three years so they could retire.
“It sounded insane, even with the £291,000 we had already saved.
“I would only be 35 and Alan 40 when we retired. But we both decided to go for it.”
I quit my job to work as a contractor. I was a little scared because I had no job security, but I would make more money.”
By focusing completely and spending as little as possible, the couple had saved £898,000 by September 2018 and took a gamble by invest the money.
“In March 2019, we took a two-month break from work and visited Los Angeles.
“On our flight home I looked at our investments and realised that despite everything we had spent over the last eight weeks, we were worth more than when we left the UK.
“So, we were only 35 years old and Alan was 40, so we decided to retire.”
Retire early
Initially, the couple kept their Basingstoke flat.
“We traveled the world and stayed in Airbnbs and hotels. We had no plans to return to the UK any time soon, so when we sold our Skoda we rented out the apartment.”
“But it quickly became stressful. When the toilet in Basingstoke broke, we had to try to fix everything from Thailand or Mexico.
“Despite the rent we were getting, the ongoing costs and hassle just didn't make sense.”
The couple were still worried about their families' concerns that if they left the British housing market, they would never return.
“There is definitely a fear of not owning property in the UK. We didn't want to make a big mistake and regret it later.”
“But once we looked at the numbers, we estimated that our investment would outpace rising property prices, allowing us to buy again if we ever wanted to. We put it on the market in October 2019.”
In March 2022 it was sold for £240,000 and in the meantime they continued to rent it out.
“It was a huge relief to finally sell it, and from that point on we didn't have anything that had a key. It felt great.”
Grow their investments
Meanwhile, their investments grew and they gave themselves 4% of their capital to spend each year, more than enough to travel through Asia, America and Mexico.
Last year they spent £63,000.
The couple has calculated that they can withdraw 4% of their capital each year and not run out of money. This capital consists of dividends and investments that have increased in value over time.
Of course, living off their investments is a gamble, as stock prices can go up or down. Still, the couple is realistic and has protected themselves by building a diversified portfolio.
Katie said: “We know it's a natural part of the stock market and we expect our investments to fall in value at times.”
“We chose the most globally diversified fund we could find, with the lowest fees.
“The most important predictor of long-term success is cost, so keeping it low has been and continues to be our priority.”
Of course, experts warn that you should only invest if you have sufficient savings and know what you are doing.
If not, you should seek advice from a registered IFA.
The couple now rents accommodation through Airbnb or stays in hotels, depending on their location.
This included a 5-star suite in Bogota, Colombia, which cost just £42 per night.
Other locations include West Palm Beach in Florida for £112 per night or Poland Stayed for three months last year and paid £38 per night.
Katie says she struggles with the freedom that comes with retirement.
“In the beginning I would make all these to-do lists and check things off to give myself structure.
“I got stressed when Alan wanted to spend a lot of money on something.
“After years of watching every penny, it was a habit that was hard for me to break.
“There have definitely been some fights between us, especially since we're together 24/7 now!”
But one thing they absolutely agreed on is Rebellious financial schoola ten-week online course on personal finance that they developed together in June 2020.
“We wanted to create something that would help people,” says Alan.
“We don't make any money from it, it actually costs us money to run it.
“But we do it to help people and that's what gives us a kick. So far, more than 15,000 people in 35 countries have taken the course.”
Although Katie and Alan chose not to have children, they have helped many people who have.
“We've found that taking control of your finances, regardless of your circumstances, can change your life.”
The couple had no idea that their work had attracted the attention of someone who did not need help with his finances: the king.
“We were absolutely astonished when we heard in May that we had both been awarded the British Empire Medal in this year's King's Birthday Honours list. It was for our services to financial education.
“One of our British participants was so impressed that she nominated us. We had no idea she had done that until we heard we had won the award. We were completely blown away.”
The duo, who are currently in Florida, can't wait to fly to the UK this year to collect the medal.
“It's incredible to think that my journey from saving pennies has led to Buckingham Palace,” says Katie.
“But the real honor is that I can help other people learn more about money.
“To have a chance at the financial freedom that we have now. That's what really makes us happy.”
How to start your own business?
Dragon's Den star Theo Paphitis revealed his tips for budding entrepreneurs:
- One of the biggest barriers that aspiring entrepreneurs and business owners face is a lack of self-confidence. You have to believe in your idea — and more than that, be the one to bore your friends to death with it.
- Never be afraid to make decisions. Once you have an idea, the confidence to make decisions is crucial to starting and maintaining a business.
- If you don't take calculated risks, you're standing still. If a decision turns out to be wrong, identify it quickly and act on it if you can. If you can't, find someone else who can.
- It's okay not to get it right the first time. My experience of making bad decisions has helped build my confidence and made me who I am today.
- Never underestimate the power of social media and remember that the internet is an equal opportunity for small businesses.
- Don't forget to dream. A machine can't do that!
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