Hello and welcome back to Mortgage Advisor on FIRE. This week I discuss the relationship between FI and climate change. Also, why debt is borrowing from your future self, and how it can be useful in the right circumstances.
Weekly Update
Euro 2024
The best team won and it is that simple. The Spanish were head and shoulders above us through the match and the tournament. I was struck by how composed the Spanish team was compared to us. When Spain moved forward they seemed in control. When we attacked we were snatching at chances and it all felt a bit desperate. Our play was static and lacking motivation, not just in this game but for much of the competition. We got to another final, and that’s a great achievement. However, we need more quality to push on to the next level.
For a long time, it has felt like we have picked a group of individuals to play for England rather than building a team. We can go back to Lampard and Gerrard in the same midfield with Scholes moved out wide. We can even go back to playing Rooney and Owen as a partnership.
In future, we should build a team around our best attacking players, and select the players who will complement that system rather than trying to fit square pegs in round holes.
Despite the result, we had a good time watching the match. We were going to watch it at my Dad’s place on his massive flatscreen but he was not feeling too good, so Oana and I went to a local Mexican bar and restaurant, Pina. It was a cool atmosphere and not too busy. A couple of things annoyed us, such as the price against the quality of food. A portion of three tacos at Street Food Chef is £8ish. At Pina, three tacos are between £14-£16, and they’re not as good as Street Food Chef.
It used to be the case that Pina did the best tacos in Sheffield, but in the last couple of years their quality has dropped and their prices have increased. It’s not a great combination.
The main thing that bugged me, though, was to do with the cleaning of the tables. A member of the staff came to the table next to us and sprayed the bottle of cleaning liquid all over the table, which caused a cloud of the cleaning product to settle on my right arm and the right side of my face.
Not the best experience when you’re in a restaurant, but fortunately our food had not yet been served or it would have been coated in this chemical mist. It’s not rocket science and good restaurants normally instruct their staff to point the spray away from customers or, ideally, spray the bottle into the cloth and then use that to wipe down.
We used to love Pina but I suspect this was our last visit.
US Election
Well, shortly after my last post went live it seems someone took a shot at Trump. It’s a strange one because I think the world would be better without him, but I wouldn’t generally support assassination unless it was the direst of situations. As I’ve thought about it more, my opinion shifts back and forth. I think Trump, in addition to being a horrible human being and an all-around piece of shit, is an active danger to society. His “leadership” during Covid was embarrassing.
I doubt we’ll ever know how many people died because of his stupidity, but I don’t think it’s a low number. He is volatile and not the sort of person you want to defuse a situation. His whole shtick sets people against each other and promotes batshit crazy beliefs. The world would be a better place without Trump in it, but shooting him in the head isn’t an optimal solution.
One thing I will say about Trump is that he knows how to work the media, and the picture of him pumping his fist in defiance will be one of the defining images of the century. The missed gunshot and the following camera shot have just secured a landslide victory for Trump, and it’s so frustrating.
Deep Fakes
I saw something on Facebook where our Prime Minister, Sir Kier Starmer, was alleged to have been on a morning television show promoting a new investment platform. The app was reported to offer massive returns. At this point, my bullshit detector was going into overdrive. The thing is, the story was backed up by some fairly realistic images and video, but it was obviously a deep fake.
Now, I use the word “obviously” but it’s not going to be obvious to all people. Some people are drawn in by these deep fake scams and go on to lose money. We can talk all day long about how people should know better, but not everyone has the opportunity to know better. There are several ways to assess society and one of those methods is to take a good look at how the most vulnerable in that society are cared for and protected.
It’s not going to be too long until the technology to produce convincing deep fake videos is freely available, just like photo editing software and large language models are usable as apps on a smartphone. When that happens it’s going to be a free for all.
As the saying goes, a lie can travel halfway around the world whilst the truth is putting on its shoes. If a deep fake is produced showing someone saying something abhorrent you can bet that it will have been shared and commented on many times without anyone questioning if it’s actually real. By the time the truth comes out, it will be too late. People believe what they are told first and are resistant to changing that belief.
I’m not sure what the answer is here, but it may be something along the lines of requiring all software that is legally available to have a feature built-in whereby the content it produces is watermarked or tagged in some way that makes it obvious it is fake.
Diabetes UK Step Challenge
From July 1st until September 30th Diabetes UK are running a step challenge to raise money for their cause. There are three step targets to choose from; 500k, 1m, or 1.7m. I’ve gone for the 1.7m target. It’s a tough target but I’d rather set an ambitious goal. Also, I have some time off work during those three months to hammer out the steps.
If you’d like to follow my progress or make a donation, it can be done here:
https://step.diabetes.org.uk/fundraising/david4047
Letters to Oana
If you missed it, Part 2 of the series Letters to Oana is now live.
Looking Back
Part 13 of the Looking Back series is also live.
What I’m Doing
Listening: Nuclear War: A Scenario by Annie Jacobsen.
Watching: Five Days at Memorial (Apple TV).
I finished the Earthburst Saga by Craig A. Falconer, and it was enjoyable for the most part. It wasn’t the most complicated of stories but it was entertaining. I’m now on a book exploring the timeline of a nuclear attack on the United States, and their response to that attack. I’m only about a third of the way in but so far it is interesting. The narration, by the author, is a little irritating though. Each sentence ends as though she is asking a question rather than making a point, and it’s one of those things that, when you notice it, you can’t ignore it.
Oana and I just finished a mini-series on Apple TV which tells the story of a hospital caught up in Hurricane Katrina, as it floods and loses power. The show is based on real events and has all the high production values expected of an Apple TV show. It was generally well made on the surface but I found it lacking in some respects. The first few episodes deal with the storm and the last few deal with the fallout and investigation. I would have thought this situation perfect for a flashback style with unreliable narration or seeing different versions of events as told by different witnesses.
It also felt as though they left plot threads hanging without coming back to them as certain characters were built up and then seemingly forgotten about. Some real-world events don’t lend themselves to dramatisation and I think this might be one of those. A documentary might have been the better route to go down.
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Financial Update
Assets
Premium Bonds: £14,000.00.
Stocks and Shares ISA: £77,635.38.
Fuck It Fund: £345.97.
Pensions: £80,929.39.
Residential Property Value: £234,044.00.
BTL Property Value: £151,029.00.
Total Assets: £557,983.74.
Debts
Residential Mortgage: £171,817.53.
BTL Mortgage: £104,851.17.
Total Debts: £276,668.70.
Total Wealth: £281,315.04.
The numbers are looking healthier than at any time I can remember, but from next week it will take a bit of a hit. By next week we will have completed a further advance on our mortgage to pay for a few things. Ideally, we wouldn’t have done this, but it beats the other options we had on the table. Manageable debt is not a bad thing, especially when the rate of interest is better than the costs of finance elsewhere. It’s a temporary setback that will allow us to progress in other areas.
When the BTL sells my asset figure will drop by the value of the property, but the debt figure will drop by the mortgage amount. The next few weeks are going to be a little like clearing the decks ready for the big push into 2025. There are some other factors at play which I can’t go into on the blog, but if things go my way it could be an exciting end to this year and start to next year.
BTL Update
I keep thinking that the process must be complete by now, but it is still somehow rumbling on. This week we paid £245 for the freeholder’s management company to send some documents in an email to our solicitor. Considering this should be a few minutes of work I wonder what the person completing the task is being paid. It just seems like an excuse to make an obscene amount of money.
FIRE, Moving Abroad, and Climate Change
The weather seems to be getting crazier each year. The last few weeks have seen almost all four seasons of weather. The annual mean temperature in the UK has increased by almost 2 degrees Celsius over the last century or so. Climate change is happening and it’s just a case of how much and how soon.
When I first started my FI journey the plan was to move to Romania where there’s a low cost of living, and where we have had lots of support from Oana’s family. As I write this, on the evening of July 19th, Bucharest has had nine consecutive days of 40 degrees or more, with all but two days clocking in at 34 degrees or more.
That’s too high to be comfortable outside of an air-conditioned building. The generally accepted temperature at which a person would start to struggle and eventually die following prolonged exposure is a wet-bulb temperature of 35 degrees. (A wet-bulb temperature is when a thermometer is wrapped in a wet cloth).
With this in mind, many parts of the world are already experiencing sustained periods of heat above 35 degrees. Valletta, Malta’s capital, has exceeded this temperature nine times in July so far.
As well as considering Romania and Malta as possible future homes, we’ve thought about Spain and Portugal. My concern is that soon, the weather is going to worsen to the point that for some hours of the day, it will be unsafe to be outside. I’m not only thinking about now, but also when I’m in my 50s, 60s, and beyond.
It’s frustrating when I discuss the climate with some people because they think it’s only a few degrees and there’s nothing wrong with a bit of warm weather. These people completely ignore the fact that it only takes a couple of degrees to tip the balance of some ecosystems, and when they start to collapse it can be extremely difficult to reverse the damage.
Part of me thinks that we’ll come up with a technological solution to all this, but an increasing part of me believes that by the start of the 22nd century, our world will be very different. Even now there are parts of the United States where it’s going to become uninhabitable within the next twenty years or so. Phoenix, AZ, is projected to endure almost fifty days of temperatures over 43 degrees each year. For context, if a person’s internal body temperature hits 43 degrees it’s almost certain they will die.
As I read different FI blogs and forums, it seems like not a lot of people are considering climate change as part of their FI plans. I think this is a huge mistake. Oana and I talk about this regularly and we’re both scratching our heads at where we could realistically go where there’s a smaller risk of dangerous climate change. Ultimately it may be delaying the inevitable because once the first domino is knocked over, they will all fall eventually.
It might end up being the case that we stay in the UK, possibly moving further into the hills. Or, the world could face a major global pandemic more deadly than Covid, which could see our population reduce massively. All we can do for now is plan, prepare, and when we’re ready to FI, see what the situation is.
Debt: Borrowing from your Future Self
Debt is not inherently good or bad; debt is a description of you having received something with the promise to pay for it later. This can be an advantage if you understand how to use debt, but many people fail at this.
A good friend of mine refers to debt as borrowing from your future self. It doesn’t matter if you are paying interest or not on that debt, you are still getting something now that you pay for later. You are committing your future self to repaying that money.
For the odd thing here and there it can be a smart way to handle your finances. For example, if you have a large purchase to make, like booking a holiday, you could pay for the whole thing on a credit card that has 0% interest on purchases for a year. In the meantime, you save cash for the holiday and allow it to earn you interest. Then, shortly before your interest-free period on the credit card expires you pay the debt off.
This example requires discipline and the ability to delay gratification. If you have trouble controlling your spending, this is not a sensible way to manage your finances. It is, however, an example of how debt can be utilised to the advantage of the borrower.
How Lenders Make Money
At the opposite end of the spectrum, we have people who use credit cards in a way that only benefits the lender. In the next example, we can look at a person who doesn’t have a lot of disposable income or savings. They live beyond their means and rather than settling for a good smartphone, they have to have the latest top-of-the-range model. The only way they can afford this is to buy it on credit. They take out a card that offers 0% interest for 18 months and happily pay £1,499 for the latest model.
The typical minimum payment for a credit card is 2%-3% and assuming this person only pays the minimum payment, they’ll have approximately half the balance remaining at the end of the interest-free period. However, the interest starts to build up and be included in the monthly payment. What was £40-£50 coming directly off the debt, is now hardly touching the balance. Depending on the terms and conditions of the card, the minimum payment may increase to include the interest plus 3% of the balance, or something similar.
In this situation, the person is left paying more each month. They have even less disposable income and will be stuck with this debt potentially for years to come. This situation then snowballs. When the person can’t afford to pay an unexpected expense, they will have to fall back on their credit card. Thus, the spiral worsens and it doesn’t take too long before the cost of just meeting the interest is taking up a substantial chunk of their monthly income.
This person is paying the price for their past self not exercising restraint. They will be paying it for years to come; long after they’ve traded in that mobile phone for something newer.
If you want to wield debt to your advantage you need to understand the rules of the game.
That’s all for this week. Thank you for reading.
Disclaimer
The views and opinions in this blog are my own. They do not represent the views or opinions of my employer. This blog should not be considered advice.
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