Part 88

Hello and welcome back to Mortgage Advisor on FIRE.  This week I talk a little about mental burnout, my discovery of the show Invincible and finish with a look at how first time buyers are struggling to buy a house.  First, the Quote of the Week:

Quote of the Week

My tolerance for dealing with other people, and their bullshit has reduced to almost zero.  It really does not take much for me to think, “fuck it” and just block someone on social media, or in real life.  There are certain times when you can’t do that, though.  In those times you just have to put on your mask and act like someone who cares.  Over time, that becomes exhausting and my stamina for this type of mental effort is reducing.  I need a long, extended break to reset and recharge.  

Part of my frustration stems from people just not thinking logically, and not seeing that cause leads to effect.  I’ll come back to this point later when I talk about people struggling to buy their first home, but it also applies to the current pandemic.  Actions have consequences, and the fact you don’t always see those consequences first hand does not mean they don’t happen.  For example, you make a joke that someone looks ridiculous with their new hairstyle.  You forget all about it.  That person may have been really struggling with their mental health and felt excited to change something about their appearance.  They might have saved up to have a nice haircut at an expensive salon.  Then, you piss all over their bonfire.  You didn’t realise that the person was on the verge of suicide.  They go home and follow through.  You made a joke and someone winds up dead.  Yes, I know I’m using an extreme example.  The thing is, it does not take much effort to just be a decent human being and think about what you are doing and saying, and how it could potentially impact on those around you.  

I don’t think I’m better than other people.  I do believe I think differently than other people, and I suspect this is part of me being (in all likelihood) autistic.  I think I can put the pieces together and see how A leads to B, which leads to C a little more clearly than other people.  However, I’m rubbish at maintaining friendships and I realise I lack a certain social awareness that adds to this.  Everyone is unique.  The point is, as a neurodivergent person, I find the neurotypical world absolutely exhausting.  It’s like the world is an office chair that’s not set up quite right; you can just about manage to sit there for a bit at a time, but you need frequent breaks to go and lie down.

Weekly Update

Another week of work and another week where I have been physically exhausted.  I am not sleeping well and I’m waking up several times a night and struggling to get back to sleep.  I can fall asleep easily, and as some of you know I fell asleep a little too easily at one point recently but I don’t think anyone noticed.  It’s just the act of staying asleep and getting a restful sleep that is impossible for me.  

The highlight of my week was watching Invincible on Amazon Prime.  For those who don’t know, it’s the source of the “Think” meme that has been doing the rounds on social media.  It’s a superhero cartoon that is aimed at adults.  To say it is bloody would be like saying water is wet.  In addition to the violence, it has some interesting language.  It’s not just gore and swearing for the sake of it.  The story is tight and well structured.  The pacing is bang on and the voice work is great with a stellar cast including Steven Yeun, J.K. Simmons, Sandra Oh, Zachary Quinto, Jon Hamm, Mark Hamill and Mahershala Ali lending their talent to the show.

Here are a few of the better “Think” memes I’ve seen:

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Bobbity

Our cat, Bob, is continuing to settle in and has now made himself a home inside our wardrobe.  Apparently having a place to sit on the balcony, and beds in the living room, bedroom and the spare room I use as an office is not sufficient for his majesty.  We had to take him to the vet again, and he needs to return in a couple of weeks for surgery.  He needs to have some teeth removed, but he will still have his murder mitts to show us the error of our ways if we step out of line.

It’s taken a while to really get attached after losing Sweep so recently, but Bob’s personality is infectious.  He is still a bit nervous but he’s also really affectionate in his own way.  I’ve just gone to check up on him, and he’s currently in our bed all tucked up in the covers.  

2021 Goals – to be achieved by 31/12/2021

1 – Reduce weight to 92.8kg.  (Current weight 123.2kg).

2 – Finish 104 new books. (Current total: 55).

3 – Complete RO3 for my DipFA. (In progress).

4 – Complete RO4 for my DipFA.  (Not started).

5 – Complete RO5 for my DipFA.  (Not started).

6 – Complete RO6 for my DipFA.  (Not started). 

I’ve been having some fun in the past week chatting with Alex Marwood, who wrote The Killer Next Door, and Imogen Church, the voice artist who did the narration for the audiobook.  I’ve been asking for recommendations from Imogen, for books she has narrated, and I’ve not been disappointed yet.  The Turn of the Key by Ruth Ware was another book she did the voice work for.  It’s been so refreshing opening myself up to books I would normally never pick up, and taking up people on their recommendations has opened up a whole new world of storytelling.

Financial Update

Assets

Premium Bonds: £17,300.00 (up £75.00 from last update).

Stocks and Shares ISA: £27,711.56 (down £153.51 from last update).

Fuck It Fund: £500.00 (no change from last update). 

Crypto: £416.64 (up £10.85 from last update). 

Pensions: £47,767.90 (up £645.98 from last update).

Residential Property Value: £199,355.00 (no change from last update).

Buy-to-Let Property Value: £128,644.00 (no change from last update).

Total Assets: £421,695.10 (up £578.32 from last update). 

Debts

Credit Card: £565.87 (up £173.14 from last update).

Residential Mortgage: £158,925.57 (down £466.52 from last update).

Buy-to-Let Mortgage: £93,079.52 (down £24.00 from last update). 

Total Debts: £252,570.96 (down £317.38 from last update).

Total Wealth: £169,124.14 (up £895.70 from last update).

Investment Income in 2021: £1,387.77 (target £5,000).

Things are ticking over quite nicely at the moment.  My credit card took another hit with more vet bills for Bob, but we have the money to pay this and the card is on a 0% interest deal.  I’m not too worried about it, and for now I’d rather keep the cash on one side.  The upcoming vet bill for Bob’s surgery is going to be £300+, so I want to keep options open as to how to pay.  It’s not a problem either way.

I’m keen to start chipping away at my residential mortgage as it’s now at the highest balance I’ve ever had.  However, this would probably be a mistake as the bulk of that debt is at a rate of 0.1% as it tracks the Bank of England base rate exactly.  For now, it makes more sense to keep investing and if the rates start to creep up I can reassess.

Buying Your First Home

I’ve been having a bit of an argument with some people on the internet (yeah, I know that’s hardly unusual for me) about the housing market, mortgages and the general capitalist way we live in the UK.  One person in particular is stating that it’s impossible for many first time buyers to acquire their first property because housing prices are rising at a faster rate than wages.  I don’t have too much of an issue with that point, because house prices do tend to rise quite quickly.  However, it’s rare that wages drop.  This is another way of describing the boom and bust mentality of the housing market. 

So, taking the argument that the “average first time buyer” can’t afford an “average house”, let’s have a look at how the data stacks up.

The Average UK House & The Average First Time Buyer

There are competing sources for this, but it seems that the current price for an average UK house is approximately £250,000.  The thing about averages is that they can be distorted by outlying data.  The average London price is just over £500,000, and if you drill down into the more affluent parts of London then you start getting crazy figures.  London is also a bit of a strange one, where everything is more expensive.  For the sake of clarity, let’s just go with the £250,000 figure.

The average (starting to hate that word already) UK salary is £29,600.  For a single person, it’s pretty much impossible that they will be able to afford the average UK home.  The thing is, how many first time buyers, who are buying alone, would want to buy a house valued at £250,000?

It’s important to remember that house prices do not exist in a vacuum.  There is not some panel of experts who decide what prices are going to be.  House prices move up and down in relation to market forces; supply and demand.  If houses are selling for £250,000 and they are not being bought by first time buyers, then we can deduce a couple of things.  First, someone is buying those houses because, well… they are being sold.  Second, if they are not being sold to first time buyers, then they are being sold to people who own property outright or people selling their own mortgaged properties.  

I see a lot of flak being aimed at mortgage lenders, but people seem to forget that borrowing money is not a right.  The lender can dictate the terms on which they lend.  The lenders will not set the bar so high that no one can jump over it because to do so would mean they would not make money.  Also, they are not going to set the bar so low that anyone can get a mortgage.  This is part of what led to the crash in 07/08.  So, lenders have to be sure that people can afford a mortgage.  

Life isn’t fair.  The capitalist system has a lot of faults.  If you don’t like it, move to a country with a different system or try to effect change through democracy.  Wait, what’s that?  Sounds like too much effort?  Well, I direct you back to the first sentence of this paragraph.  

There are some people who are trapped in awful circumstances where they, through no fault of their own, have not enough money to meet their commitments.  My statements here are not directed at those people.  My statements are directed at the First World Poor; those people earning in line with the national average who state they cannot afford to get on the housing ladder.  

A typical couple earning the national average wage would have approximately £60,000p/a.  Assuming a normal tax code for each of them, and assuming they are repaying a student loan, they will still take home just under £2,000pcm each.  If this couple cannot save at least 10% of £4,000pcm, without any unusual circumstances at play, then they are financially stupid.

We seem to be in a generation where people want everything yesterday.  Life doesn’t work like that.  It takes time to save up for a deposit.  I personally don’t think it’s unreasonable to expect to have to save for two or three years for a deposit.  It also has the added advantage of allowing couples to live together without the long-term commitment of a mortgage over their heads.  

I’ve tried making these points during the argument I was having, but each time I give an example of how spending can be reduced, the response is just an absurd simplification of what I am saying.  For example, I explained that I see a lot of people paying hundreds of pounds on expensive car lease agreements, for brands like Audi.  I see lots of people renewing their phone contract every year so they can get the latest iPhone.  On the other hand, I see people who get a modest car which they take a loan out for, meaning they own the car outright at the end of the agreement.  I see people take phone contracts out where they keep the handset for several years.  These things alone will not turn the poor into millionaires, but where money is concerned the path to financial comfort is often in making small changes that build momentum over time.  Let’s compare two examples.

Example 1: Typical Couple

They have an Audi Q3 on lease for £284pcm, and a Mini Cooper Sport for £260pcm.  They also have matching iPhone 12 Pro Max contracts at £54pcm each.  Total cost of car lease and phones; £652pcm.  This does not even include all the taxes, insurances and fuel for having the cars.

Example 2: Typical Couple 

Two Audi A1 Sportback cars for £180pcm each.  Two iPhone 11 deals at £31pcm each.  Total cost; £422.  

If you want to have the latest, most high spec cars and phones, that’s fine.  It’s your money, it’s your choice.  The thing you have to understand is that by making that choice, you are making it more difficult to get on the housing ladder.  Not only are you saving less each month, but you are making it more difficult to pass a mortgage lender’s affordability assessment.  It’s not about having a boring life where you can’t do anything.  It’s about being mindful of the choices you make.  

Life is about priorities, and the decisions that you make in your 20s and 30s will have a huge impact on your financial comfort in your 50s and beyond.  Is spending £50pcm on a phone really worth it, when a model that’s slightly older will do the same job for half the cost?  A car is a car; they have four wheels and will get you from A to B.  Putting aside the subtle differences in performance and efficiency, opting for an expensive model over a modest one that does the same job is just showing off.  Buying your first home is such an important milestone and it frustrates me when I see people unable to get on the housing ladder because they’ve not been taught how to budget, or how being on the hedonic treadmill is just insanity.  

Now that I’ve got that off my chest, I’m going to have a sit down.  See you next week.

Please show your support

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You can still see Sweep’s Instagram @sweep_the_kelham_island_cat.  

Finally, have a look at Darren Scothern’s fantastic blog at darrenscothern.com.