Hello and welcome back to Mortgage Advisor on F.I.R.E. This week is the 52nd part of the blog, which means I’ve been charting my journey to FIRE for almost a full calendar year. As such, this week’s post is a bumper edition. I will talk about the recent Presidential debate in the US. I will also look at how my blog has changed over time, in addition to the usual updates. I will also explain why I think gold is an unwise investment choice for most people. As well as the above, I will also discuss Marcus Rashford’s attempts to feed the nation’s hungry children. First, however, the quote of the week.
Quote of the Week
The last few years have been a journey of attempted self-improvement. I found myself in a rut towards the back end of 2015 and knew that something had to change. Shortly after this realisation, I discovered Audible and it’s now one of my greatest pleasures. I enjoy listening to audiobooks more than any other form of entertainment. One thing I’ve discovered is that you can learn valuable life lessons from fiction as much as from biographies and self-help books. As I’ve started to think about fiction more, it’s led me to experience fiction through a different lens. In the last few weeks I’ve gone back to a franchise I’ve loved since I was a young boy; Star Trek. I’ve binged the whole series of Deep Space Nine, which I maintain is the best Star Trek show. I’ve also watched certain episodes of The Next Generation, which is where my quote of the week comes from. In the episode Peak Performance, one of the main characters, an android called Data, loses a game of strategema (a fictional strategic game in the show) to an alien. This confuses Data as he should be unbeatable due to his incredible computing speed. He removes himself from duty, believing himself to be defective in some way. It takes the quote from his Captain, Jean-Luc Picard, to make him realise that sometimes you can do everything right, and still lose.
This quote is extremely relevant to real life. We live in a complex world where our actions and agendas are competing against billions of other people. So much of our life is up to chance, and we fool ourselves into thinking we have more control than we do. In some ways, this quote links in to the Serenity Prayer devised by Reinhold Niebuhr, commonly quoted as:
God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.
Whilst I am not religious, there are words of wisdom in this statement as well. All of this feeds back to Stoicism, a philosophy I aim to follow as much as possible.
Life is so complex we will never be able to understand why some things happen; they just do. The key is to control what you can, whilst seeking to improve yourself. I believe that it’s important to do the things you love to the best of your ability, whilst understanding that the process is often more important than the outcome.
Weekly Update
Presidential Debate
I stayed up to watch the debate between Trump and Biden and it did not disappoint. I’m no fan of Trump, but I think he probably “won” the debate. I don’t agree with his policies, but he was able to go on the attack throughout the whole debate which forced Biden on the defensive. As a result, the debate was fought on Trump’s terms, with the President constantly jabbing at Biden with questions regarding alleged payments from foreign powers to the Democrat’s nominee.
In terms of policy, I found myself agreeing more with Biden. In terms of who came across as a decent human being, it was no contest. Biden comes across as a real, somewhat flawed, person. Trump is a caricature; a joke. The fact he is President is as tragic as Brexit and the rise of the Tory party in the UK. It’s a symptom of the modern world in which facts play second fiddle to who can shout the loudest and longest. Social media is a huge issue in this respect, where people will happily share incorrect statements of fact. Whether there is a subsequent correction or retraction is often irrelevant as people tend to believe what they are first told.
It is my hope that the US elect Joe Biden. However, I don’t see him lasting a full term in office, let alone a second term. He would be 78-years-old when sworn in, which I believe would make him the oldest person to take office for the first time. I don’t wish him ill, but the facts suggest that his age may prevent him from lasting a full term. I would expect that if Biden was to take charge, much of the heavy lifting would be done by his Vice-President and the rest of the team.
Mortgage Advisor on FIRE – A History
At the start of 2016 I bought my own domain name; www.nowwelive.com. I had a vision for a website that would be a collection of blogs, opinions and original work from a team of contributors. I assembled a small group who, at first, contributed regularly. I sought out collaborations with other bloggers to try and drive traffic to each other’s sites. Despite a number of reboots, the site never took off. Contributors came and went, with promises of submissions slowly grinding to a halt. The main problem with the nature of the site, is that it needed to be updated in real-time for the sort of content we were posting, such as film reviews, football write-ups and so on. The mobile editor for the site host was awful though. It was practically unusable. This meant the site could only be updated when sat in front of a computer.
I still wanted to write, as I felt I had something interesting to say. After reading a lot of books on finance and investing, I realised that I had a lot of opinions about money. I wrote a few one-off blogs about financial topics for Now We Live and they proved popular. I envisaged a regular finance-themed blog. I needed a catchy name for the blog though. I had been reading about a concept called FIRE, which is Financial Independence, Retire Early (there are a number of subtle variations such as Financially Independent, Retired Early). As I’m a mortgage advisor, I took some inspiration from the film title Man on Fire and, there you go: Mortgage Advisor on FIRE was born.
The early installments of this blog are, how should I put it, a little rough around the edges. It took a few weeks to really find my groove, but the feedback I’ve been getting is that the current format is enjoyable and interesting. I enjoy writing this blog and I’ve found that the act of writing it, and charting my journey to FIRE is keeping me focused and motivated even when the rest of my life has felt like it’s falling apart.
One aspect of the blog I was never really happy about was the image of the blog, or the branding. I felt it needed a recognised visual identity. I am the least artistic person alive, but fortunately I have a friend in Romania who designs logos for a living. He kindly put together a few ideas and the logo you see on the site is his creation. Despite his protest, I insisted on paying him for his time. I didn’t want to be one of those people who expect to pay artists in “exposure”. We agreed on £40 and a beer the next time I’m in Romania, which seemed like a great deal.
The blog started in 2019 before anyone had really heard of Coronavirus. I had hoped that 2020 would see my passive income start to accumulate, but the pandemic has impacted pretty much every aspect of life. Although I’m frustrated at how some of my investments have performed, I have to count myself amongst the fortunate ones. I’m alive. I have my job. I am financially comfortable.
Moving into 2021, I am hoping that I’ll start to see my plans accelerate. Once we complete on the first BTL, we should be in a position to acquire a second property early next year. From that point on, with rental income from two properties, the journey to FIRE should gather pace.
Health Update
Frustratingly, I’ve made little progress. I have lost a small amount of weight, but it’s nothing to shout about. Once I start to see consistent losses in my weight, I’ll feel better about myself.
I had a strange experience a few days ago. I had gone into the city centre for some food shopping and to get some fresh air. It was not a warm day and I dressed in jeans, a short sleeved shirt and a zip-up hoodie. When I returned home, I felt faint and I was drenched in sweat. I could wring out my shirt, it was that bad. I managed to shower and it occurred to me what might be wrong. In order to explain, I have to go back a week or so.
I started experiencing neck and shoulder pain a couple of weeks ago, and stopped lifting weights until I saw my surgeon again. Remembering the advice my surgeon and physio gave me last year when I had the other shoulder operated on, I made sure to take painkillers regularly. Normally, I try to work through pain, but they explained that the body needs to be free of pain so that you can relax and not tense up. Paracetamol was not touching the pain, and I’m allergic to many non steroidal anti inflammatory drugs, such as aspirin. Codeine doesn’t agree with me, so I turned to another option. Late last year I was in extreme pain with my feet and ankles. I was taking tramadol; a lot of tramadol, as it was the only thing that was touching the pain. So, I started taking tramadol for my neck and shoulder, and it worked like a charm. It was my intention to gradually reduce the dosage, but for various reasons I missed a dose, and then another, and before I knew it, I’d not taken any tramadol for over a day. The withdrawal hit me like a punch to the head. I was sweating, faint, had blurred vision, and I was both too hot and too cold at the same time. So, I took some tramadol and tried to sleep. I felt better a couple of hours later. I’m gradually reducing the dosage and will taper off over the next few days.
Financial Update
Premium Bonds: £20,700 (no change from last update).
Stocks and Shares ISA: £13,360.62 (up £564.42 from last update).
Fuck It Fund: £100.00 (up £100.00 from last update).
Property Value: £187,554 (no change from last update).
Total Assets: £221,714.62 (up £664.42 from last update).
Credit Card: £114.53 (down £388.18 from last update).
Residential Mortgage: £142,456.43 (no change from last update).
Total Debts: £142,570.96 (down £388.18 from last update).
Total Wealth Figure: £79,143.66 (up £1,052.60 from last update).
Investment Income in 2020: £161.36 (no change from last update) (target £2,000).
A fantastic week financially, which is due, in part, to a trade I executed at the start of the week. A few months ago I invested approximately £4,000 in a US Equity Index Tracker. At the start of this past week, it had increased in value by 15%. I cashed in and used the funds to purchase more units in a specific stock that I’ve been accumulating for a few years. That stock is currently trading at a very low price and I believe it will increase in the coming months and years. The high point for this stock, in the last year, is almost triple the current trading price. I think this is a safe trade to have executed, and I anticipate this will reap rewards in time.
Attentive readers will have also noticed I have resumed paying into my Fuck It Fund again. I will start putting a little bit aside each month because I want to have a completely liquid reserve fund. This may not make financial sense, as I could have that money in bonds or shares at which point it would be fairly easy to access, but it’s more for my peace of mind.
BTL Update
Our offer was accepted on July 16th and we started the conveyancing process immediately. The vendors were also keen to move. It was estimated that the transaction would complete at the start of October, but we find ourselves approaching November and we have not completed. I sent the vendors a text message and a few minutes later they called. It turns out they have been worried we would back out of the purchase due to the delays, which are the result of the property they are moving into needing further checks. It does not seem to be a major issue and I received a message from them yesterday stating that it appears to have now been resolved. So, I’m hopeful we should be able to complete the purchase in the next two-weeks.
The difficulty now will be finding people to complete the minor repair work needed, and then finding a tenant, as Sheffield is under Tier 3 restrictions. It will work itself out in the end though. Investing in property is a long-term project, and there will be ups and downs throughout.
Gold
There are a number of investors, business people and entrepreneurs who bang the drum for investing in precious metals, and gold in particular. It is something I’ve looked into from time to time, but I’ve always stopped short of investing. It’s never felt right, and sometimes you have to listen to your instincts even if many supposed “experts” are saying otherwise until you have educated yourself and established the facts for certain. It was only in the last few days that I had an epiphany about what was troubling me with investing in gold. First of all, let’s take a step back and define currency.
** A brief acknowledgement – what I’m about to discuss is extremely complex. I’m only giving a very basic overview, so that my explanation of my opinion on gold will make sense and have context. **
In broad terms there are three types of currency; fiat, commodity and representative.
In reverse order, a representative currency would be a currency backed by a commodity, such as a currency backed by gold, where the currency represents an amount of that commodity.
Commodity currency refers to a currency where the physical currency itself has value such as gold, silver or copper. There are even historical examples of salt being used as currency, which is a fascinating topic in itself as it explains the origins of the term soldier and salary. In the time of the Roman Empire, its armies were paid, to varying degrees, in salt This in turn leads to the term soldier which can be roughly translated to “paid in salt”, and the word salary originates in the latin name for salt being “sal” and the payment that Roman soldiers received was known as a “salarium”.
A fiat currency is a currency that has value because everyone agrees it has value. This is the sort of currency that the UK, the US and many other countries use. Fiat currency is not backed by anything physical. It’s an expression of the confidence people have in the country of origin and its economy.
How does this relate to gold?
Some of you may have already joined up the dots. Those who sell gold will often refer to its security of value. They will argue that gold will retain its value even if the Dollar, or Euro or Sterling fails. Gold allows wealthy individuals to sleep soundly in the knowledge that their wealth is secure. The thing is, you buy the gold using the Dollar, Euro or Sterling, or any other fiat currency. Why would this gold salesperson be willing to part with their secure commodity for an insecure and risky currency? If their argument was valid, they wouldn’t.
I don’t believe we will see the major currencies fail because the world is so interconnected now and there is simply too much riding on it. We will no doubt see market crashes and market booms, but a full on failure of a major currency is something I cannot see happening. Should it look like happening, the major economies would simply hit the reset button and I’m convinced everyone would just agree to start again.
Marcus Rashford
I just want to finish up with a brief comment on Marcus Rashford and the issue of children from poor backgrounds not receiving free school meals. There are a lot of arguments to be made against paying for these children to eat. All those arguments are irrelevant. If children are going hungry, they should be fed. They are citizens of the United Kingdom and they should be cared for by the state if they cannot be cared for at home. It’s the principle of triage. You deal with the most urgent problem first, and the urgent problem is making sure children don’t go hungry. Then, we can deal with the surrounding issues such as parents not budgeting, the lack of jobs, the lack of relevant benefits and the absolute horror show that is the current Tory government.
I have a huge amount of respect for what Marcus Rashford is doing. It’s great to see a young man taking this government to task and utterly embarrassing them. I can’t understand how anyone can argue that children should not be fed. It’s also great to see local councils and businesses stepping up and promising to provide meals for these children.
Thank you for reading this week. If you have enjoyed this blog please share it on social media.
My Instagram is @david_scothern and my Twitter is @nowwelive01. If you have any questions, please leave a comment below.
Also, please check out my cat’s Instagram @sweep_the_kelham_island_cat
Finally, have a look at Darren Scothern’s blog at darrenscothern.com.
Mortgage Advisor on FIRE. 