Part 45

Hello and welcome back to Mortgage Advisor on F.I.R.E.  This week I will talk about a small, temporary change to the format of the blog, as well as an update on my mental health before finishing with a look at the potential financial crisis brewing as a result of Covid-19.

Quote of the Week

Like most good quotes, I didn’t go looking for this one.  It just popped up in my day-to-day life.  Although the translation results in slightly broken English, the content of the quote transcends language.  The meaning and the emotion behind those words is powerful.  There aren’t many quotes that make me pause and really think about the words.  

The quote comes from a place of pain, and bitterness.  It’s not like the quotes from Viktor Frankl I posted earlier who managed to find hope even in the most horrific of circumstances.  There is something I like about the words I’ve chosen this week, though.  Although it comes from a place of anger, the message is empowering.  I think it’s an acknowledgment that we shouldn’t feel bad for feeling bad.  Things happen to us that are outside our control, and it’s ok to feel angry and hurt about it.  The key point is to not let that hurt consume you.  So, I think it’s possible to take wisdom from Mr Tawfik’s words and combine them with Dr Frankl’s quotes and find a path forward.  

Weekly Update

Last week I wrote about how I felt I was on an upward swing, but this week has brought me crashing back down.  There is so much going on in my personal life right now, that it’s difficult to bring focus to any one thing.  It’s like I’m fighting fires, but every fire I put out creates two new ones.  I need something to give.  For now, it’s just a case of getting through each day, each hour and each minute as it comes.  Sometimes just getting by is a victory.

I need to look at my therapy as well.  My therapist is a nice woman, and she’s easy to talk to.  I just don’t feel like I’m being challenged by it.  It’s too comfortable, and the buzz, or high, I was getting from each session is getting shorter with each session.  

By the time the next part of this blog is published, I will have turned 37.  In many ways, I feel like a failure.  Objectively, I know I’m not, but I’m just so fucking depressed that it’s hard to feel anything else.  

Depression manifests in different ways, for different people, and that’s something I’m still learning to deal with in my day-to-day life.  I would describe myself as a ‘functioning depressive”.  I can get by with daily life, but it’s like I’m playing a part in a movie.  I’ve had this feeling for a long time, like I’m stuck in a low gear, unable to really let go and show what I’m capable of.  It’s a strange feeling, and I don’t think I’m describing it very well.  The few people I open up to in person are often surprised when I describe my mental health.  I was recently asked to do something for someone, which on the face of it was a great opportunity and this person was trying to do me a favour.  I had to politely decline because the thought of going into a meeting, albeit with many friendly faces, was just not something I could deal with at that point in time.

I think for now, I need to concentrate on the small things and concentrate on getting myself mentally right.  This means going easy on myself, and doing what I enjoy.  Now, I just have to find something I enjoy.

Health Update

I am going to take some time off from posting about my weight because I don’t think it’s helping me.  I’m going through a lot of difficult things in my personal life, and I thought that this exercise would help me.  However, as I’m finding it difficult to maintain a healthy diet, this section is becoming a stick to beat myself with.  So, I will take some time off from posting in detail about my weight.  

Financial Update

Premium Bonds: £20,550 (no change from last update).

Stocks and Shares ISA: £12,129.56 (down £327.36 from last update).

Fuck It Fund: £0.00 (no change from last update).

Property Value: £187,554 (no change from last update).

Total Assets: £220,233.56 (down £327.36 from last update).

Credit Card: £0.00 (no change from last update).

Residential Mortgage: £142,814.69 (down £356.92 from last update). 

Total Debts: £142,814.69 (down £356.92 from last update).

Total Wealth Figure: £77,418.87 (up £29.56 from last update). 

Investment Income in 2020: £111.36 (up £25.00 from last update) (target £2,000).

The hit my ISA has taken was countered by my monthly mortgage payment reducing my outstanding debt.  Although it’s frustrating to see my ISA stuck in the £12,000s, each investment into my ISA is accumulating more units and more stock.  This means when the market does recover, I will see more growth.  I have to keep remembering the principle of pound-cost-averaging.  

The Coming Financial Crisis

In an article published on September 4th in The Guardian, there is a story about high street mortgage lenders Nationwide and HSBC pulling their 90% mortgages for first time buyers.  The article touches on the coming end of the furlough scheme in the UK as a possible trigger for the coming financial crisis.  I think that the end of the furlough scheme in October is going to be a major trigger, but the time of year is also going to play a part.  The furlough scheme will end just as retailers are gearing up for Christmas.  I suspect we will not see a huge wave of job losses in the retail sector in Q4 2020.  Instead, I can actually see more jobs made available which will give the economy a small shot in the arm.  This may give a false sense of security to much of the general public.  

The real issues will start in January and February.  The UK flu season will be in full swing.  People will be facing the financial cost of Christmas and the New Year.  Retailers will start looking at their end-of-year accounts as April 5th approaches.  My prediction is we will see a lot of jobs lost, and a second wave of Covid as people ignore social distancing over Christmas and New Year.  The stress of job losses, and the regret of splurging at Christmas will cause many relationships to hit the rocks.  Credit card bills start landing and suddenly households are faced with a loss of income and debts they are struggling to pay.  Many people who paid over the asking price for properties during the reduction in Stamp Duty will have some harsh truths to face.  It could get very, very messy.

It’s no surprise that we are seeing high loan-to-value deals being pulled by the main lenders.  They will have memories of what happened a decade ago and will not want to be subject to government bailouts again.  Covid has, excuse my language, fucked the economy.  

One possible answer would be to extend the furlough scheme further, to see us through to the start of the 2021 financial year.  If we can keep the economy on life support until the start of spring, when we will hopefully be closer to a vaccine, then we can start to wind it down.  However, the scheme cannot continue indefinitely as all we are doing is creating an economic time bomb that will explode eventually.  The explosion could affect more than just the UK economy.

The US economy accounts for roughly one-quarter of the global economic output, and their budget deficit is eye-watering.  Factor in that China holds over $1 trillion of US Treasury Bonds, and the tense relationship between the two nations, it’s not hard to see how this situation could spiral out of control.  

The global economy is so intertwined that it’s difficult to isolate one major economic power from another, and we must not forget that the UK economy is still one of the largest in the world with London being a major financial centre.  

I sincerely hope I am wrong in my predictions.  There are things that we can all do to help avoid the crisis, and I think being sensible with how much mortgage debt we are considering taking is a major part of that.  Also, I would strongly urge the government to extend the furlough scheme until the end of the financial year in some form.  Tax breaks to companies that keep staff employed could also be a possible solution.  The important thing to remember is that the more people who are working, the more tax revenue is collected. 

The world is in a constant state of flux at the moment, and even short-term planning is difficult.  There are some principles that hold true at any time though; spend less than you earn being the most relevant one right now.  If at all possible do not increase your level of debt.  Try to build up a contingency fund, and bunker down for the next few months.  

Final Notes

Thank you for reading this week, and I hope you have a great week ahead.  If you are following FIRE or would like to know more about it, please get in touch via Twitter (https://twitter.com/NowWeLive01) or leave a comment on this post.