The Financial Dashboard – February 2020

The goals for February were:

  • Set up standing order for investments
  • Rationalise credit cards
  • Repair or replace daily driver
  • Review pet and car insurance
  • Review progress towards long term goals

Checking the assets and liabilities:

Assets FebLiabilities Feb

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by a solid 3.61%, thanks to a best ever savings rate of 53.81%. No massive changes to my expenses, just a large payday due to some extra locum work. Surplus was used to top up my emergency funds and open a new investment holding in my ISA of Vanguard’s Emerging Markets Index Fund (Acc) (1). This was chosen due to it’s relatively low OCF (0.23%), wide EM exposure and the inclusion of Korea thanks to the MSCI index.

Goals:

Goal achieved: Set up standing order for investments

A nice easy win here, but one I’ve been meaning to do for ages. When I initially set up my ISA I intended to put in as much each month as I could afford. In practice I would dither deciding how much to invest, and it led to fluctuations and lack of consistency. Setting up the standing order to go out on the day I am paid makes sure I ‘pay myself first’.

Goal achieved: Rationalise credit cards

After clearing down my debt I was left with two credit cards with not inconsiderable credit limits but no promotional bonuses. I have closed both, and opened a new account with a 27 month interest-free purchase promotion. This will allow me to purchase a car or home improvements in the future with Section 75 protection and no interest.

Goal achieved: Repair or replace daily driver

I was fairly set on purchasing a new car, and the new credit card would have enabled me to. Attempts to sell my current daily driver met with minimal success. As the insurance loomed two weeks were spent travelling locally looking at cars. There was nothing worth putting myself back into debt for. Instead I spent a fairly hefty sum (>£500) on repairs and pro-active maintenance. The old daily has 135k on the clock, and the intention is to run it into the ground, saving further into my emergency fund for a (slight) upgrade in the future. Lifestyle inflation – not today!

Goal achieved: Review pet and car insurance

Our pet insurance came due and, frustratingly, our local vets won’t deal with quite a few of the cheaper insurers. Apparently they’re cheap for a reason. The usual price comparison sites turned up a solution for ~£8/month. Meanwhile I’ve also used the benefits of classic car insurance to get the project car insured with restricted mileage (5,000) including commuting at the useful sum of £180 for the year. Classic cars are definitely cheaper in fees, if not in wear and tear.

Goal failed(ish): Review progress towards long term goals

I’ve been mulling over my long term goals recently. When I first wrote some just under 18 months ago, I was deliberately vague in places, and didn’t include my state or NHS pension for various reasons. I’ve been back and updated my progress, but the goals themselves really need a hard look. Rather than posting that here, I’ve decided to do it as a seperate post this month.

Budgets

  • Groceries – Budget £200, spent £169.83, last month £143.32
  • Entertainment – Budget £100, spent £1143.33, last month £157.64
  • Transport – Budget £460, spent £283.37, last month £195.80
  • Holiday – £150, spent £60, last month £0
  • Personal – £100/ £15.88/ £341.73
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £94.59/ £27.89
  • Fees – £70 /£648.50/ £457 – further gristle for the GMC mill

In the garden:

Very little sadly. Just too busy.

Goals for next month:

  • Review progress towards long term goals
  • Review emergency fund accounts
  • Plan for 2020s ISA
  • Get the project car back on the road
  • Gardening

Happy March everyone,
The Shrink

References:

  1. https://www.vanguardinvestor.co.uk/investments/vanguard-emerging-markets-stock-index-fund-accumulation-shares

The Financial Dashboard – January 2020

The goals for December were:

  • Continue to exercise 4x a week
  • Keep a record of all dietary intake
  • Sell 5 items
  • Fix my car

Checking the assets and liabilities:

Assets JanLiabilities Jan

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by only 0.83%, though my savings rate was 25.16%. This is because I’ve recalculated how I include our joint savings and also the worth of some my other assets. This measly percentage was still enough to take me over the 50k net worth milestone!

Goals:

Goal achieved: Continue to exercise 4x a week

Happy to report I kept this up, and it’s almost becoming a habit now. I’m paying through the nose for gym memberships to enable me to stay motivated, and it’s starting to grate. I’ll see how I feel at the end of the month, but I may drop one set of classes.

Goal achieved: Keep a record of all dietary intake

Success here too. I tried just noting stuff down, but was crap at it, so went for the high tech app option. Initially this was with an app called Nutracheck which was really good; you could search for food/meals by name or barcode and it would bring up the manufacturer and full calorie/ fibre/ protein breakdown. However, after a weeks free trial it demanded I pay a subscription. It got deleted and replaced with a similar app called Lifesum. It’s less polished, but still allows search by barcode and name, automatically assigns calories, and more importantly operates a freemium model. I’m happy enough with the free version and if someone wants to sell my dietary habits for advertising good on them.

Goal failed: Sell 5 items

This was intended to be part of my spring clean, but all the things I found weren’t worth selling and instead I took a car load to the dump and a car load to the charity shop. House is tidier and less cluttered.

Goal achieved: Fix my car

At the back end of last year my daily car developed an irritating coolant problem which didn’t prevent me driving it but meant it was using more costing more to run. I spent one dry evening in the middle of the month in the garage diagnosing the problem, and for the costs of a £12 part it’s working fine again. More issues remain and as I’m commuting a fair distance it’s probably time to replace rather than repair. Expect a big effect on my liquid cash some time soon!

Budgets

  • Groceries – Budget £200, spent £143.32, last month £195.46
  • Entertainment – Budget £100, spent £157.64, last month £242.95
  • Transport – Budget £460, spent £195.80, last month £406.16
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £341.73/ £56.99 – Bought some new workwear
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £27.89/ £25.50
  • Fees – £70 /£457/ £109.49 – The annual pound of flesh to be able to work

In the garden:

We’re still tidying and making ready. Potatoes were bought and are now chitting in a dark box. An apple tree was purchased from a local nursery and planted to provide some shade in one area and variety for wildlife.

Goals for next month:

  • Set up standing order for investments
  • Rationalise credit cards
  • Repair or replace daily driver
  • Review pet and car insurance
  • Review progress towards long term goals

Happy February everyone,
The Shrink

Thought Experiment – Your best or worst decade?

Following on from the reasons to be cheerful or fearful post rather than offer one solution, I’m going to offer four five thought experiments; ways in which world events might hit your finances. How would you feel if each played out, and how confident are you that it will or won’t?

Scenario 1: Deep Doom

Driven by cultural nostalgia for the 1920s, the world markets continue their growth into a new ‘roaring twenties’. After three further years fuelled by tech stocks and IPOs, consumer purchasing falters. The West stops buying new IPhones or leasing cars, as people attempt to control their debt. As global consumerism falls off, global economic output follows. Falls in Chinese production lead to an internal banking crisis, as companies are unable to service their debt and require huge bailots. Simultaneously, consecutive quarters of poor returns to the FAANG stocks leads their share price to collapse by 50%. Companies pull investment as they attempt to balance books, which leads to a spiral of decreased corporate spending, job losses, and decreased consumer spending. Over a period of a year global markets lose half their value. Central interest rates, already low, cannot provide stimulus. Reposessions lead to global property price falls. Bond prices collapse as once top-rated companies go under. Government tax receipts cannot cover half of spending, and radical steps are taken. In the UK, the pension is means-tested. The NHS is means-tested. Unemployment benefit is replaced by a ration system. Unemployment rises to 30%, homelessness to 10%. Shanty towns spring up across the country, and crime rates rise dramatically. The world experiences a new Great Depression.

Scenario 2: Local gloom

The UK population enjoys a period of honeymoon euphoria after Brexit occurs. The pound and FTSE100 rise to levels not seen since the mid-00s. People spend the cash they’ve hoarded. The government invests in building swathes on houses on the greenbelt and big infrastructure projects. The honeymoon cannot last, and the economic stimulus leads to inflation and increased government debt. Growth is not stimulated, and the Bank of England is forced to increase interest rates to reduce inflation. People, used to cheap loans and credit, struggle to pay their bills. Repossessions rise, and companies which were just about managing with their debt burden, go under. Tax receipts to the treasury fall, leading to swingeing cuts to the NHS, police and social services. The pension age rises to 70. Income tax goes up 5% across the board. The housing market is flooded with repossessed homes, leading to a 25% drop in prices and negative equity. Globally, markets experience a 20% correction, before continuing their march onwards fuelled by growth in tech and green technologies. The UK is unable to capitalise on this growth, and increasingly sidelined, only sees a return to stability by the end of the decade.

Scenario 3: Wiggle room

The UK population enjoys a period of honeymoon euphoria after Brexit occurs. The pound and FTSE100 rise to levels not seen since the mid-00s. This financial rebound coincides with a global slowdown, prompting the UK to become a counter-cyclical anomaly. Global companies, seeing it’s growth and position as a stepping stone to the EU without tight regulatory control, invest into the UK. UK companies on the back of a stronger pound, stretch abroad. Wages rise, whilst interest rates remain low, leading property to become more affordable. UK domestic stocks show strong growth over the decade – >10% a year, while global stocks hobble along <5%. UK bonds and property remain flat. Increased tax receipts enable the government to focus on reducing national debt.

Scenario 4: Global boom

Driven by cultural nostalgia for the 1920s, the world markets continue their growth into a new ‘roaring twenties’. Tech growth continues, and as new companies rise on the back of radical inventions, older established companies pivot their business models to capitalise on new areas of growth. Tobacco, oil, gas and pharmaceutical companies invest into clean energy and renewables. Mining companies see boosted returns as once-waste metals become sought after for manufacturing. The BRICS nations embrace the new green revolution, and increase their growth by spreading manufacturing into developing nations. Periodic <20% corrections do not dampen stock growth, with 10%+ yearly returns average, and some years seeing 20%. Interest rates gradually creep up, with global bonds achieving 5-10%. Strong wage growth also leads to increasing property prices, at least 5% a year. The world settles into a new normal, with a globally integrated industrial stream and international co-operation.

Late addition – Scenario 5: Wuhan Pandemic

The novel 2019 Coronavirus (one word people) continues it’s inexorable march across the globe. Following the Wuhan pattern, there is approximately a one month lag in each location before the true extent of spread is known, made up of incubation period and asymptomatic spread. By May 2020 the Wuhan virus has spread across the globe, and the numbers of infected in western counties is growing at an exponential rate. In June the number infected has crossed 100 million. The most severely affected are the old, weak and frail. 2% of those infected die. In the UK this numbers over half a million, mainly 1% of the UK population over 65 (18% of the general population). Nobody is spared. Everybody loses someone they know. The global economy staggers but continues, given that working aged people are predominantly spared. In the UK there is a glut of property put on the market, as empty homes are sold by bereaved relatives. Money concentrates into the hands of those left, reducing debt burden and leading to a surplus of cash. The government receives a windfall of inheritance tax receipts and reduced pension/ social care expenses. Society continues onwards, but never quite forgets the potential of a pandemic.

Bangernomics 2019

I preach, but do not devoutly practice, Bangernomics; do as I say not as I do being a common mantra among the medical profession as they down their sixth pint surrounded by a cloud of cigarette smoke. For the past five years I’ve kept spreadsheets tracking every cost from my motley parade of shonky motors. Inspired by a recent JL Collins post, I thought I would share my yearly running costs here (1).

The current fleet stands at the 15-year old daily driver, and the classic, which MrsShrink never tires of telling me is older than her. There’s also MrsShrink’s car, but I don’t include that in the numbers as it’s entirely her property. This fleet is much reduced compared to recent years, generally more reliable and responsible, and less of an environmental waste hazard. At one point I had vehicles and parts scattered across several counties, and inhabited by a surprising variety of flora and fauna.

The reduction in general tat has come with the realisation that owning said tat is less a joy, and more a millstone. My head hung heavy with the weight of untouched projects. I can only physically drive one car at a time, so better to make it one really good one, than lots of good-ish ones.

The daily driver is a good-ish one, bought at 11 years old on 80,000 miles for £2,000. Four and a half years later it’s ticked round 135,000. Here’s the vitals for 2019:

  • Completed 14,000 miles
  • Required £1,052 in repairs and pro-active maintenance
  • Cost 16.54p/ mile in petrol, for a total of £2,316 (I use the fuelly app to track my fill-ups and spending (2))
  • Plus ~£300/year in tax
  • And £350/year in insurance
  • £0 depreciation – it’s old!

For a total annual cost of £4,020, or 28.7p/mile.

It’s been an expensive year for repairs, with a new clutch costing £650. Beyond servicing and perishable parts there was nothing else out of the ordinary. Unfortunately the old girl is starting to reach the age where lots of things go wrong every year, and it’s time to evaluate the trade-off of ‘better the devil you know’ versus ‘shiny new thing’.

Now I would never buy a shiny new car. My favoured choice is buying something ten years old and running it for five years, hitting my own personal sweet spot of depreciation vs reliability. As for data to back that up, well the clever spreadsheet jockeys over at r/UKPersonalFinance have come up trumps.

Seven months ago, /u/tirboki posted this thread (3). They wrote a python script which scraped data from Autotrader on price, age and mileage, and then compared it to data the DVLA publishes on MOT failure rate. This produced some fantastic results:

But was also largely based on summary data, and therefore wasn’t nuanced. Their suggestion was that:

If you want to own a car for 1 year, buy a 5 year old car. If you want to own a car for 3 years, buy a 4 year old car. If you want to own a car for 8 years, but a 2 year old car. If you want to own a car for more than 8 years, wait for the right month (August, February) and buy a brand new car. (3)

Now I’m not going to buy a brand new car. Nor am I going to buy a base model car. /u/tirboki went on to publish a further analysis thread recently, breaking down the DVLA MOT statistics further (4). This looked at the time it took for cars to go from peak volume (i.e. the most number of the road), to 5% of peak volume, as a marker of life expectancy. There’s a great variety here, a bimodal distribution where high end marques outlast lower quality manufacturers by five years (4). Top spec models also outlast base models.

So where does your car fit? /u/adam-a has the answer for you, developing a website rate my ride which produces MOT survival curves for popular car models (5, 6). It allows you to navigate MOT pass rates as a proxy for reliability (but actually for maintenance and quality, but close enough).

My buying criteria have been <£2,000, around ten years old, high end manufacturer, high spec model, regular servicing and few failed MOTs, moderate mileage (aiming for 6-8,000/year). Cars that spend years inactive tend to come with their own problems, and are often a worse bet than something high mileage but cared for. Ten year old models of my current daily have 80% MOT pass rates, compared to 72% for a Vauxhall Astra. At 15 years the daily is still 68%, the Astra 62%. Worse when mileage is factored in.

So is it time to buy something new(er)?

Bangernomics says it’s time to get rid when the cars value is less than remedial work. I’m anticipating another £1,000 year of maintenance, and with that the cars value will be £750. Being averse to debt, I’m planning to save up for the replacement. When it comes round to it I’ll document the sums here with reasoning (like Mr & Miss Way) (7). I’ll also make use of the excellent UK vehicle stats website (8). For the time being the old girl will continue to see service, but the chop beckons.
References:

  1. https://jlcollinsnh.com/2019/11/10/what-does-buying-a-new-car-really-cost-over-the-years/
  2. http://www.fuelly.com/
  3. https://www.reddit.com/r/UKPersonalFinance/comments/bv4wwc/faq_on_car_ownership_answered/
  4. https://www.reddit.com/r/UKPersonalFinance/comments/czk6ps/life_expectancy_of_cars_an_analysis_using_dvla/
  5. https://www.reddit.com/r/UKPersonalFinance/comments/cz4x5v/inspired_by_a_post_here_a_few_months_ago_i/
  6. http://ratemyride.info/about
  7. https://awaytoless.com/how-to-buy-a-car/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-buy-a-car
  8. https://www.vehiclestats.co.uk/

The Financial Dashboard – December 2019

The goals for December were:

  • Continue to exercise 4x a week
  • Keep a record of all dietary intake (what gets measured gets managed)
  • Sell 5 items (need to get back on my de-clutter)
  • Save 30% of my salary

Checking the assets and liabilities:

Dec 2019 AssetsDec 2019 Liabilities

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by 14.42%, though not due to any stonking savings rate. Instead it was down to a house revaluation, which brought our equity up in our home up by £20k. My savings rate missed my goal at a measly 23.85%, leaving my average for the 12 months at 23.52%.

Goals:

Goal failed: Continue to exercise 4x a week

Work, Christmas parties and a break away to stay with family meant that I only managed three times a week. There’s a recurring theme this month…

Goal failed: Keep a record of all dietary intake

Failed at this too. I’ve downloaded an app to try for January.

Goal failed: Sell 5 items

Nope. Next…

Goal failed: Save 30% of my salary

Not even close. Should and could have been, however we had a plumbing emergency the week before Christmas, requiring a dip into the emergency fund. A couple of years ago this would have gone on a credit card, and hung around my head like a noose for the following year. Now the £2k could be paid immediately, without breaking a sweat, and the emergency fund topped straight back up at the end of the month.

Budgets

  • Groceries – Budget £200, spent £195.46, last month £157.76 – This probably should have been more, but we ate out a lot and didn’t host for Christmas
  • Entertainment – Budget £100, spent £242.95, last month £119 – Christmas parties, breaks away, beers, beers and prosecco!
  • Transport – Budget £460, spent £406.16, last month £394.05 – More work to the daily, and it needs further if I’m not to replace it soon
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £56.99/ £102.90
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £25.50/ £109.16
  • Fees – £70 /£109.49/ £135.40

In the garden:

Harvesting root veg, and now tidying up in preparation for planting next year.

Goals for next month… take 2:

  • Continue to exercise 4x a week
  • Keep a record of all dietary intake
  • Sell 5 items 
  • Fix my car

Happy New Year everyone,

The Shrink

The Financial Dashboard – November 2019

The goals for November were:

  • Exercise at least 4x a week
  • Automate investments
  • Repair pushbike
  • Look at new emergency fund accounts

Checking the assets and liabilities:

November AssetsNovember Liabilities

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by 3.46%, as my good run came to an end. My savings rate was also a paltry 21.86%, dragging my yearly average down to 23.64%. My payroll is still incorrect, so I’m paying PAYE tax, pension and student loan contributions incorrectly. Despite hounding the payroll departments they continue to get it wrong every month. We also bought some furniture for the house which dragged the savings down.

Goals:

Goal achieved: Exercise at least 4x a week

I actually managed this, surprisingly myself. Self-motivation must be improving; like a muscle the more you exercise it the stronger it gets. I’ve yet to decide if paying for the extra local gym is worth the added cost for the convenience, but it has meant I can squeeze in early morning workouts with ease. Need to focus on diet now to achieve some of my goals.

Goal achieved: Automate investments

Going back to the investing basics, I decided I needed to make my investments automatic and also use the paying myself first approach (1. 2, 3). As such I’ve set up a standing order to my regular investment platform, and another to my new emergency fund account. These will go out on the day I get paid, and I can use the spare cash for discretionary spending.

Goal achieved(ish): Repair pushbike

Took it to the local charity workshop for a quote, likely to be £150+, may get it fixed, may buy a crappy skip bike to replace it. Most importantly it’s no longer sat in my garage.

Goal achieved: Look at new emergency fund accounts

After a few months of poor cash savings, I decided to set up a new emergency fund account. I had been using a savings pot as an emergency fund in the Starling bank account I use for my day to day spending. This returns 0.5% and is generally a bit naff. I also found myself dipping into it for discretionary spending. I have a high interest current account with a further £2.5k sitting returning 5%, but I find moving money every month to satisfy the requirements of the account a bit of a faff. Therefore the new plan was to set up another regular saver. The local Monmouthshire Building Society offers a 3% regular saver, so I popped down to the local store to set one up. This was like stepping back in time thirty years, and I take some re-assurance from their old-fashioned safety procedures. This is how my income savings structure now looks:

Savings breakdown.JPG

Budgets

  • Groceries – Budget £200, spent £157.76, last month £176.39 – We ate out more and spent less thanks to weekly meal planning
  • Entertainment – Budget £100, spent £119, last month £101
  • Transport – Budget £460, spent £394.05, last month £301.82 – Daily car passed it’s MOT with only minor work. Not bad for an old snotter.
  • Holiday – £150, spent £0, last month £336.40
  • Personal – £100/ £102.90/ £46.56 – Black Friday wardrobe updates
  • Loans/ Credit – £0/ £0/ £140
  • Misc – £50/ £100/ £215.15 – Christmas gifts now!
  • Fees – £70 /£135.40/ £177.91

In the garden:

Everything quiet now apart from some overwintering veg settled in the ground

Goals for next month:

  • Continue to exercise 4x a week
  • Keep a record of all dietary intake (what gets measured gets managed)
  • Sell 5 items (need to get back on my de-clutter)
  • Save 30% of my salary

Happy December everyone,

The Shrink

References:

  1. https://monevator.com/the-investing-basics/
  2. https://monevator.com/no-time-to-invest/
  3. https://www.investopedia.com/terms/p/payyourselffirst.asp

The Financial Dashboard – September 2019

The goals for September were:

  • Plan healthy weekly dinners
  • Exercise at least 3x a week
  • Get two more blogposts out
  • Look for a skip bike to use for short local journeys
  • De-clutter spare room for charity shop

Checking the assets and liabilities:

September AssetsSeptember Liabilities

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by 3.32%, modest but enough to push me over the £40k barrier. My savings rate, not including mortgage repayment, was 43.76%, pushing my average up to 21.48%. That’s my best savings rate of the year.

Goals:

Goal achieved: Plan healthy weekly dinners

Within the confines of eating out/ in with friends, and the times when we’ve been away, I think this has been achieved. We’ve eaten less oven or ready meals, and more stuff fresh from scratch using our home grown ingredients. I want to build on this, by adopting a meal plan – a goal for next month.

Goal achieved: Exercise at least 3x a week

This was actually really hard. Life has a tendency to throw curveballs, and trying to fit in three workouts every week around work commitments, socialising, house chores and sleep has been challenging. Again I want to build on this – for next month it’s 4x a week.

Goal failed: Get two more blogposts out

Slightly better. June and July were a real lull, with only three and four posts, compared to eight in one month at the start of the year. I managed five in August, but still not back to my old standard. I’m going to aim for six this month.

Goal failed: Look for a skip bike to use for short local journeys

I decided not to do this, as I don’t need more stuff. I’m going to get my old bike repaired again instead.

Goal failed: De-clutter spare room for charity shop

Still a work in progress.

Budgets

  • Groceries – Budget £200, spent £144.75, last month £299.90
  • Entertainment – Budget £100, spent £101, last month £81
  • Transport – Budget £460, spent £257.49, last month £241.97
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £87.75/ £62.99
  • Loans/ Credit – £0/ £152.25/ £152.25
  • Misc – £50/ £75.65/ £30 – Gifts mainly
  • Fees – £70 /£110.40/ £209.75 – Vets fees

In the garden:

More chutneys this month as our tomatoes and beans come to an end. A few courgettes still soldiering on, but I think this weeks weather might kill them off. Despite a strong start my pumpkins are sadly the size of plums. I’ve planted a lot of new stuff this month; winter potatoes, onions for spring, spinach beet, carrots and spring cabbage.

Goals for next month:

  • Adopt a weekly meal plan
  • Exercise 4x a week
  • Get six blogposts out across the month
  • Repair pushbike
  • De-clutter spare room for the charity shop

What’s in the pipeline: (Hopefully a couple this month)

  • Stoicism and the finance world
  • Should I buy an electric car?
  • Q3 2019 – Steady as she goes
  • Property Renovation Lessons Part III
  • Plus the usual Full English Accompaniments and other drivel…

Happy October everyone,

The Shrink