Hello and welcome back to Mortgage Advisor on FIRE. This week I have a huge announcement regarding my BTL. Also, a cool end to the week, and thoughts on arguing with people. Finally, an update on the stranded astronauts, and how I would rebuild the tax system.
Weekly Update
A short working week as I only had to do Monday and Friday. I’m now off work until October and have just a few more weeks until I leave the business entirely. It’s a strange, almost bittersweet, feeling because this job has been a third of my life. I’ve met some great people, some of whom have become good friends outside of work. I’ve also learned a lot about money, banking, mortgages, and how to navigate the workplace as a neurodivergent person.
The biggest stress of the week has been trying to get the BTL sale over the line. At the start of the week, it seemed as though the deal was off. We were getting ready to relist the house for sale. On Tuesday afternoon the antics of the other side’s solicitors were becoming ridiculous and we set a deadline; exchange by midday on Wednesday or the deal is off.
The issue was that they kept changing their story and were telling the agent, our solicitor, and the buyer, all different things. At one point we were led to believe that the buyers did not have the required funds.
On Wednesday morning I had a call from the agent and my solicitor explaining that some progress was being made, and so I put the deadline back to 13:00 on Wednesday. I met my Dad, who owned the other half of the BTL, for lunch and the 13:00 deadline came and went.
Going silent…
We decided to go radio silent for a few days but a couple of hours later I received a call from the agent who levelled with me about the issues they’d been having dealing with the buyer’s solicitors. They explained that the exchange of contracts could take place the following morning. The biggest delay was because the other solicitors were refusing to give their bank details to the buyers for them to transfer their deposit.
I’m not sure what they were hoping to gain from all these delays but the agent gave me their opinion on it; the solicitors were simply too busy and were unable to cope with the workload. On Thursday afternoon we exchanged contracts which sealed the deal. The following day the sale was completed and we received our funds.
Art in the Garden
Saturday was a really fun day. Oana and I went to Art in the Garden at the Botanical Gardens in Sheffield. It’s an open-air art festival with some food and drink stalls. It wasn’t as busy as last year which was probably due to it being a bit foggy and rainy. We had a great time though, especially with the squirrels in the park. They are friendly and not at all timid. They come right up to you for food. One squirrel decided to climb up my leg and body before chilling on my shoulder:
On the way down, rather than going down my body, it went via my uncovered arm and scratched me in a few places. As it drew blood I didn’t know if I needed a tetanus shot or something, so on the way back we stopped at a walk-in clinic. They said I was fine as I’d had a shot in 2022 which I had no memory of. I checked back through my photos and found one from the same date where I’d cut open my head on a rusted metal sign. Quite how I forgot about that I don’t know.
We walked back through another park and sneaked into a university building we’d wanted to explore for a while. It was an open day so I suppose sneaking isn’t the right word. It’s the Diamond Building which has won a few awards for its design. I didn’t like it at first, but over time the building has grown on me.
Lunch
We then stopped for a late lunch at a new(ish) Italian place where we shared a few dishes including some Italian sausage with crispy bacon bits, some bruschettas with olive tapenade, and some with goat’s cheese and caramelised red onion. We also had some garlic bread because I can’t pass up garlic bread when offered.
Arguing for the sake of it…
Much like some geese wake up and choose violence, some people wake up and choose to argue. We’ve all encountered people who just want to argue for no obvious reason. You can spot these people by picking apart their argument, and when you do you find nothing but stupidity.
I’m not talking about people with a legitimate gripe or concern. I’m talking about those people who view interactions with other people as a contest; something to be won or lost, rather than an opportunity to share information, knowledge, and experience, or as a joint effort to arrive at the truth.
Recently I was the target of someone who just wanted to argue. Apparently, I present “an aura of expertise” and give “bad advise” [sic]. This was in relation to the 4% rule.
I was asked, on a forum I post on, what amount of investments was needed to retire. I gave a very brief answer along the lines of “your annual cost of living (X) multiplied by 25”. This accounts for those wanting to live on £12k p/a or £120k p/a because X is unique to you. My FI figure and your FI figure will be different.
For and against…
There are all sorts of arguments for and against 4%. Some advocate for a more aggressive withdrawal rate whilst others are more conservative, preferring 2%-3%. One major variable is how long you are drawing on your ISA for, and how long you will be drawing on your pension for. You need the right balance between the two based on your age and circumstances.
According to my detractor, the 4% rule is bullshit because the chances are most people will have money left when they die. Forget the fact that people might want to leave an inheritance to their loved ones, or perhaps leave money to charitable causes. I’m “just a bloke on the internet with a dream” according to some other bloke on the internet.
The great thing about FI is that there are endless ways to approach it, and it’s unique to each person. I steer away from giving advice as much as possible and I always encourage people to do their own research. If you invest in something you don’t understand you are gambling, and will likely lose money. It’s absolutely vital that you understand what you are doing, and if you don’t like the approach I take then, as Fleetwood Mac said, “go your own way”.
Boeing
I don’t think I’ll ever feel comfortable flying on a Boeing aircraft again because, well, just look at their track record for the last few years. Another area in which they are not covering themselves in glory is space transport. Back in June, the Boeing Starliner Capsule underwent its first crewed test flight.
This mission was to last eight days and was to transport two NASA astronauts to the ISS; Barry Wilmore and Sunita Williams. As the capsule docked with the ISS, faults with the craft’s thrusters were detected. After weeks of testing and investigating it was determined to be too dangerous to bring the two astronauts back via the Starliner. So, the 8-day mission became a 94-day mission before the Boeing capsule was returned to Earth remotely.
What about Barry and Sunita?
You may be wondering what happened to the two astronauts. Well, they will be brought back to Earth in a future mission scheduled for February 2025. Being in space would be awesome for a while, but the ISS isn’t that big and there are drawbacks to being in space such as muscle and bone wastage. I hope the two crew are in good spirits and are able to safely return.
Space exploration is fascinating and unless you’ve studied it you probably don’t realise how difficult it is. The ISS is located in low Earth orbit (LEO), which means it orbits approximately 400km above the surface. In contrast to this, GPS satellites orbit approximately 20,000km above the Earth, with satellites in geostationary orbit being over 35,000km distant. Space is big. The ISS is so close to Earth that it still experiences atmospheric drag and has to fire its thrusters on a schedule to maintain orbit. I’d still love to go to space and hope I see a day when it’s accessible to the masses, or at least those called David.
Coming back to my original point, though, I would not travel with Boeing if they paid me.
What’s in a name?
Something a few people have asked about is whether I plan to change the name of the blog, as I’m leaving my position as a mortgage advisor. Should I change the name?
The blog name, Mortgage Advisor on FIRE, is almost a brand name now rather than a description. My concern is that changing the name could confuse things. I’ve thought about maybe tweaking the logo slightly so that it shows as The (Former) Mortgage Advisor on FIRE, or something similar. Let me know what you think in the comments and/or the poll below.
Gousto
We received our first Gousto box last week and we’ve enjoyed every recipe we’ve tried. It’s all well packaged and the instructions are easy to follow. It’s something I’d recommend if you want to try some new meals. If you use my referral link below we will both get a discount for it.
Diabetes UK Step Challenge
I’m making great progress towards the 1,000,000 step target, and I’ve now completed over 600,000 steps.
From July 1st until September 30th Diabetes UK is running a step challenge to raise money for their cause. There are three step targets to choose from; 500k, 1m, or 1.7m. I had originally gone for the 1.7m steps, but it’s become clear I’ve bitten off more than I can chew. I’m now aiming for the 1m target.
If you’d like to follow my progress or make a donation, it can be done here.
Letters to Oana
If you missed it, Part 2 of the series Letters to Oana is now live.
Looking Back
Part 15 of the Looking Back series is also live.
What I’m Doing
Listening: The Dark Side of the Mind by Kerry Daynes
Watching: Celebrity MasterChef.
Financial Update
Assets
Premium Bonds: £14,050.00.
Stocks and Shares ISA: £87,413.87.
Fuck It Fund: £7,211.35.
Pensions: £82,379.98.
Residential Property Value: £234,044.00.
Total Assets: £425,099.20.
Debts
Residential Mortgage: £185,693.35.
Total Debts: £185,693.35.
Total Wealth: £239,405.85.
A week of massive change. The BTL figures have dropped off both the asset and debt side of the balance sheet, and because I included the full value of the equity but only received my half once it sold, it’s reduced my total wealth figure. This is just down to the way I calculated things. If anything I’m in a better position now because that equity has been released allowing me to invest elsewhere. The property had been empty for months and was like a millstone around our neck.
I’ll be maxing out my ISA in the coming days, and I’ve had to space out the process of moving money around because of the daily limits on transfers and card payments. It should be a strong end to the year, and then I’ll be living off my investments and investment income until I find another job in late 2025.
CGT
I was pleasantly surprised by how easy it was to pay my Capital Gains Tax for selling the BTL. The online form was simple and quick to complete, which was helped by the fact I kept detailed records of all the costs associated with the purchase and sale of the property.
I don’t have an issue with the concept of taxes, but we don’t make the system easy to understand. We have all sorts of different allowances, like a dividend allowance, trading allowance, and CGT allowance, and then we have different tax brackets which impact the amount of income tax you pay, whilst also determining which rate of tax you pay for things like CGT. Is this complexity a feature or a bug?
It feels as though there must be a simpler way of structuring tax, and what follows is my idea for a new tax system. This is based on absolutely no research and may result in economic ruin. I will not be taking questions.
Personal Allowance
I would increase the personal allowance for income tax so that it matches up with the amount someone would earn in a full-time job on minimum wage. Basically, if you earn the minimum wage you don’t pay income tax.
Income Tax: What’s Included and Bandings
I would bring all dividend income (outside an ISA or pension) in line with standard income. This would mean the self-employed, or those earning dividends through stock ownership would pay tax at the same rate as PAYE income.
Earnings greater than the personal allowance, but under £100,000 p/a would be taxed at 25%.
Then, earnings at £100,001 or over would be taxed at 35%.
Finally, earnings over £1,000,000 would be taxed at 40%.
National Insurance
I’d scrap the current system and introduce one class of NI contribution which would be a standard amount across the board. This would be 10% of earnings above the personal allowance.
Capital Gains Tax
Nothing is paid on your main residence. Also, nothing is payable on shares sold outside an ISA or pension. Second homes and other assets would be charged at the same rate as income tax, as part of the income tax regime. This would mean your CGT allowance is part of your personal allowance for income. If you have a personal allowance of £25k and you earn £20k, you have £5k that can be used for CGT.
Inheritance Tax
I don’t have a problem with the current rules on IHT. Fewer than 1 in 10 estates are subject to any IHT as things stand. Although I can see where people are coming from when they say we shouldn’t tax death, IHT is designed to limit, to some degree, the hoarding of generational wealth. There are enough provisions in place to make IHT not that much of a burden for most people.
As I said, this isn’t a serious plan but I think the system does need an overhaul. There are so many things about the tax system that confuse people. It’s still fairly common for people to think that going into a higher tax bracket means you’ll earn less than in a lower tax band. We really need to teach this stuff in school.
That’s all for this week. Thank you for reading, and I hope you have a great week ahead.
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:
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bio.link/davidscothern.
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Great news about the buy to let getting over the line, it feels like quite a while ago that I read it was on the market, so it must be a relief.
It also times well with a rumoured CGT increase, and although I don’t own rental properties myself (#indexer4lyf 🤣) it wouldn’t surprise me if that was a target.
I personally believe 4% is a perfect rule of thumb. What always seems to be ignored whenever I read / listen to people bashing the 4% rule is the assumption that after 10/15/20 years of focusing on your finances, you’ll not only quit work but also quit looking at your finances every again and blindly draw out 4% adjusted for inflation regardless of what is happening in the world. The trinity study was perfect in how it assumed a set number, because of they added rules and complexity they could have made any old number work “if only you don’t draw any money out at all in down years” or some other variations.
I genuinely don’t understand why someone would choose rage against saying 25x is about right.
Finally, I think the tax system is potentially complex on purpose. Either that or, the old saying of “a camel is a horse designed by a committee” might ring true. “Oh just change a bit here to bring on £x a year and add a sprinkle of y to increase the pot a bit, and give z people a tax break by doing…” And it does on.
It’s a huge relief.
Yeah, I don’t get why someone would get so emotional about it either. Bizarre…
I voted to add ‘ex’ to your blog title!
Although you could always add a caveat in your intro stating you are no longer in that job!
We had a Gusto subscription during lockdown and the meals became a substitute for eating out when we weren’t allowed to eat out!
I no longer subscribe but have kept all the recipe cards (we never ordered the same recipe twice so have a lot of the cards!) and I still use some of them now.
Congrats on finally selling your BTL – I hope to sell mine in the next couple of years when I am able to.
Finally, Reddit is where I go if I want to see the FIRE zealots and the anti-FIRE zealots get all emotional!
Hey, yeah we’re loving the Gousto recipes. Also picking up a few cool hints and tips for making tastier food.
I can’t tell you how relieved I am that we have finally sold that property. It’s such a weight off our mind.