Hello and welcome back to Mortgage Advisor on FIRE. This week I discuss the term “legal tender” and how it’s often misunderstood. Also, some thoughts on ISAs and stocks for the coming financial year.
Weekly Update
Another week down, another week closer to FI. This week was anchored around a hospital appointment, work, and meeting up with my Dad. My hospital visit was a follow-up from the investigations I had into possible IBD/Crohn’s last year. I’ll need to have some more tests in the coming weeks so that they can compare the results over a decent amount of time.
I met my Dad on Friday for a coffee and a sandwich and, as usual, we put the world to rights talking about money, investing, autism, and Lego. Then, we went searching for Lego but came back empty-handed. It’s probably for the best as I don’t have the spare cash or space for more. It is fun to look though.
One thing that has changed in recent months, and I bring it up now as I’ve had a few similar conversations this week, relates to the relationship between the news and mental health. I can’t remember where I picked this up, but someone said the best thing you can do for your mental health is to not watch the news. I think there’s some truth to this. The news now is just all about keeping your attention whether that’s on TV or their website. So much content is just filler, with very little insight or analysis. The media companies make their money from sensationalised stories, and getting a balanced overview of what is going on in the world.
I have posted a couple of blogs during this week; another part in my Looking Back series, and some thoughts on Decision Fatigue.
Speaking of fatigue, I have felt so tired this week. On a few occasions, I’ve been falling asleep on the sofa at 8pm, which is unusual for me. I suspect having a week of early starts is the main reason, but it’s still frustrating when I’m trying to read or watch something and my eyes feel so heavy.
“It’s Legal Tender”
Certain phrases are almost physically painful because of how wrong, ignorant, and stupid they are. One of those is the whole, “it’s legal tender”, normally uttered by someone who clearly cannot define legal tender and is just wanting to be difficult. It’s a phrase people use like a cheat code, that will suddenly make the person or business accept their form of payment. I witnessed such an event in a cafe this week, and I just wanted to shake the person and slap some sense into them.
First of all, it’s probably best to define what legal tender is. It’s not really about payment as such but rather is about settling debt. If you owe a person or business a debt, then they can’t sue you if you attempt to make payment in legal tender. In England, this is coins produced by the Royal Mint and notes issued by the Bank of England. Other parts of the UK have similar(ish) systems and rules. A business can accept whatever payment it wants for goods and services. If they want to be cashless and operate just on electronic payments, there is nothing illegal about this, despite how many people stamp their feet and throw a tantrum because they have “legal tender”.
This whole issue is, in my opinion, linked to the brigade who, for some completely bizarre reason, think that physical cash is better or more secure than numbers in an account. Maybe there was an argument for this when cash was backed by gold or another commodity, but our currency now only has value because we’ve all agreed to pretend it has value. Money works because of confidence and belief, and because it helps our society run. Whether that is physical notes and coins, or numbers on a screen, the value of that currency is determined in large part by our collective belief that it’s worth something.
Payment by card is not a new thing. Credit cards were first introduced in the 60s. Debit cards in the 80s. Contactless payments have been around for almost twenty years. This isn’t some new-fangled technology. There’s no conspiracy here. Paying electronically is more secure, more convenient, faster, and hygienic than using notes and coins.
I would love to witness a retail worker try and explain this to someone wittering on about legal tender though. It would be funny to watch the penny drop.
Fun with Cold Callers
The following took place on Friday morning.
Me: hello?
CC: Is that Mister Scott-Scott-Scotthern?
Me: who’s calling?
CC: I’m calling from [insert scam company name here].
Me: just wait a moment.
*I move the phone slightly away from my ear and start talking to Oana*
Me: you might want to put the chainsaw down for now. Also, check the plastic wrapping for holes. Do you think that hole you’ve dug is big enough for three bodies?
CC: erm… hello?
Me: Yes I’m here, I’m just surrounded by dead bodies and wondering what to do with them.
CC: I can call back later.
*line disconnects*
What Am I Doing?
TV: The Signal (Netflix).
Audiobook: We are Legion (We are Bob) by Dennis E. Taylor.
We watched a four-part German mini-series on Netflix called The Signal. It was about a signal from space that is received by an astronaut on the ISS, and how far people will go to control the news of this signal. I had a hunch about how the series would end pretty early on but thought it was too obvious. So I was disappointed when my hunch turned out to be right. A show with promise, but just executed in an unimaginative way.
I’ve been meaning to start the Bobiverse series for a while and I’ve finally done it. The premise is that a man sells his company for a fortune and signs up for a service so that when he dies his body can be stored until science advances enough that he can be brought back. It’s funny but also bleak at times. I’m about a third of the way into book one and thoroughly enjoying it.
Financial Update
Assets
Premium Bonds: £13,200.00.
Stocks and Shares ISA: £62,861.90.
Fuck It Fund: £6,048.51.
Pensions: £74,921.83.
Residential Property Value: £228,116.00.
BTL Property Value: £147,203.00.
Total Assets: £532,351.24.
Debts
Residential Mortgage: £172,897.27.
BTL Mortgage: £104,891.96.
Total Debts: £277,789.23.
Total Wealth: £254,562.01.
Investment Income in 2023: £928.01 (target £10,000).
BTL Update
I’m frustrated to say that we’ve not made any real progress in selling the BTL. The market just seems to be at a standstill in that part of the city. There are other options open to us, but none of them are appealing at the moment. For now we are just going to wait and see what happens after a bit more time has passed. It could be that we are expecting too much too soon. I’m hoping to have a chat with the agents this coming week to see what else they suggest.
Shares and Free Stuff
A fun little thought experiment I was told about this week, is where you look at a business you use often and then work out how many shares you’d need to own in that company for your dividend payments to cover your spending with that business.
Take Tesco for example. Their 2022/2023 dividend totalled 10.9p. If you wanted the dividend to match your spending with Tesco, you’d need to work out how much you buy from them. Let’s assume you spend £6,000p/a with them; £500p/m. You would need a fraction over 55,045 units for the dividend to cover your spending. However, based on the current stock price you’d have to pay over £158,000 to acquire that many units.
Perhaps it’s best not to use this investment approach.
One cool milestone that many FI followers track is how much of their expenses would be covered by their current fund value. For example, if you have £100k and plan to use a 3% withdrawal rate, then you have £250 of your monthly expenses accounted for. This could be your council tax and electricity bill. Once you have £200k in your pot, then you have £500 of your monthly expenses covered, and so on. It’s these little milestones that help keep us on course for FI. I’m gradually inching my way to having my expenses covered, but there are times when it feels like it will never happen.
It’s not long until the new financial year starts and we can start investing in our ISAs again with a fresh allowance. I would have loved to have the money from the BTL sale in time for this, but that’s not looking realistic. For the next few months, I’ll probably be drip-feeding money into my ISA while Oana finds a decent job. The expectations that some businesses have are insane for the amount of money they are willing to pay. Something will turn up though; she’s got a great employment history and lots of skills and qualifications.
That’s all for this week, so thank you again for reading. I hope you have a great week ahead. Don’t forget to like, comment, share, and subscribe. Also, if you’re feeling generous you can make a payment towards the running costs of this site using the payment form below.
Make a one-time donation
Make a monthly donation
Make a yearly donation
Choose an amount
Or enter a custom amount
Your contribution is appreciated.
Your contribution is appreciated.
Your contribution is appreciated.
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:
Biolink
You can now find all my social media pages by checking out my Biolink:
bio.link/davidscothern.
I absolutely think having mental milestones throughout the journey is key.
Comparing it to running, if you wanted to run a marathon having not been a runner before would seem daunting and it obviously isn’t going to happen overnight. But, starting with a couch to 5k, then building up to 10k, then on to a half marathon and beyond. Each of those is a really huge achievement.
In finance, getting to your first £1,000, then £10,000 and then £100,000 are all huge landmarks. From £100,000 onwards, the next landmark is further and further away. Having the idea of being “specific bills FI” is a great idea. Based on mine and my wife’s finances, assuming a 4% rule for non-pension assets, we’d be “Utility Bills FI” 🤣
For a project like this, you absolutely have to set out smaller goals and milestones. It’s just too big a project to complete without. “Bills FI: How To Keep The Lights On”
Despite mostly using card payments, I still like the option of paying in cash, electronic systems can crash/get hacked. I see the chaos caused when contactless is down and many people don’t even know what their PINs are (fortunately, I know mine!).
Anyway, saw this and thought of you: https://www.telegraph.co.uk/money/consumer-affairs/spent-hundreds-thousandslego-not-selling/
Cash will probably be around in some form for a long time. I don’t think a 100% digital society is possible everywhere, although I know some countries have/are trialled/trialling it. The Lego thing is something I’ve thought about for a while; is it worth buying two of each set so I can build one and keep the other to sell later down the line. Take a lot of storage space though!