Hello and welcome back to Mortgage Advisor on F.I.R.E. We are now up to the tenth part in this blog, which is a satisfying milestone to pass. Over the next few weeks I will be introducing a few new sections to the blog. In addition to the usual weekly and financial updates, and the subject of the week, I will talk a little about finance related news. Another section that I thought would be interesting is the word of the week, where I will pick a finance related word and attempt to define it. They say that the best way to learn is to teach, so I hope to pick up some knowledge through this exercise. The word of the week will start from next week, but I will be discussing a poor piece of financial journalism I saw in The Guardian today.
The week between Christmas and New Year is a strange time. I was away from work until the 30th and then had to catch up with a lot of emails and briefs as I had been away from the office since 12th December. I’ve been finding work difficult as I have missed a lot of time in the last six months due to ill health and holidays. Hopefully as we move into 2020, I will achieve some consistency. As I write this on the evening of January 2nd my girlfriend is on her way back from Romania where she has been staying with her family for the past few weeks. It has been a bit dull having Christmas and New Year away from her, but I’m happy that she has been able to spend this time with her family. It’s the first time in over a decade she has been home for the holidays.
New Years Eve was a bit underwhelming, even by my own low expectations. The highlight came at 19:25 when I finished my 104th book of 2019 and hit my target of completing two books every week over the year. I have blogged about this reading challenge here.
It just seems that NYE is just an excuse to get drunk. I’m not a big drinker; I have an alcoholic drink once every few weeks. I’m not anti-drinking, but alcohol tends to exacerbate some of my health issues. Also, over the last few years I have become increasingly bored by “nights out”. I would much prefer sitting with a group of interesting people, over a nice meal.
I’ve not enjoyed the holiday period this year. I would go as far as saying it’s been one of the worst holiday periods I can remember. It’s been nice spending time with family, but I’ve not felt more alone than I have in a long time. I have always enjoyed my own company, but for spells of a few hours at a time. I don’t think I cope well spending extended periods of time on my own. The fact that I’ve felt quite ill for much of the time over Christmas has not helped, nor has the fact my sleep has been disturbed almost every night.
Premium Bonds: £9,925 (up £25 from last week).
Stocks and Shares ISA: £7,452.60 (down £68.66 from last week).
Credit Card Debt: nil (no change from last week).
Loan Debt: £3,800.49 (no change from last week).
F**k It Fund: £1,151.85 (up £76 from last week).
Total Wealth Figure: £192,030.45 (total assets including residence valued at £173,501 by my lender) minus £138,500.52 (total debt including residential mortgage) equals £53,529.93 (down £70.26 from last week).
I believe this is a first; my Total Wealth Figure has decreased from one week to the next. There is a simple reason for this, though, so I’m not too concerned. December’s interest has been added to my mortgage balance, but because of how the publishing schedule for this blog has fallen, my mortgage payment was made today but has not updated on the balance on my statement. Next week, the mortgage debt will drop by several hundred pounds.
Investment Income Received in 2020: £0. (Target: £2,000 by end of 2020).
This story caught my eye on The Guardian website today, although it was published on 29/12/19. These types of stories are a guilty pleasure/frustration for me as they often have me shaking my head and swearing at the computer screen. The advice given is often unrealistic or completely banal. This article managed to hit the full house of being unrealistic, banal, irrelevant to most people with a side order of offensiveness.
Tip #1 – Don’t miss the tax deadline
You would think that the first tip would be something that applies to most people, but The Guardian takes the approach that something that applies to roughly one-in-nine adults is the most pressing issue on the agenda. There is also the fact that if you need to submit a tax return, and you don’t do it, you are breaking the law. Stating this as a financial resolution is just stupid.
Tip #2 – Watch out for currency shifts
One could forgive the first tip as being a little ill-judged, but this tip is practically offensive to many people. The fact is that for 99% of the UK population, currency shifts are as low down the list of concerns as things like alien invasion or a zombie apocalypse. With hundreds of thousands of people in the UK in food poverty, and food banks being used in record numbers, telling people to watch out for currency shifts is just offensive. For many people that are going on holiday, tiny changes in currency conversation rates hardly matter. By all means, shop around for a good rate of conversion but if your second biggest financial concern of the year is worrying about conversion rates then you don’t really have much to worry about.
Tip #3 – Shop around for savings deals
Once more, this suggestion from The Guardian is detached from the reality for most people. The average UK household has around £2,500 of credit card debt. General figures for the average amount of savings are more complex, but if you spend just ten minutes googling the situation you will see that for many people savings are a luxury.
Tip #4 – Take stock to avoid debt & Tip #5 Make your mobile work for you
In Tip #4 the author explains that you should avoid credit card debt, and if you have credit card debt you should pay more than the minimum amount. In Tip #5 the author suggests using a credit card to purchase your next mobile phone outright as opposed to taking it on a contract. I think I have already mentioned that the article is detached from reality, but this is just absent all logic.
Tip #6 – Fingers crossed for the budget
Are you f*****g me? The Guardian has published an article regarding financial tips and one of those tips basically boils down to “hope for a lottery win”.
Tip #7 – Look for energy bill deals
This is advice that has been doing the rounds for years now, and whilst there are some savings to be made it is hardly going to make the difference between poverty and comfort for many people who are struggling.
The article from The Guardian was disappointing and made me angry. Next week I will look at some more sensible suggestions that might be a bit more relevant for most people.
Ground Rules Revisited
In Part 4 of this blog I set out a series of Ground Rules to help focus my investment efforts. I now find myself having to revisit some of those rules as life has a habit of getting in the way. Some of my targets were a little ambitious and with the expense of Christmas, my trip to Romania and an upcoming two-week trip to India, I need more free cash. Also, we have had a few things go wrong in our apartment and need to free up money to deal with some repairs.
A quick recap of the rules now follows:
Rule 1: Save a minimum of £400 each month in Premium Bonds.
Rule 2a: Invest a minimum of £250 each month into my Stocks and Shares ISA.
Rule 2b: Reinvest all dividend income from the ISA.
Rule 2c: Absolutely no withdrawals allowed from the ISA.
Rule 3: Save a minimum of £100 each month in my F**k It Fund.
Rule 4: Save a minimum of £30 each month in my Tech Fund.
Rule 5: If I use my credit card, pay it off immediately.
As you may remember I removed the Tech Fund from consideration in this blog, as I realised it would not be an ongoing investment and eventually the funds would be used to replace my phone and/or laptop when they eventually stop working.
I am going to tweak the amounts in Rule 1 and 2a.
Rule 1 (updated): Save a minimum of £300 each month in Premium Bonds
Rule 2a (updated): Invest a minimum of £200 each month into my Stocks and Shares ISA.
All the other rules apply as normal.
There will probably be many months when I invest more than the minimum, but I’ve realised that in life you must be flexible when things come up. If you are rigid, you are brittle, and things that are brittle tend to break.
A bit of a shorter post this week as I’ve been a bit busy. Next week should be more in-depth as I look at some of my suggested financial resolutions. I will also look at how realistic my £2,000 target for investment income in 2020 is.
Thank you for reading and I hope you have a great weekend.
Link to The Guardian story discussed in this blog: https://www.theguardian.com/money/2019/dec/29/top-financial-resolutions-for-2020