The Full English Accompaniment – Watch the population slump, and then the economy

What’s piqued my interest this week?

In the allocations section of my Investment Strategy Statement I mentioned that I favour emerging markets (a generalisation) because of changing demographics. Events of the past few weeks have prompted me to flesh my thought process out. I have a hunch/ theory/ feeling in my waters that long term stock market movements correlate to changing demographics (so far so normal), particularly the ratio of 20-40 year olds to other demographics. This has long been muted, but is difficult to prove, partially (I think) because it depends on where and how you define the demographics and stock market changes, and how you look at dependants (1). It should be noted by the passive investor because if you invest in a national index now you want to be sure that that same index is going to keep going up.

The Japan Problem

Japan is the canary in the coalmine. People have been noting for some time the relationship between Japan’s relatively stagnant growth and its ageing population. This has improved somewhat under Shinzo Abe, averaging around 1% growth over the past decade despite the significant headwind of a falling population. With the highest life expectancy in the world and a fertility rate of 1.4, Japan’s population is getting older, with the expectation the proportion of those >65 will go from 3 in 10 to 4 in 10 in the next 40 years, with the population shrinking by 25% (2, 3). By 2025 it will have an aged dependant per worker ratio of 75% (3).

This is a huge challenge for a social security system, as more people rely on pensions and the healthcare system than the funds that are coming in (4, 5). Public debt increases or the numbers of workers increase, or both.

Europe

The problem I see is the EU isn’t that far behind. There’s a big post-boomer bubble coming, made up of those born 1955-75 (6). Shock! Millenial not slating the boomers.

We’re already starting to see one sign of the problem, as companies struggle under the weight of increasing pension debts. It’s one of the things that’s dragged down BHS, Debenhams, HoF, and look at the ongoing saga with private railway company operators. Stagecoach and Virgin don’t want to be on the hook for the Railways Pension Scheme deficit (7). As the working population reduces and the dependant population grows this chasm in the unfunded public sector pension schemes will yawn wider. Executives are looking down the barrel and running for the hills, to mix metaphors. This is across Europe. Germany and Italy have expanding dependant populations, Bulgaria has a birth rate of 1.5 and has seen its population fall by 2 million in 30 years, Poland is closing schools due to the lack of children (8, 9). Some countries though, like Sweden, are bucking the trend through immigration.

The Global Picture

Look wider and there are notes of caution but also reasons to be cheerful. Globally birthrates are falling, the low levels in the developed world balanced by high birthrates in India, the Philippines and Africa (8). Emerging market populations are growing faster than the developed markets are shrinking, so the population will keep growing, but at a slower rate (9). This is good news for the planet, which can’t sustain the current growth rates indefinitely, but bad news for those who dislike immigration, as migration will be required to maintain labour forces in the developed economies with shrinking populations. Or will it?

Before I move on it’s worth focusing on three more countries: India, the US and China (9, 10, 11).

Things are looking peachy for India, which has an expanding population likely to drive greater growth even as it modernises and develops (although this is not without its issues). The US is in better shape than most of the developed world, with forecasts for a relatively flat or increasing population before you even take migration into account (12). This is one of the reasons, combined with global corporate and technological monopolies, that I don’t believe the NYSE is about to undergo a crash when the boomers call time and cash their retirement cheques. But what happened to China? The single child policy. We’re past its peak, and now China is looking at a reduction in its working age population of 212 million by 2050 (10). 212 million less people working. That’s the current population of Brazil. That’s what state top-down planning gets you.

‘Abenomics’ and ways out

So how do we get out of our slump? Well we could open our borders to a motivated migrant workforce, but that would just be too sensible and easy. Some authors look back to Japan for the way out of this population pickle. Shinzo Abe has sustained growth in the face of a falling population primarily through recruiting more people into work who previously were not, alongside technological productivity developments (13). Japan in many ways is a deeply conservative country. The perceived social norm continues to be men go to work all day, women are home-makers. In 2013 Abe introduced ‘Womenomics’ (there’s a theme here), increasing female participation in the labour force through a number of methods (13, 14). I don’t feel this would necessarily translate to western European cultures, where women working is the norm. I think efforts in our economy to bring those out of the labour market for whatever reason into work, like zero-hours contracts, have been less successful. There’s more people in work, but productivity and earnings aren’t necessarily increasing.

Technology and automation, on the other hand, probably are solutions. Automation enables greater output with fewer workers, and can be applied to manufacturing, construction and some service industries, as it has in Japan (14). It’s not good news for the factory workers and low-skilled employees, which is all the more reason for Universal Basic Income – an argument for another time. There will continue to be some jobs robots will struggle with; caring roles or where intuition is required. As a shrink I’m probably safe. Robots are yet to understand human emotions.

Major caveats

Important flaws in this whole essay:

The stock market isn’t necessarily correlated with population demographics.

There’s lots of arguments and evidence of this. It can basically be boiled down to:

You can’t correlate specific bear markets, like the dotcom bubble, to demographic/ population change points – this is often identification error
External factors and drivers such as politics (e.g. the fall of the Berlin Wall/ communism etc) have unpredictable effects on a) markets and b) demographics
The timescales and effect sizes are such that the end result on the stock market appears negligible (15, 16).

Add in the fact that we have an increasingly interconnected world, with global corporations taking earnings from multi-national operations, and it all gets murky. I don’t think any developed market is about to crash while companies listed on it’s market utilise cheap developing world labour (17). Just also don’t ignore a developing market with increasing capitalisation (18). Which is why I aim to hold more in certain developing markets. But you, as usual, should do your own research.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

Two Thirsty Gardeners has advice on how to build raised beds (43) – just as I finish mine…
Sharpen your spades on the importance of a gardening to-do list (44)

What I’m reading (affiliate links):

The Right Way to Keep Chickens – Virginia Shirt – Another guide to our new pets.

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

View story at Medium.com

Quarterly Returns – Q1 2019

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

This post marks one year of my blog. One year of posting rants and general waffle. It marks a new year, and the end of the old tax year, so how did I get on in my Q1 of 2019?

Q1 Returns:

Net Worth Q1

Cash Savings Accounts £2800 (+£1000)
Investments £1000 (+£1000)
Cars £3000

My net worth now sits at £~33,200, an increase of £4.7k over the past three months, and up dramatically from the £~20,000 I first wrote about twelve months ago. I’m fairly sure I won’t be able to keep up a 60% increase in net worth, but I’ll keep a twelve month rolling calculation out of curiosity.

Yearly Targets:

Goal 1: Build an emergency fund

My first 2019 goal was to build an emergency fund, as per the r/UKpersonalfinance flow chart (1).

I’ve continued to add to my Santander 5% regular saver, which will reach maturity this month. It currently stands at £2200, which is a month of total household expenses at our current spending, or two months of my half. I’m now looking to set up another regular saver. I’ve parked some extra cash to pay for upcoming car and work related expenses. In the past three months I’ve decided I’m going to define my goal emergency fund as three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly. This seems a fairly realistic target for the next year.

Goal 2: Pay off short-term debts

Q1 Short Term Debt

At the start of 2019 my short terms debts stood at £1.25k to family and £2.6k on 0% interest credit cards. In the past three months I’ve paid £1k off our loan to family, but some significant work expenses had to go on my credit card, so that figure has only come down by £600. I’m going to have to work hard to achieve my goal of clearing my credit card by the end of Q2.

Goal 3: Save 25% of my earnings

Q1 Net Worth

In the past three months my savings rate has gradually increased, but it’s a bit early to take averages, particularly with the March outlier. I calculate my savings rate using this formula:

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions) / (Income + Pension contributions)

Where income minus spend equals the money left from my income in my accounts at the end of the month. It’s important to note I don’t include any mortgage payments in this (i.e. increased equity), nor do I include reductions in debt. This is purely the amount I have been able to save out of my earnings. I see some arguing that imputed rent or equity increases should be included in savings, but for me this figure is a literal savings percentage. Equity/ debt changes show up in my net worth, which accounts for the rapid increase in net worth concurrent with a piddly savings percentage.

Goal 4: Live more sustainably

Some success here. We’ve reduced our plastic usage, we’re eating more locally and sustainably sourced food, and I’ve finished setting up our mini-market garden with new raised beds for veggies and some pet chickens. As things start to crop I’ll add them up and work out cost savings from homegrown produce.

Goal 5: Commence investing!

Q1 Tax Efficiency

I’ve taken the plunge. March’s tax rebate has been quickly squirrelled into a Vanguard S&S ISA. I opted for the FTSE Developed World ex-U.K. Accumulation Fund, buying at £352.62/unit. I learnt a quick lesson in a) market timing and b) not checking investments too frequently, as literally the day after the price fell to £341/unit. I’m not in it for short term gains, I told myself.

Since then I’m trying to avoid impulsively checking the NAV every hour (bloody idiotic), busying myself building a spreadsheet to track returns and allocations. Like many others my intention is to unitise my portfolio (1, 2, 3, 4). I’ve been reading about this methodology through (as usual) Monevator, and also Bogleheads which has a fantastic portfolio spreadsheet (5, 6). Hopefully by the end of Q2 it should be ready to be unveiled.

Until next time.

The Shrink

References

The Full English Accompaniment – Making your day more environmentally friendly

What’s piqued my interest this week?

As part of our goals for this year MrsShrink and I are trying to live more sustainably. Recently we’ve got a bit stuck for ideas, and a friend recommended we go through our daily routine to look for places where we couple replace things. Here’s part of MrsShrink’s day as an example:

Morning shower:
- shower gel – swap for soap bar
- plastic loofah – swap to natural loofa
- venus razor – ceramic or wood with replaceable blades?
- face wash – home made
- face exfoliator – home made
Brush teeth:
- electric toothbrush heads – bamboo heads?
- toothpaste – tabs?
Creams/ lotions/ make-up:
- moisturiser cream
- lip balm – metal tins
- deodorant – bars or powders
- make-up – plastic free
Clothes:
- buy from charity shops
- natural fibres only
Tea & coffee:
- teabags (contain plastic) – loose leaf instead
- coffee – buy beans from sustainable source and grind

This method has helped us recognise areas where we can change. Some of the ideas we came up with are probably more expensive, but we’re going to try and implement the cheaper ones. So why not give it a go as another way of budgeting and accounting in your life.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

References

The Financial Dashboard – February 2019

The goals for February were:

Sell £50 worth of stuff
Calculate and set a budget for Entertainment
Reduce consumption of single use plastics
Finish the raised beds
Set up an account with an investment platform

Checking the assets and liabilities:

Assets Feb 2019 Liabilities Feb 19

These are taken from my Beast Budget spreadsheet. This month my net worth grew by £984 (~3%). For the first time I’ve ended the month with a net worth >£30k. I put another £200 on my 5% Santander saver, paid down our wedding loan to a family member and my credit card bill. I also put money aside as budgeted for future professional and car expenses.

Goals:

Goal achieved: Sell £50 worth of stuff

Sold some car parts, got £50 in cash, spent it on soil (rock ‘n’ roll). I’ll increase this for next month to keep the impetus up.

Goal achieved: Calculate and set a budget for Entertainment

Again I went back over the past year’s spending to calculate what my average is. I’ve previously classed entertainment as daily living type costs, and kept gym and hobby fees separate. For this year and to produce a proper budget I’m going to include them all together, so that it encompasses eating out, the cinema/ theatre/ concerts/ events, the gym and my other esoteric hobbies. There’s been a lot of variance in monthly spending, from £~50 to £~250, accounted for by concert tickets and times when we’ve eaten out a lot. In the last couple of months we’ve spent around £100, but we’ve barely left the house. I’m going to budget £150/month for the future, and anything left over at the end of the year can be used to top up ISAs.

Goal achieved: Reduce consumption of single use plastics

Gradual progress here, through small changes. We’ve moved to only buy loose fruit where possible. Our veg is delivered loose. Our meat is delivered wrapped in waxed paper. We’ve switched some of our cosmetic items, so that we only buy paper earbuds, and we’ve made re-usable face-wipes for makeup from old material. We’ve switched to shampoo bars, which are more expensive but seem to last much longer (this sort of thing). We’ve switched back to soap bars from liquid hand soap. Slow but steady, with plenty more to do. Next month I want to look at other ways we can reduce our environmental footprint.

Goal failed: Finish the raised beds

I’m tripling my veg patch size by rebuilding the raised beds using fly-tipped or old pallets and free/ cheap soil. This is taking bloody ages. Trying to scrounge free or cheap soil through gumtree and facebook is slow. I’ve probably put in about five tonnes of soil so far, with the same to go.

Goal achieved: Set up an account with an investment platform

I’ve spent much of the month looking at online brokers using Monevator’s excellent guide and a few other websites (1, 2). As we’re coming to the end of the tax year my first purchase will be pretty simple. I’ve opted to go with Vanguard directly and have set up an account in anticipation for making my first payment in March.

Budgets:

Groceries – Budget £300, spent £207.01, last month £185.03 Continue to underspend.
Entertainment – Budget £150, spent £92, last month £97.30.
Transport – Budget £460, spent £405.44, last month £124.75. MOT and tax costs came in under budget, so a little carries forward for next month.
Holiday – £150, spent £0, last month £133.09. Need to start putting a little away here.
Personal – £50/ £5.50/ £61.52. Had a rejig here which I’ll explain next month
Loans/ Credit – £350/ £288.99/ £-445.78. This is now net change for the month.
Misc – £50/ £186.45/ £123.34. Had a rejig with the new spreadsheet here too. Misc payments this month:
- £50 cash on soil (plus £50 from the car parts)
- £20 cash for a work event
- £50-odd at B&Q on more house things

In the garden:

See above for a raised bed update. The greenhouse is now full of seedtrays with early crops, and the dining room table covered in potatoes being chitted.

Goals for next month:

Sell £100 worth of stuff
Finish the raised beds
Calculate and set a budget for Personal spending
Look at other ways to reduce environmental footprint
Purchase first stock investment

What’s in the pipeline:

Stoicism and the finance world
Green Credentials
Property Renovation Lessons Part III
Plus the usual Full English Accompaniments and other drivel…

Happy March everyone,

The Shrink

References:

Frugal Motoring – Should I buy a hybrid?

In Frugal Motoring I discuss how I run cheap cars, the pros and cons for various purchasing methods (straight up cash, loan, PCP, lease), diesel vs petrol vs hybrid vs electric, ongoing political/ government motoring related machinations and how to keep your car running. Here I’ll look at the pros and cons of hybrid cars, some of the history and some worked costings.

Which hybrids am I talking about?

Hybrid vehicles have been around for as long as there has been motorised transport. Petrol-electric hybrid trams were first patented in 1889 (1). The Woods “Dual Power” of 1915 used a combined system of electric motor below 15mph and petrol engine up to it’s max of 35mph, which also charged on-board batteries. Just like a modern Prius (1).

It was a commercial failure, as were most attempts at developing electric vehicles up until the turn of the century. Batteries could not provide the range, speed or flexibility required for most users. The energy density of petrol outstripped conventional batteries. Rural communities lacked an electricity grid, and oil-based fuels were much more portable. The idea was ahead of the technology. Lots of companies toyed with electric vehicles, including AMC (developing regenerative breaking systems for the failed Amitron) and Audi (the Audi Duo, a plug-in parallel hybrid 100 Avant quattro), BMW (CVT hybrid-electric E34) and Volvo (with a gas-turbine hybrid 850/S80) (2, 3). It was Toyota with the Prius and Honda with the Insight that were the first mass-produced hybrids, using the trusty petrol engine as backup. Battery technology and the focus on reducing emissions has pushed the pace of change, and since the turn of the century hybrids have begun to become mainstream (1).

Types of hybrid

For sake of simplicity there’s five hybrids I’ll talk about:

Mild
Series
Parallel
Series/ Parallel
Plug-in (4)

Mild hybrids

A bit of a weird halfway house where the petrol (or diesel) engine is the main driving force, and an electric motor replaces the starter and alternator to provide a boost when accelerating and battery regeneration when breaking. The more powerful electric motor also allows the engine to turn off when coasting or when stopped, as part of stop-start emissions technology (5). The electric motor can’t propel the vehicle on it’s own, and systems are generally at a lower voltage. This is a route taken by most US and European marques, including the Mercedes, BMW, Audi and Peugeot, and allows for greater fuel efficiency with little change to drivetrain structure (5).

Series hybrids

In some ways the simplest design, a series hybrid attaches a fuel-burning engine to the batteries or electric motors. Electric motors provide the drivetrain and motion, and the petrol engine is there to top up the batteries or provide the electricity. This system allows the engine to run continuously at peak efficiency, but requires large batteries and motors to provide sufficient power (6). A clever idea and a solution to range anxiety for those with city cars that occasionally need rural jaunts. Because of the larger motors and batteries they tend to be more expensive, and aren’t really mainstream. The only one I can think of is the BMW I3 REX (Range-extender), which was discontinued (7). Make your own by connecting a diesel generator to an electric milk float.

Series-Hybrid

Parallel hybrids

Here the electric motor and/or the petrol engine power the vehicle by being mated to a combined drivetrain, increasing complexity and potential drivetrain losses, but decreasing energy conversion losses. Here the high-torque nature of electric motors are often used for stop-start, with the petrol/ diesel engine providing the higher power required at higher speeds. The combination means smaller motors and batteries can be used, reducing costs while increasing efficiency. Regenerative breaking recoups the battery losses, with further recharging from the petrol engine’s alternator (4, 6).

Parallel-Hybrid

Series/ Parallel hybrids

The logical next step in development was to combine these two systems (6, 8). This is what Toyota did with the Hybrid Synergy Drive in the Prius, and what is now found in most hybrid systems (9). In it’s simplest form the transmission is set up so that two modes of driving are available; an electric motor only for low speeds, and a petrol engine for higher speeds that also recharges the batteries at high RPM cruising. In some applications the electric motor is used to provide a power boost at high speeds, and the electric motor can act as a generator through regenerative breaking. The use of more complex transmission systems allows for different proportions of electric motor power and petrol engine power to be used at different times. A further development is the use of engine designs and valve-timing maps in the petrol engine which alternate to the more fuel-efficient but less powerful Atkinson-Miller cycle (9).

Plug-in hybrids

The final step in development was to add the ability to charge the batteries from the mains, rather than being solely dependent on the engine/ regen. These basically do what they say on the tin. They usually have a larger battery capable of 20-30 miles of range, with a mains connector enabling you to run them entirely on electric for short commutes, saving the petrol engine for fast or long journeys. Due to the larger (heavier) battery they can be less efficient than a pure EV or solely petrol car. Examples here are the hugely popular Mitsubishi Outlander (who basically nailed the market by providing eco-conscious chelsea-tractorists the first PHEV 4×4), plus newer Honda Accords, Chevy Volt and Hyundai Ioniq (10).

Mitsubishi Outlander PHEV

Tax benefits

Hybrids are looked on less favourably by HMRC than in the past. Pre-2001 things were just done on engine size. Then HM Gov made efforts to move away from polluting cars, continually driving emissions ratings lower, pushing tax brackets to follow. It got so good that the government got fed up of everyone having fun, so from April 2017 hybrids tax rules were changed to make it harder for hybrids to be used as a tax-break. They also made it a lot more complicated, because they’re politicians. This actually means buying an older car can work out cheaper. Up to March 2017 this was the state of play (11):

Pre-March 2017

So it was as simple as if your car produced less than 100g/km CO2 it was free tax. From April 2017 (post Dieselgate) the Gov implemented a system where tax was calculated based on the Real Driving Emissions 2 (RDE2) standard (take that VAG), with a discount for the first year and a supplement if the car had a list price over £40k payable for the first five years. This looks like this (12):

First Payment Subsequent Supplement

Notice that this still subsidises cheap EVs, but not hybrids. The other tax benefits to mention for everyday users are that home electricity incurs only 5% VAT rather than the 20% on fuel (13). Company car users get further benefits when selecting a hybrid or pure electric vehicle, through benefit-in-kind (BIK) and various means. Rather than listing them all out here I’d recommend a read of the useful “Tax Benefits for ultra low emission vehicles” cribsheet from the Office for Low Emission Vehicles, and the comprehensive calculator at nextgreencar (14, 15).

Worked examples

One of the reasons for this article is we’re deliberating replacing MrsShrink’s car with a hybrid or electric. We wanted to run the numbers to see if we could actually save money by replacing. We’d be buying second-hand which means we can navigate the tax system to our benefit with plenty of online guides to help, but for the purposes of this calculation I’ll also include some PCP options (16, 17, 18). The benefit of second-hand is that the 20% increase in new purchase price of a hybrid is mostly lost (although still present) due to depreciation (19). We’ve chosen to look at a new Hyundai Ioniq, a three-year old Mitsubishi Outlander, a six-year old Prius and an eight-year old CR-Z. The Ioniq is Whatcar’s 2019 hybrid car of the year, coming with a five-year warranty and looking super sleek and futuristic (20). For the purposes of this calculation I’ve used PCP (it’s the cheapest, but read the reasons I hate PCP here) over two years, with a £3k deposit and 10,000 mile limit on the base model PHEV (cheapest) (21). My table includes Hyundai’s claimed 252mpg but I’ve used the real-world figure obtained when by a couple of different magazines who ran a long-term test Ioniq hybrid for MPG calculations (22, 23). CO2 emissions of 26g/km mean it’s tax free for the first year. A Hyundai yearly service is quoted at ~£130.

The second contender is the Mitsubishi Outlander (24). The best-selling hybrid 4×4. Autotrader found me a 2016 PHEV model with 30k on the clock for a reasonable £260/month, again on PCP. Same £3k deposit. Mitsubishi claims between 139 (RDE2) and 156mpg depending on where you look, but again real road tests find it more like 40mpg average (25, 26). 46g/km of CO2 means free tax. A quick google finds people on car forums quoting £300 from Mitsubishi for a service. At 3 years old I’d hope the tyres would be ok, but we’ll throw in £30/month to cover a couple of replacements over the course of the year.

Next is our old friend the Prius. 2013 models come in a range of prices depending on spec. Straight-up hybrids start about ~£9k, with around 80k on the clock, whilst PHEVs start at £14-15k. This time we’ll take a standard hybrid and purchase it outright with our £3k deposit and a £6k credit card at 0% interest, with the intention of paying back in 24 months. We would intend to own for five years, and so we’ll take a guestimate at residual values by looking at what an eleven-year old Prius currently costs; between £4-6k. If we say £5k then we’ve essentially paid £4k to own a car for five years. For the sums I’ve used the credit card £6k over two years, plus the sum of the final residual value minus the deposit over the five year ownership; i.e. (credit card/24) + ((residual value-deposit)/60). This simulates financing the depreciation (like PCP) and what you would need to save over five years to go from £3k to £5k deposit (without interest). Stated MPG for the Prius is 70.6mpg, but real world appears to be more like 55mpg (still bloody impressive) (27, 28, 29). Yearly servicing stands between £180 for a minor to £350 for a major (so we’ll call it £250). As a six year old car I’d expect higher consumables, so I’ll add £50/month to cover wear and tear repairs/ tyres etc. For a 2013 model the 92g/km of CO2 means free tax.

The final contender is the Honda CR-Z, a quirky little coupe which was billed as the first hybrid sportscar (30). It’s a proper oddball, not as quick as it’s looks suggest, not big enough to be particularly usable for a family (31, 32). Made from 2010 to 2015, a 2011 model with 50-70k miles can be had for as little as £5.5k. We’ll take one of those for the maths, with £2.5 on a 0% credit card over two years. Residual is more difficult, but I’ll lowball an estimate of £2k after five years, losing £3.5k of value. Same formula for this as the Prius when calculating depreciation costs, just changed slightly to account for the drop of residual versus deposit. CO2 of 117g/km means a tax cost of £20/year. MPG is quoted at 56, but real world tests find it to be closer to 45-50 (a bit pants TBH) (33) Servicing is quoted at £200/year, and as an older car again I’d expect a bit more in terms of wear and tear although most places agree the build quality is high.

So how do the sums add up when compared to my daily Green Car. I’ve tracked all 40,000 miles with an average MPG around 33, it costs me £25/month in tax, and over the four years of ownership I’ve spent £2000 on purchase and another £2.4k on servicing and wear and tear, for a total of £92.40/month. Here’s the final breakdown:

Comparison

Summary

The sums say it all. On paper, my cheap and cheerful petrol car has cost me less to run for four years than a new hybrid would. The old lump is not pretty, it’s not fancy and it’s more polluting, but it serves it’s purpose. Ignoring the depreciation costs I would still spend more than half what I do now to run a hybrid. The MPG and tax improvement is not significant enough to offset the purchase cost. Hybrids have two powertrains, they’re heavier than a car with one powertrain; they shoot themselves in the MPG foot. There are also concerns about the durability of batteries, although the number of Prius taxis with 250k miles under their belt seems to disprove this. The volume of EVs and hybrids sold continues to rise in the face of falling wider car demand (34). I think I’ll wait for further depreciation to bring hybrids into my price bracket, and we’ll have to see if they’re a technological dead-end to be overtaken by pure electric vehicles, or will remain as a market option in the future.

References

The Full English Accompaniment – Zero-waste is still too eco-warrior

What’s piqued my interest this week?

Life has been pretty hectic over the last few weeks, preventing much blog reading or writing. At the same time we’ve been trying to make changes to our household usage to decrease the amount of plastic we buy, particularly in our general grocery shop. Our veg and meat already comes either unpackaged or wrapped in waxed paper. We’re switching from plastic packets to jars (for re-use) and tins. What do we do about plastic around our pasta, rice or shampoo?

Zero-waste and packaging-free appears to be 2019’s social trend. Small independent shops are being set-up all over the UK, although the trend towards affluent areas is fairly obvious (1, 2). These shops are targeting the on-trend early-adopters. There’s plenty of blogs with advice, and the mainstream media are cottoning on too (3, 4). There’s a concerted post-Blue Planet 2 movement that societal attitudes towards single-use items has to change. Single-use was the 2018 ‘Word of the Year’ according to Collins (5). The EU has ratified a ban on single-use plastics to come into force (provisionally) in two years time (6). Surfers against Sewage is running a Mass Unwrap event in March where people are encouraged to discard excess packaging at the tills (7).

In our efforts to go further we ventured into a few local packaging-free/ zero-waste type shops to try their wares. We weren’t there long. The organic fruit and veg, the storage jars dispensing dried goods and the shampoo bars were all there. The food was cheap, even if the cosmetics were a bit eye-watering. It was the added extras. The plastic tubs the food had been delivered in, which hadn’t been put away yet. The yak wool fleeces knitted by Mongolian orphans (think of the carbon offset for that mileage). The crocheted face cloths at £5 each. The artisan felting. The slight fug of unwashed vegan. It’s all very lovely but I don’t want to be guilt-tripped into buying an unnecessary item. I just want 500g of plain flour put in my jar. Aldi and Lidl hit my shopping requirements on the head. I can get in, pick up, purchase and get out at maximum speed without spending time trying to choose between brands. They’re convenient. I’ll probably go back to one of the zero-waste shops for dried foods, as I haven’t found a good alternative. Until plastic-free independents focus on the convenience, and not just the eco niche, they’ll never be more than a novelty.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

Jack Wallington shares his allotment plans for 2019 (35)

What I’m reading (affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

References

The Financial Dashboard – January 2019

The goals for January were:

Sell five more childhood toys. Sell five more car parts – Failure
Develop a single spreadsheet for all my financial data/ graphs etc – Success
Finish my Investment Strategy Statement – Success
Check our household green credentials – Success
Check utilities for potential savings – Success

Checking the assets and liabilities:

Assets

Liabilities

These are taken from my Beast Budget spreadsheet. This month my net worth grew by £867 (~3%), so that I’m now sitting just under £30k. It was a pretty poor month on the savings front with no overtime or extra shifts, the added expense of a holiday and the GMC and Royal College both deciding to take their pound of flesh. I’ve saved another £200 on my 5% Santander saver, and started paying down our wedding loan to a family member, but the Royal College bill went on the credit card (slap on wrist) nudging my debt up. February will also be lean as I start a new job and wait for a new payday. Luckily my new pay should be a fair bit more thanks to the vagaries of the NHS. Got to love a nationalised monopoly!
Goals:
Goal failed: Sell five more childhood toys. Sell five more car parts

I continue to fail here, and I wonder if that’s because I’m trying to sell lots of unusual oddments and expecting everyone else to want my old shit. I have gradually increased the amount of stuff listed on eBay, and have sold ~£20 quid worth of kit. I’ve also braved Facebook and Gumtree, with some success. I’m going to change this for next month and make it a more achievable sell £50 worth of stuff.
Goal achieved: Develop a single spreadsheet for all my financial data/ graphs etc

I’ve streamlined our various household spreadsheets into a new, improved Beast Budget, adding some new functions and graphs at the same time.

Jan Net Worth

Jan Credit Card
Goal achieved: Finish my Investment Strategy Statement

Now complete and to be found here.
Goal achieved: Check our household green credentials

This was a really interesting exercise, and exposed where I’m lying to myself in my bourgeois way. I ran our household information through the WWF Carbon Footprint calculator (1).

Carbon Footprint

Oh dear. Where’s it all going?

Breakdown

Ah. Breaking it down:

Home – We’re doing pretty well. Our energy is supplied by Bulb (message me for a £50 referral bonus), which is 100% renewable electricity and 10% renewable (bio)gas. All our lightbulbs are LED, our boiler is old but regularly serviced, our white goods are low-energy and the whole house is well insulated with double glazing etc.

Stuff – We don’t buy much in the way of clothes or consumerist claptrap, and I think this is mainly raised by the fact we bought new appliances when moving into our house.

Food – We’re doing reasonably here too. We eat meat three or four times a week, but I want to get this down to two. We eat a varied seasonal diet from local organic sources, and I want to grow and preserve more at home.

Travel – Oh bugger. This’ll be the (count ’em) four short haul, four medium haul and two very-long haul flights we’ve made in the last year. Seriously bad for the environment and won’t be doing that in 2019! I also need to get my bike serviced and start using it for local journeys.

This has been useful enough as an audit exercise that I’m going to check my progress quarterly for 2019 to see how I get on improving matters.
Goal achieved: Check utilities for potential savings

I try to check for potential savings every 3-6 months. Uswitch and MoneySavingExpert reckon we can save £45 over the year if we switch to EDF, Lumo or Octopus (2). I’m really happy with the customer service with Bulb (fanboi), and I’m willing to suck up £45 to know my energy is coming from renewable sources. Our previous Plusnet connection went from £27 to £38 in December, so I called their retention department who couldn’t match Virgins 100mbp for £22/month offer. We’ll wait and see whether the reality matches the quoted service.
Budgets:

Groceries – Budget £300, spent £185.03, last month N/A. We had lots of Christmas food left over, but happy with this!
Entertainment – Budget £300, spent £97.30, last month N/A. Going to look into entertainment spending this month.
Transport – Budget £460, spent £103.12, last month £233.69. Remarkably little this month, but MOTs and tuning costs loom.
Holiday – £150, spent £133.09, last month £0. Went skiing, fully catered chalet kept £ costs low and moods high.
Personal – £50/ £0/ £0
Loans/ Credit – £350/ £400/ £556.67. Upped payments to credit cards now.
Misc – £50/ £30/ £20.

In the garden:

I’m mid-way through building the raised beds and I’ve prepared the greenhouse ready for seedtrays next month. The raised beds are 2 foot high (to ward off carrotfly) and constructed from old pallets I’ve scavenged with tanalised upright supports. I’m collecting a load of free topsoil found on Gumtree next week to fill them up and then they should be ready for planting.

Goals for next month:

Sell £50 worth of stuff
Calculate and set a budget for Entertainment
Reduce consumption of single use plastics
Finish the raised beds
Set up an account with an investment platform

What’s in the pipeline:

Stoicism, Ascetism and the modern world
Property Renovation Lessons Part III
Frugal Motoring – Should I buy a Hybrid?
Plus the usual Full English Accompaniments and other drivel…

Happy February everyone,

The Shrink

References