Introduction
Hello and welcome back to Mortgage Advisor on F.I.R.E. This week I will be talking about a new personal challenge I’ve started to raise money for the NHS in Sheffield. I will also discuss the importance of being socially aware when talking about your own achievements, especially in light of what is going on in the world right now.
Weekly Update
On April 5th I embarked on a biking challenge to raise money for the NHS. This is almost like a sequel to a similar challenge I completed a few years ago when I raised money for the Movember Foundation. Back then, I used an exercise bike at my local gym to cycle the distance from Land’s End to John O Groats; a distance of just over 1,400km according to what Google terms the “traditional route.”
The new challenge is to use my own exercise bike to cycle the distance from Sheffield, UK, to Snagov, Romania; a distance of 2,858km. I chose Snagov because my girlfriend’s family lives there and we visit several times a year. Our next visit was scheduled for June 7th and so I’ve set that date as my deadline. It just so happens that it is exactly nine-weeks away from the start date of my challenge.
There were two things that my Movember challenge highlighted when it comes to cycling for hour after hour on a stationary exercise bike. It hurts your ass and it numbs your brain. I’ve always had a lot of muscular stamina in my legs. I could cycle for hour after hour without complaint, but for the fact the seat is very uncomfortable after a while. I purchased some padded cycling shorts which helped, but when my health worsened a while ago, I got rid of them. I’ve ordered more, but they will take time to be delivered. The other challenge is boredom. I try to keep my mind active through audiobooks, podcasts and occasionally parking the bike in front of the television. It still gets boring after a while.
As most people should know by now, I like to approach any challenge methodically. The numbers for this biking epic look like this:
2,858km / 63 days = 45.37km per day
It takes roughly 90 minutes to cycle 46km. So, I’m looking at approximately 95 hours of cycling. Four full days of cycling, more or less.
When I completed the Movember challenge, my plan was to hammer the cycling in the first week or so, so I could bring the daily required average down and then tail off as my endurance lessened. I’m approaching this in a similar way, but the numbers involved mean I can’t go all out to begin with or I risk blowing out and not being able to recover. My average daily count so far is 59.38km. So, I’m ahead of the curve. I want to bring the required daily average down to 30km as soon as possible, at which point I will start trailing off a little.
The charity involved is Sheffield Hospitals Charity, and my JustGiving page is here:
https://www.justgiving.com/fundraising/david-scothern6
Any donation, no matter how small will be gratefully accepted. If you can’t afford to donate, I get that. Please share the page instead as someone you know might be able to donate something.
Financial Update
Premium Bonds: £15,000 (no change from last week).
Stocks and Shares ISA: £8,099.01 (up £1,222.97 from last week).
F**k It Fund: £4,481.15 (up £150 from last week).
Property Value: £181,626 (no change from last week).
Total Assets: £209,206.16 (up £1,372.97 from last week).
Residential Mortgage: £144,906.05 (no change from last week).
Total Debts: £144,906.05 (no change from last week).
Total Wealth Figure: £64,300.11 (up £1,372.97 from last week).
Investment Income in 2020: £28.67 (target £2,000).
It’s good, in a way, to see my ISA recovering. However, a few more months with lower stock prices wouldn’t not have been a disaster for me as I could have scooped up more shares at a lower cost. I’m not too upset by this though. I keep reminding myself that behind each stock or fund, are businesses struggling and that behind each business there are employees struggling to make ends meet. I appreciate that this blog might not be something that everyone wants to see right now, but it’s as much for me as anyone else. Writing and reflecting on the past week keeps me focused on my goals. In the six-months or so this blog has been running, I have also tried to share information and experience. My goal is to become financially independent, but my other goal is to help people improve their financial education.
Other News
I often wondered if I was money obsessed. I think about money, talk about money, obsess about money for much of the time. The thing is, money is just a tool. I realised after reading many books on the subject, that money is just a means to an end. The end result is freedom. It’s freedom from doing what other people tell you to do. It’s the freedom to be able to say “fuck it” and walk away without worrying about a mortgage, food or survival in general. It’s part of the reason I call my emergency fund my “Fuck It Fund”. Money is important to me because it leads to the one goal I have in life; to be free.
I’m all for motivational quotes and inspiring stories, but there are times when it’s just wrong to put people under pressure. You have to pick your moments to try and be inspirational. We are in a strange, somewhat horrific, time. People are dying out there every day by the thousand. People are locked in their homes, frightened to go outside for fear of spreading or catching this awful virus. People are scared for their families and their friends. Jobs are being lost. Debt is increasing. There are people out there struggling through the worst times of their lives. And then someone goes and posts shit like this:
The guy who posted this on Facebook is a well known property investor and author. I’ve read several of his books and in general find him a decent guy. I find some of his posts to be a little annoying, especially ones that suggest the only difference between success and failure is effort. It’s not that simple. Effort counts, I agree. The thing is, sometimes life just happens. It can beat you down so badly that simply surviving is a victory. Making people feel bad because “someone took that same situation you been complaining about and won with it” is insulting, and ignorant. Now is not the time to make people feel inadequate. Now is not the time to beat people down. This sort of meme looks inspiring on the face of it, until you spend more than half a second thinking through the different ways it can be interpreted.
The guy who posted this told me he did not mean to insult. I accepted his statement but replied that one can be insulting without intending it. Someone can offer insult because they innocently failed to realise how their words, or actions, could be perceived by other people. We are all guilty of this from time to time. The important thing to remember is you don’t get to choose how your words are interpreted. You can choose your words carefully, thinking about many possible outcomes but it’s always possible you could inadvertently offend.
BTL Update
With the coronavirus showing no immediate signs of slowing down, the purchase of a BTL is on the back burner. This raises the question of what to do with my half of the deposit that is currently in Premium Bonds. With the stock market being so low, there is the option of lumping the money into shares and hoping there is a recovery by the time I need the deposit. I could potentially double my money. I would go as far as saying I am pretty much certain I could double my money with the only question being the timing. I could need the money when the market has dipped and I might not have enough value at that point to release enough funds for the deposit. There is also the question of tax.
The great thing about a stocks and shares ISA is that it’s tax free. No capital gains tax and the dividends are taxed at source at a modest level. It’s a great, tax efficient way to invest. However, you can only invest around £20,000 per year and if you withdraw from the ISA, you are not always allowed to reinvest the money later that year. For example; if I invest £15,000 as a lump sum, I would have £5,000 allowance left over. If I withdraw the £15,000 a few months later my allowance does not increase by £15,000. I would still only have the £5,000 allowance. The safest thing to do for now is to just keep that deposit on one side, and continue to invest monthly into my ISA.
From my next salary I will have met another financial target. I already have my first BTL deposit saved and from next month I will have £5,000 in my Fuck It Fund. I need to start thinking about how to allocate my investment budget moving forward. I will continue investing in my ISA; that’s a given. The real decision is whether to hammer my residential mortgage or start saving for a second BTL. I’ve decided to go with the latter. My mortgage is a Bank of England tracker and it’s a very good tracker, meaning I hardly pay anything above the base rate. On a mortgage of approximately £144K, I’m paying roughly £30 interest a month. It’s the cheapest debt I will ever have. So, for the time being I will allocate the bulk of my remaining investment budget into a second BTL deposit. I will still drip feed some money into my Fuck It Fund as well as investing in my ISA. If/When the base rate starts to climb again, I may reassess. I’ve got a soft limit of 1% in my mind, meaning that when the base rate hits 1%, I would then look to allocate more money towards paying off my residential mortgage. When I took my extra borrowing out a couple of weeks ago, I reduced the term of my mortgage by nine years, so I’m already on track to pay it off in a reasonable time frame.
Final Notes
Thank you for reading and I hope you have a safe week.
Mortgage Advisor on FIRE. 