28 Aug 2014, 8:43pm
personal finance
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  • Cash ISAs are king, it appears

    We have not just one but two bearish articles on the stock market now that the hacks have returned from their hols and decided everything looks less fun than on the beach.

    Maybe the teeming masses of our British ISA ‘investors’ are wise after all, as only one in ten of us 1 open a S&S ISA. The Torygraph asserts

    ‘Super Isa’ savers play safe by putting their money overwhelmingly into cash rather than investments in the first month of the new, enhanced tax-free plans

    Blimey, if that’s what they call safety, I’d hate to see what these guys think of a racy high-risk strategy. At least the writer got one thing right – you don’t invest in cash, because it always offends. The one good thing you know about cash is that it’s dying on you. I’ve will have lost about £10k to the depredations of interest-free cash 2 in my AVC fund by the time I get hold of it; fortunately I saved considerably more by not feeding it into the rapacious hands of the taxman so sometimes you have to eat the cost of doing business. In retrospect I should have left some of it in the market, but because I didn’t know when I’d need to draw it I left it in cash. And I’ve seen this safety at work, and t’aint pretty at the moment.

    The advantage of havign termites eat yoru cash is you can see the buggers and you know what the problem is. When the government does it who are you gonna call?

    Termites can also eat your cash, but the government can ruin its value without getting at it. They simply make a lot more of it.

    Not only that but I have a lot of cash outside pensions. That’s the trouble with having a low income – you need to hold a lot of cash 3. If you’re earning a decent wedge then if something goes wrong you slap it on the credit card, roll back your partying for a few months while you pay it off and that’s great. Whereas if you haven’t, you need to hold a lot of cash to cover emergencies. Or do without – Wonga is not an option because it never gets better if you have no income, something that an unfortunately large number of my fellow Britons haven’t jumped to yet.

    I have a cash ISA, from way back, in two halves – 2008/9 and 2009/10, when I thought I had very very few options and was going to be iced from The Firm in months, not three years. I’ve hung on to it because cash does give you some optionality, but I’ve never been tempted to add to it as an ISA, though I did take those nice guys at NS&I up when they were offering inflation-proofed cash. If they did that again to be honest I’d probably draw that cash ISA and whack it into NS&I. But they aren’t.

    Anyway, I’ve held this for five years, over which it’s fallen in value in real terms. Of course the nominal value hasn’t fallen, and indeed inched up, but it’s grim, and it ain’t going to get better. I retain this cash ISA purely for the tax-sheltered value – when I get control of my cash it’s going into my S&S ISA.

    Cash is king but has no earning potential

    Whereas my S&S ISA, which I have been feeding exclusively and to the max has increased by about 20% over the same time, relative to the total cost of purchase as of 2014 – not all of the money has been working for four years. Now there’s a very good argument to say this isn’t because shares are inherently better than cash over four years – over that period all you needed to make money in the stock market was to have a pulse, actually be in it, and not screw up. It’s been getting harder and harder to find much worth buying, and what with the relative strength lack of weakness of the pound, I have looked towards building out – in emerging markets, Asian smaller companies, Russia, and Africa. I could use some of the mayhem in the stock markets trumpeted by the Torygraph to get valuations down from the silly levels, particularly in the US.

    After leaving work and coming to the conclusion that my HYP will soon be able to make up the pension income I lose from leaving early 4 I started to look towards the longer term defence, and while emerging/frontier markets seem on sale this year it is a bit nutty to ignore the largest capitalist economy on earth. Although I couldn’t bring myself to buy the S&P itself at current valuations I managed to hold my nose long enough to diversify a shedload of The Firm’s Sharesave into Vanguard FTSE Developed World ex-U.K. Equity Index Fund which is more than half US. I was going to Bed and ISA that sucker but it’s had the temerity to appreciate by 12%, which puts the kybosh on that idea for this year as I’m capgain maxed. So the Coming Reckoning Of Doom will have a grain of silver lining amongst all the mayhem – it would let me Bed and ISA a whole load of stuff. It’s an ill wind, etc, and of course all the buying opportunities, yay ;)

    Maybe our cash ISA-niks are keeping their powder dry

    Beats the hell out of me what all the punters are doing with their cash ISAs. It’s not even like you can turn that much interest on cash for the tax difference to be worth the candle. Maybe they are mindful of the Torygraph’s second article and waiting for the Case-Shiller to drop back to historical averages. The trouble with that line is that it’s easy to say and hard to do. However, if the massed ranks of cash ISA savers are under the fond impression their money is safe, they need to think again. Knowing that you aren’t safe is better than believing you are, but discovering the power of inflation does destroy your money. You know that compound interest everybody goes on about? Inflation is it’s Mr Hyde – compound interest run by Bad Guys. Tax takes more than one form, and printing cash to devalue the debt takes most financial assets with it, as more and more money chases a finite supply of things of value. Most of the rise in stock market valuations isn’t real either, more money chasing the same or less Stuff. The advantage of the stock market is that the risk is printed on a sign above the door – “here be dragons, volatility and 50% swoons in a couple of days”. Whereas on a cash ISA it’s all marble hallways and apparent solidity, but in the night the termites unleashed by the Bank of England are in there, busily nibbing away and the value of your cash. The tax is the disappearing value, not the small part you pay to HMRC ;)

    There are some ways to greater safety than cash

    If our cash ISAniks really wanted more safety, they could do worse than ponder Harry Browne’s  Permanent Portfolio. (Permanent Portfolio at ERE) It’s one example of diversification across asset classes, wider than the usual trio of equities, bonds, and property/land. And cash has its place there. But you have to accept a lower return, because there are two passive non-income generating components in the mix, cash and gold. They are the sleeping King who will rise up when the Kingdom is in mortal peril – but obviously half your capital base is asleep in times of prosperity, and so far the prosperous times have been a larger proportion of the time than the recessions.

    The advantage of having a few year’s ISA behind me is that the decisions to be made each year form a smaller part of the whole picture. At the beginning, I was desperate for a sustainable income, and I was lucky to start from a bear market and one where income investing was particularly bombed and people could consider swapping income shares for income ITs on a discount. As time goes on preserving what I have becomes more important – and that means building a diversifying shell around the income core. I accept my yield will fall, and yields are generally falling at the moment. But there will come a time when things are different, and there will be a time to buy income again. Hopefully those ITs at a discount – I had only got started with one and was going to buy more but ran out of ISA space in 2009, there is unfinished business there. In the meantime, there is a time for everything – the various sectors fall in and out of favour over time. Buying into the ones in favour (right now US equities, UK residential property) doesn’t work for me. Some people make momentum investing work, but I’m not one of them. Buying sectors that are out of favour works for me, but it’s hard seeing things go down before they come good – I can get a feel for lows but not for market bottoms. Which is why I hate it when markets hit new highs – Mr Market want you to pay so much to get on the dancefloor, I want to sit those ones out :)

    the search for safety leads to danger

    Donald Rumsfeld had a point. It’s the unknown unknowns that are hazardous, but believing you have found safety leads you to have apparent knowns that are really unknowns.

    But one thing I know, from personal experience. A Cash ISA is not safe – over several years, never mind decades. Yes, the cash ISAniks will say – but the stock market can halve its value from one moth to the next. They’re right, but there’s a faintly discernible upward trend over the years, whereas cash has a downward trend that dares not speak its name 5. When I was at university in London many years ago, you could get a pint of beer for under a pound. Slowly and stealthily the value of that pound fell away.

    It doesn’t matter than 9 in 10 cats prefer the cash ISA door. Somebody should make a ‘here be dogs‘ sign for that door.

    Notes:

    1. I know they said ten to one which isn’t exactly the same thing
    2. great when you’re borrowing, sucks when you’re holding
    3. If you are going to retire early, before 55, then for God’s sake don’t pay off your mortgage if interest rates are low. They weren’t as low as now when I did that, so the folly wasn’t as clear.
    4. Once again I’m not claiming to be a fantastic investor with hot hands there – the ask is made a lot easier by the fact that my spend rate was so dramatically lower than projected I have been able to defer for a year, and indeed with Mr Osborne’s shenaigans will be able to defer for another year after that. In general, for civilian Sheep of Wall Street spending less trumps greater investing chops
    5. it’s called inflation, and NS&I were the last people to offer a believable hedge against inflation
    22 Aug 2014, 11:49am
    rant savvy shopping:
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  • Self-seeking vacuum cleaner manufacturers lambast energy efficiency moves

    Consumerism, don’tcha love it. Take the humble vacuum cleaner – invented around the turn of the last century. They served previous generations well, given our Northern European habit of carpeting homes. In much of the rest of the world people use hard surfaces for floors like wood or tiles, but that’s a bit chilly in winter. Hence the need to clean carpets using technology more advanced than a broom or a mop.

    In a curious marketing arms race started by that James Dyson fellow, what was once a pedestrian and functional piece of kit throughout the 1970s and 1980s after being perfected over the previous 50 years became an aspirational product with innovation for the sake of it – one obvious problem was solved and a few more subtle ones introduced. Consumerism loves that sort of thing – make big positive changes and introduce faults that take time to develop – you only find out about the irritations as you own the product. It also became a damn sight more noisy that it used to be, with a particularly horrible high-frequency whine, in the case of the Dyson DC03 I used to have. Yeah, I was that middle class consumer suckered by the hype. The Dyson was a lot harder to troubleshoot. There were only four things that could go wrong with a bag-ful vacuum cleaner. The bag filled up, something got stuck in the intake hose or something jammed the brush roller, and all of these were something that were easily visible to the untrained householder. The fourth thing was the motor burning out, and you could smell that :)

    Compared with that the airflow of my old DC03 had loads of rubber seals, plastic channels that would crack under use and the whole thing gradually degraded so it was replaced after changing lots of expensive parts because it lacked suction compared to the basic Henry vac in a church hall we hired. I pulled it apart to see if there was anything worth salvaging, expecting to see all sorts of high-tech wondrousness. And was greeted with a bog-standard universal motor – so much for all the high-tech wizardry, eh, James? I don’t doubt the cleverness of the cyclone engineering, but it was the marketing of a new, and ultimately not very useful, technology that enabled you to jack up prices in the 1990s. Yes, bags make the suction fade, but the consumer can fix that. Whereas whatever made the DC03 fade over a few years wasn’t replaceable by a reasonably technical consumer – for all I know the usual little lumps that get sucked into the airways and trashed the plastic channels I replaced may have knackered the cyclone bit. I always hated that DC03 for the earache, anyway, glad to see the back of it :)

    Vacuum cleaners are now marketed by the power of the motor, which seems to be pure specmanship and lazy engineering. Previous generations worked in dirty manual industries, their kids played out in the street and garden rather than sitting in front of the computer. These generations were served by vacuum cleaners that were specified in hundreds of watts – I recall being surprised in the late 1980s to see a Miele vacuum cleaner that was rated at 1100W on the high range. So the question has to be asked, if one and a bit horsepower 1was enough to clean the homes of our grandparents with their grubby street urchins, why do we now all of a sudden need the power of three horses running flat-out to clean a carpet?

    Apparently, according to Which,and Dyson  an affront is being perpetrated on the human rights of European consumers by those pesky bureaucrats in Brussels limiting vacuum cleaner motor powers to 1600W, one and a half times the power of the machine that surprised me 20 years ago. It’s still more than two horsepower – people used to deliver coal and collect scrap metal with less power than that.

    Right. So you're telling me that after 100 years of impovement, you need more power to clean your carpet than this guy needed to haul tons of coal? Ain't progress marvellous, and don't spare the horses...

    Right. So you’re telling me that after 100 years of vacuum cleaner refinement, you need more power to clean your carpet than was needed to haul tons of coal? Ain’t progress marvellous, and don’t spare the horses…

    Now some pieces of technology have been reasonably perfected for the requirements most consumers have of them. The bicycle, screwdriver, the pen and paper, the digital SLR and many others. It’s not that innovation isn’t possible in any of these, but 90% of users’ needs are met adequately. The vacuum cleaner reached this stage by the beginning of the 1980s – my experience of Mr Dyson’s much vaunted advances were mixed – great at the start but hellaciously noisy, and, to be honest, overpriced to boot as well as fading over the years and being fiddly to maintain.

    I’m with the Eurocrats here – you don’t need three horsepower to clean a domestic carpet, and motor power doesn’t seem to be turned that well into sucking power. This is specmanship and marketing spin, and more power means more weight and more noise. It’s easy to sell something on a number, but after more than a century of making vacuum cleaners this isn’t a high-tech market in its infancy.

    Also if you have to make more vacuum cleaning stuff to sell to people to make them buy things they don’t need ,why not go the Roomba route – at least it’s genuine innovation in one aspect, rather than just making the motor bigger, noisier and heavier so the marketing droids can push the bigger number? Then at least you can use the time you save to go to work to pay for it. The very fact that people will put up with a Roomba, which clearly doesn’t have a three-horsepower motor 2 shows you don’t need stupendous amounts of power. One horse power, maybe. Knock yourself out with the power of two horses – the eurocrats are easy with that too.

    1408_Mailcoach

    It’s when you running the same sort of power  that used to pull a coach and horses up the Great North Road that you have to ask yourself whether you aren’t just being suckered by specmanship.

    More power, more noise and more weight  is not the answer. Let’s hear it from Mrs Kingsland – whose machine failed in service after 70 years of cleaning her B&Bs. Apparently the new one is quieter – but too big and heavy ;) They don’t make ‘em like they used to, eh?

    Notes:

    1. one horse is good for about 750Watts – your can call on the rippling muscles of nearly three from one UK socket – ain’t modern technology marvellous
    2. very few things powered by batteries have a 3hp motor. And yes, total energy consumed is a function of power and time – even there it seems the Roomba scores relative to one of those eighties-powered units of 2/3 the new EU limit, never mind a 2010 behemoth, and there are many extra inefficiencies to a Roomba)
    15 Aug 2014, 6:30pm
    debt economy
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  • What will the power shift from labour to capital make things look like?

    As we wander around the many lovely historical relics that Britain has, usually in the care of the National Trust these days, we think we are looking at the past. Wander around the many rooms, and marvel at the effort it would have taken to keep these clean in a world without fossil fuels or vacuum cleaners.

    Stately pile in Leicestershire

    Stately pile in Leicestershire

    Now everybody in the personal finance world is trying to build capital, to make income. It’s the Holy Grail of pension planning, the vanishing point at the distant horizon, the Ermine sitting in his back garden drinking iced coffee while other people toil to fix the sewers and bring water and power and ideas to him. We don’t do this in the up-close and personal way that the Downton Abbey set do 1. We use machines and energy to do it, and if you see people power substituting for capital you know that someone’s thrown the big red switch and the projection reels are rolling – in reverse, and that the aristocracy will be in the ascendant again.

    Financial Independence is the non plus ultra  – the destination for which we PF types forego all the gratuitous consumerism of our fellow men, living like celibate monks in a brothel. It’s quite a new concept in human societies. Those grand buildings in the care of the NT were serviced by an army of grunts, basically working for The Man. Over a working lifetime, they didn’t get to save enough money to retire, because they didn’t earn enough money over and above their living requirements. Although we often associate this retirement with the welfare state, trades unions and friendly societies were in this space in the early years of the 20th century.

    One of the mantras of the PF world is you can earn a 4-5% real return on capital in a suitably diversified portfolio of assets. This isn’t bad – be grateful you’re living now rather than earlier in the 20th century ;) In even earlier times, however, the return on capital was better, presumably because the servants never earned enough spare over their needs to retire! On the downside if you were the Man you had to be the first-born son of The Previous Man – capital was inherited, passed down the line by the doctrine of primogeniture. It was a drag if you were the second son, and you were SOL if you were female.

    shamelessly pinched from Krugman who pinched it from piketty

    shamelessly pinched from Krugman who pinched it from Piketty

    I got this from Krugman’s Why We’re in a New Gilded Age but I think he got it from Thomas Piketty. There are a few interesting things here. One is that this is the return on capital after taxes – it can of course be varied using taxes. You’ll note there was a low in the period that had the two World Wars – I guess taxation was high and the destruction of capital too. Another thing that is interesting is that the high-water mark of world GDP growth encompasses my working lifetime – I finished work at the end of it. I guess there’s some kind of limits To Growth forecasting in there, or maybe Piketty’s been reading Life After Growth. Either way we’re seriously into unknown unknowns there.

    It is, therefore, possible, that my story is a blip on the thread of financial planning – the thought that an average grunt who left school owning a kettle and the shirt on his back could command enough resources to retire 34 years later. For that piece of luck I am duly grateful.

    What do we learn from this? One is that the rate of return on capital assumed by a lot of PF thinking isn’t that unusual, from a historical perspective. It is, however, a bit unusual compared to recent historical perspective. We really could do without any more bloody wars in Europe, and the associated high taxation. OTOH there did seem a big stimulus to growth, although on such a coarse scale it’s hard to say that this wasn’t due to progress in agricultural yields or due to electrification. One of the valid questions would be does growth inherently reduce the return on capital, or is this correlation with something else?

    An ermine looking back 30 years, about to enter university. Or not.

    One thing does seem clear, however. We are headed towards a world where capital is getting a larger slice of the pie. We see that in wage stagnation, and also in a fall in growth. One fo the hypotheses for the fall in growth is the increasing cost of energy. So what does the future look like?

    Much more stratified and class-bound, I would hazard. If I were collecting my A levels today, and if there were and older Ermine-head on the shoulders 2, I would question some of the shibboleths and assumptions of the consumer lifestyle and image.

    I would note that the modern world offers three doors for the A level student. One is the route of university and £30,000 worth of debt. Now in the world I have worked through, £30,000 of debt would probably have been worth the candle, but in the world I see before me, I don’t feel that way at all – I have much sympathy for this viewpoint that university is an unaffordable luxury. There are two reasons why this is different today from 30 years ago:

    • 30 years ago, the exams were much harder 3 I think it was 7% when I entered and 11% when I left in 1982 of school leavers went to university at all. The exams screened strongly for academic ability, in ways you aren’t even allowed to think about today because it hurts the feelings of those that don’t make it. As a result of this, there were far fewer graduates in the workforce, the graduate premium was stronger.
    • Poorer students got grants and I believe everyone had their course fees paid for by the LEA, whereas now we have the loans situation, which means a student is indebted by £30,000 as well as the opportunity cost of losing the money they might have earned in the first 8-10% of their working life. Although it’s not exactly the same as going to Mastercard and taking out a loan for £30,000 as Martin Lewis is at pains to explain, the trouble is that with a 50% entry target, university is by definition targets at those of average academic ability and up. As a result the graduate premium is much lower, for the simple reason that the product is a lot more common. It’s true that in there are the same 11% of old, but the problem now is employers have to find them, assuming academic ability correlates with better ability at what they want. One of the biggest problems has been that heft in student numbers – it meant that the taxpayer couldn’t afford to support five times 4 as many so the cost of the opportunity has gone up for the students at the same time as the value of the product has been dropped because the market has been flooded.

    All round this seems to be a policy failure. We haven’t asked the fundamental questions, which are

    what is university for?

    • if it is to provide better work cannon-fodder, is this what companies and the available work want?
    • is it better if companies train their staff themselves – vocational training used to be a lot better – the Ermine was trained in how to use a lathe and other gear by companies, not schools, even though it was a peripheral part of what I would be doing, I have never used a lathe directly in my line of work but needed to know what could be done with one.
    • Is is right to normalise debt to our young adults so early in life – a student debt is more money than I have ever borrowed in my life other than as a mortgage

    At the same time I note that there are other routes

    • England is an expensive place to go to university, particularly if you are English – European universities where under EU rules you have equivalent access to courses and support may be a cheaper option (and often taught in English!)
    • The modern world offers the entrepreneurial and talented more opportunities to get to market and a much more efficient business operation than was possible in the past. You don’t need a university degree if you don’t have to convince an employer to employ you – code an app needs knowledge, not a degree and you can learn an awful lot of things online nowadays. Against that the odds against the successful entrepreneur are bad. Many are called but few are chosen to succeed.

    The good thing is you have far more options. The bad thing is that the value of the default option has been mullered – price up and value down. I personally wouldn’t go to university in England if I were 18 now, though I would consider Europe 5.

    Minimize debt in a slow-growth world

    One of the macro reasons is that in a low-growth world, debt is a very-dangerous thing indeed, because it’s hard to outrun with wage inflation. Debt also means mortgages. Part of the romance Britain has with house price inflation is because one generation did well out of that (it was my Dad’s generation, not mine – I got slaughtered by housing in the UK). The oil shocks of the 1970s caused high inflation and labour had the whip hand – enough power to drive up wages. They didn’t get any richer, because productivity didn’t go up, but inflation did and their wages kept pace with inflation, reducing the value of the debt in real terms.

    Labour will be much, much weaker in the coming thirty years 6. Globalisation and increasing automation will see to that. We may get inflation, but wages need to keep up with it for house price inflation to be A Good Thing. Otherwise we get what we have now – the real value of houses rising and fewer people being able to afford them, and that is not a Good Thing – for anybody 7

    In a low-growth world, even those student loans are going to be more onerous. So beware the debt, or at least investigate getting it down, first by asking whether university is necessary and a good match to your skills and aspirations 8, and if so considering the foreign option while it’s still open to you. Hopefully Cameron’s plans for an EU referendum won’t bugger that up.

    Logan's Run

    Logan’s Run, I suppose there are some compensations for the YOLO set

    Student debt is an obvious one to minimise, but lifestyle costs are one way that the young do get through money 9. You do need some conspicuous consumption to wine and dine and play the mating game, but a little bit of excess goes a long way, as long as it’s the right sort of excess. There’s a limit to how long it’s wise to take the YOLO mantra, unless you plan on taking a Logan’s Run approach to extreme early retirement. I avoided debt in my twenties by being exceedingly tight with housing 10- I shared houses and targeted the lower, more tatty end of the market. I regularly pass one rental in town aimed at students that has a rate of £56pw – that’s probably the end I was running at. And debt due to consumerism is bad, again particularly so where labour is weak. The normalisation of consumer debt and student debt are the most toxic features arising since 1980 for personal finances. If you can’t pay for your consumer goods in  cash, you’re not worth it. End of.

    If we zoom out even further, that power shift from labour to capital is harming productivity in the UK – it means it’s cheaper to hire people to do some jobs that capital. Take the humble car wash. In Britain garages used to get great big furry roller things that you’d drive into and put a coin in and it would wash your car for you while you were inside, not a human in sight.

    The Ermine knows the meaning of the plastic bottle on the Downton promo shot

    The Ermine knows the meaning of the plastic bottle on the Downton promo shot

    Nowadays you see a lot of these car washes broken, but you see loads of signs for hand car wash in supermarket parking lots and btis of waste ground – people with a few buckets, chamois leathers and a pressure washer are cheap, It’s cheaper to pay people to do this now than invest in the machines. That is not a good sign – not a good sign at all. The Ermine knows the symbolic meaning of the plastic water bottle on the Downton Abbey promotion picture. The plot of Downton’s Abbey is running backwards, and the power of inherited wealth and aristocracy is rising again ;)

    Look at the retired colonels of The Telegraph fulminating about death taxes. These parents know in their hearts that the best way for their children to get ahead is for them to inherit wealth, because they will probably not be able to earn it. It’s the most natural thing in the world for parents to want to featherbed their kids, over and above others. And parents realise in other ways that they try and buy privilege for their offspring – the whole independent school fees is also to try and build in advantage. Pass on capital – be it financial or social web capital, because the chance to earn your way ahead is thinning out. The aristocracy will be back. Not necessarily land, this time, financial capital will do, perhaps. Some of George Osborne’s DC pension changes play into this too – now the 55% tax rate on pensions going into an estate is removed.

    So take care about the things you assume about the world ahead. What worked in the past won’t necessarily work that well in future – and loadsadebt and easy money are a particular hazard to getting ahead. Labour is going to be poorer than capital relative to the last 50 years. On the upside, the talented, the crafty and the well-connected will make bank like gangbusters, it’s the average to the modestly bright that will take the shaft – many of those that will be considering that £30,000 debt.

    Wealth warning – this is the scribblings of a jaded fiftysomething that grew tired of the the way the modern world of work is. If you are a twentysomething you have the energy of youth, you have fire in your belly and I wish you all the best of British luck. I don’t think I have said anything that’s explicitly wrong, but the glass is half empty, and one of the specific advantages of youth is that your glass should always be viewed as half full.

    From a personal finance point of view I do believe you should think about taking on a £30k claim on your future earnings very carefully and know why you’re doing it rather than just drift into it because it’s the done thing, and have a clear vision of how doing this will help you earn more than 30k in real terms across your lifetime  and compensate you for three years of not earning. Or if you are rich enough, whether a damn good time and one of the few rites of passage we have in the West is worth it as a consumer experience regardless…

    Zooming even further out, what will that society look like? Staid and sclerotic – who you are will matter much more than what you know or even what you can do. Maybe Downton Abbey with more mod cons and better contraception. Don’t think we’ll be going to the moon. Or Mars. It’s where we are going if Life After Growth is true. But it isn’t predestined, maybe the other side of Wilkins Micawber will show, the one that isn’t normally cited in PF circles

    Something will turn up

    Notes:

    1. I’m inferring this from press reports about the programme, I’ve never watched it personally
    2. because in reality I was much more susceptible to peer-pressure and going along with established norms in my 20s
    3. the exams were norm-referenced (ie a fixed percentage of entrants got As) 
    4. one of the things that pisses me off is the mantra oh my generation pulled up the drawbridge. We didn’t do it deliberately, but did it by being so weak-willed that we couldn’t face telling the less able of our blessed children they weren’t smart enough to benefit from university. This was lily-livered incompetence, not malice as far as I can tell. It is bad, but without knowing how we got ourselves into the shit we can’t formulate a way out of it. Paying fees and maintenance to five times as many people wouldn’t help. We either need to make more jobs that are matched to the lower levels of ability, or eliminate enough undergraduate places to get the proportion to match the jobs we do have. It was right 30 years ago, maybe the proportions want to be higher now because we have a different employment scene and people might be a bit smarter but an increase of FIVE times in 30 years? You don’t need a degree to work a call centre. And society should be honest enough about your ability not to encourage you to spend £30k chasing an empty dream. Which would you rather have – not getting your grades or a place in clearing or picking up a £30,000 debt and lose three years of potential working life to end up in the same position but with a fancy piece of paper? I do accept that the adult world is not serving its offspring at all well here but the answer isn’t pay five times as many people through university as we did three decades ago. Two times, maybe, and there I am all for student grants and fees being paid from general taxation – HMRC will get it back in higher tax receipts later
    5. studying abroad also makes you look more enterprising and go-getting, which everybody likes, and at ease with other cultures which some employers seem to like. But I’m no expert, so DYOR
    6. I mean labour in aggregate. At the moment a lot of capital is being appropriated by the 1% and particularly the 0.1% as income, and technically this is also labour
    7. I guess it is a good thing for buy to letters but that’s it. It isn’t a good thing for owners unless they downsize, as they still need somewhere to live, and it tempts twits like Shona Sibary to live above their means.
    8. this in itself is a beastly tough thing to ask when you’ve just started out – how the bloody hell are you supposed to know?
    9. I am staggered at what the kids of my ex-colleagues buy, though I am pleased to see one old trick is still active – if you want Dad to help you buy a car say to Mum you’re thinking of getting a moped or a motorbike :)
    10. only to throw the win away when I did buy a house – you can survive some big mistakes, just not too many
    11 Aug 2014, 2:52pm
    reflections Suffolk:
    by

    5 comments

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  • Supermoon reflections

    It’s not often that someone goes and moves a celestial body closer to us so we can see it clearer. The Grauniad has a far better series of supermoon pictures along with why it’s a supermoon, ‘cos decent photography is about the context and telling a story.

    However, although the tail of storm Bertha had been giving the region some stick it all cleared for the moon. I don’t know how your astronomer types get to see anything through a telescope, because when I stuck my birdwatching telescope at it it was far too bright to see much. However, it was easy to take a photo 1and I was surprised to see all the gnarly bits on the bottom. Taken a hell of a hammering, that has

    1408_moon_a_IMG_1410

    And I’d never noticed that in many decades of looking up at the moon. Obviously if you want a decent picture of the Moon you head over to NASA, cos they have better gear, my photo shows I’m not totally over the chimping of a tourist with their crappy smartphone photo – but hell, it’s my picture, I pressed the button. Kudos to NASA for a superior take, nevertheless :)

    NASA have better gear and get to spin it round a bit

    NASA have better gear and get to spin it round a bit

    While over at NASA I took a gander at their Apollo mission pages, I have fond memories of watching the July 1969 landing at school (we didn’t have a TV at home) at about lunchtime – they had dragged the great big set into the assembly hall. Either it’s me or we just don’t have big stuff like that with the widespread buzz of some Really Interesting Stuff Going Down now. Then I looked at the timeline, and thought of Jacob ERE

    How far are we?
    That depends on your perspective. If you take the view from 400000km, humans are no longer going to the moon and have not been doing so for 40 years. From an energy perspective, the available energy/capita ratio peaked 30 years ago. Real wages have been declining for a good 30 years as well (a connection?)

    and of course Tim Morgan on the same string in a different key. Basically the 1973 oil crisis pole-axed the world I’d read about in far too much crappy science-fiction where everything was going to get better and more exciting because people were going to boldly go into an ever-expanding space exploration.

    Carter and his solar panels

    Carter and his solar panels

    Then the price of oil went up, Jimmy Carter stuck solar panels on the roof of the White House, told people to ease off the gas 2 and the American people went bugger this for a game of tin soldiers. They considered that defeatist cheese-eating surrender-monkey cobblers and elected a B movie actor who told a much more cheerful story, which sort of stuck for the next 30 years, but I notice that humanity is still too skint to go to the moon. We last put boots on the ground in December 1972.

    Strange to think back at those fast and furious years of innovation and exciting stuff in my primary school years. It’s not like we haven’t made things a lot better and progress has arrested – if things had stayed like 1972 most of Britain wouldn’t have central heating, never mind a notable section being able to live like kings. Somewhere, however, I wonder whether that last footprint in 1972 wasn’t the day some of the vision died in the West, the first time we came up against insurmountable limits to growth… You can coast a long way from the peak with the engines out, and as ERE said, it took many years for Rome to fall. Maybe we are partying in the endgame…

    Notes:

    1. There was a surprisinglylarge amount of  light – ISO200, f/8, 1/250s
    2. the story of what happened to those panels is interesting, you can read it courtesy of the Scientific American
    7 Aug 2014, 1:08pm
    peak oil:
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  • Life After Growth

    Dr Tim Morgan, he of Tullet Prebon’s research department, has a new book out; well it’s new to me although it came out in 2013. Apparently he quit Tullett Prebon to get serious about scaring the shit out of the proletariat.

    Now our Tim isn’t known for his cheery outlook. You only have to take a butcher’s at what he wrote while at Tullett Prebon to see he isn’t chipper about the prognosis for the global economy and the Anglo-Saxon variant of it in particular. You get the drift with a title like “Thinking the unthinkable: might there be no way out for Britain? Project Armageddon – the final report”

    Tim is a bright fellow, and his book Life after Growth is a cogent summary of how he looks at the world. It’s interesting because some of his insights are well worth taking on board in their own right, and have direct application to the personal finance world.

    A Tale of Two Economies

    We often think about finance in the abstract, as if it is a law unto itself, you diversify to minimise risk, the long-run real return from equities is something between 3 and 5% etc etc. Tim Morgan is at pains to remind us that the money economy is a map, it isn’t the territory. There is a real economy underlying it – that is the economy that puts food on people’s plates, moves stuff around, makes iFads and takes away your sewage. As I observed in Today I shall live like a King, this economy is astronomically more productive than it was a century or more ago. On a pretty average day I can live a lifestyle a lot higher with much more capability than Queen Victoria – and that’s without indulging in any consumerism.

    The money economy overlays that – money is a claim on future work. Yours if you owe me money, mine if I owe you money. The abstractions helps us manage our work across time – when you take out a mortgage, you get to use the work of all the builders and the land right away. But the bank owns part of your soul – part of your wages is garnished and you work for the bank for the next twenty or thirty years.

    In a way the money economy is a model of the real economy, but we have set up the model with some implicit assumptions of how the real economy works. We have taken past performance as a guide to the future, exactly the same sort of thing that the FCA mandates nearly all investment details to tell you not to do.

    The assumption Tim Morgan fingers as the big one is that of assumed growth. Growth is how Western democracies have alleviated poverty – because the overall size of the pie is increasing the material wealth gradually increases over time. Much of that growth, Morgan postulates, is because we have had cheap energy for a long time, but gradually the amount of energy available after that used for extraction is falling, and this is strangling the global economy.

    The real economy is running out of energy

    energy returned on energy invested

    energy returned on energy invested

    So why does our Tim reckon growth is over? Largely because of this chart – the cost of getting hold of energy is rising, because not unreasonably oil companies focused on the low-hanging fruit of easy to get at stuff first  – in the early years of the 20th century you only had to drop a nail in Texas to end up with a gusher it seemed.

    Spindletop. Texas, 1901. We haven't seen one of these for a little while

    Spindletop. Texas, 1901. We haven’t seen one of these for a little while

    Where Tim Morgan  does very well is in making some of the fundamentals clear in unusual ways. Take the rise in oil prices – in his afterword he says

    It might interest you to know that, if you are an average earner – in Britain, in this instance, though this is true across the world – your salary would have bought you 1,076 barrels of oil ten years ago, but would only buy you 328 barrels now.

    That is a large change. Morgan hasn’t got any nice words to say about how Western governments encouraged their firms to outsource production to emerging markets either. I have never understood why there is a shift of power from labour to capital. I observed it – as a professional engineer I saw the deterioration in the workplace, I see it in the changing nature of jobs, it’s shown indirectly in the earlier peaking of the career arc for younger people. Tim Morgan outlines why this is so in a succinct way

    The globalisation process is pretty easy to describe (which makes the ignorance of policymakers and their advisors even less excusable). Suppose that an American company manufactured a television at a cost of $350, and sold it for $400, earning a margin of $50. The company then became able, courtesy of globalisation, to manufacture the same television in China for $50, boosting its profit margin dramatically.

    This outsourcing of manufacturing boosted corporate profitability enormously, and created big cash inflows that were placed in the banking system. At the same time, there was a haemorrhaging of skilled jobs from the United States and other Western economies, and countervailing increases in skilled employment in China and other emerging countries. In terms of the West, it is a simplification, but also a truism, that corporate profits expanded whilst wages deteriorated.

    He challenges the Ricardian advantage that underlies a lot of free-market thinking that underpinned globalisation. But essentially, what happened is the the West produced less and consumed more, and the difference was fuelled by debt, which was cheap because of the money coming in to Western banks from the new wealth in the producing nations. These banks had to lend this money out – and a lot of it has been shovelled into inflating property prices in the West, so that twits like Shona Sibary could take the money out again and spend it on middle class consumerism and school fees, not to mention having more children than she can afford at the lifestyle she wants to lead.

    And then it all went titsup in 2007-9. The chart from his book that should scare the shit out of anybody accumulating financial wealth is that the map is not staying in track with the territory.

    the map and the territory are out of whack

    the map and the territory are out of sync

    Now if he is true there’s no point in saving into a pension, because the value of what you will get back will be worth bugger all. Tim sums up the situation in Is Globalisation the Culprit, to be had from his old stamping ground at Tullet Prebon.

    In the West, a small minority prospers, principally the CEOs of companies whose profits have surged, and bankers who gain from the expansion of the lending sector. On the other hand, the majority suffers, both because of declining wages and because of rising indebtedness.

    [...]

    The next sequential stage – which probably lies in the very near future – is the realisation that the claimed reversibility of QE is nonsense. For example, do we really believe that the Bank of England can ever reverse £375bn of money creation? And that, logically, is where the tragedy ends – in money-printing, hyperinflation and collapse.

    What can you do?

    Not a lot.There’s not much that is actionable as this sort of thing requires a collective response on a fairly wide scale. It also depends on the time-scale – something that changes over 100 years is easier to adapt to than something that takes place over 10. The obvious responses fall into two opposing camps

    Spend – live for today

    One is to do all the energy-intensive stuff you want to do sooner rather than later, so if you want to see Australia or Macchu Picchu prioritise that. Hell, if money will drop in real value then borrow it like gangbusters. Maybe the consumerism addicts are right after all? The problem with that approach is that creditors may be getting increasingly keen on payback, and become increasingly creative about it, which implies a different tack

    Save – get out of debt

    However, the transition will take time. You don’t want to be carrying too much debt because as it becomes more apparent that debts may not be honoured, creditors will become keener to make sure they get their bit first. You see this endlessly on the debt boards in MoneysavingExpert – it tends to involve guys with thick necks and an intimidating attitude. FWIW this is the approach I have taken 1, though for different reasons.

    There aren’t many actionable takeaways because of the uncertainty

    That’s largely the trouble with that sort of doomsterism – the confidence interval of the predictions is huge, so it’s hard to come up with effective action. After getting out of debt you could do a lot worse than take a look at Mistersquirrel’s list of things you can do, particularly the personal skills from point 1, because these are independent of the financial system and inalienable.

    Unfortunately becoming more skilful and self-reliant is not the way that consumerism takes us – people are becoming less and less self-reliant even at some of the basic skills in life like cooking and basic construction. The increasing specialisation and antipathy to generalists in professional work is also running against that. You only have to look at back-issues of Popular Mechanics or Woodworking to see that previous generations were far more self-reliant. I am probably a fair way ahead of most people – I have built a fair number of odds and sods but I don’t have the solid grounding of my father’s and grandfather’s generations because I learned a lot of this from books, not from seeing people do it. I didn’t even know how to make a packing crate right.

    On the upside, there is much room for improvement. Many of the ways we use energy are terribly wasteful. Transportation, for instance, is bizarre. I once worked in Beckenham and lived further in London than that, and it was amazing that the trains I was using were empty whereas the platforms on the other side were chock-a-bloc with people travelling to the City. Now the Guardian is advocating long commutes as a way to save money – how long is that going to last in a world of rising energy costs and train fares?

    Things like the Internet and mobile networks are increasingly power-hungry. In principle we could have gone the decentralised resilient approach but we went for great big server farms instead. Humanity is a bit like the Americans Churchill groused about – we do like to eliminate the alternatives before doing the right thing. Even in Life After Growth there are surprisingly upbeat indications -

    1408_fig18_eroei_trendsI was very surprised to see two renewables and nuclear power clustered at the knee of the curve around current oil and gas finds, so still very useful. And the appalling return on shale gas shows that for the sugar rush that it is :) It should be noted, however, that renewables and nuclear provide electricity, which is not very useful for small-scale transport or for shipping, so it does imply changes will be afoot in the use of transport. With the cost of energy rising the world will become a larger world again – there aren’t any good alternatives to the convenience and compactness of liquid transport fuels and the concept of an electric passenger aircraft carrying 300 people at 500 mph is laughable at the moment, and indeed the thought of charging that aircraft isn’t a cheery thought at all.

    Right, capt'n, where do I plug this sucker in? Photo Dave Croker, Geograph

    Right, capt’n, where do I plug this sucker in? Photo Dave Croker, Geograph

    A 747 takes 184,000 litres of kerosene (43.15 MJ/kg, so  ~6400GJ, ~ 1.8GWh ) If we take the output of Sizewell B nuclear power station and plug all of it into our electrically powered 747 then it will be charged in about 1.5 hours. I don’t know how many aircraft Heathrow turns round in a day 2 but something tells me this won’t fly.

    The future will have less material wealth in it, for average Westerners

    and probably for others too. But let’s face it, when we look at some of what we do with our material Stuff, we have gone a bit nutty. And it only takes a bit of a push to jump the tracks from the nuttyness. Take this from Tim’s Afterword describing the effects of the changes on the average person

    This person is most of us, and his or her life is already being affected profoundly by the processes described in this book. Over the last decade, his pay has increased, and may even have risen by more than the official amount of inflation, but he does not feel better off. The prices of many things that he has to buy (such as electricity, gas, food and petrol) have gone up by a lot more than his wage packet. It is a fair bet, too, that the various departments of government, no less than utilities, are taking a far bigger bite out of his income than used to be the case.

    If his employer provides a pension scheme, its real value has probably fallen. If he has saved for retirement, the income that he can expect to enjoy is far less than seemed likely until a few years ago. If he expects to rely on a state pension, he wonders whether it will really keep pace with the soaring cost of essentials.

    Despite the squeeze on his disposable income, he is subjected to seemingly continuous commercial pressure to spend. If he has children, it is likely that peer pressure is fuelling ever greater demands for new gadgets. If he is a young person (between, say, 16 and 30), he faces the additional problems of scarce, costly accommodation and a lack of well-paid jobs. Whoever he is, he quite probably has far more debt (including mortgages and credit) than he had ten years ago.

    Although I see where he is coming from, some of it doesn’t ring true. I have fought some of these. I have reduced energy consumption and tried to switch space heating to more local sources. We have reduced food miles, along with a fair number of other people, by growing this ourselves (or rather Mrs Ermine does). I have iced most of the commercial pressure to spend, by decommissioning my TV, using ad-block plus on the Internet and realising that much of this spend simply didn’t contribute usefully to my quality of life.

    Some of the fight lies between your ears.

    Think differently. Most of our gadgets are fantastic value – as long as you don’t churn them every year following stupid peer pressure. Learn to fix some of the damn things – most of the problems lie with connectors and batteries, and there seems to be a huge aftermarket industry supplying spares. Buy fewer but better things.

    Don’t be a sucker for stupid fads that make other people money at your expense – the whole wedding industry seems to be a serious case of that, what with organised stag and hen parties that involve flying somewhere to get pissed. You’re being rooked, guys, WTF is the point of going somewhere fancy and spending shitloads of money if you’re going to be hammered all the time? According to MSE the average cost of a wedding is £18,000 3.

    Only a generation ago ordinary people used to get married on Saturday and be back at work on Monday and the cost of the proceedings were a few rounds down the pub. £18k is 10% of the cost of the average house the average happy couple aspires to. It’s barmy to spend all that on your ‘special day’ and then sweat the next five years moaning you can’t buy a house. What makes a wedding special is the interaction between the people, not the amount of money spent trying to feel like a Kardashian for a day. You aren’t a sleb. Get over it. And picture the saving for five years towards a house before you casually toss it into the maw of wedding consumerism. At least ask yourself the question of which is more valuable to you, and if it’s the wedding then STFU about not being able to get the house. You can’t bloody well Have It All™  – but you can choose the It you will have.

    I’ve picked on the wedding industry because it seems to be a particularly egregious example of “You’re Worth It” consumerism but there’s plenty more out there. I spent too much money on fast and furious holidays because it was a break from the crappiness of the working environment towards the end, until I realised that the more I spend on trying to forget about work the longer I would have to work, and that was the time I put a tin lid on it.

    you can win the fight with consumerism because you own the battleground

    Consumerism offers empty dreams that make other people richer and bind you deeper into wage slavery. It is illogical to indulge in consumerism or sponsor your kids’ consumerism if you moan about work. If you like your work or are neutral towards it, then no problem. But for every pound you spend on an iFad, you have to typically earn twice that much – you have to pay tax on the money, you have the parasitic overhead costs of commuting.

    You aren’t what you buy. And the advantage of the battle with consumerism is that it is entirely within your head. This is a space that you should control. Buying things isn’t bad – but buying things because other people tell you to is. Buying things because you’ve considered the value delivered and come to the conclusion it’s worth the opportunity cost of spending the money elsewhere or later is fair enough. Live intentionally. We don’t need so much damn Stuff to be happy. We live like kings already, and need to cure ourselves of Tiny Details Exaggeration Syndrome. The latest iPhone is nowhere near as much better to what went before as the first iPhone was to what went before it.

    Oh yeah. And don’t buy your Consumer Shit on credit, mkay? As the man said, your debt makes other people rich, That’s not cool and that’s not clever. If we could ice the Great British Consumer’s addiction to credit, we’d be in a much better position to tackle Tim’s Life After Growth. We’d probably then have to tackle the Great British Government’s addiction to debt, but one step at a time, eh?

    Notes:

    1. getting out of debt, that is. I’ve gone easy on the thick neck and intimidating attitude
    2. looking at this, a lot more than 18 long-haul
    3. I struggle to find any sympathy for the stupid bint cited by MSE who was gifted £12k by her dad only to find the bank used £6k of it to pay off her credit card debt. If you are in debt then don’t spend stupid money on your wedding. You are NOT worth it, by definition.
    23 Jul 2014, 11:20am
    economy frugality
    by

    20 comments

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  • The real way to make money using old pallets is to be Blake Lively

    Wow. I was wasting my time recycling pallets into kindling or log-stores. Here’s the way to do it

     

    Upcycled pallets - way to go, Blake!

    Upcycled pallets – way to go, Blake!

    Not only do you get to touch the hemline of Blake Lively thus acquiring a sprinkling of her faeriedust that will make you younger, more beautiful and generally transform your otherwise pedestrian life of quiet desperation into celebrity heaven, but you also get to read cock like this

    The bones of old New York get a new lease on life in these Dutch-style bicycle crates. Built to last a lifetime from reclaimed local wood sealed with natural tung oil, each beautiful Brooklyn-made piece is imbued with its own unique character. Caboose it onto your bike to carry the day’s produce, impromptu flowers for your sweetheart, or whatever you need to transport in a stylish manner—emission-free!

    Ninety-Five flippin’ dollars – that’s fifty-six of your Earth Pounds. For something with massive great slats that will spew your designer shit out all over the highway if you actually did stick it on a bike, which is why people in Amsterdam use bike baskets made of mesh so all their crap doesn’t fall out, particularly when they ride over the cobbles. Not only that but bitter experience has taught me that you stick your flippin’ uprights on the inside of the slats so you can get enough screw into the damn things else you’ll have a kit of parts again in no time at all. Years ago I made some VHS tape holders along these lines inspired by the ones in Sex Lies and Videotape where I forgot this, or else got to learn it for the first time ;)

    1407_blake

    It’s time to throw in the towel on the you can become free through not spending all your wages buying shit meme. The opposition forces are too strong when people bankroll this sort of cobblers. Decadence has set in too deeply. The economy is shattered, fewer and fewer people will earn enough to fulfil their modest aims in life, and yet the froth rises  and spreads over the surface to cover the roiling darkness. The fight is futile, the bad guys won, the battle is lost. The centre cannot hold; the falcon can no longer hear the falconer. All hail to the God of Shopping, our new overlords.

    Won’t someone send out the search party to find and scoop up all the brains that have fallen out all over New York City  so at least they can be given a decent burial rather than feeding the dogs? And please, please, let Preserve go bust quickly to restore my erstwhile belief that I don’t share a planet with too many fools ready to be parted from their money…

    21 Jul 2014, 12:35pm
    frugality:
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  • Time for homage to the Holly King

    Summertime in the city finds the good people at Monevator dwelling on thoughts of refreshment, but out here is the sticks while sipping my iced coffee I sensed a stirring in the Force and the distant laughter of the nascent Holly King, with thoughts of Winter. The old boy Thomas Tusser has something to say about summer idleness

    Some of the Five hundred points of good husbandry, Thomas Tusser

    From “Five Hundred Points of Good Husbandry”, Thomas Tusser 1580 (link to Google books scan of reprint from 1848)

    Even though the Oak King holds sway, the Holly King‘s powers are now rising. Hard to believe on balmy lazy Summer days when school is out, but this too will pass, and the nights draw in.

    A depiction of the Oak King, on Lloyds Bank in Ipswich for some reason

    A depiction of the Oak King/Green Man, in this foliate head on Lloyds Bank in Ipswich for some reason

    Now, at the height of Summer, it is a good time to convert a pallet into the finest kindling known to Man – the wood is so dry the pieces are almost musical when they hit the ground, like the plates of a xylophone.

    an axe, some wooden tongs to hold the piece upright, and some iced coffee

    an axe, some wooden tongs to hold the piece upright, and some iced coffee are what’s needed to make a lot of kindling out of pallets

    Sound of kindling pieces being moved – each almost has its own note, the tonality sounds different to me from ordinary bits of dry wood being moved.

    Like so many things you can do yourself for modest cost, consumerism has a ready-made alternative – Wilkinson’s will sell you some in a plastic bag

    Wilko kinding

    Wilko kindling

    but what’s the fun in that? The cynical part of me did wonder if the plastic bag might not have more calorific value than the product if you could use it without the noxious byproducts. I knew one fellow in an old house with an open fire and a massive inglenook who would toss an entire bag of coal on the fire, plastic bag and all. There was enough draught up the chimney that it didn’t stink the place out, but I still felt it a teeny bit on the coarse side of living.

    Thomas Tusser would look askance at such effete consumerism, and I’m with him there. I now have a couple of great big garden bags full, probably about £200 worth of kindling at Wilko prices. And running it in July means it’s absolutely bone dry, I stow the bags in the garage so it stays that way. A fine alternative are pine cones which make good kindling, and they are to hand in the coming months.

    £50 worth of pine cones, at Wilkinson's rates

    pine cones – some people pour wax into them but if you collect them in summer they work just fine on their own

    It’s the open structure and large surface area that seems to be the win here, rather than any particularly resinous property like fatwood. I figured I’d see why my kindling is almost musical in its dryness with a fine Chinese gizmo

    what my cheap Ebay meter says for the kindling water content

    what my cheap Ebay meter says for the kindling water content

    Now you can’t rely on a cheap piece of Chinese junk traceable back to national standards of a finger in the air via an indirect measure (bulk resistance?) but comparing the kindling with

    arbitrary piece of recently acquired pallet

    arbitrary piece of recently acquired pallet

    a piece of a joist that's been in a neighbour's garage since 1969

    a piece of a joist that’s been in a neighbour’s garage since 1969

    Biomass willow harvested earlier this year

    Biomass willow harvested earlier this year

    Log dropped off with us earlier this year and drying since

    Log dropped off with us earlier this year and drying since

    the kindling does seem pretty good! The willow is deceptive – the end I stuck the meter in is good (you can burn anything with less than about 20% water content) but further in it is too high, over 30%. They do generally say you have to season willow for two years to get the best of it.

    The universal handy rustic construction resource – the wooden pallet

    Loads of these get thrown out, and indeed I’ve seen many people on building sites burning pallets in the open to get rid of them. In the US they seem to worry about termites and stuff so they chemically treat them. I’d probably draw the line at using them for construction inside the house 1, but for a log store extension they were neat

    we need to finis the roof trim but this was done running ahead of an incoming thuderstorm so it wanted to be fast rather than great

    we need to finish the roof trim but this was done running ahead of an incoming thunderstorm so it wanted to be fast rather than great

    Unlike in the States the majority of pallets round here are untreated so they will rot, or maybe that’s just the result of scroungeable pallets tending to be one-wayers 2. This was constructed so the pallet used for the base and the side can be dismantled and replaced if need be. You can’t have too much wood storage, though most of our core drying is on the farm on a bigger scale. The one thing I am hopeless at is stacking wood – Mrs Ermine converted my efforts into something a third the size

    I am just no good at this compared to Mrs Ermine

    I am just no good at this compared to Mrs Ermine

    That’s enough headspace allocated to the Holly King for now, time to consider the virtues of Pimms in the late afternoon like those decadent city folk ;)

     

    Notes:

    1. not only do you not know where they’ve been, but all the pieces are of slightly varying thickness and width. I’m not a competent enough woodworker to do cabinet making with decent regular sized wood, never mind all sorts like that!
    2. According to this in Europe we do not permit chemical treatment of pallets, which is why your pallet compost bin rots so fast. That’s good if you want to burn them, though avoid engineered wood bits like the compressed blocks of the side riser because the glue gives of bad stuff if it burns.
    18 Jul 2014, 3:38pm
    reflections simple living
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  • Today I shall live like a king

    and so will you, unless you’re reading this on your smartphone while sleeping rough… I’m currently reading Ian Morris’ Why The West Rules for now and it struck me that in terms of lifestyle we live the life of former royalty. Take Queen Victoria, which whom Morris opens his book – despite being the richest person in the country at the height of Empire, she couldn’t do many of the things I can. There’s a chair in the drive with which I could be off and at the Scottish border by midnight, there are machines to do the washing for me and I can see and talk to anywhere in the world for a modest cost. Unlike even thirty years ago when I was at university, the accumulated knowledge of the world is largely at my fingertips – right here in the garden, I don’t even have to get up.

    So despite the Joseph Rowntree Foundation telling me that I am an impoverished Ermine unable to take part in society

    Straight between the eyes, no? You do not have enough to live on

    Straight between the eyes, no? You do not have enough to live on

    I live better than Queen Victoria, sitting in the garden out in the summer heat with a glass of iced coffee watching the birds sunning themselves near the bird-bath. I can get anywhere quicker than she could, indeed I am less than twenty-four hours away from any of the pink bits on the maps on her walls. I have libraries immeasurably richer than hers, and the state of medicine and health in Britain is much better too.

    And sometimes it’s good to lift my eyes from what’s wrong about the world and tip a hat to what’s damn well right with it.

     

    Drinking iced coffee on a day that's too hot to do anything else with isn't all bad, JRF - I think Queen Vic would approve

    Drinking iced coffee on a day that’s too hot to do anything else with isn’t all bad, JRF – I think Queen Vic would approve

     

     

    9 Jul 2014, 7:11am
    frugality living intentionally:
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  • Fight consumerism – get time on your side

    mistersquirrel  has been watching TV, in particular an excellent three-part series about consumerism. The third programme was the one I found most insightful, which develops the theory that adults are being infantilised by systems that give micro-rewards to urge them into purchases, and the process of buying is being made as frictionless as possible.

    Tesco really loves football. Look at all the things Euro 2012 realted you can buy

    Stuff. Shopping. Special Offers. Buy it Now! Won’t it be easier when you simply pay for the item as you put it in your trolley with contactless payments?

    It goes along with the general gamification of the world – people being herded along desired paths of action using sophisticated micro-reward systems. This sort of thing started to really piss me off at work, stupid metrics on irrelevant areas being used to herd and control people, and it appears to be going on in the consumer space too. Unlike work, however, in theory as a consumer you are in control of the money so you are in charge. One of the key techniques, however, is easy to fight. Trying to get you to buy quickly. Don’t do that. Buy slowly.

    First, check out the enemy

    the credit problem

    It’s in Episode 3 at 45mins into the programme

    “Every other company on Earth is trying to get you to spend money, and they’re putting all their effort into getting you to spend your money on Stuff all the time. [...] Make no mistake, the house always wins. [...]Business had learnt from children how the adult market could be turned into a game.!”

    “The trouble with adult consumers is they think too much”

    Benjamin Barber, Rutgers University

    I hear there’s a fellow who’s saved loads of money doing just that – thinking. Don’t give it up, adults. That’s why you’re adults – so you get a hold of the steering wheel of Life…

    “The last 30 years of selling has been about getting us to give in to this instant gratification”

    Now I have to admit, at first the Ermine thought to himself “bollocks”, but the programme developed its thesis well. In particular, the process of handing over your money has been transformed. There has been a progression -

    cash -> credit cards -> stored card details like Paypal, 1-click, mobile purchasing, contactless wristbands,

    The consumer merchandisers came up with a magic bullet, the credit card. The credit card becomes the facilitator of impetuous, narcissistic buy now consumerism, because you don’t have to wait a second.

    Benjamin Barber, Rutgers University

    Now I got my first Access credit card in 1979, as a freshman student. And yet I never got into huge trouble with it, indeed I was in my mid-twenties when I came to the conclusion that my parents were right

    Don’t spend more than you earn, son

    So I have generally paid them off within the interest-free period. Yes, I cocked up a few times and had reason to be grateful for the minimum payment direct debit feature all suppliers offer. I have sometimes carried a rolling balance, if some card company is going to be so dim as to offer me interest-free credit. On occasion I’ve been prepared to pay interest – when the Nationwide building society was prepared to pay me more interest on the borrowed money. So I don’t viscerally understand this part of how Big Consumerism is suckering the proletariat. Despite what one woman in the programme claimed, credit cards can be used properly. Just always remember you’re not borrowing money from the bank, you are borrowing from your future self. Make that your one month future self and you’ll be fine, because you’re close to him and he’s real to you. And the card won’t charge you interest!

    the Buy It Now problem

    However, I am susceptible to the buy it now problem.It’s across the modern consumerism estate – they are trying to shorten the gap between want it and buy it. Credit cards help you buy it now if you don’t have the money, but things like Amazon 1-click and Paypal make the process of paying quicker and less onerous. There’s a simple way to fix this, however. Remember the good Prof Barber. The solution I use is simple

    Put the stuff in your virtual shopping cart. Then wait 24 hours before making the purchase

    You don’t have to do too much thinking. If you’ve been suckered by gamification you will come back to the purchase the next day and think ‘how dumb is that’ and move on. Though with Amazon remember to empty the cart – else you’ll end up buying it with the next thing you get there, although there’s enough of a grace period to cancel the order. I used to think that the cooling off period needed to be seven days, and indeed in my hardest saving period at work I used a month. But I’m not so frazzled now, I can recognise dumb consumerism within a few hours now. 1 That inserts a great big monkey-wrench into the ad-men’s ability to tap into your ‘I want it now’ state of mind. It’s future-proof too – even if in ten years time they have a thought-swipe method of instant purchase you can still split the ‘I want it’ from now. Live intentionally. There’s nothing fundamentally wrong with consumerism – as long as it suits your wants and needs rather than theirs.

    Think like an adult. Think too much for marketers of consumerism. Ice the “I want it Now” mentality. And don’t spend money you haven’t got, which is a different take on the same problem

    But – but- what if it’s a unrepeatable sale, or a Black Friday or a Everything Must Go?

    Leave it be. Remember the fellow above. The house always wins. They’re trying to deny you the space to think. There’s only one way to beat the house, and that’s not to play their game. You don’t have to be nutty about it – for regular consumables it doesn’t really apply. If you always buy organic butter, know the price and it really is on offer at 10% less then knock yourself out and load up on it (you can freeze butter). It the purchase of something new to you, or being stampeded into an upgrade, where I’d say just ignore the special offers if they can’t match the 24 hour rule.

    increasingly things are being sold in a dishonest and gamified way

    Take the concept of apps – where you get something that appears to do a job for free, but to make it work you need to make an in-app purchase, for some individually small amount. Now I despise apps and the concept of paying for software in general. I wouldn’t mind paying if you had some comeback on the supplier, but licensing has generally been on a ‘sold as seen’ basis for the last 20 years or so. Open source has largely fixed that problem – by dealing with the ‘sold’ part of the deal :)

    The great thing about in-app purchases for the seller is that the app promises, fails to deliver but says you can make it work if you pay the ransom money. In other areas of life this is considered nefarious activity. It isn’t actually new – PC software used to be sold this way in the late 1980s – it was dearer to start with but often many layers of functionality that you’d pay more for. The piss-taking toerags at Novell Netware used to sell you per seat network connection licences 2, and the DOS version of MS Word had varying levels of functionality. Electronics schematic layout software would sometimes only let you lay out so many components before you’d have to pay. So this sort of incremental sales strategy isn’t new, but it was usually confined to the B2B sector back then. Businesses are usually much better at qualifying the ROI they will get on a piece of production equipment than consumers are at evaluating the enhancement of quality of life they will get for spending money on some consumer goods.

    case study:  buying an app to play a mixtape

    A mixtape is a long continuous gapless track – my application is for parties, where I use foobar and continuator to intelligently crossfade a sequence that I’ve manually scheduled and mixed in key. Some time a go I bought an iPod to develop some mobile web HTML. It did the job admirably and cost-effectively, and to be honest doesn’t owe me anything now. But I have never got it to work properly for playing music, because I despise iTunes,  which failed me dismally. Given I am playing this out on a field with no power or Internet access I had one primary CD player and two failover solutions – a second copy of the 7 hour mixtape CD on a cheap backup player and the iPod as third-line.

    As the weather deteriorated and the humidity rose 3 the main player started to skip, so I wanted to crossfade to the iPod, with no moving parts it should be best able to run through the dew point.

    iTunes lied to me when it said it uploaded the file

    You really don’t want to see this if you’re going to crossfade to it. iTunes lied to me when it said it uploaded the file

    So I had to crossfade to the crappy CD player and a regular album, and start to cue the backup CD four hours in. For technical reasons that sort of track fast forwards glacially slowly, I just got there by the time the regular album was about four tracks in, ready to crossfade back.

    Now I should have tested everything including the third-level failover, so it’s my bad. However, in seeking a solution to this, I find the music app on the iPod can’t play a mixtape and index the songs. Most people play pop songs on their iPods with a gap or an auto-crossfade, which sound poor to me 4, and is what I’m trying to improve on. Presumably nobody listens to classical music or live albums on an iPod which are also long gapless tracks. The correct solution to indexing a continuous track without gaps is to use a cuesheet and FLAC, because another thing I realised when playing the regular CD is although I can’t hear the difference between MP3 and CD audio at modest listening levels the difference is all too apparent at high levels .

    So what I need is an app. I now know what I need is an app that will play a cue-indexed single track file, but initially I thought I could mix the tracks automatically on the fly. I don’t want to manually DJ it because I don’t have the skill, I don’t get to  talk to anyone and the results will get worse as the evening goes on due to the power of drinking :)

    Enter the world of hurt that is apps – gamified consumerism in action

    I really hate apps. They’re vile, because they do so little, and the nickel-and-diming to coax even the slightest bit of usefulness out of them is hard to track. I got Algoriddms djay LE for free. but to load my own tracks would mean an in app purchase. So I did that, for £1.50, only to find that once I’d downloaded into itunes it wouldn’t let me load it on anything less than iOS7, which is Apple’s way of deliberately deprecating old gear – they just stop updating iOS for it, and 6 is as far as they will go for mine. Would it really be too much to ask that they check first before letting you buy an upgrade that won’t work on your kit, given they use such corrupt business practices? The ermine is down £1.50 with a fail on caveat emptor – I was unaware that an upgrade to a working program could be non-compatible. As I observed before, everything Apple is easy but hard at the same time.

    So I look for an app that does work. Ah DJ mixer 3 does work, but you need to pay £7 to be able to use your own tracks. Now I can’t say I didn’t have fun with that app scratch mixing and finding sixty seven ways to make things sound crap. But the automix sounds poor with pop and rock, though it’s okay with dance. I still don’t think most  of the adults at the Oak Tree farm parties are ready for EDM/dance, though I got some of the kids out in the middle dancing with the odd dance track.  I have no complaint about that app, it works for what it’s designed to do, but not well enough for me.

    So I still need an app to play a long wav or FLAC track with a cue sheet, so that’ll be Golden Ear then. I now have a bit of trepidation about dropping £6 on something that promises it’ll do the job after the frustrating experience with apps so far. You can’t trust apps to do what it says on the tin, it appears, even down to basic things like installing…

    I’ll be down £15 just to get this to play music in a way that fits my requirements. Now I can’t say that’s a huge outlay, but I only wrangle apps every six months or so, and I’ve had rotten value so far because I wasn’t allowed to test with my material before shelling out. Not only that, but there’s the incremental way these are sold. If you have a smartphone and are buying apps every other week your app costs could easily exceed your mobile subscription, but it’ll happen in random itty bitty pieces so you won’t clock it. Plus the way individual functions are chargeable means they can avoid sticker shock – you wouldn’t pay £20 for an app in one go but you might to get different levels of functionality enabled as the crippleware gets in your way.

    This experience has left me much less likely to get a smartphone in future. I hate working this way, I’d much rather pay for something that does the job upfront 5 than be nickel-and-dimed like that. I do want to be able to test things out properly, and this is something that is craftily prevented by crippling specific features.

    The other thing that is nasty about iOS is I can’t code for it without high up-front costs. Even if I had a Mac, I’d have to pay $99 a year for the privilege of getting my own programs onto my own machine, WTF is up with that?

    Low capital costs and high running or replacement/upgrade costs is the way things are going

    Unfortunately an increasing amount of things are sold this way, at a low upfront cost and you get sliced and diced on the consumables. You rent your music with Spotify, you rent your printer with shockingly expensive ink cartridges though the machine is virtually a freebie, any Apple hardware is on borrowed time because it will become orphaned as iOS leaves it behind in a few years. You as a good little consumer will simply funnel part of your paycheque into the consumerism machine to keep the world turning.

    It’s not how I want to buy Stuff, I don’t expect to keep on changing it. For instance, I have only ever had one scanner, an Epson Perfection 1200S SCSI scanner, it is now about 15 years old, and I recently got this working with my Windows 7 machine. It would have been easier to buy a new USB scanner, but I like this, it’s served me well and I want to keep it going. Back then I used it a lot, now I just want to scan the odd thing here or there. My computers are about seven years old. I can’t use a tablet because I am also a creator of content as well as a consumer. I’d punch the screen out if I had to tap tap tappity tap on a touch screen.There hasn’t been that much development in computers over the last few years that makes a difference for writing, browsing and running design software or editiong audio 6. Obviously if you play games to push the graphics then you’ll disagree, but I don’t have those sorts of requirements.

    I purchased my hi-fi preamplifier secondhand thirty years ago, and my power amplifier is a secondhand Naim 250 which has probably been in service for 20 years. I have had to service the preamp and had the power amplifier serviced a few years back. Decent gear lasts if you look after it. But more and more there just isn’t decent gear to be had, or it is made deliberately obsolescent. And I’m tired of it.

    This low service life and deliberate obsolescence is one of the reasons that I find Stuff much less rewarding now. I don’t want to have to  buy a new phone, or music player, or camera every year. I don’t give a toss about being with it, I’d just like to be able to do what I used to be able to do with it, and if apps are part of the way to make it do stuff then not get locked out of the app ecosystem after a couple of years.

    update 9 July 15:00 -

    Another great example of this came through my door

    1407-tesco-140709Loads of savings on offer from Tesco, What do I have to do to get my £45 off -

    you want me to trot along once a week like a good li'l consumer? On yer bike...

    you want me to trot along once a week like a good li’l consumer? On yer bike…

    I have to spend £375 with them, over six successive weeks. No Mr Tesco, I am not a lab rat in your maze, so I’ll pass on this. In the event that I really do want something worth £70+ from you I’ll consider it, but the existence or otherwise of your promotion will not change what I do.

    Fight impetuous, narcissistic buy now consumerism. 24 hours at a time. Time is on your side…

    Notes:

    1. This is probably the same sort of thing as your mother used to tell you to sleep on something before doing something crazy – I think most people’s emotional states vary across the diurnal cycle, it’s a way of getting a ‘different you’ to look at the purchase.
    2. it was sweet when MS, and then TCP/IP destroyed Novell’s business case and ate their lunch. I still detest this company for that egregious policy a quarter of a century after it got in my way at work
    3. everybody thinks dew is a thing of the morning, but it happens in the evening as soon as the sun goes down. Humidity rises and condensation often happens by twilight
    4. the crossfade is fixed in the iPod which works fine most of the time but sounds rotten when it doesn’t and the iTunes soundcheck level matching sucks compared to foobar’s replaygain
    5. although I don’t like paying for software I’m not religiously opposed to it. I try and find a free way of doing things but I do have a  folder of shareware registration details and I still use some of these programs
    6. I do feel the lack of performance when editing video, but I don’t do enough of that to be worth changing
    3 Jul 2014, 9:37am
    living intentionally personal finance:
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    17 comments

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  • Ralph Borsodi, and a codicil to Two Years on

    One of the features of Mustela erminea is that they are curious. You only have to look at someone trying to walk a ferret (another mustelid M. putorius furo) in a straight line to see that. I think if you are going to retire early you really do want to be curious. I read a lot as a child, and the modern world gives a lot of opportunity to be curious about it. The tools are immeasurably better too, compared to those of 30 or 40 years ago. Starting with Google but extending to the fact that information is much easier to collect, store and marshal. People share ideas more widely, because they can, and humans are a social species.

    The world is full of fascinating stuff – it is good to heave the freedom to get a hold of interesting ideas, run with them for a while, then stick them into the armoury of things that might be applied to different areas. I find it a little bit disturbing how many people imagine that people who have retired get bored, unless they can spend loads of money on entertainments. Jacob’s trifecta of shopping, restaurants and tickets springs to mind here, in supporting evidence I cite this page on MoneySavingExpert. Key headings

    Clothes and Fashion, Food and Drink (generally fast) and Travel and Days Out

    looks much like shopping, restaurants and tickets to me. This is on the otherwise generally awesome Money Saving Expert site where many of the users have got themselves into deep financial doo-doo by buying too much of these items on tick? WTF? The hot tip here, guys, is take the fight to the enemy: do much less of these things. Not only will you enjoy each instance more by dynamic contrast between going for a decent meal set against the norm of not doing that, but then you don’t have to prostitute your personal details to try and get a lousy 5 or 10% off. Just. Do. Less. Do half and that’s a 50% discount – even if you pay full price ;) I don’t muck around with Quidco and the likes of that sort of thing because I don’t spend enough on the sorts of things that Quidco works with to make it worth it. I buy components and raw materials to make stuff, not finished goods, which seems the key to the boredom problem – create more,  consume less.

    from DJing to personal finance…

    That curiosity recently delivered me an insight, combined with some of your comments. The Oak Tree farm party is this weekend, and I largely solved the problem of how to rig a couple of hundred watts of power on an unpowered island site. That’s not rave or Glastonbury level, but enough for a party of about fifty people outdoors (and a few hundred metres away from neighbouring houses – sound fades quickly outside).

    In the past I’ve stuck the tracks on a mp3 CD player and set it to shuffle, which is okay as far as it goes, but I wanted to understand how to do better. Although for some reason I actually like some of the more mainstream EDM despite being one or two generations beyond clubbing and no aptitude for dance, I don’t think our members want too much of that, but I figured a look at how DJs 1 do this sort of thing. Now I don’t want to do all this live, so I want to create the CDs with the right running order (apparently called a mixtape) and then patch in people’s iPods with a DJ mixer I bought at a radio rally for £10. I learned about BPM and mixing in key and a whole load of stuff about music theory I didn’t know, and came across this article about bringing back flow, which introduced me to the difference between insight and analysis.

    a modern-day Mark of the Beast

    Investing by insight rather than analysis

    For the last five years I shifted greatly towards analysis, because insight isn’t easy to do under pressure. There are some classes of problems which are only amenable to analysis, and personal finance has a lot of these. For instance if most people use insight to qualify risk they end up doing the National Lottery and ‘investing’ their money in Cash ISAs (which is indeed what most people do) whereas analysis shows there may be better ways. And the National Lottery is always wrong – though if you want to have the it could be you buzz then do it. Once, and only once. That turns ‘it couldn’t be you’ into ‘it wasn’t you’ for a modest cost. There’s vanishingly little more to be gained by pursuing the ‘it wasn’t you’ any more – analysis is the way to know why.

    However, I have got that analysis/insight balance wrong for the future, and worse still, some of my insight is distorted by outdated forms that have become linked, particularly with the term work but also some wider principles. Unfortunately only insight can connect me with my values as far as I can see; analysis addresses the how I do something but insight is a large part of knowing why. Because it can’t be decomposed into steps it’s easy for insight to be distorted – by advertising, by rotten experiences, by general state of mind.

    Few things really a pair of totally isolated poles, I need to add insight to my analysis to direct things closer to my values, and analysis to my insight to clear out some of the distortions and old forms that bias the compass away from my values – try and use more insight and less instinct.

    The past is a different country. I did things differently there

    One of the things I learned has been that I have shadowboxed the experience of getting out of The Firm for too long. Two years is enough to integrate the experiences.

    I need to shift focus from trying to outrun the past to run towards the future. The shift to a more frugal way of living does seem to have absolved me of the requirement to work, as it was designed to do. In doing so, however, I have linked unhealthy subconscious forces to the concept of work. It is very unlikely that I will apply to work for a company as an employee in future. So I am done with all the Digital Taylorism that is screwing up work at the middle level I was working at. I need to let the toxic waste go – it served me well in bringing enough focus to escape the rat race. It’s as if I had read this by ERE and followed the instructions but retained the anger ;)

    curiosity is not the only way

    There’s a massive variation in what people want to do with their life. For many people the value to be had from shopping, restaurants and tickets is well worth the cost of working, particularly if they can’t imagine any other way.  If it weren’t presumably they’d do something else. As long as they find working agreeable there’s no problem, in which case why not take part in the cornucopia of goods and services a modern industrial economy makes available? Indeed, I need you to consume so some of the companies I own a share of can make money, but more to the point, if you enjoy it, knock yourself out.  Obviously if you design this into your life you may want to consider how stable your work is, because it would be tough to build in so much cost into life and then feel rotten if work dried up. A portfolio career is better in that way; you can lose some strands without it becoming catastrophic.

    Although there’s a hint of bread and circuses in it, there’s nothing fundamentally wrong with hedonism. As long as it isn’t done on borrowed money that is, because you borrow it from your future self and your future self might feel differently about your current self’s inability to wait. There’s an inherent asymmetry between saving and borrowing – when saving you electively choose to live below your means now so that your future self can live above their means for a while. Your future self still has choice – they don’t have to live above their means – they could give it to their(your) kids, or the cats’ home, or burn it in the backyard. Whereas if you spend your future self’s money now they get no choice in the matter though you do – they have to live below their means, or go bankrupt.

    Another perfectly good reason is that you find the shopping, restaurants and tickets worth the aggravation of working. In that case, the game is worth the candle, but again, doing with borrowed money there’s still the issue of your future self not getting a say in the matter.

    For those who come it find working disagreeable in a way exceeding the buzz of shopping, restaurants and tickets, one good option is then to spend less. The sheer variety and range of stuff on offer can easily bamboozle us with its richness, the essential question to ask is how much is more doing for you? You first smartphone is presumably transformational 2 – it means you don’t have to arrange to meet up before hand but can do it on the fly, you can Google the price of alternatives when you are in a store thinking of a bit more retail therapy, and you can ignore the real world a bit more and walk into lamp-posts/other passers-by/the road while being virtually somewhere else, and play Candy Crush Saga to get rid of some of those empty hours. Each to their own. Your second smartphone, and indeed all the upgrades add much less to your life in terms of extra capability than the first one. When you get to this stage

    1407_apple-iphone-5s-queue

    queue of punters waiting to buy an Apple iPhone

    you’ve probably lost the plot and are out of touch with some part of yourself. Or trying to make a few bucks, but getting paid to queue is telling you something about the value of your time ;)

    I needed to get a mobile web browser a while back to test a piece of web work I had and what it looks like on a mobile. I got an iPod, and use WiFi, because it was the cheapest, didn”t come with a mobile contract and did the job. I’ve occasionally used it out and about with BT Wifi in towns and campsites. It works fine for what I want to do. For mobile telephony I have a bog-standard mobile phone with Giffgaff PAYG for when I want to do such things, and a really old hand-me down from Mrs Ermine with a Virgin SIM in it, because that’s free to call her.

    The Ermine mobile phone estate

    The Ermine mobile phone estate. Skanky, n’est’ce pas? All bought and paid for, no contracts, and cheap. But not ‘with it’ at all

    The most useful item is the USB dongle, of course now hacked to break the 3G lock so I can use it on Giffgaff to connect my laptop PC to the Internet if I am on the road. I can afford a smartphone and I’d buy one cash without a contract if I wanted/needed one. But I don’t need the continual contract cost, because I don’t prize the service enough. A typical mobile phone contract seems to be £30/pcm or £720 a year, so while not outrageous, it’s a fair yearly hit. Plus a £300 smartphone seems to be amortised to scrap over one or two years because of upgradeitis or the disgraceful habit of Apple IOS orphaning their older products after three years or so – deliberately.

    The key to early retirement is to look at how you are living and to ask yourself how much of this spending matters. And target your spending on what matters to you, rather than what matters to people you know, or to the companies getting rich off it. Mistersquirrel has a rant on consumerism sparked off by an OU programme that sounds interesting.

    Personal finance works

    Get out of debt and stay out of it 3 and live below your means.

    That’s it. easy to say but hard to do – like living like a celibate monk in a brothel. The ERE theory of living on a lot less than half your take-home really does work, and it works in spades with the 60% boost into pension savings (why 60% and not 40% is explained in the previous post) where the saving is applied to the tax-free lump sum. The pension changes have opened this whole area up. This is also easier for me because it builds upon 30 years of conventional work – the extra push to ice 8 years of work is nothing like the push to get rid of 20. Obviously the 20 year early retiree has 12 more years of freedom and life to enjoy.

    A decent amount of luck, seizing the day in Spring 2009 and maxed Sharesaves and ESIP helps. And of course there are the known and unknown unknowns. Much can happen over the next 20 or 30 years, though some of the bad stuff cannot be hedged with financial assets. Or at all… Nevertheless, it’s good to do something about the things you can control. Coffee is there to help with things I can change, red wine to help with those I can’t ;)

    It is more important to me to be of independent means than to be retired

    man-with-savingsUntil I integrated some of insights in some of the comments I had not realised a simple fact. It is the powerplay of not being financially independent that I came to detest. I don’t really give a hoot about being retired.  But I really do care about being of independent means – because it is the latter that fixes the powerplay, not the former. You often do retire once you are of independent means,  if you aren’t you have to keep working. To my chagrin, I failed to understand that difference. It doesn’t particularly change what I do, but it does change how I feel.

    MMM cited this cheesy ‘A Man with Savings’, and he can get away with it because he’s American 4. I even used it in 2011 and had got half the story right. A man with savings does not have to be always running.

    I missed the other half. It is the freedom to do things independently of needing to earn money. I liked this account of James Lovelock and the need for non-institutionalised engineers and scientists – I’m not in his league but I can recognise where he’s coming from.

    It’s been two years, and it’s obvious looking back, but I didn’t realise that, until seeing some of it reflected back in some of the comments. As an example I constructed a camera using a Raspberry Pi to see if our newly arrived cows are still there. It needed to happen quickly, because Mrs Ermine was worried the cows might scarper. As it is, although I am still scared of cows (particularly as these are bullocks/steers) and I really don’t like the way they follow you around, I will speak for these guys in that they are fairly placid. Look to pigs if you want to see troublemakers, and a pig is a lot sharper of mind than a cow or steer. I’d watch them rather than the cows, but what the hell do I know, this is not my area of expertise, so if Mrs Ermine thinks there’s a cunning interior to those steers then maybe they are the awkward squad in bovine form.

    Camera is the mess top left of the IBC

    Camera is the bodged mess top left of the IBC. And the plastic bags for the MiFi box to keep the water out…

    It’s a mess, indeed if the IEE get to see it they’d probably revoke my C Eng for unprofessional bodgery of the first order 5. But Mrs Ermine knows that she’s got cows.

    Got Cows.

    I may see if there’s and wider application – I know a guy who is into wildlife and Raspberry Pi, because he is into trailcams and had ideas for a time-lapse Raspberry Pi camera. I have the edge on the engineering, but I want to retain my freedom of action and don’t really want to be into selling or dealing with people I don’t know in connection with money. I might be able to add value to his panoply of devices and services, and if not – well, that is what is precious about being of independent means. There isn’t any of the desperation that bad shit will happen if not.

    now this looks like trouble...

    now this looks like trouble…

    Update – Mrs Ermine has now reallocated the camera to the pigs. You really can’t trust hogs…

    ...whereas though this is huge and a bit scary, it's basically gormless, the lights really aren't on much in that head

    …whereas though this is huge and a bit scary, it’s basically gormless, the lights really aren’t on much in that head

    If I can add value, then naturally I want to make something of it – otherwise my contribution isn’t valued. It becomes the symbolic talisman of the exchange of value, because the money itself wouldn’t change my life. I’m not Russian oligarch rich – I don’t have a million pounds if I liquidated everything I own. Over at RIT and Monevator, intelligent and wise people are generally making the case that a million pounds is not quite enough to retire on; I guess their lifestyles are more expansive and therefore expensive, and they sometimes have requirements like the desire to pay for university for their children which adds up. More money wouldn’t hugely change my life, it is still Time I am short of ;)

    The money is then much more along the lines of Ayn Rand’s exchange of value between free agents 6, who choose to do it (if they do) because of mutual added value. And I know all the theory behind the Ricardian advantage and all that, but it never felt that way as a wage slave, because I felt I had no choice. I should not be bound by old thinking.

    Work is a four-letter word…

    It’s something I did, and for long enough to make my fortune, as they used to say in the fairy tales of old. The last three to five years should not so dominate the first twenty-five, during which The Firm and other companies served me well. I should appreciate that a bit more. I used to read Gretchen Rubin’s The Happiness Project in my last three years at work, and I am sure that somewhere in there I read that it is good to recall some things that one is grateful for.

    In the round, The Firm served me well, particularly in the early days. And if it was going to go bad at least it stayed together until I was able to get enough together to purchase manumission.

    Despite work being a four-letter word it should become a neutral one. I need to stop running from the idea, because that is stupid. The ermine does not need to run from a concept. I like Mr Money Mustache’s take on the end of J.D.Roth’s guest article

     Mr. Money Mustache’s Afterword:

    Part of financial independence is that you don’t have to advertise yourself anymore. So while J.D. didn’t mention all of his other work, I don’t mind sharing it with you…[read more]

    I was always a supplicant in connection with work and finding work, and the concept has been linked to the yoke of wage-slavery. Something about writing that post,  the different perspectives and indeed MMMs angle there helped me shuck the outdated form. I have the FU money, so I am not a supplicant. And for two years after retiring, while I knew this in a theoretical and intellectual way, I hadn’t let go of the old forms so I didn’t feel it.

    I still have no great desire to get into the world of work however ;) It still consumes time, indeed this is the biggest charge I hold against it…

    Living intentionally

    Four years ago, in the About page on here I wrote

    I want to craft a richer life. and to do that I have to master the essentials of personal finance, rather than subsist in employment. My younger self chose his career well, but I now want to cut it short by about fifteen years. I have seen too many days from inside office windows, I want to hear the birds, live more simply and frugally and drink in the days, rather than sleepwalk my way through them.

    I’m not quite sure why I listed that under personal finance, maybe I was confusing the means with the end.

    by buying a camper van. WTF? What’s this outrageous consumerism then?

    So I did something highly unfrugal, and bought a mini camper van, Well, I bought half of one, from Mrs Ermine, I already owned the other  half of it. Because I want to travel slowly, and overland, and hear those birds. Since it was our only vehicle, Mrs Ermine was using it to move all sorts of stuff for the farm, like mash for the pigs and pallets. Although I can only really make great use of it once I am drawing my pension, because I have an income suckout until then, at least that will stop the wear from that, and Mrs Ermine now has a small car which is better suited to that sort of thing. The camper van back overhangs somewhat, which is bad for shifting heavy stuff. You want the wheels pretty much at the corners of the car so that when you sling the heavy stuff in the back it lies within the wheelbase. We already managed to break one spring, though I think the rough roads of northern Scotland had something to do with that, but it’s made me windy of bad loading.

    Great landscape, but hard on the suspension

    Great landscape, Scotland, but hard on the suspension

    I wouldn’t have gone out on the open market and bought this – but that way the proceeds stay in the family. And I can use it in Suffolk in the interim for modest cost – the great thing is I can put a bike in the back without taking the bike to bits. But I’m not badass enough to ride tens of miles on a bike. 7 The combination is great – you see a lot more on a bike, particularly nature but also photographic opportunities and stopping to investigate something is so much easier on a bike. Using both gives me range and local agility. So I’ll get some use of it and hone my craft. Long distance or long time period camping is very different from day tripping – you need decent prep and checklists, because otherwise you end up without something apparently trivial that greatly improves the experience. Like the kettle, or a can opener or the spanner to change the gas cylinder – been there done that on all counts.

    It’s not frugal. But I don’t have to be frugal everywhere – just in enough places. And of course I bought it cash ;) And secondhand, I’d hate to break the habit of a lifetime and buy a vehicle new. I left that kind of thing to Mrs Ermine. Even if I were rich as Croesus the way half the value of  a new vehicle drops off it as soon as you buy it would take the edge off my day.

    In the longer term I want to go on longer tours, maybe a pilgrimage to some ancient sites and places that may or do hold meaning to me, places with history, ancient stones, where people live slower but with more depth. One of the things Philip Greenspun picked out was

    Travel: No to the Beach; Yes to the Organized Tour

    No the the beach is easy for me. I hate heat and have never sunbathed, I have never been on a beach holiday and don’t get it, and this still holds. The second intrigues me, I have never been on an organised tour of anything – the regimented nature never appealed. There is some logic in his position. If it didn’t work out while working I’d be sore of being out half my annual holiday but this reservation doesn’t hold now. So I might try something in that line.

    a codicil on the last post on two years on

    The last post on Two Years on was cathartic, but not an easy one to write. Thank you for the great comments and thank you too to Monevator and mistersquirrel for featuring it   – I got an interesting angle from some of the c0mments there too.

    I am not the only one to exit the workplace earlier than anticipated. Over the years I have had a few people contact me offline about keeping the flame of hope alive in a difficult workplace, I hope that showed it’s possible to get to the other side.

    I don’t want to labour the point, but stress as a mental health issue is very different from what is normally called stress. Some stress is necessary to achieve anything, and if your life has dynamic balance between that and other parts of life then it is not a problem. The NHS has a good summary of what to look for and the typical triggers. It is a very different kettle of fish to having to pull a string of all-nighters and then get hammered at the topping out party when everybody high-fives the results of all that massive effort. I didn’t know that till my late 40s either.

    MMM has a great post on how to avoid falling into the trap. It won’t help many people, however, because he speaks from a position of strength. The drip-drip-drip of a slowly changing situation creeps up on you, and the tipping point is sharp – a few days IMO. Once you have passed the point of no return then the original problems must be alleviated in some way for healing to begin.

    Although different for everyone, recovery is protracted but usually does come – you shouldn’t  lose hope if you aren’t 100% in a few weeks. I spent three years flying into the storm, so two years isn’t unreasonable for the recovery, but in the end it takes as long as it takes. It isn’t a linear improvement day on day, sometimes its three steps forward and two back. I had to be prepared to fall back, and fall back and fall back long enough, and when I was not watching it the faint spark strikes in the darkness and one time it takes hold. Many aspects of self-development have this sort of thing in them where you have to let go to be able to go forward, and otherwise subconscious resistance is induced by the conscious effort to force things; it is in Scott Peck’s The Road Less Traveled, in some of Carl Jung’s work and the mystical concept of the dweller on the threshold.  Camus put it well in a different context in Return to Tipasa

    In the middle of winter I at last discovered that there was in me an invincible summer.

    I learned a lot from writing the post, because to actually write things down clarifies things because they must be lifted into the light of consciousness, and I learned more from the comments, which are a different kind of light in this case. One of the things that is clear is that I addressed the first part of the tagline of this blog, breaking free of the rat race. That is good, it was the most urgent part. But on reflection I can take the living intentionally part further.

    But don’t you get bored now you have more time and less money?

    No. Really. The keys to nailing that aren’t shopping, restaurants and tickets. Be curious, learn something new however trivial each day and create, don’t consume unthinkingly. There is also a subtext in that while my income was much higher when working towards the end my spending was probably lower than now because of the savings rate. I needed to get my taxable pay down to roughly the minimum wage because the taxman’s blood-funnel in my retirement strategy was beginning to really piss me off. I learned something unique and unforgettable when you do that, which is that a lot of my spending didn’t really work for me, and was simply dulling the pain of working 8

    I’d really, really, like to be able to say that this insight is mine alone. But it isn’t. As long ago as 1929 Ralph Borsodi wrote in This Ugly Civilization

    They do not realize that the idea that mankind’s comfort is dependent upon an unending increase in production is a fallacy.

    It is more nearly true to say that happiness is dependent not on producing as much as possible but on producing as little as possible. Comfort and understanding are dependent upon producing only so much as is compatible with the enjoyment of the superior life. Producing more than this involves a waste of mankind’s most precious possessions. It involves a waste of the only two things which man should really conserve–the two things which be should use with real intelligence and only for what really conduces to his comfort. When he destroys these two things, he has destroyed what is for all practical purposes irreplaceable. These two things are the natural resources of the earth and the time which he has to spend in the enjoyment of them.

    When he produces more things than are necessary to good living, he wastes both of them; he wastes time and he wastes material, both of which should be used to make the world a more beautiful place in which to live, and life in it more beautiful than it is today.

    Lest you think Borsodi was some turn-of-last-century Luddite, he opened that chapter with

    ALL civilizations have been ugly. They could not well avoid it.

    But this civilization is unique. Machines make it possible for this one to be beautiful, and yet it is in many respects indescribably uglier than the civilizations that have preceded it.

    For this civilization, instead of using machines to free its finest spirits for the pursuit of beauty, uses machines mainly to produce factories–factories which only the more surely hinder quality-minded individuals in their warfare upon ugliness, discomfort, and misunderstanding.

    Why did nobody introduce me to his work earlier :)  The big problem with work is that it wastes time. Britain’s productivity has apparently fallen since the financial crash. What we need is to match the rest of society (in particular house prices) to that lower productivity. Then people might have the time to raise their children by spending time with them, and pursue outside interests while working, rather than having to stagger to the finish line and then look around.

    Mixer and 12V power supply, for about £20 all-in and a bit of Ermine design and build

    Mixer and 12V power supply, for about £20 all-in and a bit of Ermine design and build

    Today I finished off mastering a compilation CD for someone’s wedding, I was investigating how to make a raspberry PI camera take pictures of our cows every 15 minutes (see above – I started writing this before I made that and got it into service). Then I am looking for a way to make an isolated power supply for the DJ mixer I bought for a tenner at a radio rally on Sunday to be able to use it for our farm party run off a leisure battery 9

    I repaired two electric fence energisers. I determined the range of WiFi on the farm (not enough) and investigated approaches to improve this at low cost, using a directional antenna.

    Then I tried to work out what my policy is for the new ISA limits. They are greater than the capital gains tax limit so I need to contribute some as real cash rather than from gradual sales of my unwrapped holdings. And there’s also the new pension rules making it favourable to have a SIPP. I am getting to the point where I will be prepared to borrow money next year maybe to put into the SIPP, because all these changes mean I have to find about £20,000 extra before I draw my pension, and I don’t want to run down my NS&I cash fund or bend my cash ISA.

    Trust me – there’s too much interesting stuff out there to poke a snout in to get bored. The bits from roughly a week described there has involved very little shopping, no restaurants and no tickets. Borsodi was right. It isn’t that you need nothing, you need the right amount of Stuff, and the way it’s promoted it’s easy to end up with way too much. There really is not shortage of things to think and do, indeed unfortunately the box of half-done parked projects seems to be increasing of late, although the box of stuff made, in service or fixed is increasing too!

    Notes:

    1. DJ seems to mean something very different from the straight scheduler of songs it meant in analogue days, it is a performance in and of itself, particularly with clubs and EDM where the aim is to achieve a seamless sequence that works together. I was warmed up to this by the stupendous amount of DJ gear available in the local Cash Converters when I was in the market for a PA amp
    2. I don’ have one, so I don’t know
    3. mortgage in my case, I didn’t have any other debt
    4. I don’t mean this disrespectfully to Americans – they haven’t got to be the richest nation on earth by being cynical, not being open to new ideas and having a great awareness of irony :) There is notable truth in ‘The Pleasure of Walking Tall’ despite it being gagworthy reading to British eyes
    5. The bodgery is acceptable because this is a proof of concept. There is a waterproof case available for the Raspberry Pi so there wasn’t much point in putting a lot of effort into making a repeatable waterproof case. Electrical tape and a minimum of holes, mainly underneath is good enough. If the project has a longer service life then a rebuild is in order
    6. yeah, I know, dangerous territory and who the hell is John Galt anyway
    7. Even if I were, I am also not leaving many hundreds of pounds worth of photo or sound recording gear on a bike and not shaking the hell out of it on the road – the conversion of a cheap Chinese bike camera to a kit of loose parts after a few hundred miles on a bike was an education in itself as to how bad the vibration is on an unsprung bike frame – I only carry camera gear in a backpack, not in the panniers now.
    8. It’s much easier for me as part of a child-free couple and at the end of my career to live on an income of the minimum wage because I have capital assets (paid-for house, productive farm and firewood). I am not a heartless bastard saying it’s easy to live on the minimum wage – it depends on what stage of life you are and what commitments you have, though I am of the old-fashioned view that one’s financial resources should be considered before taking on some commitments.
    9. the mixer take 9Vac and uses a short Cockroft-Walton stepup in the power supply to make the ±12V split rails. So you can’t just stick 9Vdc into it.