Thinking Fast, Reading Ever So Slow

So one of my goals of the year is to read at least 3 non-fiction books this year.

As someone who only enjoys reading fiction, non-fiction pushes me out of my comfort zone so three is just about all I might manage!

A book that was recommended by various FIRE people was ‘Thinking, Fast and Slow’ by Daniel Kahneman, so I picked this up at my local library.

Verdict

I’ll be blunt and shall say that I really did not enjoy reading this book.

I thought the writing was soooooo tedious, far too academic and far too long – an eye-glazing textbook.

It was a struggle and I found that I could only read/only wanted to read a few pages at a time, which didn’t sit well with me, as I usually enjoy reading chapters for hours at a time.

I don’t like to give up on books – I know some people think that life is too short for books you don’t enjoy.  I started reading it in May, it’s dragged on til now and I ended up paying a library fine.

However…

Despite the above, I thought that the topics covered by Kahneman were absolutely fascinating!

That’s the annoying thing about this book – I was really interested in the experiments and some of the theory and history, it just wasn’t an easy read by any stretch of the imagination.

One of the book’s aims is to “improve the ability to identify and understand errors of judgement and choice, in others and eventually ourselves…” and indeed, after toiling and slogging through the pages, I did learn about or rather increase my awareness of decision-making.

What did it cover?

There’s an interesting chapter titled ‘The Illusion of Stock-Picking Skill’ – one for those who think they can beat the market – which covered things like halo effects and regression to mean.

There’s been recent mention of cognitive biases and the book touches on these, which might have me looking at my FIRE plans again as it seems most people (and I include myself) are prone to these biases, such as:

  • Optimism Bias, which includes underestimating costs and duration of projects we undertake – will definitely be looking at my spreadsheets again!
  • Confirmation Bias, where we look only for info to confirm what we already think/believe, whilst ignoring any info (even if true) which contradicts our view – perhaps I shouldn’t dismiss the views of FIRE naysayers so quickly…
  • Availability Bias, where continued exposure to things can affect your judgement/thoughts – has being in the FIRE bubble/community lulled me into thinking that what I’m doing is a probability rather than a possibility?

Another topic covered was that most people underestimate the role of chance in events.  Fortunately, I believe very much in luck and chance, being a bit of a gambler (still).

The piece on loss aversion was particularly interesting especially as I could directly apply it to how I feel with my matched betting and also with my investments.

Lots of other interesting stuff covered, such as anchoring effects, stereotyping, how experiences and memories differ and the rise in use of algorithms in decision making (uh oh, robots taking over!)

Some of this stuff I would very much like to read more on, starting with this great piece titled ‘Your Lying Mind‘ which the Monevator kindly brought to my attention this week.

Anyway, I’m so relieved to have gotten the book out of the way – only two other non-fiction books to get through now although I will try to choose something a lot friendlier to read!

Recommend?

Please ignore the negativity at the start of this post – that’s just me struggling with my general aversion to non-fiction! I do recommend this book as it’s got some great insights, some interesting stuff on how people can get swayed in their decision-making and it does make you think.

Oh and I was finally able to update my book bingo card again – yay!

Retirement Conversations

Just a random post to share a few recent conversations I’ve had about retirement:

Conversation #1

I had a routine medical appointment the other day and was attended by the same nurse I’ve been seeing for a while.

When I saw her, I made a comment about her not wearing her usual glasses.

She proceeded to tell me how she had finally gotten round to having a minor operation on her eyes, which meant that she no longer needed her glasses.

The reason why she was able to have the time to have the operation and recover from it? She’d dropped to part-time hours, or as she revealed in our ensuing conversation, she’d gone into semi-retirement (Is there a difference? I don’t know, I’m just repeating what she said).

I realised then that she didn’t look different just because she wasn’t wearing her glasses, it was because she looked a lot happier and relaxed!

She told me that after a 30-year career with the NHS, she still wasn’t mentally ready for full retirement but that at age 55, she was drawing on part of her pension and that this, coupled with her part-time wages was enough for her to live on and pay for her holidays and hobbies.

Conversation #2

One of my neighbours semi-retired a year ago when she was 53.

The last time we spoke, she was working part-time for a non-profit organisation.

I hadn’t seen her in a while so when I spotted her unpacking some shopping from her car the other day, I stopped for a chat and asked her how things were going.

“Oh I’ve jacked in my part-time hours,” she told me.

“Why’s that?” I asked.

“I’m too busy to work! Too much to do, too many places to visit!” she replied.

Work/Semi-Retire/Early Retire

So that’s just two examples of people who are very happy with the decision they’d made as regards retirement/semi-retirement, and although not extremely early retirement, still early in that state pension won’t be available til they are 65.

However, I wonder how easy it was for them to make that decision? Unfortunately, I didn’t feel that it was something I could ask either of them!

Which brings me to all the kerfuffle going on about early retirees changing their minds (nicely put in this excellent post by Monevator).

Who really knows what they will do when the time comes (unless you absolutely hate your job, in which case it’s clear what you will do!) and you reach your financial goals?

Jim from SMHD tried the early retirement thing and decided to go back to work.

Early retirement is not for everyone,  even for those planning for it!

There’s every chance that instead of going for early retirement when I reach my FI number, that I may choose to work reduced hours. However, like my neighbour, I may find that even part-time hours will get in the way of me enjoying my new found freedom properly!

Or I may actually go for full retirement, which sounds very appealing when I’ve had a tough week at work and wish every weekend was a bank holiday weekend.

Or I might continue working (one more year?), which is how I feel when I’ve had a good day at work, had a great laugh and felt like I’ve achieved and contributed loads. (Yes really, I do have good days!).

I have no idea how I will feel when the time comes to pull that retirement trigger but the most important thing is that I will get to choose what I want to do.

There was a third conversation I had:

Conversation #3

Bumped into an ex-colleague at the gym. She’s still at the company which made me redundant and things seem to be going well for her.

While we were chatting, she revealed that her husband had retired some months earlier.

“When will you be retiring?” I asked her, knowing that she was in her mid-50s.

“I’m not,” she replied, “It would do my head in sitting at home with him all day! I go to work to get away from him, the weekends are enough!”

She was joking…I think!

And Another Thing

The nurse and my neighbour? Both single (one divorced) which cements in my mind that I’m fine going it alone, since it appears that most people aiming for FI are married or with significant others, helping them build their FI pot, sharing expenses.

Not that I’m intentionally staying single (or plan to stay single for long…ooooh!) but if things don’t work out on that front, I’ll be just fine! 😉

And on that note, have a great weekend all!

Where you’ll probably find me at some point on Saturday night…

2018 Goals + Bingo

Happy New Year to you all!

For those who work, I don’t know about you but this felt like the longest week ever in the office!

I have no idea what this year will bring but just hope that it will be interesting (bubbles and market corrections? Bring ’em on!), with a lot of good stuff and laughs in between! Oh and with me (and you) continuing to head in the right direction with our finances (bubbles and market corrections notwithstanding!)

Anyway, back to the main topic…Goals!

I only set a few goals last year and the focus on just those few worked well for me with little room for distraction so I’m going to do something similar exactly the same for 2018.

So without further ado, here they are:

Continue reading

Comparisons

Before embracing it, I very nearly dismissed the whole FIRE (Financial Independence/Retire Early) concept.

The idea had piqued my interest immediately but at first glance, it seemed as if I did not fit into ‘the same mould’ as everyone pursuing FI (or having reached FI).

I looked on in dismay as I compared myself with the entrepreneurs, consultants, engineers, bankers, IT specialists and other high earners who were able to tuck away not just the equivalent of my entire salary year on year, but in some cases, multiples of my salary, for their financial freedom and early retirement. My initial thought was, ‘Crap, I can’t do this, I don’t earn enough and I’m in the wrong sort of job!’

Then I compared ages and everyone seemed so young – people in their 20s and 30s aiming (and on track) to be FI and to ‘retire early’ by 40 or by their early 40s. I was already in my mid-40s by the time I came across MMM – crap, was it all too late for an ‘old girl’ like me? (although it’s a good job I don’t look or act old 🙂 )

Another thing was that it appeared that you needed to make huge sacrifices to become FI. I mean I am and was able to cut back on my spending but I couldn’t see myself taking the extreme route and being a frugal recluse, living a cheap but not very cheerful (in my opinion) life or living like a student again.

More importantly, I didn’t want to be seen as tight-fisted by friends and family. Yeah, I know I shouldn’t care what anyone thinks.  While I don’t mind being a bit different, I do care about what the people I care about think, especially if it may affect my relationships.

So, it would have been no surprise if I had gone about my merry way, thinking FIRE was a nice idea but not for me.

Except that I continued to read about it with an open mind. Why? Because despite my initial misgivings, the whole concept really fascinated me and I couldn’t stop thinking about it!

I ran some basic numbers (on the proverbial back of a fag packet) and it dawned on me that I didn’t need to earn megabucks (no, I don’t need £1 million!) or do exactly what someone else was doing or did – I could just take certain (good) ideas and apply them to my own situation.  Yep, personal finance being what it says on the tin!

FIRE  comparisons are like comparing these two

More Comparisons

However, despite embarking on my FIRE journey, I couldn’t help but continue to compare myself to others.

People whose net worths were waaay bigger than mine after a shorter space of time, people achieving astronomically high savings rates, effortless side hustles and blogs earning income to die for. Some had already reached FI, or they were only X years away and they were only in their 30s etc.

Such comparisons were at times a little disheartening until I eventually realised that it was just  pointless comparing myself to others.  The only comparison worth taking note of is that of comparing my own progress over time.

These days, I can now look at other people’s very high net worths and mega savings rates and admire them and applaud them, without feeling bad about my own attempts and performance.

To say that I never feel any envy would be to lie, but hey, I’m only human – I just don’t dwell on the envy or allow it to become negative, I just focus on what I’m doing myself. Everyone’s situation and circumstances are different, whether it’s their background, age, stage in their lives, different countries, different jobs etc.

Numbers

Not everyone likes to share their actual numbers but I made the decision to do so when I started this blog – I just know that some readers like to see real figures (to compare with their own, I suppose, haha!).

Until around nine years ago, my net worth was a negative number due to my numerous credit card debts. I eventually paid these debts off and by the time I started my FI journey in 2014, my net worth was £74,596.

As at the end of August, it stood at £205,509.

STOP! Try not to compare my net worth with your own – we are different! 🙂

I didn’t even notice that I’d passed the £200k milestone because by itself, it doesn’t actually mean anything, it’s just a number since I’m not using it in any of my calculations. However, it’s good to compare how far I’ve come since those negative days!

[EDIT – I see from some of the comments that I need to make a clarification – my £200k race with John K is with my Future Fund, not my Net Worth. My Future Fund currently stands at £125,946]

Do you compare yourself or your savings/investments progress and how does it make you feel?