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I retired at 35 and live in £42-a-night 5 star hotels – I don’t own a house or a car but I get to travel the world
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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 their reality.
The couple retired when Katie, from Uxbridge, was just 35 after they achieved financial independence by building up a £2million investment portfolio.
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"We’re worth £2 million and both retired but we don’t own anything that requires a key," Katie told The Sun. "So that means no house and no car."
Now, they spend their time travelling the world and teaching others to achieve their financial goals.
Katie’s journey from a childhood in Uxbridge to being a retired, globetrotting millionaire at 40 is an inspiring one.
"Growing up there wasn’t a lot of money for luxuries.
"We didn’t have many meals out or pricey holidays and I went to the local comprehensive."
"But I always loved saving money. Nothing made me happier than seeing my piggy bank fill up."
"I met Alan on a volunteering project in Costa Rica in 2005.
"Funny and clever he had a great energy and shared my belief that it’s better to save up for something you really want."
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Starting saving
Back in the UK, after graduating from university, Katie moved in with Alan and his mum.
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"We wanted to save for our own place," she said.
"I was earning £28,500 as an actuary and Alan was self-employed, teaching presentation skills to other businesses.
"We could have afforded to splash out but chose to be super frugal.
"Instead of meals out and holidays, we ate packed lunches and hung out with friends at home.
"We bought a second-hand Skoda. Our biggest priority was saving every penny we could."
This meant that by 2010 the couple had saved a £42,000 deposit for a £167,650 two-bedroom flat in Basingstoke.
"We still spent on things that were really important to us but didn’t spend a penny on keeping up with other people.
"We threw a DIY wedding in July 2013 and picking a hall rather than a flashy venue, so were able to celebrate with 180 guests for £12,000.
"By the end of 2014 I was earning £58,000 and Alan around £63,000. We had a really good income, but refused to waste any of it.
"Friends and family thought we were a bit crazy not to upgrade our flat – someone asked us when we were going to buy a ‘proper’ home - and car, or take a big holiday, but we didn’t see the point."
Discovering the FIRE movement
Then, in 2015, Katie read a blog about something called FIRE.
"It stands for Financial Independence, Retire Early," she explained.
"You do it by putting the biggest gap you can between what you earn and what you spend. It just made sense to both of us.
"Eventually, we’d be able to retire early and live off the money that our funds generated."
The couple set themselves a really ambitious goal – to have £1 million in investments in just three years’ time so they could retire.
"It sounded mad even with the £291,000 we already had saved.
"I’d be just 35 and Alan would be 40 when we retired. But we both decided to go for it."
I quit my job to be a contractor, which was a bit scary as I wouldn’t have any job security but would make more money."
By being laser focused and spending as little as they could, by September 2018 the couple had £898,000 saved and took a gamble by investing the cash.
"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, despite everything we’d spent in the past eight weeks, we were worth more than when we’d left the UK.
"So, at just 35 years old, and with Alan aged 40, we decided to retire."
Retiring early
At first, the couple kept their Basingstoke flat.
"We were travelling the world and staying in Airbnbs and hotels. We didn’t plan to return to the UK anytime soon so while we sold our Skoda, we rented the flat out."
"But it quickly became stressful. When the toilet broke back in Basingstoke we had to try and fix things from Thailand or Mexico.
"Despite the rent we had coming in, the ongoing costs and hassle just didn’t make sense."
The couple still had to deal with the worries of their families that if they stepped off the UK property market they would never be able to get back on again.
"There is definitely a fear about not owning a property in the UK. We didn’t want to make a big mistake and come to regret it."
"But once we ran the numbers, we estimated that our investments would outperform rising property prices, allowing us to buy again if we ever wanted to. In October 2019 we put it on the market."
It sold in March 2022 for £240,000 and they continued to rent it out in the meantime.
"Finally selling it was a huge relief, and from that moment on we didn’t own anything that had a key. It felt incredible."
Growing their investments
All the while, as their investments grew, they gave themselves 4% of their capital to spend each year, more than enough to travel across Asia, America and Mexico.
Last year, they spent £63,000.
The couple have calculated that they can withdraw 4% of their capital each year and this will allow them to not run out of money, this is made up of dividends and investments which have gone up in value over time.
Of course, living off their investments is a gamble as the stock market can go down as well as up - but the couple are realistic but also have protected themselves by having a diversified portfolio.
Katie said: "We know it’s a natural part of the stock market and we expect our investments to go down in value sometimes."
"We picked the most globally diversified fund we could with the lowest fees.
"The number one predictor of success over the long term is fees so keeping those low was and is our priority."
Of course, experts do warn that you should only invest if you have enough in cash savings and you know what you’re doing.
If not, you should seek the advice of a registered IFA.
The couple now rent places on Airbnb or stay in hotels, depending on their location.
This has included a 5 star suit in Bogota, Columbia which costs just £42 a night.
Other locations have included West Palm beach in Florida for £112 a night or Poland for three months last year where they paid £38 a night.
Katie says she does struggle with the freedom that came with retirement.
"At first, I’d create all these to-do lists and tick things off just to give myself structure.
"I’d get stressed out at Alan when he wanted to splash out on something.
"After years of watching every penny, it was a hard habit for me to break.
"There have definitely been some arguments between us – especially as we now spend 24/7 together!"
But one thing they definitely agreed on is Rebel Finance School, a ten-week online personal finance course that they created together in June 2020.
"We wanted to make something that would help people," says Alan.
"We don’t make any money from it and in fact, it costs us money to run.
"But we do it to help people and that’s what gives us a buzz. So far over 15,000 people in 35 countries have taken the course."
While Katie and Alan have chosen not to have children, they’ve helped many who have.
"We’ve found, regardless of your circumstances, taking control of your finances is life changing."
The couple had no idea that their work had caught the attention of someone who needs no help with his finances – the King.
"We were absolutely amazed when we heard in May that we’d each been awarded the British Empire Medal in the King's Birthday Honours list this year. It was for services to financial education.
"One of our British attendees had been so impressed that she’d nominated us. We had no idea she’d done that until we heard that we’d been given the award. We were absolutely stunned."
The pair, currently in Florida, can’t wait to fly to the UK this year to receive the medal.
"It’s incredible to think that my journey has taken me from saving pennies to Buckingham Palace," says Katie.
"But the real honour is being able to help other people learn about money.
"To have a chance at the financial freedom that we’ve now got. That’s what makes us truly happy."
Read more on the Irish Sun
How to start your own business
Dragon's Den star Theo Paphitis revealed his tips for budding entrepreneurs:
- One of the biggest barriers aspiring entrepreneurs and business owners face is a lack of confidence. You must believe in your idea — even more than that, be the one boring your friends to death about it.
- Never be afraid to make decisions. Once you have an idea, it’s the confidence to make decisions that 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 deal with it if you can. Failing that, find someone else who can.
- It’s OK not to get it right the first time. My experience of making bad decisions is what helped develop my confidence, making me who I am today.
- Never underestimate the power of social media, and remember the internet has levelled the playing field for small businesses.
- Don’t forget to dream. A machine can’t do that!
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