Hello and welcome back to Mortgage Advisor on FIRE. This week, I discuss wealth and share my thoughts on the super wealthy. Also, some thoughts on how my ISA balance and residential mortgage balance may crossover in just a couple of years. More Tory Shambles, and another exhausting week.
Weekly Update
Another exhausting week. I’m seemingly tired all the time, and I’m not sure if my poor quality sleep is the cause of this, or if both are symptoms of something else such as a downturn in my mental health. The relationship between physical and mental health is not as simple as cause and effect; it’s more symbiotic. Sometimes you just need something to go your way to let both types of health improve.
I’m still in a fair amount of pain down my left hip, knee and ankle. My left elbow is also still painful. It sucks. I’m seeing a consultant in a few days though, so hopefully, I’ll find out some answers.
In case you missed it, there was a bonus post earlier this week where I shared some thoughts on the mortgage industry. This is a post I’d had rattling around for a while and it seemed like the right time to tweak and publish it.
On Thursday I went to IKEA for only the second time in my life. No, I did not have the meatballs. It seems like IKEA is one of those places where, when you mention you’ve been, the first question you are asked is about meatballs. It’s more than a little strange.
We were looking for some new cushions for our sofa, and as expected we came back with some great new cushions, along with some new towels, kitchen utensils, random ornaments, loads of ziplock bags, and an unusually large packet of oat chocolate biscuits.
On Friday I did not feel well. Despite being absolutely exhausted on Thursday evening, I couldn’t sleep. When I did drift off, I woke less than half an hour later before struggling to sleep again. By 8am I had no idea what planet I was on. I think I might have had a migraine through the night as my neck had been hurting a lot through the day. Sometimes migraines are not accompanied by skull-crushing headaches, but instead, have this strange feeling of unreality. It’s a weird feeling and difficult to understand if you’ve not experienced it first-hand. The closest comparison I can think of is when you see Boris Johnson on TV with the title “Prime Minister”. You can’t understand or believe what you are seeing.
This Week’s Tory Shambles
Nadine Dorries, our Secretary of State for Digital, Culture, Media, and Sport, managed to fall to new depths of embarrassment when she confused Rugby League and Rugby Union. Attending the launch of a report into the Rugby League’s World Cup’s impact on social issues, Doddery Dorries managed to take her foot out of her mouth just long enough to babble on about Jonny Wilkinson’s drop goal in the Rugby Union’s World Cup.
You see, in Rugby, there are two sets of codes; League and Union. Don’t mistake me for a fan of Rugby; I’m not. You can be sure that if I was the Secretary of State for Digital, Culture, Media, and SPORT I would make sure I knew the difference between the two, and more importantly which code I was talking about.
We could be in for another three years of Tory government, but the silver lining is that Nadine Dorries will be a great source of comedy during that time.
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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)
- Crime and Punishment by Fyodor Dostoevsky (1866)
- Moby-Dick by Herman Melville (1851)
- Dracula by Bram Stoker (1897) ✅
- Catch-22 by Joseph Heller (1961)
- The Iliad by Homer (8th century BC) ✅
- The Count of Monte Cristo by Alexandre Dumas (1844) ✅
- War and Peace by Leo Tolstoy (1867)
- A Tale of Two Cities by Charles Dickens (1859)
- Les Miserables by Victor Hugo (1862)
- Don Quixote by Miguel de Cervantes (1605) ✅
3 – Read 10 authors I’ve not read before (7/10)
- John Birmingham ✅
- Nicole Perlroth ✅
- Sabine Durrant ✅
- Luke Smitherd ✅
- Max Skittle ✅
- Harlan Coben ✅
- Jo Spain ✅
What Am I Doing?
What I’m reading: My Dark Vanessa by Kate Elizabeth Russell
What I’m listening to: The Woods by Harlan Coben.
What I’m watching: Keep Sweet: Pray and Obey (Netflix)
We watched a four-part documentary on Netflix about the FLDS; Fundamentalist Church of Jesus Christ of Latter-Day Saints. This is something I knew nothing about, and it was utterly disturbing. The FLDS is a Mormon sect based in the US that practice polygamy, and whose leader was convicted of arranging underage marriages between older men and young girls. He was convicted of being an accessory to rape, as well as being convicted of raping a 15-year-old girl and a 12-year-old girl. There are some real monsters in our world.
I’m still working my way through My Dark Vanessa and will have it finished in a couple of days. It’s well written, but again quite disturbing. I finished another Luke Smitherd book, How to be a Vigilante, which starts off funny before morphing into a tragic story. I’ve been enjoying Luke Smitherd’s work of late, and look forward to the release of the fourth book in the Stone Man series.
Financial Update
Assets
Premium Bonds: £500.00 (up £250.00 from last update).
Stocks and Shares ISA: £59,759.03 (down £129.66 from last update).
Fuck It Fund: £500.00 (up £200.00 from last update).
Pensions: £50,307.25 (up £1,057.17 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: £470,220.28 (up £1,377.51 from last update).
Debts
Credit Card: £0.00 (no change from last update).
Residential Mortgage: £163,274.71 (down £398.59 from last update).
Buy-to-Let Mortgage: £105,331.99 (down £22.13 from last update).
Total Debts: £268,606.70 (down £420.72 from last update).
Total Wealth: £201,613.58 (up £1,798.23 from last update).
Investment Income in 2022: £2,350.20 (target £6,000).
Our mortgage payments have been made which has brought the debt down slightly. I also had some spare cash which I’ve put towards my Fuck It Fund and my Premium Bonds. I’m working on releasing more money from my properties which will be put towards some work we want done to our apartment. This might not seem like a wise investment at first, but it will add to the resale value or the rental value when we come to leave it.
Within the next two weeks I should receive more investment income which, assuming my projections are correct, will take my investment income for the year over £2,500.
Future Plans
I’ve been thinking about what we would do with the apartment if we rent it out, and we might struggle to remortgage for a BTL. There are some issues with the insurance for the building as we are not covered for flood. This is making it very difficult for people to sell, despite this area being in high demand. The only sales going through at the moment are being completed in cash without a mortgage. For that reason, I think we’ll struggle to remortgage to a BTL, which means we will have to rent the place out. If we stick with our current lender we will be able to apply for consent to lease, but that would not allow us to switch to interest-only using the property as its own repayment vehicle. However, by the time that situation comes around I should have had at least two more years to max out my ISA allowance. Combining the normal monthly payment off the mortgage debt, and modest growth in my ISA, I should be in a position to put most, or all, of the debt on interest-only using my ISA as a repayment plan
The graphs below show the projected change in balances over time. It should be noted that these are very basic calculations and do not account for daily interest on the mortgage balance. My calculation assumes that the exact same amount will be paid off the mortgage debt each month. In reality, the cash amount paid off the debt each month increases over time as the interest is being calculated on an ever-decreasing balance. This is why people often say you hardly pay any of the debt off a mortgage in the first few years. Paying the capital down takes time to build momentum.
Wealth
It seems like not a day goes by without someone complaining about the super-wealthy. I agree that there are some people with absolutely obscene wealth; people with more wealth than they could ever hope to spend. There are quite a few people who fail to comprehend just how much the megarich have. So, a few examples;
Elon Musk: $220,000,000,000.00 approx wealth.
What this could buy:
The United States Navy has 11 aircraft carriers (not counting helicopter carriers). A new aircraft carrier costs $13.3 billion. Musk could buy 11 new carriers and still have $75 billion left over. Assuming Musk wanted to buy 30 fighter jets for each carrier, he could buy enough F-35C aircraft to fulfil this ambition and still have around $50 billion left.
Another way of looking at this wealth is to compare it to the GDP of other countries. According to 2017 data, Musk’s current wealth is slightly greater than the GDP of Portugal ($219B), the Czech Republic ($216B), and Romania ($212B).
It is an insane amount of wealth for one person to have.
So, here’s the question; should there be a cap on wealth? If you think there should be, I’d like you to think about why.
There is a correlation between wealth, and convenience and entertainment. The richest people on Earth:
1 – Elon Musk (SpaceX, Tesla, & PayPal)
2 – Jeff Bezos (Amazon)
3 – Bernard Arnault (Co-founder of Louis Vuitton)
4 – Bill Gates (Microsoft)
5 – Larry Page (Alphabet – parent company of Google)
Looking at the above list, with the exception of Bernard Arnault, the other four people listed have become rich through offering services that the world relies upon for convenience or entertainment. It might not be immediately obvious why Elon Musk fits into this category, but PayPal was instrumental in promoting online payments. SpaceX is helping to launch and maintain satellites that help with all sorts of global communication systems.
Amazon is something that many in the developed world would struggle to live without. I’m not making a value judgement here, but simply stating the fact that people find the service convenient which is evidenced by how much business the company completes.
Bill Gates helped bring computers into our homes, and the Windows operating system has become something that almost everyone is familiar with. Alphabet needs little explanation as it’s the parent company of Google; something that has not only become a fundamental part of our lives but has also become a verb; to google, which shows just how ingrained it is in our society.
So, my next question; would these people have developed services like these if there was a cap on wealth? I don’t know. Money is a great motivator. If you create a product or service that revolutionises the world, would you be happy being told you could only profit so much from it, and then that’s it?
Rather than saying there should be a cap on wealth, which is not a particularly helpful suggestion, perhaps we should start talking about how to make the whole system more equitable. We could close down loopholes in the tax system for corporations, and tweak the system of individual taxation so that people pay what is right from an ethical standpoint.
There is no perfect system, and for the entirety of human history we have had the rich, and the poor. We need to concentrate on lifting people out of poverty, rather than tearing down those who are wealthy. Whilst the two issues are related, it is possible to do one without the other.
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: