Part 224

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss safe withdrawal rates, scammers on Facebook, fun with cold callers, and a strange situation with a friend.

Weekly Update

We’ve made some changes inside our apartment as both Oana and I will be working from home full-time shortly.  So, we’ve got Oana a new desk, chair, and a few other bits and pieces.  As part of this, we’ve also bought some more Kallax units from Ikea so I can display more Lego.  Priorities, am I right?

All of this means we have a few things that we need to get rid of, including a rowing machine, a beanbag, and a footstool.  All of these items are pretty much brand new and unused.  The rower would have been used were it not for my shoulder and elbow troubles, which persist to this day.  The beanbag and footstool were bought when we did our big refurb a couple of years ago.  In hindsight, we got carried away, and neither has been used.

Anyway, I sold the rower on Facebook marketplace and the buyer was great; polite, friendly, communicative, and paid without hassle.  He haggled the price down a little (£250 down from £280) but I didn’t mind because he was just a genuinely nice guy.

At the opposite end of the spectrum, we have the scammers.  These people are the worst.  I received a message from a woman wanting to buy the beanbag.  It all seemed ok, and then she asked for my bank details to send the payment over.  Not a problem, I always prefer bank transfers to cash because handling physical money is gross.  Then, she asked for my email address because her bank account needed an email to send a receipt to as it was a business account she was using.  This got my Spider-sense tingling, but didn’t send me directly to red alert; more yellow alert.  This woman then wanted a screenshot of my emails at which point I binned the whole thing off,  and reported and blocked her.

The fun and games did not stop there.  Later that same day another woman got in touch about the footstool, saying she wanted to buy it.  Then, she says she will send a “UPS Postman” with cash to come and collect it.  If you don’t know, this is a common scam.  I replied, asking her if she had read the item’s description and she returned saying she had.  I found this interesting because in the description I stated clearly that people wanting to try weird shit like sending a courier to pick it up will be ignored.

I stopped selling on eBay because of scammers, and Facebook is starting to go down the same route.  It’s not just the scammers but the people looking to rip you off with insultingly low offers.  Can you tell this annoys me?

Another thing that annoys me (apologies this is turning into a rant, you’ll just have to let me run out of steam) is cold calls.  For a while now I’ve started having fun with them by;

• Claiming not to believe in phones, whilst talking with them on the phone.
• Claiming to be a close personal friend of various members of the monarchy.
• Asking for more details of their scam, as I work in fraud investigations.
• Replying only in film and TV quotes.

This week, I took a new approach when Josh from Sky called.  I answered the call in a whisper and continued talking in a whisper until near the end.  The conversation went like this:

Me:  hello?

Them: Hello?

Me:  hello?

Them: Is that David?

Me: yeah

Them: It’s Josh at Sky…

Me: ok

Them: Can you hear me?

Me: I’m playing hide and seek with my girlfriend and I don’t want her to hear me

Them: I wanted to talk to you about a new package

Me:  Wait… Wait… I think she found me **starts yelling** fuuuuuuuuck **end call**

Now, credit where it’s due, Josh called me back later that day but I was distracted when I answered so didn’t commit to pretending to be trying to find my girlfriend as she was now hiding.  

So that’s been my week in a nutshell; dealing with scammers and winding up cold callers.  How was your week?

Ghosting and Friends

This one is really strange and it’s left me completely confused.  Oana, and to a lesser degree me, had made friends with a woman over several months.  What had started as a business relationship organically evolved into an actual friendship.  This woman sent us gifts for our birthdays, and for Poppy.  Oana and her would talk daily, sometimes for hours, and I would exchange messages with her now and then.  We met in person numerous times and even had her over for dinner several times.  The point is, that this was a seemingly genuine friendship built over a prolonged period.

A few weeks back this friend went radio silent.  She was not seen on WhatsApp for weeks, and would not respond to calls, texts, or any other attempt to communicate.  Oana and I were seriously worried for her, with all sorts of thoughts running through our minds; was she in the hospital? Had she died? Was she trapped in an abusive relationship? Pretty much every terrible thought you can have about what has befallen someone, we had.  

Oana and I talked about this situation trying to work out what we knew about this woman.  We knew her name, but not her address.  Despite her having our address and visiting our home, she was always cagey about divulging her information.  She has no online presence; no social media or anything like that under the name we know her by.  All we knew was that she claimed to live on the other side of our city.  

We were both concerned about her welfare, and Oana in particular was upset as she had become close to this woman.  Eventually, we received a text just stating she was ok and would talk to us at some point.  

I don’t know what has gone on to make this person go completely off the grid for weeks and ignore all attempts at communication when just a day before going radio silent she was communicating with us normally.  This wasn’t a one-way street with us bombarding her either; many times she would initiate conversations and keep them going.  Was this an attempt to probe for information?  The whole thing is just very strange.  I’m of the view that people change over time, and as people change so do relationships.  Some friendships fizzle out, and that’s ok, but I’m always of the view that it’s best to just be upfront about it.  This didn’t fizzle though; it went from hot to cold as quickly as turning out a light.

Financial Independence and AITA

Oana and I have a guilty pleasure, in that we like to read stories from the subreddit Am I The Asshole (AITA) and then judge talk through them.  Some of the stories are clickbait, but some of them seem genuine.  One we discussed on Friday evening involved a married couple in their 30s.  The brief overview is that the guy was doing some cleaning and found a holdall at the back of the wardrobe, which the woman had filled with clothes, toiletries, and $1,000 cash.  When the guy asked her about it, she revealed it was her “go bag” in case she needed to leave in a hurry due to domestic abuse.  The guy felt hurt that his wife didn’t trust him, and felt the need to have that backup.  If we take the guy at his word, he’s a chill person, who doesn’t get angry.  I appreciate that the first eight words of the previous sentence are doing some heavy lifting, but let’s just assume it’s true.  He is now considering divorcing his wife, and breaking up the family as they have a young child together.  Does the guy have grounds to feel hurt?

I think it’s understandable that he’s hurt, but I also think he needs to acknowledge the fact we live in a society which is far from equal.  We live in a world in which, when a woman has a baby, her earning potential drops.  I’ve heard this referred to as the “Motherhood Penalty”.  Even when children are not a factor, women face major inequalities in the workplace and with their earnings from work.  Our society is far from equal, despite how much we might want to kid ourselves that it is.  It’s not entirely a one-way street, as men are expected to live up to certain stereotypes as well, but I’m not going down that rabbit hole today.  Coming back to the question, does this guy have grounds to feel hurt?

Well, yes, I think it’s natural to feel hurt if you are genuinely a good person who has never given any indication that you’re abusive or could be abusive.  However, we don’t make emergency plans on the basis that we think we’ll need to use them.  We make these plans in the hope we don’t have to use them.  A young woman with a young child is amongst the most vulnerable sections of society.  It’s all too easy for a woman in this situation to become trapped after giving birth, and there’s a term for this; “baby trapping”.

The way I look at this in my relationship is that I insist Oana has her own financial independence.  Yes, we pay jointly for our joint commitments, but she has her cash, and I have mine.  Oana has said more than once that she’s happy to use her savings for things for me, or us, but I believe that she needs to have her own pot of cash that is just her own and that she should add to that regularly so she has an emergency fund.  I do this because having your own emergency pot of money is just good-fucking-sense.  Where is the good in trapping someone in a relationship?  

What Am I Doing?

TV: For All Mankind (Apple TV).

Audiobook: The Invisible Universe by Matthew Bothwell.

I’ve seen people raving about For All Mankind for ages and we’ve finally got around to watching it, well the first episode at least.  It’s an alt-history show which features a different outcome to the race to land people on the moon.  I’ve heard some people say it works as an almost prequel to The Expanse, so I’ll be interested to see how that plays out.  For All Mankind has a big cast and some strong names on the production team.  Ronald D. Moore is one of the creators, and fans of Star Trek and the reboot of Battlestar: Galactica will recognise his name.  Another name that always stands out to me is Naren Shankar, who has also worked on ‘Trek, and served as co-showrunner on The Expanse.  He also has a background in Applied Physics and Electrical Engineering.  In short, I’m excited to get stuck into this show as I think it’s got a lot of expertise and creativity behind it.  

Financial Update

Assets

Premium Bonds: £13,150.00. 

Stocks and Shares ISA: £58,715.38. 

Fuck It Fund: £6,029.25.

Pensions: £71,314.32. 

Residential Property Value: £228,116.00. 

BTL Property Value: £147,203.00.

Total Assets: £524,527.95.

Debts

Residential Mortgage: £173,195.63. 

BTL Mortgage: £104,912.43.

Total Debts: £278,108.06. 

Total Wealth: £246,419.89.

Investment Income in 2023: £661.27 (target £10,000).

There’s not a huge amount to talk about with my finances at the moment.  It’s been a week where not much happened; no investment income, and no changes to my debts.  It’s going to be a similar story this coming week, and then the week after I’ll receive a dividend payment.  

The big story for the coming week is that my tenants are moving out on 11th February, so by the time you read this they will have already ended their tenancy.  Once the end of tenancy inspection is complete we can look at getting the house on the market.  It will be a relief to have it sold and be done with the BTL experiment.  

Safe Withdrawal Rates

The 4% safe withdrawal rate has long been considered a golden rule for retirees, providing a seemingly safe benchmark for sustainable income in retirement. However, we should question whether this rule is too cautious for all situations. 

One of the most important pieces of information regarding SWR is the failure rate, but I think the failure rate is often misunderstood.  FIRE plans don’t just fail suddenly.  We’re talking about financial plans that are set up for decades of spending.  If you need to drawdown £2,000 per month, and you are sticking to the 4% rule, you would need a pot of £600,000.  If that pot was to drop in value to £550,000, then you would need to draw approximately 4.36% to still have £2,000.  Note: the withdrawal rate is based on the assumption the monthly drawdown will remain constant throughout the year.  

The great thing about such a long-term plan is that you can always adjust things on the fly.  If you have a month where the market has boomed, you may not need to draw 4%.  Other months might see you draw down 6%, or 8%.  The point is you can tighten your belt, or loosen the purse strings as you go.  If it looks like you are going to deplete your funds more quickly, or the market is going through a rough patch, you can reassess your spending or even take up a little part-time work to subsidise your cost of living.

4% is very cautious, and understandably so.  No blogger or advisor will want to give advice that could go wrong, especially about something so important.  However, this leads to situations where success and failure rates are treated like a roll of the dice, in which the outcome is instant with no room to amend or adjust.  In reality, if you are keeping an eye on your finances, you should have plenty of time to change your strategy to make sure you don’t fail.  

Ultimately, you have to do what is right for you.  Everyone has a different approach and different preferences.  If you are looking to retire at 60, do you think your spending will be the same at 70? 80? Or 90?  Likewise, if you are retiring at 40, will your spending be the same at 60?

You may consider all this and decide on an even more cautious SWR, or you may realise you can be more aggressive in your approach to FIRE.  

There was a story in the news this week talking about new data suggesting people need much more money to have a comfortable retirement.  The main points are in this snip I’ve taken from the story:

https://www.bbc.co.uk/news/business-68222807#

I often find stories like this to be frustrating.  The first thing to think about is what constitutes comfort in retirement. Comfort can look very different from person to person.  I’m also dubious of the massive gap between a minimum income, and the income needed for a comfortable retirement.  I know personally that the difference between a basic life and a comfortable life is not the best part of £30,000.  I’m happy with my current standard of living, and I could maintain that with £20k net per year.  

Research like this always feels like a one-size-fits-all approach, and I think people should be wary of looking at these figures and panicking.  Take stock of your finances, think about what you want your future to look like, and then proceed from there.

Until next time, thank you for reading, and if you want to discuss any of the points in this blog, leave a comment and I’ll respond as soon as possible.

Disclaimer

The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.

If you want personalised financial advice, seek an appropriate professional.  If you are in financial difficulty, seek advice via the resources below:

StepChange

MoneyHelper

Biolink 

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

bio.link/davidscothern.