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What is this blog about, and who is it for?

/ Gracie Sunderland

What is this blog about, and who is it for?

This blog was born because I couldn’t find anything like it. I started it as a single British woman in my late thirties, living with my two primary age children when we had just moved to Denmark. As of 2024, I am in my mid-40s, with all the joyful tween and teen years for my children that entails. And whilst we are still in Denmark, my career means that I expect to move countries in the coming years.

I started this blog through a love and interest in the Financial Independence, Retire Early (FIRE) community. However, whenever I needed advice or a community to talk to about being a great single parent, living on a budget, or planning my side hustle, I struggled to find information that resonated. Sometimes it was because I’m single; other times, because I felt I had a different ethical approach which I didn’t see reflected. If you have similar needs, or just want to see a real story of personal and financial growth during what sometimes feels like times of real challenge, I hope this blog can be a great space for you too.

I cover several main topics focused on financial independence, personal finance, social justice and lifestyle management all through my own personal journey:

My Personal Financial Journey: I walk you through my own experiences and challenges as a single mother working towards financial independence. This includes dealing with emergencies, budgeting, and managing household expenses​, as well as making long term financial decisions for my children and wider family.

Financial Tips and Strategies: Whilst I don’t give advice I aim to provide practical thoughts on money management, including tips on setting up an emergency fund, being savvy with money. I also share how I try to spend mindfully toward the life I want to create, whilst optimizing on spending like meal planning, travel, and activities with my children.

Financial Planning: I also share my own journey of planning for the short, medium and long term, looking at retirement planning, raising money savvy kids, and preparing for my children and other loved ones’ financial futures. A lot of this links to career planning and how (and why) I think about getting to ‘work optional’.

FIRE Community and Inspiration: Whilst not everything resonates, I have found a great FIRE community  with a lot of inspirational stories and resources from well-known figures in the community, such as Tiffany Aliche (The Budgetnista), Paula Pant, and Mr. Money Mustache. I also regularly share recommendation for podcasts and books that are helpful for financial education and inspiration based on what I am finding interesting and useful as my journey continues.

Policy and Social Justice: Personal finance might be personal but it doesn’t happen in a vacuum. I aim to explore policies and trends which impact on our money including cost of living issues, issues impacting the stock market, and changes in budgets and taxation relevant to a UK audience. I also focus on social justice and how I understand that neither how we make or spend money is the same for everyone.

Goal Setting and Accountability: I highlight and give tips on the importance of setting realistic financial goals, having an accountability partner (and what that looks like for single parents particularly), and staying focused on financial plans is a recurring theme. I share my own goal-setting process and regular reflections on progress, both financial and how I am feeling about it all.

Disclaimer: The content on this blog is for informational and educational purposes only. It is not intended as financial advice. Please consult with a qualified financial advisor before making any financial decisions.

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So I bought a new rental 2

/ Gracie Sunderland / 1 Comment

This should really be entitled “so I finally rented out my new rental” but hurray! It is done. I have been talking about moving on my rental journey since I started this blog, and my last post which was almost three months ago (sorry dear readers, long story which I might come back to) set out the decision making and purchase of that property.

I wanted to talk a little bit about the financial side of it here. I paid £230,000 for the property. In my home town, that amount would barely even buy you a garage, but further north in the UK it really does buy you more. I’ve written extensively about choosing to sell my rental in my home town but maintain a rental in the UK so I won’t go back over it here, but it was a decision that took a long time – and realistically I still have doubts about. But it’s done, so on we go!

I also bought the property free and clear, so it has no mortgage on it. I saved this money essentially in equity from my previous house, which I had laser-focused paying off over the last five years. Whilst I hadn’t fully paid it off, issues with rising mortgage rates and my challenges of spending so much time overseas meant that the mortgage cost of it was starting to really increase. There were costs associated with the purchase and legal elements but because it was such a relatively cheap property, these were significantly (and disproportionately) lower than my last house. A big element is that the stamp duty threshold in the UK – basically a tax on a house purchase – doesn’t kick in until a property is worth more than £250,000, meaning I didn’t have to fork out the £7,000 additional amount that I did last time. The house is a new build and is on a company managed estate. This means there is a monthly fee (of about £60, payable by the tenant) but there was additional set of costs for the purchase based on legal assessment and sign up to the management company. In total this all came to £2,636.

Legal and purchase costs
Standard legal and purchase fees £       1,968
Legal and purchase fees relating to estate management £           668
  £ 2,636

In addition to the standard costs, it took three months to rent out, following about six months of the purchase process since I struggled to find what I wanted, and it took some time for the process to go through. This period has a financial implication as well. In addition there are a few costs needed to get the house tenant-ready, and between these I paid out an additional £1,233.

Pre-tenant and compliance costs
Compliance maintenance (electrical check, smoke alarms etc) £           300
Payment of 3 months estate management fees £           178
Payment of council tax £           354
Landlord insurance (one year) £           401
Total £       1,233

So at this point in time, I have £230,000 of my capital tied up in real estate. In addition, buying and preparing the property for rental required an outlay of £3,869 or about an additional 1.7% on top of the purchase price. As noted, this is unique to a low cost house, as these costs disproportionately increase with homes in higher price brackets.

And now it’s rented out! The rent is set at £850 per month, which is quite a bit less than the UK average of £1000 (excluding Greater London) but that’s based on the location. Minus the letting agent fee which I need as a) I don’t live near the property and b) I am utterly useless at household maintenance, of 10%, I will make an initial net of £765, from which I will need to pay any additional maintenance or upkeep, as well as continued landlord insurance for which I will keep back 10% of the net, or about £1,000 per year. So with a projected profit of about £8,000 per year, I will not be retiring fully on my rental empire. But it works – to stay invested in the real estate market; have some money which isn’t at the whim of the stock market; to have a second option for my family in case the s**t hits the fan; and to have a regular stream of income. And I am glad it’s set up so I can leave it to tick along whilst I focus on other things!

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How to save for your kids

/ Gracie Sunderland

Last week I was writing about how to pay for kids’ college, and the realisation that a) I am off track compared to my previous budget and investment planning and that b) there are a lot of ways to financially plan for your children’s future. As ever, this is complicated if you are a single parent and trying to balance the prorities around just keeping it together versus building foundations for the future you want for your family. And it’s complicated if you aren’t living/working/planning for college in one country.

But I wanted to come back and talk a bit more about saving for kids and some of the options and thought processes.

Before all of these processes, ensure that your kids are financially literate. Having them engage with the household spend and planning, understand that paying for one things rather than another is a choice, and managing their own pocket money, really builds them into adults who can make good decisions. Ideally we also raise them to be kind, smart, caring individuals who don’t get sucked into corporate BS and are mindfully contributing to the world, but I’ll have to let you know how I get on with that one.

Another post on this coming soon.

1. Just start saving something, as soon as you can

Even a piggy bank works. Getting into the habit of saving small means that the reflex grows as your child gets older. There are better ways to invest the money, but an early focus on the saving part will help as you work out additional options.

2. Think about whether there are others who might save for your children

For me, my parents paid £10 per month into a savings account for each of my children between birth and five years old. It’s not a lot, but it’s what they can afford and it still represents £600 per child. They are also of the generation / mindset that doesn’t believe in generational wealth in the way that meant they would look at their grandchildren and focus on this kind of thing, but lots of people feel differently. So it might be worth exploring, especially if you have family who are in the habit of giving generous birthday or holiday gifts which might be better split into savings.

My kids have never been gifted money, so whilst there is lots of advice about putting this into savings, it really depends if it’s coming your way in the first place.

3. Think about risk, and decide whose name you are going to save in

This step comes before investing. There are great children’s accounts which can act as investment vehicles but your child will be able to access these usually at 18. So you need to work out what the risk is of them getting that money at a time in life when – let’s face it – lots of people will make poor decisions. Taking the example of saving for college: if I put the savings element into an account which reverts to them at 18 and they choose to spend that money on a sound system / gap year / bitcoin or whatever, and take huge student loans, I can’t stop them. I can refuse to put in place additional support (and can sit around with my head in my hands wondering what I did wrong as a parent) but I can’t solve for it.

In the USA, saving into a 529 account fixes this problem by offering savings specifically in a child’s name, but which can only be spent on college. American FIRE folk have a lot more to say on these, but as far as I know they only exist in the States.

The flip side of risk is if you save in your own name, but either you make poor decisions (listen, at 43 I am totally aware of my own fallabilities) or you have the kind of emergency situation that means you use the money. Ideally you can mitigate against such risks with other elements of your portfolio, but the point of risk-based thinking is to look at all the possibilities before they happen.

3. Harness the power of compound interest by investing

So the great thing about investing for children is the long time frame means that compound interest is real. If you put £25 a month into a savings account paying 2.45% from a child’s birth until they turned 18, they would have £6,775 by the time they could access the account. However, investing that same amount in an index fund and it grew at 4% per year they would have £8,000 when they reached adulthood after charges. And it’s possible to be more hopeful – with the 20-year average of the S&P500 coming in at 9%, the possibility could be a lot more. And comparing to the atrocious 1% savings rates we’ve seen in the past few years (recognising this is changing) investment seems to be the best option.

4. Be tax efficient, and don’t get caught up with high fees

Almost all countries have a way of saving for children which has tax breaks. In the UK, Junior ISAs (Indivdial Savings Accounts) are the best option, since you can choose savings or stocks and shares accounts both of which have a tax wrapper which protects any gains. You can also split the annual maximum contribution to a JISA of £20,000 across the two types if you want to split your risk, and any adult can contribute.

There are different fees and options for investments which change, so it’s worth shopping aorund for the best. In the UK, moneysavingexpert has an up to date list with easy to understand comparisons.

5. Think about long term futures

I’ve written about my own pension issues many, many times, and with this in mind I also opened pensions for my children. In the UK there is a Junior version of the Self Invested Pension Plan (SIPP) in order to give them some minimal comfort so they don’t end up making career choices out of paranoia that they’ll be broke old people.

There are incredible benefits of compound interest for a J-SIPP, given that the money basically has 65 years to compound, and remains tax free regardless of growth depending on how you withdraw it. You can only pay in £3,600 per year, which attracts 20% tax relief. For me, I only started doing this when I have the other bases covered adequately and it remains a tiny portion of savings and spend in our household.

But paying in £25 per month from birth through til 18 means you contribute £5,400 in total but with 5% growth, this will be worth about £30,000. So it’s not All The Money In The World, but it makes me feel more confident in how I can support their whole lives. At 18, the SIPP rolls over to them as an adult, and they can continue to contribute, but not withdraw money until retirement.

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Paying for kids’ college: surprise choices

/ Gracie Sunderland

With all the busyness going on in the world, my blog posts here are a bit less frequent – but I am stlil around, and still thinking all the time about personal finance, and how to make this as useful as possible. Thanks for sticking with me! Come keep me company as well over on the related Insta page, which has a lot more about daily FIRE life choices (mostly food, let’s be honest) and more.

The last few months I have been thinking about the next season of my life, and some of the related choices. My job has a mandatory rotation – basically I have to leave every five years or so and go to a new position in a new country. Aside from this being knackering for me, it has major impacts on my kids’ education. And their educational needs and choices has massive impacts on my options.

When you have kids, this particularly sucks. Trying to move at ‘the right age’, not move during a school year, manage what each childs’ needs are and who to prioritise – and that’s alongside trying to balance what location and role is available at the point where I have to move.

I have been focused up to now on their basic education and making choices around the kind of school and curriculum I want them to go through, funding this since our expat life style and having to move often usually means public schools aren’t an option, and just keeping them happy. For higher education, I have assumed that I will work and cash flow this.

Two major issues have come up which surprised me. Firstly, British children need to live in the UK for three years before univsersity in order to be eligible to pay ‘home fees’. This means I either need to go back to the UK summer 2024 in order for my son to be there long enough – taking a massive hit on income since I’d have to change jobs etc – or be prepared to pay international fees. The difference is significant, with the University of London charging £9,250 for one year undergraduate, compared to £21,500 for an international student. Thankfully accessing student loans seems to be based on citizenship.

But this has thrown out my calculations quite significantly. The average cost of living as a student in the UK is between £900-1400 per month (London hikes up the prices). So to attend university now as a home student requires around £71,000 for the three years for a home student, or £107,000 for an international. With inflation and assuming we aren’t eligible for home fees, this would be around £120,000 for my son and £130,000 for my daughter. And an additional £250,000 that I need to either save for or be able to cash flow. Ouch.

This week I also found an update from Financial Samurai, who retired at 34. He is returning to work in order to ensure he can pay for college for his two children. There’s a very detailed post here, which also sets out the pros and cons of returning to work. His post also sets out an assumption that he will need to cash flow $1.5m for this purpose: assuming $700,000 for his son in 2036 and $800,000 in 2039 for his daughter. The assumption is based off the current $320,000 price tag of a four-year private university that grows in cost by 5% a year.

Obviously the cost of higher education in the USA is significantly more than in the UK or most of Europe. But there are scholarships and a number of financial aid intruments that the UK doesn’t have in place, since we only introduced tuition fees in 1998, and the support around higher education hasn’t grown with the increasing fees.

But this is all quite depressing. The FIRE community, unspurprisingly, also contains a number of different approaches to college education and the extent to which we should plan to pay for this for our children. Mr Money Mustache doesn’t save for his son’s college, and doesn’t anticipate he will want to enrol.

Others suggest that a solid approach – and one which splits the risk with the children themselves – would be to plan to save one-third, cash-flow one third, and have the student take on loans etc for the remainder. In our case that means saving an additional £80,000 and cash-flowing £13-4,000 per year over six years, and assuming each child comes out with about £40,000 in debt. Luckily my kids’ ages mean they should be in college at different times. And whilst £40,000 seems to me like a massive debt to have at 21, I am not sure that other options we are going to have.

So let’s see. For now it seems that the financial hit I would take on returning to the UK significantly outweighs the increased costs for university education. And I recognise that there are lots of different pathways coming up for training and education, as well as new employment pathways which don’t require a degree. University is unlikely to become obsolete – especially for things like medical degrees – but I expect other, major questions will be coming up as well as we continue this discussion.

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The List: managing family life and finances

/ Gracie Sunderland / Leave a comment

Once again, life took over and the blog (and my Insta) took a back seat. Spending time supporting family; travelling with work; and generally taking a bit of time to Think About Stuff means that I have been focused elsewhere. Photos throughout this post from a trip to South Africa 🙂

One of the things which I spend a lot of time thinking about is The List. I am going to go out on a limb here and say that every woman has The List, following us around like a puppy widdling on the carpets. If you ignore it, it only gets worse. And you’ll end up having to replace the carpets as well.

I am sure other people have The List. But I suspect you also have your own corners of the Internet to chat about it, so you’re welcome here but my focus is on women, and single mums in particular.

It’s a significant focus of the book/film I Don’t Know How She Does It where it’s used as a literary device to show how busy the main character, Kate’s, head is. She’s constantly shown to be in the middle of her List that includes everything from preparing packed lunches or a leading a high level business meeting to remembering to have sex with her husband (“It’s been three weeks! Move up the list to Urgent!”). Actually I loathe this film because at the end she realises she can’t have it all and quits her corporate role to have better work-life balance. I mean, I love a work-life balance as much as the next person, but it would be amazing if we could have some media which actually says – go ahead and do your thing, whatever it might be. And by the way, it might be the high-status, high-stakes power moves. If you’re there, it’s not a mistake until YOU decide it is.

Anyway, The List represents the cognitive and emotional load that (mostly) women hold in terms of day to day responsibilities to make it all work. Any single parent regardless of gender will have this, because it is literally just you keeping food on the table and the wolves as far away as possible.

Research found that this silent labour is divided into three categories, which overlap, making it harder to measure the time spent and the impact. Cognitive labour means thinking about keeping the wheels on: the practical elements of household management including shopping, cooking, household maintenance etc. Emotional labour is managing family reactions and sentiments: not just organising the playdate for your kids, but making sure they are confident and happy, the other parent knows what the pitfalls might be, ensuring they are well rested to they are calm enough to enjoy it etc etc. The third area is where these two overlap, and all of the anticipation and planning needed to make both the practicalities and the emotional responses to them run smoothly enough to keep things moving.

There is a lot of research about how this burden falls largely on women – and extends past kids to taking on responsibilities for extended family, remembering and navigating family and cultural celebrations etc – compared to men. And on the impact this has on women’s ability to make career choices, work over time, get promoted and achieve higher salaries and more successful careers in the long term.

To be clear, this isn’t just women whinging about doing the washing up. It has an impact globally. The UN estimates that unpaid and domestic labour equates to 10-39% of Gross Domestic Product (GDP) a figure which can contribute more to the economy than transport or manufacturing in some countries. The fact that the labour contribution is unpaid also makes it silent, and therefore much harder to combat.

Anyway, all that to say that we all have The List. There are short, medium and long term things on it, and also Zombie Apocalpyse things which we should probably plan for, just in case. This latter is usually what comes up in the middle of the night.

In April I really took time to try and work on some of the medium and longer term things, even taking days of work to get to them. I involved the kids in some of them to share the responsibility, and we had joint rewards when things got done. Items included:

  • Painted the front door
  • Tried to fix the doorbell: couldn’t do so, bought and fitted a new one
  • Cut back all the roses, random other plants I don’t know etc in the garden
  • De-cluttered all the random piles of books, donated those we don’t want and organised the keepers
  • Ruthless de-clutter of surfaces where things gather
  • Discussed, planned, wrote my updated Will, had it witnessed and sent it in. This also took a lot in terms of planning Guardianship of the kids if the worst happens, discussing it (in an age appropriate way) with them, and with the potenital Guardians. Pretty heavy going
  • Moved an old JISA into my daughter’s current ISA plan
  • Put an offer in on a rental property
  • Got the boiler serviced
  • Got the Quooker (hot tap thing) fixed – this has taken MONTHS to find someone to do it
  • Organised daughter’s birthday party and presents for later in May
  • Son’s hospital / doctor / dentist and what not appointments all lined up including a half day of really working through plans and options with him
  • 50 work things which needed to get done including performance reviews, tidying up my CV, and applying for new jobs

And to be honest I do have a sense of feeling lighter. I know that The List is self-regenerating and many of the things on it will not biodegrade but will continue, widdling all over the carpet. But for now, it’s less of an albatross and more of a homing pigeon, and I can live with that.

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Net Worth Update – April 2023

/ Gracie Sunderland

Come and join me over on Instagram, for regular tips on money saving (ok, very often about meal planning and grocery budgets), simple pleasures, mindful money and of course, weekly hang outs with the Barbies who are also here to inspire you!

Since we are about to end the 2022-23 tax year in the UK, it’s the time of year I always calculate my net worth. I also did this in December, but since I had just sold my rental property and was calculating expenses, taxes and so on I kept some back for those purposes. Now the dust has settled, I have a much clearer picture.

This time last year I was writing about how it feels to be at almost $1 million net worth. Interestingly, and largely thanks to changes in FOREX rates and that I have my investments in sterling, my dollar net worth hasn’t changed much and now stands at $980,000. But the true amount has increased: from £ 717,677 to £793,000 or an overall growth of £75,324 over one year.

That equates to an increase of more than £6,250 per month which I can feel pretty proud of! It has also been a shocker of a year in terms of the markets, soaring cost of living and a whole bunch of other apocolyptic doom feelings.

And it’s a reminder that time in the market rather than timing the market, and keeping consistent, is more important than looking for tricks.

So what is my portfolio made of?

With the sale of my rental, this is now much less heavy on house equity. I have split my savings into two here – one is the investments I have, and the other is a chunk of money which I intend to use to buy a rental property, and about £100,000 set aside for other investments and savings opportunities.

Pensions £            288,826
Savings £              68,711
House Equity £              90,464
Money to invest £            345,000
TOTAL £            793,001

The main growth has been in ‘money to invest’ – largely because I worked out all the house sale costs and this is the final figure – and also in pensions. I pay a significant chunk to my employer pension which is also matched, and I also added to my SIPP when I sold my rental.

I always find it interesting how people calculate their FIRE number and what they need to live on. In theory I need £30,000 per year in retirement. Using the 25 x income calculation, would mean aiming for a net worth of £750,000 which I am already above.

But there are a couple of issues with this. One is that my pensions can’t be accessed until 67 (or if all the pensions changes proposed come to pass, 100 years old by the time I get there). The other is that retiring on that money assumes that my kids are financially independent. I spend a lot more than £30,000 at the moment (I would say largely on them though I am sure they would disagree), and it’s an interesting moment of reflection about the choices I am making for me and the kids, and what our options are. My net worth also doesn’t include a paid for house any more, and my calculation of income required on retirement assumes that I have one and therefore don’t have a mortgage or rent.

So that’s it. There are other very small pots in there like crypto and angel investments, but these are the real pillars of my financial plan. But the pot is growing, and I am staying on the path. Kudos to all of you following your dreams of independence!

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End of tax year ‘to do’ list

/ Gracie Sunderland / Leave a comment

The clocks changed last night: this is how British people refer to daylight savings. I realised it is not universal, but since this is a post focusing on the UK tax year we can just start there.

So, the clocks changed, the snowdrops are out, and its raining rather than snowing. That can only mean one thing: the end of the tax year. I’ve been talking about this – like all of it, the flowers, the weather and the financial planning – over on my IG page. Do come and join me, a lot of this is more fun with pictures.

Since 1753, for various nefarious reasons, the UK tax year runs from 6th April-5th April the next year. That means there is a week until the 5th April deadline for the 2022-23 year ends, and since the 6-10th April are also public holidays (quaintly referred to as Bank Holidays, honestly I didn’t appreciate how idiomatic British English is until I moved away) there are just eight working days to put in play any transactions relating to this tax year.

There are a couple of big things to be aware of in terms of the tax year:

  • If you self assess for tax, you will need to get ready for the end of the year and for doing your tax return;
  • There may be changes announced which will impact you from 6th April which you should be aware of; and
  • Each tax year you get tax-free allowances which mean you get to keep more of your money through savings, pensions and other approaches. It’s all very simple but if you don’t use the allowances you lose them.

Of these, I will come back to planning your tax return (clue – I *love* doing mine). As more of a global blog I won’t go into the details on the second point but key things to look into are a raise in minimum wages for 21-22 year olds, but also a raise in national insurance in order to pay for social care. For this post I want to talk through some of the allowances, just in time for you to put them into play.

  1. You can max out tax free savings vehicles. The main one for most people is an Individual Savings Account, or ISA. There are multiple different types in the UK, but your money grows tax free. You can invest up to £20,000 per year. There are tons of benefits here – you don’t pay tax on any of the growth, ever, and since you can place it in a stocks and shares ISA you have a decent chance of it growing a lot. There are other options including Lifetime ISAs (though these are open only to people below 40, and are closing out). ISAs need to be opened or rolled over each year and money needs to be paid in before 5th April. If you don’t reach the £20,000 contribution allowance you just get it again next year – and it’s totally worth setting one up however much or little you can put in.
  2. This is also true for savings vehicles for your children. Junior ISAs (JISA) have an allowance of £9,000 per child per year and with stocks and shares JISAs and the power of compound interest, this can make a huge difference in financial planning for your children.
  3. Also thinking of savings for kids, there is the option to open a Self Invested Pension Plan (SIPP) just as there is for adults. The allowance is £3,600 per child per year and whilst the account moves into their name at 18, they cannot access the money until age 57. Again, the power here is from compound interest so even a tiny amount can be worth it with the tax benefits thrown in as well.
  4. For adults, the SIPP allowance is also worth investigating, especially if there are limits to your workplace pension or other options. This year you can pay in up to 100% of your gross annual earnings up to a maximum of £40,000 which will increase in 2023-24 to £60,000.
  5. If you are married then there are tax free allowances you can take advantage of. It’s possible to ‘share’ a tax allowance with a spouse depending on your different earning levels. Doesn’t apply to me so have not looked into it deeply, but it’s worth noting.
  6. Finally, check your tax code. It is your responsibility to do this – whilst there is a tax free allowance for income tax each year, the wrong tax code can mean that you’re paying too little or too much, and that can come back around when you least need an extra bill.

I hope that has been useful! Remeber – with the time left, you could open a new account and max out the allowances before the end of the year.

Reminder on the disclaimer: I am not a qualified financial planner or advisor and none of this blog or post constitutes ‘advice’. Treat is as seriously as if you were chatting to someone super interested in a subject at a bar. So you might find out something intersesting but you definitely wouldn’t act on it until you took other advice. Cool? Cool.

What a week (in finance)

/ Gracie Sunderland

Blimey. This week has been far from relaxing if you are in any way interested in finance – or indeed interested in having any money!

The world shaking news about the collapse of Silicon Valley Bank (SVB) was quickly followed by the potentially much more impactful possible collapse and subsequent bail out of Credit Suisse. Those of us who remember 2008 perhaps quaked a little in our boots, since fallout from failure in the banking sector has wide ranging consequences on ordinary people. Indeed, the failure of SVB is the biggest bank failure of a US Bank since that financial crisis.

Credit Suisse is one of the most important global wealth managers, and is in the top 30 financial institutions who are considered ‘systemically important’ and whose collapse would impact across the financial ecosystem world-wide. Unfortunately with that in mind, Credit Suisse shares have lost more than 75% of their value over the past twelve months and their bail out by the Swiss Central Bank might not even be enough to shore them up in the medium to long term.

So, what does it mean? Clearly as someone who doesn’t work in finance I have only the vaguest idea. In general though, commentators seem to agree that whilst the impact will be felt, the regulations put in place after 2008 mean that they will be felt as ripples rather than a tsunami. However, if SVB was impacted for example by rising interest rates and inflation, then there might be a lot more to come.

The knock on effect has of course been a downturn in the stock market, with share prices reducing and the banking sector in particular – unsurprisingly – hard hit. As we get to the end of the financial year in the UK and I am preparing to max out my stocks and shares ISA I am trying to view this as buying shares on sale, rather than freaking out and hiding my money under the mattress.

The final thing was the UK budget, as announced by Jeremy Hunt. Aside from the cost of living crisis in the UK (and I could say more but I’m trying not to be overly political here…) he is focused on ‘prosperity with purpose’ without seeming to make any meaningful movements to support people’s ability to live whilst the supposed magic happens. Hunt committed to keep the energy cap as well as increasing support to get people into work. What jobs there might be is a different question.

The main news seems to have been the reform around childcare, also based on ensuring people can work more hours, meaning parents of children aged nine months to three will be offered 30 hours a week of free childcare in term time – as long as both parents are working at least 16 hours a week. Let’s see if the issue of childcare places and the under payment of many places under the free hours scheme will get resolved.

How will the budget – or the issues with the Bank – impact you? I’d love to hear from you!

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So I sold my rental: part 1

/ Gracie Sunderland / 4 Comments

Welcome to this blog post – if you’re new, do have a poke about the other posts, and if you’re an old friend, thanks for sticking with me. Also do come join us over on Instagram for frugal food and adventure ideas, reflections from the Barbies (those girls don’t play), and some inspiration.

So, I was banging on mysteriously in my financial review of 2022 about some major changes in my portfolio, and the biggest one is that I have sold my rental property in the UK. This was something under consideration for a long time – indeed, it’s a year ago that I made the first call to an estate agent to get a valuation. During my portfolio valuation in March 2022, I realised that 60% of my net worth is in property. Since around 30% was in pensions, it meant that there was very little liquidity.

Whilst I don’t need a ton of liquid cash, I am at a point where I need more flexibility. That might mean having more accessible money for investing in a side hustle, or a smaller property in Kenya as I plan my transition there. So it doesn’t mean putting it all under the bed in a cardboard box but it also doesn’t mean hosting so much of my net worth in one property.

I write about housing and home ownership a lot, especially recognising the tensions where structural inequalities impact people’s ability to own a home and how this affects generational wealth. I also recognise that the UK rental market is an absolute catastrophe, with rising rents and rising uncertainties holding back a huge number of people from fulfilling their potential. It isn’t just about whether people can buy a home of their own: spending huge amounts on rent means that it’s harder to save for a future, and lack of stability in the market is impacting the sense of living in ‘permacrisis‘ which is impacting mental health for so many.

All of which are critical conversations. But this post is just about the decision to sell my rental property, and how it is working out so far.

One of the main challenges with having such a heavy lean towards net worth invested in property, is the level of risk. Whilst owning a house to live comes with a certain amount of risk, it is very different to owning property as an investment. If my house that I live in goes down in value, all the other houses locally will likely go down in value too meaning that I haven’t lost out substantively: the market has changed for all. Plus if I want to live in that house, as long as I can pay the mortgage (hello rising inflation), it balances out.

With the uncertainties in the housing market in the UK, I felt that the risk was too great and that I would be stuck with the house forever. I had bought the house planning to live in it with my kids, but then I got a job overseas and now I really don’t see us moving back any time soon. Whilst it was a good house for us when my children were smaller, I had planned for it to be a ‘five year home’ and we are past that point – even if we wanted to move back, the size and layout of the house, and proximity to a decent secondary school, means it doesn’t work for this season in our lives.

Whilst the rental income was covering costs, it wasn’t enough to make the locking up of all other assets worth it. In fact, choosing to rent out a house that I had bought as a family home only made sense when I was thinking we might move back to it. Many FIRE podcasts talk about this – basically, what you look for in a rental property and a home for yourself are different. Which is not rocket science, but good to remember.

Paula Pant has some useful guides to working out whether a rental property is worth it. You can have a read for yourself to get into the complexities of it, but my property fails at the first hurdle. Paula’s ‘one percent rule’ recommends that you only consider a property where the rent equals one percent of the purchase price. So if you have a house like mine where the acquisition price was £360,000 it should rent for £3,600 per month. Whilst the rental markets in the UK and US are totally different, by the time of the sale (noting that the value had increased, and I had frozen rents at the same amount since 2016), rent for my property equaled less than 0.25% of the market value.

So I decided to sell. I wanted to treat my tenants well, and gave them six months notice that I would not be renewing their tenancy in September. I agreed a price and put the house on the market. Since things are so strange at the moment, I had no offers for some time, then an over asking price offer which I accepted immediately. There was a lot of negotiation trying to get things done as quickly as possible on their side so they could be in for Christmas, and my recognising that just after my dad passed away, I was really not capable of dealing with very much. So, with help from the estate agents, we muddled through and completed on the sale 10 days before Christmas.

And that’s it! It feels like a long post but it was a decision which took so much thought, and one where a lot of the thinking was basically crystal-balling in terms of what would happen with housing market, mortgage rates and so on. And in the end, I had to make a decision based on the information that I had at the time, and what season of life I am in right now. I am finalising the financial assessment of how it went and will share in a future post (including all the joy of Capital Gains Tax woohoo) but for now, I am excited about what’s next for that money, and hoping the new owners had a great Christmas in their new home.

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2022: Financial year in review

/ Gracie Sunderland / 1 Comment

I like to start the new year with a stocktake of how my finances are doing and whether my savings and investments went according to plan, then using this as a prelude to setting some plans and goals for the coming year. This isn’t the only focus for the year, so check out future posts to find out more about setting intentions, vision boards and the like. But it is a good way of gathering some baseline data to see where I am starting from.

To say 2022 was a tricky year financially is a massive understatement. Whilst the economy globally seemed to be strengthening post-COVID at the start of the year, the invasion of Ukraine in February turned a lot of the world’s certainties on their head. Prices started to go up for petrol, food, energy, leading to massive cost increases in the basics for most households.

This trend has continued throughout the year, with supply chain issues as well as scarcity in some areas leading to a crisis with the soaring cost of living. I feel like I’ve been writing about this all year: 92% of adults in the UK have reported an increase in the cost of living, with 60% saying they are ‘very concerned’ about their ability to cope with additional rises. Food banks in the UK had to distribute more than 1.3 million food parcels in 2022, an increase of 50% since pre-COVID figures. I recognise that whilst financial freedom remains a critical goal in my life, so many people are getting closer to the financial precipice that they really need to get support, and get it now.

Inflation also grew at a significant and rapid rate, hitting almost 11% in the UK by the end of December. For many people, including me, this had an immediate impact on mortgage interest rates, biting even deeper into the daily costs of getting by. Whilst the expectation is that inflation has now hit its highest point and will start to reduce in 2023, the impact (and uncertainty) of these shifts are real.

It has also been a shaky year for the markets. Again an understatement, with the Financial Times headline for the end of the year reading Stock and bond markets shed more than $30tn in ‘brutal’ 2022. Markets in the US had their worst year since 2008 (and we all remember what a brilliant year that was). Whilst I love FIRE and the focus on both balancing for risks, and keeping your head in the event of a downturn – and I have definitely moved on from panic selling in 2020 – it has felt like another rollercoaster ride which just hasn’t been that fun.

This has also been the worst year in terms of growth for my own portfolio. I made some major changes this year (more about this in future posts) to rebalance away from being over-invested in property, but continued to invest throughout the year in mutual funds and my pensions. I added in kids’ savings here which I don’t normally do, but as they are starting to get older I need to come back to my financial planning for them, and make sure I am adjusting as needed depending on their age and stage.

My investments this year came to almost £80,000, though some of this came from my property sale meaning that my investment from salary alone came to £50,000. I am extremely proud of this figure and what it represents in terms of prioritisation and tenacity. Since I have been working on myself over the last few years, I can feel that pride at the same time as recognising that my salary and privileges mean that I am in a very unusual and blessed position.

2022 Contributions
Personal pension (SIPP) £                   8,600
Savings (stocks and shares ISA, emergency savings) £                 31,000
Work Pension (pre-tax) £                 18,444
Mortgage capital overpaid £                   5,000
Kids’ savings (JISA, J-SIPP) £                 16,000
Contributions £                 79,044

Next steps for me are to do a review of my net worth (and realistically to not compare it to a US$ amount as I traditionally have – with the recent forex issues, this is a pathway to sadness) and set out some plans and goals for 2023. Whilst I do that, I will just continue to save and invest as usual, and get ready for what is hopefully an easier year for us all.

Look forward to hearing about your 2022 and how able you were to follow your financial plans given that major challenges during the year.