Friday, 27 July 2018

Britain Blowing Hot & Cold

I'm sure many have been enjoying the hot weather in recent weeks. It’s certainly possible that we are on for one of the hottest and driest summers in a very long time. Temperatures are rising over and above 30C. 37C in some places. 
Gold Hill Shaftesbury in summer

It has been such an anomaly that it is being compared to the summer of 1976, the hottest summer on our records (Non UK readers will note that all you need to say in Britain is “summer of 76” and everyone knows exactly what you are talking about). The difference is that 1976 saw 18 days running of 30C+ and we, at time of writing, are only half way through that record. Time will indeed tell.

However, I must draw your attention back to March 2018. We in Britain witnessed a beast of uncontrollable and relentless power sweep over our little island. I am, of course, talking about the ‘Beast from the East’. A horrendous storm exacerbated by clashing with storm Emma who was conducting a flanking manoeuvre over the SW of England shortly after.   

The beast, who began its assault in the SE of England on February 24th, had already covered most of Britain in snow before having to confront storm Emma on the 2nd of march. The storm combo had claimed sixteen lives in Britain. 

Frozen rain, blizzards, drifting snow, strong winds and some of the coldest temperatures in years gave The Met Office cause to issue a red weather warning, the highest alert, in some parts of England. In some places, as much as 50cm (20in) of snow fell and caused mass disruption all over the country. 

The weather was so bad that I wouldn't have been surprised to see Lord Commander John Snow on BBC news telling us ‘winter is coming!’ Not nearly as bad as seeing a man dressed up as the Night King in my local coffee shop. I may have believed it if I hadn't seen him drinking a double espresso; and yes, for the record, I did ask him if he had had a ‘long night’. 
Gold Hill Shaftesbury after storm Emma

Forgive me for being facetious. There is an important connection to be drawn between these two weather extremes. The winter snow from the Beast ended in March and our current heatwave started officially on the 22nd of June. Only three months between them! 

I would be wrong not to also mention that April the 18th and 19th were recorded as the hottest days in April for 70 years where temperatures rose to 29.1centigrade. The London marathon on April the 22nd was also the hottest London marathon ever recorded at 24C and people participating were strongly advised not to wear any fancy dress. 

I stress this because I cannot find any evidence online of any similar swing in extreme weather in Britain and in such a short time gap. Anyone who can't or wont believe global warming and climate change are an issue or believe it wont effect you in your own lifetime needs to wake up. The effects are obviously already here. Scientists have said, according to The Guardian newspaper, that climate change has made our heatwave twice as likely. I have included the link to that article below if you would like to read further. 

www.theguardian.com/environment/2018/jul/27/heatwave-made-more-than-twice-as-likely-by-climate-change-scientists-find


Forget ‘winter is coming’. Summer is here! 

Sunday, 22 July 2018

A Written Monthly Budget

We don't hear about this enough I think. A monthly budget should be apart of every household and I would even be bold enough to suggest that budgeting should be in the school curriculum. Millennials these days have literally no idea how much money is leaving their accounts each month. Counterintuitively, they always seem to know when, and by how much, they are paid each month. 

Don’t believe me? Try asking a millennial how much they got paid last month. Most will be able to tell you the exact number, sometimes to the penny (or cent). Now ask them how much they spent last month. They may even grace you with a blank stare before reposting, “I don't know exactly how much but I know I'm okay.” This is exclusive evidence that millennials know how to spend money blindly but no idea how to budget. 

Health warning: Asking someone about their wage is considered rude in Britain.

I would also ask you the same thing. Do you know how much is going out? Are you forever getting surprise overdraft fees and bouncing payments? 

Well, get your glasses on and get a calculator ready because Im going to show you a remarkable spreadsheet. 

*


Welcome, to the biggest mind-f**k in personal finance history. 

Some quick points before we continue:
  • The monthly wage is based on the UK minimum wage (£7.83) at 37.5 hours a week. 
  • This is based on a working person living alone.
  • The Orange cells are calculations, white cells are inputs.
  • You will notice five (5) categories:
  1. Personal
  2. Car
  3. Debt
  4. Home 
  5. Summary
  • None of these figures, for the record, have anything to do with my own finances.

Now, lets take a look into these categories.

A) Personal
When doing your own monthly budget, it is important to find every single penny (or cent) that leaves your bank account and add it to this column. If you find that you spend £28.43 on take-away coffee each month then write it in. This spreadsheet is, first and foremost, a shock and awe exercise. 

Most people have a mobile phone on contract. I wont get into the details about smartphones in this blog but that may be a subject later in the year. Let it be said though, most, if not all, millennials have a smartphone today. At the time of writing, a brand new iPhone 8 64GB in a standard colour costs £699 (over $900 US). Who’s got that kind of money to buy a smartphone outright? 

Spotify, Apple Music, Netflix, Amazon Prime and others have one thing in common. You don't own anything. You pay for the privilege of downloading as much or as little as you like when you like. These streaming services are more and more common but they come at a price. They might not seem expensive but once you add them all up you might be amazed how much you are spending. 

B) Car

This has been given its own column because its financial impacts are mind-boggling. In a few weeks time I will be discussing car financing with you all. As an ex-salesman for Ford, I can give you an honest inside look at car financing, however, today we will be taking a more generic look. 

A car payment of £149 is not expensive but its important to show it. Guaranteed Asset Protection (aka: GAP Insurance) is an additional and optional insurance which, in my previous professional opinion, is vital for car finance. Thats not an elevator sales pitch, its a realistic requirement. 

For non UK readers: Car tax, insurance, additional insurance and loan details will vary dramatically in Europe and in the US. 
Car/Road tax and Car Insurance are required by law and can be paid as a single yearly payment or on a monthly basis. Road tax is based on how much CO2 your car creates. Insurance is ‘car specific’ here in the UK.

You must take a detailed look at your car spending, especially if you are financing a vehicle, because it will be a real eye-opener when you see the total box at the bottom. 

C) Debt

Yes, Im sorry, we have to talk about debt. 

Personal loans are too easy to secure in Britain and can make life harder and not easier. Our ‘modern’ culture gives us permission to take out loans to pay for weddings, televisions, holidays and pretty much anything we can't or won't save for. 

I know several people, myself included until recently, who have two credit cards. One of which is usually a 0% transfer credit card which is a great way to offset debt and not pay any interest, but only if you’re using it to pay off as much as you can. 

The two payments in the debt column (£19.12 and £14.36) would be a typical ‘minimal payment’ which only covers the months interest and not the credit itself. In other words, you wont be making any progress  in clearing your credit card debt. 

Add all your debt payments up and be amazed!

D) Home

This should be self-explanatory. Your basic household bills. Add these up to include your rent/mortgage, utilities, groceries, internet usage and anything else orientated around the home. 

I don't have children, but if I did I would include childcare and other expenses here in the home column. 

In this example I have priced the rent at £350 per calendar month which is a very cheap, one bedroom flat (or ‘apartment’ to my american cousins). A decent sized two bedroom house with a garden would be closer to £700 per calendar month. 

The Summary

Time to be very afraid. Only 3 cells are required here: the total expenses for all four categories, the monthly wage not including any overtime or bonuses, and the funds remaining cell. 

It is important to include the first cell because you need to be shocked by how much money is leaving your account. As said previously, the wage in this example is based on an average working week with a minimum wage. The funds remaining is simply the 2nd cell minus the first cell and this is the cell which will make you take massive action. 

Go back and look at the spreadsheet again. None of the figures here are over-exaggerated and are based on normal UK living. If this doesn't make you want to start writing up a budget right now then either you have more money than you know what to do with or you are frightened by what you will find. 


If you are frightened, good, get on with it. You must find out where you are going wrong and/or where you can save money to pay off debt quicker and start saving some money. 

Friday, 13 July 2018

Wealth

Todays contribution is based on a LBC radio show hosted by  James O’brian. LBC, for those of you who don't know, stands for ‘Leading Britain's Conversation’ and is a daily talk show where listeners call in to give their opinions and share their experiences on a subject chosen by the host. 

James O’brian in particular is a journalist who is renowned for his fiery arguments, strong yet innocuous opposition to Brexit, his tenaciousness of facts and evidence, and his stance on empathy. James, who can be found on twitter @mrjamesob, has changed the lives and views of many of his one million daily listeners, myself included. Had I the chance to speak with James face to face I would first tell him not to talk over me while I'm trying to talk over him (only his regular listeners will understand that reference). Then tell him that his work on LBC has been the most eye opening, thought provoking and enlightening I have ever heard. 

All that aside, one subject that caught my attention was the question of “What is the definition of rich?”  This was bought about by Jeremy Corbyn, leader of the labour party and her majesty’s opposition. He suggested that rich people in the United Kingdom should be contributing more tax to help the struggling economy; the NHS in particular. 

Before I continue, can you see the problem with that statement? Can you define rich? Go on, try. I will wait……………

……………

It’s not easy is it? Each definition can be easily combated by realising that being ‘rich’ or ‘wealthy’ is perspectival. 

If Mr Corbyn suggested that, for example, his definition of rich was anyone with combined household earnings of £50,000 and above, those who earn £50,100 a year would be the first to protest. Imagine if you were lumped into a massive tax bracket by a margin of just £100? Just to make matter worse, imagine the smug people who earn £49,999 a year! 

The not-so-obvious point is being ‘wealthy’ does depend on the difference between income and outgoing bills. Earning £30k a year and having monthly bills of £1k would make you wealthier than someone earning £120k a year with monthly bills in excess of £10k. Is that rich? 

The only way to make a fair system in my judgement is to create more tax brackets.  Tax should be a gradual spectrum. Anyone earning less than £20k a year should be tax exempt. The tax system could then go up in ten thousand pound intervals. Gradually paying a larger tax percentage each time. 

This ensures a fair tax system and eliminates the need to use words like rich and poor that always offends regardless which end you think you are. If you think you’re wealthy, you will be offended by being categorised as poor. If you consider yourself less well-off you will be offended by being considered wealthy by government standards. 


Also, I take issue with the words ‘rich’ and ‘poor’. They are abstract words with no concrete meaning because they depend on ones perception. The only way to make sense of it is to replace them with ‘wealthier’ and ‘less wealthy’ which coincides with viewing wealth on a continuum and not a standardised bracket. 

Friday, 6 July 2018

Goodbye Car

This particular blog will not be a surprise to people living in big cities like London or New York but here, in the southwest of England, everyone has a car when most of us don't need one. 

In a previous blog I mentioned that my car was the hardest thing for me to let go of when I was going through my declutter stage of my minimalism journey. Why was it so hard to let got of and what helped me through the process? I have chosen to share this particular predicament with you because if you are going through something similar, you will also feel a homogeneous pull and you will make excuses to retain if you don't resist. 

I had, until recently, a 2014 Ford Fiesta ST. For those of you reading from abroad I am unsure if there is a different name for this model but be assured that it is an ‘affordable sports hatchback.’ I often and loudly told anyone who was remotely interested in cars that this ST was my pride and joy. My toy that I could enjoy driving and look good while doing it. Why did I get so attached? 


I distinctively remember a conversation I had with my dad when I was around 15 years old. He said, “Son, when you get to 18 there will only be three things on your mind; Cars, money and women.” 

Now, this is a massive generalisation on my fathers part but, as it happens, he was right in my case. Father like son I guess. Remembering this was important because I could finally link my 'attachment' to an 'attitude.' Recollecting this young man chasing popularity, women, money and cool cars, allows me to now conclude that I had a serious ego problem.

Therefore, it is perhaps a little comforting that I can look back at this time and remind myself that I'm now 28 years old and a different kind of man. Ten years ago I could have been described as a womaniser, narcissistic, arrogant, immature and egotistic. 

To bring us back to the original point. My ST was a toy, a statement and a “look at me” superfluous object that I jealously held on to by way of habit of my younger self. Once I had made this discovery I was able to start letting it go. Yes, it’s a lovely, fast, good looking car but these days I have nothing to prove to anyone. My partner Ellie hasn’t left me since I sold the car, my friends don't suddenly think less off me and no one else, to put it bluntly, cares! 

To tie all this together we must return to the question of ‘why’. Be careful not to ask the wrong question; “Why can I not let this go?” That is a very different question. Its too generic and will have you guessing for a long time. Instead, when faced with a situation where you cant let something go, ask yourself firmly and with honesty; “Why am I so attached?” This will focus you to draw on the problem and discover the solution.


For me, it was the old teenage egotistic disposition that was holding me back. Whats stopping you?