Review of All About The Money podcast article.

I just had the displeasure of reading one of the most childish articles on personal finance I have ever read. It’s an article I wrote when I was aged 23.

https://www.bbc.co.uk/programmes/articles/4Gsq4lf46lWz2tB74LH9KQq/why-im-sick-of-being-told-to-save-money

OK, so I didn’t write it, but I probably had the same attitude to money as this young lady back then, and I know what happens when that attitude continues on as you get older. You get in huge debt believing that you will never get old and have plenty of time to make your first million.

As you are reading my site, and I’m sure you are interested in saving money, you are probably left baffled how such an article was published on a mainstream media site arguing against what is logical and reasonable.

On one hand, she is arguing that she has not saved a penny, but on the other has given no reasonable details of actually trying. The one feeble example given was not going on holiday for a year (or an academic year which is apparently 9 months). She attempts to compare a bus holiday to Butlins to going to Amsterdam or Lyon.

While describing her so called fruggal holiday to Amsterdam, she says she got 2 nights for £99. Yes well done great stuff. What about the flights, spending money and eating out (and well its Amsterdam right)? How can spending money to go on holiday be saving money compared to not going and not spending anything?

If you are in the habit of blowing £100 on a night out and eating out several times a week (she mentions running a failed nightclub business) you are not going to save much even if you go to Butlins. I know, I’ve done it (eating out I mean… I’ve never been to Butlins).

I find it particularly frustrating that she justifies having an overdraft because everyone has one. How can having an overdraft ever be justified as ok? I had an overdraft for many years and it NEVER felt fine. I hated paying the fee every month and being in debt to the bank. Being in debt NEVER felt fine to me so I struggle to see how anyone could honestly say they are fine with it.

I think this article is wholly irresponsible and should not be on such a site such as the BBC without a counter viewpoint. I do wonder if the BBC trying to condition young people to spend all their money by convincing them its ok to have zero savings and fall into debt?

I have had many times when I’ve had zero savings and been struggling to pay rent due to blowing all my money when I was in my early twenties. It never felt good! That’s why people say have some savings.

If you have read any of my other posts, you will know I had massive debt (£40k+) and it felt awful. Only once I grew up, stopped spending, and lost my FOMO did I start to feel secure about finances.

Her punchline is: “If I had listened to my bank manager my whole life, I’d be at zero balance in love, life and gallows humour”.

I find this a bizarre statement that tries to justify an immature attitude to life and money. Blame circumstances rather than yourself at your peril. I would be surprised if she has ever met a bank manager. 

The biggest faux pas in this article is her attempt to compare saving money to domestic abuse which I cannot fathom the jump in logic there. Surely saving your own money will mean you are less likely to fall into domestic abuse as you will not be dependant on others and means you can leave the situation you are in.

Establishing frugal habits early on in life such as saving can only snowball later as you gain more income and can save more compared to your expenses. If you don’t get used to a fake Instagram luxury life that you can’t afford you won’t ever miss it. I wish I’d known about FIRE 10 years ago because if I had, I’d be retired by now!

Maybe I’m privileged right now but I worked hard to get where I am – hell i’ve documented part of it on this blog. It’s taken years and years to develop a career that is paid well and I’m proud of what I’ve achieved. I can tell you that since I adopted a FIRE mindset my life has improved vastly. My balance in love, life and gallows humour is infinitely higher than when I was in debt up to my eyeballs and living paycheck to paycheck.

Holidays and fun

I have just returned from what seems like a month of holidays. I went to San Francisco to visit my good friend and his girlfriend, with my girlfriend. We stayed in their lovely flat in amongst the fog in Richmond, SF, near the Pacific ocean.

They then came to the UK and stayed at our place for a few days before we all went to Munich for Oktoberfest.

This is the first big holiday I have done while on my FIRE journey. It was always going to be expensive but I think it was totally worth every penny.

Having spent several years living overseas, I am no stranger to travelling. However, in the past, it may have been done by loading up a credit card and forgetting about it. I was also ‘great’ at booking things last minute and paying a premium for it.

This time was different…

What did I do to reduce the costs of this holiday? Firstly, planning it many months in advance. We first talked about going in January. Planning so far in advance is not something I am comfortable with, but I did it this time. Having so much time to look forward meant I had time to buy things like flights early and mentally prepare to go on holiday.

The timing was dictated by my friend’s birthday, and also Oktoberfest. so not much room to wriggle. However, it meant that the dates were fixed early and we knew what we had to do. It also happened to be just after the summer peak, so I think that helped with the pricing.

Flights

I bought the flights for San Francisco about 3 months before I went. I have found that often this is the optimal time to book as airlines know people like to book early or last minute. This sweet spot meant I got flights for £400 return from London to San Francisco. If I ditched the hold luggage and had a stopover, it could have been £300 return, but it didn’t make sense to waste time doing that.

Flying to Oktoberfest was a different matter. London to Munich at this time is astronomically expensive. To get around this, I flew to a different city and booked a high-speed train into Munich. It saved about £200 each.

sf

Accommodation

San Francisco is possibly one of the most expensive cities for accommodation in the world. It had the highest rents (double London’s) and the hotels are not cheap. We were able to save a fortune by staying on an air bed in my friend’s home. It was a great way to do it and meant we got to spend more time with them.

Oktoberfest again required a different approach. I don’t have a friend I can stay with in Munich. However, I was acutely aware that accommodation is vastly overpriced around Oktoberfest. I booked a hotel in January and paid upfront to secure the best price. It was also further from the festival, with my plan being to get the metro or taxi’s. Our friends stayed in a grotty hostel near the festival for 235 EUR/night, where we paid 150 EUR/night for an actual hotel room. The cab home from the fest was 25 EUR so a substantial saving! It had the added benefit that it was in a quiet suburb away from the busy areas, something I have come to appreciate at my age.

Spending

To be honest, in both scenarios, I made little effort to save money while on holiday. I wanted to eat what I wanted, and drink what I liked and go where I felt. It was all good. The best thing was I knew all the money I was spending was not on credit. I used a Monzo card to withdraw currency and pay for items which saved on bank charges.

I learned that planning in advance, spreading the cost of the holiday over the year, and being reasonably frugal can lead to big savings with little impact on enjoyment. I realise this is not rocket science or new to anyone, but thought I’d share my experience.

oktoberfest

Summertime is coming (allegedly)

Here we are in mid-June already. The 12C and pouring rain would lead anyone to believe it was mid-March, but that’s the UK for you.  It’s been a busy few weeks for me as I have travelled to Luxembourg several times for work and also had numerous new ideas and ventures come my way.

Firstly, the debt situation has continued to improve. I now only have £1440 of credit card debt left to pay. I was immensely proud of myself for getting this far and feel like this period of hard-core debt reduction is nearing its conclusion. That is getting me excited about starting to invest and save money.

I have been sitting back and reflecting on the journey since January this year. I had roughly £17,000 of loans, credits card and overdrafts. Now, of that, only £1440 left. I can’t believe it. I will write a dedicated article to mark the day I become debt free which I hope is fast approaching.

Secondly, I have started a side hustle. After the bitter disappointment of having 20+ rejections for pupillages, I realised there was nothing stopping me from setting up a legal advice consultancy. So, along with a former classmate, that’s exactly what I did. I have set up a legal consultancy specialising in construction law. I’m hugely excited about that and look forward to our first clients. Fingers crossed!

Lastly, in parallel, I have been quietly sending out my CV to various companies which have yielded me several interviews. It is always hard to know how much to ask for, but I think asking for at least 20% more than what I am currently on was a good guide. There are other factors to consider such as job security and type of work I will do. However, I do think it is my time to maximise my return and cash in. The more I earn, the quicker I will reach financial independence.

The situation at my current work has barely improved and I think I don’t need the stress of not knowing whether the company will be around much longer in my life. Working somewhere you are almost surprised when you receive your paycheck is no way to live.

So it’s been a very productive few weeks for me. I truly believe that focusing on the fire goals has allowed me to focus on other areas of my life for the better.

May update

May has been a long month by all measures. Many things have come to a head and I’ve felt both directionless and demotivated at times, and extremely excited about the future at others.

Firstly, the issues with the company have made me reassess what I am doing career-wise. I think I’ve mentally checked out of the company, and although I have half-heartedly applied for new jobs, it’s only a matter of time before I do so properly. I just feel there is no point in working hard for a company that is on the brink and is being run so irresponsibly. The atmosphere in the company has become rather unstable and certain individuals are attempting a power grab (the chairman’s son-in-law). As he is a deeply unpleasant man and is unlikely to be going anywhere, it only leaves me with one choice long term. In the meantime, I will keep working and collecting the dough.

Secondly, a visit by some antipodean friends of my girlfriend gave me some great ideas. They had given up their jobs and were planning on travelling round Europe in a camper van. It will be 3-4 months of adventure and fun. Although they were not officially doing ‘FIRE’ they were certainly far more financially free than me. It goes to show that at age 28 and 26, with careful saving, they were able to undertake this great adventure. They don’t do very high paid jobs but decided this was a goal and lived a lifestyle that would allow them to reach the goal. They lived in a shared house in Melbourne and didn’t eat out much. Now they have enough money to give up work, buy a camper van and live carefree for a bit. Well done them.

The great idea was the result of a side hustle that my friend had where he ran a website and provided services to contractors making £16,000 in the process. I realised that I could do exactly the same thing with my skills albeit, providing a different service. So I plan to set up a company of sorts and do it part-time. Should it take off, I would do it full time. Watch this space…

Debt progress

I have been paying off my debts steadily. I have to confess that I didn’t mention a £700 credit card bill that I let sit since February in any of my previous posts (mainly because I was ignoring its existence). So that was disappointing, but it was there and is now paid. I also paid £300 to my other loan which got me below the £3000 mark. This was a huge achievement and the end really is in sight.

I feel like I am 2-3 months away from clearing my debt. This is slightly longer than I had anticipated but I have felt the need to splurge a bit this month. A trip to Bath for the weekend, eating out a fair bit, and a trip to Scotland to visit my mother have eaten into my balance. However, they were all needed and enjoyable. I didn’t use a credit card to pay for any of them and I still have money in my account at the end of the month AND I paid £1000 of debt off. Not bad.

I do feel I will have to reign it in a bit this month however and really get to the end of the debt, but overall I feel that my finances are under far greater control than they ever were before.

OSV18_01_PowerStation_Hero.0.jpg
Dream campervan

 

 

 

Some anxiety

anxiety.jpg

The past three weeks have been rather difficult for me. Despite my genuine excitement at being able to ‘see the light at the end of the tunnel’ for my debts, some external forces have upset this happy FIRE ship.

On Tuesday shortly before Easter, when I arrived at my company’s office, there was a bouncer on the door and a notice saying we could not go in. Rather perturbed, myself, the Chairman and other employees didn’t really know what was going on.

I work for a small consultancy business with big ambitions, and one that has taken some big risks. Apparently, historic projects had lost some money and the company had not paid the rent in a misguided attempt to juggle cash flow. Big mistake; the landlord had kicked us out.

After several days of working from home, we were allowed back in at greatly unfavourable terms and I believe the company had to pay rent in advance.

Clearly, this caused a great deal of anxiety and stress for myself and everyone else. The kind of thoughts running through everyone’s head were did the company have enough money to pay bills? Would we be paid? Was the company going bust? They assured us it would be fine. I wasn’t convinced.

I am delighted to say that I got paid on the 30 April and I am feeling a bit better about it all. I may still look elsewhere for a job, but as I have just won my first new client, I am reluctant to pack in all that hard work. I left the security of big corporates to experience risk and reward and while I never expected to hit these lows, it is not always going to be plain sailing.

This remains an ongoing saga.

The fall out

What does this mean for my journey to financial independence? The answer to that question is threefold.

Firstly, It has somewhat knocked my confidence in what I am doing. The aggressive approach to paying off my debts effectively is pushing me to my limit. By the end of the month, I had £5 left in my account. I am refusing to spend on a credit card or take an overdraft. I made it to the end without breaking or missing any bills, but it didn’t feel great. I desperately needed the paycheck to stay afloat.

Secondly, I knew that using all my savings to pay off my debts was risky as it left no room for manoeuvre. I only have £200 in my savings which is not very much at all. I was feeling good as I was making such fine progress in paying off my debts, but it is a stark reminder to leave enough for emergencies. I had thought about this and reasoned that if something bad happened, I could use my credit card. However, my mentality has changed so much since starting FIRE that the thought of adding to my credit card and undoing the good work so far almost made me feel ill.  Perhaps leaving a months salary in the bank may have been smarter and letting the process take a couple months longer might have been a better move.

Thirdly, and most importantly, the whole episode has made me more determined to succeed at FIRE. The timing of this event was particularly bad as I have taken a big risk to clear debt leaving me with no reserves, but if this happened in 12 months time, I would have a large cushion of savings and investments on which to fall back. That thought alone is motivation for me to keep going. It is the quintessential reason that I am doing this so that I don’t need to rely on my job and other people who may be inept at running a business, for my livelihood.

To conclude, it seems that in taking a risk to clear my debts, I’ve accidentally put myself in the exact position that FIRE aims to get me out of. I always viewed this phase as the most painful part of gaining FI and it has been more painful than expected for reasons both within and outside of my control. I will persevere, but perhaps with more caution until I have a significant buffer behind me.

Another week has passed

I’ve had a good week. My work treated me to tickets to England v Scotland at Twickenham. It was an astonishing game which will stick with me for the rest of my life. I really do wish my Dad had a chance to see it. It would have been an expensive day save that my company will pay for it. Can’t get better than that?!

As for my FIRE quest, I’m feeling much better. My cash flow has improved, people have paid their bills to me and I have the cash to get me to the end of the month.

One crazy development is that I’m now seriously considering selling my car. I absolutely love my car. It’s a BMW M135i which had a 3.0l twin turbo straight six engine. It is terrifyingly quick and I enjoy burning away at traffic lights and surprising the hell out of Porsche Boxter drivers and the like. I bought the car the week my father passed away almost as a distraction from the extreme grief I was feeling. I was thinking about getting a car but never could bring myself to do it. I think Dad dying made me think ‘fuck it life’s too short’.  I got it on a PCP finance deal and have paid £299 per month since then. That has been ok generally. However, I realised this week that the total cost of the car is around £470 a month once insurance, tax, servicing and fuel are taken into account.

That got me thinking, even if I got an Uber twice or three times a week, there would be no way I would spend that much. This car has always been a luxury, and one I very much enjoy, but looking at the hard facts of the money it is costing me, it is very hard to justify keeping it under the new FIRE routine.

One of the first FIRE blogs I read talked about a chap who had to talk his wife out of keeping their BMW. He explained that this was very challenging to do as she did not wish to give it up. I now find myself in the same position. It’s hard and I don’t want to get rid of it, but I know doing so will accelerate my goals. I have driven that car across Europe, to Scotland and Deven. It’s part of me. It’s freedom. I’m giving up more than just the monthly payment.

So I could sell it to webuyanycar.com or similar. I don’t know what to do at this point. I believe the outstanding loan is about £12500, and the value they would give is around the same. I could also leave it until the finance runs out in a year and hand it back. However, that may also have costs that I haven’t anticipated such as servicing etc.

Ultimately, it’s just a car. I can always get a different car later. Or I could just use my bike. Anyway, I’d be interested to hear what people think about this.

Feeling the pain

Last week I paid off £1200 of my credit card. It felt good to be making progress, but also scary.

I’ve taken the approach that I must clear these debts as fast as possible with a target of 3-4 months being a stretch target. I’m anxious that I may be biting off more than I can chew. I now only have £1172 in my account to last me the month. I know I have at least £650 of payments coming out before the next paycheck.

However, I am owed £500 in rent and have £400 of expenses to clear. In theory, this is a cash flow problem. But because I have cleared my entire savings to clear the debt last month, I have no buffer. It also occurred to me that when I switched bank account I opted not to have an overdraft. That means that I paid off about £400 of overdraft.

I also had the expense of getting my car serviced which set me back £550. It needed to be done to keep the plunging value of my vehicle from going into free fall.

So yes, I have made this difficult for myself. I’m hoping that self-discipline will get me through. I also wish I’d done my sums better. I also believe that this is a short term pain for a long term gain.

Once I have cleared these debts, I will be saving £1200 per month. By Christmas I should have £10,000 at least in savings. I look forward to the day I can relax about my finance.

Keeping my eyes on the prize of being debt free and being able to invest is keeping me going.

Why am I doing FIRE?

I am in my mid-thirties. I didn’t really think much about the future when I was in my twenties and I think my interest in FIRE is part of a realisation that life is rather short and there is a limited time to do what you want. Of course, I thought of the future, but it was perhaps a fantasy future which was what we were taught to aspire to, rather than the reality.

I have led a fairly interesting life and have experienced things that the majority of people my age may not have (marriage, divorce, living overseas, loss of a parent). I have also had some extremely positive things happen to me such as returning to university to follow my dream of becoming a barrister (that is an ongoing dream!).

By stopping work for a year, I stepped off the treadmill that so many people my age are on. That feeling of constant pressure to get to the next stage of life. The route set out for us which is seen as a success (school, university, job, marriage, house, car, kids… then what? slow death?).

I was blown off course by becoming divorced at age 30. I won’t dwell on that, but at the time, it felt like a massive step backwards in what had until that point, been a life that felt like I was boosting forwards. I was depressed for some time, but as they say, it made me stronger and a better more compassionate person.

I think realising that taking a step backwards wasn’t the worst thing that could happen was a real eye-opener for me. I realised that I could recover from it, and come back stronger. I also believe it gave me the confidence to take action and pursue an alternative career at a later stage in life.

More recently, finding out about FIRE, which is essentially a movement that encourages people to minimise expenses and live frugally, was appealing as I had given up a well-paid job to return to University.  I had no money and had become used to living the frugal life. When I got a job, I thought, what if I keep living this way? I have kept things under check and found that I am not missing out at all. Most of my friends these days have bought houses and are mortgaged to the hilt with kids in tow.

In the past, I would be eating out 5 times a week, going to the pub and spending £50 a time 2-3 times a week. Did I have an alcohol problem? I may have, but if I did, I don’t now.

I have a mortgage, but no kids, and feel my salary is more than ample to live off. I don’t eat out that much anymore. I don’t eat takeaways. I learned to cook and eat reasonably healthily. I go to the pub and drink moderately. All these subtle changes have reduced spending compared to what I shall call ‘pre-university’.

So I am not doing a full FIRE thing yet, but I am attempting to follow its philosophy. The basics of minimising spending and saving as much as possible are no-brainers.

I’m at the beginning of the journey, but find it has given me a more disciplined outlook. I am looking forward to paying off my debts, followed by building up savings and investments. That is the way forwards!