29 Sep 2015, 1:26pm
living intentionally:


  • October 2015
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  • A quick visit to the country of the middle class at the Aldeburgh Food and Drink Festival

    I never really gained the understanding of why I spent badly, because I reduced spending to achieve an externalised goal, leaving work early. Doing that projects all the energy into the how, rather than the why, and the how is easy – if you don’t need it, don’t buy it.The symptoms of excess consumerism weren’t terrible in my case either  -I didn’t borrow to buy consumer goods and managed to pay down my mortgage to the last £1000 after 20 years, even while spending like a typical consumer sucka 1. In comparison, for instance, blondeonabudget discovered some quite deep truths about why she was spending on consumer goods in a post about decluttering and another one about changing habits, rather than, say, discharging a decent wodge of consumer debt.

    I just fought the symptoms so my experience is that once you’ve broken the habit, it doesn’t reoccur. Or maybe the YMOYL technique of qualifying how much work you have to do to pay for this gewgaw was enough. Certainly I can’t imagine any consumer goods being worth enough to me to consider working again to buy them! But I now have the privilege of standing on the outside looking in, rather than standing on the inside trying to imagine what being outside the consumerism bubble is like.

    Food is a good place to investigate hedonic adaptation

    OTOH I do want to understand hedonic adaptation and perhaps use it right as I may make more frequent excursions to the country of greater hedonic spending, but this time living more intentionally. And yeah, it is a Rich People’s Problem just like the whole idea of early retirement is 😉

    I believe I can derive much more enhancement of quality of life from spending a little bit on a wider range of experiences taking care to repeat infrequently. The trouble is doing that needs time and reflection – parameters I was short of while working, and I suspect a lot of products are sold in order to address a short-term problem without standing back and taking a systems approach – why am I having a problem with this? The regimented rhythm of the wage-slave’s year needs quick fixes now and is not conducive to introspection.

    Introspection goes against how many things are marketed – of course company X wants you to consume as much of their stuff as possible, and things like subscriptions, bulk discounts and the like are incentives to do more of that. Food is, in many ways, a classic case – there is the short-term gustatory sensation and a longer-term feedback mechanism that you have had enough. To a first approximation in natural foods these are balanced within the range of human metabolism, but a lot of industrially produced foods are either lacking in parts or actively designed to be moreish 2 so people wolf them down consuming more before the ‘I’ve had enough’ feedback loop kicks in. In Michael Pollan’s book In Defence Of Food 3 , he boiled the solution of how to get this right into a few key statements –

    Eat food, not too much, mostly plants.


    • Don’t eat anything your great grandmother wouldn’t recognize as food.
    • Don’t eat anything with more than five ingredients, or ingredients you can’t pronounce.
    • Don’t eat anything that won’t eventually rot.

    The latter is interesting – it’s quite disturbing how long supermarket tomatoes, bread and milk last now. If you think about it, you are a long tube deriving power from a controlled anaerobic rotting process going on inside you, this does seem to be running against the end use. 4

    You’d do okay on Pollan’s criteria at the Aldeburgh Food festival :) Now there is a materialist-rationalist counter to this.

    Description is important, but no distinction should be sacred. Michael Pollan’s “real foods” are like Sarah Palin’s “real americans”. It’s good to have standards, and tastes, but labels can be problematic. More practically, our old foods can’t really compete today. They are too expensive, inconvenient, and bland for most consumers. If we want people to be healthier we’re going to have to beat fast food at its own game.

    The general approach is to establish that it takes about 3kWh to run a human being for a day 5 and while we await science delivering us a mechanism whereby we can just plug ourselves into the wall socket to recharge overnight 6, there is a technically decent interim solution called Soylent (hopefully not yet available in green) – from its creator

    For its nutrition Soylent 2.0 is perhaps the most ecologically efficient food ever created. You may think me smug but I and many other people have poured their lives into creating something amazing and we have every right to be proud of it.

    For all I know in the megacities of the future there will be a highly interconnected system with some equivalent of Soylent piped in the same way as we run water and gas. That’s for future generations to sort out if this is what being human means. The falling resilience of such interconnected systems also worries me, in the same way as if some clever computer virus corrupted the Internet infrastructure I am not sure we would have the communications or skills left to black start it from a sea of disconnected islands.

    I’m with Pollan here. I can live with the irrationality of old-fashioned eating for the better ride, although if I were a student I might investigate Soylent as a way to save money and stop flatmates pinching my food from the fridge 😉

    Not everything about hedonic adaptation involves spending money. Many commercially grown foods either never had any taste to start with 7or the taste fades rapidly down the long supply chains – sweetcorn for instance fades in flavour after half an hour, never mind the two days Tesco think of as fresh. Take strawberries, for instance – they use to taste of something in the 1970s but I don’t bother with them any more because while they look much better now than they used to they taste of very little. However, I could adapt to this by growing them. Growing things helps with the hedonic adaptation along the time axis too – it’s called eating with the seasons.



    Snape Maltings on a sunny Suffolk day

    Snape Maltings on a sunny Suffolk day

    I was reminded of this when  went to the Aldeburgh Food and Drink Festival, to take a look around what people are doing, pick up some ideas about how the middle class 8 think about food, because I have an interest in an operation that occasionally sells to this demographic, and, what the heck, it was a nice day.I managed to avoid paying the £8 full price too, because I was too tight for that 9. We went early on Sunday, and it’s a shame I didn’t get into the groove fast enough to record some of the crowd hubbub, there were certainly a lot of very posh accents early on :)


    The food looked and smelled good, and it was interesting to observe the wide range of stuff you can grow in a sunny eastern outpost of Britain – and it doesn’t have to all look like fields of ripening grain.

    Sutton Hoo chickens

    Sutton Hoo chickens – they do taste better than industrial chicken, though they tend to be on the large side for two people

    A lot of this was about the story as much as the product. Now in a country where we’ve been eating horsemeat masquerading as beef for long stretches of time this is no bad thing, and indeed the story of a lot of factory farming is rarely told because it’s nasty. But it reminds me that an awful lot of consumerism is about the story – and when you’re dealing with food then the adman’s admonition to “sell the sizzle, not the steak” is particularly stark

    Tim Hayward selling the sizzle

    Tim Hayward selling the sizzle – he has a book out, but this is a pretty nice example of flambe in action

    There’s an interesting observation that the reasons you don’t buy something can be broken down into

    People’s objections to a purchase can essentially be narrowed down into 4 main groupings: No need, No time, No money, No trust.

    The aim of getting better at personal finance through spending less is to shift the baseline in the no need and no trust axes a long way off most consumers’ settings. I got out of the show without buying anything, though I did consume a few items. But I did enjoy listening to the stories – it is possible to break the link between the story and the action. I went as flâneur – to people-watch, to observe, and yes, to enjoy a few stories. There is entertainment to be had in some retail spaces and trade fairs without having to buy anything :)

    In fairness I should add that I was treated to a coffee and half of this fine platter from Lane Farm by Mrs Ermine who was doing some networking here.

    some of Lane Farm's fine salami

    some of Lane Farm’s fine salami

    I went along for the ride, and also to go as a tourist to the Land of Middle Class and their fancy ways. Some of them do add to a better experience, and I am considering what I will change when I get hold of my own pension money. I’m not totally averse to some food frippery – I armed myself with some Lane Farms salami earlier this year when I went on a week-long course at a joint where the catering was vegetarian from a lowest-common-denominator angle rather than a moral stance 10. And I opined that paying £600 on one restaurant meal was perhaps a better thing to do than get a year’s worth of weekly Mickey D’s in the hedonism department.

    Fennel - looks gorgeous but tastes dire IMO, and I'm not that keen on the smell, either

    Fennel – looks gorgeous but tastes dire IMO, and I’m not that keen on the smell, either.

    And here is  a different approach to frugality – you do not have to use a consumer product, service or experience for its intended purpose. One of the joys of retirement is watching other people and learning about new things. I’m not going to use any of the things I learned here – among others I learned that older beef apparently tastes better, that it is possible to put fennel in a dish and not have it taste revolting  – Tim Hayward managed. It’s a funny old world, and sometimes it’s just good to lend an ear to an interesting narrative told by a fellow who can spin a good yarn. Hayward introduced me to the concept of the bum sandwich, another snippet of information I’ll never use but slightly enriched my life.

    I was tickled by Tim Hayward’s apparent surprise that there are people from Cambridge who have weekend retreats on the Suffolk coast. The coast gets some of its charm by the very fact that communications start to thin out as the A12 ceases being a dual carriageway after Wickham Market. There’s no big source of real employment for ordinary people, it’s too far from London and Cambridge to commute, so tourism and vacation homes are going to abound. I confess I had my Hayward moment when I spied this stall

    Handmade treats for your hound from a canine bakery

    Handmade treats for your hound from a truly Artisan bakery, Patisserie and Chocolatier. You read it here first!

    It’s good to know that there’s still a lot of money about, though it’s perhaps not so good to know that people’s brains fall out into such a big wet mess on the floor when it comes to anthropomorphising their precious hounds.

    Luxury hand made dog treats

    It’s just so wrong, in so many ways. When you see a dog eating, it’s utilitarian snarfing, not for nothing is it called wolfing something down. You can get pink “Good Girl” chocolates 11 or blue “Good Boy” ones at 145g for £10.80. These are marketed to the emotional needs of the owner rather than the nutritional needs of the mutt, because dogs have dichromatic vision with no red-green discrimination, they don’t have the long cultural tradition of pink for she and blue for he, and 145g of stuff ain’t gonna touch the flippin’ sides, guys! But good luck to Barkers, if they can turn such muppetry into a profit.

    I enjoyed my package tour to the Land of the Middle Class – travel broadens the mind, and you can travel in many more ways than distance.


    1. You can still be a consumer sucka even if you live within your means and in budget. The symptoms are more subtle than mahoosive debt piling up all around you – you simply get to sell a bigger proportion of your life to The Man than you need to by working longer
    2. often by the addition of umami flavourings, sugar and/or salt
    3. I read Pollan’s book as a dead tree variant borrowed from the library. It’s of slight concern to me that apparently the e-version is Word-Wise enabled to explain the long words to the literately-challenged – it’s a book about food, FFS, not quantum physics or aetiology
    4. Some packaging is there to counter aerobic decomposition – nitrogen purging, vacuum packing and the like which is probably okay.
    5. at 2,500 kCal daily and converting to kWh – it surprised me that a human being is a greater power drain than a fridge-freezer
    6. In fairness to Rhinehart of Soylent fame, he doesn’t really approve of AC current either, alleging the US power grid to be about 25% efficient
    7. plants used to work in symbiosis with microbial action in the soil to make nutrients plant-available. As we switched to industrial farming from the 1950s to 1970s this changed, since industrial farming doesn’t bother with that, adding macronutrients as salts to the soil, replacing and indeed impairing the microbial action. Coincidentally the mineral content of our fruit and veg has been falling ever since the 1950s, as shown by the longitudinal food compositions studies of McCance and Widdowson eg this paper
    8. there was a fair range of people there, but let’s face it, we are talking middle class in the Daily Telegraph sense of the word rather than the logical US version of the term
    9. Mrs Ermine subsidised the ticket in return for the ride there of about 40 mi round-trip, I didn’t jump over the fence
    10. in contrast some places are vegan from a religious or ethical stance, and it would be rude to abuse their hospitality by consuming meat there – and after all there are taxis and towns with restaurants ;)
    11. There probably needs to be a public health warning here that normal chocolate contains theobromine, which humans can metabolise but dogs can’t, so don’t go slinging your hound a box of Milk Tray to save £11
    25 Sep 2015, 12:48am
    living intentionally personal finance


  • October 2015
    M T W T F S S
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  • Frugality and the myth of the endless more

    Most of us are rich compared to previous generations, but we are surrounded by talented storytellers who tell us otherwise. These storytellers are paid handsomely to change our perception of the world, because they want us to buy more stuff. Humans love stories, it is how we try and make sense of the world around us, but because of this the stories and myths are powerful, precisely because they frame our thinking.

    Somebody asked me recently if I could give them something actionable they could do to be more frugal. I gave a bit of a double-take, because I don’t particularly regard myself as frugal, but I’m game for it. But first I gave it some thought – what does frugal mean to them? I have a sneaking suspicion that being frugal means something different now than what it used to mean. Nowadays, I would venture for most people the definition is

    Frugality is not spending more than you earn 1

    How the hell did we get here? In previous generations not spending more than you earn was the default assumption, frugality was either spending less than you earn, or having to spend as little as possible because your household income was seriously constrained. We’ve shifted a long way to where the norm is spending up to your ability to raise credit.

    The fallacy that credit increases spending power

    Look at MoneysavingExpert’s forums. There are three forums devoted to credit cards. The first – Credit Cards – is about the normal usage and abusage of credit cards, with the emphasis on the latter. The one about Stoozing (free cash from credit cards) is a misnomer these days – you can’t get free cash from credit cards, though it used to be possible 2


    credit card mandala

    The next one is Credit File and Ratings, which is all about people bitching about not being able to borrow yet more money because they are perceived a bad risk –  either they defaulted previously or they’re just not rich enough. MoneySaving Expert should simply put up a big pop-up dialogue box when anyone posts on this board saying

    HAHA – Consumer Sucka – you have already borrowed more money than you can afford, Stop. Wrong Way, Turn Round now. Pay some back or Just. Stop. Overspending.

    But they don’t. Presumably there’s money in it for MSE 😉 The questions on that board about how to become a better risk (borrow less, pay some back)are far and few between compared to the ones about ‘what is the best way to game this faceless system so I can borrow more money because I Must. Have. Now?’

    Spending Power ≠ Cashflow

    The trouble is that credit is not there to increase spending power. It is there to manage cashflow.This was much more apparent in the early ads from the 1970s

    I’m Access. he’s Money
    Here’s a new way of looking at us

    I won’t run out on you. He will. Money does a wonderful disappearing act. Usually in the wrong place at the wrong time. But I’m always in your pocket, ready to buy what you need, when you need it. And when Money isn’t big enough to pick up the bill, which he often isn’t these days – you can call on me to get things settled.

    I’m flexible. He’s not. My flexibility means that when he’s stretched, I’m not. Using me, you can buy essentials immediately and spread the repayments over whatever period of time suits you best. At this time of year, you could call on me to buy all the presents, drinks, decorations, everything. In fact you could give Money a complete Christmas break. He looks like he needs it.

    Access – your flexible friend (Telegraph Sunday magazine, Christmas 1978)

    You can see some of the rot setting in, the first paragraph talks of needs and the second starts off with essentials. it then all goes titsup when there’s the mention of Christmas. Christmas is a want, even if you have children. It is not a need. If the choice is paying the rent or paying for Christmas, let Christmas go hang – your kids need a roof over their heads more than they need consumer tat.

    Charlotte Metcalf can't afford Christmas this year

    Around Christmas 42 years later from the ad this TV producer can’t qualify wants for needs, never mind introduce her daughter to the sad fact that you can’t always have what you want in life. Thatcher, bless her simplistic heart, believed that

    her vision of Britain was of a property-owning democracy of savers with moral restraint. She got indebted spendthrifts. She wanted the British people to be like her father, but they turned out more like her son.

    The cashflow function of credit cards still holds. One of the best ways for a retiree with a steady income to use a credit card is in fact as an emergency fund. This was cited by Jacob ERE and indeed he also cited the exception which is why an Ermine doesn’t use that – I have no income 3. A retiree with a pension has a steady income, so he doesn’t need to carry a cash float against modest emergencies, and for major ones like house burning down there is insurance. If the roof leaks they can use the credit card, and pay it back over a couple of years. Emergencies shouldn’t be a regular occurrence, else they are normal costs of operation and maintenance.

    It’s questionable whether an employed person can use the same method, depends on how likely they are able to find another job if they get fired, because that’s a very likely sort of emergency in one’s working life. All other uses of credit cards that carry a balance are basically a way to pay more for for less. Say you are one of MSE’s Consumer suckas carrying a balance of £20,000 on a 5% APR card. To put a dent in that loan you have to spend less than you earn, which you don’t want to do, and say you buy £10,000 worth of stuff each year and pay off £11000 on the card. So you carry the loan. Effectively you are buying £10,000 worth of goods for £11,000. Well done you. It’s like looking out for anti-sales – everything must go – 10% dearer today. Of course you’ll chase the cashback and the Clubcard points and sing about the 1% off. It is, after all, a much nicer story than the 10% you’re paying over the odds year on year.

    More credit means we get into arms races with each other

    One fellow, presumably a dyed-in-the-wool laissez-faire free-marketeer, opined that the increase in credit kicked off by Margaret Thatcher relaxing credit controls in the  early 1980s that I ranted about here was a good thing. We all, pure intellectual rational agents that we all are, decided that we would use this money to sink shitloads of money in increasing the price (not the value, the price) of houses, because free markets and free agents brought us this result so it was obviously what we all wanted. In the same way as our tax pounds going to Help To Buy has had the thrilling effect of raising house prices by £8000 because as any fule kno what first time buyers really really want, is for some kind fairy godmother to give all the other blighters they are in competition with some extra money so they have to pay more for the house.

    I’m of the opinion that sometimes you shouldn’t be allowed to do what you want to do, but presumably I’m a Trotskyist dirigiste rather than a follower of Ayn Rand. More consumer  credit is fundamentally bad, because it encourages people to live beyond their means. It still beats me why it is allowed so much – it’s not like it actually lets people Buy More Crap. To be honest if they were buying their consumer goods without credit they’d be buying more goods and services  – our MSE Consumer Sucka could be buying £11,000 worth of Consumer Crap rather than £10,000 worth and sponsoring a bank with the remaining £1000 p.a. – what’s so special about banks that they deserve a 10% tithe of his contribution to GDP?

    This is part of the evil heart of darkness behind the way we have set up our economy – it demands that we chase the endless more, and indeed credit does let us get more faster – and then we get a little bit less for our money as we service the deadweight interest of the loans. That way madness lies, and it’s called a Money Shop. WTF is the price of money in a money shop? Any time you are paying more than £1 for £1 you should be asking yourself why.

    The myth of progress being the endless more

    Let’s say we have some technical advance that means it costs half as much to produce product X. We can use that in two ways. We can rejoice that we only need to work half as long to buy the same amount of X as we had before, and then use the rest of our time to spend more time with loved ones, do something else more interesting than working with half our time. Interestingly enough, you 21st century wage slave are probably getting the short end of the stick here compared with mediaeval peasants, because what we do with greater productivity isn’t take more time off 4, which is what people initially did with improvements in efficiency. Presumably the advantage the peasants had over us is that since a day’s travel on horseback is about 20 miles there was a limited supply of replacement labour ready to ride in from out of town and undercut them; whereas if you want to take a sabbatical in a highly paid industry you may find yourself out of a job unless you are unique or can nobble the competition. As a result you start to see success as the endless more, because it’s hard to vary your time at work 5, unlike the peasants.

    Mo’ betta

    We buy more, or we simply pay more for stuff we need, like housing. Funny old world, isn’t it? Say you were a Martian and got out of your shiny green spaceship and looked at how western consumer culture worked. You’d scratch your head and go WTF? These guys are surrounded by historically stupendous abundance, and they charge round like blue-arsed flies after more of this abundance, then grouch to each other how they never have time to see their kids?

    The trouble is those stories we tell ourselves – success is always faster, better, cheaper, more. That assumption underlies so many of the stories that surround us that we start to believe it’s true. More is not always better – for instance it appears that we are becoming fat bastards because average portion sizes are slowly being ramped up. The connection with more=better means we waste a fifth of the food we buy.

    Mo’ betta’s evil twin, hedonic adaptation

    We notice differences more than absolute levels, above certain limiting thresholds. Which means our appetite for more is limitless, if we just follow our instincts. That’s taken humanity to some bad places in terms of excess consumption. In the 1970s your British middle class family might have gone on a foreign holiday every other year. From looking at Facebook it seems four times a year is the minimum these days. Now granted it’s got cheaper, but are they having four times as much fun? The experience of flying anywhere truly sucks nowadays compared to 20 years ago, you can say two good things about it – it is much cheaper and you get there a little faster. Just about everything else is worse. And yet more is more…

    Curiously enough, it’s easy though rarely done to nut hedonic adaptation – increase the gap between your hedonic experiences, and if possible make the gaps variable. If you want to pay a few hundred on a restaurant, do it every six months or yearly. It will be more special to you than spending the same amount of money per year on something more quotidian, or shudder, a weekly stop at Mickey D’s 6. You probably need to squeeze the gaps out to quarterly or more to avoid normalising on the experience.

    We are programmed to buy

    Let’s take a little bit of sage advice from this dear waif who delivered herself of the deathless wisdom that if you have savings in your twenties, you’re doing something wrong. Unlike many in the PF scene, I actually have some sympathy for the message in the title, largely from a cycle-of-life point of view – it is very hard to get started as an independent adult and always has been. Sometimes you have to pay out all your income, to be honest if you are in your twenties and just avoid spending more than your income I’d say you’re doing a damn sight better than most of your peers, who come on MSE’s credit card forums all dazed and confused why they are getting dunning letters. Let’s examine the random noise that passes for cognitive thought in our waif’s cranium, and see if we can detect any coherent signal.

    I don’t have any savings, but I also don’t have any wants.

    Crikey, this young lady has discovered Zen Nirvana a long time before this greybeard. I am in awe of her precocious wisdom, she’s obviously up on the literature of Thoreau, who delivered himself of the same message more poetically

    A woman is rich in proportion to the number of things which she can afford to let alone.

    Hats off to you, Lauren. Unfortunately it all goes pear-shaped right after that

    don’t know about you, but I like to enjoy my life. I like to go out to eat, buy clothes I don’t “need” and spend money with friends on memorable nights out.

    Hmm, so what exactly are these wants you don’t have? For starters you have associated enjoying your life with spending money, enough to enumerate a  bunch of manufactured experiences, clocking ERE’s trifecta in two lines

    In general, if you ask the average consumer what enjoying life is all about, it distills to the following trifecta: buying tickets, going to restaurants, and shopping.

    Well done Lauren. Hero to zero in the first paragraph. She does go on to make some fair points that young people may delay reaching some life stages compared to their parents; this is not unreasonable if they are going to live longer. I have much sympathy with the longer adolescence theory – I wasn’t an adult at 18 and probably only just at 21, which was where the threshold of adulthood used to be considered before the 1960s. So that’s the long explanation of how we got to living within your means being considered frugal these days. Too much Lauren YOLO. Anyway, back to our frugalista:

    Ermine to wannabe frugalista – live intentionally

    What is something that a typical consumer could do? Live more intentionally. We make most of our decisions about spending in a framework of do we have enough money. And yet we are selling precious minutes of our life here. Here was my idea for the prospective frugalista, the techniques are not original to me, but it’ll do:

    • For the next week, note everything you spend. At the end of the week, look back over it, and ask yourself – did this enhance my quality of life proportionately? Classify into wants – that’ll be all of Lauren’s purchases, and needs – tickets to work, groceries etc.
    • Work out how much time you have to spend going to work (including commuting time) to pay for it – if you earn £80k for a 200-day 8-hour day + 4 hours commute  and take home £54k p.a.  net and pay £2k on commuting then your hourly rate is 52,000 ÷ 200 ÷ 12 = £22/hr
    • Armed with this insight, for the next week, simply delay buying any Wants for 24 hours. The next day, ask yourself if you want to buy this Want, and if the answer is yes, knock yourself out

    These helped me; I still use the technique of waiting for 24 hours for some things. For some people it works well enough to take five and attune to whether this purchase is really worth it to them. The 24 hour delay is usually enough to get yourself into a different emotional frame of mind, and this often enough to split off something that looks like a good idea at the time from something that looks like a good idea all the time. It easily halves wants.

    The reason this works is because it is often how you spend your time that matters, rather than how you spend your money. Armed with that knowledge you can often get better value for your money – the stories the ad-men tell us are that it’s all about the money. That’s bollocks – it’s often more about the who, the how, the when and the why. But these are elements not in the admen’s control, so they push the story that it’s about how you spend your money.

    This is one of the reasons early retirement can work well, even though it is never a wise thing to do financially – you always have more money if you work longer. But if time matters more than money for many experiences, the trade can be a win, and many things are much cheaper if you can take longer or be flexible on timing. You can never have enough money to feed every Want, so the secret is in knowing yourself well enough to discriminate between your wants. Some of them are your wants, but all too many of them are illusory, the background radiation of an economy that needs the endless more to survive. As time goes by it’s about the who and the how and the when and the for how long, and less about the what. There’s a delicate balance in all these parameters, and only a very faint sound of Thoreau’s distant drummer to guide you to your inner voice. The rest is the boorish shouting of admen and sales types who want you to sponsor their dreams.


    1. For the sake of completeness I’d make the integration time a calendar year, to catch all recurring costs
    2. Some people labour under the misapprehension that cashback, topcashback, points et al are free money. They aren’t. You are being slightly overcharged for your goods and then sell a bit of your headspace to the card companies to normalise increased spending in return for a little bit of cashback. You save far more than the cashback by just buying 5% less consumer shit. But each to their own – believe the story you want to hear if you like
    3. this is increasingly untrue because my ISA throws off a fair bit more income that I would get claiming JSA, but since I reinvest that I don’t count it as income
    4. there is an argument to be made that early retirement is one way of taking more time off
    5. this is more an aspect of working for an employer – if you are a contractor or you are The Boss you have some flexibility here
    6. £560 for two incl wine at Raymond Blanc’s joint is about the same cost as a year’s worth of weekly Big Mac meals for two in Oxford
    15 Sep 2015, 1:44pm
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  • October 2015
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  • Financial Independence and the cycle of life

    The UK PF scene has expanded a lot of late, and this is all to the good IMO – there are many ways along the path to freedom from The Man. Some are slow and steady, some have Sturm und Drang. Most writers are far more ambitious that I was. As yet there aren’t that many other reporters filing reports from across the FI event horizon, indeed there are more from the US side than from Blighty.

    There are, at heart, two different sides to personal finance, as epitomised in the classic highwayman’s salutation and title of the seminal PF book Your Money or Your Life. You start out in an industrial consumer society as an adult with nothing, indeed, increasingly with less than nothing due to student debt 1 but with a stupendous energy, ability to learn and ambition. You gradually exchange this capacity for financial income, and if you are part of the PF community, you try and accumulate some of this income as wealth.

    The financial side – it’s all about the money

    There is the finance side, this is all about SWRs, reducing fees, seeking opportunities, evaluating risk. I’ve drawn back a little bit from writing about that, because a) there have been a lot of new authors entering the market that fundamentally know more about these things, Monevator is still there and there’s not much that I can add, b) some of the changes Osborne has made have given me the opportunity to seriously derisk my pension savings by allowing me to buy out some of the actuarial reduction to my pension; my ISA will be paying for wants rather than needs, and c) personal finance is interesting but not fascinating for me now – it was fascinating while I was working for The Man and it was an enabling technology to shorten that period. The essential takeaway I have learned by experience is still the same as was taught me by my parents and that I largely followed  –

    Don’t spend more than you earn, son, and never borrow money for Wants, and only for those Needs that are non-wasting assets 2

    I can count the number of times I used more than a month-long consumer credit on my fingers, which is uncommon in the modern world. Once when starting work to buy a hi-fi preamplifier on 9 month’s 0% credit, which although stupid didn’t cost me anything because it was paid on schedule (and is still in service over 30 years later), one bank loan to buy my first car which was also stupid but was paid back on time and never repeated, a 0% credit card loan to pump up the deposit on my first house, paid back on time, a mortgage for 20 years, one time with credit cards when first going out with DxGF where I failed Micawber and started to fall behind but corrective action was taken within two months,  and more recently to avoid having to sell more than a capital gains tax allowance worth of shares.

    The personal and the cycle of life

    The young, of course, bless ’em, know they will never get old. So you start work, and life is good, you’re earning money, and of course you will always have the capabilities you’ve always had. Age shall not weary you, nor the years condemn – after all you have not seen the changes that time wreaks on the human spirit. Or indeed the quieter rewards of wisdom if knowledge is integrated over time.

    It is as it should be, life is not a rehearsal, you pass through the stages but one time, and each of them has value. Unfortunately, to make a decent fist of financial independence/retiring early you need to have some feel of these stages, because the demands on your finances will never be the same as when you start work. As a rough obvious qualification, and making tremendous generalisations:


    huge changes in these years, between possibly university and getting the first job. People often pair up in these years, bringing a different set of rewards and challenges. Deep within the British psyche is the concept that you should be able to buy a house in this period, but I would venture this is unrealistic at the current time. I was 29 when I bought my first house in 1989, which is a time that has similarities to now, that was both unwise and also jobs are less stable now.

    These are the years when you set the foundations of a professional career, because of this, taking time out (to have children or take a break) tend to have a serious adverse effect on your lifetime earning power. This is particularly bad in technical fields like IT – a year out of IT is pretty much ‘hello world’ time again


    Four-fifths of people will be wrangling children and work in these decades. Taking time out in the first half of this decade has some adverse effect on lifetime earning power. People start to slow down towards the second half of this decade – particularly those with children are run ragged, and their focus is not as single-minded as it once was. Mark Zuckerberg summed it up well

    “Young people are just smarter,” he said with a straight face. “Why are most chess masters under 30?” he asked. “I don’t know,” he answered. “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”

    He got slaughtered for it because it’s not politically correct, but I believe he has a lot of point in that the simplicity of young people’s lives is a great asset for work areas that deal with roiling change.

    In the second half of this decade it’s often about domain knowledge, contacts and leadership. You better have some of these, because towards the end of this decade if you don’t, you start to become expensive and replaceable.


    These are often the hardest years for many people, and they coincide with a statistical low-water mark of psychological well-being 3 in people

    likelihood of depression in the UK labour force, by age

    likelihood of depression in the UK labour force, by age

    I personally wouldn’t casually draw a U through this – the peak in the late 20s I think is real – a quarter life crisis, the disappointment is ‘is this all there is’ and to me there seems a clear deterioration from the 30s to the early 50s. I like the personalTao’s explanation

    Quarter life crisis in a nutshell is all about how a person shifts into society. Midlife crisis is the reflection of Quarter life crisis. Midlife transformation is all about how a person shifts out of society to become their own person.

    I’m going to barge off the scientific into the anecdotal. The part of The Firm I was in never had great mental health. It hired people who were already a bit unbalanced, in the early days before a big purging in the late 1990s they had a significant number of serious outliers and downright weird people – stupendously brilliant in some areas and almost dysfunctional in others. They got rid of most of these folk by 2000, as they decided to get out of R&D. But the background radiation of the selection was presumably still there. Every so often someone would top themselves, this always got hushed up but I knew someone on the site fire team who got to hear about incidents. The windows in one of the towers aren’t openable any more, but the paving slabs were still cracked last tie I saw them.

    I saw some people go off with stress. I saw heart disease claim the lives of some colleagues, and towards the end of this age decade is when that starts catching up with you.


    In the early part of my career, this age cohort was well represented. After all, the human lifespan is typically three-score years and ten, even 30 years ago, and in something soft like electronics and studio engineering it’s hardly like the Grim Reaper comes to call early. Indeed, in the late 1980s and early 1990s these guys formed the typical 25% of workplaces that elementary arithmetic would lead you to expect, given my decade grouping and a 40-year working life. Early retirement was not a thing then – I went and got truly hammered at my first BBC boss’s retirement bash – he was 65 ISTR although I’m pretty sure the BBC NRA was 60. At The Firm I saw a fair few old gits swan off into the sunset at 60.

    Something changed in the last decade and a half. Now The Firm ran out a lot of their 50-somethings in the dying days of the dotcom boom. But I went to very few retirement celebrations in the last five years of working there, when some of the late 40’s people in 2000 would be coming up to 60. Some of that is due to other changes in the workplace – The Firm shattered the esprit de corps with some of the changes. But I saw a lot of people go off sick and there were a few funerals. Now I don’t know enough of longevity to know if this is the natural slope of the bathtub curve of reliability, but I do know that in the rest of the community I know I haven’t seen any 50-60 years olds get planted…

    This age cohort is prime target for redundancy at the level of middle management. They’re often expensive, Zuckerberg’s thinking abounds. To be honest, if you are working for The Man, just don’t expect to for most of this time. As a test, look around your office and take the average age of the oldest 25%. It should be in the 50s. If it’s less, there’s a message in there for you that’s worth listening to.


    You’re in extra time, bud. Though you’re probably feeling more chipper :) By definition you aren’t interested in early retirement.

    What’s with this U shaped curve?

    Two things. One is practical and by observation – work and raising kids is no fun when both partners work, and even if you are part of the child-free 20%, work is no fun. As you progress higher up the greasy pole, youfeel less secure, because the last few years in business have been challenging and wider changes are making your position more precarious. It isn’t entirely enough to explain it, and I’d venture that some of the explanation is to be had in these words

    It seems to me that the basic facts of the psyche undergo a very marked alteration in the course of life, so much so that we could almost speak of a psychology of life’s morning and a psychology of its afternoon. As a rule, the life of a young person is characterized by  a general expansion and a striving towards concrete ends; and his neurosis seems mainly to rest on his hesitation or shrinking back from this necessity. But the life of an older person is characterized by a contraction of forces, by the affirmation of what has been achieved, and by the curtailment of further growth. His neurosis comes mainly from his clinging to a youthful attitude which is now out of season….

    Carl Jung, 1929, CW 16, ¶75

    There is a change and a reorientation to be had across this time, and in a consumer society this is a particularly pathless land. The changeover of perspective is felt, and it is never comfortable

    “The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfortable, unhappy, or unfulfilled. For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways or truer answers.”

    M Scott Peck

    In a materialist world-view, it’s hard to square these changes that seem universal enough to be part of being human, and all too often the discomfort is projected upon the outside world – the hoary new sportscar of the mid-life crisis, the trophy younger wife, the endless striving to avoid the uncomfortable truth that wherever you run to, still yourself you see in the mirror in the morning. To pinch some more of the wisdom of M Scott Peck in The Road Less Travelled

    “Life is difficult. This is a great truth, one of the greatest truths. It is a great truth because once we truly see this truth, we transcend it. Once we truly know that life is difficult-once we truly understand and accept it-then life is no longer difficult. Because once it is accepted, the fact that life is difficult no longer matters.”

    Many, many people fail the test of mid-life – because as they come to the signal-box where the switches will be thrown they project their past upon their future and fail to give the right instructions

    “Thoroughly unprepared, we take the step into the afternoon of life. Worse still, we take this step with the false presupposition that our truths and our ideals will serve us as hitherto. But we cannot live the afternoon of life according to the program of life’s morning, for what was great in the morning will be little at evening and what in the morning was true, at evening will have become a lie.”

    Carl Jung, Modern Man in search of a soul

    You may disagree with some of Jung’s background, and some of the surrounding text is of its time, though I would say still translatable to the modern world.

    the iconography says it all :)

    the iconography says it all :)

    Corroboration is to be had in the Harley Davidsons, sports cars and the existence of sugardaddie.com (tagline – where the classy, attractive and affluent meet). Thank you to the Daily Fail’s Helen for the tipoff!

    Ok Ermine, WTF has all this psychology/metaphysical shite got to do with FI/RE?

    tl:dr – Life is short, use it well. You will change if you grow well through the life-cycle, else ossify and atrophy. Don’t count on a 40 year working life in a stressful field.

    Welcome young PF reader (if you’re an old git you’ll have gone meh way back). Think of the grizzled Ermine as the Ancient Mariner in Coleridge’s Rime of the Ancient Mariner, and you as the Wedding-Guest 4 – because if you are still reading by now then the hidden menace of the tale holds reader in thrall

    The Rime of the Ancient MarinerIt was kicked off by Mr Z’s great post – Sprint, Walk or Jog and it reminded me of a long three-year journey I undertook, in adverse conditions, to try and get out. Believe me, I would have given a lot ot kick back from the sprint phase – The Firm was desperate for people to go part-time and offered decent terms. I considered it, but then lifted my eyes to the glittering prize, and kept going.

    It’s hard to make the figures add up to retire early, and to be honest to do it at all compared to your fellow wage-slaves you need to sprint. Mr Z’s walkers will never get there – subtle trends in the economy are running away from the workforce, and if you do the same old same old then you will probably retire at 70+ if at all. Some of these forces are the same ones that make saving for a house run away from the average punter. FWIW to some extent I am absolutely guilty as charged by Mr Z

    It’s whirlwind at the end, pulling together what ever resources are available and blaming everyone else for not letting you know that this day would come.

    although in my favour I would say that I took corrective action with extreme prejudice when I did realise I had been asleep at the switch…

    but I can return the favour. Beware of the siren song of sabbaticals – because if you plan to get to FI/RE working for a company the cost of taking time off is high and variable, and you are unlikely to get much beyond 50. Many people will think they see lots of 50+ people in the workplace, and it’s true. But there’s a dirty little secret about the whole FI/RE community that is rarely acknowledged – income matters. If you are talking about early retirement you are unlikely to be on the UK average household income of £27k p.a.

    UK taxpayer mean and median earnings by age (taxpayers only)

    UK taxpayer mean and median earnings by age – taxpayers only (source ONS data) Mean reflects the fortunes of the typical striver for FI, median for the average Brit.

    Note that this is taxpayers only – it doesn’t include those with an income below £11k p.a., the unemployed, welfare claimants, Ermines. Now think about the odds, you’re somewhere between the blue and the red lines, and I’d say you can’t necessarily count on a long, highly paid working life of 21 to 65. The signs of the 50-60 flameout are written all over that chart.

    It isn’t predetermined – but the odds ain’t great.

    Like anything else in life, you can shift the needle on the dial. Certainly working for The Man post 40 is a hazardous thing to rely on for FI/RE, but maybe you will run a business or become a contractor, as long as you can stay ahead of the game you can do well. But when setting direction in your 20s and early 30s you don’t know how well this is going to turn out. Right up until the month 5 before I recognized the writing on the wall I was expecting to work to 60 and then retire. Why 60? That was NRA for The Firm when I joined. It would have been a terrible waste to have done that – to call in M Scott Peck again

    “Until you value yourself, you won’t value your time. Until you value your time, you will not do anything with it.”

    I hadn’t got my head round the fact that I really should have been asking myself what do I want to be doing with my time – I was guilty of using the program of life’s morning into its afternoon, without even a celebratory drink when the sun passed the yardarm!

    You’d be unwise to assume a 30-40 year working life in a highly paid/stressful job. Your late forties onwards is when the cracks are likely to start showing up. And the blighters don’t take no for an answer. One of the computations I did was if I bailed early, how many years of working minimum wage at Tesco were going to be needed. Let’s just say that the answers was enough to get sufficient intestinal fortitude to keep going, discard the blandishments of going part time or taking a year out and getting on with it.

    The life-cycle favours doing your sabbaticals either before you start on the treadmill, in which case they are called gap years or postgraduate degrees, or taking them at the end of your working life – as I am doing now. If you want circumstantial evidence of the magnitude of that hit, then look at this chart

    earnings by age (taxpayers only)

    earnings by age (taxpayers only)

    and ask yourself when in the age grouping do women typically  start having children – and remember this is taxpayers only so a SAHM presumably does not feature. Having children may be a very rewarding activity, but it’s not remunerative work, and it has consequences for earnings. Everything worthwhile has a cost; and if a sabbatical is worthwhile than of course it also has a cost. That cost does not appear to be trivial. Although I’m not comparing like with like, since a sabbatical is a one-off setback, it still not zero and it’s more than the pay you forego.

    If you want FI/RE, the odds favour keeping your nose to the grindstone. Extraordinary results demand extraordinary effort to achieve. There’s a damn good reason why most people don’t retire early, and of the rest, many just retire early (50+) like me, rather than extremely early (40+). If you want to make easy money, do something hard.


    1. there’s a strong case to view this as a graduate tax, due to its peculiar nature and to try and not normalise debt
    2. the common examples are a house and education
    3. Is well-being U-shaped over the life cycle? Blanchflower and Oswald, Social Science & Medicine 66 (2008) 
    4. I failed Eng Lit so here is a secondary interpretation of the meaning
    5. Hindsight shows that the evidence was scribbled all over the place in the preceding couple of years, but that’s hindsight for you
    12 Sep 2015, 4:31pm
    housing personal finance


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  • Financial advisers and the triumph of hope over experience

    I thought I had done the whole UK property tragedy in this snarl, but Monevator pointed me to an absolute corker.

    ‘I’ve inherited £15,000 aged 20. When can I buy a £350,000 house?’ [he earns £17k p.a.]

    Let’s imagine our 20-year old hadn’t written to the retired colonels of the Telegraph, but had wandered into the pop-up-shop that is the financial advisers of Ermine, Ermine and Ermine, and asked that of the grizzled mustelid 1 sitting behind a desk with a green banker’s lamp.

    The ermine is child-free, but I don’t totally lack compassion, and a small tear would appear in the ermine’s eye, but he would give it to this young pup straight, unlike the two, count ’em, two, IFAs who appeared in the article. Something like this:

    George, me old fruit, I hate to be the bringer of bad news. You can’t get there from here. You, a twenty-year old young man, have just inherited £15k, which is roughly a year’s salary. You would like to buy a four bedroom detached house. You are on less than the average wage. It ain’t gonna happen. What you need to do is focus on earning more, and also scale back your ambition here. Let me tell you a story. I was earning far more than you in real terms when I stupidly bought a house in the mid-morning of my working life, and while I have had three decades to make stupendous mistakes, no financial error gets anywhere near the magnitude of that cock-up. The UK housing market is a heartless mistress – funded by an army of BTL sugar daddies I regret to say are my age fleecing the young, themselves in servitude to Britain’s rapacious financial industry it will eat you up and spit you out in little pieces.

    Your lucky stroke is that your ambition so outweighs your means that lenders will probably save you from yourself. Invest wisely, though do have a little bit of fun to celebrate the old girl’s passing. First see to your emergency fund of six month’s wages, held in cash probably with Santander to get some interest. Then invest the rest in a S&S ISA index fund and forget about it for five years.

    Your position is not hopeless. Inform yourself about the credit cycle, and the things that drive house prices. Do scale back that housing ambition – you may well want a four-bed house to raise a family, but hopefully there will be a lady of the house who can help with the finance.



    1. one of the advantages of being an ermine is is doesn’t matters if your fur turns white, because that’s what it’s meant to be
    11 Sep 2015, 5:44pm
    living intentionally reflections


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  • turning work into performance art by gamesmen

    The world of work changed tremendously over the three decades I spent in it. Much of that change has arisen as a result of the tremendous improvement in communications since I entered the workforce in 1982 1. Communications in 1982 were the telephone and the letter, computers were rare and accessed by expensive text terminals on RS232 serial lines and didn’t feature highly in the early days. Companies were much more hierarchical and experience was more valuable – equipment, technologies and staff didn’t change as  often as they do now.

    Over at Retirement Investing Today RIT has a fascinating post Will I want seclusion in FIRE – he is much more analytical than I am and identified trends which, looking back seem obvious but I sure as hell missed them 😉 Part of the thesis is that RIT self-identified as an extravert but he wonders if this was an adaptation to the performance art known as work.

    The Swiss psychologist Carl Jung gave us the concept of extraversion and introversion, although they are commonly understood to mean something a bit different from his description. The general summary is

    Extraversion tends to be manifested in outgoing, talkative, energetic behaviour, whereas introversion is manifested in more reserved and solitary behaviour.

    RIT’s post set me thinking, it’s not surprising that the vastly improved range and nature of communications today will play well to extraversion, and it is my experience of the changes in the workplace. Early on I decided I wanted to work in research and design, and within the first few years of working had got myself into this field- something where the intellectual challenge is interesting and also areas of work that don’t greatly feature the endless flapping of lips that makes up a lot of human activity. Although humans are top predators which normally tend to be loners in the rest of the animal kingdom, we are social animals. But some of us are more social than others; I only just about get the point of Facebook and I am still trying to work out exactly what is the point of Twitter 😉

    FI/RE tends to favour introversion

    ERE Jacob called out that the group of people chasing early retirement tended to include more introverts than the general population. It’s not that surprising when you think about what you have to do differently to achieve FI early – you have to opt out of some of the shared experience of modern consumer life. For example I don’t have a television any more, not because I can’t afford it, but I don’t want to give headspace to ads and I don’t want to live other people’s dreams. It’s not cost-free – there is a hell of a lot of good stuff on TV. I aggressively block as much online advertising as I can – some popular websites just don’t work on my system, and when I see the web on other people’s computers I am flabbergasted at the amount of ads and moving crap there is everywhere.

    Although I’d agree with ERE that the balance of FIers is shifted along the spectrum to introversion it is a trend not a requirement – after all Huw over at FFBF is enthusiastically organising meet-ups which get a good attendance so there are a decent number of the PF community who are towards the more extraverted end of the spectrum. I probably lie a long way to the introverted side, I have tried but I can’t really see what the point of a PF meet up is – which is not a criticism of the concept at all, it’s just something I can’t get my head around.

    The workplace increasingly favours extraversion

    In my thirty years at the workplace, I saw them knock down the walls of the roughly ten-person offices that were common at the BBC Designs and the early days at The Firm, first into sort of cubicles and then into the instrument of productivity destruction that is the open-plan office. The talented engineers of the early days were often very seriously weird human beings, some were almost totally unable to read human emotion and could piss others off deeply without realising it or meaning to. People could get away with being such oddballs if their work was great 2 , indeed I would say that probably most of the major advances in human knowledge have been made by people who had something wrong with them.

    The rest of us are just a little bit too average to push the envelope that much. Some of these oddballs and misfit  guys (they were mainly guys, engineering is just like that 3) were strange, some of them just plain stank because their minds were focused on thinking rather than the issues of being a large animal rather than a brain on a stick. But when they got in their stride they would be talking about stuff that left me searching for the overdrive setting on my brain, regardless of the amazing hum in the office…

    In those distant days although there were annual appraisements a lot of this was around what had happened in the last year. The designs and research were often easier to ascribe to one individual, and I was okay with that. I was happy to be judged by the results of my work – did this work well and was it reasonably in budget? I led an international team of guys doing some research on optical transmission, but communications were still largely done by fax and the phone, although there were primitive forms of email using UUCP and some DEC Vax technology. But the world of work started to change with the advent of the Web.

    Many of the extremes were eliminated – there was much less individual eccentricity and excellence in the world of work I left that when I started. Some of that is good – some of those early workplaces carried deadweight. I applied to the University of Southampton do to a MSc in electronics in the mid Eighties after observing some 50-year olds in Studio Engineering at the BBC who were on the same 2N5P entry grade as me. If you always follow the path of least resistance, you tend to roll downhill. I was prepared to make the climb for a better view.

    and so the cycle will turn again, and start anew

    a fast follower

    My experience was influenced by these external changes, but also that I was slowly creeping up the greasy pole and also that The Firm had shifted its emphasis away, and one Big Cheese openly admitted, from becoming a ‘first mover’ to becoming a ‘fast follower’. Apparently in MBA circles there is a sound intellectual basis for this policy, which is kind of depressing in a general way. Eventually the wellspring of human progress will dry up as we all try and follow each other

    Astute fast-followers recognize that part of Customer Discovery is learning from the first-mover by looking at the arrows in their backs. Then avoiding them. 

    The changes in the world of HR seemed to be that it was all about performance management, writing lies and bullshit into dire computer systems, impose forced distributions that implicitly set everybody against each other  – if I avoid helping you then you can become meat for the mincer rather than me, despite all the platitudes about teamwork. Performance management favours those who shout loudest and big themselves up the most – the clue is in the word performance, which has a double meaning in English for a good reason. It’s about the singer, not the song.

    RIT has the edge on me – he was able to observe, and adapt, he will retire earlier in his life than me. And good luck to him – to be honest his daily experience of work sounds like a hell of a lot rougher than my three years of running out in lockdown mode – I didn’t spend much on useless consumer shit, didn’t eat out and didn’t go on holiday but it wasn’t that tough! Unlike RIT  I was unable to play against type and eventually I came to the logical conclusion that I am better off out of there. Though I was tickled by some of the comments

    I certainly don’t enjoy spending time with wider family and friends who continue to consume like the best of them.  Their talk of how much their house has gone up in value or what new car they are going to buy now just bores me.

    It’s called getting older 😉 Although it’s not for everybody, I find Carl Jung’s work a decent map for the territory of my life-cycle

    It seems to me that the basic facts of the psyche undergo a very marked alteration in the course of life, so much so that we could almost speak of a psychology of life’s morning and a psychology of its afternoon. As a rule, the life of a young person is characterized by  a general expansion and a striving towards concrete ends; and his neurosis seems mainly to rest on his hesitation or shrinking back from this necessity. But the life of an older person is characterized by a contraction of forces, by the affirmation of what has been achieved, and by the curtailment of further growth. His neurosis comes mainly from his clinging to a youthful attitude which is now out of season….

    Carl Jung, 1929, CW 16, ¶75

    and observation shows that a trend towards reflection and understanding is associated with ageing well 4– arguably a shift from extraversion which is needed to be successful in the first half of life to introversion and deepening in the second half.

    Countering that I became less introverted after retiring, because I own my own time and take things on my terms or walk away. The performance managed workplace made me mistrustful of other people because you don’t have to be stupendously clever to see the logical conclusion of a forced distribution – your end of the boat goes up at other people’s expense, and vice versa.

    Some people learn to live in the matrix quickly. They are always seen as stars, but they have no real results to prove it.

    I took a hit in a non-work area of life and interpreted the bad quarterly performance review after that as the starting gun to get out three years later. As it happened The Firm needed a legacy skill I had for the London 2012 Olympics and invested a little in trying to patch it up, but once the mainspring is broken the clock can never be rewound. I did that work because I needed the money to thread my way out of there, and it was satisfying in its way, but I struggled.

    Modern performance management f*cks people up, particularly introverts.

    I was particularly maladapted to it because I didn’t grow up with the problem, for most of my career performance management was about results, not narrative. I believe that there is a lot of fluff and peacockery now that just wasn’t possible in workplaces before, facilitated by easier and cheaper communications, from the cc CYA emails to the endless telephone conferences to try and work out what you are going to start to all do, it just grows, along with the empty metrics and targets collated because it can be done 5. ERE again identified the problem – the workplace is becoming a game, with rules and levels – it rewards those who learn to play the game, the gamesmen, whereas I am more to the craftsman end of ERE’s taxonomy.

    ERG may not like the stupid dance, but he probably grew up with it. Performance management is the #1 reason I retired early, I never, ever, wanted to have that feeling again. I was okay with what I was doing, but the writing was clearly on the wall – the workplace was becoming increasingly hostile to introverts. It is apparently possible to change this orientation, and if not then some people can fake it. But you get more cantankerous as the years roll by – WTF should I change myself to dance to this rotten tune when I can leave the stage altogether and navigate by the light of my own lamps? I’ve only got another three or four decades max, I have enough money to have a good time and indeed re-enter the middle class and inflate my lifestyle should I want to do that once I have access to my pension savings.

    There’s a very good argument to be made that you should do this thinking about what you want to spend your time on earth doing at a much earlier stage, and it’s good to see such a lot of people in the PF community are indeed doing just that in their 30s and 40s. Life is short, use it well 😉


    1. of course as an engineer much change in what I did adapted to changes in technology
    2. this is still present in some tech extremes –  like the way Google employees can’t cook for themselves or do their own washing, which is why Mama Google sees to it to fix their household requirements. Free food, free laundry, free haircuts. free car…
    3. when the IET which is the UK electrical and electronics engineering trade body has to establish a more female-friendly alter ego as the Women’s Engineering Society with nary a link to the IET then it shows that there’s trouble in Paradise – along with the carping about the status of engineers in the UK the lack of women is something that occupied the Letters page of the IEE when I joined in 1982 and still exercises them as much 30 years later
    4. Jung himself did pretty well – anybody whose last words are “Let’s have a really good wine tonight.” is someone who knows how to cash in their chips in style
    5. there’s nothing fundamentally wrong with metrics, but as Stephen Covey says, begin with the end in mind. Why are you collecting these metrics, and are you measuring it because it’s easy to measure or because it’s worth measuring?
    7 Sep 2015, 4:07pm
    housing rant:


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  • house prices – finance grabs punters by the balls with the invisible hand of the free market

    Housing is the third rail of British investment classes, and I don’t usually go there for the simple reason that I don’t invest in it.

    However, I never really spent much time working out exactly why this asset class is so heady and dangerous. I spent a lot of time looking in the rear-view mirrror working out how it hurt me, examining how, after 20 years of actually paying down the mortgage I had just about broken even relative to the estimated cost of renting, and how terribly front-loaded the risk was – I got away with it because I stayed in the same job for 24 years and bought that house six months into that job.

    Even Monevator declared the asset class overvalued and he’s not a fellow who likes to let on that crystal balls have their place at very rare times :) Although I am still chortling about this –

    by the 1980s they could begin amassing the property wealth they have today – aided enormously by the right-to-buy and buy-to-let booms that the current Government is only just applying the brakes to.

    Not me, mate, I took the sucker punch here and I’ve read the early 1990s news reports that predate the Web where 3 million of my compatriots were in negative equity. The specifically housing part of my networth is probably less than a tenth of the total, and I own half the equity in the house outright (Mrs Ermine owns the other half, not a bank :) ). I do own land elsewhere that roughly doubles that, arguably my property asset class worth is about a suburban semi . Before Londoners start to spit bricks and think the Ermine is on the Sunday Times Rich List, remember that house prices in the provinces are much lower than in London.

    As an aside, I’m intrigued by the result of 80 years of peace in Europe leading to the nonchalance of

    it could eventually be the country I live in. The gulf between what you can buy in the UK and in the great livable cities of Europe is staggering.

    The ermine is a jittery fellow, and even if we discount Brexit, I hear the distant drumbeats of serious social unrest in Europe. Sometimes it takes an outsider to clarify the matter

    At different times and for different reasons, all of the large European states—the United Kingdom, France, Italy, Germany—have blocked attempts to create a common foreign and defense policy, and as a result they have no diplomatic or political clout.

    They haven’t wanted European leadership, and most of them wouldn’t have wanted American leadership either, even if any had been on offer. The richest economy in the world has a power vacuum at its heart and no army. Now the consequences are literally washing up on Europe’s shores.

    But that’s not the point of this post. It is the discovery of the cogent rant linked to here in the comments of Monevator’s Yes, we do have a house price problem article. Unfortunately it’s far too long, so my service here is to summarise some of the observations in a post that is too long but a hundredth of the size:

    In an industrial consumer society, shelter is the one basic Maslow need most people buy on credit

    1402_Maslow's_Hierarchy_of_Needs.svgTake a look at the bottom two layers, which are basic and fundamental needs. Most of us don’t buy food on credit – cash is king here, from income. If you do buy love you probably use cash too 😉 Unlike in the US, healthcare is free in the UK. Although I am sure that there are many who would like to try, we don’t currently charge for air, and most people pay for water as they go along too.

    Unfortunately there’s one big item that addresses homeostasis, sleep, security of body etc, and that is shelter from the rain and other hazards, in short, housing. A hairless mammal in a Northern European climate needs a home. The vast majority of people, on leaving the parental home, are not rich enough to buy a house outright. They need to borrow most of the price.

    The free market fails dismally where everyone buys an essential product with credit

    If I want to buy a pound of apples, or a car, markets work well, because what is called market substitution happens if suppliers price-gouge. I switch to oranges if apples are too dear, I use public transport or a bicycle if cars are too dear. In this way the balance of power is matched – if the buyers are too tight the product is withdrawn from sale because producers don’t find it worth their while, if the producers want all the money the buyers disappear. Adam Smith’s Invisible Hand does its job well when everybody can walk away and do without. When you can’t, the Invisible Hand grabs you by the balls and your heart usually follows. Nowhere is this clearer than with housing.

    more »

    5 Sep 2015, 12:11am


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  • You don’t need a remote-controlled iKettle. You need remote controlled coffee in the morning

    The kids are back to school and the wage-slaves are finally back to work, leaving the world blissfully quieter for retirees 😉 However, the silly season was extended over at the torygraph, who bring us the amazingly useless invention of…


    This Smarter iKettle allows you to boil it remotely from your bedroom when you wake up, or when you’re on your way home from work. It will also tell you when your hot water is ready to pour, remind you to refill, and tell you when the kettle is empty.

    the iKettle. Much like the Internet Connected fridge and the smartwatch, at £80 this is a solution in search of a problem. One which has had perfectly reasonable solutions ever since the 1960s, as the Telegraph very well knows. Indeed a search for the device shows it exercises the minds of our retired colonels-pining-for-the-glory-days-of-Empire an awful lot. Perhaps they had a crush on the woman in the ads back in the day :)

    1509_teasmadeI like the enterprise of the British search of a morning cup of tea –

    Mostly it was bought by a middle-aged, middle-income workforce who needed help getting out of their suburban beds.

    Presumably they were sore that that the price of servants was so high in the 1970s… The Teasmade had some  positively lethal forerunners in the form of a methylated spirit burner lit by a match struck by the clockwork. What on earth could go wrong, eh – on a good day you rise to the pong of meths and stewed tea, on a bad day you get woken up by the smell of your house burning down. What’s not to like?

    The trouble with the iKettle is that apart from a few people who drink hot though probably not boiling water as is, what you want to do with your boiled water is use it for something else, be that making beverages or boiling some spuds so you may as well go over there and press the damn button, and you tell whether the kettle has water in it by sloshing it about or listening to the noise. There is no need for the remote control at all. Indeed, if you want to spend money on simplifying your boiling water experience a Quooker tap is the way to go, you cut out all that filling the kettle first malarkey.

    Tea? In the morning? What is this risible concept anyway?

    The ermine household has no truck with the idea of tea, pretty much until 4pm. It’s coffee that is needed before the sun rises above the yardarm. Way back in working days I used a timer connected to a coffee machine in a gonzo version of the Teasmade and it served me well for years – far better to rise gradually to the smell of coffee than to some ghastly buzz or the latest Autotune hit. Obviously there’s no point in having an alarm as a retiree, so I have much sympathy with the concept of remote control – as long as it does the full job. So out with the timeswitch and in with the JS designs remote control mains socket. I have tried numerous Chinese cheapie remote switches, but they are all ghastly – no frequency control so if they work in summer they don’t in winter. What you really don’t need is one with a single switch that toggles state, because if the coffee is not in the same room you can’t get feedback on which state is ON. Separate on and off buttons, please.


    JS uses a CR2032 cell, it’s easier for the Chinese crap alternatives to use one of those infernal 12V lighter batteries that has 10 LR44 coin cells in them, which makes running costs dear. I’m of the view that for something you get to use frequently it’s worth paying more to get something without rattiness, and lightwaveRF took all the Chinese rattiness 1 away for me…

    Anyway, the remote controlled mains socket and a lo-tech manual filter coffee machine that will power up if left switched on when the mains appears solves the problem the iKettle fails dismally – and you don’t have to putz about with a smartphone to launch coffee either.

    There’s a certain fin de siècle decadence of something so complicatedly futile being exhibited at the IFA tradeshow as part of the leading edge. At least you could eat a chocolate teapot, and I have more admiration of the colonial entrepreneurs of over a century ago with their Heath-Robinson meths burners and matches. Let’s hear it from Stephen Covey and his Seven Habits of Successful People

    Begin with the end in mind

    You want a hot beverage at the end, not an excuse to piss about with a smartphone. 2. If we nailed this in 1902 we can keep to Covey’s maxim a century later.


    1. investigation with a frequency counter of why the Chinese sockets would work some of the time showed they used a LC tuned circuit oscillator with a strip of PCB track inductor for frequency control of the TX, and were susceptible to temperature, humidity and hand capacity
    2. While on the subject of smartphone driven hardware, experience has shown me that software has a much shorter mean-time-to-obsolescence than hardware. Any gizmo that needs an app to make it work will have the service life of a bluebottle, as Apple’s planned obsolescence orphans the app with an iOS upgrade.
    25 Aug 2015, 10:04am


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  • This correction ain’t all that much yet…

    be careful what you wish for. You may just get it


    The Grauniad sets us right: On the sea of red v sea of green debate, the answer is, of course, that red is an auspicious colour in Chinese culture, indicating wealth. Thanks to Tom Phillips, our man in Beijing.

    All around there are headlines of market corrections and doom and mayhem, plus the curious fact that the Chinese seem to use green for falling prices

    So an Ermine takes a look and wonders, hmm, is it yet time to pump up the old HYP with a bit of cheap stuff? One of the shares I could use is Unilever, I recall being a bit sore when I read UTMT had got in at about £24 and I was already well behind the curve. So I sat on my hands, there’s always be another day, plus I’m not really that keen on a desultory 3.8% yield… In an HYP it is crucial to get a decent yild when you buy, because one of the corollaries of a HYP peortfolio tends to be that these are established companies, and Slater reminds us that elephants don’t gallop. So you must. not. overpay.

    UTMT has described the firm’s strengths and weaknesses well, notable is a fair sized exposure to emerging markets, and investors really hate anything to do with EMs right now, and so the company should be down the toilet, right?

    UTMT would still have the edge on me

    UTMT would still have the edge on me

    Well, not so fast. Now it could certainly get there, it depends on whether this market rout has got legs. I feel it does, but others don’t, and what do I know. However, it does highlight the need to have a clear target of where to be prepared to buy at. For HYP shares (usually in the FTSE100) I start to get uncomfortable paying more that the long-run market PE of about 15 for the FTSE100 although many of these big brands tend to be high-ish, which is why I hadn’t got in with UTMT. I was spoiled by building a lot of my HYP in 2009 and 2011, there is some hazard that that makes me overcautious buying in normal times, and to totally go on strike in heady times like the last three years.

    memories of this being in on the radio in the lab in the heady dotcom days of 1997, when buying dotcom shares was going to make me my fortune, though work was good enough I had no thoughts of FI/RE

    So I’m all for a market rout, but let’s face it, what I really want, what I really really want, is a bear market – 20% off recent highs at least, and half of that fall is to get to fair value IMO. And so far, sadly, none of the trigger values for stocks I actually want to buy has been reached, despite all the excitement. There are, of course, areas of temptation. I really want to buy JII, but it’s just not really there yet. So far, this seems to be a rout, not a market capitulation, and the starting point had been from outrageously lofty levels. We’re back to late 2012 on the FTSE100. I want the Summer of 2011…

    So in the absence of anything really worth buying I’m drip-feeding into my existing holding of Vanguard Lifestrategy 100. Not because it’s terribly exciting, and the price is only back down to what it was at the beginning of this year, but because the cost structure of funds on TD are made for drip-feeding. I’d hate to look back if this turns out to be short lived and to have done nothing in the swoon. That’s the trouble with trying to use downturns – the hardest part is actually buying in the fog of war…

    24 Aug 2015, 9:49am


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  • BTL Investors discover the problems of leverage and tax arbitrage

    It’s good to take a short break from the exciting carnage on the stock market and sink some needle-sharp teeth into some egregious special interest pleading. Maybe I’ve be offered an opportunity to buy the FTSE100 below 6000 by the time I’ve finished this :) 5000 by the end of the day – or maybe next month… Happy days are here again

    It’s an evil market all round, British property, and the Torygraph has taken up the cudgel on behalf of Britian’s overleveraged and undertaxed BTL investors

    What is also becoming clear is that worst hit will be those modest, middle-class savers who have prudently chosen to invest in buy‑to‑let, often alongside pensions and Isas, as a means to supplement their income.

    The mechanism of Mr Osborne’s tax attack is the removal of landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.

    Let’s actually parse this bullshit, and translate it

    Middle class savers seeing property as a one-way investment, borrowed shitloads of money they didn’t have to ‘invest’ in an illiquid asset class, and now whinge like drains that they can’t claim back tax on their borrowings. Some of them even whinge that their kids can’t get on the housing ladder without spotting the irony. (okay I added the last bit about their kids)

    Well, welcome to the real ‘king world you greedy sons-of-bitches. I can’t waltz into a bank, borrow £200,000 and plunk it down on stocks, claiming back the tax I pay on the interest either. Diddums. Indeed, the horny-handed toilers who just want to buy a house to live in the damned thing don’t get to claim back the income tax they paid on the money they earned to pay the mortgage interest, so exactly why you demand the privilege so you can soak tenants better beats me. Once upon a time buyers could do that, it was called MIRAS and that was iced fifteen years ago because it simply led to higher house prices because people bid up to what they can afford.

    Connie, a BTL 'Landlord' where the bank owns three quarters of 'her' property portfolio

    Connie, “my five properties were my pension” a BTL ‘Landlord’ where the bank owns three quarters of ‘her’ property portfolio

    Let’s hear it from Connie

    I never thought that mortgage interest, which I regard as a cost, could be taxed as though it were profit.

    How delightfully tragic, my dear. You know the poor little people you beat for the sale, you know, Joe and Josephine Smith who were actually going to buy that house to live in it? They were going to pay the tax on their mortgage interest, so WTF makes you such a special case, eh? I haven’t actually asked them, but I guess they also regard it as a cost, FFS.

    The fundamental problem is that if you have to borrow money to ‘invest’ then you are a hair’s breadth away from destruction. Plus there’s the wider issue – exactly why were we tax-subsidising people to borrow money to royally screw up the already deeply borked housing market in this country?

    There’s nothing fundamentally wrong with being a landlord, if you have the capital or your business model works given the cost of capital at normal commercial rates. But if you need tax breaks on the cost of capital to make your business model work, then you are being subsidised to piss on your tenants who can’t get that tax break, and it really is high time that perverse incentive is stopped. The Torygraph listed a whole load of special-interest pleading, but it’s basically on behalf of people who have invested in an undiversified, illiquid asset class on margin to become rentiers 1. It’s just not the same as buying productive plant and machinery to make more widgets better, where I can see the case to setting interest paid against tax.

    Undiversified, illiquid assets, and margin are not hallmarks of prudent middle-class savings, this isn’t something suitable for widows and orphans. If this is your retirement strategy and you’re an average grunt rather than Nathan Rothschild, and you think of it as prudent, well, we’re not in Kansas anymore…


    1. I don’t have a particular problem with people being rentiers, but you have to have capital to do it. If you can’t afford the entry ticket, then work for your living instead, rather than trying to arbitrage a tax-privileged borrowing situation relative to your tenants, because, well, you’re vulnerable to the loophole being closed ;)
    23 Aug 2015, 1:41pm
    personal finance reflections


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  • Valuation matters – the dirty counterfactual to steady index investing.

    I’m going to stick my neck out against a common shibboleth here. Compared to many UK FI pursuing people the Ermine has only a short accumulative investing life; this is because I am FI, I haven’t done a stroke of work for more than three years. Because I am earning zilch I still have a very large cash holding of several times my erstwhile gross salary. Some of this was won hard by working for The Firm, but a decent part of it was won hard by investing in 2009 and to a lesser extent in 2011, with a generous risk-free punt assisted in taking up The Firm’s kind offer of Sharesave in 2009 with both hands, yes, please, lots, and a little bit of help from ESIP. In retrospect I could have played the latter far better, but the stupid mind-games played by The Firm hammered my perspective somewhat, and I focused on pension and ISA savings.

    Once I get a steady pension income I can invest a large chunk of this. However, I have a shorter investment perspective and can’t take 30 or 40 years to do it because a) I’m likely to be dead by the end of the term and b) the ravages of inflation will destroy roughly half the value every ten years at the long-run UK inflation rates. In comparison, a worker starting out now will steadily earn the money they will invest in the market.


    Most of you have 30,40 years of working and investing life ahead of you. Bear that difference in mind, and remember that this is my opinion. The history of the world is littered with people honestly believing things that are totally wrong. This article is worth exactly what you paid me for it. Remember you are not me. The UK PF/FI-RE blogosphere has changed greatly in the last few years for the better with younger writers looking to escape the rat race extremely early. Most of you are young and in the prime of your working life. You are not me, a grizzled veteran with a dwindling stock of financial ammunition but a decent sized accumulated bunker where I will make my stand. Etc.

    This also assumes you are looking at making money through stock market investment. By far and away the best way to make money through your own efforts is to add value through starting a business, which gives returns greatly above the return on a diversified portfolio of stocks, which are basically a secondary market for businesses other people started and sold to us all. The trouble is that the odds against success are absolutely terrible and the lifestyle isn’t that great in the early years either. Which is why most of us are (dis)contented wage slaves working for The Man. Working out whether to pay your suppliers or your fellow humans working for you when the kitty is nearly empty is a peculiar type of stress that employees just never get to experience.

    Enough of this disclaimer shit, I’ve done my duty. You have been warned that this may be a total load of arrant bollocks, like anything else on here :)

    Slow and steady investing in low cost assets is the received wisdom

    Received wisdom is that to build capital in the stock market as a wage slave, save a steady amount every month come rain or shine. Do this in a widely diversified low-cost index fund for decades and you’ll be sorted. Minimise platform fees and fund fees and take advantage of tax privileged accounts where possible. Here is a decent instruction manual and here is someone living the dream.

    Let’s first take a butcher’s hook at why this works for most people. Basically if you work for 20 or thirty years, then look at the FTSE100 (in practice you’d go for a wider index)


    note Owl’s comment that the scale should be log Google will fix this for you if you go settings vertical scale log and if you click on the image to go there I have set that to log

    your job is now to find any start period where you are worse off at the end of 20 years that you were at the start bearing in mind that this chart doesn’t show the effect of dividend income so you need to tilt it up by about 3.5% p.a. which is the long-term average yield of the FTSE100.

    But it gets better – since you are buying whatever you can get for regular lumps of cash, you buy more in bear markets, Google dollar/pound cost averaging to see how it works. Your accumulated capital is roughly doubled over a normal 40-year working life because you reinvest earnings. Although I am eternally cynical about the magic of compound interest, a doubling is worth having – it is more valuable if your earning power peaks early, which seems to be one aspect of the modern career arc compared to mine. You can simulate your odds on firecalc. I’m not going to spend any more time on talking about how great slow and steady investing is because this is about the counterfactual, for people who don’t have decades of investing ahead of them. Loads and loads of other people are going to give you that spiel, and if you have 20 to 30 years of accumulation then knock yourself out and JFDI. It’s lowish risk, as long as you anticipate there still being a global financial system in 30-50 years time. If you don’t then you have much bigger problems on your hands that fretting about early retirement, and you are misallocating intellectual and nervous capital by reading further. The fundamental win of slow and steady investing was identified many years ago by Jesse Livermore the Boy Plunger

    And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

    That’s not to say the Livermore was a Boglehead, far from it 1 , but he was a shrewd operator. In general, the market goes up over the long term. Put the time in the market, and you get more of the up.

    Valuation matters more for people with shorter time scales

    One fellow raised this a few years ago and got continuously slaughtered for it by the cognoscenti to the extent he shows serious signs of becoming paranoid (Rob, don’t even bother commenting should you come across this tiny backwater – I thank you for your ideas which I came across in 2008 but I won’t tolerate conspiracy theories because life is too short). GIYF for readers interested in the story, the keywords passion saving will take you most of the way there. Nevertheless, if you don’t have thirty years then you should at least look at the Shiller CAPE and ask yourself if this carries no meaning at all to inform your investment decisions – Jarrod Wilcox’s overview is a good summary.

    Long story short, run towards fire. Buy when valuations are low. There is a corollary that you should sell when they are high, which I don’t use, because I have come to the conclusion that I am not a good caller of the time to sell. As a result I buy and hold 2, I just don’t sell. But I do modulate when I buy, and for the last couple of years when valuations have been high I have not committed new money into the market, I have focused on discharging capital gains tax liabilities 3 by selling unwrapped holdings within the CGT limit and either buying the same or diversifying into my ISA. Yes, I’m buying overvalued stocks, but on the flipside I am selling overvalued stocks so it’s a wash from the high-level view.

    I can’t afford long term drip feeding, because it ain’t going to help me fast enough. I don’t have a huge talent for spotting the up and coming. But valuation has served me well three times now, and hopefully will serve me well again if the sound of distant thunder turns out to be an incoming storm.

    more »


    1. Livermore was an extremely active investor, and not only that, one who favoured shorting stocks. Because stock markets creep up over the long term, you are fighting a headwind as a shorter. Livermore scored by shorting through the Great Depression :)
    2. This philosophy inherently limits me to HYP style dividend paying shares and income versions of funds/ETFs
    3. you can discharge more CGT in bear markets because your unwrapped holdings are worth less. But that would come at the cost of shovelling new money into a bear market, so it’s better to defuse CGT more slowly in bull markets.
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