Part 125

Welcome back to Mortgage Advisor on FIRE. This week I discuss gambling addiction, and then take a detailed look at corporate values. There are the usual financial updates and more information on our BTL refurb. First, the Quote of the Week:

The last few weeks have seen many people I follow on social media relapse with their gambling addiction.  Overcoming this addiction is so difficult.  I know that first hand.  It took me several attempts but it’s now been over 968 days since I last gambled.  One question that comes up time and time again from addicts, is whether it’s possible to gamble in moderation.

For the problem gambler, it’s impossible to gamble in moderation.  It just can’t be done.  The whole issue with having an addiction is that your behaviour is beyond control.  The gambling industry makes a big show of offering responsible gambling controls, but it’s all just bullshit.  It’s not a great control when you can just change the limits you set yourself.  

The whole industry is evil and preys on those who are vulnerable to addiction.  A House of Lords report just last year stated that 60% of gambling industry profits come from only 5% of gamblers; the addicts and those at risk.  In short, a few people and businesses are making a lot of money from the suffering of others.  It’s also important to remember that gambling addiction has the highest rate of suicide across all addictions.  

Once you are made aware of how much gambling has infiltrated daily life, you can never unsee it.  Gambling adverts are everywhere from TV, to radio, to social media, to YouTube videos and beyond.  I’m not arguing that gambling should be abolished because that’s unrealistic.  Humanity has engaged in gambling for as long as there’s been civilisation.  Outlawing gambling would drive it underground.  The key is to regulate it tightly enough so that there are too many barriers for the vulnerable sections of society to overcome, whilst not interfering with those who can legitimately enjoy the activity.  Driving gambling into the shadows will hide those struggling and be counterproductive in some ways.

Some parallels can be drawn between gambling and gun ownership.  In the US the subject of gun ownership is, to put it lightly, a touchy one.  Those who want to regulate gun ownership are not necessarily saying they want to outlaw gun ownership completely.  However, the hysterical section of those who want to keep the current laws scream about their rights.  It’s a debate that promotes binary thinking at the extreme ends of each side.  It’s the same with gambling.  Go on social media and look at the comments people make when posts are written arguing for better regulation, or for abolishing the marketing of free bet offers.  It’s worrying and embarrassing.

Weekly Update

I have an appointment for my autism assessment after two years of waiting.  I’m not worried about it, even though I fully expect confirmation that I’m autistic.  It doesn’t change anything about me; I don’t suddenly become different because I’m autistic.  If I am, I will have been from birth.  It’s not something that develops or something that you can catch.  It is what it is.  

I always find this week, in my four-week rotation at work, tiring.  I work from 10:30 to 20:00, Monday to Thursday.  I always have more headaches and sleep disturbances during this week in my schedule.  At least it’s over for a few weeks now.  

My friend in Ukraine is coping with the constant threat of being bombed in Kyiv.  I don’t know how she has the strength to keep going.  The whole situation is heartbreaking, and the response of the UK government is embarrassing.  The rest of Europe is opening their doors to these refugees and we just keep putting barriers up.  Regular readers will know of my links to Romania, and from what I’m told the people of Bucharest, in particular, are going that extra mile to help their neighbours.  

For a couple of weeks now I’ve been feeling unmotivated and generally melancholic.  A conversation I had left me feeling worse.  It’s not their fault, and I respect this person.  She was just the messenger and I have no ill-will towards her.  The message though, was one that I found hugely frustrating.

When I’m presented with something that makes no sense, I have this irresistible urge to point out that it doesn’t make sense.  It’s like an itch that needs scratching.  I spoke with someone I know well, who has a similar thought process to me and it was quite cathartic knowing I’m not alone in being exasperated with how so many people and businesses simply cannot think logically.

The issue I’m referring to is when people don’t consider the problem under discussion in the context of the wider world.  For example; you are looking for a new phone contract and you have two options.  Assume each option gets you the same overall product and contract:

Option 1: Phone and usage allowances cost £3,000.  Interest is charged at 6%.  You are going to pay the loan back over 36 payments.  The monthly cost is £91.05, and the total overall cost is £3,277.80.

Option 2: Phone and usage allowances cost £3,000.  Interest is charged at 2% if you pay a £100 fee.  The monthly cost is £85.90, and the total overall cost is £3,092.55 plus the £100 fee, so £3,192.55.

There isn’t a massive difference between the two scenarios but let’s also assume that you have a strict monthly budget of £90.  You also have £100 you are happy to use to pay a fee to get a lower payment.  You can then rule out the first option and are left with just the second option.  As luck would have it, the second option is also the most cost-effective overall.  Happy days.

Some people would suggest that the £100 has more value in your pocket than saving just a few pounds each month and over the term of the loan.  In isolation, this is a fair point.  However, we are ignoring the fact that you have a strict budget of £90pcm.  In this hypothetical scenario, if you want to avoid the £100 fee because the assumed saving is not seen as significant enough, you then have to take the loan over an extra year to bring the payment within what you can afford.  So, on to Option 3…

Over a term of 48 months, you would pay £70.24 each month with a total cost of £3,371.36, assuming you go with the rate of 6% that has no fee.  

A few questions to consider:

Is comparing the first two options a fair comparison?

The rates are different, so in one respect it’s like comparing apples and oranges.  However, that’s the basis of almost every comparison.  If you are hungry and only have £1, and you have an apple on sale for £0.90 or an orange for £1.40, you don’t go hungry because you can’t make a “fair comparison”.  You go with the most cost-effective option; the one that gets you the most bang for your buck.  With the phone scenario, you are getting the same phone and the same usage allowance with all options.  The choice isn’t between one phone or another phone, it’s a choice between how you pay for the phone, and when you look at the numbers, in the context of what you know about the person deciding (can only afford £90pcm and has £100 they are happy to use to pay a fee), there’s a clear best option.

Are arbitrary rules logical?

If you are working at a phone shop, and there is a rule in place that states you can only offer an option with a fee if the overall saving is the amount of the fee plus 50%, then what do you do when the saving is the fee plus 49%?  48%? The problem with percentages is that in some scenarios, a 50% difference could just be a few pounds if the fee is small in absolute terms.  If you state that the saving has to be a set amount of currency, you have the same issue but in reverse.  Context might be for Kings, but it should be considered for all actions.

Is there always a correct choice?

This is where language can be tricky.  Not every problem has a correct answer.  Some just have various partial answers that come with their own pros and cons.  Some problems might have multiple correct answers, and the only difference is how you get to that answer.  If you are dealing with a situation where there is no definitive solution, but rather a spectrum of possible solutions, then you need to take a step back and ignore the “how” and the “what”, and instead you need to ask “why”.

Start with Why

A few years ago I read a great book by Simon Sinek after watching his TED talk on the same subject.  Both the book and video are called, Start with Why. The message is simple; the people and businesses that inspire, that are innovative and successful start by asking why?  Why are we in business? Why are we doing this? Now, Simon makes it clear that the why isn’t about achieving a result.  It’s not enough to ask why and then answer, to make money.  It’s about finding out what your values are and then making those values the core of everything you do.  It reminds me of a quote I read in a journal article on Zappos, a US-based retail company selling shoes.  For years they had rave reviews from customers and staff about how they did business.  Zappos have a clear mission statement:

“To live and deliver WOW”

This is their why.  From that, their success is born.  Within ten years of starting business, Zappos was bought for over $1B by Amazon.  The quote I refer to is this;

The above quote can be found in a related article at Forbes.com.

There is an excellent blog on company values at toistersolutions.com, where values are discussed at length.  The blog states that most corporate values are too vague and open to interpretation.  For example, if a company states that it has “clear communication” as a value, what does it mean? How does that inform behaviour?  Also, shouldn’t clear communication be a fundamental part of all business?

Too many businesses get caught up on what and how, with no consideration of why.  I want you, dear reader, to think about your employer and see if you can work out their “why”.  If you can, I’d love to hear from you.  

Starting with why does not need to apply to business only.  It can be applied to your own life, and help you find purpose.  Do you have a personal why? Once again, I’d love to hear from you if you do.

A Brief Interlude

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2022 Goals – to be achieved by 31/12/2022

1 – Reduce weight to 90kg.  (Current weight 122.4kg).

2 – Complete 10 “classic” books.

1. Crime and Punishment by Fyodor Dostoevsky (1866)
2. Moby-Dick by Herman Melville (1851)
3. Dracula by Bram Stoker (1897)
4. Catch-22 by Joseph Heller (1961)
5. The Iliad by Homer (8th century BC)
6. The Count of Monte Cristo by Alexandre Dumas (1844) ✅
7. War and Peace by Leo Tolstoy (1867)
8. A Tale of Two Cities by Charles Dickens (1859)
9. Les Miserables by Victor Hugo (1862)
10. Don Quixote by Miguel de Cervantes (1605)

3 – Read 10 authors I’ve not read before.

What Am I Doing?

What I’m reading: The Future of Another Timeline by Annalee Newitz. 

What I’m listening to: Moby Dick, & If the Universe is Teeming with Aliens… Where is Everybody?

What I’m watching: Star Trek: Picard, & This Is Us, both on Prime Video.

The Future of Another Timeline is interesting so far, but with working long hours this week I’ve not had much mental energy to read.  

I’m listening to two books at the moment; Moby Dick with my girlfriend, and Where is Everybody? on my own.  Moby Dick is on my list of classics that I want to complete, but we’re only a short way into it so far.  The book on aliens is interesting as it attempts to offer a solution to the Fermi Paradox.  For those who don’t know, the Fermi Paradox asks why we haven’t found evidence of alien life despite the mind-boggling number of stars and planets in the observable universe.

I have my own theories on the Fermi Paradox, and I doubt there is a single solution that applies universally.  I suspect there are a few factors at play.  I could see Dark Forest theory being plausible, but I also have another idea but I don’t know if it has a specific name.  I’ll explain…

Our efforts to explore space come from a combination of several factors; a moon that is very large in comparison to our planet.  Most planets that have moons have a much bigger size/mass difference.  Our moon is clearly visible at night, and when viewed with the stars, it’s no surprise that our ancestors have looked up at night and wondered what is there.  Also, whilst it’s difficult to achieve escape velocity for Earth (approx. 11.2km/s), if Earth’s diameter increased by just 50% with no change to the density of the planet, achieving escape velocity using rockets would be pretty much impossible.  Our ability to achieve orbit, and explore our solar system neighbours is fortunate.  There could be many alien civilisations that can’t achieve space flight because escape velocity is too high, or because they lack the materials to build and fuel this type of project.

Financial Update

Assets

Premium Bonds: £8,000.00 (up £800.00 from last update).

Stocks and Shares ISA: £44,202.70 (up £3,237.82 from last update).

Fuck It Fund: £4,200.00 (down £875.00 from last update). 

Pensions: £50,845.65 (up £1,086.15 from last update).

Residential Property Value: £213,900.00 (no change from last update).

Buy-to-Let Property Value: £138,030.00 (no change from last update).

Total Assets: £459,178.35 (up £4,248.97 from last update). 

Debts

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

Residential Mortgage: £164,858.62 (no change from last update).

Buy-to-Let Mortgage: £92,903.78 (no change from last update). 

Total Debts: £257,762.40 (no change from last update).

Total Wealth: £201,415.95 (up £4,248.97 from last update).

Investment Income in 2022: £525.03 (target £6,000).

The stock market has almost completely recovered my losses from the Russian invasion of Ukraine, and my pension is looking a little healthier also.  I’ve had to draw some money from my Fuck It Fund, as my BTL needs a little more work.  On the whole, my finances are looking fairly positive as we approach the end of the financial year.

We paid a visit to the BTL this week and it’s looking much better.  A lot of work has gone into improving and repairing the property.  There is still a bit to do but we could be looking for tenants in the next week or two.  

I’ve decided to reduce my pension contributions for the next few months, as I want to have a little more cash to use for other things.  I’m wanting to max out my ISA allowance as soon as possible.  Also, once we can let out our BTL we will be able to release funds from the equity in the property.  This will help speed up the purchase of a second BTL.  Getting the first property is the most difficult.  The second one is almost as difficult, but from there it gets easier as income and capital gains compound more quickly.  

My income so far for 2022 is a little behind where I hoped it would be.  However, I’ll receive a dividend in May which should boost the figure significantly.  Also, I would expect that by then we will have a tenant in our BTL.  I’m not admitting defeat regarding the £6,000 target but I’m not going to be too upset if I miss it, so long as I beat last year’s total income of £3,771.93.

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