21 Jun 2017, 9:37am
living intentionally Suffolk:
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  • A FIRE approach to air conditioning

    One of the advantages of being an employee is that The Man usually air-conditions your cubicle. Well, for knowledge workers, anyway, rather than, say, brickies or landscape gardeners. And the heat is on in England at the moment.

    Way back when, in the 2003 heatwave DxGF and I bought a standalone air conditioner and we thrashed that unit, but it used a horrific 3kW to sort of chill one room. It seems to take far more energy to cool something down through a certain temperature difference than it does to heat it up by the same difference, I guess these things are dreadfully inefficient, particularly standalone units that try and pump out the waste heat carried in air as opposed to dual systems with an inside and outside unit with the waste heat carried in a circulating liquid. So you get a 3kW heater in the room to add to the load. Not only that, you have to open the window a crack to get the exhaust hose out.

    We were grateful for that in 2003, but it made an unconscionable noise and power was cheaper in those days. 1

    Dunwich beach

    So it needs some lateral thinking. I need a large body of water, and the North Sea will do. Time to park myself down by the waterside and chill out to the waves –

    and the peaceful sound 2. There was a pleasant breeze off the sea – it was almost too cold.

    I did look around and wonder why the other punters weren’t at work – some were retirees but half seemed to be families. I can’t really moan that the beach was teeming like Benidorm.

    So the ermine air conditioning isn’t really that portable. But it does have some extra features, like the fine ruins of Greyfriars Friary

    Greyfriars, Dunwich

    and it seemed rude not to celebrate the moment with some fine dining

    Local strawberries and cream from the Friday Street farm shop just off the A12

    Londoners travelling up the A12 for a weekend break may want to note the  Friday Street farm shop, which is a few hundred yards detour off the A12 on the London-bound side. The strawberries and cream set me back £3.23 which I thought was a good deal for quality in both items, and they have a good range of foodie delectables. I paid roughly twice that in fuel. There are some that may carp that you can’t spend £10 for gratuitous decadence every day, but I have done my time of ultra-frugality now. No nightingales to be heard in Dunwich forest, where I’ve heard them in previous years, it’s probably too late in the season now

    Dunwich is noted for mostly having disappeared into the sea. In 1250 it was a rich port town of 4000 souls. Since then the sea has gnawed away about 1.5km of the coastline, so most of the old town has fallen into the sea. It is now a village of about 100 people.

    The last surviving gravestone from All Saints church, lost to the sea. This was Jacob Forster who departed this life March 12th 1796, age 38

    The sound of the sea is not far from Jacob Forster’s grave. It’s coming for him after two centuries of undisturbed repose…

    Mr Money Mustache will no doubt consider seeking air conditioning an act of pusillanimous weakness, but the trouble is that no part of Britain is very far from the sea, and in a maritime climate it always really wants to rain. Even on a hot day with blue sky – the inherent desire to rain results in high humidity. So things like swamp coolers work fine at the lower latitudes of LA, but are a waste of space and money here.

    In LA at the same temperature this would be way down towards the 40% mark

    So I am leveraging the fact that I own my own time, and summer is a good time to live like a king, reasonably cheaply. Strawberries and cream by the seaside is pretty good 😉

    Incidental rant: why doesn’t Britain have proper cadastral records?

    I came across this notice walking from the car park to the Friary:

    No cadastral records, no bloody clue

    Every other European country has a definitive land register of who owns what. But not in Britain. Because all the land was seized in 1066,  what the King didn’t keep for the Crown was handed out to the aristocracy, which hoards it and passes it down the generations, much of the land in the UK is not on the Land Registry, so you get situations like this.

    In any French village you can ask to look at the cadastral records at the Mairie to know who holds a piece of land. Isn’t it about time that we sorted ourselves out and demanded of the aristocracy and anyone else that it bloody well registers every single claim to every piece of land it asserts that it owns, and if no claim is made after 10 years then tough shit, it belongs to us all? After all, if it isn’t registered then Lord Warburton-Smythe can simply make sure everyone looks the other way when his sprog Jimmy Warburton-Smythe-Pollock take over that part of the family estate when he pegs it because no bugger knows about that acreage, because it isn’t on the records. Decent cadastral records would help catch sneaky buggers avoiding inheritance tax and would be a prerequisite to introducing a land value tax. It smacks of dire incompetence not being able to find out who owns what of a scarce and finite resource, and one every other civilised country has solved. But since the lack of transparency serves the aristocracy perfectly well, they won’t let anything be done about out it, the piss taking bastards.

    Notes:

    1. Americans will be tapping their heads, and go just get damn split system aircon, but I wonder how you have any hearing left. When I arrived in LA after a long flight and got to the motel the room aircon unit was on, and I thought I can’t hack this racket, so I turned it off. You don’t do that in LA in July – not getting any sleep was preferable to being fried 😉 Airconditioners I’ve come across in Europe are usually made by Japanese firms like Mitsubishi and are much quieter, but that thing was an all-American GE unit and made a terrible noise. Elsewhere in the city aircon seemed unwholesomely rowdy until you got to a Fortune 500 company offices or a bank. I guess people just get used to the noise.
    2. the intermittent rumbling is sadly the wind, I only had a handheld rig as I wasn’t expecting to do any recording.
    16 Jun 2017, 11:18pm
    living intentionally
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  • Over 50s are big spenders on home and lifestyle into retirement and beyond

    Be afraid, people, be very afraid. Saga 1 tells us the over 50s are big spenders. It’s the beyond retirement that I’m intrigued by, have these profligate silver surfers found a way of borrowing from their own cold dead hands? I’m sure the intergenerational foundation would have something to say about that, but Saga?

    I’m sorry, but by the time you’ve gotten over 50. you shouldn’t be in the business of borrowing for frippery, For sure, you shouldn’t be paying down your mortgage if there are better things you can be doing with your money, like socking it into a pension or investing it. But if you want a new kitchen, and need to buy that sucker on the never-never, then you need to take a long hard look at yourself. Now there is a case to say YOLO, but only if you can be sure that you can outrun your debts. The advantage a young person has in going YOLO and living beyond their means is they have human capital in spades – their future self gets to work longer or harder to redeem their overspending. The finished at fifty, not so  much.

    For a fifty-something to play the YOLO game effectively, you need to be able to know the year you die. Now you can determine that, but it’s all going a bit Logan’s Run

    Jenny Agutter in Logan’s Run

    and often involves Dignitas. I’m personally of the opinion that a sentient being ought to be able to choose that option, but terror management theory generally induces most of us off the way of the Cylopes. It really would make retirement planning a damn sight easier, but the option is still an uncommon choice.

    So many new cars, Saga surfers, so few holidays, WTF?

    Saga say these over 50s buy three new cars in the decade 50-60 and yet only seven foreign holidays, which strikes me as odd, what’s with the materialism grizzled citizens of Saga-land? Mind you, Saga are one of the few banks to advance a loan based on income both from a pension and from savings and investments. The trouble is the usurous 7.9% APR. I’ve groused before on how an retiree is a loans pariah, even when the aim of the loan is to use tax allowances, indeed a 7.9% APR would be tolerable to get a 20% uplift. But not if you have to be a homeowner and it’s secured on the house. Although taking up a use it or lose it tax allowance is a reasonable sort of thing to borrow money for, it becomes non-reasonable if you open yourself up to the risk of losing your house or becoming a forced seller.

    Paying nearly 8% for a new kitchen or car before you have saved for it is just foolish in my view. and by the time you are into your sixth decade you really ought to have learned better. Unless you have a good reason to believe your future self will be richer than your present self, just don’t do it.

    The 50s is a very tough decade for the FI crew to get right

    This decade is tough for many reasons. You can’t get hold of your pension savings until your are 55 and rising, so a whole chunk of your savings may be sterilised, the old silo problem again. You are fast running out of human capital – it very much depends on the field you have been working in, but openings at the sort of salary you were on if you can consider early retirement may be rare. Your financial risk exposure to redundancy is high, and you have less time to catch up if it does happen to you. You may be at a peak of child-related spending unless you had your children very early in life. One of the notable features of the early retirees from The Firm before 55 was that they were mostly the child-free, and being out of the university expenses meat grinder was probably a big part of that.

    Retiring before 55 runs against the general way people do retirement, and it’s a more critical decision because just as you cut the power you have the longest glide path to sustain. It’s a hard balance to get right. Looking back, it is clear that I underspent in the early years following retirement in 2012. Compounding the error I earned a few lousy bits of money in a few one-off hit and run jobs and then picked up a steady income from some technical stuff and bookkeeping until last month. I never recognised these amounts as any useful amount of money, because they were typically less than 10% of what I had been earning when I was working, and I didn’t trust them, so they formed no part of my budgeting. But they seemed to make a surprisingly large contribution to the slowing of the fall in my networth, which was aided by the stock market being tremendously kind to me across the years 2009 to now, until I could make it with just my DB pension because I could defer it long enough.

    Much as I was a purist in that the aim of retirement was to bust The Man right out of my life, I discovered that it was freedom from the rules and the bullshit that I wanted, only later did I find it was also the freedom to do other things, which is why it is time to get work right out of my life again as my pension savings come on stream. No SHMD The Returned for me 😉 I am no longer self-employed as of this month, now that I have collected my second and last year of Class II NI contributions purchased at the spiffing price of £150 p.a. When I was on PAYE I was paying over £5k p.a. and the cheeky barstewards made those years count less for being contracted out. It’s not necessarily the last money I will ever earn, but I will favour no-commitment one-off hit and run jobs in future.

    I don’t know what the personal circumstances of all these profligate Saga spenders are. This extract doesn’t convince me they are that well off –

    Lenders have been short sighted by turning down people by looking only at earned income which is one of the reasons we launched Saga Personal Loans, to give more people access to credit they can afford in order to live the way they want to.

    Perhaps Saga haven’t targeted me because I am simply too poor, not because I have cleverly dodged their tracking mechanisms. But if their fifty somethings are borrowing money to do up their houses and buy three new cars in 10 years, then these guys aren’t that rich either, and they certainly aren’t living within their means. I spy trouble ahead for these indebted consumers as their human capital rapidly dwindles. The ermine may look poor to Saga, I’ve never bought a new car in my entire life, never mind three after retiring. But I am rich in a way that these silver borrowers aren’t. When I buy consumer goods on credit cards I pay them down in full each month as the statements fall due. Saga’s big spenders are rich in cars and kitchens, I am rich in self-determination. Each to their own.

     

    Notes:

    1. I am very happy to say Saga haven’t yet detected from my spending patterns and personal data held by advertisers that the Ermine has crossed the 50 turns around the sun mark despite me being closer to 60 than 50, I have never received junk mail from them
    14 Jun 2017, 5:36pm
    economy personal finance
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  • workers will retire from five million jobs in the next 10 years

    Government figures tell us that over the next five years people will retire from 12.5 million jobs, and there will be only 7 million young people to fill them. Somehow the authors of the report also assume that another two million jobs will be created. Oh yes, and last year our blessed fellow countrymen decided that they didn’t want Johnny Foreigners coming over ‘ere and taking our jobs. The inference seems to be that we need to get our ageing baby boomers out of retirement to go fill these jobs.

    Now a cynical Ermine thinks to self firstly ‘when Hell freezes over’ and secondly – a number of things that are wrong with this scenario. It’s not just investments where past performance is not supposed to be a reliable guide to the future. I’d say there’s this problem with economic prognostications too.

    Let’s take a look at what’s been happening with jobs over the last few decades, shall we?

    Once upon a time, like when an Ermine first rocked up for work in the early 1980s, you could apply for a job, and you’d actually be working for the company on their payroll. That was the case whether you were a graduate engineer or if you were the toilet cleaner. Said firm would also invest in you – they would train you, which was of particular relevance if you had a generalist degree or the company worked in a technical specialism that had unusual quirks. They would also pay into your defined benefit pension – for The Firm at least this even applied to the janitors until the mid 1980s.

    The something called neoliberalism showed up, and communications and IT improved significantly. A whole bunch of blowhards like Peter Drucker came along and pretty much said that pitch everybody against everyone else, let the devil take the hindmost and may the best man win.

    As a result, CEO pay shot up as a multiple of the average employee’s wage, and that was after they hived off the janitors et al to supply services companies and drove wages down to the lowest levels, so the average employee is drawn from a smaller pool of higher qualified staff. That CEO ratio still shot up, not because CEOs add any more value to companies now, indeed looking at stock market returns they’re adding less than before the millennium, but because they are top dog and they can.

    A quick detour through Globalisation, BPO and All That

    Then in the 1990s and early 200s we had wave upon wave of business process outsourcing which sent anything you could send off to lower wage economies, this afflicted the English speaking world more than others because of a ready global pool of decent English speakers. This has very materially improved global pay and reduced global poverty in a big way, as the the right-wing nutjob Tim Worstall correctly opines. And repeats himself thusly. As do the not left-of-centre Adam Smith Institute.

    It isn’t true that everyone benefits from free trade and globalisation. The net effect on all humans is vastly positive, but there are still those that lose. And that’s a political problem, not an economic one. For the people who don’t win are, largely speaking, those below median incomes in the already rich countries.

    Now Tim’s probably rich enough not to give a shit, I figure TW is well over the median income in a rich country. So was (and possibly am) I, but I am far closer to the edge than him, so I am more twitchy. None of these fellows are wrong. All other things being equal, for the sum total of humanity globalisation delivers the goods in the way Bob Geldof and so-called aid just didn’t. It probably wasn’t Sir Bob’s fault – the sort of corruption and baksheesh that aid generates is remarkable, there are many problems in the world that helicoptered money just can’t fix. But even the distorted version of free market capitalism that goes now left all that do-gooding in the dust when it came to alleviating global poverty.

    Globalisation also needed a population explosion because it needs growth.

    There is some argument to be made that it also enabled a shocking population explosion which has made a lot of things like food, water and climate change a lot tougher to nail in future than they were when I was at school, when there were half as many people in the world. I suspect globalisation only works when there is economic growth, and to have economic growth you need growth in the number of consumers, but I am not smart enough to say that is categorically the case. At the moment the score is Oxfam-nil:Globalisation-1

    Communism was also a great idea in theory. Trouble was it went against the grain of human nature. So the trouble with globalisation is that people don’t care evenly about humanity in general. They care about the humanity that is closest to them. Within rich countries we have institutions that sort of temper this instinct, but when the people who are getting the uplift are far away, then the people below median incomes in rich countries who are drifting backwards economically get really, really, pissed off. They let people know, through Brexit and Donald Trump among others. In general they want to put a spanner in the works, because nothing pisses people off more than not getting ahead while seeing other people are.

    The effect of globalisation on First World Jobs

    It makes lovely jobs lovely, and pretty much the rest of them shit. Q: What’s worse than a zero-hours contract job? A: A ZHC job where you get fined £250 a day if you can’t find a replacement if you’re sick. Or only £150. Welcome to the lousy jobs. I am glad that I had my career while the Iron Curtain was still down – true, we had to watch films like Threads and worry about being nuked in four minutes but at least I wasn’t competing with Vladimir and 1 billion in India, and I was working in an analogue world where the cost of replication was higher than now. That suited me very well, because while I am on the right hand side of the bell curve I am not that far to the right of it, and I am an introvert which is maladapted to the interconnected and always-on world of work now. Collaboration and teamwork – meh. You get ahead by having an edge, and you get an edge by spending time understanding what is going on IMO. Chatter on SMS and social media is for gossip, and meetings aren’t much better 😉

    Back to the original premise – a deficit of 7 million jobs?

    Well they’re not going to be getting old gits like me back out of retirement to go into the bear-pit of zero hours contracts, are they? The second word would the -off. Because all in all, working is increasingly a pretty shit proposal, and it’s particularly crap compared to my experience of working in the past. Fortunately, a whole different bunch of guys is telling us that Humans Need Not Apply and that the robots will be doing all these shit jobs. Hopefully this deficit of people desperate for crap jobs is going to do some good then, and people will automate the crap jobs they can’t get the retired baby boomers to fill. This will finally lift capital productivity in Britain although possibly not per-capita productivity. Pret a Manger say that 1 in 50 of their workers in British. Well, tough luck – Londoners are going to have to pay more of their bonuses for their coffee and snacks or brown-bag it, and some teenagers in London are going to get breaks they couldn’t get before, until the robots come. Or they will set up camp somewhere outside the citadel and bus in the serfs. I am not so sure I find that such a terrible thing.

    There, Mr Government and your hired guns. Fixed that for you. Taking 7 million shit jobs out of the economy is A Very Good Thing in this humble Ermine’s opinion. There’s now’t wrong with encouraging those old gits to punch their cards one last time and clear off, even if there aren’t enough worker drones to fill their shoes. The balance had been swinging from Labour to Capital ever since the 1970s. There are too many crap jobs in the UK, and retirement of the Baby Boomers could be just what the workplace needs at the bottom end.

     

    9 Jun 2017, 7:41am
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  • Sowing the wind in the summertime and the living is easy…

    Nearly a year ago the Will of The People™ amply guided by the Will of the Press Barons™ spake of their dreams of throwing of the foul yoke of Brussels, and the Pound took a dive of about 20%. And people said either it was a price well worth paying for freedom from EUSSR tyranny, and anyway, since we make so much of our own stuff and grow so much of essentials like food, the effect on inflation was going to be a mere few percent, so chill out you goddamned remoaners etc etc. In the frenzy of cheer and Enlightenment values we had the Daily Mail calling the judiciary the enemies of the people, perhaps they should have been true to their hearts and used the term Volksverräter

    Well, fast forward a year, which is often when the harvest from last year’s sowing is due, and what have we got? Presumably loads of hospital building, increased pay for NHS staff in the pipeline and all that good stuff we had plastered on the side of buses? Let’s hear it from Mark Carney then.

    Uncertainty for companies about the outlook may also have made them unwilling to raise wages at a faster pace until they have more clarity about future costs and market access

    Oh well, guess that’s the price of freedom then, guys. You don’t get ‘owt for n’owt. I was reminded of this as a couple of Conservative dudes cruised round a few days ago wanting to know if they could count on my vote. I’ve been looking forward to this for a while, to ask a genuine Tory how David Cameron could have been allowed to fuck things up so beautifully by asking a question to which he didn’t really want to hear the full range of answers. An affable old Tory gent, Geoffrey Van Orden responded that it will be fine and all right on the night. He was the first aristocratic-viewpoint Brexiteer I’ve come across, because the Ermine is of lowly stock and doesn’t normally move in such circles. I know enough ordinary folk who were into the sovereignty side of things, and tended to be a little bit older than me. That’s fair enough, it takes more than one viewpoint to make up a world, and at least these retired folk aren’t subject to the vicissitudes of finding work. Nor have they had the possibility of going abroad to earn money and escape the tyranny of British housing and its vile BTL landlords ripped away from them, so although I don’t agree I can see they hold a valid different opinion. I have also run into a couple of the xenophobic sort of Brexiteers, I try and avoid the lowlife scum end of the spectrum. But since it is largely the wealthy gentry and their mouthpieces of the right-wing press that brought us this joyful freedom, I was interested to see what an example was like in the flesh.

    I noted the public school accent and education, which gave him the edge in verbal dialectics compared to me, although I also observed the entitlement to rule character. He identified me as a Remainer and feigned sympathy for the cause which he clearly doesn’t have. Was clearly chilled about the way Brexit has made political discourse pretty nasty in this country, and is of the view that if a few Poles get roughed up, well, that’s just statistical variation, correlation with Brexit not causation, dear boy. I guess the ends justify the means.

    Geoffrey showed me just how much further away from the heat the rich really are

    The ermine is hopefully on the right side of the impending Brexit economy suckout, but it worries me. Sure, I read things like this article and with this sage reflection:

    The fuse of currency depreciation had been lit, and was quietly making its way towards the tinderbox of rising inflation, higher household debt and increased pressure on spending power.

    The average household is now spending an additional £21 a quarter on groceries compared with last year. That may not seem a huge amount, but with inflation on the up that could mean an extra £119 over the course of this year. Airfares, package holidays and energy bills are all rising while wages remain the same.

    and think to myself well, if £120 a year is going to push you over the edge then you’re hosed anyway. You way as well stick your head between your knees and kiss your ass goodbye right now. And FFS, airfares, package holidays – you need to pay your energy bills but cut out the holidays if you find the wolves howling ever closer to the door. To be honest the prescription is always the same, cut the wants before the needs, live within your means, and avoid picking up commitments that you can’t afford to run.

    But it’s still a worry for me, I am many multiples of that £120 a year from the breadline but they’ll all add up. Whereas the likes of the old buffer Geoffrey swan blithely through that sort of worry, because they are so far away from being washed away by the incoming tide that they spout about grand plans, which broadly sum up to a Trump-esque “Make Britain Great Again”. I never did understand why they had so many wartime films on the telly in the 1970s but it seems that the sentiment burns on in many Brexiteers’ hearts, particularly if they are of a certain age.

    Geoffrey talked lovingly about his fine work with the Indian trade delegation when I reminded him that I am old enough to recall the National Front marching through Lewisham in the 1970s and that sort of intolerance of t’other seems to be on the rise again. Apart from a minor technicality of him doing this as a MEP which will be worth a bucket of spit after Brexit, it really isn’t the days of the Raj any more, and I think some of these old boys are going to have to be pushing up daisies before Britain finally starts to deal with the world as it is in 2017 rather than as it was in the 1950s. Having shitloads of money just seems to insulate you from some of these realities.

    I had a really great choice in this election of nothing I like at all. One the one hand is the Maybot going Brexit means Brexit and on t’other side we have somebody who was probably a closet Brexiteer anyway. I had the choice between something I never asked to happen and a genial but ineffective old buffer that reminds me of other aspects of socialism in the 1970s like that creep Arthur Scargill and his band of merry thugs flying pickets exercising their God-given right to stop other people working because they had the power of force.

    A plague on both your houses

    But we seemed to have had a general election with no overall winner, which was probably the best result for my views, although what I voted for was lost, so thank you the rest of the British public. It seems the despicable rightwing press was largely ignored in their seething spewage. The Tories buggered this up in the first place by having a Brexit referendum at all, and now seem to have lost a lot of their pre-Brexit majority. Good for Theresa May returning to the electorate after such a big change in the background 😉

    Theresa May’s WTF? expression

    But what I feared more than a Tory landslide was a Corbyn majority. Corbyn has done well and hopefully will do his job in diluting the Empire-dreaming hard Brexiters. It’s not a good result, but it’s probably the least worst. You sowed the wind, Tory PM Cameron, with you damned manifesto promise of an EU referendum. Now the hard Brexit nut-jobs have reaped the whirlwind by being just too full of cock. Maybe we’ll have to try and talk in a civilised way about Brexit, rather than revel in the arrogance of ‘no deal is better than a bad deal’

    Oh and though I had no part in it since I couldn’t bring myself to vote Corbyn, I am pleased that

    Labour’s gains included the symbolic toppling in Ipswich of Ben Gummer, the author of the Conservative manifesto.

    It’s an ill wind that blows nobody any good 😉

    10 May 2017, 6:24pm
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  • How work is stealing leisure from us

    I’ve never come across the concept of serious leisure before, but a bit of Internet ratholing brought me to the Serious Leisure Concept, which takes a look at how people spend their spare time, should they be lucky enough to have such a thing in their lives. The site is heavy on sociological speak, but they break down leisure time occupations into

    Casual Leisure

    the sort of instant gratification, hedonistic and gormless thing that gives leisure a bad name – watching reality TV etc. It’s a bit wider than that

    [Casual Leisure] is fundamentally hedonic […] Among its types are: play (including dabbling), relaxation (e.g., sitting, napping, strolling), passive entertainment (e.g., TV, books, recorded music), active entertainment (e.g., games of chance, party games), sociable conversation, and sensory stimulation (e.g., sex, eating, drinking). Casual volunteering is also a type of casual leisure as is “pleasurable aerobic activity,” or casual leisure requiring effort sufficient to cause marked increase in respiration and heart rate (Stebbins, 2004a). Casual leisure is considerably less substantial, and offers no career of the sort just described for serious leisure. In broad, colloquial language casual leisure, hedonic as it is, could serve as the scientific term for doing what comes naturally. Yet, despite the seemingly trivial nature of most casual leisure, I argue elsewhere that it is nonetheless important in personal and social life. (my emphasis)

    Well, yeah. You need the yin to balance the yang in life, and going without shooting the breeze and eating is taking austerity too far.

    Southwold from the coffee shop with a distant view of Sizewell. Casual leisure happening.

    I think we all get this side of things. The other two categories were interesting additions to the taxonomy:

    Serious Leisure

    is the systematic pursuit of an amateur, hobbyist, or volunteer core activity that is highly substantial, interesting, and fulfilling and where, in the typical case, participants find a career in acquiring and expressing a combination of its special skills, knowledge, and experience

    They then break down amateur, hobbyist and volunteer down further, but the essence of this type of thing is that it isn’t an immediate and known win like getting a coffee, you must put something of yourself into it to get something out of it. I found this sort of thing more rewarding after retiring, for the simple reason that you have more time to hone the art. I screwed up a little in being shorter of money in the first few years of retiring than I am now – don’t pay off your mortgage early if you want to flatten your income profile 😉 But I would go as far as to say getting into serious leisure will improve your experience of retirement no end. I’m not comfortable with their use of the term career, but perhaps that’s because I have BTDT, unlike Jim I have absolutely no desire to climb another greasy pole. Like him, I did not leave the rat-race as an elective  move towards the positive goal of FI, although perhaps I had the advantage of having a three-year run-out period.  That nobbled any fond nostalgia for the hell on earth that the modern management practices have turned the professional workplace into for my INTJ type. Either way, I hope they don’t mean career in a work sense, but it is of course true that there is an arc of progression from noob to wizard-guru as you hone the art and craft of your serious leisure pursuit.

    I think I want to do more of this. And perhaps less idle surfing, though I do love coming across new ideas and poking a curious ermine snout into the vagaries of this world. I recently got back into video editing and shooting, partly for a short job with some travel coming up, and I was amazed at the improved performance and the way editing and compositing, even 3D compositing is done routinely. I whiled away most of today learning what has happened in this field since I used Premiere around 2007. Is that serious leisure or idle mucking about? Dunno.

    Project-based leisure

    is a short-term, moderately complicated, either one-shot or occasional, though infrequent, creative undertaking carried out in free time. Such leisure involves considerable planning, effort, and sometimes skill or knowledge, but for all that is not of the serious variety nor intended to develop into such. Nor is it casual leisure. The adjective “occasional” describes widely spaced undertakings for such regular occasions as arts festivals, sports events, religious holidays, individual birthdays, or national holidays while “creative” stresses that the undertaking results in something new or different, showing imagination, skill, or knowledge. Although most projects would appear to be continuously pursued until completed, it is conceivable that some might be interrupted for several weeks, months, even years

    I was unable to work out if I do any of this. I do pursue some projects over time, but I can’t see how “continuously pursued until completed fits in”.  That starts to get to sound suspiciously like work 😉 One needs a good few leisure projects, and cut between them. That sort of dissipation wouldn’t be tolerated at work!

    There are some real-life examples on this page – this one was from participant Meghan

    how one person sees their leisure activity in this taxonomy

    I was surprised that so many listed travel in their project-based leisure, I’d have put it in casual. But they did the course so they know better, or maybe their travel isn’t like mine. We also have serious sample bias here because all the respondents are undergraduates, they have yet to join the treadmill of the rat-race and they probably don’t have children.

    I got on to the serious leisure site after reading about the demise of the weekend, which is much more the typical narrative that you hear, basically it’s ‘Leisure – what’s that? We work all the hours given us and on the weekend we drive the kids here there and everywhere in between doing the laundry etc etc”. I recognise two of the themes from her piece. The first theme was the much greater freedom I had as a child that seems to be the case for children now, and also the opportunities to fill my own time without structured events. Having children was something people did and fitted into their lives when Katrina Onstad and I were children 1, it seems to be much more all-encompassing now.

    The other theme was the way people don’t seem to have hobbies any more.

    Hobbies are declining, but a hobby is exactly the kind of activity that adds value to the weekend. Stamp collectors and basement inventors may not be cool, but they know the benefits of becoming fully immersed in an activity and losing track of time – that rejuvenating “flow” state

    The students were anomalous in that they did have hobbies. When I was growing up in what by modern standards would be a poor area, many of the adult working neighbours had hobbies, they were often creative but low-cost. Many of the guys actually made furniture 2 using hand tools, others made models, and some of the women made clothes 3, presumably both clothes and furniture were much dearer in real terms than they are now. I’d say there’s more consumption and casual leisure now compared to the other types that there used to be.

    We’ve imbued work with the job of giving us meaning, and it seems to rob us of our leisure time in so many ways

    I recognised another pathology mentioned in Katrina Onstad’s weekend article –

    A friend used to make beautiful earrings occasionally. Almost ritualistically, she would buy the beads, and carefully craft the small, coloured jewels in a quiet workspace. Then came Etsy. Now she makes beautiful earrings and sells them, ships them and manages this business along with a full-time job and a family. What was leisure became labour. The side hustle is a weekend thief, but in a time of stagnant incomes, many must choose income over time.

    I’ve seen that too. I made some ultrasonic microphones because I wanted to differentiate bat sounds and ended up selling some of these because people wanted to do the same. It was okay, but I was working at the time, so it was a weekend time thief. More recently I had been doing the accounts for a small operation and recently finished that – the time commitment was low, but the relief on finishing up is worth far more than the income. It’s unpleasant enough doing my own tax return, life is too short to see more of the taxman’s tiresome demands on behalf of others.

    Somewhere in the back of my mind there must be an old tape still playing out from childhood or early adulthood that income = security, and worse than that, only income from selling my time = security. Perhaps when I finally draw my works pension in a couple of years I will chill from that. Intellectually I can see that I will run out my SIPP in a couple of years, this year it paid me with whisker of the HRT threshold, but I don’t really regard that sort of saved money as an income. There is learning to be had here. I’m not averse to doing the odd hit-and-run job, the microphones were that sort of thing, but I need to avoid regular commitments – the sort of thing Katrina’s Etsy friend ended up with. There is a lot of recommendation to turn a hobby into your job, and yet some good reasons not to.

    Much of the point of hobbies and leisure interests is that this isn’t work. The fun with the microphone was developing it and looking for bats with it and hearing the differences, it was solving the problems. After making one or two, the novelty palls, and I’m not good at repetitive things, it’s the fun of the chase of design I liked more. I guess the lady with the earrings may have the same thing – making a new one is the buzz, mailing them out and dealing with returns, not so much perhaps.

    There’s a more subtle problem. The business world tends to kill creativity in its search for continuous improvement and optimisation, it strips out the places to play. Although it isn’t creativity in the artistic sense, the design part of problem-solving is a form of creativity, if it isn’t up against the clock IMO. As a young research engineer/scientist I covered many more areas than I did as time went on. Part of that was The Firm shifted quite heavily away from research to development and then into IT, specialising and compartmentalising the workforce as it did so. But I think there is a wider trend towards specialisation – the mantra of concentrate on your core competencies and outsource everything else. In the more vertically integrated scientific and technical companies I worked in 30 years ago I got to learn electronics, I got trained to use a lathe, milling and shaping machines and oxyacetylene welding not because this was what I was going to be doing but because they didn’t want their researchers to run the workshop staff ragged with requirements that couldn’t be made. Companies now would probably outsource all that sort of stuff unless their primary function was mechanical engineering.

    That may be more efficient, but it’s much less interesting. Pursuing a hobby doesn’t demand hyper-efficiency, because it is just as much about the journey as it is about the destination. There’s reward to be had in the tides of a hobby, in the ebb and flow of the creative process. These meanderings may not be efficient, but they are part of the fun.

    Notes:

    1. I would hazard a guess she was a child less long ago than I, perhaps Canadian kids kept their freedom to roam longer than Brits
    2. Look at this Popular Mechanics from the 1970s for how common making furniture this was – I wouldn’t have a hope in hell of making something accurately enough out of wood to be fit for being in the house
    3. this was the 1960s and 1970s, remember
    26 Apr 2017, 8:27pm
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  • HMRC decide the Ermine’s gone to work for Goldman Sachs, taxes accordingly

    Flexible drawdown is great but it’s easy to get suckered for huge amounts of tax. Although I originally planned to draw my DC pension under the tax threshold over five years, paying zero tax, there is of course a problem with the best laid plans of mice and men, which is that things change. My original computation was imagining running down the cash saved into the SIPP, and I had invested it conservatively, with a fair lump in gold, some in VWRL and some in cash. Then Brexit happened and lifted the nominal value of the stocks and the gold, by destroying 20% of the real value of the pound. So I get to pay tax anyway where otherwise I might not have.

    In more change I am looking to buy a house, raising the cost of the new one before selling the old, and because I am a poverty-stricken bum under the railway arches according to the finance system’s favourite metric, income, nobody will lend me anything. I need to raise that in cash. So I paid more tax, drawing just short of the HRT threshold in a lump sum and then nothing for the rest of the year. It’ll only buy me half a used Lamborghini, perhaps a cut’n’shut.

     

    The ermine’s new place of work in HMRCs eyes – as teaboy, runner or floor sweeper. People at GS seem very coy about their pay, claiming it averages 64k for an analyst. In which case perhaps the Ermine gets a corner office, on nearly 10x that. I’ve even doing okay on FireVLondon’s pay ranges. Shame it’s an HMRC cockup and not real, eh?

    HMRC, on the other hand, seeing £43k come out have decided I am now working for GS as a teaboy and earning half a million pounds, arrived at by multiplying 43 by 12. Yeah, I wish, guys. What I told Hargreaves Lansdown is to can all monthly payments this year and pay out 43k, whereupon HMRC help themselves to 40% of it. Cheeky barstewards.

    I had been warmed up to this by the Telegraph (H/T Monevator). Although that article says this only applies if your pension provider has an emergency code 1 this isn’t true in this case. I went through that bunfight year before last as they still had me working for The Firm in 2015, despite the fact I hadn’t earned from there since 2012. But I never did anything with the P45 because I had no new employer to give it to. In fairness to them they did get it sorted out within a month and refunded the excess tax.

    So it’s time to do that all over again, via this link. Even if you fill in the form online it’s worth reading the print off and post form first, because the explanation of the form fields is much better on that. In particular I suspect I screwed up because I declared 43k as total amount of income I expect to get. Which is correct, but probably should have been zero, because the next box asks

    Details of pension flexibility payments paid as lump sums

    and I guess mine might be construed as a lump sum, although it’s not against the law to be paid one’s income annually in advance. But in the end 43k is the total amount of income I expect to get from that source.

    They also ask if you are contributing to the pension, and getting savings income and self employment income. In theory if you get all this right they will repay the overpaid tax. Which is over 10k – they helped themselves to £17,734 which is slightly over 40% of the total. Whereas they should have taken (43,000 – 11500)*20%=6300.

    Still, on the upside, once I have gone through this I will be able to run this SIPP down tax-free. I only have another 5400 in it. I will add £3600 this year and another 3600 next year, take my £1800 PCLS on the new money, leaving me with 10800 to run out tax-free in 2017/18. Unless, of course, the stock market takes a hissy fit which will probably jack up the price of the gold. If, of course, Brexit is the stupendous success that Barry Blimp tells us it will be I will take a bath on that gold and my ISA, guess that’s the price of being a saboteur and Volksverräter.

    There’s a lot to be said for being paid annually early in the tax year from a SIPP

    On reflection, although last year I drew from the SIPP on a monthly basis, that’s probably not the smartest way to do it, if you know how much you’ll be drawing that year. Drawing it all at the beginning of the tax year lets me get the money to work for me earlier – Hargreaves Lansdown don’t pay a particularly exciting interest rate on cash in a SIPP, so I may as well pull a large lump sum as soon as I can and get it working for me rather than funding Peter Hargreaves Brexit ambitions. I went monthly because of the warm fuzzy feeling of it being a simulacrum of my old employment income, but what the hell, I coasted for three years on investment income and savings and didn’t overspend.

    I should have behaved like a grown up and made this work for me being paid up front, even if I had to fill in a P55 form every April. Ain’t hindsight a marvellous thing? After this one it will never apply to me again, because I have too little left in the SIPP. Unless they pull the same stunt when I take £10k next year, and assume I will be earning £120k.

     

    Notes:

    1. ie they assume you earn at least the personal allowance elsewhere and tax you at 20% on everything
    18 Apr 2017, 11:24am
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  • Fear and loathing in Britain’s favourite asset class

    On a small island with a lot of people, there is one type of asset that has become a national religion for Britons, and that is residential housing. You can’t lose with bricks and mortar, is written through the national psyche like the lettering on a stick of rock. It runs so deep within the national character that we have the common spectacle of well-off people preying on the poor by buying up houses to rent to others on a onesy-twosy basis, using the terrible security of tenure in British rental housing facilitated in the Housing Act 1996 to extract cash from those who can’t get a mortgage because they are too poor.

    Thatcher handing something over that wasn’t hers to give – an early RTB house deeds

    So rich people use their better creditworthiness to borrow money to buy houses to let, renting them out to poor people who can’t borrow money to buy houses, and making a tidy profit. They even claimed back the tax on the mortgage interest, a privilege denied to the poor saps who are buying a house on a mortgage to live it it. I am pleased to say that this nasty little anomaly has been canned now 😉 Britain has too few houses as it is for people who want to buy-to-live, they don’t need BTL (buy-to-let) middlemen inserting their money funnel into the punters’ wage packets sponsored on the government’s dime.

    When the Ermine was a child, this job of landlording to families was largely done by the councils and the poor and even the modestly well-to-do had the option of renting with an adequate security of tenure, but those days were lost when Thatcher bought the votes of the sitting council tenants by selling the council housing stock to them at a knock-down price. The official version of this is of course a roaring success

    the policy of giving tenants the Right to Buy on advantageous terms their council houses gave immense pleasure to many who had never imagined being able to possess a place of their own and pass it on to their children. People were ecstatic.

    Well, they would be. You always make friends dishing out free money, and it was the discounts (a.k.a. free money) given with Right to Buy that made the impact

     the Right to Buy had benefited a large number of individual households but it has also had an uneven impact spatially and socially, has added to residualisation in social renting and has had an adverse strategic impact on housing. The discounts provided under the Right to Buy had inflated the demand for home ownership. In the longer term transfers to private renting further diverted resources to meet higher rents in the private sector rather than providing additional or affordable housing.

    […]

    Looking back over the history of RTB it is apparent that, rather than the symbolism associated with a legal Right, it was the manipulation of levels of discount that were key to the operation of the policy. The Right to Buy with lower discounts would have had much less impact.

    Which is how we got from my London grammar school days when about half the kids lived in council houses, including some of the ones whose parents were white-collar workers, to today where almost half of all local authorities in England no longer have any significant council housing.

    Housing is to the Ermine as Moscow was to Napoleon

    Rule 1, on page 1 of the book of war, is: “Do not march on Moscow”. Various people have tried it, Napoleon and Hitler, and it is no good.

    Monty

    So it is with the Ermine – the greatest personal finance error I have ever made was buying a house in 1989. I have never managed to beat that level of numbskullery despite greater resources. Now I hope that this is an indication of actually using the intervening 30 times round the sun to improve the art of being human, but let’s face it, the bar was set very low for the depths of financial folly I needed to avoid plumbing again. I moved once since that first house, because a two-up-two down was okay for a bachelor Ermine but when DxGF moved in it was time to get some more space, which is the entirely average three-bed semi I am in now.

    When I bought it in the dog days of the dotcom boom, I bought the new house before completing on the old house. That sort of thing makes moving a lot easier, and you can get decoration and rewiring done much easier in an empty house. I hate being a function of other people, so housing chains rub my fur up the wrong way and make me snarl. The amount I had lost on the old house meant I could carry the old house with a combination of savings and a hefty 0% interest loan on a credit card, I had a 90% mortgage on the new house.

    I am looking at moving again, and it is a significant distance across country. Retiring is a good time to think about where you want to live, as the limitations placed by working are lifted. It’s not necessary to move, but I find the the dreary journey halfway round the M25 to get past the carbuncle of London more and more irritating, now I have the time and the money to travel more. On the other hand, a retiree needs to think about the human setting, so we want to move to an area where we already know a number of people, so in our case that is westwards but not particularly northwards.

    Stoney Littleton Long barrow. One of the many megalithic sites that draw me westwards as a retiree. No, I’m not planning to live in it 😉

    We own this house outright, and have stocks and non-residential land assets, the combination is considerably more than the sort of house we are looking at buying.If I put the stocks together with the proceeds from the land assets and cash I hold, I have enough to buy a house of the sort I want before selling the current house. Trouble is all the stocks are in my ISA. Some of the cash is with NS&I ILSCs, ideally I would prefer not to sell that either. Some of it is in my SIPP, had I jumped to it I would have drawn out to just below the higher rate tax threshold last month, but I failed to engage brain there.

    I get to do that this month, drawing ~43k gross, and pay £7k in tax. I can chill about that because I would have paid 41% in tax had I not used the SIPP when I earned the money. So I am still 21% better off, and indeed I got the Brexit boost on that last year since it was in some international exUK index fund.

    I started to sell out of some of the ISA, though of course keeping the cash in the wrapper until the last moment. I started with the crap, the sorts of things one acquires in a HYP but turned out to be a really bad idea. Many years ago I came to the conclusion that while I may do okay on buying, I have no talent for selling, which is why in the HYP I don’t sell out of the crap. Some of it even came good – dogs like RSA eventually crossed the loss to breakeven to profit mark simply by paying dividends. Some didn’t, I followed Warren Buffett into Tesco, and, well, ’nuff said, eh? At least I had illustrious company in the cock-up. I paid less than WB 1, but he bailed faster. As Buffett said (p18)

    In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.

    I ain’t got Buffett’s talent, I was far too trigger-happy as a seller, so I needed to stop that. That trigger-happiness shows even in my actions here – although I believed I was going to liquidate the entire ISA to raise the cash at the time, I started shooting dogs first. A different way of looking at reversion to the mean might have started to liquidate from the top, after all those are the greatest gains to be crystallised. Once a mutt’s lost > 50% most of the damage has been done 😉

    you had it coming to you, bud. There is a school of thought that says you should actively seek out dogs, but I’ve waited many years for my ISA mutts to turn, they aren’t just last year’s disreputable hounds

    Shooting the dogs was easy. Most of them I’ve had for a long time and they’ve never come good. Now a fifth of my ISA is cash, and I’ve run out of hounds to put up against the wall.I had about a twentieth of the ISA as mutts, I sold about a twentieth of good stuff before I just couldn’t do it any more, and a tenth I carry in cash because you never know when buying opportunities may show up.

    exchanging equities for housing felt that I was marching to Moscow. No good would come of it…

    Look at the housing market now. It is up in the sky 2. We have the economic damage 3  of Brexit coming down the pike, inflation is lifting which may bode rising interest rates and the market is softening. That’s not necessarily a bad thing for me, as I am looking to move upmarket. I’m not carrying any debt once all is settled so rising interest rates don’t trouble me, but they sure as hell will trouble others in the market carrying a huge mortgage based on affordability at 2%. Which will depress prices, because if they can’t pay they won’t pay.

    This play by Dario Fo was big in the early 1970s inflationary oil shock. The title could be the anthem for Britain’s overstretched mortgagees as Brexit inflation starts to bite and interest rates rise. According to Wikipedia, Pluto Press was a division of the Socialist Workers Party when this was published.

    I looked at what I have left in the ISA and I simply couldn’t bring myself to press the sell button, and exchange stocks, something of value, for housing, because I loathe the housing asset class. Couldn’t do it even on a temporary basis, as I searched for something else to sell from the ISA and would have had to mine the good stuff I began to feel sick, and an old recording started to play out in the back of my mind. A recording first made in 1990 through to 1992, when I froze in that first house to save money for the mortgage and subsisted on peas, economy bean soup mix 4 and rice while I watched one neighbour get repossessed and the other side jump before that happened. Interest rates came within a hair’s-breadth of 15% p.a. Intellectually I can tell myself that things are really different this time because I am not buying as a leveraged buyer with a mortgage, but it’s no good. I drank the water from that polluted well before and was sick for ten years. Sure, I’ve taken losses in the stock market, but never got to lose more than I had to start with…

    Repairing the ISA

    I need to go fix the damage I did to my ISA estate by trying and failing to convince myself I was going to liquidate it to bridge the housing purchase. I can’t honestly say I am that sad to see the back of the dogs, though they did of course serve as a sort of memento mori reproaching me to the tune of “Self, you aren’t such a fantastic hot-handed stock-picker – I am TSCO and I remind you that you had absolutely no ‘king idea of what you were doing trying to slipstream Warren Buffett, so don’t get so full of cock”. I have a limit order on some gold that should go through this week, because God knows what the pound will do over the next couple of years, and it’ll bring down the cash to 10% where I’m easy with it. There is a case to be made that a fellow with no unwrapped holdings any more should hold his gold outside tax wrappers, because I don’t have so much that CGT would be a hassle, and gold doesn’t pay dividends which are troublesome outside a tax shelter nowadays. But I just need to get it to a holding position for now. And my Charles Stanley ISA needs to go back into VWRL and L&G Dev World ExUK where it was, so I get to eat a load of transaction costs for my thumb-sucking indecision. Bummer. Still beats the hell out of losing all that ISA tax sheltering. At least I stepped back from the brink. Obviously I’m not putting my £20k new contribution into the ISA while I need short-term float, because I have till nearly this time next year to get round to that.

    There’s the smell of decay in the air on housing

    A grizzled snout sniffs the air, and I smell the sickly scent of putrefaction in the housing market, the scent the youthful Ermine  insouciantly ignored. One of the things that puzzles me about housing now is the shocking compression of prices. When I was buying my first house 5 on the  terraced places were about £45k, and semis were about £60k 6. Where I am looking Zoopla tell me terraced houses are about £214k and semis are £248k. It’s as if the entry-level prices have been skyrocketed proportionally, whereas the incremental costs to get something better has reduced. The terrace to semi ratio was  1.3 in the late 1980s and has fallen to 1.16 – you get a lot more for a little bit extra, and this still sort of holds going up to detached places, which command less of a premium than I expected. It is as if first-time buyers are flattening themselves, artificially boosting the crummy end of the housing market. Looking at my existing area this ratio is about 1.2. Only another 10% on my house would get me a detached house over the road. Of course Zoopla could be full of crap, but these differentials seem very squeezed to me.

    The Ermine’s twitchy snout has picked up the last ten of the one real housing recessions we’ve had this millennium, so I am prone to false alarms, that early experience of housing is a distorting lens through which I look at Britain’s favourite asset class. It’s why I am not a BTL landlord, and property is a lot less than half my net worth. This is not because fundamentally I have a beautiful nature full of compassion for my fellow man, after all if I am not a BTLer then some other person will step into the breach. I am not a BTLer because I am shit scared of the asset class, it’s hateful because of what it did to me, it’s illiquid, it depreciates much faster with a tenant than an owner-occupier, and there seems a shedload of miscellaneous aggravation that goes with the whole patch.

    Everything is vile about buying and selling houses in England. I haven’t done it for almost twenty years, and while the experience wasn’t great then, many things seem to have become worse. For starters, exactly what reason does an estate agent have to exist in the 21st century? The cheeky blighters seem to want to see proof of capital assets before taking an offer to a vendor, which is not easy in a distant town with ratty internet connections 7 and no printer. This was an absolute blinder on me and was definitely not the case 20 years ago. I suspect there was also some subtle discrimination too, if I had shiny shoes and dressed in a sharp suit I might have been given the benefit of the doubt. But seriously, WTF is the point of an estate agent? I use rightmove to search 8, the days of receiving endless offers of places 200% overbudget through the post aren’t something I want to go back to. Rightmove and other Internet sites actually listen and don’t show things that are overbudget. I would have thought the Internet would have fixed the problem of estate agents by eating their lunch by now, but it appears not.

    I’m also unlucky enough to be selling into a gently softening market sector in Suffolk and a slightly appreciating one where I want to go. Some of that is because of who I am and what I want to buy. I want a detached place because I don’t want to hear people’s kids, pets and domestics, we want more garden, and stairs if any only in a straight line. I don’t want to see children’s trampolines and plastic toys, or people fixing cars in their front gardens. I don’t want to hear traffic from main roads, and I have no interest in new houses, which are tiny and too close together. I don’t want a ‘period property’ which is a maintenance and energy efficiency hazard. I don’t want anything near a river or less than 40m above sea level because of flooding amplified by climate change, low-lying parts of the target region has had problems with this in recent years. Something built from the late 1950s to 1970 is probably about right.

    I am competing with old gits like me who have a working life behind them, and what I am selling is a 3 bed semi which is a typical family home. Families made hay with all the child-friendly largesse Labour showered them with in the times of plenty, and are feeling the draught now.  Hence the softening market my end. Countering that I am looking to move somewhere where there appears to be zero professional work to be had for forty miles 9 which tends to be the way for attractive places because work is usually a blot on the landscape.

    The design of the conveyancing system in England is foul, where there is no commitment from the buyer and seller until exchange of contracts; something done so much better in Scotland and probably just about any other First World country. The English way brings out the worst in both the buyers and sellers, making evil shits of us all. Requiring a 10% escrowed deposit forfeited if either side welch on the deal would improve that no end. Hopefully being a cash buyer will help the power balance for me there, and not having a chain will help with selling. Time will show.

    How about joining my fellow countrymen on the never-never?

    How about borrowing? It’s all the rage on this septic isle, I hear. I can breeze way past the average UK household non-mortgage debt of £13,000 and lift the old stats a bit. Normally the Ermine has the same attitude to debt as a vampire has to sunlight, but:

    I have the cash, but it’s tax-embargoed in my ISA and SIPP. Unlike the rest of the country, with their rising credit card debt, PCP car loans and whatnot in need of government help to bail them out of their fiscal stupidity, I actually have the money to back the loan. As long as I pay less than 20% over the life of the loan I am better off borrowing the money than paying the extra 40% tax on it taking it from my SIPP, which I need to clear down to £3600 10 before reaching normal retirement age for my main pension.

    I can’t get a mortgage, because I am too old and mortgage affordability is all about income. I would have thought a DB pension payable in three years time would be good enough as an income but it has to already be in the process of being drawn, and the SIPP doesn’t count because I draw in variable amounts a year according to need. The credit card company won’t give me an increase in credit limit to use the balance transfer stunt that worked when I bought my first house, because I am poor in their eyes, under the railway arches poor..

    MBNA to Ermine – “Swivel on this, bud. You may, of course, beg us on bended knee and we may graciously reconsider your request”. Ermine thinks to self “well up yours too then”. There are other ways to skin this cat.

    In 1989 two credit card firms loaned me £15k, the equivalent of £34,000 today at 0% interest to reduce my mortgage LTV. And they got paid back on time. In those far-off days you didn’t have to declare anything other than income on a mortgage application and there were no credit reference agencies. The 20-something year old Ermine doing the most gormless thing in his financial life with no capital was deemed a better risk than the grizzled mustelid of today who actually has capital assets several times the putative loan. No. I’m not bitter and twisted. Really I’m not 😉

    I have been a small-time ~5k Zopa lender since 2013 until now when I recalled that to build up reserves, and curiously enough Zopa offered me a decent amount for five years at 3.4%. They had a much better repayment structure too. You have the take the loan for a long term, so that the repayments aren’t too high, but for a part bridging loan I don’t need to keep the loan for the term. Normally if you take a loan for five years, you don’t save any interest repaying it early. With Zopa it seems there is a fixed fee of .6% you pay if you have the loan for a microsecond or all the way to five years, plus 3.2% p.a. As such carrying the loan for six months would cost 2.2% of the loan – much less than a normal five year loan for that APR.

    I liked Zopa, though in the end their 25k lending limit isn’t really enough to put much of a dent in the ISA. But I’ve often had the odd tax, ISA filling or CGT need to defer liquidating unwrapped shares from one tax year to another and I wish I’d thought of them before. I’ve used credit card 0% offers for these applications, but the trouble is one has to borrow about twice as much as needed (and pay the arrangement fee of ~2% of the total) because of the requirement to pay down the loan at 5% of the residual a month. Zopa is a much better match for that sort of thing.

    In the end I raised the loan privately. It seems commercial lending to punters is axiomatically all about income, so it will always be mismatched to FI/RE folk. The takeaway from that when interest rates are low is don’t pay off your mortgage early – you will often need flexibility as you thread your way in early stages of FI/RE, particularly before you reach your DC pension age (55 at the moment). That mortgage gives you flexibility, and the tax-free pension commencement lump sum is a good fit to paying down the capital – effectively you redeem the capital with deferred pre-tax income.

    BTL-ers score several hits on the Ermine by proxy

    BTL owners are bad news for owner occupiers, for different reasons than why they are bad for tenants and for first-time buyers. As an owner-occupier you want to move away from such areas. BTLers are strapped for cash, and they aren’t there in person to deal with the consequences of their or their tenants’ actions. It slightly disturbs me that all the regions I used to live have gone downhill. My parents’ place in SE London used to be an owner-occupied zone where they were among the poorer on the block, over nearly 50 years it became a dump where Stephen Lawrence was murdered, I had a pushbike locked to itself half-inched from their drive in the 1990s, they got robbed in the early 2000s. I wouldn’t dream of living there if you paid me and provided an armed guard. And it’s gone BTL, because, well, it’s London.

    Two places I had a bedsits in west London seemed to have descended into high streets of dirty chicken shops, betting joints and fast food retail. I guess the areas were already fully landlorded, but landlords in those days used to really own the places they rented, tending to be on a professional and larger scale. The blight of BTL mortgages started in 1996, around the time the AST was enacted, so BTL landlords could know that they could kick tenants out on reasonably short order. The area I bought my first house in Ipswich in ’89 has become a BTL rental dump with frequent mattresses on the street and much multiple occupation, and towards the end I had a pushbike nicked from my own back garden – not particularly to do with the BTL-ers but bike thieves prey on studenty neighbourhoods and BTL had made it studenty, so it was worth doing over for bikes. I’m beginning to suspect this downhill drift is a curse on me, but at least so far I’ve jumped in time…

    Hopefully the BTL thing will be reined it a bit by not letting the BTLers squeeze real people who couldn’t get tax relief on mortgage interest payments, the poor devils are so desperate that first time buyers sometimes try to masquerade as BTL buyers to get round the way the system is stacked in favour of BTL buyers. I’m going to watch carefully for the presence of BTL in the next place I go.

    BTLers have other adverse effects on housing – the market has slowed after being pumped because the buy-to-let brigade are finally getting soaked on tax on the same basis as real people who actually live in the houses they buy. It is perhaps a reason for the softening where I am, I’ve noticed more To Let signs and when you look on Zoopla they have been recent sales , so BTL was over this area like a rash a couple of years ago.

    And finally I take an incidental hit in needing to front the extra BTL secondary home ownership stamp duty tax for the time I have two houses. I have zero ambition to become a BTL landlord, but I have to drum up an extra £10k because of the guilt by association and presumably have to fight HMRC to get it back.

    But UK property is hopelessly overpriced?

    Yes. It’s a foul asset class that has screwed me royally before. It will no doubt screw me royally again, at least to the tune of the difference between what I sell my current house for 11 and the price of what I buy. But for the bulk of the transaction I will be selling a hopelessly overvalued asset to buy a similarly hopelessly overvalued asset. I have another 20-30 years of healthspan if I am lucky. Waiting another two years for the existential clusterfuck that is Brexit to make all of us poorer may save me money if there’s a housepricecrash, 12 but it is 10% of that healthspan. The gimlet-eyed older Ermine is more able to take the hit than the fresh-faced twenty-year old Ermine who was shafted by the 1989 housing market. In theory a softening market is good for someone going upmarket, but the devil is in the detail, and there is always devil in anything to do with UK residential property.

    Notes:

    1. I bought into some of the suckouts, which reduced more my overall cost of acquisition. But TSCO was still a falling knife, and WB is still a better investor than me
    2. Equities are also up in the sky now, although some of that is the Brexit effect making them look higher. But they’ve been tracking up since 2009… However, the tax sheltering of my ISA has a separate value of its own, I would be in deep shit with the changes to dividend taxation if I had to hold it unwrapped
    3. or short-term adjustment to liberation pains if you are a Brexit booster
    4. I just took a look for bean soup mix and I’m chuffed that they still do this, though the price looks astronomical to me. This stuff explodes in volume when you cook it so the young Ermine could stretch a packet of it a very long way, more than a week ISTR. Note that it’s a lot cheaper if you buy the parts from your local store catering to local Asian consumers and mix ’em up yourself rather than buying from Sainsbury’s
    5. Although it was a similar time of excessive valuations, the distorting factor then was couples were rushing to buy to get dual MIRAS tax-relief on 60k rather than 30k, I presume they were targeting the semidetached sector with a view to having kids, whereas now the focus is on get anything
    6. this was in 1989, the 2016 inflation adjusted amounts are £102740 and £137000 respectively
    7. in the usual way, everything a mobile phone does, like providing a tethered data connection works, but badly and only a ghost of what it should be
    8. I do appreciate the irony of using something owned by a bunch of estate agents, but at least they follow my limit and requirement instructions properly
    9. I am, of course, looking at this with the jaded eyes of an ex-big company careerist, not the dynamic go-getting entrepreneurial sort that the powers that be hope will drag Britain out of the shit in the years to come
    10. which is the amount non-earners can put in a pension
    11. when owning two houses there is the risk of the market running against me over the difference. Although every other Briton believes you can’t go wrong with property I know from experience you can, and the current falling trend in the housing market is against me if I buy first and sell later, so I will try and minimize that period. Being a cash buyer and chainless seller has some value in the transactions, which may compensate a little for what I lose across the gap.
    12. HPC’s wishful thinking gives them an even worse house price prediction crystal ball than the Ermine, they predict a perma-status of impending house price crash, pretty much the last 100 of the one retrenchments we’ve had
    17 Mar 2017, 12:38pm
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  • I need a jolly good stock market crash to go along with that 20k annual ISA

    It’s nice that we have a bigger annual tax-free investment allowance in April (20k up from 15,240), but most of the opportunities for saving and investment suck at the moment IMO.  Tax-sheltered savings are all very well, but there’s no point in doing that with cash these days, because at current 1-2% interest rates you can save 25k of cash as a higher rate taxpayer and twice that much as an ordinary grunt before you run out of savings interest allowance. And have you tried 1 to get 2% in a cash ISA lately?

    What to buy next year then?

    Over to the good old S&S ISA. So I have 20k burning a hole in my pocket next year, what should I go for? Although I do some background steady index investing in one ISA, with about half a year’s contribution I try and aim at what’s beaten up at the moment. I’ve tended to be too early into these – I was saved by Brexit from an early foray into Putin’s Russia, and saved by Brexit again when I was overenthusiastic about emerging markets. Other dogs have come good by their own work, and been Brexit boosted – I can’t remember when I first bought BRWM when it was in the doghouse and topped it up when it continued to be in the doghouse, but it has redeemed itself of its mutthood to be a good team player in my ISA now. I can be happy that I have nothing in the most popular fund lists for 2017, apart from VGLS100, which I have just sold. In indexing, I am a VWRL guy these days, because I have zero cost of carry 2. It’s good not having the same stuff as everyone else. I tried that the other way round in the dotcom boom and it didn’t end well at all 😉

    Valuations have been high of late, those nice guys at starcapital have a summary of where we stand with CAPE and various other metrics. Donald Trump’s America is the 600lb gorilla here at 43% of global weighting, but I was surprised to see Blighty in there with 5% global, and indeed to see that France is a bigger part of global markets than Germany though less than the UK. What the hell should I buy, if anything? Trumpland is way up there in valuation. And I’m already buying a load of that via a regular Dev World exUK purchase as well as VWRL, I really don’t want any more of it. I have every admiration for American exceptionalism, but you can have too much of a good thing.

    The trouble with looking at performance is that Brexit has muddied the waters greatly

    Our fellow countrymen voted for a pay cut of 20% so they could take their country back and stop hearing furreners jabbering away talking foreign on the High Street. An awful lot of my ISA is foreign assets, and even the UK based HYP tends to be FTSE100 big fish who earn a lot of money out of the UK. As a result the whole thing, denominated in pounds, is sky-high. It’s sort of like the effect on this picture

    If Brexit were an Instagram filter it would look like the top right

    It makes it the devil’s own job to tell what’s going on, whether something is up because of its inherent value, or if it is the effect of the devalued pound. Into that fog of war I need to try and invest £20k, or hold it as cash because I deem the stock market overvalued, or some combination of all that. And I’m puzzled. Okay, so when you take last year’s £15k ISA allowance and deflate it by the 20% Brexit Tax then that means 18k of the new allowance represents the same real value as £15k did last year if you’re buying foreign assets, however, the allowance has genuinely increased by about 10% in real terms.

    What on earth is a fellow to do?

    Perhaps His Trump-ness is really going to drag the US out of the twisted wreckage of the financial crisis, by building walls all over the place, and telling the rest of the world to fuck right off as he Makes America Great Again. At the moment it seems he does policy by diktat and his pronouncements bear more resemblance to religious belief, or at best a random wibble generator powered by haterade, but that is obviously my pusillanimous European 3 upbringing blinding me to his multifarious talents.

    Talking of making countries Great Again, over here we seem to have a similar sort of random policymaking on the hoof, it’s all about taking back control and a lot less about what the grand future is for Little England after the Scots have scarpered. At least the Donald has a destination, rather than just a method in his madness. All we seem to have is process. Brexit means Brexit because it’s the goddamned Will of the People™. Yes, but WTF does it actually mean?

    For most people, ignoring valuations and drinking the regular passive investment Kool-Aid is fine for this year. Tax year 2017/18 is just going to be another of the many years in your slow and steady journey to retirement nirvana. For just one year out of 30 or 40 it doesn’t matter than much to you if you buy over valued Stuff, you have years enough ahead and  some other year will be like 2009, so you’ll do okay on average. Even for me, 20k is not a large part of my ISA, because I have most of my saving years behind me, but it is likely to be the last when I can fill an ISA.

    Half of it will come from unwrapped holdings, because the writing is very clearly on the wall for holders of unwrapped holdings, basically you’re toast. For that portion, buying currently overpriced index funds isn’t so bad, after all what I will sell was also overpriced and Brexit-Boosted, it’s not like I actually earned all that money in the distant past when I was a wage slave. But it would be a dreadful shame to put my last 10k of real 20% devalued Great Brexitted Pounds into a sky-high market. Valuation matters IMO, and stinks at the moment. I guess about 30% of the number in the total box of my ISAs isn’t real and needs to go before it comes to reasonable value. The over a third nominal boost in my unit price last year is ‘king absolutely ridiculous, even if I knock off the lift due to the Brexit dumabass levy. Equity prices need to come down.

    If you need a sign of the impending Minsky moment – well, Diamond Bob is back in town it seems. The last lesson of the financial crisis has been unlearned. Time for a rumble on the markets, the last checks and balances on excess have failed to hold back the forces of darkness…

    It’s not like there’s a shortage of good reasons for a Minsky moment, but the tragedy is while I know it’s coming, but never know exactly when. I might take time out on that 10k half this year until this time next year, however. It’s an error I can afford to make, assuming the Minsky moment doesn’t happen and I get to write this article again this time next year. It’s my last significant burst for the ISA, and hell, I want the markets to be down in the dumps for that, or at least like January 2016.

    Notes:

    1. MSE has found you 1.75% fixed tops at the time of writing
    2. VWRL is an ETF, TD don’t charge to carry shares, whereas they charge me to carry VGLS100, and VGLS100 has too much home bias for me as I already have a hefty home bias in the HYP
    3. well, European for the next two years anyway
    10 Mar 2017, 6:14am
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  • The taxman is coming for your dividends – ISAs are the main defence

    Young ‘uns know this already, but there are a lot of older folk who swear by share certificates and shouldn’t. My Dad was one – wouldn’t touch this newfangled nominee account rubbish when it was introduced 1. The trouble with certificates 2 is you eschew any kind of tax wrapper, which seem to be nominee only. There’s a bit more pressure on these refuseniks now because the taxman is coming for your dividends in a big way. Once upon a time, if you had dividend income that wasn’t greater that the higher-rate tax threshold 3 you could get it all tax-free. Well, last year they pulled that down to £5k a year. And from roughly this time next year it’s coming down to £2000, all due to the Budget.They are clearly after unwrapped dividend income, largely to stamp out the practice of self-employed directors paying themselves a token wage and then a massive amount in dividends. It’s worth noting that the tax on dividend income is still much lower than the tax on actually selling your time for money to an employer, 7.5% (update – I misrepresented the total here – PJ’s comment sets the record right on the need to account for corporation tax too in the case of the self-employed, though not the dividend-income shareholders) as opposed to 20%, but it’s a book-keeping nightmare for people who hold individual share certificates or people who hold unwrapped equity holdings on many platforms 4.

    Most dividend yields aren’t usually much more than 5%, so this means that you are sort of okay with up to ~£40,000 worth of shares, but why take the risk? Get your shares into an ISA 5 – and you have until 5th April to take action this year to bed-and-ISA some of these suckers. But be warned of capital gains tax, so don’t crystallise gains of more than £11k a year. If you need more than that you can do other stuff, like use your SIPP and you can also give shares to your spouse, but whatever you do do it, and do it now and early next year.

    I had a CGT gain that it’s taken me the last few years to run out into an ISA. Next tax year is my last crack at that sort of game, after which all my equity holdings will be in ISAs or SIPPs. I will still retain the empty unwrapped account if it doesn’t cost me anything. After all, you never know, we may be due for another market crash, and if I start thinking along these lines, and can raise the cash, and have the cojones, I may be grateful for more than £20k equity purchasing capacity that year. Then I will take the time to chunter that into the ISA over the following years.

    From a capital gains point of view, even if you want to maximise your ISA savings, you may be better off crystallising the existing gain in unwrapped holdings of Company X and investing 20k of the same shares in Company X in your ISA, even if it means you buy 20k worth of some different shares of Company Y unwrapped 6, because that resets the CGT clock on the unwrapped holdings. Some platforms give you a better deal on costs if you bed and ISA – TD, who I used, is one of them. But if you have share certificates then don’t putz about with that for this tax year – you usually have to get your share certificates into a nominee unwrapped account and then do the Bed and ISA from that. It’s very likely you just haven’t got enough time for the Crest forms to go through in time for this tax year end.

    You have three tax year end periods before you get hit with this – 2016/17, 2017/18 (after which the cut to 2k will happen, due in 2019) and 2018/19, so get with it.

    Listen to what’s written between the lines

    The chancellor is quite right, in that the self-employed white van folk have been playing merry hell 7 with the tax and NI system compared to PAYE employees. Last year I paid a whopping £150 to buy a year’s worth of State Pension accrual – that’s something that used to cost me thousands of pounds a year as a PAYE grunt. It’s easy to attack that sort of loophole, which is why the next tax year is the last year I will get such a good deal. I am chuffed that it is my 35th year out of 35 needed and I shall pay my £150 Class 2 NI contributions with alacrity for one last time for tax year 2016/17.

    distribution of the rise in class 4 NICs across the income spectrum (Resolution Foundation)

    But the self-employed also take the piss in another way, and that is the ‘company director’ who pays himself a pittance wage with the majority in dividends. These were the guys who were targeted by last year’s dividend tax allowance of £5000, but the tax paid is only 7.5% relative to he PAYE grunt’s 32%. As a higher rate tax payer you’re up to 32.5%, which is still a better deal when I was paying 41% (nowadays 42%) tax on PAYE when I was younger and hadn’t discovered what pension savings are there for.

    But there’s another bunch of NI mickey-takers out there, and yes, there’s a mustelid of white pelt in there too. These are the people living on a pension. There is no NI to pay on a pension, and somehow what with all the talk of fairness and the fact that Britain’s true tax rate is about 32% for basic rate taxpayers rather than the headline 20% I can see that changing in not very many years hence. First they came for the self-employed…

    There’s probably a lot more tax win to be had among the self-employed. Not the ‘self-employed’ Deliveroo drivers on zero hours contracts, it’s the “company directors” paying themselves and their wives in dividends. You gotta follow the money, and that 7.5% dividend tax level starts to sound far too low for future years, too. The Deliveroo guys don’t pay themselves in dividends, it’s the well-heeled self-employed that are in the Chancellor’s gunsights here.

    Saving equities in the uncrystallised part of my SIPP is a small way to fight back?

    One of the ideas I thought if I wanted to hold non ISA shareholdings is – what if I hold them in the uncrystallised part of my SIPP? Say I hold £1000 of Megacorp paying 10%. So I put 1000 into my SIPP and the taxman makes this up to £1250. Megacorp pays me 10%, ie £125. I drift this £125 off to my crystallised pot. Because I will always be a BRT taxpayer soon because of other income, I get to pay 20% tax, ie  £25, ending up with £100. Bugger. But on the other hand, without going through this I’d have only got 10% of £1000, which is, drum roll… £100.

    Now if I’d held that in my unwrapped trading account, and accumulated enough to pay tax on it then I get to lose 7.5%, ie end up with £92 from Megacorp p.a. I don’t have a huge need for my SIPP once my main pension starts paying out. I will save my £2880 p.a. to get my 25% boost from the taxman up to £3600. On 75% which I get to pay 20% tax, boo, hiss, but it’s still worth it, because £720-£540=£180, which is a 6.25% guaranteed ROI for two months of a year, and where the hell else are you going to get that on cash these days?

    But if for some reason I had money coming out of my ears and a 20k ISA limit was not enough, I could get a £2880 increase on that by misusing my SIPP. People who are working can do better than that, provided they become basic rate taxpayers in drawdown. Beats holding it all unwrapped and no need to sweat capital gains. If Megacorp goes up 100% I get to pay tax on the price if I sell, but hell, I bought 25% more of it at the lower price because of the taxman’s bung. The uncrystallised portion of my SIPP looks like an interesting place to hold equities after my ISA compared to an unwrapped trading account. On the downside, the potential 32% tax and NI merger could gut the value of doing that.

     

    Notes:

    1. he was a canny old boy in many ways – when he retired in the mid 1980s and the company retirement FA suggested he used unit trusts for diversification the FA got sent off with a flea in his ear because the fees on the suggested unit trusts in those days were absolutely huge. But he didn’t get PEPs or ISAs later on
    2. There are some advantages – your cost of carry is zero, and you are less likely to turn over your portfolio because of the aggravation
    3. if you had no other income
    4. if you hold loads of shares on one or two platforms each platform gives you a consolidated tax certificate for the dividends across your entire portfolio which makes the job of reporting the dividend total a lot easier
    5. If ISAs aren’t enough to contain your vast wealth then I guess you are probably rich enough to use offshore tax havens and find suitable advice 😉
    6. Or you leave it a month before you rebuy Company X
    7. they get less too, they don’t accrue entitlement to contributions based Jobseeker’s Allowance
    7 Mar 2017, 10:32pm
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  • Spring at the Minsmere Bird Reserve

    In this post I thought I’d share how I spent some of that time I bought back from The Man today. It’s also a little bit about Suffolk, and I get to play with audio on here – most of these recordings are binaural giving the bst effect on headphones. The sun was out and I felt like a bit of Spring at the Minsmere bird reserve, on the Suffolk coast. It was free but if you aren’t a member of the RSPB then it will set you back £9.

    I’d say even at that price it’s worth it – they have put in a lot of effort over the last few years to make the areas around the visitor centre and in particular the information and some of the events child-friendly, but the place is big enough to get away from all that too, since it is clustered around the visitor centre, cafe and shop.

    View over the Scrape part of the reserve

    In general spending time in Nature doesn’t cost you anything other than the cost of getting there, but they have worked hard to make this accessible and certainly if you’re coming from a distance it’s worth the price of entry because they have concentrated a lot here. I wasn’t after anything in particular, just a whiff of Spring and a load of birds, what’s not to like?

    Spring seems to come earlier at Minsmere. At home there are still a few winter visitors like Redwings in the trees and very few birds singing, other than our indefatigable Robin. At Minsmere I was greeted almost immediately with a Chaffinch in full song, which is the first I’ve heard this year

    The main feature of the reserve is the Scrape, which is a very shallow lake filled with brackish water. At the beginning of World War 2 the farmland around Minsmere was abandoned to the sea to make it more challenging for a German invasion of the East coast. These defences is still there in the form of anti-tank defences

    Minsmere concrete cubes – anti-tank defences on the sand dunes facing the sea from 1940

    The flooding helped more welcome invaders though, the iconic Avocet started breeding again in the flooded region in 1947, and they are still there

    The Avocet, with its upswept bill-tip

    It’s about a three-mile walk around the Scrape, and there’s a right racket from all the birds on the islands in the Scrape. Many of the gulls and waders breed there, though it’s the gulls that make most of the noise

    Birds on an island in the Scrape

    and this is a quiet time for them, they get a lot louder later on in the year! It wasn’t particularly windy today, but the sea sounded good with long rolling waves

    the North Sea at Minsmere

    If you arrive in the morning at Minsmere and the sun is shining, then it is worth going clockwise round the Scrape (ie first head off from the visitor centre via the reedbed of North Wall by following the signs to East Hide. That way you have the light behind you rather than in your face, and it sort of follows you round if you take your time. The furthest point in the sluice – in Summer it is a good place to see swallows. I had indeed enjoyed seeing them close up in previous years

    but I hadn’t realised they nested inside the sluice! A lot of water goes through this, it’s a terribly noisy place to make a home, but they don’t seem to mind the row.

    and on the way back I got to hear one of these guys – this loud sound is made by something the size of a sparrow, the Cetti’s Warbler

    Minsmere is a welcoming place, they go out of their way to highlight interesting stuff and there were some volunteer guides posted near a couple of adders lurking in the undergrowth. It was a bit cold for them, but they were out of hibernation and coiled up, although in the drab winter skins, so the devil’s own job to spot. I didn’t feel totally good about being a couple of yards away from a venomous snake, but it was worth a gander at some coiled trouble with the trademark flickering forked tongue. It was a good end to a morning reminding myself of better ways to spend a day than going to work 😉

    Minsmere is just off the A12, about 80 miles from London.  Visitors from London might like to stay at Southwold for a pleasant weekend break, which is only a little bit further up the A12.

    Minsmere at the RSPB website and on Twitter. That’s about the first worthwhile use of Twitter that I’ve discovered, kind of fitting in the case of a bird reserve 😉

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