Part 189: If you’re not stoozing, you’re losing (maybe)…

Hello and welcome back to Mortgage Advisor on FIRE.  Some thoughts on stoozing, nuclear power, and Netflix clamping down on password sharing.  Also, a slight financial reset.  

Weekly Update

I had my follow-up with the consultant to discuss the results of the three recent breath tests and the accompanying blood tests.  Much like the previous times I’ve gone down this route, the tests are mostly negative.  There was some suggestion of abnormalities in my liver and/or pancreas, and I’m having more tests to clarify what’s going on.  At least I’m not gluten intolerant; I really like bread, pasta, pizza, tortillas, donuts, biscuits, and so on. 

I’ve been struggling with spells of dizziness and lightheadedness as I continue to taper off Mirtazapine.  I’m still losing weight, which I think is related to the reduction in my Mirtazapine dose, so I can live with the withdrawal symptoms.  I’m in the middle of my two-week block of taking 15mg, and assuming the withdrawal effects are not too severe I’ll drop down to 7.5mg the week after next.  

We have just about finished shopping for what we need for our holiday.  We will soon be setting off for a two-week cruise around Norway and we can’t wait.  Norway is where this blog was first conceived, and I’ve told the story several times.  The short version is that in 2019, whilst on a cruise around the fjords, I was reading books on finance and investing and wondering how I could escape the rat race.  I discovered the FIRE movement and my blog at the time was stale and sat dormant, and the name “Mortgage Advisor on FIRE” just popped into my head.  Who knows what lightbulb moments will take place on this cruise?

A Moment of Remembrance

It’s been a while since I’ve done a section on The Tory Shambles and this week saw me lose major blog material with Nadine Dorries and Boris Johnson both standing down as MPs.  I suspect that the country has lost absolutely nothing with these resignations, and I hope that the future brings absolutely nothing but misery for the bumbling dipshit Johnson in particular.  He should hang his head in absolute shame at the way his government handled the pandemic.  So, why the call for a Moment of Remembrance?  Well, it’s to make sure that no one tries to romanticise the time Johnson was in power, or tries to rewrite history.  It should be recorded for all time just how awful his time in office was.

Netflix

Netflix shot itself in the foot recently.  We were paying £15.99 per month for UHD and up to six screens.  We were sharing our password with one other person (just as many other people are doing) who lives next door(ish).  They were just outside the range of our wifi by maybe a meter or two.  Anyway, because they’re on a separate network they kept getting a message asking for their TV to be authorised.  Then, when we loaded up Netflix we would get the same message.  After a fair bit of back and forth, the person we were sharing with has gone for their own account at £4.99 whilst they finish a show they are halfway through, and then they are cancelling their subscription.  Meanwhile, we have downgraded our account to the £6.99 version.  

So, in summary, Netflix will have gone from receiving £15.99 for an account which is designed to be used by multiple people, to receiving £6.99.  Having read through the pinned thread on the Netflix subreddit it seems we are far from alone in this.  There’s far too much competition in the streaming world for companies to be this militant.  If you’re going to offer a subscription for up to six screens, and you can see that it’s been used on two wifi networks, then surely it makes better business sense to honour the package at £15.99.  Netflix seems to be operating on the basis that they’re an essential service that people won’t give up.  I think they’re in for a rude awakening.  They’re competing with Amazon, Disney, Hulu, YouTube, Apple TV, Paramount+, HBO Max, and a range of other services.  I could personally manage without Netflix but I know Oana loves her Spanish and South American TV.  For me, it’s all about audiobooks and podcasts.  

Nuclear Power

We’ve been watching The Days, a dramatisation of the Fukushima nuclear disaster, and it’s got us talking about nuclear power, green/renewable energy, and the climate crisis.  Nuclear power is often demonised as being dangerous but the data just don’t back that claim up:

Nuclear power is, with the exception of solar, the safest form of power generation, and it’s not even close when compared to fossil fuels.  If we want to avoid a major climate disaster then nuclear power is going to be absolutely vital in securing that future.  As has been argued many times on Sceptics Guide to the Universe podcast, the choice before us is not between renewable energy and nuclear power; it’s between fossil fuels and nuclear power.  Renewable sources like solar and wind are great, but they’re not the answer to sustainable, reliable, and consistent demands for energy.

On a recent episode of the SGU podcast they explained why it’s difficult for renewable sources of energy to make a real impact, and I’ll do my best to summarise those points.  Imagine you have a series of solar farms scattered around a large area.  Each of those farms has to be connected to the national grid.  Each connection is a complex engineering work that takes a lot of time, money, and other resources.  The current wait time to be connected to the grid in the US (and I think the UK IIRC) for these projects is measured not in months or years, but decades.  If you have a hundred different projects each producing a little bit of energy, then you have a hundred different projects waiting decades to be hooked up to the grid so their generated power can be used. 

Compare this to a nuclear power plant.  According to Energy.Gov a standard nuclear power plant generates the same power as over 3 million PV panels, or 431 utility-scale wind turbines.  Nuclear power works whether it’s sunny, cloudy, day or night, windy or calm.  Nuclear power does the heavy lifting, and renewables are there to supplement nuclear.  

The other limiting factor with things like wind or solar is that there is not enough effective storage for the energy generated if it’s not required at that specific point in time.  We just don’t have the infrastructure in place to store vast amounts of electricity for times when there’s a surge in demand.  This is why we are using more fossil fuel now than at any other time in history.  Yes, we are using more renewable energy but because energy use is increasing every year, we are still burning more fossil fuels, and this is why we absolutely need more nuclear power.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: The Days (Netflix).

Audiobook: Too Big to Jail by Chris Blackhurst.

As I mentioned earlier we are watching The Days on Netflix.  I’ve just finished Too Big to Jail and I thought it lost its way a bit in the final third.  Those interested in banking corruption may find it interesting.  To quote the blurb; “Inside HSBC, the Mexican Drug Cartels and the Greatest Banking Scandal of the Century.”

If anyone has any recommendations for books for my cruise, I’d love to hear your suggestions.

Financial Update

Assets

Premium Bonds: £10,000.00 (no change). 

Stocks and Shares ISA: £82,675.48 (+£294.33). 

Fuck It Fund: £642.64 (+£142.64).

Pensions: £59,420.92 (+£1,650.66). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £524,717.04 (+£2,087.63).

Debts

Credit Card: £0.00 (no change).

Loans: £9,400.00 (-£100.00).

Residential Mortgage: £177,258.04 (no change). 

BTL Mortgage: £104,986.33 (no change).

Total Debts: £291,644.37 (-£100.00). 

Total Wealth: £233,072.67 (+£2,187.63).

Investment Income in 2023: £3,677.76 (target £8,500).

I’ve sold some units in a stock I hold in my ISA.  I’ve been going back and forth in my mind wondering if it’s better to cash in to pay off some debt, like my loan, and the cost of our upcoming cruise.  I’d wanted to hold on to this stock for longer in the hope the price would increase but it’s been fairly fairly static for a while now.  

Something else that has become clear in recent months is that our household food budget needs to change.  It seems that every time we go to the supermarket the cost of everything is increasing.  It’s so expensive to even just exist without any luxuries.  So, we’ve had something of a reset in our finances with the sale of these units and adjusting our household budget.  My ISA is going to take a hit of approximately £20,000 which is pretty disheartening but it should free up several hundred pounds each month.  

Stoozing

I came across a new financial term this week; stoozing.  It refers to the practice of taking out credit cards that offer 0% interest on purchases for years at a time, and then using those cards for your day-to-day spending.  As the cards are interest-free, there’s no pressing need to pay the balance off in the usual timeframe to avoid interest.  The key here is that you don’t spend money you don’t have.  All the spending on the credit cards has to be backed up with cash you have in a bank account.  You then transfer the money from your bank account into a savings account with a decent rate of interest.  

For example; you spend £100 on groceries at the supermarket on your credit card.  At the same time, you transfer £100 from your bank account to a savings account paying interest.  The idea is that your savings account balance should match your credit card balance.  At the end of the 0% period, you use the money in the savings account to pay the balance off.  As the balance has been earning interest, you should receive a nice little boost at the end.  

Although this looks fine in theory, it takes a lot of discipline.  This approach is not suitable for anyone who has difficulty controlling their spending or working to a budget.  It’s potentially very risky and could leave someone with a large credit card debt they are unable to pay.  All that being said, this is another example of how knowing the rules can lead to better performance in the game of money.  I can’t emphasise enough just how high risk this approach could be in the wrong, undisciplined, hands. The fact I’m talking about it here should not be seen as an endorsement of the approach or advice, it’s merely something I recently discovered that I found interesting.  

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 188: Like a punch in the face…

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss why you should never use Barclaycard.

Weekly Update

I had my final breath test this week, and I’m glad they’re over.  The test itself isn’t too bad, but the fact I have to stop some of my meds a few days before the appointment causes some discomfort.  I’m seeing my consultant this coming week so I’m hoping that I’ll have some sort of answer as to the cause of my gastrointestinal problems. 

I’ve continued with a lower dose of mirtazapine and felt no ill effects.  I’ve been on this antidepressant for a couple of years now, I think.  One of the common side effects is weight gain, and another is increased appetite.  Since cutting my dose by 25%, and being more mindful of my diet, I’ve lost 3.2kg in a month.  Assuming I continue to have no withdrawal symptoms I’m going to continue to reduce the dose and hopefully be off the drug completely by mid-July at the latest.

On Saturday we should have been going to Manchester to see Coldplay but the train strikes made the whole thing too difficult.  We sold the tickets for the price we paid, so no major loss.  Instead of going to Manchester, we went to Meadowhall for more clothes shopping for our upcoming holiday.  I hate shopping.  I hate Meadowhall.  Today was, strangely, not as stressful as I expected but it was tiring.  

More Customer Service Nightmares

On Monday a friend of mine sent me some info for a credit card offer with Barclaycard.  The offer was that you would receive 50,000 Avios if you opened the card before the end of May, and spent £3k in three months.  Also, the offer included a free trial for a load of Apple services I already subscribe to, but I’ll return to this later.  All in all, simple enough, and easy enough to satisfy the spending requirement.  I collect Avios and this seemed a nice, simple, way to boost the balance.  But seriously, I mean, fuck me ragged, never in my worst nightmare did I expect the service from Barclaycard to be so unrelentingly dogshit.

Here follows a brief timeline…

29th May: I apply for the card and I’m accepted.  I’m asked to upload proof of income (two most recent payslips) to activate the higher credit limit.  I upload the payslips immediately. 

29th May: No email acknowledgement received of the application, but a reminder is received asking me to upload proof of income.

30th May: Still no email acknowledgement of the application, but a further reminder asking me to upload proof of income.  I upload the income information again.

31st May: A further reminder to upload my income information.

1st June: Still no email acknowledgement of my application.

2nd June: My card arrives.  Inside the pack is a load of standard information, T&Cs etc, as well as confirmation of the welcome bonus of 25,000 Avios.  

2nd June – 13:05: I call Barclaycard to ask about the discrepancy in the welcome bonus and to ask about my income information.  On their call system, they have an option to discuss your Avios Plus card and they also have an option to discuss the 100,000 Avios welcome bonus.  I navigate the menu and James answers my call.  During my twenty minutes or so with James, we ascertain that he knows nothing about a 50,000 offer (despite me having a screenshot of said offer from the Barclays website) and he can’t give me any information about it.  He explains he needs to ask another department, and puts me on hold.  Ten minutes later the call is terminated.  

2nd June – 13:40: I need to go to an appointment nearby at 14:00.  I figure I’ll call on the way.  I dial the same number I originally used to speak to James and my call is answered by Becky.  I briefly explain the issue, but she can’t help and had to transfer me.  My call is answered by Leighton, who after a brief explanation also can’t help me, and so I’m transferred to Jenny, who (altogether now) also can’t help me.  Jenny suggests that another department may be able to help, but there’s a wait to get through to them, so she’s going to mute her headset for the next fifteen minutes (seriously, I’m not making this up) whilst they pick up.  At this point, I’m outside the place of my appointment and explain that I’ll have to call back later to make a complaint.  So far, with the exception of a minute or so between James hanging up on me and me calling back, I’ve been on with Barclays for just under an hour and got absolutely nothing cleared up.

2nd June – 14:20: I call back and get through to someone but I didn’t catch their name.  I explained all that had happened and that I wanted to make a complaint.  For the next twenty or thirty minutes I’m asked to repeat information again and again.  I arrive home and start changing for the gym, thinking naively that the call can’t take much longer.  I finish changing for the gym and head out still going over the details of my previous calls.  I’m still on the phone as I walk to the gym and wait outside to finish up this call.  After a ridiculous amount of time, I’m told that none of my requests can be actioned.  What were my requests?  I’m glad you asked.  My requests were:

  1. Close my account.
  2. Confirm it has been closed in writing.
  3. No charges should be applied (the card had a £20pcm fee). 
  4. Some sort of gesture for the awful service so far.  

So, none of these could be actioned, and I asked to speak with the complaints team directly.  The conversation took an absurd turn:

Me: I want to speak with the complaints team.

Them: So you don’t want to raise a complaint?

Me: Well, I want to speak with the complaints team….

Them: So, you don’t want to raise a complaint.

Anyway, eventually this person simply transferred me to the complaints team.  

The lady who answered was not given any of my details.  At this point, I’m still standing outside the gym.  I don’t have my wallet with me or the card info, and because I’ve not email acknowledgement of the application, I can’t provide any information to this lady to find my account.  Eventually, she tracks me down, reads through the notes, and asks me to explain my side, which I start to do just as she ends the call.

Now, this person had just confirmed my phone number with me as part of her security checks, and so I figure she’ll call me back.  

So, I ended up having to call back and I ask to speak with the complaints team as I was just disconnected.  I’m transferred and left on hold for a further ten to fifteen minutes.  I’m still outside the gym.  Someone then answers but I could barely understand him because of the noise in the background.  It sounded like this person was working in a nightclub or bar, or something.  For no other reason than this, I’m going to call him Disco Stu because I didn’t catch his name.

Disco Stu can’t find my details anywhere.  We can’t hear each other because of the noise in the background, but I can hear the people in the background shouting, laughing, and whatnot.  I’m ready to give up, so I end the call and figure I’ll do my workout and deal with this another time.  Just as I’m setting myself up to work my back, my phone rings.  It’s Barclays.  It’s Disco Stu.  He’s moved somewhere a little quieter but still can’t find my information, so I leave the gym, walk home, and get my card details all whilst speaking with him about what’s gone on so far.  Eventually, the card is cancelled but the rest of the complaint had to be escalated to the complaints team.  

Also, the friend who sent me the info is having almost exactly the same experience.  However, he’s tried to access the free Apple services and, surprise, it doesn’t work.  

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC).

Audiobook: The Hating Game by Sally Thorne.

Financial Update

Assets

Premium Bonds: £10,000.00 (no change). 

Stocks and Shares ISA: £82,381.15 (-£734.79). 

Fuck It Fund: £500.00 (+£100.00).

Pensions: £57,770.26 (+£24.98). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £522,629.41 (-£609.81).

Debts

Credit Card: £0.00 (no change).

Loans: £9,500.00 (no change).

Residential Mortgage: £177,258.04 (-£470.77). 

BTL Mortgage: £104,986.33 (-£5.93).

Total Debts: £291,744.37 (-£476.70). 

Total Wealth: £230,885.04 (-£133.11).

Investment Income in 2023: £3,677.76 (target £8,500).

I was looking at one of the funds I’m invested in this week, as I suspected the income per unit had decreased.  After spending a couple of hours going through historic statements and trades, it appears I’m right, sort of.

When I first invested in this fund, the IPU was £0.0026117.  The last payment received had an IPU of £0.0026001.  So, yes, a fractional decrease in the IPU, but there’s another variable not considered.  This fund pays a monthly dividend, but the April dividend is always a bumper payment.  The three April payments I’ve received had the following IPU;

April 2021: ​​£0.0162349

April 2022: £0.0208834

April 2023: £0.0258401

Whilst the IPU for eleven months of the year has slightly dropped, it seems that the IPU in April has been steadily increasing.  As a result, I’m happy to remain invested in this fund.

I’m afraid that’s all for this week.  Thanks for reading and have a great week.

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 187: The ISA Bridge and The ISA Fort

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss the ISA bridge and my own alternative, the ISA fort.  Also, health updates and a nice boost to my investment income for the year.

Weekly Update

I had my second breath test this week and it seemed to go ok.  Fortunately there was no one trying to use the waiting room as their office this time.  I just have one more breath test to go this coming week.  

On Saturday Oana and I ventured to Meadowhall shopping centre to look for clothes for our upcoming holiday.  I don’t tend to mind shopping centres, even though I’m autistic.  I know many autistic people find shopping centres too stressful.  However, I generally don’t mind them, except for Meadowhall which is the absolute worst.  There’s something about it which is oppressive, and it’s just not a pleasant place to spend more than a few minutes.  

There’s quite a lot of stuff I need for this upcoming holiday, including some formal wear.  I had a big list of things I needed, and upon exiting the centre I had ticked off “socks”.  Those who know me in real life are aware that the last few years have seen my weight increase a fair bit, and I’m now wearing clothes a couple of sizes up from my “normal” size.  Most of the shops I went in had nothing above large.  So, not a successful outing.

On the subject of my weight, I have had it spelled out to me that I need to take drastic action.  I had a diabetes check up and was basically told I need to lose quite a bit of weight, and I need to lose it quickly.  I was offered the chance to take part in an NHS organised crash diet, with meal replacement shakes.  I’m not keen on this idea because those shakes tend not to be kind on my gut.  I was also advised to start on Metformin, but there are common side effects including diarrhoea, cramps, nausea, and vomiting.  Considering that I’m under the care of a gastroenterologist for long running digestive issues the last thing I need is something else rocking that particular boat.  

I think I knew that crunch time was coming for my weight and my diabetes.  I made the decision a week ago to start coming off Mirtazapine, which is a drug to treat depression and anxiety.  However, I’m not feeling much better on the drug and one of the most common side effects of Mirtazapine is weight gain and increased appetite.  As I said to the doctor, “I can either be fat and miserable, or just miserable.”

I take a lot of pleasure in walking, biking, weight lifting, and exercise in general.  However, as I’ve been steadily gaining weight, my body is aching more and more because of the strain of this extra weight.  If I successfully come off Mirtazapine and start losing weight, it should do my physical and mental health a world of good.

Next week we had plans to see Coldplay in Manchester. We were already feeling a bit unsure about going but we’ve ended up selling our tickets on. Originally, we were going to spend a couple of nights in Manchester, see Coldplay, have some good food, and come home. However, hotels in Manchester decided to double their prices, and the train network decided to basically implode. Our train to Manchester was cancelled, and we were struggling to find alternative transport. So, we decided to cut our losses, which ended up not being that big. We got a full refund on our train tickets, and we sold our tickets to the concert for the price we paid. All we lost was the booking fee.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC).

Audiobook:  The Girl Upstairs by Georgina Lees.

Financial Update

Assets

Premium Bonds: £10,000.00 (+£1,925.00). 

Stocks and Shares ISA: £83,115.94 (-£1,848.77). 

Fuck It Fund: £400.00 (no change).

Pensions: £57,745.28 (-£727.78). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £523,239.22 (-£651.55).

Debts

Credit Card: £0.00 (no change).

Loans: £9,500.00 (no change).

Residential Mortgage: £177,728.81 (no change). 

BTL Mortgage: £104,992.26 (no change).

Total Debts: £292,221.07 (no change). 

Total Wealth: £231,018.15 (-£651.55).

Investment Income in 2023: £3,677.76 (target £8,500).

A nice boost to my investment income this week, as I received multiple payments putting me on track to (more or less) meet my annual income target.  The stock market has not done me any favours since I maxed out my ISA allowance a few weeks ago.  Since that investment my ISA has lost around 5% of its value.  I know it’s only a “real” loss if I sell units, but it’s still a small psychological blow when I see my investments treading water or reducing in value.

ISA Bridge or the ISA Fort

There are so many different approaches, strategies, and philosophies when it comes to FIRE that it can seem confusing to those encountering the concept for the first time.  The most common approach, at least from people I’ve met and discussed FIRE with, is to accumulate a pot of money until it reaches critical mass (25 x expected annual income needed to retire).  At this point, in the majority of cases, the pot of money should be sufficient to support most people in retirement indefinitely.  I have several problems with this approach.

First of all, I don’t like plans that require the underlying asset to be sold.  The idea that a pot of money, in this case, units in an index fund, should support someone from the moment they FIRE until death assumes that the person in question has calculated their costs accurately.  It’s easy for someone to say that £30k or £40k should be enough to support a comfortable retirement, but living in that scenario is a different matter entirely.  This plan requires the person to sell the units they’ve spent years, possibly decades, accumulating.  If part way through retirement, the shit hits the fan, then the person has fewer resources to cope with that unexpected crisis.  In my opinion, selling assets should be an absolute last resort.  

My second issue with this approach is that it seems wrong to plan one’s financial life around disposing of all the wealth built when that wealth could be used for the betterment of the community.  It is my hope, that when I die, I can leave behind a financial windfall for the various charities and causes that are close to my heart.  If I sell off my assets to fund my retirement, I’ll leave these organisations and individuals with nothing.  

So what’s this all have to do with bridges and forts? Well, the common plan I’ve outlined here is generally a bit more complex than building up a single pot of cash and living off this for the rest of one’s life.  FIRE planning can be broken down into stages, and involves a couple of different investments; ISAs and pensions.  ISAs can be cashed in with almost no notice and at any point, whereas pensions can only be accessed once you reach a certain age; 57 in my case.  So, the ISA bridge refers to funding the period between giving up work and being able to access your pension.  The ISA bridges the gap between those two points.  Again, I’m not keen on this idea because I don’t like selling assets. You could say, I’m never gonna give them up.

The ISA Fort

Imagine that each unit you own in a stock or fund is a brick.  To build a fort you need a lot of bricks.  You patiently build your fort one brick at a time, and over time you construct a solid foundation, with high walls.  This fort represents the protection and security that financial independence grants you.  Now, imagine that you have to start dismantling that fort one brick at a time.  The enemy (the myriad crises that crop up from time to time) are watching and waiting for the fort to be diminished so that they can attack.

For me, when you build a defensible position and shelter (accumulating assets) to protect against enemy troops and harsh weather, you don’t start selling off the bricks (the units that make your investments) to pay for food, clothing, leisure, etc.  Instead, the fort starts to produce income as traders, smiths, artists, and farmers all start buying and selling within the protection of the fort (I’m referring to the dividend income these assets produce).  

In this example, the income generated from trade within the fort may be minimal at first.  However, that income can be reinvested in more units (bricks) which means you can expand your fort to allow more traders to operate under your protection.  The progress might be slower, but it just seems to be a more stable, secure, and sensible approach. 

Proponents of the more traditional approach to FIRE, who are planning to use an ISA bridge, will argue that the investment pot will never actually reduce to zero because they’ll use a safe withdrawal rate, and gains in the market will compensate for units sold.  The basic idea being that if you’re cashing in 4% of your fund each year, but the fund is growing by 8% a year, you’ll be fine.  Well, it’s great in theory, but again I have reservations about this plan.

The safe withdrawal rate of 4% that is commonly thrown about is not a guaranteed way to preserve capital.  It can work, and in many cases may work fine.  There’s always the element of doubt though because market returns are never regular whereas most costs tend to be regular.  For example; if your basic costs of living are £1,500 per month, then you can be pretty sure that it will be at least £1,500 every month.  However, the market might return 9% one month, and lose 12% the following month.  The market is volatile, whereas the basic costs of living are generally fairly stable in the short to medium term.

Maybe I’m too cautious but I’ll never be onboard with following the traditional approach to FIRE.  I’d rather take a bit longer, and invest in assets that generate income, and use that as the foundation on which I’ll build my future.

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 186: Making History and Building the Future.

Hello and welcome back to Mortgage Advisor on FIRE.   This week… Thoughts on building for the future and living for today.  Also, an incredible effort by Sheffield Wednesday, and a disrupted routine.

Weekly Update

An eventful week, with a stressful first half and an amazing second half, which funnily enough matches what happened with the football club I support, Sheffield Wednesday.  I mentioned last week that we were coming off the back of an awful 4-0 defeat in the play-off semi-final first leg against Peterborough.  No club in EFL history has come back from a three-goal deficit after a play-off first leg, let alone a four-goal deficit.

Sheffield Wednesday F.C. “Hold my beer”.

The Owls put on a fantastic display in the second leg with wave after wave of attacks on the Peterborough goal, and with Wednesday 3-0 up with 97 minutes played, Liam Palmer scored our fourth to bring the aggregate score to 4-4.  This in itself is an incredible achievement, but as the match went to extra time the Owls were once again pegged back as Peterborough scored with a hugely fortunate goal.  No one would have been surprised had this goal knocked the wind out of Wednesday but they battled back and scored again, taking the match to 5-1 on the night, and 5-5 overall.  And so, the match went to a penalty shootout, in which Wednesday scored all five of their spot-kicks securing their place in the play-off final.

The scale of this achievement should not be overlooked.  On May 18th, Wednesday were the most mentioned football club on social media.  Every football page I follow, not to mention news outlets, carried this story front and centre.  It’s become known as The Hillsborough Miracle.  In a strange way, it was almost worth losing the first leg 4-0 having come back to win in this fashion.  

I’ve been critical of the owner of our club, but nothing can take away from the praise I have for the players, manager, and coaching staff at the club for how they bounced back from such an awful first-leg result.  Now we face Barnsley in the final at Wembley on the 29th of May.

As much as the end of the week was full of excitement with the football, the start of the week was taken up with medical stuff.  I had to have a hydrogen-methane breath test, which I needed to prepare for a few days in advance.  I had to stop some of my normal meds in the days leading to the test, and on the day before follow a restricted diet.  Any major change to my routine is stressful at the best of times, and the test itself didn’t make things easier.  I had been advised I needed one test.  This was wrong.  I actually need three tests on different days, meaning I have to follow the same preparation routine each time.  The test itself is quite straightforward.  You have a special drink, and then breathe into a device every fifteen minutes for the next few hours.  I brought my headphones to listen to an audiobook but a fellow patient was treating the waiting room as an office, conducting work calls on his laptop and monopolising the waiting area with his meetings.  

Anyway, this coming week I have to go back for the second round of tests.  If that guy is there again conducting work meetings, I might just join in. 

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC).

Audiobook:  The Starless Sea by Erin Morgenstern.

I’ve tried starting The Starless Sea a few times but never got too far into it.  However, this time I was determined to give it a fair chance.  I’m roughly halfway through and it’s got me intrigued.  The main hook that draws you in is that the lead character finds a mysterious book in his university library that seems to know events from his childhood.  The book also seems to be telling stories within stories.  It’s keeping me interested and I’m looking forward to seeing how it ends.

Financial Update

Assets

Premium Bonds: £8,075.00 (+£575.00). 

Stocks and Shares ISA: £84,964.71 (+£1,019.25). 

Fuck It Fund: £400.00 (no change).

Pensions: £58,473.06 (+£579.39). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £523,890.77 (+£2,173.64).

Debts

Credit Card: £0.00 (no change).

Loans: £9,500.00 (no change).

Residential Mortgage: £177,728.81 (no change). 

BTL Mortgage: £104,992.26 (no change).

Total Debts: £292,221.07 (no change). 

Total Wealth: £231,669.70 (+£2,173.64).

Investment Income in 2023: £1,958.10 (target £8,500).

Some nice gains in the stock market this week, and a decent amount of income received.  My 2023 investment income is almost a quarter of the way to my target, which might not seem that positive as we’re almost 5/12ths of the way into the year.  However, this coming week will see a big dividend payout which will push my investment income YTD figure to over £3,500 by next weekend.  My projections are that I’ll be at, or around, £4,000 by the end of June.  So, almost halfway to the target with half the year still to go.  

At times, this whole FIRE thing can feel like a real slog through the mud with no end in sight, but when I look back at the progress made in the 186 weeks since I started this journey it does give me a boost.

I was chatting with a friend the other day about money and investing; pensions specifically.  He was asking my view on how best to prepare for his future, but he also feels like sometimes it’s all a bit pointless because he might not be around in his 50s, 60s, and beyond.  It’s a valid concern as we never know what is around the corner.  Medical advancements could see us living to 150 years old, or we lock our front door and be hit by falling space debris as we step outside.  The key thing to remember is that we don’t have a choice when it comes to getting older; we either will get older or we’ll die.  All we can do is prepare as best we can for each eventuality.  That means investing for the future but also having enough money and time to spend on the things we enjoy in the here and now.  

Another thing to consider with FIRE is that you don’t have to keep up the same level of investment for the whole duration of the journey.  Whilst it makes sense to put as much money as possible into investments in the early parts of the plan, once you build up a decent-sized investment pot it’s entirely possible to wind back the amount of money being invested because the money already invested is starting to compound and grow.  

I’m in that situation now, where I feel like a lot of the hard work has been done.  I’ve got my first BTL property.  I’ve built a decent pension pot, and my ISA has steadily increased since 2019.  My next big milestone is getting my ISA balance over £100,000.  The foundations of my FIRE plan are in place and are reasonably solid.  I need to continue building on those foundations, but it doesn’t need to be all-consuming any more.  Like I said to my friend; plan for the future but live for now.  

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 185: Giving that extra 10%

Hello and welcome back to Mortgage Advisor on FIRE.  This week I talk about percentages; the 100% mortgage, increasing savings rates, compound growth, and more.  

Weekly Update

It’s been my week of working until 8pm which always leaves me exhausted, but it means I get a three day weekend.  On Friday I had a few medical appointments, the last of which was a series of blood tests.  I don’t mind having blood taken but the person taking my blood really struggled to find a vein.  The needle kept going into my arms and was wiggled around trying to get the blood to come.  I left the hospital with cotton wool and tape over a few puncture wounds and now I’ve got a few bruises.  I think the person taking the blood found it worse than me.  I just thought it was funny but they seemed to be getting stressed.  Thinking about it, it must be stressful trying to do something like this and it just won’t work. 

The less said about Friday evening the better.  Sheffield Wednesday played the first leg of their play-off semi-final and fell to a 4-0 defeat.  The whole club is a mess and we need new ownership.  There’s not a single area of the club that has improved since our current owner took over.  But yeah, the less said about it the better.

On Saturday I went for a drink and some bao buns with my Dad.  It was his first time trying bao buns and it’s fair to say he enjoyed them.  In the evening Oana and I had a friend over for some Mexican food.  We always have a good laugh with this guy.  Oana and I met him through our mutual employment and have been friends for over a decade now.  Whenever we meet up the time just zooms by. Below is a pic of the food we made; some chicken, onions, and peppers in a Mexican seasoning, with some rice, pickled red onion, jalapeños, creme fraiche, and guacamole.

The Boring Middle

This, and similar phrases, are ones I’ve noticed a lot more often in recent months.  FIRE has become increasingly popular in the last decade or so, and it shouldn’t be surprising that a lot of FIRE followers are finding themselves in this Boring Middle phase.

When you first start following a FIRE plan the milestones come thick and fast.  When you save £500 one month, then another £500 the following month, your pot has doubled.  However, a couple of years down the road that £500 monthly investment looks like a drop in the ocean.  It feels like diminishing returns but it’s absolutely vital to remember that each investment into the pot makes a difference.  Think about it like this, if a building requires one million bricks, the first brick and the final brick are both equally important if you want the finished structure.  

So, for now, it’s just about following the process and letting each investment grow and compound over time.

As I was thinking about this idea of the Boring Middle, a friend sent me an article about how increasing your savings rate can bring forward retirement.  The article talking about percentage increases in a way that I could understand, and in a way that most reasonably knowledgeable investors can understand.  However, I felt the content suffered from a lack of clarity for complete newbies.  This ultimately boils down to how percentages work.  Let me tell you a story about a store I used to work at.  This store had a discount card scheme where you paid a couple of pounds for membership.  This then granted you a minimum 10% discount from the normal price.  Every so often they would run a “double discount” promotion where you got your normal 10% discount, and then a further 10% discount.  Almost every single customer assumed this meant a total discount of 20%.  However, that’s not how percentages work.  Take this example…

You have a fleece on sale at £100.  With the normal 10% discount the price is reduced to £90.  If you take a further 10% off, the price is now £81.  So, the total saving is actually 19%.  

Let’s look at another example, but this time a stock that is priced at 50p.  If that stock increases in value by 10%, and then drops by 10%, it doesn’t end up back at 50p.  Instead, the value goes from 50p to 55p, and then drops to 49.5p.  

Anyway, this article talked about increasing your savings rate by 1% and the impact that would have on your FIRE target date.  However, this 1% increase was not referring to increasing your savings from, say, £100 per month to £101 per month.  It was referring to the percentage of your salary that you invest, and then bumping the rate up by 1%.  So, if you invest 10% of your salary each month, you’d increase it to 11%.  If you save 20% of your salary, you’d instead do 21%.  

People have to be very careful when talking about percentage increases.  I remember one book that started with a cautionary tale of a student describing the increase in knife crime in their city.  I can’t remember the exact details, but it was something like, “knife crime has increased every year, by 50%, since XYZ date.”  What they had meant was the figure had increased from the first date to the last date by 50%, and that it was a steady increase year on year.  How is this different?  

Year 1: 100 crimes.  If this increases by 50% by Year 10, then you’d have 150 crimes at the end.  If the number of crimes increased by 50% each year, then you’d have almost 6,000 crimes in Year 10.  The wording matters.  It’s also a great example of how compound growth works, but I digress. 

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC).  The Power (Amazon).

Audiobook:  Apples Never Fall by Liane Moriarty.

We’ve still been enjoying Masterchef on the BBC.  This week saw the last of the heats, and this coming week is “knockout week” where the competition starts to get serious.  A few years ago Oana and I both read The Power by Naomi Alderman, in which women around the world develop the power to emit electricity from their bodies.  This drastically changes the nature of human society.  The book was generally good, and I remember it kept me turning the page.  It was absolutely no surprise it was made into a TV show.  The show is ok.  It suffered from a few instances of X-Pac Heat, in which characters were annoying but not in a way you love to hate, but in a way that you mentally switch off.

Financial Update

Assets

Premium Bonds: £7,500.00 (+£150.00). 

Stocks and Shares ISA: £83,945.46 (-£372.67). 

Fuck It Fund: £400.00 (no change).

Pensions: £57,893.67 (+£246.64). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £521,717.13 (+£23.97).

Debts

Credit Card: £0.00 (no change).

Loans: £9,500.00 (-£100.00).

Residential Mortgage: £177,728.81 (no change). 

BTL Mortgage: £104,992.26 (no change).

Total Debts: £292,221.07 (-£100.00). 

Total Wealth: £229,496.06 (+£123.97).

Investment Income in 2023: £1,555.75 (target £8,500).

Another week with only minor changes to my finances.  I get paid next week but only a small amount of my salary will be able to go to investments, as we have some other expense we need to account for.  Both Oana and I need some new clothes.  We don’t go shopping for clothes that often, and generally prefer to shop online, but this time we actually need to go and try things on.  Neither of us are looking forward to it but it’s necessary for some events we have coming up.  It’s also going to cost a fair bit, but that can’t be avoided in this instance.

By next week’s post I should have received more income which should push my 2023 year-to-date figure to approximately £1,900.  The week after should see that figure almost double.  My investment income is the only major positive I can take from my FIRE plan at the moment.  The market feels stagnant and the days are dragging.  I was exchanging messages with a friend to this effect, in that we measure financial plans on the scale of years and decades, but we live our lives in days and weeks.  So, in the short term it can really feel like a slog when nothing seems to be moving in the right direction. 

Track Record Mortgage – Skipton

This week saw Skipton Building Society launch a new product called a Track Record Mortgage.  This is a mortgage that requires no deposit and is based on the applicant’s history of paying rent.  It’s an interesting approach to lending, but I think it’s going to end up a niche product with not a huge amount of take up.  

On Skipton’s website there is a calculator that works out how much you may be able to borrow based on the rent you’ve been paying.  I had a play about with the figures and it just doesn’t seem to add up.  For example, my BTL property is valued at £145,893.  I last advertised it for rent at £725 and had a lot of interest, with a tenant recently moving in.  However, according to Skipton’s calculator a track record of paying £725 in rent will allow the renter to borrow £135,170 over a term of 35 years (the maximum they allow).  Using my own apartment as another example, these are being listed for let at £1,100-£1,200 per month.  Skipton’s calculator suggests the renter could borrow £223,730, which is slightly lower than the current index value for my apartment (£226,085) and much lower than what some of them are selling for (£230,000+).

I think the concept of a track record mortgage is a great idea, but I think it needs refining.  So, what would my proposal for a similar mortgage product be?

David’s Rent-to-Buy Mortgage

My idea is similar in some respects but with several fundamental differences.  It’s easier to explain with an example.  Let’s use a fictional couple, John and Jane.  

John and Jane want to buy a property but have no deposit.  They see a house for sale that they’d love to live in.  It’s on the market at £150,000.  They see a zero-deposit mortgage being offered by my fictional lender.  The proposed mortgage looks like this… The applicants choose what “deposit” they would want to select;  10%, 20%, or 30%.  They then choose the term over which they want to save the deposit.  So, let’s assume they go for 20% over 5 years.  That means they need to save £30,000 over 60 months; a total of £500 per month.  But how does this actually work with the lender?

In this type of mortgage the lender would buy the property on behalf of the applicants, who would be locked in to this mortgage from day one with early repayment charges that last for the duration of the “deposit saving” period; in this case five years.  During this period, the applicants also pay rent to the lender at a rate of say 2% of the market value at the time of application (2% of £150,000, divided by 12 = £250).  In total, each month, John and Jane pay £750 to the lender; £500 for the “deposit” and £250 for “rent”.

John and Jane could end this agreement at any time during the deposit saving period but forfeit part of the deposit saved so far (the early repayment charges mentioned earlier) and the lender would then be able to sell the property on the open market.  If, at the end of the deposit saving period, John and Jane proceed with the purchase, then the new mortgage starts, and proceeds, just like any other mortgage.  

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 184: 250,000,000 reasons…

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss property prices and mortgage rates.  Also, the cost of the coronation, and my thoughts on monarchy.

Quote of the Week

“£250,000,000”

This week’s news has been dominated by the coronation of Charles.  My views on the monarchy range from “indifferent” to “fucking raging”.  The idea that in 2023 we have this group of people that are treated as, somehow, superior purely because of their birth is ludicrous.  There is not a single coherent argument that can be made for maintaining a monarchy, and those arguments that are made are easy to dismantle. 

Tourism

If we abolish the monarchy it doesn’t mean we have to get rid of the various castles, palaces, and estates that form the physical infrastructure of the monarchy.  I’ll hold my hands up if I’m wrong in what I’m about to say, but I’m pretty sure the cost of a ticket to any of the palaces or residences doesn’t include a “meet and greet” with any member of the royal family.  People still regularly visit palaces all over the world in countries that no longer have a monarchy, so why do we think tourism will drop if we suddenly remove this archaic institution?  If anything, tourism would increase as previously off-limit areas would be open for business.

They do a lot of work for the country

Such as…? There are literally dozens of nations around the world that manage just fine without an unelected monarchy, where official representatives are chosen and not born into their positions of power or authority.  As for their supposed “hard work”, I’d wager that almost anyone in full-time employment who also has to; cook, clean, do their own shopping, arrange their own finances, look after children, or complete any of the huge number of chores that come with daily life would happily take on the workload of any of these leeches.  

Tradition

I mean, what could possibly be wrong with continuing to do something just because it’s what’s always been done?  Human history is littered with many traditions and customs that are best consigned to history.  It’s a sign of an enlightened society when we can look back at how things used to be done and feel shame.  It’s a sign we’ve grown as a people.  I don’t understand how a typical, everyday person can look at the royal family and feel pride.  I mean, the very concept of a royal family is based on the idea that they are inherently better than the general population.  If someone came up to you on the street and argued that they are better than you, or carry greater value or worth than you, you would rightfully be offended.  So why accept this from the monarchy?  Do royalists view themselves in such low regard?

All these points bring us back to the rumoured cost of this absolute fucking farce; £250,000,000.

Exact numbers vary, but it’s thought there are at least 15 million people in poverty in the United Kingdom, of which roughly a third are children*.  Yet, the country spent £250,000,000 to watch some guy put on a hat.  Let that sink in; all this expense so we can watch a guy put on a hat.  This whole shitshow should be a source of national embarrassment.  

*sources, because someone on Twitter said “I don’t think we have millions of children living in poverty.”

https://www.jrf.org.uk/data/overall-uk-poverty-rates#:~:text=In%202020%2F21%2C%20around%20one,living%20in%20poverty%20(27%25).

https://www.savethechildren.org.uk/what-we-do/child-poverty/uk-child-poverty

Weekly Update

It’s the time of year when the wildlife on the river starts to thrive.  We are lucky enough to live on a stretch of river with geese, ducks, moorhens, herons, kingfishers, and more.  There are many nests up and down this area and it always brings joy, and a sense of peace, to see nature in this way.  A few years ago we had a family of four white geese, of which two were nesting, as well as a large family of Canada geese, including seven goslings.  We also had many ducklings and other young birds.  I remember vividly looking down the river and being so happy at all the nature on display.  Then, later that day a bunch of people came rafting downriver and all the wildlife disappeared, and it’s never recovered back to that level.  It’s extremely annoying.  

Earlier in the week Oana and I went for a walk around the area and checked in with a nesting Canada goose with several eggs.  There were half a dozen people rafting on this stretch of river and they kept coming close to the nest, and the goose was obviously in distress.  What is wrong with people?  Why can’t we just leave nature in peace?  The closest we got was on a pedestrian bridge over the river.  These rafters were coming within a couple of meters of the nest.  We asked them to keep their distance, but it seemed to go in one ear and out of the other.  

I’m not saying that people shouldn’t be allowed to use the river for recreation, but there should be some common sense.  This river is shallow; only a few inches deep in places.  I could stand in the river and the water would only come halfway up my shin.  We’re not talking about a large, fast-moving river, so it would be great if we could just leave these animals in peace and observe them from a distance.  

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC).

Audiobook:  Children of Ash and Elm by Neil Price.

Financial Update

Assets

Premium Bonds: £7,350.00 (+£6,000.00). 

Stocks and Shares ISA: £84,318.13 (-£2,309.52). 

Fuck It Fund: £400.00 (+£25.00).

Pensions: £57,647.03 (+£272.36). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £521,693.16 (+£3,987.84).

Debts

Credit Card: £0.00 (no change).

Loans: £9,600.00 (no change).

Residential Mortgage: £177,728.81 (-£476.12). 

BTL Mortgage: £104,992.26 (-£9.49).

Total Debts: £292,321.07 (-£485.61). 

Total Wealth: £229,372.09 (£4,473.45).

Investment Income in 2023: £1,555.75 (target £8,500).

We had some spare cash that had been earmarked for another purpose, but we changed our mind on what we were going to do, and so I’ve been able to invest that money in my Premium Bonds.

My ISA took a hammering this week, but there are signs that the housing market may be picking up.  Earlier in the week Nationwide Building Society reported that house prices rose 0.5% in April, after months of decreases in prices.  What I need is for prices to increase steadily for the next couple of years as it will allow me to draw out the equity in my existing BTL to put into more investments.  

Property investing is much more expensive now than it was just a couple of years ago.  Mortgage rates have increased across the board and data from Rightmove suggests that first-time buyers are paying at least £190 more each month for their mortgage than if they’d taken a mortgage out a year ago.

I do worry that we have a ticking timebomb of mortgage debt which could cause problems over the next five years or so.  During the pandemic years, the mortgage market was insane and house prices surged.  Anyone who bought during this time, and stretched themselves to the brink of what they could afford, will have taken a rate that is extremely low compared to rates available today.  In July 2020 a typical five-year fixed rate was around 2.25%, whereas today it could be anywhere from 4.5%-5%.  On a £200,000 mortgage with a 25-year term, this would be an increase of roughly £300.  If you were already at the brink of what you could afford, then this will come as a hammer blow to your finances.  

If enough people find themselves struggling to afford their mortgages, then it could lead to a fire-sale of properties, which in turn would lead to an oversupply and subsequent drop in prices.  

May is a huge month for my FIRE plan as it should see almost a quarter of my annual investment income received.  I’m expecting a sizable dividend payment, as well as rental income which will push my investment income for the year so far to around £3,650.  In an effort to boost my income, I may start charging people £25 to watch me put on a beanie, because I’m apparently “a chancer” (If you know, you know).   

Anyway, that’s all for now.  It’s been a long week of work, and I only closed my work laptop at 4pm on Saturday.  I hope you are having a relaxing bank holiday weekend.  Thanks for reading.

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 183: Eggs and Mortgages

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss repayment versus interest-only mortgages.  Also, eggs, trust, and relationships, and a fun weekend of art.

Quote of the Week

“You can’t unscramble an egg.”

I’ve been thinking a lot about this idiom, and a related one which you’ll have probably heard at some point, “to make an omelette you have to break a few eggs.”

It’s weird how multiple things can happen at roughly the same time that make you think about phrases like this.  I’m listening to an audiobook by Jon Ronson called So You’ve Been Publicly Shamed and it all comes back to the same point: “You can’t unscramble an egg.”

What does this actually mean?

Well, imagine you are in a relationship with someone.  It doesn’t matter if it’s romantic, platonic, or professional.  The only thing that matters is that this relationship has been built over time with trust being slowly strengthened on both sides.  Then, the other party does something that is so ill-judged it beggars belief.  They make a public comment that erodes all the trust that’s been built up.  The relationship has not just gone back to square one.  It’s been damaged so badly that it might never be the same again.  You can’t unscramble that egg.

I’ve seen people talk about bullying and compare it to scrunching up a piece of paper.  You can try over and over again to fold the paper out and iron out all the creases, but that piece of paper is never going to look fresh out of the notebook again.  It’s exactly the same when trust has been broken in a relationship.  An apology can help, but no relationship is ever going to be the same following such a break in trust.

This point comes back to something that I’ve spoken about before, as has Darren Scothern in his blog on autism; Words Have Power.  So, whether you are a friend thinking of making a “joke” at the expense of someone you hang out with, or a loved one passing judgement over someone’s appearance, or a company voicing an opinion on a business partner, you really should think long and hard about your choice of words and how they will be interpreted by the wider world.  Once those comments are out in the world, even if you apologise, even if you later try to explain your comments or provide context or a rationale, there’s no turning the clock back.  

Intent has a lot to do with what I’m saying.  People make mistakes, and if it’s clear that something is an honest mistake with no ill intent, and efforts are taken to rectify that mistake immediately, then sometimes it can actually strengthen a relationship.  For example, a business you work with makes a mistake on an order.  You make them aware of the mistake, and before you have a chance to think about it any further, they have already started putting it right.  Transparency, honesty, openness, whatever you want to call it, can count for so much here.  No one is perfect, but when people or companies go that extra mile to rectify a mistake it shows what their priority is; the relationship, rather than their own selfish position.  So many people, and companies, treat relationships as a zero-sum game, where a person has to win at the expense of everyone and everything else, rather than treating a relationship as a two-way street where taking action to benefit all sides is the goal.

Wealth and Large Numbers

I don’t think people grasp just how much wealth, the truly wealthy actually have.  A few things prompted this thought; a recent Reddit discussion, and a couple of conversations with people about wages.  Take politicians as an example.  An MP in the UK has a basic salary of around £86,000, with extras paid for expenses or additional duties.  £86,000 is, by most definitions, a decent amount of money to earn and would comfortably put the earner in the top 10% of UK wages.  The top 1% earn over £182,000 per year.  Still, a huge sum to most people, but what about the absolute top earners?

Denise Coates, the CEO of Bet365, recently earned more than £260 million in a single financial year.  Assuming a standard 35-hour working week, that’s roughly £140,000 per hour.  

Don’t misunderstand my point; I’m not defending MP wages, although I think MPs should be well paid, I also think they should be much more accountable for what they do, but that’s a debate for another time.  My point is that when people look at those earning £100,000+ and criticise them for being “rich” or “wealthy” and not doing enough for the community, we should remember that someone earning £100,000 has much more in common with a minimum wage worker than they do with people like Denise Coates.

We could take this point even further.  There are thought to be 177 UK billionaires with a combined wealth of over £600 billion.  How much more than a million is a billion?  Well, one common example is the difference between one million seconds and one billion seconds; roughly 12 days and 30 years respectively.  To put it another way, one million days would take us back to around 800 B.C., whereas one billion days take us back over 2.7 million years. 

The human brain can’t always comprehend just how big some numbers are, let alone just how wealthy some people are.  I think we need to remember this when judging those people who are earning very respectable sums, like £100,000p/a whilst at the same time giving an easy ride to those who literally have more money than they can ever hope to spend.

Weekly Update

Nothing much to report from the working week as I was working throughout.  On Saturday Oana and I had a day out visiting local artists in their studios as part of the Open Up Sheffield event.  We had a good chat with John Wilkinson and Kieran Flynn, and although they have very different styles, I liked their work a lot.  

Kieran’s work is abstract, which is about the limit of my technical knowledge when it comes to art.  When it comes to paintings there are two questions I ask myself, What would it look like on my wall? How does it make me feel?  My favourite piece by Kieran Flynn would be Ablaze:

Anyone who knows me well, knows I’m a sci-fi/astronomy geek.  Looking at this painting, I feel like I’m looking at a star set against a nebula.  I don’t know if that’s what was intended with the work, but like with any art the person viewing it can bring their own meaning to it.  Oana also liked his style, saying that she likes the way he matches colours.  When we spoke to Kieran he was working on a piece where he’d be asked to incorporate a horse, and it looked like a cool work in progress, with the animal silhouetted against a warm, reddish background.  If we can free up some wall space, somehow, we would definitely look to buy from Kieran.  If you want to buy from him, or just explore his work in more detail, click the link below:

https://kieranflynnartist.bigcartel.com/products

After we explored the studios around our side of the city, we ventured into the city centre and had some lunch at Lucky Fox, a fried chicken place.  It only occurred to me on Friday night why it’s called Lucky Fox and when I realised, I felt quite stupid.  What are foxes known for? Breaking into chicken coops and eating what they find.  

Anyway, I don’t know what the deal was in Sheffield city centre today but everywhere we went people were preaching about Jesus through megaphones.  Whilst we were eating at Lucky Fox some random guy game and dropped a leaflet on our table about Jesus.  I don’t believe in any god, but I respect an individual’s right to private worship and belief, but I draw the line at screaming about hellfire and brimstone whilst I’m trying to have a nice, relaxing time out with my girlfriend.  

I don’t talk much about football in this blog, and to be honest I’m hardly interested in the game anymore.  I think a lot of this is down to my recovery from gambling addiction, and my disgust at how gambling companies have wormed their way into every facet of the game.  I still follow Sheffield Wednesday and I just need to highlight how spectacularly the club has imploded in the last couple of months.  At one point, not too long ago, I believe we were five points clear at the top of League One having played two games less than our rivals.  Then, the wheels came off, and now we sit third with one game left to play having missed out on automatic promotion.  It’s almost impressive just how quickly it all went wrong.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always, for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Masterchef (BBC)

Audiobook:  So You’ve Been Publicly Shamed by Jon Ronson.

Financial Update

Assets

Premium Bonds: £1,350.00 (no change). 

Stocks and Shares ISA: £86,627.65 (-£919.25). 

Fuck It Fund: £375.00 (no change).

Pensions: £57,374.67 (-£941.05). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £517,705.32 (-£1,860.30).

Debts

Credit Card: £0.00 (no change).

Loans: £9,600.00 (no change).

Residential Mortgage: £178,204.93 (no change). 

BTL Mortgage: £105,001.75 (no change).

Total Debts: £292,906.68 (no change). 

Total Wealth: £224,898.64 (-£1,860.30).

Investment Income in 2023: £1,555.75 (target £8,500).

Nothing too exciting has happened in my finances this week.  Almost all my monthly income happens between the 1st and 22nd of the month, which means the last week or so of each month is fairly quiet.  On the 1st, my mortgage balance comes down, and then the various income streams I have hit my accounts until payday.  

Assuming there are no major hiccups, I should only have a maximum of 35-40 months until I’m ready to FIRE, and even fewer months if we’re talking about Lean FIRE.  May is a massive month for my investment income, with a dividend of over £1,600 expected.  When combined with the monthly rental income, and other dividend payments from my income funds, I’m looking at being around £3,700 by the end of next month.  

I’m starting to think about how to handle my residential mortgage later this year, as the deal on the bulk of the debt is coming up for renewal.  The majority of my mortgage debt is on a rate of 0.81%, so I’ll be looking at a fairly big increase in my interest rate.  One big decision I need to make is whether to switch to interest only.  When my pension statement comes out in a few months, I should have a projected fund value large enough, in combination with my ISA, to satisfy the requirements to put the debt on interest only.  Being on interest only means that my contractual monthly payments will not reduce the debt, but this means I’ll have more money to throw into investments.  

There is a lot of fear out there about interest-only mortgages.  However, for those who can budget effectively and invest in a disciplined manner over the long term, I believe these mortgages are fantastic.  I’ve done the working out before in a much earlier blog post, but I’ll repeat the core message here, and it’s best explained with an example.  There are a few concepts you need to understand to fully grasp the argument for interest only.  The first concept is inflation, and the second is compounding gains.

If you have a mortgage of £200,000 and a property worth £250,000, your loan-to-value is 80%.  If you have this mortgage on a repayment basis, with a 25-year term, and a rate of 5%, you are looking at payments of £1,170pcm, and a total amount payable of £350,882.

So, inflation and compounding gains… Now, there are a lot of different sources saying a lot of slightly different things about rates of inflation, and the rate at which house prices increase year on year.  It doesn’t really matter what figures I use here, so long as I use the same for each example.  So, I’m going to assume a standard 3% rate of inflation and assume that house prices increase in a smooth fashion by 5% each year.  

On a repayment mortgage, after the 25-year term is up, you should have reduced the balance to zero.  Your property should be worth £870,000; a huge increase.  However, due to inflation, it would have the same value as approximately £419,000 in 2023.  

If you look at that same mortgage but on an interest-only basis, well, this is where the magic happens.  If you have £200,000 of debt, on interest-only you will still have £200,000 debt at the end of the mortgage term; 25 years in this example.  Assuming inflation runs at a standard 3% a year, the value of that £200,000 debt will only be £95,500 in today’s money.  So, you’ve not actually paid any of the debt, but the debt has “reduced” anyway due to inflation.  Also, the monthly payments on this mortgage would only be £834; £336 lower than on repayment.  If that money was invested in a low-cost index fund each month, at the end of 25 years, with a growth rate of 6%, you’d have an investment pot worth over £230,000.  Granted, inflation means that this pot would not have the same relative value as of now, but it’s still a net gain in your favour.  The total amount you’ll have paid back on the mortgage is £450,182; £200,000 debt and £250,182 interest.  

To summarise;

Repayment Mortgage

Total Amount Payable: £350,882

Investment Pot: £0.00

Interest-Only Mortgage

Total Amount Payable: £450,182

Investment Pot: £232,846

Assuming you use the investment pot to pay off the debt in one lump sum at the end of the mortgage term, you have just over £32,000 left over.  The interest element of the interest-only mortgage has been paid over the term of the mortgage.  The money invested is the money that you would have used to pay back the mortgage debt on the repayment mortgage.  In both examples, you have a monthly budget of £1,170, but you are creating wealth in the interest-only example.  

I understand why some people would be uncomfortable with this approach.  The chances are, that in any 25-year period, you will see several small dips in the market and possibly a major crash.  Timing the market is near enough an impossible task, so you have to take the risk that when the debt is due, your investment pot is sufficient to pay back the debt.  If you were approaching the final few weeks before the debt is due, and there’s a sudden crash of 20% in the market, you’d be in trouble.  What I’m demonstrating is an investing approach; a strategy, not a step-by-step guide for repaying your mortgage.

I can’t stress the point enough, though, that these examples assume nice, smooth, standard rates of growth.  The stock market is anything but nice, smooth, and standard in the short term.  Over the long term, however, the data is quite compelling.  There’s a reason why the stock market has been described as, “a device for transferring wealth from the impatient to the patient” (Warren Buffet).  If you can stay focused, and ride out the peaks and troughs of the market, the accumulation of wealth is not just simple, but inevitable.  The risk here comes from your mortgage having a defined, set, date for repayment, which may not nicely match up with the ups and downs of the market.  

What I’ve described here should not be taken as advice.  I don’t know your circumstances, and before making any major financial decision, you should seek independent advice from an expert or professional.  

That’s all for this week, thanks for reading.  

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 182: FIRE, Interrupted.

Hello and welcome back to Mortgage Advisor on FIRE.  This week I share some of my frustrations with how people communicate.  Also, thoughts on the series finale of Star Trek: Picard, the usual financial updates, and a big boost to my investment income for 2023.

Quote of the Week

“Shares? It’s bullshit.”

It’s been a while since I included this section in the blog, and I know a few of you have asked about it. This week I’ve had a few things happen that can all be brought under the header of “People Frustrate Me”.

There is a belief that autistic people struggle with turn-taking in conversation.  I don’t know where this comes from, because so many neurotypical people seem to struggle with basic things like not interrupting the person who is answering the question they just fucking asked.  Seriously.  If you ask someone a question, at least give them a few seconds to attempt an answer before jumping in and interrupting.  This has happened to me a couple of times this week, and the latest instance was just bizarre.  The person I was talking to kept asking me a question and then within a few seconds was talking over me.  Each time I just stopped talking, but this person just carried on.  The next time it happened I decided to just carry on talking, but after ten seconds of us just talking over each other I gave up.  The next time it happened, I timed how long this person talked after interrupting me.  They talked, non-stop, for two minutes and forty-three seconds.  It might not sound like a long time, but try it out.  Start talking and set a stopwatch going.

The other instance that frustrated me this week was when I called Sainsbury’s to deal with a food delivery (I’ll get to this shortly) and the agent I was talking with kept answering my question before I’d finished asking it, meaning they were answering the question they thought I was asking rather than what I was actually asking.  This all leads to conversations that end up being deeply unproductive.  As the saying goes, “You have two ears and one mouth for a reason; use them in that proportion.”

Anyway, how does this relate to the quote?

There are many ways in which our brains take shortcuts when it comes to processing information.  These are known as heuristics, and they allow us to analyse information and react more quickly, but not always more accurately.  There is an evolutionary advantage to this.  If our brain needed to spend precious seconds interpreting a strange noise, by the time we had identified it, a predator would have pounced on us.  So, it’s better to react first and analyse later in this setting.  

So, heuristics are like little programs our brain runs so that we can almost do things on autopilot.  The problem with this is that we are then more vulnerable to cognitive biases which can drastically reduce the accuracy of our thinking.  Imagine software that has been created to sort through images.  You want it to sort through a selection of images of fruit and vegetables, and you set up a rule so that red, roundish items go into the folder labelled “tomato”.  You set the program running but find later the tomato folder has red apples, red peppers, and some strawberries and raspberries.  So, you refine the program to take greater care when sorting through the images.  Each refinement slows the program down.  It is this sort of speed versus accuracy tradeoff that happens in our mind when it comes to decision-making.

One major cognitive bias that frustrates the hell out of me is anchoring bias.  This is where people put an undue amount of weight on the first piece of information they receive, even if that information is later countered by many other sources.  For example, a young man who has an inflated sense of self-importance, with an opinion of his own ability that can’t be backed up by any achievements, may believe his equally arrogant and misinformed parents when they say that “shares are bullshit.”  That piece of information will act as an anchor for any future discussion around investing in the stock market.  So, when you are sat around a table with this person and the subject of shares comes up, they believe your investing approach is bullshit but they can’t back up that opinion, so they sit there smugly like a poster child for the Dunning-Kruger effect, not realising that everything they do, say, and think is just parroting what came before.  If we want to find a source of Zero Point Energy we would be as well looking inside this person’s skull because something is causing the little sparks of consciousness they exhibit and it can’t be a brain, but I digress…

The key takeaway here, and it might sound like common sense, but don’t just believe what you are told.  Just because you hear one thing before the other, it doesn’t follow that the former is true and the latter is false.  As the famous quote argues, “A lie can travel halfway around the world while the truth is putting on its shoes.”

Weekly Update

We were supposed to have a Sainsbury’s food shop delivered this week.  We live in a city centre apartment and have had deliveries to our apartment every couple of weeks for over a decade.  Our neighbours also have deliveries from all the big supermarkets.  Each time, they bring the delivery to your apartment door.  Enter Sainsbury’s.  

This particular delivery driver refused to bring the order to our door because of the double yellow lines outside our building.  A few things to note, although there are double yellow lines, our apartment is at the end of a road with a dead end.  There is no traffic.  The only vehicles that come down this road are ones entering the secure car park for the development, or supermarket delivery vans which just park on the pavement as it is wide enough to comfortably accommodate a van.  

Our driver would only bring our food order up if we went to guard his van.  I’m not going to send Oana to guard a van at night, nor am I going to go and guard the van whilst this driver drops off a large, heavy shop which Oana would have to unpack from the crates.  We don’t work for Sainsbury’s, and we’re paying a delivery fee.  

I said to the driver, “Every other driver brings the shopping to the door.  If you are refusing to do that, you’ll have to take the order back.”  I didn’t raise my voice, I just laid the information out like that.

So he started arguing with us.  If only I was joking.

Three hours and three phone calls later, we were trying to explain to Sainsbury’s customer service what had happened.  We were promised a manager call back, which didn’t happen.  We were promised a credit for the delivery fee, which didn’t happen.  We were told we’d get a delivery slot confirmed for the following day, which didn’t happen.  Basically, we were told this would all be looked into and we’d hear from them, but it never happened.  We had to chase them each time to try and get a resolution.  

We had ordered the delivery for the date we choose because we were both off work.  Sainsbury’s seemed put out by the fact we were selective over the time we could accept delivery the next day, almost as though they were doing us a favour.  We arranged delivery for between 7pm and 8pm, as that was when I’d be done working for the day.  The driver rang our apartment at 6:27pm to bring our delivery.  I was still working.  So, he had to come back an hour later.  I mean, it really shouldn’t be this difficult.

On Friday I messaged Sainsbury’s about the apparent “gesture of goodwill” we were supposed to get, but we’ve had nothing as yet.

In other news, it feels as though my elbow problem is starting to get worse again so I think I might be pushing the rehab too far too soon.  I would have seen the physio this week, but Bupa told me I had reached the limit of my cover until I got a report from the physio.  It then turned out this was incorrect information, but by this point, I’d already cancelled my appointment.  A few years ago, this sort of mistake would really frustrate me, but now it’s just another part of daily life.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Picard (Amazon), Street Food USA (Netflix), Masterchef (BBC).

Audiobook:  The Great Gatsby by F. Scott Fitzgerald.

Picard has ended and it was largely disappointing.  The final episode was a lazy rehash of Return of the Jedi.  Space battle with a fleet engaging a space station? Check.  Aging star ship flying to the centre of a huge spaceship to blow up a reactor-type thing?  Check.  Our hero confronting an evil villain with the fate of their relative in the balance?  Check.  It was entirely derivative, and as much as I wanted to like it, the more I think about it the more disappointed I am. On the plus side, it was visually stunning.

Anyone who knows me or Oana well, will know that we are foodies.  We’ve been watching the Street Food series on Netflix, with the most recent one focusing on the US.  The last episode took us on a tour of Portland’s thriving food truck scene.  Some of the food looked amazing, but food is as much art as it is science.  The most technically brilliant food doesn’t stand up to more rustic dishes that have been made with love.  Street food is the perfect combination of skill, invention, and passion.  Food isn’t just about food, as bizarre as that statement may seem.  Food and culture go hand in hand, and one of the best ways to learn about a culture is to learn about their food.   

I decided to have a go at The Great Gatsby having seen the ballet a few weeks ago.  The book was better than I expected, but I did have a fairly low expectation based on the ballet and what I’ve seen of the film.  I only took the chance because the title was available for free, and I doubt I would have bothered if I’d had to pay to listen.

Financial Update

Assets

Premium Bonds: £1,350.00 (+£850.00). 

Stocks and Shares ISA: £87,546.90 (+£537.88). 

Fuck It Fund: £375.00 (+£50.00).

Pensions: £58,315.72 (+£681.87). 

Residential Property Value: £226,085.00 (no change). 

BTL Property Value: £145,893.00 (no change).

Total Assets: £519,565.62 (+£2,119.75).

Debts

Credit Card: £0.00 (no change).

Loans: £9,600.00 (no change).

Residential Mortgage: £178,204.93 (no change). 

BTL Mortgage: £105,001.75 (no change).

Total Debts: £292,906.68 (no change). 

Total Wealth: £226,758.94 (+£2,119.75).

Investment Income in 2023: £1,555.75 (target £8,500).

A good week for my investments with solid gains in the stock market, and a nice dividend hitting my investment account.  Next month will see an even bigger dividend, and by the end of May I should have over £3,500 of investment income for the year so far.

I don’t have a huge amount more to say this week.  The frustrations I’ve mentioned have taken up a lot of my mental bandwidth, but it just keeps pushing me further towards FIRE.  I have a lot of faith in the goodness of humanity, but we can be seriously annoying at times as well.  

Anyway, until next time, thank you for reading.  If you have any comments or feedback, I’d love to hear from you.  Leave me a comment and I’ll reply 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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 181: Why We FIRE

Hello and welcome back to Mortgage Advisor on FIRE.  This week I look back at my FIRE journey.  Also, some updates on my BTL, and my investment approach for the rest of 2023.

Weekly Update

It was my week of working late shifts this week, where I finish at 8pm.  I have to work these shifts once every four weeks, and it’s my least favourite shift.  Saying that, there are two positives to it, like starting work mid-morning, and having a three-day weekend as I only work those hours Monday through Thursday.    It always leaves me exhausted on the Friday, and I felt rough AF this Friday.

Although I was feeling rubbish I had plans to meet up with a friend, and as it had been ages since we last caught up I didn’t want to cancel.  We had some lunch and geeked out over our shared Star Trek obsession, as well as sci-fi in general.  I was glad I made the effort despite feeling ill, as I had a great time.

I’ve been feeling rough because I’m in the process of completing a “gluten challenge”.  This is where you are tasked with eating gluten every day for around 4-6 weeks to see if your body produces the antibodies that signal you have a gluten intolerance.  I still have another two and a half weeks to go, and I’m desperate for it to be over.  

What is FIRE?

Every so often I like to take stock and look at the progress I’ve made since starting this journey.  It’s also a good idea, I feel, to remind myself what I’m doing, and why I’m doing it.  So, with that in mind, let’s go back to the beginning and look at what FIRE is.

FIRE stands for Financial Independence, Retire Early.  It’s a philosophy, or outlook, that’s geared towards leaving the rat race and securing one’s own independence from working for a living.  It’s not an “anti-work” movement.  It’s not about being lazy or work-shy.  It’s not even about money; it’s about freedom and time.

For the vast majority of people, life revolves around work.  The standard full-time working week is between 35 and 40 hours.  Add time travelling to and from work, for some people at least, and you can easily have 50 hours a week spent working and travelling because of work.  Then, there’s the time to prep for work, and for completing household chores, food shopping, and so on.  If we assume that we sleep for 8 hours each night, then between work, the daily logistics of living (shopping, cooking, cleaning, tidying, etc), and sleep, we use up a minimum of 120 hours each week.  There are 168 hours each week, and before even considering leisure activities or even just time for doing nothing, we’ve already used over 70% of the time available to us.  If we can arrive at a point where we no longer have to work for money, it frees up a vast amount of time for, well, anything.  

I’ve told this story before, but I think it’s worth repeating.  It’s the story of how I discovered FIRE, and how I started this blog.

A long time ago, maybe 22-23 years previously, I was working out how much money I’d need to have saved in a basic cash ISA to provide £1,000 a year in interest, and then £12,000 a year.  I seem to remember calculating it based on an interest rate of 3%, but that could be my faulty memory.  The point is, even before I knew anything about investing, stocks, or property, I was already thinking about how to generate an income without working.  

Fast forward to 2016.  By this time I’d been working in mortgages for a few years.  I’d started accumulating shares and was looking at other ways of earning income.  I was not in a great place mentally and was gambling, but not at the worst point of my addiction.  I started learning about different types of investments but I did not yet fully understand stocks or funds.  I dabbled in some crowd-funded property investments, and managed to exit those investments with a slight profit.  I was still very much learning about investing and had not yet discovered the FIRE movement.

I can’t remember the first time I heard of FIRE but it was probably sometime in 2018 or early 2019.  I started devouring books on investing and finance.  I was on a train to Southampton listening to The Millionaire Next Door, and then on my cruise around the Norwegian fjords listening to The Simple Path to Wealth, and Your Money or Your Life, and the idea for this blog started to form in my mind.  I had another blog at the time, which was part football, part pop culture, and part political rant, but it hadn’t really taken off.  One day on the cruise, I was leaning on the balcony of the ship looking out over the North Sea, and I knew that I couldn’t face year after year, decade after decade, working in the type of job I was in.  It was slowly, but relentlessly grinding me down.  I was still a year or so away from realising I was autistic, but the voice in my head saying that I was somehow different was moving from an occasional whisper to a more sustained mumble.  In the latter months of 2019, and into 2020 things conspired to turn that mumble into a roar, and so started the worst year of my life.

I started this blog on November 1st, 2019 but the earlier posts were very rough around the edges.  I like to think that the quality of my writing has improved, and the fact that I’m getting much more traffic now would tend to support that belief.  Back then, though, I was enthusiastic and learning new things every week.  I went to India in February 2020 and returned just before the first Covid lockdown.  My mental breakdown in 2020 was, probably, in some small part related to Covid, but in a very selfish sense the pandemic did me a favour.  It led to me working from home, for a start.  Had I been in a position where I needed to keep going to an office, I don’t know where I’d be now.  What I do know is that masking for eight hours a day, five days a week, was grinding me down.  

When my breakdown happened, it came suddenly.  It was like being hit by a train.  I’m not going to go into the specifics, but I had a series of things happen that hit me so hard that I still don’t feel like I’ve fully recovered.  I view that time in 2020 as one of those times where there’s a before, and an after, and the person I was before, and the person I am now, are like two completely different people.  One positive I could take from all this is that I never relapsed into gambling after quitting in July 2019.  

Following 2020, and the confirmation that I am, in fact, autistic, a lot of things started to make sense.  The feeling of being different.  The almost physical sense of dread from having to spend hours and hours with other people.  The constant baseline level of stress and anxiety that everyone else seems to not have.  All these things started to make much more sense when viewed through the autistic lens, as did my need for FIRE.  And so, here we are, approaching the middle of 2023, and edging closer to my original goal of achieving FIRE by my 40th birthday.  

It was always going to be a tough goal to achieve, going from basically a standing start to financial independence in four years.  However, I believe it was better to set that tough goal early on because it motivated me to fundamentally change how I approached money and investing.  It’s perhaps a good time to explain my desired version of FIRE, because there are several different types.  I just want to get to a position where my investment income meets my basic cost of living.  This is in contrast to the more popular approach to FIRE, which is to build up an investment pot that is then “cashed in” over time to fund one’s own cost of living.  The idea is that if you only cash in 3%-4% of the total value of the investment pot, it should last for decades because the fund will also be growing in value as you sell off units.  I’ve never been a fan of this approach because it goes against one of my personal rules for investing; never sell stocks and never sell property.  Many will disagree, and that’s great.  It would be boring if we all held the same beliefs.  I want to preserve my capital because, when I die, I want to leave much of my wealth to charitable causes that are important to me.  As such, my approach is to acquire assets that generate an income without the asset itself needing to be sold.

My FIRE Number

Depending on my mood, my FIRE number is anything from £12,000 to £25,000 income per year.  Once again this is something that most FIRE followers view differently.  Many people aiming for FIRE have a number for the overall size of their investment pot.  This is calculated by taking a safe withdrawal rate (most people seem to use 4%) and working out their annual cost of living.  For example, if you wanted to retire with a standard of living that cost £30,000p/a, then using a 4% safe withdrawal rate you would need an investment pot of at least £750,000 (4% of this figure is £30,000).

My preferred brand of FIRE at the moment is Lean FIRE. I don’t have an expensive lifestyle, and my pleasures in life are simple; fresh air, books, and exercise.  I don’t need vast amounts of money for this.  My investment income over the last few years has been moving in the right direction.  I’ve not included 2019 in this, because I only started this blog late in 2019, but have a look at the figures below:

Investment Income

2020: £189.90

2021: £3,771.93

2022: £5,685.20

2023 (estimate):  £8,000(ish).

I suspect I need the rest of 2023, and then 2024 and 2025 to accumulate enough income-generating assets to support my version of FIRE.  The last four words of the previous sentence are important…

Just because someone is financially independent it does not mean that they will not work again in the future.  The key point is that having financial independence means you can pick and choose the work that appeals.  Rather than working for money, you can work for satisfaction and fulfilment.  What I’ve come to realise, knowing now that I’m autistic, is that the overwhelming majority of the baseline stress and anxiety I experience every day will disappear once I no longer have to work in a job that requires hours of speaking to people.  Don’t get me wrong, I’m not hostile towards other people.  It’s just that my social battery no longer holds a charge like it used to.  Interacting with people online, or via messaging apps like Whatsapp is fine.  Real-time interaction for more than an hour or two at a time is something I just find absolutely exhausting.  I’ve found myself thinking more and more about a quote from Lord of the Rings, where Bilbo is talking to Gandalf.  He says, something along the lines of; “I want to see mountains again, Gandalf.  Then find somewhere quiet where I can finish my book.”  Me too, Bilbo.  Me too.  Now that I think of it, Bilbo also likens himself to butter being spread thinly over too much bread.  Our Bilbo is quite the philosopher, it seems.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Picard (Amazon), Unsolved Mysteries (Netflix).

Audiobook:  War Lord: Last Kingdom Book 13 by Bernard Cornwell.

As I type this, I’m nearly done with the final Last Kingdom book.  I’m not going to spoil things for anyone, and all I’ll say is that it’s been a heck of a journey following Uhtred from his childhood through to old age.  I will have to revisit Cornwell’s Arthurian trilogy soon.  After that, I may go back to The Cemetary of Forgotten Books series, or possibly Ken Follet’s Century Trilogy.  

We now have just one episode left of Picard.  I really wanted to like this show.  I really wanted to enjoy it, but it’s so incredibly dumb.  When any plot relies on the stupidity of characters to progress, it’s a stupid story.  The plot should not control the characters.  The best stories are those where the characters are fully formed, with layers and complexities, and the plot is a natural progression of what those characters would do in that set of circumstances.  

Financial Update

Assets

Premium Bonds: £500.00 (-£37,500.00). 

Stocks and Shares ISA: £87,009.02 (+£20,194.68). 

Fuck It Fund: £325.00 (no change).

Pensions: £57,633.85 (+£380.95). 

Residential Property Value: £226,085.00 (-£1,921.00). 

BTL Property Value: £145,893.00 (-£1,240.00).

Total Assets: £517,445.87 (-£20,085.37).

Debts

Credit Card: £0.00 (no change).

Loans: £9,600.00 (-£100.00).

Residential Mortgage: £178,204.93 (no change). 

BTL Mortgage: £105,001.75 (no change).

Total Debts: £292,906.68 (-£100.00). 

Total Wealth: £224,639.19 (-£19,985.37).

Investment Income in 2023: £662.41 (target £8,500).

The valuations of my properties have been updated with the mortgage lender, and it’s no surprise that they’ve fallen again.  It’s a drop of roughly 0.84% and I’m hopeful that the next quarter will see an increase, but that could very well be wishful thinking.  The valuations don’t mean much in the short term, as I’m not planning on selling.  However, long-term increases in the value of the properties will allow me to release the equity to put towards other investments.  Realistically, I think it’s going to be another 18-24 months before I’ll be in a position to borrow against either the BTL or my apartment.  

We finally have a tenant in our BTL.  They moved in earlier this week, and I’m hopeful they’ll take better care of the property than the last two tenants.  Our first tenant left the property flooded, with damage to the walls, ceilings, and blinds, with blood and damp present throughout the house.  The second tenant wasn’t quite as bad, but still caused damage that cost over £1,500 to put right.  

By next week my investment income for the year should have surpassed £1,000.  One of my investment funds pays a monthly dividend, but the April dividend is usually higher.  Next week is when I get paid also, so I should be able to increase the value of some of my investments.  The next few months are going to be a little more expensive than normal though, so a smaller percentage of my net salary will go towards investing.  We have two foreign holidays, and a couple of short UK breaks before the end of the year.  Although transport and accommodation are paid for, we still need spending money.

The big financial update for this week was the huge drop in my Premium Bonds balance.  I cashed in £37,500 worth of bonds, and paid back my investment partner following the aborted transfer of ownership of the BTL.  I used the remaining money to max out my ISA.  So, a significant change to my balance sheet this week.

That’s all for this week, thank you for reading, and I hope you have a good 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:

StepChange

MoneyHelper

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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern

Part 180: Under Pressure, and Compounding Gains

Hello and welcome back to Mortgage Advisor on FIRE.  

Weekly Update  

I’m having shockwave therapy on my elbows and I was reassured a little at my last appointment that it’s not just me experiencing crap customer service.  My physio, who is great by the way, was explaining that he’d recently moved house and had nothing but problems dealing with everyone from British Gas, to retailers he used to buy things for his new home.  One of my readers also commented that they’d had no end of problems trying to update basic details on their accounts with various investment account providers.  Is service getting worse generally?  Are we simply less tolerant of dealing with bullshit from companies?  Is it a mixture of both?

So much in customer service, and business dealings in general, comes down to transparency and trust.  When you deal with the company, you want clear, transparent communication.  Every single time you deal with a business, you are placing a degree of trust in them, but that relationship also works the other way.  I don’t like the argument that “respect is earned”.  It’s intellectually lazy, and if you think about it for more than a moment you realise that the end result of that argument is that we should only treat people with respect once, well, once they’ve earned it.  That’s not helpful for building business relationships.  With any business relationship, there is a degree of vulnerability as both sides feel each other out to see if they can work together.  In these early stages, any behaviour or action that casts doubt on that trust can be irreparable.  I’m thinking about times when a business says one thing verbally, say over the phone, but then something else in writing.  Or, one thing over the phone, like they have gluten-free options in a restaurant, but when you turn up everything has gluten in it.  

No, the “respect is earned” argument is bullshit.  Respect should be the default position.  Trust should be the default position.  Basic levels of respect and trust should not have to be earned, but they can be easily lost in the early days of any business relationship.

It’s Easter, sorry Eostre as per the original pagan festival, weekend.  The only benefit to me, an atheist, is the long weekend.  Oh, and chocolate eggs.  Lots of chocolate eggs.  

Normally when I’m stressed I comfort eat, and chocolate can be a big part of my comfort eating.  If I’m stressed beyond a certain point, though, I tend to not feel like eating at all.  I’m in that phase at the moment.  I’ve got a lot of stress coming at me from a lot of different directions, and there’s not really anything I can do to avoid it.  I just have to weather the storm and come out the other side.

One thing that was fun this weekend was when Oana and I tried out an augmented reality app around Sheffield city centre. Below are some images taken from the videos we recorded.

How To Support Mortgage Advisor on FIRE 

If you would like to show your support, please consider making a donation to my virtual tip jar at my page on Buy Me A Coffee.  You can use the link below, or click on the picture to be taken to my supporter page.  

https://www.buymeacoffee.com/davidscothern

Alternatively, please consider sharing this blog on your social media.  Shares are the most valuable commodity for any blogger and the most difficult thing to earn.  

Thanks, as always for your interest and support.

2023 Goals

Click here to see my 2023 progress (opens a new tab). 

What Am I Doing?

TV: Picard (Amazon), Unsolved Mysteries (Netflix).

Picard is stumbling along and now has just two episodes left.  The plot seems to have moved along at a glacial pace, and I’m not sure how they can bring the story to a satisfactory close in less than two hours.  

Unsolved Mysteries is a little guilty pleasure.  Some of the supposed mysteries are easy to explain, but also tragic, such as the episode on the tsunami in Japan in 2011.  The episode explained that many people who survived had encountered the spirits of those who died in the disaster.  Incidents included people thinking they’d seen a close relative, but when they got closer to them their appearance changed.  I really feel for those who lost loved ones in events such as these, but we know human perception and memory are far from perfect.  Under periods of extreme stress and trauma, our brains can do strange things.

Audiobook:  The Flame Bearer: Last Kingdom Book 10 by Bernard Cornwell.I’ve been enjoying The Last Kingdom books, and I now have just three more books in the series of Uhtred of Bebbanburg.  It’s a testament to Cornwell’s storytelling that he’s crafted a series of books this long and there’s not really a bad book in the series.

Financial Update

Assets

Premium Bonds: £38,000.00 (no change). 

Stocks and Shares ISA: £66,814.34 (+£1,342.50). 

Fuck It Fund: £325.00 (+£200.00).

Pensions: £57,252.90 (-£20.41). 

Residential Property Value: £228,006.00 (no change). 

BTL Property Value: £147,133.00 (no change).

Total Assets: £537,531.24 (+£1,522.09).

Debts

Credit Card: £0.00 (no change).

Loans: £9,700.00 (no change).

Residential Mortgage: £178,204.93 (-£469.93). 

BTL Mortgage: £105,001.75 (no change).

Total Debts: £292,906.68 (-£469.93). 

Total Wealth: £244,624.56 (+£1,992.02).

Investment Income in 2023: £632.16 (target £8,500).

It’s the start of the new financial year, and I wrote a little post midweek to mark the occasion.  I’ve been looking at how long it will be until I can realistically achieve Lean FIRE, and I think I can get there by the end of 2025.  To achieve a level of FIRE that maintains my present standard of living will take longer, but I’m wary of predicting beyond the next couple of years.  At the risk of sounding like a broken record, it’s all about following the process and letting the results take care of themselves.  

In my midweek post, I talked a little about the difficulty of staying motivated during the long, middle, part of the FIRE journey.  Well, one thing that many FIRE followers do to stay motivated is going back to their spreadsheets to crunch the numbers.  It can be a huge boost to morale when you see how investments can compound over time.  For example, when I max my ISA out in the next few days I’ll have approximately £140,000 in stock market linked investments i.e. ISA and pension.  Over the last 100 years or so, depending on who you ask, the stock market has returned a little over 10% a year.  If I was to let my investments grow for the next twenty years with no further contributions from me, a smooth 10% rate of growth per year would result in my investments being worth just over £1,000,000.  

I did another calculation assuming all the same variables except that for the next five years I invest £1,200 per month, and then let the investments compound for the following fifteen years.  This resulted in a pot worth just over £1,400,000.

Next week should see a lot of change in my numbers as my Premium Bonds will have reduced and I’ll have maxed out my ISA.  Also, our BTL situation should be much clearer as our potential tenants should have a date for moving in.  It seems to have taken an age to get the property ready for letting again, but the wait is almost over.

I’m afraid that’s it for this week.  I’m not in a good mental state at the moment, with my stress levels very high.  Hopefully, by next week some things will have settled down and I’ll feel a bit more upbeat.  I hope you’re having a great Easter break, and as always thank you for reading and your support.

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 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:

www.darrenscothern.com

If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below: 

https://www.buymeacoffee.com/davidscothern