2 Dec 2016, 12:49pm
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  • An accidental tourist in the world of Matched Betting

    A big meme in the UK personal finance scene is matched betting. I was cynical about this for many reasons, but particularly because I assumed that this was arbitraging odds. Capitalism tolerates arbitrage, but you normally have to be very well-heeled to to do it. Your stockmarket platform uses arbitrage, hedge funds to, banks do it all the time, middlemen of all sorts. End consumers, not so much, and punters are are end consumers at the bottom of the food chain. Turns out I was wrong about the arbitrage – although that is one way people make money out of matched betting, the primary way seems to be making money out of freebie signups. Arbing odds seems to be an easy way to run into trouble. Gambling is very lucrative for the bookies, they throw zillions of promotional freebies out there, and you can pick up a few pennies from the firehose of offers to part prospective punters from their money.

    1612_coral

    what an online bookie looks like – Coral in this case

    By betting on both the result and the anti-result you can eliminate the risk of the result and extract some of this free cash. There are many catches – it’s time consuming, you have to prostitute your personal details to many bookies, presumably your bank looks at the string of gambling transactions and won’t even think of advancing you a mortgage. On the plus side it’s a bit of a game, and particularly interesting for me is that it is tax-free. One of the things that holds me back from taking some jobs is the problem of accounting for piddling bits of money. I don’t ever want to work for a salaried job again, but on the other hand although I quite like the idea of hit and run jobs many are small, and paperwork bores me. The taxman doesn’t tax betting income because it’s usually anti-income and people would offset it against tax from real income.

    The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade.

    HMRC

    As far as how it works, I’m not going to try and describe that. Too many others who know more about it have done that – take a look at oddsmonkey for how and why.

    Why matched betting isn’t gambling

    The key thing that makes matched betting not the same as gambling is that you back one side and lay the other, so the risk is cancelled out. Screw that up and it’s betting. Ask TFS about the Winner offer 😉 It’s actually TFS who started my foray into this underworld, because he had the cojones to narrate how he had screwed up. Everybody else is saying it’s money for old rope, so my bullshit detector was always going off. Mind you, TFS has a little of the gambler in him anyway, as I’m sure I saw gambling costs as a line item in one of his monthly summaries. And TFS is a fellow who dreamed of becoming a professional gambler. I was about to pollute his comment stream with a cynical comment as to ‘professional gambler, WTF is that?’. But them I thought I ought to really hit up Google in case I was about to display my ignorance, and it turns out that professional gambler is a thing. These are people who do effectively arbitrage odds, theoretically through a superior analysis of the event being betted on. I suspect very Few are chosen from the Many 😉 Matched betting isn’t professional gambling either.

    The weird world of gambling and casinos.

    “The music businessgambling world is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.”

    Hunter S Thompson could have been talking about online gambling

    I’ve never been in a betting shop and I hate sports, deeply, on all levels. I just don’t give a damn. The whole betting scene is garish as hell, it’s like a wall-to-wall caricature of Donald Trump in the way it appeals to the inner monkey in us.It’s like going to Las Vegas, you kinda feel a little bit dirty on the inside and outside after you’ve tangled with this sort of trash

    But using Oddsmonkey it’s easy enough to sidestep a lot of that, going straight through to the particular page wanted. I found it was worth paying them the £16 a month simply to shorten the whole process, obviously you need to be making a lot more than that for there to be any point. In the beginning, with signup offers it’s easy to do that, although I suspect making a profit will get a lot harder later on, and at some point it will fall below the can’t be arsed threshold for me, which appears to be higher than for most other people at this. The Ermine is a lazy devil when it comes to pointless makework, which is what this boils down to. There’s also the wider issue that the annual dividends on my ISA are more than I’ll probably extract from matched betting signup offers in a year, and I get that for sitting on my backside and the dividends will keep coming year after year.

    Why it won’t last

    Fundamentally, matched betting is extractive, it creates no value. I presume the bookies are busy working on Bayesian systems to spot customer matched betting patterns, and restricting their accounts. Because of the dreadfully onerous know your customer rules in the UK you can’t just spin up new accounts to dodge that. I’d give matched betting five years tops before it’s stamped out. It’s possible that they make so much money on normal punters they don’t really bother, but the fact that bookies limit some matched better’s accounts indicates they perceive a problem.

    What it could do for you

    If you’re prepared to sit behind your computer most of the evenings and particularly weekends, then you seem to be able to extract about £15,000 p.a. Go look at Early Retirement Guy‘s alter ego, MatchedBettingGuy for a fellow who has hit this hard.

    What it may do for me

    I’ve extracted a couple of hundred. But then I’m lazy, and I don’t really need the money. I confess to a buzz at extracting money from bookies, and it reminds me a little bit of playing computer games – but the last time I did that was in the late 1980s on an Atari 800. I stopped that for the same reason I struggle with MB – it was fun but a pointless waste of time – and I made that call on computer games when I was in my 20s ;). Some part of me despises the valueless waste of my time with matched betting, I’m not improving myself or adding any value to the world doing this. I’ve probably trashed my credit rating for a while, but then one of the delights of being FI is I don’t need to borrow money from anyone. I have no idea of how people continue once they’ve burned through the new customer offers, because getting a decent return from existing customer offers seems really hard work. So maybe an Ermine hit and run on the bookies of Britain will be good for about a thousand pounds in all. Which is worth having I suppose, but I’m very clearly missing something compared to ERG.

    Keep your nose clean and keep this stuff off your main computer

    Remember Hunter s Thompson. This is an ugly industry feeding off human weakness; you don’t want it anywhere near normal life.

    I use a separate gmail account, and a computer booted off a Linux liveCD so it’s new-born every restart. Although I don’t see most ads due to adblock plus I don’t really want the Big G to spam me senseless. And whatever your main bank account is, where your salary and mortgage get paid, well, it would be wise not to use that IMO 😉

     

    9 Nov 2016, 8:14pm
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  • Trump-o-calypse turns into a stock market Meh

    Looks like we’re with stupid, then. Yeah, I’m one of the college educated Remoaning cheese-eating surrender monkeys that the majority all hate, and in the last few remaining moments of freedom I have before The Donald makes America Great and Brexit makes Britain Great I’m going to sneer. I don’t know who the hell I am walking amongst, but they don’t think like me and I am the minority. Shit. Brexit could be considered an aberration, and doesn’t really matter in the grand scheme of things, now we have a great big dose of the same old shit in a different way coming from the same motherlode. A group that’s been Cock of the Rock for years isn’t any more, and they want the 1950s back. That Obama geezer called out the problem in a State of the Union speech five years ago. Unfortunately he didn’t give DARPA enough money to invent a time machine to rewind history 60 years.

    At least in America you now get legalised weed whereas I don’t even get to apply for EU citizenship after my fellow countrymen arranged to strip me of it. So following Stephen Covey’s principles of the Circle of Concern I will change the things I can. I will follow 3652days lead and configure my affairs to subsidise it as little as possible.

    Because they got their country back, and I sure as shit ain’t paying for it.

    3652 days

    Anyway, this is about something bigger, though oddly enough opinion is divided even there.

    Stock markets to Trump-o-calypse – “Frankly my dear, I don’t give a damn”

     

    Mr Market sauntered on by, doing a Rhett Butler to the passionate heaving bosom of the punditry that had called a win for t’other side. And the ermine was poised to snap up some US stocks, hell, even to sell some gold to do it, because I have been light US equities because they have been overpriced for years. Obviously good old TD direct had a hissy fit and went titsup in the morning, though they’ve got over their fit of the vapours now. Hargreaves Lansdown and Charles Stanley weathered the storm, I guess you get a better class of big iron for Hargreaves higher annual fees. Trouble is, there’s not much difference in VUSA since yesterday. So I will leave it be. I am regularly buying a L&G dev world exUK fund monthly so I was buying the S&P cheaper for most of this year. Particularly before June…

    Looks like the experts lost out this time too. Maybe that slimeball Gove was right. Experts were experts in the old world but then the magnetic poles shifted or the flying spaghetti monster got crushed by an asteroid and now they always come up with the wrong answer. This Ohio report reminds me of the barmy summer day of the Brexit vote and I went to the polling station in the day 1 and saw loads of a particular demographic with a creepy grin from ear to ear and a spring in their step, it was like being on the set of the Stepford Wives and their retired colonels.

    Let’s look on the bright side of this, shall we? Mebbe the gimlet-eyed Mr Putin won’t feel quite so pissed off about whatever deep childhood tragedy makes him such a nutcase, because he has a more congenial nutcase on t’other end of the hotline. Sod it. I’m with Vlad, too, HRUB has almost come to parity, although I think that is more to do with my bodacious band of buccaneering Brexiteers dreaming of imperial glory to thank for that, by making everything foreign dearer 😉 But what the hell. Make Britain Great, Make America Great. Perhaps Vlad is Making Russia Great. If we all pull up the drawbridge, thump on our chests maybe the cargo cult dreams will come true. The US cousins of the people with the creepy grins who stole my EU rights seem to be voting for Trump.

    Millions of people voted for his promise to achieve an improbable reversal of the decades-long structural decline in American manufacturing. By November 2020, the voters of Mahoning County will expect results.

    “I want him to bring America back,” said Smith, the carer for disabled children. “Bring back the jobs, bring our country back.”

    Good luck with that, lady. The 1950s ain’t ever coming back.

    Notes:

    1. because being a retiree means I can
    2 Nov 2016, 4:37pm
    living intentionally personal finance
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  • Sick of the daily grind but can’t wait for FI? Try a new angle from Andy at Liberate Life

    Many of us in the financial independence/retire early space want to get financial independence because we want freedom from the Man taking over all our time. However, attaining financial independence takes a long time and it’s a tough slog. Retirement Investing Today has reached the finish line in his early forties after nine years of this. RIT even asks himself is he an outlier, I would say he is. I am less of one, but I went three years with no holidays and working hard and spending as little as possible to get out in my early fifties. What you have to go through to get to being able to retire early isn’t fun before, though it is afterwards 😉

    It also concerned me that a lot of the narrative on here isn’t very widely applicable to people starting their working lives now – after all I started work thirty-five years ago. I think Andy has a lot to offer this cohort, because while work has changed, it isn’t all adverse change, and some of his ideas may help play that hand better in the modern world. Andy challenged me in the narrowness of my vision regarding work – his persistence in the face of a curmudgeonly and stuck in it’s-ways Ermine can be seen in this comment thread

    Getting to financial independence is about earning and saving, and it pays to get that right, both in terms of earning as much as you can and saving as much of that as you can, but I’d say that more than half the battle is getting control of your headspace, knowing what you are doing and why. The younger Ermine was called out as a spendthrift wastrel and compared to many in the PF scene he was, although he avoided the general category error that is consumer debt which dooms many to a life of wage-slavery.

    Andy is offering a different take on this. More choices open up when you separate the requirement for independence from financial independence and retirement

    Andy has looked at the financial independence/retire early (FI/RE) scene with fresh eyes, and he observes a lot of independence can be had before financial independence. He is an inspiring example of someone in the FI community who isn’t working in finance 1 in London, but is getting freedom of self-determination and control of how he spends his days. Andy is in his early thirties and lives with his charming wife and two delightful young children in the beautiful surroundings of Devon near Dartmoor.

    Andy from liberate.life with the rolling Devon countryside in the background

    Andy from liberate.life with the rolling Devon countryside in the background

    In particular, he is of the view that many of us miss the point in focusing on the distant goal of financial independence. You can get a lot of independence and a lot of resilience from The Man by looking at working and earning a living in a wider way.

    So I decided to find out more, and visited him down in Devon, on the way to looking at some prehistoric stones on Dartmoor. The rest of this post is an interview with Andy about some of his ideas on life and work.

    An Ermine interview with Andy from Liberate.life on how he separates independence from financial independence.

    The title of Andy’s site says it all – his aim is to liberate life from the limitations of working for The Man on one side, while at the same time not deferring all gratification until he is as grizzled as an Ermine, because his kids will have become adults by then and he’d have missed them growing up.

    Changing your thinking patterns is never easy, and a lot of how we think about money and work was set quite early on. In the interview I ask Andy about his vision of what a good life is, and he talks about how mastery of his destiny is important to him and what he has changed to get closer to that, and his different take on financial independence.

    More ideas from Andy on how to liberate your life

    Andy’s website liberate.life is both about the how and why, but he offers more targeted way to help you make the changes:

    a free email six-part course on how to quit the rat-race in 18 months*

    one on one coaching* on how to become more entrepreneurial, and how to test new business ideas so they show whether they are likely to succeed sooner rather than later.

    Andy can help you liberate your life with his one-on-one course, if you are open to new ways of thinking, and have the talent and drive to make changes. He is open about the scale of the challenge and the rewards. Andy’s approach is to steadfastly challenge limiting beliefs about work and earning, so you can use your ability to add value to other people to the full. Hell, he has even got the grizzled Ermine to think about doing some kind of paid work, just for the fun of it 2

    He’s even more persistent in delivering the message in person. Resistance is futile – the world of work has changed, and agility and lateral thinking in the face of change are what helps get ahead now IMO.

    What did I learn from Andy?

    I should acknowledge I haven’t done his course, but we did talk for a long time. I’m not his target audience because it is too late for me. I had to solve the financial independence conundrum on my own. And yet it’s clear that both my limited history and the nature of leaving the workforce left large regions of limiting beliefs:

    Limiting belief 1: A view that selling is a sleazy occupation and I have never done it and have no place in it

    This is as a result of my limited experience- I have only ever worked for four companies, and three out of the four were very big firms. I was far removed from the front line. Selling is an essential part of making any enterprise work, and my concept of sales and marketing was a combination of Arthur Daley, Spanish boiler-room telephone sales scams and used car vendors.

    Now if I look back at my career I have sold ideas and strategies to people, but if we ignore that as lost along with the career, I then looked at designs and services I have sold to people outside my main job. And discovered that because I had always conceptualised sales as the spoken word, I had ignored sales I had made through the written word – a few thousand pounds on articles (ignored because I have been reading journalists decrying the death of print for years), and also a few pieces of equipment sold because people had chased me down to buy equipment after I have published technical articles on new opportunities and techniques.

    In particular, because outside work I generally influenced through the written and not the spoken word I missed that I had already been selling through widening influence in the way of writing technical articles, even if I did make my customers chase me down and articulate their requirements as a request.  I am clearly of the Ralph Waldo Emerson mousetrap school of thought here 😉 If I wanted to take this further I would carry on in that line, using influence by contributing original articles to special-interest organisations and getting sales from that. I had missed seeing all of this because selling is done verbally in my beliefs. It is theoretically possible that using social media I could expand this, although I don’t have to. I use Google to publicise my articles 3, and by choosing to specialise in niche areas it works for me. I don’t SEO or all that malarkey – write decent stuff about technology I am interested in and choose small pools. Decent writing matters. I’m never going to win the Booker prize, I am wordy and not always focused. But in these small pools I am competing with engineers, not with Shakespeare, JK Rowling or even Dan Brown. ’nuff said.

    Limiting belief 2: Quite serious blind spots regarding working and earning

    These came around because of the way I reached FI, running away from something rather than towards it. You shouldn’t do that generally in life, and I was saved from the boredom that afflicts many who retire to get away by the return of an inquiring mind. That exit left marks from the experience that work hurt a lot at a particular time of weakness, and this was generalised. In fact it was the absence of control that hurt, if I had been in a position to turn round to the boss who tried to shaft me and say

    “Quite frankly, if that’s how you feel then you can f**k right off and stick your performance management where the sun doesn’t shine, if you want to do things in such a stupid way then be my guest and find some other sucker to cover for your failure to look ahead”

    I probably would have felt fine and dandy about the whole thing. Obviously I would then still be working, arguably wasting precious time of my life to earn money I didn’t need so it’s perhaps best that it happened that way.

    So I ended up with the feeling that the whole principle of selling some of my human capital for money ends up as pain, as opposed to the specific example at that specific time did. I inferred the general from the particular, and you shouldn’t really do that from one data point, it’s bad epistemology.

    I am sure there are other limiting beliefs, but I’ll vouch for Andy’s tenacity in hauling those out.

    So there you go, particularly for younger cohorts for whom the journey to FI looks very long and hard. As the man says – Sick of the daily grind but can’t wait for FI? Take a look.

    *Disclosure – Andy contributes to the Ermine’s beer fund for signups through here, but this won’t cost you any extra. I never promote something I don’t see real value in, I scrapped Google Ads from Simple Living In Suffolk years ago when they flashed offers of Wonga et al to unsuspecting readers. Having met him, Andy seems to play a pretty straight bat, judge for yourself.

    Notes:

    1. I have nothing against people working in finance in London. But you’re a breed apart because of the pay levels, and the rest of us need hope and inspiration too 😉
    2. Note: I am interested in the research field and it benefits people I care about. I am not The Returned 😉
    3. this blog is an exception, I don’t really know how people find this, though I am glad you do, and I tip my hat to fellow bloggers who I believe are the main route
    19 Oct 2016, 12:40pm
    personal finance:
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  • Investing in…the State Pension?

    One for early retirees older than 40, really, the known unknowns are too great when you’re younger, but otherwise it could be an offer of an annuity at an unbeatable rate of more than 100%. Try getting that on the open market!

    I’ve never really taken UK State pension into account in my financial planning, for two reasons. One is that it never seemed to be near enough, and I always assumed it was going to be means-tested, and the second is that I have sufficient private pension. I’ve also been contracted out for 2/3 of my working life, which means I would get less anyway.

    Over the 30-40 years of an adult working life, you will go through many fads and phases of the State pension, you will see at least 8 government administrations, well, assuming that the logical conclusion of Brexit isn’t a one-party state at some point. Each of them will fiddle. As a result I filed the SP in the ‘too hard to think about and not very relevant to me’ department.

    Now someone pitching for financial independence and retiring early is likely to have a shortened working life, I had 30 years of proper working, ie rolling up at a place of work and getting paid for my trouble. When I started work you had to have 40 years of working life to earn a full State Pension, elementary arithmetic showed me that leaving university at 21 and retiring on a typical white collar pension scheme retirement age of 60 was going to leave me a little short, and I compounded the issue my taking a year out to do an MSc in the late 1980s 1. As it was there were no other periods of unemployment until my career ended at 52. Fortunately for me they changed the rules in 2006 I think so I only needed 30 years. I was chuffed, because 52-21-1 makes 30 years so I was home and dry.

    Then they changed it again in 2016 so I needed to get 35 years, and now I am SOL because not only am I 5 years short, a sixth of the total, but I was also contracted out and there were dark mutterings that this will cost me a lot. Looks like my original suspicion this will be means-tested on money-grabbed out was right.

    I’d already gone through the pain of getting a national insurance record statement from HMRC, which involved filling in forms and sending them off up North somewhere and waiting an interminable period before a computer printout landed on my doorstep through the post. I read this Torygraph article bitching about how it was all too hard and thought I would actually go read the PDF written by the ex pensions czar Steve Webb, because he always struck me as a sensible sort of fellow except for a brain fart when he invited pensioners to go get a Lamborghini.

    That'll be a nice Lamborghini, and to hell with the money

    That’ll be a nice Lamborghini, and to hell with the money

    He now works for Royal London insurance because ,well, nobody voted Lib Dem in the last election and he was one of them. Turns out he has written a pretty coherent guide, and it appears that the Telegraph was shit-for-brains when they wrote their article, or collectively feeling the after effects of a particularly excessive office party. In particular, their “Topping up your state pension guide” is the dog’s bollocks, written by none other than Steve Webb. I can only presume the Torygraph journos are arts/PPE grads who are scared by  flowcharts ;).

    It’s so good I’ve saved a local copy of it here because when I go through my older posts featuring external links, it is clear that Jakob Nielsen was on the wrong side of history in his 1998 “Fighting Linkrot” article. That’s battle was comprehensively lost, we all know what happened, the good guys lost and were trampled into the ground.

    You can now get your NI and State Pension forecast online

    Something that I learned from Steve was that you can go here

    http://www.tax.service.gov.uk/check-your-state-pension

    and go get your own SP forecast. It helps if you already have a HMRC ID like from self assessment, and you want a copy of your passport nearby, but it went okay for me, and you get much more detail on your NI payment history than the old system. It turns out an Ermine’s NI record, if I had stopped contributing in April last year, is good for a State Pension of  £141 p.w, which is about £7300 a year.

    Now at a SWR of 4% that is effectively a bond portfolio of £182500. It has different risks to a bond portfolio – it has political risk rather than market risk. That’s not so bad if it is part of your portfolio, as opposed to nearly all of your retirement savings, however, because diversification of risk is a good thing. Its nature, however, is well suited to underpinning market risk, and bond investing in boring. I personally hold no bond assets whatsoever, but this is because I have a deferred defined benefit pension due in four years, and this covers the same sort of risk. I also have far, far more equity savings in my ISA than my SIPP, because I don’t want to pay tax on my savings, so I am running that SIPP into the ground ahead of my pension.

    The State Pension offers an early retiree a great annuity rate

    For two possible reasons – if they are an early retiree they probably don’t have 35 years of NI contributions, that’s the whole point of early retirement, and moreover they may have been contracted out. It is the second reason that makes it worth me contributing another three years of NI contributions, because that will wipe out my contracted out deficit, and I will reach the upper ceiling of £155.65 a week, ~£8191 a year. The obvious question here is ‘is it worth it’. That nice fellow Steve has done the dirty work for you here. You can choose to sit on your early retired chuff and pay voluntary Class 3 NI contributions, at ~£730 a year (it depends which years you are buying, I am assuming in my case these are years going forwards, though I could pay a little less to buy out years 2013 and 2014). which buys me ~£207 a year according to Steve.

    A far better way, however, is for an Ermine to be self-employed for three years and to pay his Class 2 ~£150 a year NICS. An ermine obviously doesn’t want to pay tax, so I work at a very low level, nominal minimum wage for 1 day a week. However, I don’t spend a day a week doing that – I hired the magic of PERL to extract the records from a bank account to inject into Quicken for that job, where the previous lot used to type in all the transactions. Because I don’t need to pay PERL any wages, my earning rate goes up from NMW, but I go a lot more part-time to compensate 😉 The pay rate is still pretty piss poor compared to The Firm, but it beats NMW by a long chalk, and I don’t pay tax on it 2  😉

    Now paying £150 to get £207 a year for say 10-20 years 12 years in the future sounds like a bloody good deal to me. I paid my £150 with alacrity and good heart this April for the year 2015/16. Technically Steve Webb is right and I should refuse to pay for 8 years and then pay up all at the end, because for all I know I could cark it tomorrow or sometime in the next 12 years go and do a Jim and go back to work because I miss the metrics and performance management shite so terribly that I need it back in my life. But sod it, I am going to pay my £150 early for peace of mind. And next year and the year after that.

    There aren’t many places you can go buy a deferred to 67 inflation-linked annuity returning 138%. Normally you are looking at 3% and have to have one foot in the grave to get a better rate. Even if you can’t find a way to look self-employed and go the Class 3 NICs route you’re looking at an annuity paying 28%. A top rate, risk and asset-class diversification and backed by Her Majesty’s Government. You owe it to yourself to at least ask the question of whether you can do this 😉

    force majeure

    There’s always going to be the tin-foil hat brigade that say that these promises aren’t worth the steam off their piss and will be repudiated. I am/was one of them, but in the end it’s down to Stephen Covey’s Circle of influence versus circle of concern. Personally I prefer the other statement of the same conundrum –

    For sure, the government may repudiate the State Pension, tax the crap out of it, the buccaneering Brexiteers may destroy the value of the pound so much that a pound buys you half a peanut in 20 years or there may be a war of all against all. Any or all these things may come to pass. I’ve got a lot more chilled than when  I was working, shit happens but not usually all the shit happens. There’s somebody offering me a taxable inflation-linked income of £890*0.8 3 for a one-off cost of £600 spread over four years, and over there there are people offering me the same £891 as an annuity for about £23,000. I’ll take the government up on their kind offer and to hell with the downside. I can afford to lose £600 for those odds.

    Notes:

    1. Looking at my NI record I see that either my younger self bought the extra NI when I went back to work, or for some reason doing an MSc on a Manpower Services Commission grant meant I got NI credits for that year. I didn’t get NI credits while doing my undergraduate degree
    2. because I am careful to only have income below the personal allowance, rather than I am keeping it all in the British Virgin Islands with Mossack Fonseca
    3. 20% tax
    11 Oct 2016, 11:56am
    personal finance rant reflections
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  • to live different you must do different

    The Ermine has been using some of that extra time you get in retirement to go travelling, after a jaunt round Salisbury Plain with the archaeologists working for  military 1 and then on to Dartmoor, when I met up with Andy from liberate.life to talk about the modern workplace. Andy is a driven and hardworking chap so he’s already written the post by the time I get round to writing this, so I will stick with this picture of Haytor on Dartmoor, which is near his neck of the woods.

    a fine rock and worthy fo a moderate scramble to get up to

    a fine rock and worthy of a moderate scramble to get up to

    where we had lunch. Lots of stuff discussed, because he has a different take on the world of work.Very different to mine, particularly how to approach it.

    Occasionally a younger fellow has managed to use their initiative to find out how to contact the Ermine by email, along the general lines of all that work philosophy’s all very well, but how does it apply to me? And it’s saddened me that I’ve never had much of an answer to that. My story is a tale that started in a different era, and while many of the tools of the trade are the same, many things are tougher now, while conversely some specific opportunities are much greater now. After that discussion, perhaps there is a way to mitigate some of the adverse changes, of which more in a future post.

    We humans are storytellers, but we often narrate the story of our lives in other people’s words

    Let’s face it, we call that culture – Romeo and Juliet stand proxy for infatuated lovers even after 400 years. Less inspiringly the Kardashians stand for sucess, and  Donald Trump for alpha maleness, froth and scum float to the top as well as the cream.

    All the world's a stage, and this is one of the 'alpha male' castings. I don't get it either.

    We aren’t fussy about where we get our stories – all the world’s a stage, and this is one of the ‘alpha male’ cast of characters. I don’t get it either, but he does it for a lot of people.

    We borrow from stories and weave the threads into the image of our ideal lives. The story of how work and life fit together comes from many places – it comes from how we saw people do that growing up 2. A lot of it comes from advertising, where clever people tell us stories to try and get us to spend money on things and services. Take a look at Ad Age 3‘s top 15 campaigns of the 21st century, and the way they talk:

    Some of these ad campaigns are here because they changed the way consumers thought about the world around them

    Their words turned into your stories… The lead quote was a corker

    “Historians and archaeologists will one day discover that the ads of our time are the richest and most faithful daily reflections any society ever made of its whole range of activities.”

    Marshall McLuhan

    Your life has been designed, and not particularly by you. Most readers of PF blogs 4 are earning more than the median wage (~£27,000, FTE) – I hazard that this is the point where the fight switches from earning more to spending less, and the spending has a lot of the narrative written by people paid to make you spend more. Sometimes it’s good to see the extreme point to understand yourself – take a look at the phenomena of superyachts, which as PhD researcher Emma Spence has discovered, is basically all about consumerist willy waving writ large. You, dear reader, have to make do with with more house than you need and an iPhone. Nobody needed an iPhone 20 years ago, now everyone is walking around with £500 worth of easily pinched/broken hardware on their person…

    That is one tasteless ugly piece of kit, non? And this is the attractive side. Apparently something to do with Philippe Starck, he of the elegant lemon squeezer. Where’s a Viking longboat or Jonny Ive when you need ’em eh?

    What you consume is often the most egregious version of others writing the script, other parts of life have elements of this. I got to nearly 50 without realising that I actually had agency over how old I was when I retired. I hadn’t realised this was under my control, FFS – I took the age of 60, the normal retirement age at The Firm, and accepted that without bothering any brain cells with asking why this was so.

    Some of the things we can do are constrained by what other people do. The price of housing, for instance, given an endless supply of credit, will tend to find a level where the cost of servicing a loan can be managed by two people working full-time, because that’s what most people in that market are doing. Low interest rates and low inflation won’t help to pay off the loan over a working life, because it makes all the numbers bigger. For some odd reason we think low interest rates make houses more affordable. It just makes them dearer.

    Most people don’t get to financial independence under their own steam. To be different you have to do different.

    Many people’s idea of financial independence is getting the State pension, roughly when they are 67-70. They effectively outsource the job, although whether that gives a decent standard of living very much depends on whether they are paying rent and/or have other sources of non-work income on retirement. That’s the default setting, both in terms of time and in terms of money.

    There are two major areas you can do different to your peers. You can earn more, and you can spend less. The greatest win to be had is, of course, targeting both. Retirement Investing Today is an example of what you can do here. Unfortunately you immediately have a major problem when you want to swim against the tide, and that is that humans are social animals. If you are going to do different then spending less is going to make you look poor to your peer group. And most people just hate that feeling.

    Earning more is the obvious other way to go, then. You need to have the talent and the luck, but even if you have those, you tend to take a hit along the spending axis. This is because your work peer group becomes more spendy as they earn more. In practice the axes of spend less and earn more aren’t orthogonal and mutually independent. There’s probably no real way round it, in the accumulation phase you are likely to look on the poor side to your colleagues. I guess this is what seems to makes it easier for introverts to chase FI  – one of the few cases where this trait is an advantage.

    Not so easy after all. How about spend less? Fight consumerism by targeting the base of the fire.

    1610_advertising

    You’re changing the story there – in this case the story pumped out by the advertisers of what a good life looks like. After all, good ads changed the way consumers thought about the world around them. I presume this was in the direction of spending more and consuming more, because otherwise, what’s the point? I’m quite taken with the poetic description from Brandalism in this piece of agitprop 😉

    Advertising shits in your head – but, first, its torrential, golden flow stains your magazines, your phone, your computer, your newspapers and your streets. Advertising shits all over and dominates our culture. It is a visceral, powerful form of pollution that not only affects our common public and cultural spaces, but also our deeply private intimate spaces. Advertisers want your ‘brain time’ – to shit in your head without your knowledge.

    It’s why I run Adblock Plus and Ghostery, both set to 11 – kill ’em all. Destroying advertising as much as possible makes life simpler and more pleasant. It is a shame that at the inception of the Internet, we failed to craft a decent payment model, so advertising and the surveillance model became the original sin of the Internet, but there we go.

    I don’t have a beef with real people recommending real things they have trialled, it is the automated stuff like Google Ads that is the problem – anonymised mind-spam sold to the highest bidder. A while ago I went to a meeting in Leeds where I discovered how people think about blogvertising. A very few of you 5 will see I have an Amazon box on here – all of those are books I’ve read or things I’ve mentioned on here. I was running Google ads, but never saw them, because that’s what AdBlock Plus does for me 😉 When I realised I was running ads for Wonga and consolidating loans, because that’s what personal finance is about to most people I pulled it. Not because I thought any of my readers were going to be swayed to the dark side and toddle off to their local Money Shop to buy some overpriced money at extortionate rates, but because I didn’t want to be part of the problem.

    There are three non-spending areas that cause a lot of hurt for British consumers below 45

    Consumer spending causes a lot of trouble, because it’s a never-ending tactical battle fought one little piece at a time. But three strategic changes have caused a lot of damage to the personal finances of people starting out now. Let’s take a look at these

    University, and the apparent dearth on non-university alternatives

    When I started university in the late 1970s, fewer than 10% of school leavers entered university. It was much easier to fail exams in those days, because they were norm-referenced. It isn’t entirely clear to me what you have to do to fail exams now, because we have lost the cojones to tell some young people, and more specifically their parents, that they simply aren’t up to the mark academically.

    In itself that’s not so bad, but because so many more people go to university, the old system where the taxpayer fronted the cost in the hope of getting more tax revenue in the future from the higher earnings became unaffordable. Even if everything else were the same, it would cost five times higher proportionally 6 to take 50% of school leavers through university than 10% was in the 1970s.

    When you flood a market with five times the product, you also devalue it. When I started work, having a degree was a serviceable proxy to indicate I was in the upper 10% of academic ability, and for jobs that suit that sort of thing (engineering, science, research, for me) that was relevant. When nearly 50% of people go to university a degree tells you roughly they are of average brightness or above. Knowing someone is average or more is useful, but probably not something you’d pay £60k for over a working life.

    There appears to be no control of numbers going to university in the UK, it’s all about the money, which is a shocking abdication of political will IMO. Contrast this with the situation in Germany where numbers are controlled in some cases. Yes, it goes against the free-market-money-is-all mantra, but it’s also a damn sight cheaper to go to university in Germany. In fact it seems a damn sight cheaper to go to university just about anywhere in the EU other than England and Wales. Shame this option is probably only good for the next couple of years for British wannabe graduates, who are SOL afterwards 7 🙁

    The fundamental problem with university in the UK is the product is getting astronomically expensive at the same time as it is being devalued. University has become an unaffordable luxury. Unlike Germany Britain is also not particularly improving the non-university options, much noise is made of apprenticeships but it is often simply a mask for cheap unskilled labour. The trends in the world of work are running away from unskilled labour. An apprenticeship where the apprentice learns something about a craft is good, but is only good if the craft is likely to remain one done by people in the future at decent rates of pay.

    Housing

    In Britain we used to build social housing but we sold that off to the then council tenants to buy votes. I seem to recall Thatcher expressly forbade allowing councils to use right-to-buy revenues to build more housing. As a result less than a fifth of social housing flogged off cheaply is replaced, I am surprised it’s that high. We used to have credit controls up until 1980-ish but removed those, because the free market always delivers the correct solution, even when it is banks incentivised to lend money to people who have no capital but need to buy an essential good. So we have high house prices and richer banks. It’s not just the banks, anybody with capital, from banks to people who buy up houses and then rent them out to people without any capital at exorbitant rates and no real duty of care to make the joint habitable. So we now have high house prices, richer banks and richer BTL investors. Well, at least somebody is winning I suppose…

    As an example of just how out of touch the government is on this, Gavin Barwell, the Housing Minister, no less, delivers himself of the Marie Antoinette-esque recommendation that people should leave their housing equity to their grandchildren, FFS. That is so deeply fucked up it’s not even wrong. We’ve seen this movie before. When you go and see National Trust stately homes

    concentrating inherited wealth led us to stately homes and a tiny part of the population owning nearly everything

    concentrating inherited wealth led us to stately homes and a tiny part of the population owning nearly everything

    you are looking at what happens in a world where inherited wealth accumulates across the generations, combined with a world where the return on labour was very poor. It took a couple of world wars and a lot of technological progress to break that up. Even then, the aristocracy, sharp blighters that they are, simply requested an inheritance tax exemption on agricultural land, got it, and this is why most of Britain by area  is still in the hands of a few hundred family estates who were gifted the land by William the Conk more than a thousand years ago. Obviously they don’t drive the tractors themselves – they get contract and tenant farmers to do the dirty work, kill our birds, pollute the drinking water, flood our towns and cities and then claim subsidies for the activity for shits and giggles  because they can.

    What should happen IMO is a total escheat of all property on death 8. Those damn grandchildren didn’t work for it, and if they aren’t to get their throats cut by the massed and desperate hordes of people who weren’t born with a silver spoon in their mouths in the accommodation dystopia being created, then the current trajectory of ever-increasing housing costs needs to be shifted. I was able to save enough money through my working life to buy a house from a standing start. That’s getting harder and harder to do as more and more funny money chases property, but no, Gavin and George Osborne, more inherited housing wealth is part of the problem, not the answer. Unless you are actually going to go out and kill all the poor people who are dirtying up your nice world.

    The world of work is changing

    The accelerating trends in automation and globalisation, are part of a general shift of power from labour to capital that has been going on for the last 20 years. In a double whammy for poorer First World residents, globalisation is amplifying the shift of low-skilled jobs that can be moved to cheaper labour forces. While this is undoubtedly good for business and capital, if you were part of that unskilled labour force in the UK you get so see your jobs go. The last 20 years have seen a tremendous fall in poverty and inequality, but that’s worldwide. Let’s hear it from Tim Worstall – right-wing nutjob and apologist for unfettered free-marketology sans compassion for poor saps less clever than he is, riffing off this paper written by Ayn Rand Chari and Penlan. Take it away, Tim:

    According to a World Bank Study, in the three decades between 1981 and 2010, the rate of extreme poverty in the developing world (subsisting on less than $1.25 per day) has gone down from more than one out of every two citizens to roughly one out of every five, all while the population of the developing world increased by 59 percent.8 This reduction in extreme poverty represents the single greatest decrease in material human deprivation in history.

    That’s a pretty good outcome from an economic policy and it’s why I support the process of globalization quite as much as I do. Absolute poverty, that peasant destitution, is something I regard as an abhorrence. Killing it off through economic growth I thus regard as not just desirable but a moral duty.

    OK, but there’s a problem with this, as the paper points out. For some policies will be good for one set of poor people, those absolutely poor out in the Great Big World, yet bad for another set of the poor, those who are the poor in the already rich societies. And this globalization and free trade mixture is exactly one of those policies that has this effect. Rising inequality in the rich nations is a logical result of adding those couple of billion low wage workers to the global economy. We could predict it would happen, theory tells us it should happen and it has happened: no one should be surprised about that.

    I’ve made clear around here a number of times that I both understand this point and also think that it’s a perfectly fair price to be paying. Yes, of course, that’s easy enough for me to say as I’ve not got to pay it. […] But that the relatively lowly paid in the rich countries stand still for a bit while the absolutely poor of the world climb the economic ladder to the joys of three squares a day, yes, I think that a price well worth us all paying.

    Delightfully technocratic, Tim, and for all I know you’re right, it is indeed tough to fault the logic from a strictly rational/intellectual POV, the reason I can be sanguine about it is that while not as rich as Tim I am still on the right side of that inequality divide. You’re a clever cookie, Tim, the the sleight of hand is that price well worth us all paying. Seems a bit rough that it is just the poor who get to pay the price, Tim, might have been a bit more helpful if you’d like to chip in and  help out. As it is you only have to weep crocodile tears and wring your hands, because that’s conveniently precluded by the Ayn Randian logic. The UK poor aren’t standing still, they are going backwards – unskilled jobs are shit and getting shittier, for the simple reason that the value of unskilled work is falling. The second part of Tim’s article is a load of rationalising about why you can’t do ‘owt about that because if you redistribute towards your locally poor you shaft the globally poor- to wit

    It’s entirely possible that we could have some policy or other that makes our own, rich world , poor better off. But which at the same time makes the absolutely poor of the world worse off. And if we did have such a policy, and we were also concerned about the poor, then we shouldn’t have that policy. Even though it benefits our poor they’re not in fact all of the poor. And given where our poor are in the global income distribution then they’re almost certainly not the poor that we should be worrying about.

    He uses the specific examples of agricultural subsidies 9 in the US to show how this works, and the EU has its own version of this. 10 I can’t fault his logic, but I would pay money to watch him try and develop that line of thinking with some of the people in the UK who have been at the losing end on globalisation. A government isn’t voted in by the people of the world, but by the people of a specific area. The Brexit vote was an example of regional pushback. Trump is another. Poor people find it deeply offensive when rich people tell them their standard of living has to fall to help some bunch of poorer people elsewhere while the rich swan off and don’t take any hit themselves.

    This process of requiring more skills is drifting up towards what used to be known as middle class jobs, because it’s now automation that is coming for some of those jobs. When I considered learning something about accounting to become more competent and doing the books for a business, I came to the conclusion, supported widely in the comments, that it wouldn’t make sense to invest in training for something that is likely to disappear or be outsourceable. This is a microcosm of the wider ‘should I invest in university problem’, which is part of the topic of Poppy Noor’s little rant here, though I do think she needs a dose of  ‘if you want to live free, your utopia is irrelevant‘ to get her to be effective about changing her lot in life rather than be right about how it isn’t right.

    Being right about how things aren’t right makes for a deep and satisfying rant, but the chat with Andy on Haytor left me wondering how a 25 year younger Ermine would tackle the changed world. It would need to be different from the way that served me okay.

     

    Notes:

    1. It’s seriously unwise to go for a looky-loo on that bit of Salisbury Plain without the military’s help 😉
    2. which of course puts it about 30 years behind the times we actually try to live it in
    3. I am tickled that they don’t like people using ad-blockers. Reconnaissance behind enemy lines is always a tough game
    4. This is a total guess, but you’re not going to be worrying about financial independence and retiring early much lower down the scale. You’ll be worrying about making next month’s rent
    5. those that aren’t running adblockers, and if not, why not?
    6. I am making the handwaving assumption that the increase in population is roughly tracked by the increase in taxpayers
    7. It wasn’t me wot did it despite being an old git, I was a Remainer
    8. I’d generalise that further but the great thing about land is you can’t hide it in overseas tax havens
    9. Agricultural subsides subsidise the rich landowners in the UK, I don’t know enough about the US situation to know if it’s different, though I’d say CAFOs, and subsidised high-fructose corn syrup are indicative of a different sort of pathology than consumers sponsoring the aristocracy
    10. One of the tragedies of Brexit is that a big potential win from it, canning agricultural subsides, was nixed early on
    27 Sep 2016, 12:27pm
    living intentionally personal finance:
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    36 comments

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  • Archives

  • Earning and working are different things in a post FI world

    Before they are financially independent, most people work to earn the money to buy the stuff they need and want, it’s how 21st century capitalism is meant to work at the moment. It gives rise to the term ‘work’ – something that you have to do otherwise bad shit happens, like you end up with all your stuff thrown out on the pavement.

    1609_evicted

    Because it’s something you have to do for many years, many of us get Stockholm syndrome with work. Inveterate story-tellers that humans are, we tell ourselves that work is innately a Good thing and lends meaning to our lives. Let’s take a fine example of this from someone who I’m generally in agreement with, other than in this aspect of life:

    But I believe almost everyone will benefit from having an ongoing economic relationship with society while they can – even if only for a day or two a week.

    Monevator

    I’m the poster child for disputing this paradigm. I consider it a limiting belief, and have taken pot-shots at the Calvinist work ethic every so often on here. The beauty of financial independence, however, is that you get to have the choice of whether to work or not. Over at SHMD, Jim has decided that he missed work, so he went and got himself a job, even though he doesn’t need the money.

    Now I have never missed work, ever since I handed in the tools of an office-worker’s trade way back in June 2012. There is, however, a general psychological principle

    Everything that irritates us about others can lead us to an understanding of ourselves

    Carl Jung, MDR

    I would generalise that to everything that irritates us… I don’t think it’s particularly personal in this case. If Monevator and Jim and 99% of the rest of the FI world want to work till they drop, good luck to them. It’s just the concept that work is an inherent good that gets my goat. As a society, we are going to have very serious trouble and mental distress with this meme if the robots and globalisation really do take half our professional jobs in the coming years, unless we have a social revolution that probably involves bending some of the axioms currently underpinning society. Hopefully one of them will be work = meaning 😉

    I realize today that nothing in the world is more distasteful to a man than to take the path that leads to himself.

    Hermann Hesse , Demian

    In order to live intentionally, therefore, I need to separate the beliefs coloured by past experience from my current experience, and my temperament had the past experiences not happened. Otherwise I will live in an imaginary prison, boundaries that once had value but have no more.

    What does the word Work mean to me

    It means a lack of freedom, it means grind, it means being trapped. It means earning money, it means selling my time for money, it means restrictions on my time. It means doing stupid shit like justifying my existence, it means filling in time sheets that have no bearing on reality, paperwork just because. Because humans are devils with their recency bias, this litany of woe is because the most recent experience was largely negative. But for 27 years out of my 30 it also meant the opportunity to travel, to do good interesting stuff and to build capital across my working life as I slowly exchanged human capital for financial and social capital. If I were to allocate the experience of my years evenly, then only 10% were bad, maybe 12% if I add in the six months I was unemployed between graduating into Thatcher’s first recession in the 1980s and starting work.

    So it’s easy to see the limiting belief. Work = pain, and I need get as far away from that as possible. Even in 2009 I intellectually knew that was an extreme view, but one that because of where I was in my working life I could get away with. The power of the intensity of feeling galvanised me to clobber wasteful spend and save and take the necessary risks with extreme prejudice, and reach FI 8 years early.

    What I did not realise was that simplification also distorts

    and it is the distortion that clouds much of my thinking when it comes to the topic of making money

    I think the word ‘work’ has picked up some unnecessary bad connotations […], especially as we’ve transitioned out of the years when ‘the recipe’ (grammar school -> degree -> job for 40 years -> pay your dues -> final salary pension scheme) still worked.

    liberate.life in this comment on here

    I was that grammar school guy, son of a maintenance fitter, who went to university, got a degree, then worked only four real jobs 1, have a final salary pension scheme. It worked for me. I was able to retire early because I saved roughly half the notional capital behind my FSP, but having the FSP effectively gives me a massive bond-like holding, which means my risk tolerance with stock market investments is insane, because the FSP will keep the wolf from my door.

    Liberate.life is the counterfactual to my experience – younger and more dynamic, but electronics engineering is the field the younger Ermine worked in. And yet he is yin to my yang – he can sell, and freelances, and as I read this it looks like the antithesis of everything I know about work. It’s like looking in the mirror and seeing half the image right way up and half of the reflection upside down. I’m damned if I know which half is off but I suspect it’s mine 😉

    So it was time to investigate the subject of work and money deeper. For a long time the obvious issue, that I associate work with pain, simplified things too much

    I associate specialisation with success with work

    For 25 years I was working in a big company, and in a big company hierarchy. Big companies tend to narrow people down into specialisms in engineering, because they have enough people that they can do that. I pursued some technical interests after leaving work, and have some of this on a blog, when I read it back it is a whole load of random bits and pieces on all sorts of subjects as I flit from one are of interest to another. Mine is worse on that front than your typical engineer’s blog, they at least tend to have a reasonable common thread for a few posts. As someone who is financially independent I can afford to pursue my whims, but if I were looking for staff and I saw that sort of character, I would think Jack of all trades and master of none, and file the CV in the round filing cabinet on the floor.

    I haven’t even stayed with electronics and software, a few weeks ago I offered to fix a generator on a no fix no fee basis. I was pretty sure that Google was going to be my friend, the world is full of Honda GX small single cylinder 4-stroke petrol engines and Google is full of people who are describing faults and getting hints on how to fix them. The fault was the engine would run for about 20 seconds and the die. Google told me this was likely a blocked breather vent in the fuel cap, which I confirmed by unscrewing the fuel cap as the engine was about to conk out. Whereupon it ran fine 2 😉

    TFS identified this sort of mentality as a ‘scanner’ but twenty-five years of working in big companies has taught me to identify it as ‘dilettante’. Apparently it is more tolerated in today’s world of work, a kinder term for that sort is multipotentialite. It is more tuned to today’s world in some ways, because better communications means provided you can search well, you can gain the benefits of other people’s experiences by covering masses of ground. You just couldn’t do that before the Web, you couldn’t find enough different people to talk to, and it would have taken ages anyway. Multiple tabs were made for that sort of approach to finding stuff out – cover masses of ground, fast.

    lots of tabs is the way to search - untill you run low on memory

    lots of tabs is the way to search – until you run low on memory

    So I have uncovered some unhelpful associations, and indeed at some level I despise that generalist tendency because for 25 years that wasn’t how to have success at work. It is possible I played against type for a quarter of a century because I prized security and stability and did not know how to manage money over more than a monthly basis. I always needed an answer to the Micawber question, and a regular income made that possible. I struggled with that while running several years from savings, in hindsight I didn’t spend enough. The generalist tendency occasionally caused me grief at work and probably slowed my rise up the greasy pole, on the other hand even in a big company you need people who can cross domains. It tended to work well in good times but be awkward in bad times.

    But since I have the drains up I may as well keep on digging at these unvoiced assumptions…

     I associate a steady stream with income – I am virtually blind to feeling uneven income is income

    I can’t really relate to income that comes in unevenly in dribs and drabs, because for 30 years income arrived in roughly the same amount each month, apart from overtime (in the early days) and bonuses (in the last couple of decades). It’s still a little bit of a mystery to me how a string of lousy £50 here, £100 there dividends in my ISA adds up to a good few thousands of pounds of income when rolled up over the year. I was able to jump over the uneven lumps ≠ income in the ISA because there are so many of these minor transactions I can think of this statistically. Many people work really hard to make their dividend income spread evenly across the year, this sort of happened naturally for me, although slightly peaking in Q1 and Q3. You can have 20 companies working for you in a HYP, but I would defy anybody to work 20 part-time jobs or even have 20 streams of income, that sort of diversification is hard to have with many income streams.

    At a gut level I don’t really consider the sort of hit and run one-off jobs like the generator as income. For sure, Quicken adds them up for me so I can declare this, as long as I keep my pension + earnings below the personal allowance I am chilled. Last year I was able to toss a lot more than the usual £3600 in my SIPP because these things added up to a fair bit more than that. But it doesn’t feel like income, because it is unreliable and lumpy.

    I associate earning money with work

    and worse than that, I associate earning money with selling my time for money. So these one-off jobs don’t feel like work which is good, but they don’t feel like earning money either, which is bad. I don’t trust them, so I just bung the result into SIPP and live off the steady income from the SIPP, because I can’t budget with variable lumpy amounts. By a curious twist of fate a retiree older than 55 can put all their earnings into a SIPP in one year and get it bumped up by 20% to extract the next year, provided they don’t draw more than the personal allowance. I’ve only got another few years worth of that before my main pension shoves me well into the normal tax bracket, but I may as well enjoy the windfall while it’s there.

    And yet together with the income from the ISA these odd jobs will start to add up to about the national minimum wage. It was not so long ago that I was chuffed that the dividend income from the ISA matched what I would have got from jumping through the hoops to get JSA (£71p.w so ~ 3700 p.a.) and yet the rate of increase of the ISA income per year is creeping up 3. I don’t draw an income from the ISA because I don’t need to – I want to pump that up as much as I can before I enter the regular BR tax bracket in a few years, since it is tax-free income.

    I have lived in a big-company bubble for 25 years and it has limited my vision

    I owe liberate.life some beers for widening my search. Because the similarities of the engineering skillset (naturally separated by 25 years or so due to the age difference) and yet pretty much everything else looking like a counterfactual, he’s shown me a set of limiting beliefs I was unaware of. More surprisingly to me, they aren’t particularly due to the trauma of the nutty performance management usage and abusage I took in 2009. That does exist, and has it’s own consequences. The idea of following Jim SHMD’s path and selling my time to an employer to draw a salary brings me out in hives. I’m not gonna go there, and I don’t need to.

    But unassociated with that, my concept of making money was massively narrowed by my experience of working life, the unchallenged assumptions of that grammar school kid who followed the default track. Now that I am grizzled of fur and sufficiently past the finish line that I have options all the way up to and including doing nothing, I can zoom out and ask myself the question – is there a better way?

    Perhaps I should turn the telescope round and ask myself what do I want out of earning money. I have identified a project where I could use a bit more money. It doesn’t directly change my own lifestyle, so my greatest fear of earning more through selling my skills doesn’t apply – that fear is that I would earn money, inflate my lifestyle with Consumer Crap™, get locked into it and lose the delightful freedom of FI. I am happy with what I will have, my lifestyle will inflate somewhat anyway as my income increases once my main pension starts. I don’t need to earn more money to raise my lifestyle. Although once I believed that I screwed up discharging my mortgage early which meant I took an income suckout for the last four years, now I am on the other side I’m not so sure that I regret taking the suckout over the convalescence period. but that’s easy to say from the other side of the mountain. I got a significant ‘pay rise’ this when my DC pension started in June and will get a massive ‘pay rise’ when my non-deferred pension starts in a few years. Breaking the link between making money and my own lifestyle gives me detachment which can distance me from the suffering normally associated with ‘work’.  It is one aspect of the freedom to that financial independence is about, once you have spent the time integrating the freedom from.

    So what do I want from off-piste opportunities to make money?

    It is a subset of asking

    I think I would feel truly fulfilled if I spent most of my days…

    a subset for the simple reason that I have command of my time, being FI. I will do other things that fulfil me, this does not need to replace my use of time, but it needs to add, or at the very least not take away.

    1. I want to earn through doing something that is congenial
    2. and interesting
    3. has some originality or novelty
    4. creative in some way 4
    5. with decent people who aren’t dickheads in general 5.
    6. that helps people or causes that I know or care about personally
    7. that is specifically something I bring to the party from skills, temperament or talent if any
    8. I want to spend less than a day a week on this, but I favour that being in all-or-nothing chunks with long gaps in between. Part of this is that I am limited by the tax system, I don’t want to work for the government 20-40% of my time. I have done my share of that over the last 30 years.
    9. I don’t what to sell my time for money. Obviously doing something creative takes time, but I don’t want it in the form of billable hours, more billable results
    10. I don’t want to ever see performance management. An engineer’s work speaks for itself, should that be the field I use
    11. I don’t want regular or ongoing time commitments. Hit and run jobs are what I  want, get in, do, then get out
    12. I don’t want to carry a smartphone all the time
    13. I am happy with no fix no fee and no guarantee of regular work – but if you aren’t there regularly for me there’s no guarantee I will be there for you 😉 and yes, that is sort of at odds with 9
    14. I prefer to sell Mind, not Stuff. Stuff gives warehousing and cashflow problems, and regulation is a bitch. It’s not hard and fast though.
    15. I do not want to be derivative or routine. I don’t want to be a replaceable work unit. No chuntering out ebooks or matched betting which seem common fave side hustles in the PF scene. I am rich enough not to have to do this, and old enough to know my time is limited.
    16. no franchising, if I am not original enough to make a decent return then I will just walk away

    and if I do do this, I want to earn a lot more than the minimum wage for the time I do spend on it. Unless it really is so much fun that I don’t mind, but I’m not building that assumption in from the off. I am not volunteering. I don’t do that, particularly the sort of staffing job. I have done one-off data analysis and design stuff for the RSPB, but not under the usual volunteer x hours a week, it was task-oriented.

    Unfortunately the logical conclusion is freelancing or contracting. I have no experience of that at all, zero track record, no domain knowledge, I am an introvert and can’t sell. So I have never done this in a big way although I did have a multimedia/web design company on the side in the early days of the WWW mid 90s to early 2000s. But selling was my weak point and when the major customer changed technology I folded the company. I read this and think ‘bloody hell, I can’t do any of that’.

    Not only that, but it appears that small companies are where the most likely chances of success are. I have worked for a small company, a 10-15 man band, but it was at the very beginning of my career 34 years ago. Small companies are like the past – they are a foreign country; they do things differently there.

    The Ermin place of work at my first company. The duff sensor heads are lined up on the back wall. I don't have a good explanation for the can of wifebeater on the bench, perhaps were were celebrating a big Egypt order. 'elf 'n'safety would shut this joint down i na jiffy. We used to wash PCBs in boiling Arklone, a CFC with the instruction 'don't fall down, else you'll stay down'. The vapour was heavier than air.

    The Ermine place of work at my first company. The duff sensor heads are lined up on the back wall. I don’t have a good explanation for the can of wifebeater on the bench, perhaps we were celebrating a big Egypt order that came in around this time. ‘Elf ‘n’safety would shut this joint down in a jiffy nowadays. We used to wash PCBs in an open tank of boiling Arklone, a CFC with the instruction ‘don’t fall down, else you’ll stay down’. The vapour was heavier than air.

    I had some bizarre engineering experiences in small firms, two stick in my mind. In my first company, the design engineer swore blind that a virtual earth amplifier had a high input impedance. Now at 22 I didn’t know a lot, particularly when to keep schtum and STFU, and I had been testing these blasted things which used to want to take off and oscillate more often than not. That’s bad in an optical sensor. But I did know that a virtual earth was a low impedance input. So when there was much head scratching in a meeting as to why we have more duds than good ‘uns I go and pipe up “but a virtual earth is a low impedance – the clue is in the name”. I was dead right, and the clue is indeed in the name, but there was a deathly silence and the assembled multitude digested the unwelcome fact that the lead designer had goofed, as pointed out by the rawest recruit. Seemed a good idea to move on from there after a year…

    The second was when I was the lead engineer on a project at The Firm, and we had contracted some clever fellows in the Cambridge Fens. These guys had minds like planets, and I had told them the average TV sound in expected typical audio levels of 0.7Vrms. For some reason they decided they only needed a peak to peak level of 1V, sadly convention has it that the peak to peak amplitude in this case is 0.7×(2×√2) or nearly 2V. The passage of time had gentled the Ermine’s needle-sharp teeth and I had learned that it pays to nudge people to coming to the conclusion that perhaps a mistake had crept in somewhere. But I confess I had to look it up in a textbook after a meeting where one of these guys a lot brighter than me was declaiming that the signal was entirely correctly 1V, he really believed that. They were awesome at digital stuff, could pull their set-top box code apart and have it have it changed in a few hours. In a bigger company somebody else would have been in charge of all that fuzzy analogue stuff and this challenge to basic engineering fundamentals wouldn’t have happened, particularly in front of the customer 😉 Small companies have much more of a heady mix of absolute brilliance and the occasional absence of fundamentals, in my limited experience of them.

    For many reasons I would be a fish out of water trying to apply what’s left of my skills in this different world. I have no knowledge of the terrain, and I don’t know if my passport is good for the country. To my advantage I don’t have to succeed, though of course that may work against me too, perhaps I will not have sufficient fire. It’s not looking good, but I have one key advantage. I am not desperate – I am financially independent. Even at the moment the amount in my current account slowly creeps up month on month and I need to toss it into the Nationwide every so often to win 5%. As a result my risk profile is very different from normal, I can screw up a few times and let it go.

    There are other odd wrinkles, take this perfectly reasonable recommendation

    To free yourself from the grind, be defined by your strengths

    I can see that might work when each piece of work is won anew, ie there is no history, it’s obvious to play to your strengths. But in my career I achieved many wins by fighting down weaknesses – it is this which turned an introverted young Ermine into someone who could speak in public and lead international teams. Even in the specific realm of personal finance I had to fight down the common get rich quick belief that trading is the way to make money with stocks, and come to understand that the noisiness of the information, the abnormally high likelihood of infrequent outliers and the high frictional costs mean that often the less you do 6 the better your long-term performance.

    So there are many hurdles and mindset-shifts before I could turn freelancing for small companies into something workable. And surprisingly, none of them are particularly associated with the issues that finished my big company career. Why consider this route? Because the one thing I know I don’t want to do again is a regular job. I don’t have the time, there are all sorts of bad associations, and it’s not what I want to do with my life. Because that was the only way I knew of making money, I accepted I was never going to make money from my human capital again.

    People have occasionally challenged that assumption. But it took time for the noise and hum from the crash-landing of my career to die down, and for me to see an opportunity that wouldn’t lock me into a consumption lifestyle, so that I could see the remaining limiting beliefs. Whether it will amount to aught is unknown at the moment.

    Andy’s liberate.life is a different take on financial independence, with less emphasis on the financial and more on the independence

    In the personal finance sphere our weapon of choice is  of course personal finance, it is the Law of the Instrument. If all you have is a hammer, everything looks like a nail. It’s written in the term financial independence, hell, what other sort is there? Well, given the assumption we are talking about living in a First world consumer economy in the 21st century, that is.

    We are aiming to save enough money to not have to work. RIT is the poster child for doing this relatively young, but his journey to FI was a pretty harsh ride. I’ve never earned anywhere near the amount of money I guess RIT earns, but I’ve never taken that sort of punishing schedule for years on end either. In my case, because I was naturally closer to the end of my working life, I could get away with focusing on the financial route to independence. You can become more independent, in terms of choice on how you spend your time, without becoming financially independent. The model I and most people follow, working for a company to get nearly all your income, is one of the least independent ways to get the financial capital you need to live life in a Western consumer economy.

    Andy at liberate.life is a new kid on the PF block. Although it doesn’t apply to me, he challenges the principle that financial independence is an indivisible unit. His site is well worth a look if you are in this position

    You made it! You’re financially comfortable. Your car is new enough to not break down all the time. You live in a nice house. If you have kids, they’re well dressed. People hold you in high regard and by society’s standards, you are a success.

    So why the hell does your life feel like such a grind? At one point, you were young and full of optimism but now you just follow the routine, day in, day out. You don’t have any passion for what you do any more. You do it because you have to. You’ve got bills to pay.  You can’t see a way out of this before the sweet release of retirement at 60-something… and then you’ll be too old and worn out to live out the dreams you’ve always had anyway.

    Now since I am not a million years off 60 I would dispute

    and then you’ll be too old and worn out to live out the dreams you’ve always had anyway.

    Bollocks to that, mate, remember that statistically happiness is U-shaped across the life cycle in many Western societies, so some of this is part of the human condition. But that proviso aside, he’s offering a freebie course in how to get FI 7, and if you want to pick his brains specifically 1:1 interactivity is there if you pay him for his time.

    In many ways getting to FI is a matter of asking the right questions as much as finding the right answers. The right questions can lift limiting beliefs into the light of conciousness. You don’t have to fight limiting beliefs if you don’t want to or need to. I’m not going to bother fighting the belief that working for an employer has become a soul-destroying issue of gamesmanship and playing the game with meaningless metrics that strip out the joy of solving problems sometimes otherwise known as work, because I don’t need to. It’s probably not universally true, even for me now.

    But now I have found a potential application for deploying the residual vestiges of human capital I may still have which won’t lock me into lifestyle inflation and consumer crap, it is worth challenging some of the limiting beliefs about making money other than just using my financial capital. And without a doubt, Andy helped me ask some of those questions, and I have found that the default answers were often wrong, inconsistent and incomplete.

    So if you feel you have made it but want a way out go read some of his work, if only to ask yourself some awkward questions. You may not like the answers but they can serve you well.

    Notes:

    1. excluding casual crap before leaving university – kitchen portering, repairing radios and TVs and odd-jobbing
    2. Obviously you shouldn’t run an engine with the fuel cap open because petrol vapour is inflammable and invisible so don’t try this at home.
    3. in fairness that was written nearly six years ago when the best you could put into an ISA was about 10k p.a. Some of the win in getting to three times that was the fact Osborne turbocharged this to time and a half, the time honoured magic of Saving Hard at work rather than any particulalry sharp investing chops
    4. it doesn’t have to be engineering – for the past few years I have been makingsome money from photography and from sound recording. But trends in the wider economy are running away from those sorts of things
    5. Everybody s a dickhead sometimes, it’s part of the human condition, and that’s OK. Persistent dickheadery is what I want to avoid
    6. inaction on its own is not enough although Robert Kirby’s The Coffee Can Portfolio made a good case it was, inaction is necessary but not sufficient IMO
    7. for the sake of full disclosure I have done neither
    13 Sep 2016, 9:24pm
    economy reflections
    by

    44 comments

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  • The Smartphone as a tool of oppression in the Gig Economy

    Smartphones connect us with the virtual world, but also bind us. 1

    A digital nomad in her natural environment (Bali I think). Smartphones work just fine for people like these

    A digital nomad in her natural environment (Bali I think). Smartphones work just fine for people like these, they never had it so good

    The smartphone epitomises what has changed about the world of work, and a whole bunch of articles this last week have reminded me that it has changed, in my view adversely for many workers. I am beginning to understand why so many people are pissed off at the lower end of the employment spectrum. At the middle and top end, they are having a blast – the smartphone is emancipation of the four hour work week, the contractor, the digital nomad and all that. All these dudes are whooping it up and going “wassup, you never had it so good?”. Tim Ferris’s The 4 Hour Work Week is the bible for this crowd. . Back in the real world, it’s the lumpenproletariat taking the shaft, along with a lot of disrespect through what has become a tool of oppression.

    How low end work used to be in the 1960s to 1980s

    The world of work in the analogue world had a lot of hazard and unpleasantness in it, there was overt racism and discrimination is many areas, and humans did a lot of physical work which was terrible for their health. Some of the improvements in longevity and the narrowing of the expected lifespan between men and women of recent years has been due to running some of these jobs out of town. My Dad worked with glass bottling machinery, he was already losing his hearing by my age and was stone deaf by the time he died. There’s a whole gratuitous rant in this post about for God’s sake don’t trash your hearing with loud sounds and use hearing protection with power tools when you’re over 40 inspired by his experience. Blue collar work was a bastard and took it out of you.

    Arthur Scargil, 19 years a miner and rabble rouser deploying flying pickets against Edward heath. Met his match with Thatcher in 1984

    Arthur Scargill, 19 years a miner and then rabble rouser successfully deploying thugs otherwise known as flying pickets to switch off the lights under Edward Heath’s 1970s administration. Met his match with Thatcher in 1984.

    As I child I used to listen to the revolting turkey Arthur Scargill harp on on the radio about how mining was a tough and dangerous job demands oodles of pay, and yet resisting like hell when Thatcher offered 2 to stop future generations going down t’pit by switching power generation away from coal to natural gas. WTF was going on there? Scargill called a strike to guarantee that uneconomic pits should not be closed, presumably a social service to keep dangerous employment open despite it not making money. Coal mining was typical of a lot of blue collar work in the past – dirty, dangerous but compared to low-end unskilled work now, paid better to compensate for that. This Is Money have an interesting contrast of working conditions between 1952 and 2012. In pretty much all aspects conditions in 1952 were worse. But there was a place in the economy for unskilled labour, and people knew where they stood. On the downside, opportunities were dreadfully limited for women and for the brighter poor.

    Many blue collar jobs had a decent level of community spirit among the workforce, which manifested in the strong union presence. These jobs were stable across years, even a working lifetime, largely because work practices didn’t change much. In some manual jobs skill and experience built up over decades. So although there was a lot wrong with many jobs, there were some things right. In particular the sense of community and the dignity in work. Some employers provided pensions which were defined – my Dad was a fitter but benefited from one of these.

    A key part of  most jobs in those days was that they were clearly defined into working time and non-working time. When the factory whistle blew and the workforce downed tools they were off the clock and work was out of mind. This was because communications were limited – phones were connected to places not people. I personally feel the smearing of work into non-work has been one of the most pernicious things to have changed over the last 20 years. As John Philpott of the Chartered Institute of Personnel and Development said in 2012

    The world of work has fundamentally changed, but it is not a change which is making many of us happy, according to the Chartered Institute of Personnel and Development.

    He blamed the invention of new technology, from laptops to the BlackBerry 3  and the iPhone, which is ‘imposing entirely new pressures on staff.’

    While it has liberated people to work from home or from outside the office, it has resulted in ‘information overload, created pressure for an instant response, enabled more sophisticated monitoring and surveillance of employees, and blurred the boundaries between work and non-work time.’

    It is possible that I have a limiting belief because my idea of the place of work and leisure was formed in the previous generation – Stephanie Buck (H/T Monevator) puts it elegantly:

    Leisure came to define a person’s identity during this time, in many cases superseding career identity. Having a hobby was not only accessible, it was a status symbol. It meant one had time to relax, a privilege previously enjoyed only by the very wealthy.

    This is probably one of the reasons why I just don’t miss working at all. I have been able to surrender a career identity because it had less meaning to me. That is the upside of my antediluvian understanding of work. I was also fortunate enough to have spent most of the time working in a reasonably congenial environment with enough challenge to be interesting. I don’t recognise most of my job in Buck’s later observation

    Instead of viewing work as the inevitable grind and hobbies as core to one’s identity, as in the post-war era, today’s professionals strive to equate career with leisure.

    I started work in 1982, in the transition period between that world and the one we have now, and benefited initially from the improved flexibility but the old community structures of the workplace.

    That was then – better communications is changing the workplace massively

    Communications have improved over the last 20 years – the advent of the Internet and WWW came in tandem with mobile communications where you now call a person rather than a place you expect them to be, and of course you have more modes of communication.

    Strange things have happened as a result. In the early days we expected better comms would mean people to be able to do remote working from anywhere, even on the beach. See digital nomad, above – just imagine all of us doing that. At school I was really told that the future would have lots for leisure time and  we’d be typically working one day a week. How did that turn out for y’all?

    In fact what has happened is that high-paying jobs have concentrated in London 4 which sucks in people and money, creating a lot of misery in the middle range of ability because they are all in competition with each other for finite geographical space and skyrocketing housing costs. It really wasn’t meant to turn out like this, but it seems the network effect, combined with the increasing instability of jobs means workers need to concentrate geographically, both to interact more with each other but also to have a better chance of replacing one job with another when they get the chop without having to move or take huge commutes.

    We didn’t realise it at the time, but the limitations on communications and physical transport of goods and services was a great equaliser. As a thought experiment, say we still made chairs by hand but otherwise had all the information comms and containerisation and Deliveroos we have now. When a horse limited a day’s range to 20 miles, every market town could support, say, a skilled carpenter. In a globalised and high transport world, you’d only need as many carpenters as you need to make the amount of wooden stuff needed. Put them all in one place, call it Heartwood Valley and transport the goods for next to nothing. The quality of the carpentry will probably be a little be higher, and the price probably cheaper, but there will be far fewer carpenters employed worldwide. House prices in Heartwood Valley will probably rise, both because the star carpenters will be making more money but they all have to live where the jobs are.

    So now take finance, management consultants, IT and stick ’em all in London. No wonder grunts can’t afford to live there. This is not a new phenomenon, though the intensity of the effect is increasing. Thirty years ago an Ermine in a modest but above-average paying technical job was driven out of London. Where I was more fortunate than Millennials was that the concentration of jobs in London and hollowing out of the rest of the country hadn’t happened, and that jobs were more stable so the risk of ending up in a one-hoss town was less strategically dangerous than it would be now.

    Zero-hours contracts aren’t new

    I worked on what would now be called a zero-hours contract, in 1979/80-ish ISTR. As a kitchen porter – the idea was you go to an agency early in the morning and they would allocate work on a first come first serve basis. There was no guarantee of any work at all, but you generally got to know the system. No phones or anything. When I inflation adjust my earnings to now I was working for a lot less than the minimum wage, too. That sort of work allocation existed elsewhere too,  dockers used to line up in the morning on the same sort of basis to get casual work unloading ships.

    Smartphones let employers dynamically allocate work to people via apps, that has the opportunity to turn zero hours contracts into oppression. Casual work is casual because anybody can do it – if you can drive you can drive for Uber, for Deliveroo, and pretty much anyone can flip burgers for McDonald’s. The best way to improve your earning power is to get out of this commodity competition for replaceable skills, because if you have undifferentiated skills then competition is always going to drive your pay down to the minimum wage or lower.

    The lower than minimum wage is achieved by zero hours contracts – there are fixed costs associated with being available and ready for work – commuting to the workplace, having a car in the case of Uber, not being able to work for someone else or take your children to school. So you are always are risk of taking a hit if you can’t get your hours up enough. Now in the past the agency sometimes did take a dislike to some people and would always call out others for work before them, but at least that discrimination was visible, and done in person. When an app doles out the work you have no protection against that sort of thing and may even be unaware – as the FT’s “When your boss in an algorithm” describes.

    The problem isn’t so much zero hours contracts as such, or even app scheduling – after all every taxi company used to have dispatchers who would match the drivers to incoming jobs over the radio. The problem is zero hours contracts combined with unskilled work, where the work allocators can simply pitch the workers against each other, micromanaging jobs and people in a never-ending treadmill. When one hamster falls off the wheel, there’s an unlimited supply of  rodents to replace them.

    1404_hamsterwheel

    One hamster is pretty much like another – hamster work is fungible

    In that sort of environment the advantages of flexibility accrue to the employers not the workers. To add insult to injury, the welfare safety nets like unemployment benefit are predicated on the job for life, or at least the job for weeks. They just don’t help you fight that sort of here today gone tomorrow employment pattern. These are not entrepreneur hamsters playing the market for their talents. This is unskilled piecework.

    The so-called joys of self-employment

    The Grauniad asks whether zero-hours contracts really are worse than jobs for life. Sure, for many people with skills that command a premium, contracting and zero-hours contracts can be great. There are the guys that write about how great the opportunities are. Heck, a retired Ermine hasn’t been able to avoid making money totally, and I would be happy with the lack of commitment of zero-hours contracts 5 – if it pissed me off in any way, I’d just walk away. I can afford to do that because I am financially independent. Financial independence is very rare in a first world consumer society – there are many, many people who have far more wealth and income than I but who are not financially independent because of their spending.

    It’s easy to big up the joys of self-employment. Yes, you have the freedom of self-defined work and your time is a little bit more your own. Set against that you have the stress of managing a variable income, you have all the grief of self-assessment and the trials of HMRC, you have to run the business, make the judgement calls on capital spend versus return. You also have to carry a massive cash float to manage contingencies, else you risk getting slaughtered in the first cashflow crisis that comes along.

    Those that make self employment work for them tend to be the more entrepreneurial, and those with skills that can command a premium. I look at Liberate Life’s description of how to live life working without a job and it looks like one of Dante’s Inferno’s circles of Hell to me – I hate selling in all of its forms 6 – all that hustling would be a nightmare for me. I am so glad that I managed to get to the end of my working life before these changes happened. Perhaps there is sample bias – if I were 21 again then this gig economy world would be all that I had known and I would follow such a path, which looks a great way to play that sort of hand.

    But I knew another way, and to my eyes it was a far better compromise for the majority of people, who are of average talent but want to have some stability, have kids and FFS do something other than thinking about work all the time. It served me well, I like to think I had a little more talent for the scientific, engineering and analytical than the average Brit, though I am nowhere near clever enough to work for Google. It isn’t like the compromise kept everybody down, and if you really wanted to run your own business and had talent then you could knock yourself out and go do that too.

    Maybe I am simply at odds with current thinking. There was an interesting thread on MSE where a fellow retired, and got so bored he went back to work, which made me think what was summed up in this post

    It’s a bit sad to spend such a large part of your life working, retire, and then realise you haven’t actually got a real life to enjoy so go back to work again. It suggests an absence of hinterland

    Whereas now you’re increasingly on call all the time without getting paid for it, at below the mean level of ability you seem to be yanked about on a smartphone string and have to think about work all the time. In particular, the sort of digital Taylorism the FT’s Sarah O’Connor talked about in this podcast and article treats their unskilled workers with a shocking level of disrespect.Not only are these unskilled workers micromanaged via their smartphone apps, but they are stripped of the employment rights that used to protect casual workers from the variability of the workload (by paying them for their time, including downtime during the working days). The work providers talk up the virtues of self-employment and being able to choose how much you work, but decline too many jobs in a row and you’re embargoed for 24 hours, so the choice is pretty clear, do as we say or piss off. Hobson’s choice, not a better work/life balance.

    It tickled me to hear John Gapper’s faint public school accent debating the plight of the precariat with O’Connor’s slightly preppy uptalking and lashings of vocal fry. I don’t think they know the territory, though kudos to Sarah O’Connor for doing some fieldwork at Uber Eats. It’s epitomised when Gapper asks Sarah at 2:24

    “Are they employed? I means what is their actual status? Are they workers…”

    It’s not so much what is said – it’s a reasonable question, but you can hear the arm’s length treatment in Gapper’s tone of voice – these aren’t the sort of people the FT hacks typically consort with. I can almost picture him holding the dirty rag at a distance asking “so what exactly is it that we have here?” 😉

    Elsewhere in the FT, however, it seems that there are still a lot of recalcitrant proto-Ermines among the millennial set that aren’t that enamoured with the go-getting entrepreneurial dynamism of the gig economy. Over to Sarah again

    young workers seek traditional permanent contracts to unlock the necessities of life …

    The traditional permanent job contract is still the key that unlocks a range of life’s necessities. Without one, you will struggle in many countries to secure a loan, a mortgage, a mobile phone contract 7 or even a room to rent.

    like all that boring shit like a roof over your head and not having to think about work for 24 hours every flippin’ day.

    There’s hope. but not soon

    New ways of working have often led to oppression of the weakest party (generally labour) until regulation can catch up with it. There’s nothing inherently wrong with better information and mobile platforms, after all Uber and GPS means relatively unskilled drivers can provide a low cost London taxi service that was previously the domain of cabbies in a guild with The Knowledge. Because these things started in the teeth of the 2007-9 recession and regulation hasn’t caught up, they have spread quickly, because they give an advantage to the work providers and probably the work consumers, at the cost of the work doers. Our definition of employment and self-employment that has been acceptable for many decades isn’t fit for this sort of employment/work. So regulation needs to catch up, there’s probably space in the marketplace for smartphone mediated work matching to give novel services with a better balance between the conflicting interests of capital, labour and the consumers. It’s inherently the way of capital to to misuse it’s power over people, for the reason identified by Baron Acton in 1887

    Power tends to corrupt and absolute power corrupts absolutely.

    Capital is a claim on future human work, the power to get people to do what you want. It needs regulation to gentle it away from being purely a tool of oppression, and it takes time to find that balance. Of course there is always the head-banging Ayn-Randian counter proposal for a no-holds-barred let it all get sorted out in the market. I guess once we’ve killed off the weaklings perhaps the water will find its own level. It’s a bit harsh, but I guess it works. For some strange reason it tends to piss people off seeing that sort of thing happen to their friends and family members, so unless there really is a Galt’s Gulch Uber can retire to they will probably have to come to some less one-sided agreement in time.

    It’s not all about the money

    though at the bottom end it is… Some of it is about dignity and respect. When I boil it down to the essentials, what I came to hate so much about working at The Firm when they laced it up with stupid performance management metrics wasn’t that the pay was crap, it wasn’t. It wasn’t what I did, which was okay and mildly interesting when it was the actual job in my job title, as opposed to feeding the performance management system bullshit. It was the increasingly demeaning and disrespectful nature of the micromanaging performance reviews and endless justification of my existence, the gamification of the workplace. This crap was unnecessary – it was either a deliberate ploy to make people feel so shit about themselves that they would leave, without having to pay redundancy, or it was some sort of management fad. I recently heard from someone still there, at a more senior level than I reached, who was going through this again – he had to justify his existence, say why he was meeting objectives half of which had been imposed without discussion, and I was so glad to be out of there. But at least the pay was enough to reach FI with a bit of grunt.

    When you’re working at the casual end of things, your boss is an app, you have the same sort of arbitrary rules plus various ratings for jobs taken, customer feedback etc you have the same disrespect without the compensation of getting paid the FU money.It’s one of the tedious things about buying online from the gig economy. You get bombarded with requests for feedback to up their metrics. Sorry, but I don’t do feedback any more. I just want to pay the money, get the goods and get out of there.

    Recently I bought a replacement car battery from Halfords because I had been a jerk and ignored the signs the old one was fading. So I jumped the battery with a leisure battery and got lost on my way to the cheaper joint. Knowing I was at risk of not starting the engine again if I stopped it took the hit at Halfords. Then realised I only had spanners in my car toolkit, not a socket long enough to reach the lower battery clamp, and my 30-year old jump leads weren’t man enough to turn over a diesel engine from the new battery. So I was faced with pay the £10 fitting charge or buy a socket set, well,  I was idle and paid up. It was a pleasant enough transaction, but no, I didn’t actually want to get a card soliciting feedback on my experience. It’s bad enough online, and there’s no need to feed these stupid monitoring systems in bricks and mortar shops too.

    No wonder people are pissed off at the bottom end of the gig economy – they are paid sod all and treated like shit. One or the other you can live with, but not both.

     

    Notes:

    1. I don’t speak of it from experience, because the first smartphone I got was after I finished work. And I decommissioned the bugger about a month ago because it was seriously pissing me off. It did most of the things I could do with a computer, but all at half cock, and was poor at answering phone calls.
    2. I know it was an existential fight and all that but the miners lost my sympathy when they turned the lights off while I was at school and I heard arrogant SOBs like Scargill tell how they were going to run things by sending thugs round to stop other people working.
    3. Doesn’t that date the report – this was a year after the hot summer of rage when da yoof ran amok and rioted in London for better trainers, communicating via BlackBerry Messenger. I don’t know if you can get a Blackberry these days
    4. I know, not all of them, but the drift has been huge
    5. that which I do is probably closer to individual contract jobs, I wouldn’t take low end ZHC jobs where you have to be there for them but they don’t have to be there for you, because I am not having people take the piss out of me for money, the second word in my response to such a proposal would be “off”
    6. I chose LL because he is an engineer with IT and electronics which was what I used to do in a former life
    7. I have never attempted to get a mobile phone contract because I am a PAYG aficionado, but presumably as someone without a permie job I would be SOL on that one too
    25 Aug 2016, 9:21pm
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  • Why aren’t the National Trust and the English Heritage the same thing?

    After all, they sort of do the same kind of thing, act in the same sort of space and need to merge IMO. Before 2009 I had been a member of English Heritage for a while, largely to get into Stonehenge for free 1. It was a good staging post on the way down to the West Country, and usually picked up enough visits to make it worthwhile. It’s been a while since I was part of this, but now I have returned to the land of those with a regular income, I need to go out and put some of that to work.

    I want to see more of Britain, and take my time

    One of the remarkable things about Britain is that a lot of the place is like a history theme park, and that it has all sorts of bizarre things scattered around the landscape. Take this oddball triangular building. It challenges you a bit being inside, we are so accustomed to rectangularity in rooms that it’s quite disorienting.

    Rushton Triangular Lodge

    Rushton Triangular Lodge. It’s not a funny perspective, the groundplan is an equilateral triangle

    The aristocracy of this country was eccentric that way, and fortunately the reforming post-war governments dispossessed enough of these folk of their undeserved wealth gifted them by that varmint William the Conk that we have the opportunity to see some of them.The general principle was since so many people got slaughtered in service to King and Country in the World Wars it was considered a bit rough to have the toff dynasties lording it over the proles like they used to.

    There’s no need to get the violins out for the aristocracy – the landed gentry still own about half the rural land this sceptred isle, because the crafty devils struck a deal with the reforming post-war governments. Of course, Mr Attlee, they said, you wouldn’t like to break up family farms now, would you, after all we have just survived a war and had to dig for victory? So give us an exception on agricultural land for inheritance tax. Which still stands, but of course our landed gentry can’t be arsed to drive their own little Fordson tractors or get their hands dirty. They take public money in the form of subsidies to the tune of about £245 for every British household to reduce the costs of carrying their unearned capital stored in agricultural land, get huge contracting firms to farm the land, and flood it with chemicals, poison our birds while they of course keep the ancestral wealth in their dynasty free of IHT, because it’s agriculture, innit? To add insult to injury for the great unwashed, Gerald Grosvenor, who owned £9bn of ancestral wealth when he carked it recently, moaned that it didn’t make him happy. Well, Gerald, you know what you should have done then, you miserable git. Spread some of the love around, then maybe your kids don’t get to moan the same when they’re 64 😉 Seriously, you couldn’t make it up.

    In the UK there are two heritage organisations, the National Trust and English Heritage (and the Historic Wales and Historic Scotland equivalents to EH). The overlap is notable – for instance EH run Stonehenge and the National Trust own the site, and Avebury it seems the National Trust run the site, even if they did upset Bill Bryson. Cynical me wonders how he managed to shell out £31 before seeing a stone, and whether his role as an English Heritage commissioner had something to do with his discombobulation. I’ve had the same dilemma as Bill whether to take a fleecing from the National Trust or observe from the sidelines but if he really did manage to miss one of these great big things

    One of the massive stones at Avebury, of which there are many

    One of the massive stones at Avebury, of which there are many

    while he was so busy chasing comestibles then I think he needs a visit to the optician. Personally, I don’t expect to pay anything even for parking when I go to Avebury, but I guess I have more experience of the site than Bryson had 😉

    they're all over the place

    stones are all over the place, Bill

    I’m with the NT here–  we don’t need more or bigger signs, because if you’re the sort that misses twenty-foot high sarsen slabs by the side of the Queen’s highway, then you aren’t going to spot the signs to the stones. The territory is map enough in this case. more »

    Notes:

    1. free once I’d gone about three times in a year ISTR
    19 Aug 2016, 7:40pm
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  • Telegraph to wannabe FI/RE new parents – you must be kidding!

    The Telegraph’s Money Makeover is a rich seam of entertainment for a grizzled mustelid observing the triumph of hope over experience in the human condition. It seems to be an endless tribute to wannabe buy-to-letters wanting to retire on a woefully small portfolio, thirty-somethings with a tenuous understanding of just how much money you need to have to retire before midlife and the oddball doctor with a massive salary, none of which ever seemed to stick to the sides. I could generalise many of the tribulations as “if you are asking whether Buy-to-Let will solve all your problems, the fact you are asking the question tells you the answer is no”. As a respite from this folly, this week we have a paragon of financial rectitude who is debt-free by 37, but there’s still no pot of gold at the end of his rainbow.

    Consider this plangent photo of domestic bliss and unachievable dreams, a comely couple and two preschool rugrats with their associated plastic paraphernalia.

    with two young sons, JM wants to retire as soon as possible to spend more time at home.

    with two young sons, JM wants to retire as soon as possible to spend more time at home.

    Our man has done an awful lot of things right in the search for early retirement. He appears debt-free in the true sense – paid down his mortgage on a Cambridge semi at £300k, which is a very respectable achievement at 37 1. But he’s done two things wrong for his dreams of early retirement, and they’re in the foreground of the picture.

    I’m not saying that having children means you can’t retire early, but JM has a fairly pedestrian job for early retirement ambitions, and kids will seriously hamper his ability to reduce his outgoings, which is the other route to early retirement – being able to sustainably reduce your spend. Which is pretty much what the Torygraph had to say to him. To wit:

    JM is doing well in retirement provision but the challenge for him will be getting enough funds to enable him to retire early and provide for his family.

    followed by the coup-de-grace

    I would sound a note of caution, as one parent to another: children tend to get more expensive as they get older. 

    The other lot aren’t that much more encouraging

    Mr Massey’s primary goal of retiring early to spend more time with his family is unrealistic given his current financial planning route.

    and

    should concentrate the bulk of his pension savings into shares-based investments as, realistically, retirement is at least 18 years away.

    A quick tappety tap on the Ermine abacus tells me that 37+18=55. As for spending more time with the fruit of his loins, in 18 years time they will have just come of age. He’s not gonna do it before then  unless he does something very different.  Having children is going to be a big project for anybody- if we say JM is exceptionally frugal and gets his two for the £230,000 they say it costs to raise one child, then clearly in 20 years time his pension pot will be down that much 2, or at a 4% SWR down about £9000 p.a.. That’s not the sort of thing that early retirement dreams are made of. Of course some people with children  can retire early. But you’ll usually find they were in a different class of earnings to JM – The Escape Artist for instance, worked in the City. He probably earned a little bit more than JM, who doesn’t even pay higher-rate tax, which makes paying a fixed sum into a SIPP much less painful than for basic rate taxpayers.

    There are other minor aspects of JM’s carry-on which could make it less of a stretch. Let us take this oxymoronic statement

    He takes risks where he understands them and has £17,000 in a stocks and shares Isa invested in Greggs, BP, Poundland and Tesco – companies he is “familiar with”.

    Mr Massey is satisfied with his investments so far, although Tesco has delivered some losses.

    He said: “Everyone always goes to Tesco – I thought how could the shares fall? Well, they did.”

    JM, you got frickin’ soaked on Tesco. I’m not particularly having a larf, so did I. I didn’t buy them from a careful consideration of the company, but figured if I paid less than Warren Buffet I would be okay. Turns out this was one of the few occasions when WB didn’t know what he was doing. So I got soaked too. I didn’t understand the risk, and nor did you. The big difference between us, bud, is that Tesco is less than 1% of my portfolio, whereas it’s probably more than a fifth of yours. I also realised within three years of starting along the high yield portfolio route that the global imbalance 3 was probably hazardous to my long-term wealth and started to shore it up all round with diversifying index funds, focusing on ex-UK to specifically fight that bias. So go do yourself a favour and listen to Lars Krojer and sharpen up your act. Once my contributory investing career is over 4 I may choose to listen to Lars, so save myself a hunk of time I could be spending on more interesting things to do.

    So, JM, you had your two precious little bundles of joy because of all the warm feeling, extra meaning and richness that they add to your life. Good things are worth paying for, and life is full of choices. That particular choice means you won’t get to put your feet up at 55. For God’s sake don’t suddenly decide that your special snowflakes need private education, else you’ll be retiring about never on that salary. Now of course you could go out and get a much better paid job working for The Man, but pushing 40 is leaving it a little bit late to do that. Colour me a heartless bastard but “trust and grant manager at a charity” sounds like a) you’re milking it b) there aren’t that many opportunities for progression and most of them will be dead men’s shoes, the charity sector is notorious for crap pay 5 and c) you are just one re-org or restructuring away from redundancy. So better hope nothing goes wrong in the next 18 years, eh?

    There are things you could do to make yourself better off in retirement. But you ain’t getting to retire early. Paying your mortgage off was a grand achievement and hats off to you, but paradoxically it was probably a bad move for retiring early. I cocked this up too. At historically low interest rates, you could have carried that sucker for longer and pumped more of your salary in pensions, getting a 20-32% lift and getting longer for it to appreciate, while paying 3% on the money. The 20% uplift plus the ~4% real return on equities make that a win even if you get to  put your 25% pension commencement lump sum into clearing the mortgage in 20 years. Think of it as tax-free mortgage saving. Of course mortgage rates will go up over two decades but you will also be paying it off slowly so you’ll take less of a hit, and inflation will erode the principal anyway.

    So listen to the drunk telling the traveller how to get to the city with your unrealistic dreams of early retirement.

    If you want to get to there, you don’t start from here.

    I am curious that none of the advisers asked this fellow whether his question was wrong. It often pays in life to try and make sure you ask the right question, because once you have framed that you’ve eliminated some of the options. Surely if he wanted to spend more time with his family, perhaps the question should be ‘ Can I afford to go part-time for 10 years and see my family grow up’ rather than “Can I retire early”. He still won’t get to retire early, but perhaps he gets something else of value. His wife has clearly jumped to this option, and by reducing the £700 a month childcare bill he would reduce the financial hit and get to see more of his children rather than more of the office.

    Notes:

    1. a cynical Ermine wonders exactly how he has managed to pay off £300,000 on a household income of £77k within’ say, 10 years. One assumes the untimely demise of a rich aunt may be a factor
    2. a DINK couple usually spends more on other things, so the difference may be less
    3. that imbalance is less bad for me because many of the FTSE100 firms I have in my HYP make their money partly overseas. Greggs and Poundland seem pretty domestic, looks like JM invests in what he sees on the High Street. From what I see on the High Street I would actively run miles from any firms with a High Street presence, the Internet is eating their lunch. Tesco is in fact my only such firm
    4. I am reasonably convinced by Lars’ argument you can’t long-term sector pick and beat the market, though I am less convinced that if you only have a few years to get into the market that valuation/when you get into it is irrelevant. I happened to be very lucky in starting in 2009, though of course the effects of the GFC on my job was the reason why I started then.
    5. until you get to the executive levels where anything goes
    15 Aug 2016, 12:40pm
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  • work as a limiting belief post FI

    We all go through life accumulating experiences, and, inveterate pattern-matchers that we are, all too often we infer the general from the particular of those experiences. In the search to impose order and meaning on our world, we frequently conflate correlation with causation, and build up a mental map of the world at odds with the territory. Some of these beliefs about the world gained from experience are just plain wrong or get overtaken by events after they are formed. To take one

    “You need to work”

    When I left university I had no money and therefore needed to work. I hadn’t come across the option of dropping out and possum living, and it probably wouldn’t have appealed, a young buck must run with its kind 😉 Peer pressure is strong for young adults.

    But in that first year I built a limiting belief, by inferring the general from the particular. I needed to work, at that time and for a significant time afterwards. But not for all time. I needed to earn enough to pay the capital cost of some of the necessities of life. I didn’t think that deeply about buying a house, though I left London because it was clear that I wouldn’t be able to buy a house there and maintain a decent lifestyle. I really should have thought more about buying a house at a market high, but that’s another story. There’s a pattern developing here, an across the board intentional living fail.

    A considerable amount of luck saved me from myself – I was enterprising enough to shift myself from boring jobs until I found one that loaded the grey matter enough to be congenial, I was fortunate enough to end up in a company where I was looked after pension-wise and the pay was decent enough. And then got on with the job of spending too much but not more than I earned on consumer crap, partying, beer and travel.

    And so across the intervening years, the world globalised and loads more people joined the capitalist workforce, and it started to arbitrage towards cheaper countries. I was protected from that from a long time but eventually the erosion came to my door. There’s an argument that the Millennium Bug work of the year 2000 accelerated this erosion of developed world work in the IT world. The Firm opened a BPO joint in Mahindra and a couple of the localised Big Cheeses instrumental in setting it up benefited handsomely from their shareholdings in that.

    I wasn’t passionate about IT although competent, I moved into it and out of electronics engineering because that was what The Firm did. Some people did jump ship at the time, fearful that their electronics skills would atrophy. In the first glimmerings of intentional living I came to the conclusion that I worked to live not lived to work, I was in serious negative equity so I adapted and retrained. I suspected electronics design would go to cheaper countries, and it did – the tide would have gone out on me faster in electronics that it did in IT. 1

    Limiting Beliefs

    Steve Pavlina has a pretty decent summary of limiting beliefs –

    Limiting beliefs can seriously hold us back in life. But most of the time such beliefs are invisible to us. They control some of our thoughts and behaviors behind the scenes, enough to curtail our results in some area of life.

    His article also proposes a method of eliminating these. I don’t have his particular brand of materialist rationalism, so while I am prepared to acknowledge some limiting beliefs, I won’t fight all of them. One of mine is that something snapped in me mentally in the last few years at work, and that once something like that has broken it will never bear that load again. Since I’m rich enough not to have to challenge this by finding another job, I don’t have to go through the pain of challenging it, or indeed find out that it is in fact true. The evidence that countermands that belief is that people overcome much greater mental challenges than having a really shitty experience of working for a year.

    The way this belief limits me is that I will never be able to feel safe enough to deploy any money that I earn in working again to increase my lifestyle, because I will be afraid of losing having the FU nuclear option on work. So while I might well appreciate more baubles and jaunts, no consumer shit tastes as good as financial freedom feels. And I’ve gotten used to owning my own time. So I’ll pass on the extra money and enjoy the extra time.

    Over at SHMD Jim has returned to work. While that wouldn’t be right for me I tip my hat to a fellow who concluded a 0 hours week wasn’t enhancing his quality of life, and took the obvious corrective action – go get a job. I’d actually read Jim’s article before it was cited on Weekend reading and just thought good for you Jim, about time too 😉

    When I read the phrases selected by Monevator from Jim’s post I thought blimey, did I read the same article? Monevator is a much more pithy and concise writer than I am, but the precise extract and reformatting together with the extra narrative in his post I think says something about both the observer and the observed:

    I was struggling a bit with the retirement lifestyle, and finding the change from a full on, full time working week to a zero hour one quite difficult to handle.

    I just couldn’t shake the notion that I was too “young” to put my feet up, that I should be working and that I should be out there earning money.

    I might not have “needed” the latter, but it never quite felt that way.

    SHMD as cited by Monevator

    Jim’s evocative description of the problem shows to me an incongruity between his map of how things should be compared to the territory of how they were. He doesn’t need the money, but he needs things to be different to how they are to feel happy about it. This looks like a limiting belief to me, largely because Jim “shoulds himself” twice in one sentence. Two different takes on this issue, one from Psychology Today and the other from the A0M seem to indicate this limiting belief is from an external locus of control in the affected topic. He is measuring an internal state by a yardstick written by other people. Since humans are a social species some of this is inevitable, and there was an easy and obvious solution. Make the territory more like the map and go back to work.

    Monevator admits his gut belief later on

    But I believe almost everyone will benefit from having an ongoing economic relationship with society while they can – even if only for a day or two a week.

    Sadly, by the time most people reach the point of having options, they seem to feel too burned out by the workplace to explore all the various other ways of making money more freely.

    Protestant work ethic detector goes off. You don’t have to work to have an ongoing economic relationship with society. I allocate capital, society pays me for the pleasure of using it 😉 Heck, on the other side of the coin the consumers of Britain racking up unsustainable credit card debt have an ongoing economic relationship with society, even if they are on the dole, or reality TV show aristocrats.

    Reality TV show aristocrats

    Reality TV show aristocrats in an ongoing economic relationship with society

    I am thinking of buying a Naim 272 to replace my 30-year old preamplifier, tuner and audio streaming box, surely I still have an ongoing economic relationship with Salisbury then? I don’t even have to worsen Britain’s consumer debt mountain because I have the money.

    Now I am a case of the burned out husk Monevator refers to, although I have to say that the proposed alternative of endless hucksterism of selling your wares as a freelancer/contractor gives me even more the heebie-jeebies than the thought of going back to work for The Man. But I’ve already confessed to the potential limiting belief in my case, so far be it from me to criticise either of these two good people for tolerating theirs 😉 We can all afford to pay the cost of our limiting beliefs – I will be poorer by the opportunity cost of the money I could have earned, they will be poorer by the opportunity cost of the time spent working after financial independence. Conversely, they will be richer in money, I will be richer in Time, and each to their own. Neither course is right or wrong, it can only be right or wrong in combination with the individual’s predilections and temperaments, which may change over time.

    What’s that burnout process all about then?

    Like Monevator, the younger me didn’t understand the burnout mechanism. I saw burnout in enough other people at The Firm, but had been fortunate enough to occupy specialisms slightly removed from the ritual slaughter and yearly cull of too many project managers as the number of projects to manage dropped. I was offered enough PRINCE2 training but I’d rather drink my own urine than be a PM. I have respect for the job and the difficult balances to be made, but I don’t want to be it, and particularly for the Firm. I didn’t realise then that  the The Firm employed the same techniques as some Japanese companies on some of these guys – because there were technical reasons why compulsory redundancies were expensive for them, so they needed to mind-f*k people. They created a Redeployment Unit, which was ostensibly to re-educate some of their dead wood old fossils superfluous headcount. It had a terrible success rate – more than 50% of people eventually left on voluntary redundancy terms, because they couldn’t stand the endless Jobcentre style filling in CVs. You had to fill in so many a week, just because. It drove a fair number of people round the bend. In many cases they had been pulled from overworked teams to match headcount targets, it seemed to be a particular irony to then go for a coffee with their ex-team-mates and hear that deliverables were slipping because there weren’t enough boots on the ground. Which conveniently meant they could pull the project, outsource it to India and send the rest of the team to the RU, while marking down their performance management results. Conveniently you were barred from taking voluntary redundancy if your performance management score was needs improvement, so they saved money by sending people round the twist. Nice.

    Performance management clobbered me because for the first 20 years at The Firm, appraisal was roughly about how well you did the job. I was okay with that. For an engineer their work usually speaks for itself. However, performance management was a way of introducing arbitrary extra elements, FFS like giving 5 minute seminars at all hands meetings whose tedium was increased by 5 minute presentations on random stuff to tick the box, and it was a bewildering mishmash of capricious targets. Basically you had the choice of meeting the targets or doing the job.

    I pre-empted this with the last vestiges of energy I had in reserve in 2009, and fired off speculative applications because there was an opportunity to use some of my legacy electronics engineering skills for the London 2012 Olympics. I was fortunate enough to win that lottery and sweat out three years doing something interesting, time-bound and rewarding. I got a decent sendoff and the guy in charge of delivering the Olympics said I was leaving on a high, and in terms of what I did, yes. But I formed another belief about working then. Which is that working in the modern world of professional jobs is all consuming, over-controlled pissing match that hurts, and I want no more of it in my life.

    It took time before freedom from became freedom to, and I realised the value of the prize I had unwittingly taken with me on the way back from the pub at that final leaving do. Eight precious years of my life that I will never live again, and in decent wealth and health, and indeed I still have a few to go before I reach 60 where I’d join the original track of my retirement from work. What’s the point of burning them up working? As Arnold Zack said to Paul Tsongas

    Nobody on his deathbed ever said, “I wish I had spent more time at the office.”

    Tsongas retired on (physical) medical grounds and cashed in his chips at 55.

    It is the privilege of youth to think you will live for ever in perfect health – in general this squares with your experience of life so far, but as they say past performance is no guarantee of future success. I got a long way into middle age on that assumption, and I am still to be to the best of my knowledge in good physical health. But when something existential that you took for granted fails in service, then the knowledge that can happen changes you. I like to think I got some wins out of the negative experience – I deepened, and took the opportunity to jump the tracks of the assumptions I had never challenged since first starting work. I took the glittering prize of my time back with me, but I only unwrapped it and saw its gleam after the first phase of decompression had passed after two years. I had to switch off so much of myself to get through the last three years of working that I had to train myself to see beauty and appreciate music again. It is all the more amazing because I know the emptiness of the burned out years. I have more gratitude for it. It is sweeter for having known the loss, and to discover in the depths of winter, I finally learned that within me there lay an invincible summer. 2.

    I hazard that Monevator hasn’t had that experience in the work area of life and I hope he never has, and Jim took corrective action much earlier in his journey out of work, or had greater resilience. Indeed, the younger Ermine knew the feeling of Monevator’s surprise at people’s passivity in the face of an adverse work environment –

    Sadly, by the time most people reach the point of having options, they seem to feel too burned out by the workplace to explore all the various other ways of making money more freely.

    It’s always a puzzle, why the hell don’t people sort their shit out and improve their situation? The reason it so often happens is that while mental stress may manifest in an obvious breakdown, the seeds are sown and grow in tiny incremental stages beforehand. It is in these days, months and years beforehand that the fightback must commence.The breakdown is the result of feedback mechanisms that are trying to compensate for the stress finally being overwhelmed. While they work OK these feedback mechanisms minimise the visibility of the problem by trying to maintain the norm. So by the time people realise something is wrong they have passed the point of no return, they do not have the energy to start the fight. I was fortunate in having good people around, and doubly so in having a rare legacy skill that was needed for the last three years it took me to buy my way out. There is much more luck than judgement in that narrative. Some judgement, yes – in the switched off nature where I had lost most of the function of the emotional centre I still had the intellectual centre working at half cock. I was able to see with unclouded vision that buying into a shattered market of 2009 might be a good idea 3, and the nonfunctioning emotional elements did not jam that with the ‘run for the hills’ response. But it’s probably the luck that won it. I learned from that experience, charging into the markets in 2011 during the Summer of Rage and again earlier this year. Last year I was into EMs, which was probably jumping the gun, though the addled brains of my fellow countrymen destroying the currency have helped buy me out of that trigger-happiness and even these dogs are starting to perform.

    Work meant more for me when I was younger, it was part of how I saw myself, and it took the long process of individuation to de-identify myself against external values and own my values.  There is a lot of existential value associated with work for many people – take Ruth Graham’s rebuttal of the deathbed quote. It’s also not terribly surprising that people who suffer burnout break the link between meaning and purpose and work. After all, if I felt like Jim about work I would have to go back into the fray, risking the burnout again. It is easier to change myself than the toxic world of performance management and meaningless metrics.

    Jim doesn’t have that link broken. There are hardly that many terrible consequences of working when you don’t need to. But it isn’t totally cost-free. Those are years you won’t get to live again. Work is a way for finding challenge and interest. But it’s not the only way.

    How to go nuclear on your career

    This is a bigger change that gradually inching down, or switching to a different type of work. If you have any lingering doubts, then don’t do it. Go for the slowly reducing your hours if you can, or alternative employment. After all, that’s the point of being financially independent. You can choose not to work, but you don’t have to. If you are reducing your hours, things are simpler, you probably want to stay in the same location.

    But if you are aiming to finish work, or do something else, then you have more options. Moving is one of them – of course if you have a partner/children and particularly if they are not retiring at the same time then this is out, unless moving closer to their work. For many people FI roughly coincides with their children coming of age, which I hear is also a big life change for the parents. It’s a good time to re-evaluate what you want out of life.

    Anybody living in London should seriously consider their options on reaching FI. It’s a young person’s city and no place for old men IMO – and you may as well leverage the closeness to massive pool of employment premium on the value of your house or reduce the rent you’re paying. It’s an opportunity to reduce costs, unless you value the lifestyle more than the cost.

    For many people work is a huge part of the amount of day-to-day intellectual stimulation they get, they are too busy in their non-work time making all the trappings of a middle class life happen and wrangling kids. Pull the plug on work in that sort of lifestream and there’s going to be a great big instant hole.

    If you are going to quit then you have to step up to the bigger change. You have greater opportunities too, simply because you now have all your time to allocate to living your unique life. In no particular order I toss these out as things worth considering, they work for me. I’m not saying they have to work for you

    Look to your social circle post-retirement

    Early retirees, very early retirees, men, those who move on retirement all have a particular issue with this and ideally want to start addressing it before they leave work. To stereotype shockingly in the interests of brevity

    Early retirees (30s-40s) and men often have a lot of their social circle connected with work. Retire early and half your social circle is still working and will be for the next 20 years. You want to at least think about backfilling this, and you’re probably going to have to make most of the effort.

    Those who move on retirement may face having to start anew in a different place. If you have an idea of where you are moving to, there’s a case to be made for cultivating social connections there ahead of time.

    Retiring is also an opportunity to leave behind people who have become toxic in some way, it’s not all bad 😉

    Toss your TV.

    Slightly tongue in cheek, but it is a particular form of a general principle. Create, learn and be intellectually active rather than a passive consumer. TV is great escapism to switch off from work. You don’t need that any more. And too much of TV is vapid attention-grabbing pabulum whose main purpose is to be a carrier wave to ram consumerist messages into your head.

    Learn something new every day

    You probably had to do this at work. If you are retired, then you have the freedom to cover new ground. Learn about new things just because. It doesn’t have to be useful. I am thinking of making a bull-roarer today. It is the diversity of what you learn that makes you a more rounded person, and exposes you to more viewpoints. Read at least two papers from the opposite sides of the political spectrum. Try and open your mind to points of view that you don’t agree with. Are they at least internally consistent? Are your views? Are your views perhaps wrong?

    Read books as well as the Web

    The Web is a fantastic resource for learning something new every day. But it is shallow, it is bad for your attention span, it is often unreferenced and unauthoritative, and there is always the vile commercial imperative in a lot of writing, which favours the attention-grabbing and the short form. I found too much web reading damaged my ability to take in information from books, I had to slightly relearn that

    When I say books, I mean books that have at least some print format that is not self-published. If a publisher had to take a risk on the book it is more likely to have merit. The massive swathes of ebooks written by money-grabbing incompetents are a way of trying to ‘monetise content’ and from my experience that content isn’t worth my time. There isn’t a book in everybody, leastways not a book worth anybody’s time. I wish there were a way of screening out the output of ebook content mills on Amazon. Using your public library to borrow real books is one way round that.

    Walk/bike everywhere

    I’m a walking guy on this front, but that’s because Ipswich is a relatively compact market town. most places I want to go are within two miles. Over distances like that walking wins over cycling by not having to park your legs outside your destination and worrying some scrote is going to pinch them. I’m of the opinion no retiree needs to use a gym 4. The trouble with walking when you are working it it wipes out a huge amount of your small amount of free time, after all if I want to walk somewhere two miles away and come back it’s going to wipe out an hour and a bit of my day. That’s tough if I only have four hours free time. But it’s no beef for a retiree. It’s good for you, and thinking while walking is somehow a different and more lateral experience too.

    Obviously there’s space for the car as well, if you are going to haul stuff. But don’t go nuts on it. I walk a mile and a bit to recycle glass, carrying it in a rucksack. You can easily carry 10kg in a backpack, more in panniers on a bike.

    Create experiences, don’t buy them

    Climb hills, learn about Nature, invent, carve, repair, originate before consumption. Many ‘attractions’ are simply commercial enterprises designed to separate parents from their money because they don’t have enough energy or imagination to distract/entertain their kids themselves. I personally avoid places like this like the plague. But there are similar joints for adults, and, I am sad to say, particularly targeted at men who have a weakness for extreme this and that. There are general trends to commercialise, professionalise and monetise recreation. What did kids do before Go Ape? They climbed the trees and built their own tree-houses from scrap wood. BTDT

    Do hedonism, but vary it. Prize diversity and  quality over quantity

    There’s nothing wrong with going to a decent restaurant every so often, but it should cost you more than £100 for two (Londoners probably need to think £300). Do better, but less often. There are vast swathes of middling and low end joints which aren’t worth your custom, go big or go home, but go infrequently. And spin it out with other sorts of hedonism.

    Travel alone sometimes

    You see far more of a place when you travel alone. Conversely the experience of travelling with your partner is a more congenial experience and gives you shared stories. Make space for both.

    Be insanely curious

    Poke about in the cornucopia of variety that is our world. Take things to bits, turn them over and wonder why. Lift stones and see what’s underneath 5. Play

    Do one thing at a time, and do it well

    There’s a trend towards multitasking – looking at your phone while listening to an audiobook etc. Humans haven’t suddenly become great multitaskers over the last 20 years. If it’s worth doing it’s worth doing well.

    Leave the smartphone at home

    This is a personal bugbear of mine. I decommissioned my smartphone when I realised it was simply pissing me off for no good reason, and swapped it for a dual-SIM plastic Nokia 150. Why? Dual SIM gives a better chance of getting a signal in the countryside if they are on different PAYG bearer networks, plus I can route outgoing calls and SMS via the cheapest option. I couldn’t stand the touch keyboard, and prefer predictive text SMS. The RF performance of a basic phone is so much better than a smartphone, people can actually hear me and I get to hear them (if they aren’t using a smartphone outside an urban area). Every photograph I’ve taken with a mobile phone is a little bit shit and makes me wish I hadn’t taken it or had used a real camera. I don’t regularly do Facebook, twitter and all that cobblers. A smartphone is a really crappy satnav, because again the RF performance of the GPS is poor in urban areas, which is of course where you really need detailed navigation and good responsiveness. They are great in the open, on motorways and A roads, the sort of places where it’s easy to navigate using map and road signs 😉 I bought a Garmin satnav after realising that I was going to more places I hadn’t been before even in Suffolk and was spending too much time and fuel overshooting, then turning round to back up. It performs properly in urban areas, uses DAB to update traffic reports rather than spying on me by using the mobile network. A smartphone does a load of things, all of them poorly, and I got sick of that in the end.

    Reduce unnecessary interruption in your life

    Most of these come from electronic devices and social media. You can probably still swim with the hive-mind by connecting every three hours and then disconnecting, and the old saw about connecting to email once or twice a day is also worth noting. Even if you are a social media maven, well, connect every hour or half-hour if you must, and then give your full attention to whatever you are doing. If you can’t be bothered to give it your attention, then perhaps just cut it out of your life altogether. You don’t have this choice at work, because obviously you are being paid to do what others want.

    Pursue novelty. For its own damn sake

    But try to avoid paying for it 😉 In general any new experience or thing should challenge you, teach you something  or make you grow some tiny bit. Too many manufactured experiences are designed to get you to buy something or take part in the sequel, hence try to avoid paying for it. I admit that three years of frugality mean I take this a little bit too far. I should become more prepared to pay for and honour quality and distinctiveness.

    Choose diversity in what you do

    You may think you want to lie on the beach or play computer games all the time. Too much of any one thing isn’t good for you. Mix it up. You have the opportunity now your time is your own. Seize it. If you’re sitting in the same place for as long as you were at work you’re probably doing something wrong even if it is on the beach or at a computer game.

    Does retiring early kill you faster?

    Towards the end of his piece Monevator opined,

    Incidentally, I also think retiring early is bad for your health.

    This is a hard subject to get any accurate research on. For starters, people who retired early in the 1970s and 1980s tended to be be educated white collar workers, which is a shocking sample bias. These guys are going to be richer than the general population, and, surprise surprise, richer people live longer anyway. Pretty much everyone reading this will probably have a longer life expectancy than average all other things being equal, let’s face it the poor don’t read about personal finance and early retirement because it’s not relevant to their lives. There are just too many confounding factors and statistical wrinkles to establish facts with a decent confidence interval. We diverge more and more from each other as we get older – at graduation you had more in common with your peers than you’ll have with them at the reunion year when you all start drawing your State pension. There are more subtle forms of sample bias. Some people retire early for health reasons, arguably I am one of them, although for mental rather than physical health. If you retire early for physical health reasons then you’re loading the dice towards shortened longevity, I don’t know what the stats on that are like for mental health. For physical health reasons it’s probably still the right thing to do – for you, and for the same reason as retiring early was the right thing for Paul Tsongas. You gotta play the hand you are dealt.

    There’s an ESRC report that concluded 6

    “Early retirement is generally good for people’s health and wellbeing unless it has been forced on them,” the study said.

    “Those forced into early retirement generally have poorer mental health than those who take routine retirement, who in turn have poorer mental health than those who have taken voluntary early retirement.”

    A moot point for me then. Arguably it was forced upon me, although I did not retire using any formal ill-health procedure, and indeed took an active part in the decision to retire early but using voluntary early retirement mechanisms. In that case Monevator’s prognosis is right and  I will die younger than my parents. OTOH I can hardly say the ESRC’s narrative on mental health squares with my experience of life post retirement 😉

    There’s sport for both of us in Sing Lee’s interesting piece using the pension funds from several big American white-collar employers’ pension funds. I confess that I agree with Lee in that technical creativity is probably at it’s peak in the 10 years around 30. Although he took a lot of shit for it Mark Zuckerberg was probably right that young people are just smarter. If people stopped berating him for his political incorrectness and listened to what he said, he proffers a mechanism which makes a lot of sense to me

    “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”

    Looking at the other end of the working life arc Sing Lee’s 2002 talk of over-funding of pension funds sounds delightfully naive now – he didn’t realise that the developed world was going ex-growth after the dotcom bust. However, when he charted the years of retirement versus age at retirement, I think his narrative is pretty much along with the narrative what I did, although I didn’t have the strategic vision and just ended in a tactical firefight.

    The pace of innovations and technology advances is getting faster and faster and is forcing everybody to compete fiercely at the Internet speed on the information super-highways 7. The highly productive and highly efficient workplace in USA is a pressure-cooker and a high-speed battleground for highly creative and dynamic young people to compete and to flourish.

    However, when you get older, you should plan your career path and financial matter so that you can retire comfortably at the age of 55 or earlier to enjoy your long, happy and leisure retirement life into your golden age of 80s and beyond. In retirement, you can still enjoy some fun work of great interest to you and of great values to the society and the community, but at a part-time leisure pace on your own term.

    On the other hand, if you are not able to get out of the pressure-cooker or the high-speed battleground at the age of 55 and “have” to keep on working very hard until the age of 65 or older before your retirement, then you probably will die within 18 months of retirement. By working very hard in the pressure cooker for 10 more years beyond the age of 55, you give up at least 20 years of your life span on average 8

    But anecdotally I see where Monevator’s coming from. I’ve seen people retire and then pretty much switch off. My Dad did this. He retired, at 65, from his job as a fitter, and while he didn’t zone out totally he watched far too many crappy TV game shows. On the upside he was also stuck to Teletext and share prices 9, he read company accounts and went to AGMs, as well as gardening and the occasional travel. In support of Monevator’s angle, as a non-early retiree, he got to 86 before leaving this mortal coil, which is still 16 years of extra time over his allotted three-score-years and ten.

    Retiring early does hit people who get a lot of meaning and self-esteem from work. It’s not inconceivable that if they lose meaning from life they may live shorter lives, and certainly have a lower quality of life. The obvious answer is ‘don’t retire early’.

    Notes:

    1. I still indulge the passion for electronics in making instrumentation, it’s of course different from the purely analogue world I cut my teeth on as a teenager but still fascinating. But there’s no point in trying to make money from it, too niche, too much regulation and too many Chinese copycats ready to eat my lunch. OTOH I would probably still be an employable bench tech/engineer, because there is still some niche instrumentation being made in the UK. But why the hell would I want to drive to Cambridge every day?
    2. pinched from Albert Camus, Return to Tipasa
    3. I am not a passive investor, because to build my portfolio I had an extremely short timeframe of only a few years. My contributory investing career is almost done now. To me valuation matters for new money, and 2009 was a good year to apply that. I may become more passive after I have finished contributing, though I will leave my HYP in place for the zero carrying cost and the income.
    4. If you get an endorphin rush, have masochistic tendencies or simply like the stale smell of sweat and pheromones, then damn well go for it – there’s nothing wrong with gyms if you can afford the money. I just don’t think they are essential.
    5. Old World only – don’t do this in Australia, where if it moves it wants to kill you
    6. I had the devil’s own job trying to locate this. It is called “Health And Well-Being In Old Age: It’s Still Money That Counts” by the ESRC in 2009 The press can get it from Science Daily
    7. how delightfully anachronistic, I haven’t heard reference to Al Gore’s information super-highway for years, it’s so AOL Connie
    8. Sing Lee does stand somewhat charged with inferring the general from the particular. For starters his stats about longevity are typically from people who retired 30 years ago, so the pressure cooker pace of change wasn’t so bad. Some of the jobs will have been more physically wearing 30 years ago which may have taken a physical toll. There’s no good answer to the delay in longevity statistics, we will find out what early retirement really does for my age cohort in a few decades.
    9. this was pre-internet
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