The Full English Accompaniment – A nation of preppers?

What’s piqued my interest this week?

This week that bulwark of British strength Theresa May advised us all we should start prepping for a “no-deal” Brexit, just as the Government had by stockpiling food and medication. We should “take comfort” in the Government’s actions (1). “It’s right to prepare for all eventualities” (2). Unfortunately the actual understanding of how they’re going to do this is lacking (3). Currently the EU supplies 31% of the UK’s food, and Brexit will have huge implications across the supply chain (4, 5).

This led to lots of media outlets running pieces on ‘what to stockpile’. The Guardian recommended olive oil, pasta, pepper, rice, spices (6)The BBC warned of the threat to our sandwiches (7). Heavens! Anything but the sandwiches! Even The New Scientist got in on the act (8). Plenty of organisations are piling on the warning bandwagon. The UK dairy industry has warned that butter, yoghurt and cheese will be occaisional luxuries (9).

My solution to this problem is to gradually move my consumption to more local suppliers. Coming from a farming family I’ve always tried to support UK growers. For at least the past few years I’ve only bought UK grown seasonal veg, and cooked based on what is in season. Very middle class yes, but healthier, more varied, and often cheaper. This year I’ve tried to take this further, using a local butcher and market garden co-operative (feel free to roll your eyes) delivery. It appears I’m not alone. We all saw Blue Planet 2, the anti-plastic movement gains traction, and people are finding ways of reducing their packaging usage. One of these ways is going back to the local milkman with his bottles. Milkmen are seeing a surge in demand throughout the country (10). Fresh local milk served in retro glass bottles delivered by an electric van does sound pretty ‘now’. Expansion has not been without it’s problems for the national Milk&More, but these appear to be teething problems (11). The traditional local trader milkmen are doing better (12). We’ve come full circle with convenient deliveries from local producers. Everything old is new again.

Have a great weekend,

The Shrink

Side Orders

Other News:

Opinion/ blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.telegraph.co.uk/politics/2018/07/25/plans-stockpile-food-blood-medicine-case-no-deal-brexit-sensible/
  2. https://www.bbc.co.uk/news/av/uk-politics-44972582/brexit-is-uk-planning-to-stockpile-food
  3. https://www.theguardian.com/commentisfree/2018/jul/26/stockpile-food-no-deal-brexit-dream-on
  4. https://www.independent.co.uk/news/uk/politics/brexit-latest-food-supplies-shortage-warning-policy-failure-supermarkets-imports-eu-a7844751.html
  5. http://www.sussex.ac.uk/spru/newsandevents/2017/publications/food-brexit
  6. https://www.theguardian.com/politics/shortcuts/2018/jul/12/a-no-deal-brexit-survival-guide-what-food-to-stockpile
  7. https://www.bbc.co.uk/news/business-44960293
  8. https://www.newscientist.com/article/2175259-the-scientific-guide-to-stockpiling-food-for-a-no-deal-brexit/
  9. https://www.independent.co.uk/news/business/news/brexit-dairy-products-butter-milk-cheese-industry-warning-lse-study-a8452501.html
  10. https://www.theguardian.com/lifeandstyle/2018/feb/07/return-milkround-plastic-problem-glass-bottle-deliveries
  11. https://www.theguardian.com/money/2018/apr/02/milk-and-more-grocery-delivery-delays
  12. http://www.itv.com/news/wales/2018-05-02/milk-bottle-sales-booming-as-consumers-turn-their-backs-on-plastic/
  13. http://www.bbc.co.uk/news/business-44926442
  14. https://www.bbc.co.uk/news/business-44950610
  15. https://www.bbc.co.uk/news/business-44202542
  16. https://www.telegraph.co.uk/personal-banking/savings/basic-savings-rate-would-reward-loyal-customers-banks-wont-take/
  17. https://www.telegraph.co.uk/personal-banking/mortgages/concern-thousands-mortgage-borrowers-fall-immediate-financial/
  18. https://www.telegraph.co.uk/investing/bonds/new-retail-bond-fund-pays-45pc-year/
  19. https://www.theguardian.com/money/2018/jul/25/uk-pensioners-income-growth-outstrips-wage-rises-ons-estimates
  20. https://www.bbc.co.uk/news/business-44732847
  21. https://www.theguardian.com/business/2018/jul/28/uk-interest-rates-finally-rise-bank-of-england
  22. https://www.bbc.co.uk/news/uk-44943672
  23. https://www.theguardian.com/money/2018/jul/26/household-debt-in-uk-worse-than-at-any-time-on-record
  24. https://www.bbc.co.uk/news/business-44926447
  25. http://monevator.com/find-the-best-online-broker/
  26. http://www.thefrugalcottage.com/what-would-you-do-if-you-won-the-lottery-giveaway/
  27. http://www.thefrugalcottage.com/life-update-20/
  28. http://www.msziyou.com/identifying-as-xennial/
  29. https://theescapeartist.me/2018/07/24/the-art-of-wealth-preservation/
  30. http://www.retirementinvestingtoday.com/2018/07/sobering-retirement-income-drawdown.html
  31. https://www.ukvalueinvestor.com/2018/07/measuring-investment-performance.html/
  32. http://monevator.com/death-to-the-lifetime-isa/
  33. https://youngfiguy.com/why-the-lifetime-isa-is-not-a-simple-to-understand-product
  34. https://youngfiguy.com/palms-up-or-palms-down-person

 

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Musing on… Long-term care costs and financial savings

This post has been mulled over for a long time, trying to discern and distil a direction. It began (as these trains of thought often do) with an idle r/financialindependence post. If you’re not familiar with that, it’s a subreddit for FI-types, predominantly populated by Yanks (Reddit being a sort of forum-cum-meta-aggregator of internet waffle). In this post a group of our ex-colonial cousins were discussing long-term costs (1):

So far, so not our problem. The UK may have significantly higher tax rates (ignoring ISAs etc), but it pays for (in theory) the NHS and social care, the cradle-to-grave support system for when times are bad. The NHS and social care system are what makes FIRE and any sort of fuck-you to working possible in the UK. Check out the video and post TEA and Rhik Samadder did on the matter (2).

National, personal cover

As we celebrate the NHS’ 70th birthday, it’s worth reflecting on where this all came from. Before the birth of the NHS all doctors services were private in the UK. If you needed something, you went to your local doctor, hoped they had been trained adequately, paid your money, got your treatment, hoped it worked. There were no guidelines. There was no standardisation. This worked fine for the wealthy, who could afford the best, but for the poor would die from an inability to pay the doctor. You can find plenty of stories from that time, but if you read one, I recommend the recollections of the wonderful Harry Leslie Smith (3). He remembers a doctors visit costing half-a-weeks wages, which they sadly did not have (3). This private price has scaled with inflation. A 15 minute private GP consultation will set you back £70 (4). As a profession we remain a rare commodity, and on an open market our hourly rate is such. The NHS affords the government a position of power and collective contractual employment which, despite press vilification, means we still come relatively cheap.

In the days before the NHS, workers would club together to pay for ‘self-help’ organisations, to provide medical care for one another. Beginning in the late 1800s, the Tredegar Workmen’s Medical Aid Society was one such successful organisation (5):

By the 1920s, the society employed the services of five doctors, one surgeon, two pharmacists, a physiotherapist, a dentist, and a district nurse. For an extra sum each week, members could also benefit from hospital treatment.

During the inter-war depression, the society continued to provide services to unemployed people, even though they could no longer afford to pay a subscription. By the mid-1940s, the society was providing medical care for 22,800 of the town’s 24,000 inhabitants.

Aneurin Bevan, who was born in Tredegar, took the Workmen’s Medical Aid Society as his inspiration for the NHS, saying: “All I am doing is extending to the entire population of Britain the benefits we had in Tredegar for a generation or more. We are going to ‘Tredegarise’ you.” (5)

The fragmentation of the NHS, gradual privatisation and reduction in care available deserves a separate post. For now, with a sense of perspective, we can look across the pond and be smug about our NHS (6). Cradle to grave cover, in our most frail years, maternity and care home. Isn’t it marvellous. Except… have you ever been in an NHS care home? And how much do you think that care home costs?

Who wants to live forever?

Time and again bloggers discuss their financial plans, how they’re 50 now, and they see themselves having 30 more good years. They fall into a common trap, recent research shows 8/10 of those over 50 underestimate their life expectancy (7). Most people guess they’ll live to 82-ish, whereas the data says more like 88 for men, and 90 for women*. We have got much better at keeping people alive for longer. Those aren’t necessarily going to be good years though, and so people trot out those bleak jokes; “oh just roll me off a cliff at 80”; “I’ll just head off to Switzerland”; “I’ll just pop my clogs then”. Except those are all to varying degrees illegal/ unethical. We doctors can’t just settle you off in a dignified way when you decide you’re not much use or aren’t enjoying things anymore. How do you decide when that is? Death is so very final. As a culture we have developed a fear of discussing or even considering our own mortality.

(*N.B. You can’t actually use ONS life expectancy at birth figures for this. Infancy through to teenage years (and early adulthood for young men) still have higher mortality. Once you pass your mid-20s your life expectancy actually statistically increases to accommodate for this.)

So for our friends the FIRE-savers, that’s an extra half decade of savings to account for. Suddenly retiring at 55 with a 4% SWR estimating a 30 year retirement isn’t quite enough (8). Life expectancy has increased in the 20 years since the Trinity study was published (9). A 45 year-old sitting down now and estimating for a 4% withdrawal starting at age 55 may well have a good 40 years ahead of them. It’s not just the %withdrawal that’s a variable in this calculation, it’s the duration too. For some really interesting drawdown calculations, check out RIT’s recent post (10).

The final splurge

How much do you think your living costs will be too? The common practice appears to be to take roughly your current living expenses, and times that out for the number of years you need. Some people estimate less, as they figure their homes will be paid off. An interesting piece of research by investment firm Schroders casts doubt on that. It found that savers underestimated their living costs in retirement by 15% (11). Only half of people surveyed had enough to live on comfortably (11).

Coming back to people facing their own mortality, and a decline into frailty, did you include the care home fees in that cost? The answer to the previous question is that the average care home price per year in the UK is £29,270 for a residential home, £39,300 for a nursing home (12). That’s average too, as with everything the South is more expensive, and we all like to imagine ourselves in our twilight years in a beautiful peaceful home, and not being roughly manhandled by someone on minimum-wage with no dignity or care, before being hauled up on a CQC newspaper expose (13). If you want to see what it’s like in your area, the UK Care Guide has a number cruncher and area analysis (14). You can decide to stay in your own home, but there the costs can mount up too. 24 hour care can be more than £150,000/year (13). And again for perspective, your life expectancy from a diagnosis of dementia in your 60s – 6.7 years, in your 90s – 1.9 years (15).

Where’s my cradle to grave?

Too right, where’s the NHS and social care system in all of this? Broke, that’s where. Historically there were jobs that provided care and nursing homes for their retired workers as part of their payment plan (although I can’t imagine anything worse). Now the burden falls on the social care system. The boomer population is ageing, and everyone is living longer. Social care reform remains a political football as no side wants to try to tell people that their lifetime of NI contributions and tax wasn’t enough to pay for their care (16). The “squeezed middle” baby boomers (le sigh) are already paying up to £10k a year to look after their ageing parents, and this will only get worse (17).

To try and at least partially cover care home fees, the central and local Govs have created an Orwellian masterpiece of committees with opaque criteria to make decisions about who gets support and who doesn’t. It’s called NHS Continuing Healthcare when the NHS is involved, i.e. if there is ‘sufficient medical need’ (17). If you can’t qualify for that you get means tested by the local social care trust/ provider (18). AgeUK make a fair stab at explaining it on their website (19). I’ve seen people die before any decision on who will pay has been reached.

http_com.ft.imagepublish.upp-prod-eu.s3.amazonaws

The final stretch of this little essay is about the means testing that social care can use. It’s not actually free at point of care. The system used is fairly complicated in it’s own right, but the Money Advice Service has a good page breaking it down (18). Your income and capital are assessed. If you live alone, and in certain other circumstances, your home will be counted as part of your capital (18). The local authority can and will sell your home to pay for the fees, even if you don’t want them to (20. 21).

If the local authority deems you have deliberately disposed of assets, for example by gifting your child your home, to avoid paying means tested fees, it can claim them back. This quietly introduced piece of legislation is called Deprivation of Assets (22). The rules have subsequently got much tighter around gifting any asset; housing, jewellery, money, objects (23). As always, do your own research.

We can’t take it with us

To summarise, as a culture we fear death and avoid considering our own mortality or old age due to the association. This is a shame, as people are more active in their old age and living longer than ever before. We underestimate the costs and expenditure we will have in retirement. Old age will cost more than we collectively think. The last few years cost A LOT MORE. Don’t ignore your final years, embrace those calculations, and spend them in luxury if you can.

Have a morbid time!

The Shrink

References

  1. https://www.reddit.com/r/financialindependence/comments/8fyu65/do_longterm_care_costs_factor_into_your_fire_plans/
  2. https://www.millennial-revolution.com/freedom/early-retire-uk/
  3. https://www.newstatesman.com/politics/2014/10/hunger-filth-fear-and-death-remembering-life-nhs
  4. https://www.bupa.co.uk/health/bupa-on-demand/gp-services
  5. https://www.theguardian.com/healthcare-network/2018/may/22/south-wales-town-forged-nhs-points-future-tredegar
  6. https://www.reddit.com/r/financialindependence/comments/8zx7iq/health_insurance_as_a_barrier_to_fire_in_the_usa/
  7. https://www.ftadviser.com/pensions/2017/11/28/most-over-50s-underestimate-life-expectancy/
  8. https://www.madfientist.com/safe-withdrawal-rate/
  9. https://en.wikipedia.org/wiki/Trinity_study
  10. http://www.retirementinvestingtoday.com/2018/07/sobering-retirement-income-drawdown.html
  11. https://www.moneywise.co.uk/news/2018-07-03/savers-vastly-underestimate-the-cost-retirement
  12. https://www.moneyadviceservice.org.uk/en/articles/care-home-or-home-care
  13. https://bit.ly/2OiBuIN
  14. https://ukcareguide.co.uk/care-home-costs/
  15. https://www.bmj.com/content/341/bmj.c3584
  16. https://www.independent.co.uk/life-style/health-and-families/nhs-social-care-uk-reform-aneurin-bevan-health-poverty-andy-burnham-a8429571.html
  17. https://www.moneyadviceservice.org.uk/en/articles/are-you-eligible-for-nhs-continuing-care-funding
  18. https://www.moneyadviceservice.org.uk/en/articles/means-tests-for-help-with-care-costs-how-they-work
  19. https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/
  20. https://www.ft.com/content/34c336e8-3e5c-11e8-b7e0-52972418fec4
  21. https://www.telegraph.co.uk/finance/personalfinance/insurance/longtermcare/11441163/Why-you-WILL-have-to-sell-your-home-to-pay-for-care.html
  22. https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/
  23. https://www.which.co.uk/elderly-care/financing-care/gifting-assets-and-property/343063-what-are-the-rules-for-gifting-assets

The Full English Accompaniment – UK bloggers I follow

What’s piqued my interest this week?

As the glorious summer of Brexit discontent and trade wars continues, I’ve mainly ignored the press in favour of my new garden and unpacking.

Last week a few people commented about the extensive list of links I put up. I’ve got into the habit of reading financial blogs in my spare time at lunch. I thought therefore this week I’d make a list of those I follow. The first ten or so I check every couple of days, other I may look at fortnightly, saving up posts for a stack of reading. I favour UK bloggers, those that write informed (evidenced) guides and experiences, those that share their numbers and those that don’t preach opinions. If a blog starts giving me their own theories based only on anecdotes I quickly switch off and diagnose quackery. I’m aware others have made similar lists, but hopefully I’ll bring to light someone you’ve not read before. Without further ado:

Non-UK:

Anyone obvious I’ve missed? Get in touch.

Have a great week,

The Shrink

 

Side Orders

Other News:

Opinion/ blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://monevator.com/
  2. http://quietlysaving.co.uk/
  3. http://thefirestarter.co.uk/
  4. https://firevlondon.com/
  5. https://simplelivingsomerset.wordpress.com/
  6. https://youngfiguy.com/
  7. https://youngfiguy.com/mrs-yfg-why-we-dont-fight
  8. http://thefireeng.com/
  9. http://diyinvestoruk.blogspot.com/?m=1
  10. http://diyinvestoruk.blogspot.com/2018/07/brexit-fudge.html?m=1
  11. https://www.ukvalueinvestor.com/
  12. http://financiallyfreeby40.com/
  13. http://www.thefrugalcottage.com/
  14. https://littlemissfireblog.wordpress.com/
  15. http://www.msziyou.com/
  16. http://www.msziyou.com/inflation-friend-or-foe/
  17. http://www.msziyou.com/nature-or-nurture/
  18. http://fiukmoney.co.uk/
  19. https://3652daysblog.wordpress.com/
  20. https://firethe9to5.com/
  21. https://tuppennysfireplace.com/
  22. http://www.earlyretirementguy.com/
  23. https://sexhealthmoneydeath.com/
  24. http://financialindependenceuk.com/
  25. https://makesaveinvestmoney.com/blog-page/
  26. https://theescapeartist.me/
  27. http://www.retirementinvestingtoday.com/?m=1
  28. https://www.mrmoneymustache.com/
  29. http://thecannycontractor.com/
  30. http://diversifiedfinances.com/
  31. https://www.physicianonfire.com/
  32. http://www.bbc.co.uk/news/science-environment-44841123
  33. http://www.bbc.co.uk/news/business-44838413
  34. http://www.bbc.co.uk/news/business-44840953
  35. http://www.bbc.co.uk/news/business-44891786
  36. http://www.bbc.co.uk/news/business-44893625
  37. http://www.bbc.co.uk/news/business-44882861
  38. http://www.bbc.co.uk/news/uk-england-cornwall-44879858
  39. https://www.tax.service.gov.uk/help-to-save/about-help-to-save
  40. https://www.theguardian.com/business/2018/jul/19/more-than-500-gaucho-cau-workers-lose-jobs-as-restaurant-group-collapses
  41. https://www.theguardian.com/environment/2018/jul/19/subsidies-for-new-household-solar-panels-to-end-next-year
  42. https://www.theguardian.com/money/2018/jul/19/radical-plans-to-end-huge-costs-of-buying-a-freehold-unveiled
  43. https://www.theguardian.com/money/2018/jul/12/new-build-clawback-overage-persimmon-complete-survey
  44. https://www.theguardian.com/business/2018/jul/11/pounds-unexpected-robustness-may-point-to-underlying-strength
  45. https://www.bbc.co.uk/news/44880278
  46. https://www.bbc.co.uk/news/business-44851363

Quarterly Returns Q2 2018 – A Tale of Two Cities

For my first quarterly return, I’ll lay out the basic plan for the future, and then tell a little story of hindsight.

Quarterly return posts will supplement my monthly Financial Dashboard, but with a different focus. While the Financial Dash mainly deals with my day-to-day, week-to-week goals, budgeting, the Quarterly Returns will cover investments in detail and look at my yearly targets. Here I will track purchases and sales, document my investment strategy, and discuss re-balancing and changes over time. Inevitably there will be some overlap, but I’ll try to minimise this.

Eventually the plan is to display some pretty graphs of exposure, increase over time etc. As I’m still developing my spreadsheets, for now I’ll just make a nice list.

Q2 Returns:

  • Cash Savings Accounts £400
  • Investments £0
  • Esoteric tat £3000

Lovely.

Yearly Targets:

Goal 1: Build an emergency fund.

As per the r/UKpersonalfinance flow chart, I’m working towards building an emergency fund (1).

I currently have a month’s outgoings in our joint account, and working towards two months. I’m chipping away at this, but now I have a month’s worth tucked away (and completed some fairly massive life-costs) I’m going to target debts.

Goal 2: Pay off debts

At the start of Q2 my short term debts were £2.5k to family and £4.3k on 0% interest credit cards. These are now £1,250 and £4.1k respectively. The aim is to bring my credit card debt down gradually, but as it’s at 0% for another 2 years I may indulge in some stoozing (2). I can also now close two redundant credit cards now I have no upcoming credit applications.

Goal 3: Reduce superfluous outgoings.

I’ve managed to reduce my living costs (see below), but an area for future work.

Goal 4: Commence investing!

The target for Q3.

A Tale of Two Cities

Inspired by Ermine’s tale of a dumb property purchase, here’s mine (3). This is a story of opportunity cost, the British love affair with owning our own home, and how as a person sometimes buying is not the right thing to do.

As mentioned in my Musing On… Mortgages post, MrsFireShrink and I were lucky enough to purchase our own home in our mid-20s. There are plenty of reports and opinion pieces currently doing the rounds, detailing how a third of my generation “will never own a home”, how it’s a housing crisis and changes must be made to the broken market (4, 5, 6). Wind back to 2014, and those worries are starting to bubble to the surface, but not yet in the public consciousness.

In those heady, pre-Brexit, pre-coalition-of-the-contemptible days house prices are still rising. Property is still a sure thing. We’re over the 2008 wobble, Dave Cameron is in charge and ‘the city’ and financial markets are looking bullish. Every man and his dog is flipping the equity from their own home into a nice little BTL side-hustle, an earner for retirement, inheritance for the children. The market looks nice and rosy, house prices always go up, right…. right? (7):

Enter stage-left MrsShrink (then MissFrugalStrongIndependentWoman) and I. We sat and planned our future together. I was living in work digs, 150 miles from MrsShrink. These were particularly miserable NHS digs, built after the war and updated when things broke, sometimes (for example see 8). Lying on my lumpy single bed as snow, rain and hail came through the single-pane aluminium-framed windows (which you couldn’t shut properly) I dreamt of a home to call my own. Heating that wasn’t on flat out, 24/7, even in midsummer. An oven that worked, A gas hob younger than me. A fridge lacking CFCs, etc.

The saving grace of these digs was that they were cheap. Really cheap. 90% of my earnings was paying off accumulated student credit card and overdraft debt, or sitting in our first, joint, savings account. MrsShrink and I knew nothing of investing, and to this day MrsShrink is fearful and does not trust the markets. Our plan saw me moving back to join MrsShrink in the city we had studied in, which we had both fallen in love with.

MrsShrink was equally frugal. She had moved in with a friend who had recently bought and was renovating a small terrace. While it was uninhabitable she was staying at his parents, paying a tiny rent, but not ideal accommodation. 6 months in and she was desperate for her own space.

With a small gift from MrsShrink’s mother we had enough for a deposit. The city we studied in was located in the South. An ex-naval city, bombed in WW2 and with high unemployment. Lively, cheap to live in, plenty going on and lots surrounding. Rows of identical, overengineered victorian terraces meant housing was around the national average despite being in the South. Early on we decided we wanted something old, with features, with potential but a manageable project.

The house

We spent six months viewing 20+ houses. We watched perfect houses get snatched up by people outbidding us. We viewed some real shitholes, rotten floorboards and collapsing joists. We stretched a bit and leveraged to 90% LTV on 200k. We planned to be there until we had kids, so fixed for 5 years. In 2014, everyone predicted an interest rate rise.

Eventually we found a place. It was a bad house on a good street, with agents pushing for much more than it was worth. In an area of high demand it had been sat for a year. [Warning sign]. It was vast, full of old features and 10% over budget. It also stank of fags and had some qwalitee 90s additions. Faux plastic panelling and fibreboard partitions anyone? [Warning sign]. The electrics had recently been done (cheaply) as had the central heating (cheaply). [Warning sign].

All this didn’t matter. We were in love with it. We could own this big house on this lovely street, all our own! We’ll renovate it, start a family, make loadsa-cash.

The troubles

We put down an offer for 5% under asking, which was accepted after a bit of haggling. We organised a full structural survey. This showed some damp and rot in the downstairs structure, so we went back to the vendors and knocked another 5% off. We were now on (just) budget. We weren’t fazed by this, every old house needs some work, and for houses where the vendor has been there over 10 years a survey may be the first time anyone looks for problems for a while.

The survey also stated that the walls were covered with thick wallpaper, as were the ceilings, and so the structure was impossible to examine. Fair enough said we. [Error]. As first time buyers we were a quick sale. Besides we were now desperate to be in. We wanted our house. [Error]. We completed within two months.

Walking back into the house for the first time, we were hit by a wall of fag-smell. Didn’t matter, we loved it. We held a party where we provided pizza and equipped all our mates with wallpaper stripping kit. The nicotine/tar ran out of the walls in rivulets. We all got contact high. Once we removed six layers of wallpaper and wood chip (spawn of the devil) the resultant 120-year old plaster was absolutely dead, falling off in chunks.

So it continued. I won’t document it all, but selected lowblows included:

  • Undiscovered rotten joists
  • Woodworm
  • Live bakelite or cloth-wrapped wiring throughout which hadn’t been removed, just run as parallel circuit
  • Replastering throughout as rooms sequentially were found to have collapsing or damaged plaster
  • Drains collapsing, prompting the stack to back up and digging out 7ft of liquid shit in midwinter
  • Fibreboard dropped ceilings in bedrooms hiding fire damage
  • Asbestos boarding
  • Boiler wired through twist-and-tape off a socket, with no fuse
  • Porch collapsing due to rot hidden behind a fascade

Lots of the work I completed myself. The sleet helping to wash off six month old faeces was a particular joy. We dropped about £15k over three years completely renovating. I hate to think what it would cost in labour, as I did 10+ hours a week on it in addition to my 60 hour work week.

The move

Three years into owning our home I was offered my dream job, one that I didn’t believe would ever happen, working with some of the top people in the world. Snag; it’s 150 miles away in another city. After discussions, I moved to pursue it, with MrsShrink following when she found work. We spent the following six months finishing the house to a high standard travelling the 150 miles at weekends. We never got to appreciate the fruits of our labour.

Facing financial pressure, paying rent and bills on one home and a mortgage and bills on an empty one, we let it out. The tenant was a young professional with a young child, highly qualified, working in my field. Responsible we thought. [Error]. The high end finish did not remain smart. The deposit did not cover the damage.

With the tenant out and again paying for two houses we put it on the market. We had to port our mortgage to avoid a hefty 5% early repayment charge. An asking price offer made within a week of listing fell through three months later, days before exchange. Another offer fell through a month later. We finally accepted an offer 10% under asking price six months later. We completed two months after that, exchanging on our new property on the same day.

The moral

Why am I telling this story? Through sweat, tears, blood and new grey hairs we made £15k net profit. About what the house would have gained through local market forces anyway. We have more equity in our new property and gained a lot of experience for the purchase of the current house:

  • Don’t overlook flaws because of love unless you’re willing to pay for them in time, stress or money
  • Don’t assume that a survey finds everything (or is even worth the paper it’s written on)
  • The more layers of cosmetic presentation/ furnishing/ detail in a house, the more it can hide
  • You may not make money on property
  • You can’t tell what tenants are like until you see how they live
  • Market estimates are dung; something is worth what people are willing to pay for it
  • Get paperwork evidence for everything
  • Houses naturally depreciate over time, they fall down if uncared for

Ultimately we learnt the hard way that early in life mobility for work can be a greater asset than equity. The British romanticism of owning our home hamstrung us and tied us to a financial obligation. As young professionals we could have been better served by considering our mobility as an asset. Don’t settle down until you really know you’re going to. There endeth the lesson for 20-somethings.

Reference:

  1. https://www.reddit.com/r/UKPersonalFinance/
  2. https://en.wikipedia.org/wiki/Stoozing
  3. https://simplelivingsomerset.wordpress.com/2014/04/06/when-not-to-buy-a-house-a-cautonary-tale-from-a-quarter-of-a-century-ago/
  4. https://www.moneywise.co.uk/news/2018-02-16/homeownership-among-millennials-plummets
  5. https://www.theguardian.com/money/2018/apr/17/one-in-three-uk-millennials-will-never-own-a-home-report
  6. https://www.theguardian.com/society/2018/apr/28/proportion-home-owners-halves-millennials
  7. https://www.ukvalueinvestor.com/2018/06/uk-shares-uk-property-better-value.html/
  8. http://s0.geograph.org.uk/photos/41/10/411045_a8075d90.jpg

The Full English Accompaniment – The Thick of Brexit

What’s piqued my interest this week?

In the last month a couple of don financial bloggers have again weighed in with their opinions on Brexit. First as Brexit entered the terrible twos TI reflected on his opinions and public opinions of it during that time (1). If you want a case example of the arguments that result check out the comment section.

Then Ermine gave us a post in his usual semi-satirical fashion on how to prep for B-day (2). This was both informed on his financial prepping, and amused on the end-is-nigh front.

So here’s my opinion, in the form of a Malcolm Tucker quote.

I’m just fed up to the back teeth of it all. In fact, beyond the back teeth. Brexit is the acidic backwash dissolving my oesophagus so I can’t feel when I’m swallowing whatever witches brew bitter pill this coalition of the inadequate and unelectable cook up.

This week the white paper on what the government would like from the EU as a deal finally arrived (3). Boris postured and buffooned his way out of the door looking for a front page splash. Rees-Mogg said something Dickensian. Trump weighed in with his usual bleached orangutang demeanour in The Sun (4). The. Bloody. Sun. Proving once again he’s Zaphod Beeblebrox incarnate.

I actually thought the white paper represents a decent compromise. Mujtaba Rahman’s opinion piece in the Guardian hits the nail on the head (5). Brexit is such a divisive premise that no one political party can agree on what to do. It is one last political hand grenade lobbed as a ‘look that-away’ by the arch-distracter Cameron. Danny Dyer has the right of it (6):

Lloyd’s have followed other companies in suggesting that Brexit will hasten or push them to move abroad (7). There’s been so many companies threatening Brexit-related doom that I take it all with a pinch of salt. No-one knows what’s going to happen, as no-one adequately explained or researched what could. Brexit is such a nebulous concept everyone wants something different, and some lack the ability to articulate what they want anyway. Because of this, a government who’ve basically followed whatever the prevailing populous wants (or shouts loudest for) are paralysed, dithering. So much for leadership.

Have a great weekend,

The Shrink

Side Orders

Other News:

Opinion/ blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://monevator.com/weekend-reading-brexit-enters-the-terrible-twos/
  2. https://simplelivingsomerset.wordpress.com/2018/06/28/battening-hatches-opportunities-brexit/
  3. https://www.theguardian.com/politics/2018/jul/12/brexit-white-paper-seeks-free-movement-for-skilled-workers-and-students
  4. https://www.thesun.co.uk/news/6766531/trump-may-brexit-us-deal-off
  5. https://www.theguardian.com/commentisfree/2018/jul/13/soft-hard-brexit-no-commons-majority-theresa-may
  6. https://youtu.be/-W77154J0-w
  7. http://www.bbc.co.uk/news/business-44805565
  8. http://www.bbc.co.uk/news/business-44807281
  9. https://www.bbc.co.uk/news/business-44819007
  10. https://www.bbc.co.uk/news/business-44823466
  11. https://www.moneywise.co.uk/news/2018-07-13/britons-too-scared-to-invest
  12. https://www.moneysavingexpert.com/news/family/2018/07/customers-urged-to-cut-water-usage-to-avoid-hosepipe-bans
  13. https://www.moneysavingexpert.com/news/shopping/2018/07/tesco-bank-customers-unable-to-use-online-and-mobile-banking-again
  14. https://www.theguardian.com/money/2018/jul/13/stoke-is-debt-capital-of-england-and-wales-followed-by-plymouth
  15. https://www.bbc.co.uk/news/business-44817930
  16. https://www.theguardian.com/money/2018/jul/07/heres-how-scammers-get-away-with-it
  17. https://www.nybooks.com/daily/2018/07/12/how-the-bbc-lost-the-plot-on-brexit/
  18. http://monevator.com/any-money-in-shares-is-better-than-none-at-all/
  19. https://www.ukvalueinvestor.com/2018/07/3-high-yield-capital-light-compounders.html/
  20. http://diyinvestoruk.blogspot.com/2018/07/my-strategy-is-evolving.html?m=1
  21. http://www.thefrugalcottage.com/dividend-income-june-2018/
  22. http://thefirestarter.co.uk/matched-betting-how-to-make-money-betting-each-way-horse-racing/
  23. http://thefirestarter.co.uk/matched-betting-how-to-make-money-betting-each-way-horse-racing-part-2/
  24. http://quietlysaving.co.uk/2018/07/14/holiday-toilet-rolls-2/
  25. https://www.mrmoneymustache.com/2018/06/30/tinyhouse/
  26. https://theescapeartist.me/2018/04/19/theres-something-you-need-to-know-about-fairness/
  27. https://firevlondon.com/2018/07/08/june-2018-the-liquidity-of-treacle/
  28. https://youngfiguy.com/p2p-lending-a-review-of-the-market
  29. https://youngfiguy.com/an-interview-with-david-at-lets-automate-your-money
  30. https://youngfiguy.com/financial-challenges-millennials-face-and-how-to-beat-them

The Full English Accompaniment – Beginner’s guides to investing

What’s piqued my interest this week?

Over the last few weeks, in the breaks between sanding, painting, filling, sawing, strimming and all the other fun that comes with a new house, I’ve been reading lots of basic investment guides. Not the ‘you should invest here’ type, but general overviews of the mechanisms. Tim Hale’s Smarter Investing is of course in my reading pile (second, behind an exam textbook), but blogs and videos are excellent for five minute tea (or beer) stops.

My attempts at being more frugal, and aiming for some sort of FI life, started by lurking on the UKpersonalfinance subreddit. A long forgotten post pointed me to Monevator. The Investing for beginners guides there got me started (1). I was pointed to the MoneyMustache, and Weenie’s Quietly Saving. DiyInvestorUK and UK Value Investor have taught me more in depth about passive and active options.

Monevator’s weekend reading this week highlights a millenial-focussed investing and financial advice series from the FT (2,3). A more cynical person than I would say that millenials are more finance savvy out of necessity rather than choice.

Lately I’ve been really enjoying The Plain Bagel, a YouTube series by a young guy called Richard Coffin (4). As he’s based in Canada, a lot of the tax-reducing products discussed are Canadian or American, however it’s great for the basics. His ‘fundamental series’ consists of 13 <10 minute videos covering investment mechanisms, vehicles and psychology. Here’s a little sample:

Hopefully he gets support to keep producing great videos.

Have a great weekend,

The Shrink

Side Orders

News:

Opinion/ Blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://monevator.com/investing-for-beginners-why-do-we-invest/
  2. http://monevator.com/weekend-reading-thrifty-business
  3. https://bit.ly/2m07LHQ
  4. https://youtu.be/I81xqr8HzBE
  5. https://www.theguardian.com/business/2018/jun/25/countrywide-property-sales-uk-estate-agency-profit
  6. https://www.moneywise.co.uk/news/2018-07-03/savings-update-rates-the-rise
  7. https://www.telegraph.co.uk/business/2018/07/04/savings-crisis-uk-households-8bn-red
  8. https://www.moneywise.co.uk/news/2018-07-06/japanese-knotweed-ruling-could-lead-to-more-claims
  9. http://diyinvestoruk.blogspot.com/2018/06/brexit-vote-revisited.html
  10. https://www.moneywise.co.uk/news/2018-06-25/buy-to-let-the-elephant-the-room-the-housing-crisis
  11. https://www.theguardian.com/environment/2018/jun/27/gestation-crates-farming-cheap-bacon-how-shops-and-shoppers-let-down-our-pigs
  12. http://www.schroders.com/en/uk/the-value-perspective/blog/all-blogs/five-famous-market-gaffes/
  13. https://www.wealthsimple.com/en-gb/magazine/money-diary-hector-bellerin
  14. http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
  15. https://www.ukvalueinvestor.com/2018/06/uk-shares-uk-property-better-value.html/
  16. http://monevator.com/does-the-passive-label-put-people-off-index-funds/
  17. https://www.fool.co.uk/investing/2018/06/23/why-there-could-be-huge-opportunity-to-build-an-income-stream-with-ftse-250-dividend-stocks/
  18. https://simplelivingsomerset.wordpress.com/2018/06/22/the-concept-of-financial-freedom-is-an-unattainable-chimera/
  19. https://www.mirror.co.uk/money/money-saving-expert-martin-lewis-12766455.amp

The Financial Dashboard – June 2018

Apologies to regular readers (hello? anyone? awake at the back?) for the lack of Full English Accompaniment last week. MrsShrink and I have been moving home, which occupied all our time.

The goals for June were:

  • Set up a Starling/ Revolut/ Atom/ Monzo account – Achieved
  • Sell five items from my hoard – Fail
  • Reduce daily living (groceries and lunch out) and entertainment expenses to budget – Achieved (ish)
  • Eat out a maximum of once a week – Fail
  • Repair or purchase a new bike – Fail

That didn’t go so well. Oh dear.

Net worth fell. Moving house is expensive.

June 2018 Dash

The value of my assets derived from my residence increased (bigger house) but my cash assets fell as we spent our emergency budget/ spare cash moving house. I’ve added data from our joint account now, as although it doesn’t generally feature on these pages, it does explain where some of my cash ends up parked. I also finally tracked down my life insurance figure, but I’m not including that in asset calculations:

June 2018 Assets
Goal achieved: I set up a Starling account, putting my money where my mouth is. I’ve talked in previous blog posts about Starling and it’s relative benefits. Once the dust settles from the house move I intend to move all my spending money into the Starling account, and use it’s ‘pots’ feature to split off money in that account (1).

The liabilities took a big jump this month with my increased mortgage. The credit card debt continues to reduce regularly, and we took a small amount of equity from the house sale to pay back wedding loans to family:

June 2018 Liabilities

Goal failed: Sell five items from my hoard. Everything I own is in boxes. Haven’t even begun to look.
Goal achieved (ish): Reduce daily living (groceries and lunch out) and entertainment expenses to budget

I have managed to reduce my outgoings in part. We’ve finally completed on our house sale 150 miles away, and have moved into our new home. This means we’re no longer paying rent and mortgage, so my costs for this have fallen.

I spent much less on eating out, having friends over for dinner rather than going out. I also tried to make more lunches or take things from home, but this remains an area to be worked on. I celebrated by paying nearly a thousand pounds for a professional exam. #thuglife. Daily driver insurance also fell this month, biting a hole into my finances where the absent emergency fund should have been.

I’m going to keep this goal on here, as I think I can keep improving.
Goal failed: Eat out a maximum of once a week – improving, as mentioned above, but I still ate out more than once a week.
Goal failed: Repair or purchase a new bike. Found a repair shop. Haven’t set foot in it. I can hear the tutting of mustachioed frugal community members from here.

Goals for next month:

  • Rein in spending on the automotive hobby by setting a budget
  • Sell five items from my hoard – carried over
  • Reduce daily living (groceries and lunch out) and entertainment expenses to budget
  • Eat out a maximum of once a week
  • Repair or purchase a new bike

Happy July everyone!

The Shrink

References:

  1. https://www.starlingbank.com/blog/6-ways-move-spending-saving/