The Fear

Things seem pretty scary at the moment. Climate disasters, war in Ukraine, Ebola in Uganda, right wing shifts in Italy, significant remilitarisation in Europe, a soaring cost of living – I could go on. Having always been a political animal I now refuse to have the news on in the morning because it makes me want to go back to bed and just stay there.

Writing a blog about personal finance (and I mean that in the loosest sense) means that recognising the impact political and socio-economic changes have on people’s lives and opportunities is critical. There is a big difference between painting a falsely aspirational picture versus giving people hope and courage to try a different path and see how they can succeed in their context.

So I just wanted to take today to talk about The Fear and why it’s not unfounded.

100% faith over fear. But it takes a lot to say faithful in an unstable world when you keep getting kicked down. Photo by Sincerely Media on Unsplash

Personal finance is largely built on evidence-based faith. We look at the options open to us; historical shifts, values and movements; and our own future plans and needs. Then use all that information to triangulate the best options. I mean – this is what happens ideally. Sometimes we get hopeful, or greedy, and it’s more like a game of pin-the-tail-on-the-donkey. Sometimes we freak out, and it’s more like flipping over a table full of delicious food in order to hide underneath it. But in essence, making decisions means assessing what we think will happen, in our lives and in the markets, and trying to match them up with available options.

Take deciding to invest in the stock market. This is traditionally somewhere where it’s easy to be fearful, and decide not to get involved (caveat – there are other excellent political reasons not to do so, but that’s for another time). It is also a place where people are likely not to realise that not investing creates other risks around having their savings eroded by inflation. But intentional action always feels more scary than unintentional inaction, even where the impact might be the same.

Over a long period of time, the stock market has consistently gone up. As the financial planners say, it is time in the market, not timing the market that delivers results. Taking the graph below which models the sorry history of a fictional investor who puts money in just at the worst possible time, we see that he still benefits from compound interest and ended up with a 7.98% annualised return.

In other words, however disastrous certain moments were, the net result of investing in the stock market has been positive.

Modelling of a single, ill-timed (and imaginary) investor. Credit

The massive caveat here is that if the market crashes at a point where you need your money, you are screwed. And that’s where The Fear comes in. In the example above, if that investor had lost their job and been forced to pull out their savings to live off, or reached pensionable age and had to cash out an invested pension, they would not have won.

This is all aside from people freaking out and pulling their own money at the wrong time, like I did in 2020. If you are in a position where you must – either for reasons of perception or fact – have to take money out of the market at a time when it is down, you will lose.

This week I have been reading Nomadland (also a film). This amazing book charts what has happened to the “invisible casualties of the Great Recession”, largely older people who unexpectedly found that, in spite of investing in it for years, the American Dream would be forever out of their reach. There is more I want to reflect on about the changing nature of work – most of the people featured in the book will never be able to retire but are forced to work seasonal, temporary jobs – but that’s for another time.

Having a global financial shitstorm happen at a time in your own life where for whatever reason – divorce, illness, getting to an age where you are considered disposable – on top of all the other institutionalised inequalities that impact on people’s ability to make ends meet, can push you permantly to the bottom of the heap. Whils the stock market recovered from the 2008 mega crash, and people who were able to stay in the market have done very well indeed, 10 million Americans lost their homes. For those who lost their homes but were upside down on the mortgage or on other debt, they could spend many years paying for something they no longer own. Having to make money to service a debt for a dream they suddenly couldn’t afford.

So The Fear is real. It’s not to stop any of us from dreaming, or investing, or anything else. I still wanted to recognise how quickly things can go left: there are long term impacts that we can still see, and blithely ignoring the possibilities is just foolishness. I want to leave with these two photos from Detroit of a residential street 9 years apart, in 2009 and 2018. Detroit was one of the hardest hit areas during the recession, meaning there are a lot of streets like this.

It’s ok to be afraid and still look for ways to keep moving in faith: in fact, that’s maybe all we have. But remember that there are people and places which have been erased by these historical financial moments. And they won’t be coming back.

From a community to an overgrown pathway in less than ten years. Read the full story and see other examples here.

The cost of having kids

This started off as two totally different posts but for whatever reason, I ended up wanting to talk about the cost of having kids. Clearly feeling grumpy about it!

Having kids is a huge fianancial commitment whether you are single or not: even a married mama will earn one-third less than male counterparts by the time her eldest is 12. Very often people focus on the cost of having kids in terms of the things we need to buy for them, which is honestly by far the smallest part of the equation. Lots of places list out the things you’ll need and how much they might cost but it’s not rocket science, and with the rise in great second hand equipement, doesn’t need to break the bank. I bought everything second hand (other than a car seat because you can’t guarantee it hasn’t been in an accident which migth render it useless, and cot or Moses basket mattresses since you there is a small chance that using a second hand mattress from outside the family increases the risk of Sudden Infant Death Syndrome or SIDS).

Clue: you need very little of this stuff. Photo by elliot verhaeren on Unsplash

I got many things for free, and did without a whole load of others which seemed unimportant. Then I made sure I passed on all my used stuff, from books and maternity wear to kids clothes, toys and books, to make sure someone else benefitted. Kids use things for such a short amount of time – though honestly they can also properly trash some things which are just unusable after a few months – that most things are good for another few years. So much of the things we purchase for our children end up as waste, with more than 2.2 billion pounds of clothing for children aged 0-11 ending up in American landfill each year: the equivalent of 45 pounds per child. 90% of toys are made at least partly of plastic, and 80% end up in landfill including things in good working order that kids have just grown out of.

Which is kind of ironic given that this wastefulness is bringing about the kind of climate change that means the lovely babies we are so proud to show off in a new outfit, or make smile with a new toy, are more likely than ever to end up living their adult lives at the sharp end of a fiery apocolyptic disaster. And even if you don’t believe in climate change (you probably shouldn’t be on this blog to be fair) or don’t care, the sheer wastefulness in terms of money and resources makes doing things differently surprisingly easy.

Not my child but what a cutie: Photo by Kiana Bosman on Unsplash

But these costs are nothing compared with the cost of childcare, and the impact on your career. And we haven’t even started talking about if you want to prepare them for college, or save up so they can have a deposit for a house. In 2020, 49% of first time buyers under 35 got help with their deposit from their parents, with the majority of them saying they wouldn’t have been able to buy a house without this support. So if you can’t help out your kids, they are going to get left further behind. Just in case you didn’t feel bad enough already.

Research (though I always think these things are a bit vague given the many different approaches you can take to parenting) suggests that the cost of raising a child in the UK is £193,801 for a single parent. Using that and the lack of financial support since their birth, I will have lost almost £400,000 by having children. According to some back-of the-envelope calculators, investing that in a low cost ETF or stocks and shares ISA would grow to around £700,000 in the 18 years. Add to that the reduced earning power, and having two kids has probably cost me £1 million.

Obviously, I didn’t have children to make money (child labour is illegal after all…) And this calculation doesn’t include the fact that they will look after me in my old age (which, thanks to our cultural background, they really really will). Having kids is awesome, and my two are both pretty much the best fun I ever have, as well as potentially being part of the solution to the problems my and my parents’ generation have created in this world.

Also not my kid, but a child quietly reading a book is something I fully support. Photo by Aaron Burden on Unsplash

But the cost of having children is real, and shouldering the burden alone can feel like a huge strain. Being part of the FIRE movement, where it feels like it’s predominantly white married couples who have nothing to do with my life (this was the other post I started writing) can make things feel even lonelier. But FIRE as an approach means that I feel in control or the spending and financial decisions I make, and more confident that I am creating the kind of future my kids, and I, deserve.

Commitment #2

Last week I posted on my Insta about paying off £27,000 in 19 months and I wanted to talk about it in a bit more detail here and how it relates to my thinking on commitment.

Generally I don’t carry debt. I appreciate there are a number of schools of thought on this one, especially about ‘good debt‘, credit card benefits and so on but for me it always comes back to the kinds of risk I am willing to take (TL:DR – not many, usually based on complex zombie apolocalypse scenarios where I can’t look after my kids).

But when I was buying a house last year it turned out that I couldn’t bridge the gap between my deposit and the mortgage. I had 10% as a down payment but needed more to be able to access the financing. I had already scrimped hard to get the downpayment together and, with fees and costs associated with moving, just couldn’t make the rest in the right time frame without leaving myself with no emergency fund at all. So I took a bridging loan, just as a personal loan from my regular bank.

I figured that adding it as a risk to the overall house buying approach should work. Photo by Ingrid Martinussen on Unsplash

But in taking out that loan I made a commitment to pay it off as quickly as possible. The total to repay including interest over the original 60 months was £29,349 for a £25,000 loan. This felt like more interest than I was willing to pay, and was definitely a spur to get it out of the way. My original monthly payments were £500 per month, and with this rate I paid back £1,400 on average every month.

And now, aside from mortgages, I am debt free again. And it feels like a huge weight off my shoulders.

One dictionary definition of commitment is an engagement or obligation that restricts freedom of action. For me, having this loan restricted my actions in other areas, which was interesting since I already thought I was quite frugal:

  • This is the big one – no holidays. I value travel and connection with my kids and our worldwide family but I cut it out for this period other than going to visit my sick father. Everything else felt like it could wait. So one month in Kenya long planned for this summer got cancelled and that money paid off the last £5,000. Interestingly planning this trip also raised issues of commitment about how others were showing up (or not) for me, which made the decision to cancel a lot easier.
  • A ‘squeeze tax’ on most of my other spending. Basically this meant reducing groceries and other discretionary spend by about 10%. It also showed me what the space is in my budget, though I am aware I don’t live that close to the knife edge anyway. I added in two additional meals a week to be prepared on a Sunday meaning I could use up odds and ends, use the slow cooker, and generally remove the temptation to nip out and spend more money on food as the week headed to Friday. Ditto with packing lunches for the office. And clothes – I spent around £120 on clothes in this total period for all three of us.
  • Cancelled all subscriptions. All but one. I used to regularly check I wasn’t being charged for things I didn’t want, but here I cut out everything I didn’t actively value.
  • Got energy from freaking out. I have been writing about the cost of living crisis which we are all freaking out about, whether a little or a lot. I made the decision to take the loan when I could easily manage the monthly payment, and looking down the barrel of rising prices everywhere, made me really conscious that I needed to tighten down my commitments.

The take away for me was that through commitment all things are possible. This isn’t going to be true if you are already living close to the breadline, but for many of us on the FIRE journey, our ability to squeeze more out of our budgets depends on where we are trying to go. I have never quite managed to find the same drive for investing and saving as I found for paying off this debt which is showing me some interesting tactics and opportunities to get better (or clearer) at getting inspired in those other areas.

So I feel pretty proud of this. Being able to commit to something, and see it through with very minimal support, really keeps me confident of my ability to chart this path, however much it changes along the way. So stay committed. Stay focused. Sometimes restricting freedom of action can feel limiting, but remember that you have a bigger goal in mind.

Cost of living crisis 1: Energy

Quick reminder to come and get your flowers (or a random selection of inspiration, poor jokes from me and photos taken my by daughter) on my Insta.

The soaring cost of living crisis is real. You don’t need to understand inflation, changes in base interest rates or why the stock market is having a wobble to know that your supermarket shop is costing more. Indeed, there are so many cause-and-or-effect conversations about the macro-economics of it all that at the moment I don’t care. But I do know that I just got a water bill for the equivalent of £4,000. And that’s just one of my skyrocketing utility bills which are stacking up like an angry little bomb waiting to go off.

I wanted to write a few posts looking at different aspects of what is going on and why, and how we can navigate it and stay sane and solvent. Starting this week with energy as it’s top of mind, and one area where increases are making a terrifying dent in people’s pockets.

Even the moths have flown. Photo by Towfiqu barbhuiya on Unsplash

So what can you do about your energy bills?

My focus here is for the UK though a lot of the household tips are universal. Whilst I live in Denmark, the utility market remains a total mystery. We don’t have many companies, especially since in urban areas a lot of energy is from the Kommune or local council. This means there are no switching or price comparison services. So whilst prices are going through the roof the options are a) turning everything off or b) saving money elsewhere.

In the UK, energy costs have already doubled for many households and will likely rise by October to almost £3,000. With the median income in the UK being £31,400, this means that energy only (not even all utilities) is costing households 10% of their income. Unfortunately switching deals is not likely to make any difference and is not even available to most unless you get an ‘existing customer’ deal. And watch out if you do switch since exit fees have gone up 10 times in the last year.

The idea of creating competition in the energy sector in order to benefit customers has only created a monster market where providers can do what they like. Issues in Ukraine are exacerbating fears around supply, but these price rises have been coming for a while and are only possible on the back of the ‘competitive’ set up.

Pulling money from your bank account all the way into the horizon. Photo by Matthew Henry on Unsplash

The main things you can do to save energy are things we should all be doing anyway for environmental purposes. Unfotunately some of them require an outlay at the start which might not be possible in these belt tightening days but some are pretty simple.

Big outlay changes

  • Look at your heating system. Is your boiler efficient? There are simple ways to check. Generally putting in a new boiler unless you absolutely have to isn’t going to save you anything, but when you do, shop around for the most efficient kind going.
  • Think about insulating your house more efficiently. When I was growing up my best friend had cling film across all the windows to reduce heating bills, so it doesn’t all mean huge outlays on triple glazing. There are some great tips on insulation from the Energy Trust – such as fitting a hot water tank with an insulating jacket at a cost of about £25 which will save you £35 a year in heating costs and 115kg of carbon dioxide emissions.
  • Consider generating your own electricity. This can be very expensive, and most of the government grants have ended. But with the energy crisis likely to be long term, it’s worth exploring if you have any spare cash to invest here. Solar is the obvious one for homes, with a lot to think about before you take the leap.
  • Check if your appliances are energy efficient and consider replacing them, once they are dead, with a focus on efficiency. White goods especially – fridge, freezer, washing machine, oven – are massive energy leakers.
Turn off that tumble dryer! Photo by Brina Blum on Unsplash

Day to day changes

  • Use your timer and thermostat. This is the easiest way to save money and help the environment, just having the heating on when and where you actually need it. Go through the house and turn down radiators where you don’t need them on.
  • Turn down the thermostat already. Most money saving and environmental groups recommend 68 degrees (20 celsius) in the winter. Remember how cold your grandparents’ house was? You’re aiming for a bit warmer than that. Don’t expect to be walking around in a t-shirt, instead invest in a fluffy dressing gown and socks, and pretend it’s intentional hygge.
  • Decide what you will use less. Tumble driers are particularly energy heavy: dry outside in the summer, or get a couple of clothes racks and dry inside. When I lived in a badly ventilated flat, drying clothes inside contributed to mould and meant that I had to have the heating on and the window open so I used to go to the laundrette which takes time and money in a different way. So one to think about how best to manage depending on your circumstances.
  • Turn off all standby appliances, including turning off plugs which aren’t in use. My grandparents always turned everything off at the plug at night in case of lightening – this isn’t a bad idea just in order to stop energy leakage.
  • Make sure you have a full load every time you turn on the washing machine or dish washer. Wash your clothes at 30 degrees – it really does work. Use the eco setting if you have one. The one on my dishwasher lasts 3 hours and is really noisy so I load the dishwasher during the day then put it on after breakfast when I leave for work.
  • Check out your fridge and freezer. Fridges should be set between 3-5 degrees, and freezers need defrosting regularly (this is a job on my list. Note to self – do not do this with a knife or you will regret it). Fridges actually work more efficiently when they are nearly full so add that extra milk or whatever and you will save on the energy bill.
  • If you are really struggling, there might be help: Citizens’ Advice can help out.
Protest signs in London 2022. Flickr/Gary Knight

Finally, consider the politics. My blog is about personal finance, but this is so closely linked to politics that it’s hard to keep out. There might not be simple answers, but the people who are already the most vulnerable are going to be the hardest hit and the most hurt. And that’s something we can all care about.

Happy Father’s Day

Caveat: bit of a controversial post. Consider yourself warned.

Happy Father’s Day to all the great dads out there. To all those who miss their dads; all those who never knew them; all those for whom ill health, distance, or social norms have made relationships difficult. Basically all the same things I say on Mothering Sunday. All parents matter.

Today I have been thinking about the ‘bitter single mums’ trope which is particularly active on social media on Father’s Day (seriously – why do you have the time? Shouldn’t you actually be hanging out with your kids?) and about a series of conversations I’ve had on toxic masculinity and how men are so undervalued by society that their only possible reaction is violence and disrespect. I am not a psychologist or a social scientist so I am perhaps even less qualified than usual to write this blog, but these are things on my mind so I share them with you, with these caveats in place.

Add your own definition. Photo by Jon Tyson on Unsplash

The FIRE movement has a lot of great parenting role models. On a personal level I find the amount of people who reach FIRE based on spending one partner’s income tedious and irrelevant, but I get that for many folk it’s a new way of thinking about family spending. Lots of FIRE people got on this path in order to spend more time with their kids, and to be better parents, and that is something to celebrate. Mr Money Mustache has a lot to say on parenting his son, including since he and his wife divorced. Brad and Jonathan in Choose FI are always talking about their kids and how their FIRE pathway has focused on being with their children, and on leaving a legacy.

In fact there are lots of brilliant dads out there, of course there are. My own father, and the father of my children, don’t fall into this category but I don’t hate them for it – my children have never heard a bad word from my mouth about their father. The issue is that I have to make up for it, financially, emotionally, in terms of time spent and choices made and so on. And that’s not ideal but it’s ok. I am very lucky though in that I have an amazing step-father, fathers of friends (two of whom I have been really close to and sadly passed away this year), uncles and all. And I have friends, family and colleagues where I have so much respect for the way the father shows up, that it really inspires me on a daily basis. So I salute all those fabulous men: we see you. You’re doing great.

A Palestinian father bathing his daughter and neice, giving them as much of a normal happy childhood as he can in spite of the chaos all around. Credit: Wissam Nasser

There is, though, an increase in the number of women having to parent alone. There is plenty of blame around this, and there are multiple sides to every story, but the truth is that men are now allowed to absent themselves in a way that society permits. In my personal experience, this lack of involvement doesn’t stop them loudly complaining about how their ex will not facilitate the kind of contact they want with their children. The kind of people who complain in this way are, again in my experience, the same who want contact on a whim, when it’s convenient for them, and will change those times at the drop of a bar bill.

In Kenya, the outgoing President Uhuru Kenyatta has even made the issue of single parents as one of his key concerns. Globally Kenya is one of the countries where women are most likely to become a single parent, with almost 60% of women likely to be single by the time they are 45, whether or not they have children. Kenyatta’s concern was with the rise in the percentage of single parent households from 25% in 2009 to 38% today. I am not Kenyan but I lived there for a long time and intend to return for the RE aspect of FIRE (watch this space for posts on that thought process, white privilege and colonialist mindset – I’m here for self critique and growth as well, of course). It is one of the places where I find being a single parent the hardest, since even though there are so many of us, it is seen through a lens of shame and ‘burdenhood’ which basically makes me a social pariah. This kind of nonsense article, which paints women as insatiably greedy and self-centred, character developing then abandoning poor, defenceless Kenyan guys, just fills me with rage.

It’s also ironic when – look, I’m just going to say this and take the flack – Kenyan men are seemingly happy to pay for a whole lot of whatever when it comes to relationships. And I mean prepared to pay rent/transport/salon for your side chick (girlfriend) for years, but you think that I, as someone who earns 10 times more than you, is going to be a financial burden? Kthxbye.

There is also a growing narrative around the issues of toxic masulinity, and how men feeling undervalued, undermined and unable to navigate the changes in society mean that they are struggling to find ways to act as men, husbands and fathers in this brave new world. Masculinity itself isn’t toxic, that much should be obvious. So challenges men are facing are absolutely something which we need as a society to deal with in order to create a world that works for everyone. But at the same time this cannot be an excuse for gender-based violence or refusing to look after your own children. And it will bleed into the next generation. If you as a man are struggling with masculinity and shifts in social expectations, it should be obvious that if you have children – and not just sons – they will need you are a role model to work through those challenges with.

The seed never falls far from the tree. Photo by Bibhash Banerjee on Unsplash

In short, we could all do better. This world is not binary: most parents are both good and bad depending on the day. I might be doing it alone but it doesn’t mean I am any good at it, just that I don’t have the luxury of deciding to step out for years at a time.

And I am all for putting in the work to create a world where men feel appreciated, valued and heard. Where they can grow into their power in a way which doesn’t involve crushing (either physically, emotionally or financially) the women and children in their lives. That’s something that we can all believe in. Happy Father’s Day.

Staying strong

I’ve had lots of topics in my head this week to write about – the possible impact of inflation in investments; how to get started with real estate; my tax return (I am SO MUCH FUN at parties). But sitting here this Sunday morning I just feel – crappy. It’s been a busy few weeks but it has felt sort of like a deflating balloon: handing off at the end of my temporary promotion (after almost nine months of working my ass off); hitting some financial walls that I wasn’t expecting; finding it hard to get the enthusiasm together to plan for the summer, which should be exciting but I. Just. Can’t.

I mean, really. Consider how many people in your life ask this question becuase they care about the answer. Credit Finn /Unsplash

I feel lonely. And that’s a difficult spot to be in and stay motivated. There is something about having to constantly be my own cheerleader, my own auditor, commentator, coach, tiger mom or whatever else is just exhausting. Right now, nothing is motivating me enough to play all these roles and keep myself on track. I want to just lie down in a dark room – and unless I can pull myself out of it and get back to a place of peace, that is exactly what I will end up doing.

It is also hard to accept that when you start growing into your self, you leave people behind. The simplest antidote to loneliness feels like it’s company. So we go and hang out with those friends at the bar, take someone home for the night, get into social media scrolling. But all those things feel so empty that they can make the loneliness feel worse – make you feel like you are creating white noise instead of real connection, to distract yourself from doing the hard things.

Somewhere between these two things is where I am spending a lot of my time at the moment. I’m struggling with my own judgement about what matters, who to trust, and how to voice my needs. Honestly, I am scared that the depth of my need for closeness means that I am prepared to overlook a lot of small things which are flags that there are people who aren’t really that bothered about me after all. And I just don’t know where to go with that at the moment.

I wrote a post in January about loneliness, how it is more common than even, and the impact it has on our well-being. In that post I focused on three strategies for mitigating the feelings of loneliness and finding the kind of peace which acts as a foundation when things get rough. The first was building a stronger community, whether with family or friends, all the other Sunderland supporters you can find (good luck with that) or the girls you play Roller Derby with. My second strategy is around focusing on the calendar. Having rituals or activities which mark the passing of the seasons – from new year’s resolutions, spring cleaning, or The First BBQ of the Summer – makes me feel more like an active participant in something positive. Finally perhaps it’s about learning to listen, and to be heard. Building meaningful connections can take time and can be challenging – especially if you are feeling low – but it’s really worth it.

The JFK quote above though is also a reminder that finding peace, which is the first step to pretty much everything else really, is a transformational process even at personal level. It means taking down walls, building up new boundaries, reframing pathways and just keeping on going with the constant shift. This article about the habits that people give up on the road to peace was insightful and is helping me think about my own reactions. It talks about moving away from toxic people, from comfort, from the pursuit of perfection or impressing others, or from holding grudges (this is my own personal favourite).

But even though it sounds obvious, transformation is hard. Growth is painful. Moving away from people, and having that level of certainty in yourself and your pathway, can be lonely and exhausting. Thinking about where you will be in five years might be the right approach when you’re struggling to keep going, but if you’re doing that whilst watching people you have moved on from have The Best Party Ever on IG then it can feel like a fictitious bargain made only in your mind. I have days like today when I forget how these feelings and challenges show up, but I know that I always get through them, however crappy I feel for a little while. It’s ok. We got this.

And if it gets on top, go somewhere that reminds you of the powerful certainties of this world, and get it back into perspective. Photo by frank mckenna on Unsplash

Don’t Panic!

TL:DR – don’t panic! Whilst I’m not the Hitchhiker’s Guide to the Galaxy, those two little words do have to give particular comfort. Especially without the exclamation mark, which suggests that panic of some kind is right around the corner. But it’s Sunday morning, and I am three coffees in and heading to a kids’ birthday party once I’ve written this, so perhaps I need the drama. But whatever you do, don’t let your panic define your actions.

This week I have been thinking a lot about doom and gloom. More than usual, in any case. I wouldn’t say that I have Eeyore tendancies but the world is a busy, scary and sometime relentless old place these days, so a bit of doom is on the agenda. From the endless heartbreaking news from Ukraine, to the real debates about what the exceptionalism shown in that situation means for the reckoning coming for the colonialist staus quo, to the ridiculous news that the UK has a monkeypox outbreak (I mean – really?): it can feel like the only time I hear the word ‘positive’ is when a friend does a COVID test.

Really don’t, even if you can’t hitchhike your way off the planet

But what is going on in the world of FIRE, of savings and investments? There have been a few things that struck me recently and I try to keep coming back to these:

This is even more true in the world of finances i.e. literally everybody’s day to day world. The soaring cost of living, shortages of fuel, eggs, potatoes or whatever is real. Every time I go to the supermarket there are empty shelves, and shelves full of things at a price that I am not willing to pay. In the UK, the price of cheese (CHEESE!) has gone up by almost one-quarter. Once the costs of Marmite and tea start to spiral out of control we will all be shafted, frankly. (Denmark is powered by licorice and pork products, neither of which we eat so I focus all my crazy-hoarder-lady issues elsewhere).

Beautiful! But can you afford any of it?? Photo by ja ma on Unsplash
  1. Plan for the worst, then remember this is what you did. My Crypto portfolio has totally crashed. In the last two weeks, more than $300 billion has been wiped off the value of Crypto overall, so this is not really a surprise. There was real panic that Coinbase was going to go bust – and take people’s money with it. Whilst that didn’t happen, Luna, a popular Crypto token, did, taking $40bn with it. My reaction has been to do absolutely nothing. I refuse to look at my portfolio other than on the twice-monthly date I always look at it. And then I refuse to act or worry about it. This is based on the fact that when I invested in Crypto, recognising that it is high risk, I did so only with what I consider to be beach money. This is money where if I lose it, it means not taking the kids to the beach in the summer, rather than meaning I can’t pay the rent. So when I freak out about losing it all in Crypto, I try and thank my previous financial planning self, and then just not worry about it.
  2. Remeber you are not a mystic. Don’t make decisions based on crystal ball gazing. The thing weighing much more on my mind is house prices and whether they will crash. And this is also one where my attachment to my net worth is at odds with a moral sense that rapid house price increases really are shafting those less well off in a way which will impact on generational wealth for a long time to come. The reason I put this one under the heading of trying to predict the future, is because a) we really don’t know and b) none of the ‘experts’ can agree. Whilst there is a general sense that the market cannot keep rising, particularly in light of inflation and changes to mortgage interest rates, there is no evidence at this point that the housing market is actually slowing down. I’ve been thinking about selling my house in the UK to diversify my assets but I need to make this decision on a range of factors – none of which is whether I can guess the future.
  3. Use this time to deep dive into your risk tolerance and decision making, rather than wanting to act. In March 2020, I panicked, and sold out a significant chunk of my investments. This was based literally on being inexperienced, and freaking out. I wrote a lot about it at the time, both the why and the results. This has definitely impacted on my holdings now but I have to chalk it up to an experience that I needed to get better at investing. It also gave me space to think about what my risk tolerance really really looks like, and how I can build that in to my investing (and my life).
Beautiful! But can you afford any of it? 😉 Photo by Travel-Cents on Unsplash

More next week on overall approaches to investing, but I wanted to start with some thinking – and reassurance – that however doom laden the picture is, panicking is definitely not the answer. Trust yourself, your knowledge, and your planning. You’ll survive the storm.

Don’t forget if you want more cakes/sunrises/Barbies and less doom, come and join me on Insta.

Mind the (early retirement) gap

Quick reminder to come and join me (and the FIRE community) on Instagram @brilliantladiesmoney. At least join once a week for the Friday Banger – music that inspires me on my journey – definitely my favourite moment of the week. From Sauti Sol to Sizzla (plus artists who don’t begin with S), it’s all the tunes that get me back on track.

Following my posts on working out what you need to retire on and looking at where my current portfolio will take me I wanted to talk about the early retirement gap.

Unsurprisingly, most non-FIRE retirement discussions focus on investing in pensions. Paying into pensions is a tax efficient way to save, and has the added benefit of hiding your money from yourself so you can’t change your mind about your future plans and spunk it all on a beach house. But the early retirement gap is the time between quitting traditional employment and being able to access your pensions.

Mmmm beach house though. Photo by Harshil Gudka on Unsplash

Looking at my portfolio really showed how critical this gap is. Since my assets are heavy on real estate and on pensions, there is a gaping hole in the middle where more flexible options should be. Add in the need to wait for pension income, and it might be time to rethink the plan a little.

So I went back to basics in terms of what I will need and when, and mapped out income against it. This resulted in a long and complex spreadsheet which I won’t share here but started from the premise of living until I am 80. I already wrote about being at the ‘tail end’ or probably half way through my allotted time on this earth – and I would caution that you think about this stuff when you are in strong existential form as I found it quite depressing. Anyway – it’s infinitely less depressing than not thinking about it and ending up broke, so here we go.

You will see I put in some assumptions and I wanted to unpack two of these a little. The net result though if I follow my plan to retire at 50 is three years where my expenses will still be super high, then 15 years of gap until pensions kick in.

The impact of having kids and the choices we make. I don’t know where I would be financially if I hadn’t had children, but without them I could already retire on my current portfolio. I wouldn’t change them for the world of course – this is purely a financial observation. If you want rantings about how the system is stacked against single mothers, then pretty much the rest of the blog awaits you.

One big question though for the next phase is about whether I support my children through higher education, assuming they want to go. I have already committed to putting them through private schools, most of which is based on the fact that we move country every three years and need some consistency. Part of me absolutely wants to make sure they get through university debt-free. Whilst debt levels in the UK is still nothing like the USA, it is heading in that direction. On the other hand, with the right money mentality and guidance, there is nothing to stop them getting scholarships, working and managing what debt they had to get through on their own. The FIRE community tends towards the latter, with Mr Money Mustache in particular being vocal about both reducing costs for college and letting your children use the tools you have given them and find their own way.

I looked at the most basic costs for a UK college education and it would add around £20,000 per year per child to my expenses. Because of the age gap between my kids, I would need to cover this for six years, three of which are after my planned early retirement date. So that’s likely £120,000 in total that I would need to earn in that period in order to cash flow it.

In some ways this is a conversation that will never end though – will I help my kids buy their first house, look after their kids for them, whatever else? Or just focus on not being a burden to them and help out when I can? It is one of the times I hate being the only parent giving financial support, because whilst I don’t want them to miss out, it’s a lot.

Will an Oxford education even still be relevant in the future? Photo by Ben Seymour on Unsplash

Pension dates and what the future looks like. This is another interesting question which I never really thought about until I hit 40 and my future as a creaking elder suddenly felt a whole lot closer. Most of the US podcasts on FIRE assume that pensions kick in from 59.5 but in the UK – at least with pensions in any way connected to the public sector – pension age is 67. This really does add a lot of years that have to be covered by investments or income. By the time I retire, this could easily be 70 years old. Public sector pensions may be great because they are defined benefit but they are also pegged to the national pensionable age so there is a chance these will all shift to be much later. And pensionable age continues to increase, as the overall population ages and there are more people drawing pensions than paying into them. Which I understand but it’s hard to plan when the goalposts keep moving.

I have also bravely added in the UK State Pension which I struggle to believe will exist as anything other than a means-tested benefit by the time I retire. And whilst at £716 per month or £8,592 per year, it’s not enough to live off it would make a significant difference to how much I need in my overall portfolio. However I hold it very lightly as a possibility in spite of paying tax and NI for my whole career, even the overseas year. We already have ample evidence that the UK Government will not hesitate to shaft women (and by shaft I mean change the age at which they can access their pension with almost not notice, then underpay women £1 billion and not even bother to try and clear it up) if they think they can get away with it.

Planning for the sunset years <cries in Young Person> Photo by Jason Blackeye on Unsplash

So that is how it looks. The gap is real but thankfully there are a number of ways to think about filling it without having to stay in full time employment – more on that in a future post. For now though, working out exactly what this looks like and what the options are makes me feel more confident about making movements.

What does your early retirement planning look like and how are you thinking about future support to your kids?

Mothering Sunday: the financial impact version

Aw, happy Mothering Sunday! This week I am full of exhausted rage, and wanted just to focus a little on what it feels like to be a single mum, and why generalised negativity from society, the media and government policy is harming this generation of children.

First though I want to recognise that Mothering Sunday is a day which can set off lots of different emotions depending on your own particular track and relationships, but either way, it’s getting warmer and hopefully you’ll have something nice on this weekend.

Being a mother is a privilege and a joy, let me say that first off.

But it is also bloody hard. It’s hard for everyone, even those who have a partner. As we have moved away from traditional societies (and in fairness all the rubbish things that they required), the safety nets of support have been removed.

The invisible workload of mothering (yes, mothering rather than parenting, unless you are a single dad – recognising it and owning it as gendered is a feminist position) is exhausting. There is a great post from 2018 called ‘the invisible workload of motherhood is killing me‘ which, of course, I only just found time to read because I am too damn busy. Its is an accurate and helpful portrayal of what parenting looks like – and it’s just the day to day of parenting, not what it looks like to be trying to reach FIRE, or date, or anything else at the same time.

Motherhood is in any case fraught with issues. There have been a host of articles about how fatherhood has changed during the pandemic and how dads are starting to appreciate the ‘whole’ of parenting. But this is against a background in which women are expected to take the domestic burden (unless someone chooses to step in), and in which those dads have been able to refuse to engage until they were locke at home as well. Women are expected to work as well, though by the time a woman’s oldest child is 12 she is likely to be paid one-third less than male counterparts. These days, with the cost of living crisis and lack of affordable childcare, so many low income families are struggling.

Triple chocolate brownies, the Mothering Sunday gift my 12 year old son made me ❤

The cost of living crisis disproportionately impacts women. Women consistently earn less than men across their career, which also impacts their pension and retirement years.

On my FIRE journey, earning less, and being responsible for each and every cost in the home, has a significant impact on the timeline, and likelihood of becoming financially independent. It’s not like there aren’t exceptions of course. But the system is stacked against single mothers, and in my experience, also has no sympathy for us. The impact of these collective issues on generational wealth cannot be ignored and it’s likely that our children will also struggle, however hard we try.

I was particularly triggered this month by an article about the failings of the Child Maintenance System which is a UK body aiming to ensure that children’s costs are fairly shared after divorce or seperation, and that any alimony is paid in a timely way. To quote the article – 90% of single parents are women… Half of single parents and their children are consigned to life below the poverty line, a penury that 60% of them would escape if fathers paid the maintenance due. The comments on the article went in to the predictable bun fight about access and custody arrangements, as well as not really understanding that maintenance is for the children, not the ex-spouse.

So in addition to the structural arrangements in which I earn less and have more responsibility, I am also supposed to do it alone since the legal system really doesn’t give a shit about holding both parents to account for the financial side.

I would be furious, if I wasn’t so tired.

I have been hyper-aware this week of why I am overwhelmed. And it’s two things – first, the sheer magnitude of All The Things. Work (so, so much work), kids, feeding everyone, administration of the home, family and friends, and anything I need. Secondly, it’s the constant mental engagement – the ‘invisible workload’. Planning, organizing, working around, being in communication, trying to soothe, calm, engage, nourish and play. I have been dating someone who does not have children, and whilst he very loving and caring, he cannot even begin to fathom what responsibility and busyness looks like in my world. That makes me just try to hide it all so he isn’t bored or put off: and that becomes something else I have to be responsible for.

But you know what – parenting absolutely remains a joy and a privelige. I would just enjoy it more if I wasn’t expected to run on empty all the time. Big up all my single mamas this Mothering Sunday. I see you.

What do you actually need to retire on?

Last week I wrote about how my net worth is now $950,000, and how I was feeling about it. Do come and join me on Insta where I tell the same stories but with a lot fewer words, and with photos of Barbies. What’s not to like?!

This week I want to talk through what the limitations of my net worth are. Not because I’m ungrateful or want to scare off people who are much earlier on in the journey, but because there are impacts to how we organise a portfolio which means that net worth doesn’t necessarily tell the whole story in terms of what I need to retire on.

So let’s go back to basics. The FIRE approach to early retirement takes as standard the 4% rule: basically, you need to save 25 times your annual financial requirements, then you will be able to withdraw 4% each year in a way which will keep you going for at least 30 years.

Yes ma’am! Photo by Precondo CA on Unsplash

There has been a huge amount of discussion on this in the FIRE community and outside. The 4% rule comes from the fairly standardised view of return on investment in the stock market. The S&P500 for example has an annualised return rate of 7.5% over the past decades. So if you assume inflation gobbles up 3%, you’re left with 4% that you can withdraw before impacting on the capital.

Right now, there are commentators noting that the 4% rule might not work as well in future, as the stock market goes into a period of instability (or, you know, total global apocalyptic meltdown). Others point out that, on balance, the markets always right themselves eventually. At the point of drawdown though the issue is this – if you are retired and you need to spend out of your portfolio, you can’t wait for the market to resettle, and you can’t withdraw based on an average. So if you need to take money at a challenging time when the markets are down, you will either only be able to take out less, or it will diminish your capital.

As an aside, if you are new to this journey you really don’t need to know everything about the stock market but you might want to explore a little – I love Paula Pant’s recent basics guide.

Enjoy yourself! Either by talking about the stock market, or by planning your fantasy life when you retire. I know which I prefer… Photo by Jay-Pee Peña 🇵🇭 on Unsplash

(Side bar – I do my financial planning in GBP£ but calculate my net worth in US$ because it looks better. I know, I know, the games we play with ourselves…)

The reason this matters is because it has a significant impact on how much you need to save in the first place. I worked on the basis that I need £30,000 per year to live on – there are a lot of assumptions and years of budgeting behind this, but broadly, it works. Which? have a fascinating annual survey of how much retirees spend annually, and they calculate that £31,000 per year is enough for a single person to have a ‘luxury retirement’. But this assume the person is older, without the need to financially support children or their own elderly parents. It also says that spending on food and drink dramatically decrease and let’s face it – that’s not going to be me.

To withdraw 4% and have this be £30,000 per year in retirement, I would need to save 25 times that amount. So 25 x 30,000 = £750,000 ($975,000), which is very close to where I am. Using a more conservative approach would suggest using the 3% rule instead, or saving 33 x 30,000 = £990,000 ($1.23m).

There are lots of caveats to this in terms of how you do your planning and what it means, but it is also a stark reminder of where the mindful money aspect comes in to play. It sounds obvious, but the more you want to spend in the future, the more you have to save now. This also means looking at paying down debt, or paying off your home: basically balancing your expenditure with your planning.

Gather up your courage and do your calculations. Big Shaq is with you!

That means that the first and most important step is to know your numbers. Next week I will walk through my portfolio and some of the challenges in calculating an early retirement age, especially around accounting for defined benefit pensions, and deciding how to treat buying a house vs renting, as well as understanding what each of these options means in your planning.

Until then, I hope you enjoy working through some of your numbers. I’d love to hear from you, here or on Insta, about how it’s going and whether there are any more hacks and ideas I can help with.