On a dreary, rain-soaked day back in 2014, Katie Donegan was posed a life-changing question by her husband, Alan. “What do you really want from life?” At 29, Katie had never truly contemplated this before. However, this simple inquiry set the couple on a transformative journey with one clear objective: to retire as early as possible.

Alan had stumbled upon an online community of individuals dedicated to extreme saving, all driven by the ambition to exit the workforce at the earliest opportunity.

Embracing this philosophy, Katie and Alan embarked on a path of stringent budgeting. Their efforts paid off, allowing them to retire from their jobs by 2019, at the ages of 35 and 40 respectively. Since achieving financial independence, their days have been filled with travel and indulging in personal passions.

Their dedication to financial literacy did not go unnoticed. Recently, they were honored with the British Empire Medal (BEM) for their contributions to financial education through their complimentary program, Rebel Finance School.

Now aged 41 and 47, and currently exploring Colombia, Katie and Alan shared insights into their remarkable journey of saving, investing, and working toward financial liberation.

They discussed how they remarkably transformed £100 into a £1 million fortune in just five years, and they offered advice for anyone aspiring to follow in their footsteps.

Alan and Katie Donegan forked out £100,000 living in Colombia and travelling this year. They spent £40,000 a year when living in Basingstoke

Starting out

When Katie and Alan first met in 2005, aged 20 and 26, money was tight. Alan was working as a landscape gardener, paid bi-weekly, and Katie was a student.

After graduating she took a job at global accountants Deloitte and was paid about £28,000, initially working as an actuary.

Alan started his own confidence and skills training business in 2009, which made about £50,000 a year and in 2014, he discovered an online community called Fire, which stands for Financial Independence Retire Early.

The movement is popular in the US and advocates investing as much as possible in your youth so you can stop, or reduce, the amount you work long before retirement age.

Alan says: ‘That changed my mindset. Why would you not want to stop working early?’

The secret to success

Alan says the couple had a ­formula and worked within it.

‘You need to save 25 times your annual spending,’ he says.

By working out how much you spend over the course of a year – or would need to spend if retired – you can figure out how much you need to squirrel away.

This is based on the principle that if you keep your money invested, it will almost always grow over the longer term (with some bumps along the way).

That money should be in a ­combination of tax-efficient ­wrappers, such as Isas, pensions and Lifetime Isas, he adds.

If you are flexible with your spending and are happy to reduce your expenses in years where the stock market falls, or take on work to top up your savings, you could save a smaller amount.

‘Our very first target was annual spending of £34,000 and a total pot of £650,000. Once we understood our spending patterns more, we revised our annual spending  target to £40,000 with a total pot of £1million invested,’ he says.

Building their fund

To build a retirement – or ­‘freedom fund’, as they called it – Katie and Alan focused on putting as much money as possible into low-cost global tracker funds.

These follow the world markets and their performance. Alan says: ‘We created a gap between what we earned and what we spent, invested it every month in global index funds, and let compounding do the heavy lifting.

‘The steps to building your pot are exactly the same regardless of what you earn. Reduce your spending, increase your income where possible, take the gap between the two and invest it in low-fee index funds.’

The couple’s main focus was the savings rate, or ‘freedom rate’ as they call it – the percentage of their income that went into investments every month. They aimed to set aside six per cent – and at the height of their saving managed to save 81 per cent.

Alan and Katie started using this strategy in early 2014, investing just £100 a month. However, they ramped this up quickly, living as carefully as possible and later ­taking on contracting work to increase earnings.

By December 2015 their ‘freedom fund’ was worth £291,233. 

This money came from working and putting away as much of the cash as possible as well as rent from two buy-to-let flats in Basingstoke, Hampshire that they later sold. 

By December 2018 the fund was worth £898,002, and they hit their £1m target in April 2019 and gave up work. 

In 2021 they sold the flat in Basingstoke they had been living in and invested the £240,000 proceeds.

Today, their fund is worth £2,453,612, even though they no longer work and make an annual loss on the free course they run.

Their ‘freedom fund’ has dipped and grown over time, including when the Covid pandemic hit and when Trump’s tariffs spooked the market. That hasn’t stopped the pair continuing to put all their money into stocks, even though having some of your money in bonds is a widely recommended way of reducing investment risk.

Katie says: ‘We learned that volatility is the price of admission.’

Living frugally

To hit their target quickly, Katie and Alan focused on their income and outgoings. Living in the flat in Basingstoke and driving a Skoda Citigo helped cut costs.

Alan says: ‘We weren’t “giving things up”, we were trading short-term comforts for long-term freedom, and that felt powerful. Every pound invested was buying back our future time.

‘We cut what didn’t matter to us and kept what did. Intentional spending beats miserable budgeting every day of the week.’

Now Katie says: ‘We have been working to spend more and let go of the frugal habits.’

They spent £40,000 a year when living in Basingstoke. This year, they spent £100,000 living in Colombia and travelling.

Making mistakes

They admit to making many mistakes along the way, including investing in property. They bought the two buy-to-let studio flats intending to make a profit from renting and house price inflation.

‘They were extremely slow to sell and barely grew in real terms,’ Katie says.

‘Property can work, but it’s not as liquid as people think. We sold, simplified, and moved the money into the stock market.’

They also regret having put money in Premium Bonds.

Katie says: ‘We found our money was being eroded by inflation. You should absolutely have some cash in an emergency fund but having too much is a mistake.’

Alan says the journey towards retirement didn’t feel quick.

He says: ‘Mathematically, we knew compounding would work. Emotionally, we didn’t expect it to feel so slow at the start. You invest your first £100 and it grows by £1. Then years later your portfolio moves more in a day than you used to earn in a month.’

Alan has one crucial piece of ­wisdom to share with anyone who wants to retire early.

He says: ‘If you want the same financial results as everyone else, do the same as everyone else. If you want extraordinary results, do something extraordinary.’