Playing With FIRE

This post is partly about the eponymous movie, featuring outgoing FIRE exponents like MMM. It will be shown in Birmingham on the 5th of July, well done Cashflow Cop for getting this shown outside the Great Wen. But I couldn’t help thinking about the other meaning, too…

The Ermine is an introvert1, so I fought the FI battle as a loner. For sure, I learned from other people – Monevator for how and sort of why2, Early Retirement Extreme for why though not so much how, I was too old and too wedded to some creature comforts to live the ERE life.

At that time the FIRE blogosphere was ruled by introverts too, unlike now, where I’d say extroverts rule the roost. I’m glad I started when I did, because I could relate to people’s narrative. We were crawling from the twisted wreckage of the credit crunch. The credit crunch had squeezed The Firm I worked for, and what had been a decent job for 20 years started to go bad, fast.

I read this post shortly after what I interpreted as a manager trying to run me out of the company. I was more than a decade away from retirement and needed a fast track out. I had been living the usual life of hedonism, though I didn’t carry consumer debt.

The world looked very different then – as Monevator described people’s emotional state was in the pits, the financial world was ending. I read that, and yes, I was one of the people that thought he was barking mad. Rather that yell abuse, however, I asked myself “what if this nutter is right, there is some logical coherence in what he says”. If he were right, this was a remote chance to stick a rocket on my exit plans. So I bought. That committed money to a remote chance, but that money wasn’t anywhere near enough to buy me out of 10 years of working. Looked at in that way, it was a rational choice, though a long shot.

I chose individual shares and a HYP approach, because I thought I was smarter than perhaps I was. I still have most of those HYP shares. It didn’t matter what you bought then, everything was down the toilet. It mattered that you bought.

Swimming in troubled waters – if I will fall, may I fall slowly, all is lost

I recall coming across the song Désenchantée from a colleague, and even with schoolboy French I got the feeling and it matched my mood playing on my work PC as I put half or the 2008/9 allowance into a Cash ISA and half into an III S&S ISA.

I had been slaughtered in the dot-com bust a decade before. Intellectually I saw the logic of Monevator’s words, but I did not feel that there was any hope, after all, it hadn’t worked out that well last time. I invested that money because I saw I was going to fall, though not when the end would come3. I did not have 10 years of working life left ahead of me. Your late 40s is often a troubled time of life,  you cannot live the afternoon of life by the principles of the morning.

The next month I did the same again, in the new tax year, but I also signed up to the company salary sacrifice AVCs and pushed my pay down to virtually the minimum wage, investing in a 50:50 UK:Global index fund. The other options were cash or 100% UK. I did not do this because I was an optimist, I was of the view that this was most likely a lost cause, but that there was a worthwhile chance.

The modern FIRE landscape is a very different place from that lonely and desperate world

We stand on the ramp of a long bull run from those troubled times. Extroverts are optimistic guys, they need to feel things can only get better. Let’s hear it from MMM on the practical benefits of outrageous optimism. Pete isn’t the sort of fellow to play Désenchantée on loop as he throws overboard the trappings of a comfortable middle class lifestyle into the bottomless stock-market pit for a low chance of a big win. He knows he is going to clean up and face-punch the bad guys. Every last one of them. Self-doubt is for pussies.

His story is better, and it’s been turned into a movie. Well, there’s more to it than that. Apparently it was shown in London earlier this month. I totally agree with Cashflow Cop that it shouldn’t just be the Londoners that should get the benefit. CfC has been instrumental in getting this sorted so it will be shown in Birmingham on the 5th of July. Take a look at Cashflow Cop’s site more generally – he is a UK FIRE aspirant who doesn’t live in London or work in finance. As for the movie,

It’s all rather American, but the principles of financial independence are the same. Go and see it for inspiration, particularly if you are an extrovert.

But leaven the feelgood story with the knowledge that…

Continue reading “Playing With FIRE”

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an engineering cameo at the Royal Bath & West show

There’s no finance angle – it’s a snapshot of an early retiree going along for the ride at a trade show, something I used to do at work.  It was good just being a grunt, rather than the organ grinder

One of the odd things about retirement is doing something that reminds me of my working life, but in a different context. I’ve done enough trade shows for work, both as a visitor but also as an exhibitor. Things like that don’t fall naturally to an introvert. Engineers often become engineers because they are better with things than with people 😉  But you can learn. And so it was that I had a very minor walk-on part on a stand at the Royal Bath & West show in the imagineering tent.

The show itself is an agricultural show, so there’s the usual bits of horsing about, and exhibits of sheep and pigs. Some of the vintage vehicles were pretty neat. Farming kit aplenty, and it would have been a good place to load up on wellies if you are going to the Glastonbury mudfest in a few weeks.

the train set was fun

the train set was fun

I was lucky enough to be there early in the show’s run, an agricultural show can get pretty high when the weather is warm 😉

Imagineering is all about introducing kids to engineering. I’d never heard the word before, though it has a half-century history in the States. Personally I had been pretty cynical about the idea. I’m of the view that if the interest is there, it will out. I learned a fair amount of electronics from picking TVs out of skips (people were throwing out their B&W full-size TVs in the 1970s as they replaced them with colour TVs) and scavenging the parts1. I learned from books and magazines that were written for adults.

Continue reading “an engineering cameo at the Royal Bath & West show”

Will the last UK finance blogger please switch off the lights on their way to Twitter

In a recent post Monevator started off decrying the slow fade-to-black of the UK finance blogs, did nobody tell him that

This is the way the world ends
Not with a bang but a whimper.

but more seriously, I wonder if it isn’t in the nature of the beast. The blaze of frenzied writing is to be had in the initial stages as you are working out what is what, and if this FIRE malarkey is possible at all, and what  stage of the process you are at. Then come years of grind, when not much interesting happens at all, particularly is your investment strategy is basically buy a tracker every month for 20 years, then quit on the proceeds.

The end of the world features tumbleweed

Before I join in bemoaning the passing of the old guard we really ought to have a rundown of some great new UK FI blogs I have come across:

There are also some interesting EU FI blogs, achieving FI is different in most of Europe because tax-sheltered accounts seem to be less generous and tax thresholds lower. It reminds me of the situation in the UK when I started work, when although we were all poorer the social safety net seemed to have a bit more humanity1. The Anglosphere has gone more towards a winner-takes-all model, diverging both from mainland Europe and from its former self when jobs were more stable, addressed a wider range of the intellectual ability range and particularly in the UK, housing was less vile. Firehub.eu is a good place to start. I wonder if the Brits will be kicked out in April for their renegade ways 😉

Steady investing and a lack of market drama isn’t good for narrative

I would say that RIT has done well with the steady investing narrative, turning it into a book. But there are only so many ways you can slice the lemon. Maynard Paton has an interesting FIRE journey – note that it also features some fantastic luck. In his case, calling the housing market well, but selling out of stocks before the GFC to realise liquidity to buy the house. Luck on its own is not enough, you must also carpe diem. MP gets to stop work nine years earlier in life than me.

It was much easier to write about investing ten years ago. We had just gone through a humdinger of a crash. Not only did you stick out in a big way saying the stock market was something to run towards, rather than away from as fast as you could, but starting from such a low base meant the market was tolerant of mistakes other than churning. The expected return is inversely proportional to valuation, you could buy pretty much anything left standing in early 2009 and do reasonably OK. Building a high-yield portfolio (HYP) with a useful yield looked like a reasonable possibility then. Nowadays you’d have to indulge in risky behaviour to get a high yield because valuations are higher. Sure, there’s Sturm und Drang in the papers about recent retrenchments, but the FTSE100 is back to two years ago, not 10! Continue reading “Will the last UK finance blogger please switch off the lights on their way to Twitter”

What Colour is your Parachute

I read my first copy of Richard Bolles’ seminal job-hunting tome What Color is your Parachute in the late 1990s. The big cheeses at The Firm had decided to move away from research, and out of electronics towards development and software. I was wondering if I should stay with my first love, which was electronics design, or stay with the Firm.1

Parachute is a great resource and a good read. At the heart its message is as old as the Delphic Oracle itself – know thyself. Around that message, however, is a good periphery of tactics and perspective. There is only one problem. Parachute is a weapon of contemplative reflection. You can’t use it under fire, IMO, and when do most people turn their attention to looking for a job?

When they either need a job right now, or are fearful of losing the one they have already.

I’m not looking for a job, despite Monevator exhorting the early retiree to get their sorry ass back to the workplace for a day a week. Although Britain is a post-Christian country, the feeling that the devil makes work for idle hands seems to run deeply through the personal finance community. I’d fingered Calvin for the problem, but it seems the ‘work and suffering is good for you’ meme runs deeper than him

Here in the West we have a lineage of puritanical belief systems that still leave their mark, and all forms of Christianity teach that suffering brings us closer to God.

Niall Ferguson made the case a few years ago that this Protestant work ethic is the reason that the West is cock of the rock, his crystal ball didn’t show that the fire was burning out rapidly. Sic transit gloria mundi.

Read widely – library ebooks don’t have late fees

The Ermine reads widely, particularly as the library lets you borrow ebooks for free, and a little munging with Calibre gets that onto a Kindle which makes it easier to read in the park, or a particularly favourite little beauty spot near me with a swing seat and a glorious view. So when I saw a copy of WCIYP 2018 I thought I might take a look at what’s changed over 20 years

Billed as a practical manual for job-hunters and career-changers, it is an interesting read. It has been nearly thirty years since I last applied for a job in the open market2, and getting on for eight since I applied for an internal job, so much has changed. The first part of the book is about the conventional approach, and why this doesn’t work. This is the method the DWP push the unemployed into – registering with Monster jobs and scattercasting CVs3. I’ve only actually ever once had a CV work, and this was at the very beginning of my career, and even that was responding to a newspaper small ad which invited applications with a CV.

The problem with resumés and CVs is that they only work when employers are finding it tough to fill jobs. Continue reading “What Colour is your Parachute”

There be a rumbling and a sound of clucking chickens in the air

Or should that be Turkeys? It’s not looking good for citizens of nowhere these days. Although I don’t have their wanderlust, as a rentier I’m now probably part of the managerial aristocracy that’s been doing okay out of the TINA world order up to now. Said world order pretty much destroyed my job by first deskilling it and then exporting it to India, but I was lucky enough to be old enough to escape the rat race by sneaking under the falling portcullis.

I was never convinced by the theory of the lump of labour fallacy, and figured unrestricted low-wage immigration was going to lower wages for the poorer end of First World workers, a fair number of these voted for Brexit. Lo and behold, we seem to be getting evidence of the inverse effect of lower wages from the CIPD once the firehose of low-skilled workers is throttled back a smidgen – to wit

The Chartered Institute of Personnel and Development (CIPD) said the number of applicants per vacancy had fallen since last summer across all levels of skilled jobs, and said shortages were forcing many companies to raise wages.

The number of people applying for the average low-skilled vacancy has fallen from 24 to 20 in the past year and from 19 to 10 for medium-skilled posts.

Well I’ll be flippin’ damned. Who’d a thunk it, eh? At least some Brexit voters may get some of what they wanted. The fall in low-end applicants is 20% compared to the 10% fall in higher-end applicants, highlighting who has been taking the sharp end of that shaft. It’s an ill wind…

Perhaps if our welfare and unemployment system hadn’t turned quite so vile and nasty in peddling the chimera that work is the way out of poverty for the unskilled and make them feel so shit about themselves, then we could have come to a better way of divvying up of the spoils of war. And of course these guys will have to spend some of their slightly increased wages on paying a lot more for imported goods and services on WTO terms if they are lucky, our man Jacob Rees-Mogg and the vile shit-stirrer Boris Johnson will see to that. Let’s look on the bright side, though. At least BoJo is no longer in the Foreign Office. British diplomacy used to be envied, while often suspected of perfidy. We will probably need friends in future, the great BJ never was an asset in that line of work. Continue reading “There be a rumbling and a sound of clucking chickens in the air”

getting under the skin of Brexit

A lot of political discourse these days consists to yelling insults to the other side across an unoccupied no man’s land of the vacated centre. The Ermine is/was a Remainer, largely from the economic point of view, but I thought I would use Kindle Unlimited (KU) to try to get a understanding of what the other side thinks. I’ve already used Brexit Central, but the advantage of KU is that political screeds often end up on Kindle Unlimited, so you can sample a lot fast. 1 I wanted to try and get inside the heads of the majority, to let people develop their arguments, rather than take the soundbites. Plus people are more civilised when they think they are talking to the converted.

There’s a lot of dross on KU, some of the Brexit stuff confirmed the Guardian’s stereotype of the Brexiter as old racist white guys who hated immigrants. I wish I could remember the authors or the books in question, they yattered on about “common sense” but were basically latter day Enoch Powells without his rhetorical gift, and disliked all immigrants including white Eastern European ones. This kind of author made themselves known from the first paragraph.

I wasn’t after that, I was trying to get a handle on the case for Brexit. Two KU authors helped me get an idea, one was Daniel Hannan’s Why Vote Leave, with an honourable mention for supporting cast to his jingoistic book How we invented Freedom.  The other was Andrew Mather, who falls definitely into the category of old white guy 😉 One should always be wary of people who cite their membership of MENSA2 in an indirect appeal to authority but one should equally be wary of inferring the general from the particular, people who are wrong in some aspects aren’t therefore wrong in all. Mather’s book was

Brexit: Why We Won: What Remain will never understand about the Leave victory

which seemed to be a good place to start as a Remainer trying to understand the leave result. These aren’t the only decent books from Brexiters, but these were the ones I read rather than skimmed. I came away from the exercise with more respect for the internal consistency of the leave argument for its supporters.

The price I paid for this project is that Amazon now thinks I am  on a diet of the Daily Express, Breitbart, and this is the sort of reading they offer up, I guess one has to suffer for one’s art 😉

Last time there was a bit about trigger warnings, global warming conspiracies and social justice warriors, so I seem to getting less intolerant with distance from this exercise. I didn’t realise that Brexiteers swam in such waters 😉

Amazon is of the view that there is some correlation between Brexiteers and climate change denial, and oddly enough those that rail against speed cameras repressing their inner Mr Toad. It’s a funny old world, and it shows the toxicity of the way filters amplify extremes. In the analogue world you would walk past the billboards for the Tories, then the one for Labour, whereas on the Internet there’s some guy running ahead fo you swapping out the opposition’s ads for ads for cars, lingerie and PPI claims before your sensitive head gets troubled with uncongenial points of view.

Some of the problem of Remain’s argument was that it was bloodless and talked in terms of abstractions,  ‘the British economy’. I quite like this description of how dialectic tends to swing between the poles of abstraction and reflection, which puts the issues more poetically than I could.

The [British] economy is an abstraction, and for the last thirty years or so it has gone along with the assumption that neoliberal assumptions of free trade, globalisation and lower taxation are all good, and indeed ‘the economy’ has expanded greatly as a result. The Britain I graduated into, less than a decade after the last EEC referendum, was far poorer in general than the Britain of 2016, but not everyone was poorer than now in every way. As JMG described, the issue with abstraction is

it becomes impossible to miss the fact that the supposed universality of the world-theories of abstraction has been obtained by excluding countless things that don’t fit. Some of those excluded things are bits of data that contradict the grand theories, but some are much vaster: whole realms of human experience are dismissed as irrelevant because they don’t fit the theoretical model or the methods of inquiry that a given age of abstraction happens to prefer.

Let me take one example of human experience – youth unemployment. I graduated into Mrs Thatcher’s first recession, and found my first job a month after unemployment reached its high-water mark, worse for that age group than at any time since. I was unemployed for six months. The experience left enough of a mark that I never took that chance again,  finishing work from one company on Friday and starting at the next on Monday, until I went to work for the very last time 30 years later. Continue reading “getting under the skin of Brexit”

Millennials can chill about not having massive savings

… because they’re young. Young people generally don’t have savings, and it beats me where the idea came from that they should have. H/T to Monevator, who introduced me to the idea that people in FT land are feeling troubled that only one in six millennials have £100,000 in savings. My personal reaction to that was WTF, what do these guys know that I didn’t?

I was in my late 40s before I ever saw an account with six figures to my name. Apparently you need a deposit of £100k to buy a house in London. Housing has always been expensive in London. I was born in London, went to university there, and spend the first decade of my working life there. I had job-switched a few times and the Bank of England inflation calculator tells me I was earning reasonably well for a twenty-something. I was single and child-free.

What was the best housing situation I could afford back then? A single rented room in a HMO in Ealing where I had to put salt round the periphery to prevent black slugs invading the place. This was an upgrade on the various rooms in shared houses I’d lived in before. I was in my late 20s, and no, I didn’t really have any savings either, other than about £5k, because I had believed that I needed to pay the fees of my MSc course myself, but it turned out that the Manpower Services Commission gave me a grant. It still didn’t help me buy a house in London.

So I moved out of London. The problem of not having a deposit was still there, but when I moved to Ipswich I was earning better and the prospects for salary increases were better for me. So I borrowed about £10k from a MBNA credit card on interest-free credit for a year to put down as a deposit for a house, perpetrating the single greatest piece of financial folly in my entire life – buying a house at a market high. I used my better salary to pay down that interest-free card over the year – I really did pay 0% on it. But I didn’t have savings of £15k from the start. Those were more innocent times, when mortgage companies looked at only your salary and didn’t ask about CC debts, because such debt was not as commonplace as now.

That £15k deposit was the equivalent of £40k now. Earlier generations of Ermine weren’t any better at saving than Millennials. There is an argument that young people start off more skint now than they used to. There is a compensation for those working in cities that they observe much faster career progression in their early 30s than previous generations

so it’s difficult to tease this appart – I would say that average and middling talented young folk had an easier time in my generation that Millennials, but high-flyers have much better opportunities now, part of a general winner-takes-all trend.

The Hemingway law of motion – Slowly at first, then all of a sudden

In Hemingway’s The Sun Also Rises, there is this passage summarising  economic change

“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”

Continue reading “Millennials can chill about not having massive savings”