Hello and welcome back to Mortgage Advisor on FIRE. This week I take a look at two opposing methods of debt repayment; the snowball method and the avalanche method. Also, the latest update on the index valuation of my property. There are the usual financial updates, and I can’t let the week pass without talking about the recent political upheaval. First, the Quote of the Week:
Quote of the Week
I like Michio Kaku, and I’ve read a few of his books. He’s an American theoretical physicist, and a well known science communicator (i.e. someone who talks about science to the general public). One topic I’ve seen him cover a few times is that of the multiverse. The idea of a multiverse fascinates me; to think that there are other realities where you did something a little different and it created a whole new set of possible outcomes.
Some people talk about the multiverse, whilst also talking about there being an infinite number of possible universes where every single possible outcome happens. For a long time, I’ve felt that if we could prove the existence of the multiverse it would be the death knell of reward based organised religion. Think about it, if you are judged for your actions in life with either heaven or hell, then how is that judgement fair if you simultaneously choose all possible actions across the multiverse?
One possible solution I had to this was the idea of NPCs; each reality doesn’t have coherent or “true” copies of you. Rather, there is one “true” self that goes through life. Whenever a timeline branches off, your real self continues down one branch, but a non-player character (NPC) version of you takes its place in the other realities. Inevitably this would lead to realities where there are no “true” selves, in which case that reality blinks out of existence. Other realities may have one “true” self, with the remaining population being NPCs. Evidence to support this theory can be seen whenever you see Boris Johnson or Nadine Dorries speaking in public. That vacant stare; the emptiness behind the eyes.
However compelling this idea is, it still doesn’t sit right with me. I’ve never been able to put into words why, but I think I’ve hit upon the explanation.
We talk about there being an infinite number of possibilities. The thing is, the concept of infinite can’t be defined because any definition reduces the idea of infinite to finite. So, whilst there may be an absolutely vast number of possibilities, there can’t be an infinite number of possibilities.
Think about reality for a moment; the physical world is made up of particles. There are atoms, which are the smallest units of an element that can exist. You can go smaller though into the structure of the atom; neutrons, protons, and electrons. If you reduce the physical world to the smallest unit we know of, you arrive at the Planck Length which is written as follows:
1.616255(18)×10−35 m.
In simple terms, 0.0… and then a whole fuckload of zeros ….016m
Where am I going with this? When we talk about free will vs determinism, an example of a pool table is often used. The table is set with the balls organised in the traditional triangle. Someone smacks the cue ball into the pack, causing the balls to bounce around the table. Those balls collide into each other. This is how you can picture determinism; from the moment you hit the cue ball, every interaction between the balls are set. If you have a strong enough computer you can then model how the movement of the balls will play out. The key factor here is that the pool table is not an infinite system; it’s a finite system. The pool table has boundaries. We suspect our universe has boundaries because we can only break down the universe into units so small, beyond which space, and by extension time, is indivisible. If space and time can only be broken down so far, then you are left with a finite number of possibilities instead of an infinite number.
Now, I find it fun to have these little thought experiments from time to time, and I acknowledge my ideas are probably riddled with incorrect assumptions and information. The great thing about science is that we are always learning. If you spot errors in my thinking here, please point them out and leave a comment.
Weekly Update
Much of this week, with the exception of work, has been spent arranging for work to be completed on our apartment. We’ve lived here for just over a decade now, and in that time we’ve not changed our furniture or decorated. In fairness, it was brand new when we bought it. We are having all our furniture taken away, with most of it going to the British Heart Foundation to sell in their stores. We are having all the carpets ripped up and replaced with wooden flooring. Also, the whole flat is being painted. The contractors have said it will take around a week, but it’ll be worth it once it’s done.
I’ve mentioned in previous posts that I’ve had hip/groin pain for a few weeks. I’ve seen a consultant and had some scans, and the result is that I have an arthritic hip. Fantastic. It doesn’t hurt all the time, but after I had the appointment I was in a lot of pain. The consultant had to manipulate the joint to test how, and when, the pain was triggered. It took a couple of days for the pain to subside. The good news is that I can return to the gym, but I have to be even more careful.
I finished up the week by meeting a good friend of mine for brunch. It’s always good catching up as we have the same key interests; science fiction and ripping on the Tories. Which leads me into….
This Week’s Tory Shambles
Nadine Dorries… I have no words… Just look at the state of this tweet from a few days ago.
She is congratulating Nadhim Zahawi on his new appointment as *checks image she tweeted* Chancellor of the Exchequer. However, if you read the tweet she states he will *reads tweet* “deliver for health.”
Is this surprising when she doesn’t understand how Channel 4 is owned and funded despite being the Minister for Digital, Culture, Media, & Sport. Is it surprising when she confuses the two codes of Rugby? Or when she gets confused over whether 96% of people support or oppose her plans?
If you ever think that maybe Boris Johnson doesn’t deserve the kicking he’s getting from all sides right now, just remember how his actions, and the actions of his government, led to thousands of needless deaths during the pandemic. Remember how his party ignored lockdown rules whilst the people of this country lost loved ones without even having the opportunity to say goodbye.
Whilst the mass resignations are a positive, you have to put it in the following context, taken from a message a friend sent me:
“The Charge of the Lightweight Brigade”
This might be my new favourite quote. For those who don’t know, it’s a play on the phrase, “The Charge of the Light Brigade” which was part of the Battle of Balaclava in the Crimean War, which saw a cavalry charge of British soldiers against a Russian force. The British cavalry were subjected to intense fire from three sides and they suffered heavy losses. There is a poem of the battle by Tennyson, of which I’ve shared my favourite part:
Anyway, back to my point. The Labour leader, Sir Keir Starmer, called the new Tory frontbench the “charge of the lightweight brigade”, as Boris Johnson struggled to fill his ranks following the avalanche of resignations he was buried under.
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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 (8/10)
- John Birmingham ✅
- Nicole Perlroth ✅
- Sabine Durrant ✅
- Luke Smitherd ✅
- Max Skittle ✅
- Harlan Coben ✅
- Jo Spain ✅
- Kate Elizabeth Russell ✅
What Am I Doing?
What I’m reading: The Warehouse by Rob Hart.
What I’m listening to: Weird. Dark. by Luke Smitherd.
What I’m watching: Thor: Love and Thunder (cinema).
I really enjoyed Thor: Ragnarok, and thought it was one of the best films of the whole MCU. However, the fourth film in the Thor series is not very good. I wanted to like it, but the humour was off, and it felt as though Thor’s character had regressed. The villain of the piece, Gorr The God Butcher, was played by Christian Bale, and in typical fashion he went all in to his portrayal. However, Gorr just wasn’t that menacing as the film fell into the trap of telling and not showing.
Luke Smitherd’s audiobooks have been keeping me occupied. I recently finished, In The Darkness; That’s Where I’ll Know You, and I think it’s one of his best works. The book I’m listening to at the moment is a collection of short stories, and I’ve only just started it.
I finished My Dark Vanessa this week, and it was very well written. It has one of the most compelling depictions of trauma and PTSD I’ve read. The subject matter, child abuse, grooming, and sexual assault, is not pleasant, but it’s a very powerful story. I’m not too far into The Warehouse yet, but should have it finished for next week.
Financial Update
Assets
Premium Bonds: £550.00 (up £50.00 from last update).
Stocks and Shares ISA: £59,207.26 (down £551.77 from last update).
Fuck It Fund: £550.00 (up £50.00 from last update).
Pensions: £50,951.76 (up £644.51 from last update).
Residential Property Value: £229,159.00 (up £10,868.00 from last update).
Buy-to-Let Property Value: £147,876.00 (up £7,013.00 from last update).
Total Assets: £488,294.02 (up £18,073.74 from last update).
Debts
Credit Card: £0.00 (no change from last update).
Residential Mortgage: £163,274.71 (no change from last update).
Buy-to-Let Mortgage: £105,331.99 (no change from last update).
Total Debts: £268,606.70 (no change from last update).
Total Wealth: £219,687.32 (up £18,073.74 from last update).
Investment Income in 2022: £2,350.20 (target £6,000).
The index valuations for my properties have been updated by my lender for Q2 2022. Both properties increased in value by approximately 5%. I’m in the process of drawing down some funds for our apartment to pay for the works being completed. This will be the last further advance we do on our apartment for some time, with the cost of borrowing increasing. Previous applications for extra borrowing have seen us charged a rate of less than 1% for those funds. The rate on our current application is over 3%.
As part of the additional borrowing application we are reducing the term of the mortgage by five years. The payment is still very manageable and we may overpay above the new contractual payment. The bulk of our mortgage is locked into a deal at 0.89% until 2024, and if we want to avoid a huge spike in payments we need to start chipping away at the debt faster.
The Snowball and The Avalanche
There is a vast amount of information online about how to best pay off your debts. I want to concentrate on two methods, known as the Snowball method (SM) and the Avalanche method (AM).
The SM encourages you to pay the minimum payment on all debts except your smallest debt, which you pay off as quickly as possible. Then, when you have paid that debt off, you allocate the money you were using for those payments to the next smallest debt. For example;
You have the following debts;
- Credit card balance £500 (interest 12%)
- Loan balance £7,000 (interest 3.5%)
- Car loan £11,000 (interest 2.4%)
- Mortgage £120,000 (interest 4.49%)
The idea is you pay the minimum payment for the loan, car loan, and mortgage. You pay your credit card off as quickly as possible. Then, you pay the minimum payment on your car loan and mortgage, whilst hammering away at the loan as fast as possible.
This approach does not take into account the different rates of interest on each debt, but it can be mentally rewarding and motivating as you see the impact of your payments sooner. You can start ticking off the smaller debts and feel as though you are making progress. It might not be the most efficient way of paying your debts, but there’s a lot to be said for easing the mental burden of having lots of small debts hanging over you.
The AM is very similar, but rather than ordering debts from smallest to biggest, you order them in terms of highest interest rate to lowest. The drawback of this approach is that if your highest rate of interest is on a large balance, you can feel as though you’re not making progress. In absolute terms, the AM may result in paying less interest overall, but working out the different total costs of debts with different rates and different terms can be tricky.
I’ve often said that money is a game, and if you understand the rules it is much easier to be successful at the game. However, like any game you have to enjoy playing it. There’s not much point in sticking to a strategy that is causing stress, anxiety, and depression. If the snowball method makes you feel better, then there’s an argument to be made for choosing it over the avalanche. Using the above example debts, if you chose the AM, you would clear the credit card quickly, but then be stuck paying the mortgage for years whilst the two loans hammer you for interest for their full terms.
If you are in debt and want to know how best to pay it off or manage your finances in general, please seek expert advice from the usual sources;
Until next time, thanks for reading.
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:
Mortgage Advisor on FIRE. 
Excellent blog post, as usual. The debt repayment information will be useful for many people. Regarding your thought ps on infinity though… a couple of errors in your thinking. Firstly, a verbal definition of something is not the thing itself, so although the definition of infinity is finite, this does not logically mean the infinite is not possible. Also, and in a similar vein, if the universe is made up of pieces which individually are of finite size, it does not logically follow that the universe (or multiverse) must be finite; there could simply be an infinite number of said pieces. I’m not necessarily arguing for infinity here, just pointing out the flaws in your position.
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