In our How I Manage My Money series we aim to find out how people in the UK are spending, saving and investing money to meet their costs and achieve their goals.
This week we speak to David Horne, 62, a business owner living in London with his wife, Kate, 61. After a long career in finance, David suffered burn-out and wanted to radically change his life. He started a business as a wine merchant, but this wasn’t successful. David spent over £100,000 during this period, even though he wasn’t earning much. Since then, David’s picked himself back up and runs a different business, Add Then Multiply. He has over £270,000 in a self-invested personal pension (SIPP) and is keen to boost this further.
Monthly budget
My monthly income: I make about £2,600 per month from my business, Add Then Multiply. I also make £3,000 per month as a non-executive director for a healthcare company.
My monthly outgoings: We own our home outright. Council tax, £281; groceries, £500; gas and electric, £325; water, £25; broadband, £72; mobile paid by company, £50; life insurance paid by company, £276; critical illness insurance, £232; money into pension, £2,000; eating out, holidays, hobbies, clothes and day trips, £1,500. Any savings go back into my business. I don’t have car fuel costs as we’ve got an electric car.
I come from a middle-class family and was born and raised in Canada. We weren’t wealthy or poor and when I asked about money, my parents always said we were “comfortable”.
After studying economics and German at university, I had a long career in finance. I trained to be an accountant with PwC, earning £10,000 a year in 1983. In 1987, my wife and I moved with PwC from Canada to Switzerland, where I made £50,000 a year. After moving to a new job as a finance controller for a business in Switzerland, I earned £70,000.
We then moved to the UK with the company in 1992 and I took a £40,000 pay cut, but my salary grew to £65,000 over time. Next, I then moved to a chief financial officer (CFO) role for a public relations business, earning £85,000 per year. I then became CFO for an AIM-listed firm in the UK, making £120,000 a year. In 2006, I moved to a different AIM-listed firm, on a salary of £140,000 a year.
In the 2009-10 tax year, I made £250,000, with £140,000 coming from my CFO role and £110,000 from a success fee following the sale of a business where I was a non-executive director.
I quit my job at the AIM-listed firm I was working at in 2010. The board of the company fired the chief executive during the global financial crisis and hired a new guy. We were like chalk and cheese. I hated going to work each day because I thought my boss was an idiot.
After leaving the company, a mid-life crisis ensued, leaving me wanting to start my own business. I was suffering from burn-out and wanted a change. I wanted to do something I was passionate about, and after speaking to family and friends, it boiled down to either music or wine. My daughters, who were then teenagers, told me I was too old for the music industry and that a wine business would be ideal. I got my wine trade qualifications in 2010.
After starting my business, I quickly realised how hard it was to make money in the wine trade. I could go to a trade wine tasting event every day, but didn’t know how to sell wine successfully and consistently.
I went into denial about my situation and was still spending money and living like I was earning £140,000 a year. I spent around £100,000 on what I’d call lifestyle expenditure.
It had a terrible impact on me. Financially, I could see my savings going down each month. Emotionally, it was like the dream I had of being a successful wine merchant was turning into a nightmare because I wasn’t successful. The denial went deeper because it was too painful to face.
My parents visited me for my 50th birthday and my dad expressed real concern about what I was doing and the impact it was having on my family. Three weeks later he had an accident and never recovered. My mum, siblings and I were in the intensive care unit in Vancouver with him when he died. My father’s death gave me the kick up the bum I needed to get out of my state of denial.
I’m only running the wine business as a hobby now. I have a small group of friends who I buy wine for, but I am the biggest customer by some measure.
Looking back, it was a tremendous lesson in how not to start a business! I had never worked in the wine trade and had no experience in sales or marketing. I naively believed that because I knew a bunch of high-earning City people, they’d buy wine from me and everything would be wonderful. It was a hard fall.
The most important thing is that after I fell, I got up again. I now run a business called Add Then Multiply, helping business founders scale their companies. I started a business in a sector I knew about and was known for. I make about £2,600 a month from the business. I also have £3,000 a month coming in from a role as a non-executive director for a healthcare company, which takes up about 1.5 days of my time each month.
In 1992, my wife and I purchased our 30s semi-detached house in Ealing for £160,000. We had a loft conversion done in 2002, at a cost of £60,000. We became mortgage-free in 2018. It is a wonderful feeling to own your own home outright.
I have run my own SIPP for 20 years, working with a stockbroker. My company pays £2,000 per month into my SIPP. Its market value today is about £272,000. I’m also an angel investor in several private companies. I estimate my angel investments are worth £300,000. I save excess cash in my company as it’s more tax efficient than paying it to me as a salary or dividend.
I have no plans to retire. I love what I do and am building a lifestyle that I will not want or need to retire from. My dad was forced to retire from his last roles at the age of 83 and he died two years later. I’ll keep going, thank you.
Money is a tool human beings created to facilitate trade and commerce. It’s also a measuring stick. It has come to represent power and influence, but there are huge distortions in the market. For example, a footballer on £200,000 a week versus a nurse on £35,000 a year is not a fair measure of their respective value to humankind.
My attitude to money has changed over the course of my life. I’ve always been comfortable with money and was certainly motivated by it when climbing the corporate ladder, but it reached a point where it became a hygiene factor rather than a motivator. Then with the wine business and denial I was in, I ignored money for a couple of years, which is how I burned through £100,000.
Over the next decade, I want to grow Add Then Multiply and take on people who will eventually run it. I can then gradually reduce my workload, travel more with my wife and spend more time with family – we have a grandson who is two, a granddaughter on the way and hopefully more to come. Given what I do, I can combine travel with my work. With my laptop and mobile I can work from anywhere in the world.
As the business grows, I will put more into my SIPP as I’m well below the £60,000 annual threshold. I’d like to build my pension and angel investments to at least £1m, which would generate a £50,000 retirement income annually. Plus, I’ll get the state pension and whatever I earn from my business on top of that.
Want to take part in How I Manage My Money? Email money@inews.co.uk