Part 139

Hello and welcome back to Mortgage Advisor on FIRE. This week I take a look at the differences between student loans in the UK and US. Also, how changes to mortgage lending rules might not actually change anything. There are the usual financial updates, and something I never thought I’d type; Dinosaur Woman. First, the Quote of the Week:

The United States has done it again.  They demonstrated to the world that despite all their assertions to be the land of the free, and the home of democracy, they’ve taken the rights of women back decades.

The reversal of Roe vs Wade doesn’t, to my understanding, automatically mean abortions are illegal across the whole country, but it has made it much more difficult for women in many states to have an abortion.

Someone needs to explain to those in the US who are anti-abortion that The Handmaid’s Tale is a work of fiction.  It’s not a guidebook on how to build a society.

In making this decision, the Supreme Court is going to force pregnant women who want or need an abortion to either cross state lines or even leave the country completely, so they can get treatment.  It will, no doubt, drive some women to have dangerous procedures done informally which will lead to medical complications and even death.  It’s just insane.

Another thing that I’m just utterly confused by is how many women in the US are against abortion.  If you are anti-abortion on religious grounds, where is the line drawn? Do you think women should have the right to vote? What about the right to their own bank accounts? The right to an education?  If you are dictating what they can, and can’t, do with their own bodies, where does it end?  I know that using the “thin end of the wedge” as a tactic in a debate can be too simplistic but there are times, like now, when it’s a valid point to make.

There are many decent people in the US, and I enjoy visiting the country from time to time.  The thing is, from the outside it seems to be a country going backwards.  Between the student loan crisis which sees the total student loan debt exceeding $1.75 trillion, and a third of the population stuck with medical debt, and over 250 mass shootings so far in 2022, it’s hard to look at the United States and think, “that’s an example we should aspire to.” 

The US vs The UK

My country, the United Kingdom, is far from perfect but at least we have the NHS, and student loans are slightly less terrifying than in the US.  Out of interest, I compared the student loan debt situation between the US and UK.  It looks like this;

Average Student Debt

US – $28,950 per borrower (£23,579)

UK – £25,585 per borrower ($31,413)

Not as much of a difference as I’d expected.  The significant difference between the loan systems of the two countries is how the loans are repaid.  In the UK you need to meet a minimum income threshold before payments begin.  Then, a percentage of the amount you exceed the threshold by is taken as payment.  In the US there are a few different types of loans, from what I understand, but the payments are taken almost immediately after you graduate, with only a few exceptions.  The US system is absolutely brutal, and there are some crazy examples of how people are stuck in a cycle of debt making thousands of dollars worth of payments and not even treading water, but rather sinking slowly.

Weekly Update

Another week where I’ve been exhausted.  I’m now in a fair amount of discomfort and pain in my left hip, with pain spreading into my knee and ankle.  It’s annoying and I can feel my knee throbbing as I write this.  I’m being referred to a consultant to investigate the cause of this pain, but it’s going to be another couple of weeks until my appointment comes around.

I’ve mentioned in previous posts that my sleep quality is very poor.  I’m waking up several times a night drenched in sweat no matter how I choose to sleep.  My GP thinks this could be down to my antidepressants.  I’m not convinced, but with their guidance, I will start lowering my dosage.  Back in 2020 when I was at a crisis point with my mental health, I had my dose of sertraline increased to 200mg daily.  I’ve been advised to drop to 150mg for a couple of weeks and aim to reduce it to 100mg and see how I get on.  I think it’s understandable that I’m concerned about how my mental health may be impacted by this, but all I can do is test it out.

The weekend has been enjoyable so far, and I spent a few hours on Saturday with my girlfriend, Oana, in the city centre.  We had some lunch at a Peruvian restaurant whilst looking through travel brochures.  We are planning a trip for my 40th birthday next year and there are some amazing holidays we’ve seen.  We’re massively excited to get something booked, but we need to arrange time off with our employers first.  If my boss is reading this, she should expect a holiday request soon.

When Oana and I went into the city it was a nice, sunny day.  So, we had a good laugh when we got caught in a downpour.  We had just picked up a few more plants for our balcony and managed to get an uber back home.  It might not sound like we did much, but between both working full-time and the pressures of daily life, it was nice for us to have a few hours together.

This Week’s Tory Shambles

Mick Lynch: The hero we need.

Watching Mick Lynch destroy one Tory MP after another has been brilliant.  He clearly gives zero fucks and his calm demeanour is incredible.  He rarely interrupts his adversary and seems to prefer letting them talk themselves into a corner before dropping them with a well-placed verbal uppercut.

I can’t let the week pass without mentioning Dinosaur Woman either.  Someone that dumb must be a Tory plant, and when I say plant I’m not sure if I mean a stooge or an organism that survives through photosynthesis.

The situation with the strike action might end up being the final nail in the coffin for the Tory government.  We are looking at several more planned or rumoured strikes.  The economy is in ruins and people working full-time jobs are having to rely on handouts to feed themselves.  We’re supposed to be a leading economic power not just in Europe but across the world.  Yet, people are choosing between food or petrol because the cost of both is increasing at an alarming rate.  

Back in the day, one person working a full-time job could support their partner and children.  I know that they didn’t have to pay for the internet, Netflix, mobile phones, and so on, but at least life was somewhat affordable.  Now, you have situations where it takes two people working full-time jobs to even think about owning a home, let alone having a family.  I have no idea where Oana and I would have been had we both not worked in mortgages.  Without the knowledge of the system, and the benefits of working in the industry, we may still be renting.  It’s crazy.  

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

1 – Reduce weight to 90kg.  (Current weight 118.9kg).

2 – Complete 10 “classic” books (4/10)

  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 (7/10)

  1. John Birmingham ✅
  2. Nicole Perlroth ✅
  3. Sabine Durrant ✅
  4. Luke Smitherd ✅
  5. Max Skittle ✅
  6. Harlan Coben ✅
  7. Jo Spain ✅

What Am I Doing?

What I’m reading: My Dark Vanessa by Kate Elizabeth Russell

What I’m listening to: Diary of a DA by Herbert J. Stern.

What I’m watching: Taco Chronicles (yes, still).

Yes, I’ve finally picked up a physical book and started reading.  I’m only a little way into the book but it’s well written and intriguing.  It’s also very disturbing.  Oana read it whilst we were away, and the girl sitting next to us on the plane had also read it.  So, it’s now my turn.  The story is based on a teacher at a private boarding school grooming a young girl to begin a sexual relationship.  It makes your skin crawl, and I’m sure it’s only going to get worse.

Diary of a DA is a bit dull, although it sounded interesting when I downloaded it.  The book is largely autobiographical and looks back at the career of Stern’s time as a DA in America.  These types of books can be great, like The Secret Barrister.  The key to a great book in this style is to not just list names, dates and events, but to provide commentary and insight into what is happening.  I’ll finish Diary of a DA but I’ll probably forget about it within a few weeks.

Financial Update

Assets

Premium Bonds: £250.00 (down £19,000.00 from last update).

Stocks and Shares ISA: £59,888.69 (up £19,217.50 from last update).

Fuck It Fund: £300.00 (up £200.00 from last update). 

Pensions: £49,250.08 (down £381.31 from last update).

Residential Property Value: £218,291.00 (no change from last update).

Buy-to-Let Property Value: £140,863.00 (no change from last update).

Total Assets: £468,842.77 (up £36.19 from last update).

Debts

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

Residential Mortgage: £163,673.30 (no change from last update).

Buy-to-Let Mortgage: £105,354.12 (no change from last update). 

Total Debts: £269,027.42 (no change from last update).

Total Wealth: £199,815.35 (up £36.19 from last update).

Investment Income in 2022: £2,350.15 (target £6,000).

With a lack of progress in finding our second BTL and a busy few weeks ahead, I decided to draw down my Premium Bonds and max out my ISA.  I’m not turning against property completely and will rebuild my deposit funds over the coming months.  It’s just, for now, I felt the money would work harder for me in my ISA than in Premium Bonds.

I’ve had some more investment income come through and I’m closing in on last year’s figure for income.  Hitting the £6,000 target for this year is probably not going to happen, but as long as I progress from last year I’ll be happy.

Change to Mortgage Lending Rules

Several media outlets have reported on the story that UK mortgage lending rules are being relaxed.  Like with most media reporting, it’s not as simple as they make it out to be.  What has been announced is that one part of assessing affordability will no longer be necessary from a regulatory point of view.  I’m talking about the “stress test”, where lenders assess whether a borrower could repay their mortgage based on a higher rate of interest.  

Just because it’s no longer a requirement for lenders to do this, it doesn’t mean they will scrap the test altogether.  I suspect some lenders are still haunted by events in 2007-2008, but whether these memories are forgotten over the coming years is something we’ll need to wait and see on.  

The thing about mortgages is that it can take decades for the impacts of irresponsible lending to reveal themselves.  I’m convinced there will be some difficult times ahead for many people with interest-only mortgages, but this could still be years away.  It’s a similar issue faced by many people who have bought homes in the last few years.  Once more, it’s best explained with an example of a fictional couple; Bobby and Poppy.

Bobby and Poppy are wanting to buy their first home.  They have saved a deposit by putting aside every spare penny they have.  Luxuries have been banned, and their own home is their focus.  They see an ideal property; a three-bed semi-detached house.  They get into a bidding war and manage to push the deal over the line.  They take a mortgage over the longest possible term so that the payments are affordable.  A little while later, their first child comes along.  Bobby drops hours at work to be a stay-at-home parent.  

When Bobby and Poppy started out, they had two full-time jobs paying for their cost of living.  The mortgage was at the limit of what they could afford.  Then, they have a child and what was a two-person household with two sources of income quickly becomes a three-person household with one, maybe one-and-a-half (if Bobby works a little) sources of income.  Then, their initial interest rate comes to an end, and they are faced with higher rates from their lender.  

The above example is what makes me think we’ll see another drop in the housing market in the coming years.  The scale of the drop isn’t something I can predict, but I’m fully expecting it to happen.  This will produce yet more issues, especially for those struggling to pay their mortgage who might find themselves in negative equity.

One thing I do with my monthly budget is to act cautiously.  I typically round up our direct debits and living costs in my spreadsheet to build in a buffer for the unexpected.  I see so many people that do the opposite, and look at their finances with unfounded optimism verging on ignorance and naivety.  

Those who have followed my blog from the beginning will be familiar with my advice on budgeting; don’t track what you are spending from this point on.  Instead, look back at what you have been spending when you were not thinking about it.  That’s the only way to get a true reflection of your finances.  Then, you can start to make plans to improve your fortunes moving forward. 

That’s all for this week.  Thanks for reading, and leave a comment with your thoughts.

Biolink and other links

You can now find all my social media pages by checking out my Biolink:

bio.link/davidscothern.

Also, check out Darren Scothern’s blog which talks about autism, being autistic, and general mental health:

www.darrenscothern.com

2 thoughts on “Part 139

  1. Just wanted to say I really enjoy reading your blog! Really informative and you have a great insight/edge/discussion point noting your job.

    Keep it up!

    Like

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