Getting Smarter With Money

A recent post on Monevator gave a review of Eat The Rich, a 3-parter on Netflix which documented some of the insane and crazy events in 2021 around the GameStop meme stock, events which momentarily shook the US hedge funds industry.

Straying outside of my usual dystopian/sci-fi/zombie TV comfort zone, I binged all the episodes and found it quite entertaining, although those ‘rappers’ got far too much airtime in my view.

During the whole wild rollercoaster trading period of the GameStop, I did jump on the bandwagon briefly with a small investment gamble but far from revelling in the excitement and willing it to ‘go to the moon’, I just wasn’t cut out to embrace the ‘cult’ and I sold as soon as I saw a bit of profit.

I even joined r/wallstreetbets, the reddit forum where members shared their massive wins (and losses) to see what it was all about. I’m a gambler at heart but what people were doing there, some throwing their life savings at the meme stock, was just foolishly reckless, although some appear to have made a lot of money, probably from the alleged ‘pump and dump’ strategy employed by same.

After watching the last episode of Eat The Rich, my eye was caught by another ‘similar’ programme, Get Smart With Money, which had the blurb: “Financial advisers share their tips on spending less and saving more with people looking to take control of their funds and achieve their goals.”

I was surprised to see that FIRE ‘celebrities’ such as Pete Adeney (aka Mr Money Mustache) and Paula Pant (of Afford Anything blog/podcast) were involved.

Have to say that I quite enjoyed it, in a confirmation bias kind of way, I guess. I didn’t learn anything new, but it was good to follow the progress of the people taking the ‘advice’.

The Guardian didn’t give it a very kind review, but I guess that’s to be expected. As you can imagine, the documentary was squarely aimed at folks who aren’t having to choose between heating and eating, who don’t see Martin Lewis as a messiah – it’s for people with some means to improve their finances if they only had a bit of guidance and know-how. The concept of FIRE is extremely niche, as you can see from the comments section whenever there’s a FIRE article in mainstream press.

Living Costs

I don’t think I’m going to be in any real crisis due to higher living costs but that doesn’t mean I’m going to be unaffected by the increases, so I need to do what I can to keep my costs down.

I started drafting this post when Kwasi was in charge, but nothing’s really changed for me with Jeremy’s mitts on the nation’s purse-strings.

With food prices going up, every other grocery shop is now just a top-up, ie main shop in Morrisons or Tescos one week, basket top-up shop in Aldi the following week. I’m not sure why I haven’t been doing this before, I’m just shopping for me so I don’t need to buy a trolley-full of stuff every week. This has made me use up what’s in my cupboards/freezer rather than keep the cupboards brimming and has reduced my average monthly food shopping bill.

Been doing more batched cooking with a mix of winter-warming soups and stews on the menu and only planning on using my oven at weekends.

Previously, my energy direct debit had been £67.74 a month. With the Government energy subsidy, my new DD will be £21.66 so my bill has pretty much gone up by the expected 30% (without the subsidy). I still have a credit balance of around £150 which I will just leave there as that will be eaten up when I do eventually turn on my heating (holding out for November no less!). Much as I’m tempted to invest the £40 odd I’m ‘saving’, I think I’ll be putting it to one side, especially as government help is now only until April 2023, not the two years as promised previously.

A couple of my friends are tightening their budgets as they have one eye on that ‘C’ word – yes, I mean Christmas – so one of our planned social outings has been cancelled, which is fine by me as I’ve had to fork out on some unexpected work-related costs recently.

Death Pledge, aka Mortgage

The one expense that I might get anxious about is my home mortgage – I only fixed it for two years so my 1.25% runs out the back end of 2023.

Why didn’t I fix it for five years? Well, how was I supposed to know that rates would shoot up like they have, I thought I’d be able to get a better five-year deal when my two-year expired! Oh, the things we would do in hindsight!

I wish this was a chart of my investment portfolio, not of interest rates!

I’ve done a stress test on my mortgage and the numbers suggest I can live with an interest rate increase of up to 8%.

Beyond that, my standard of living would start to go downhill, and I’d have to dial up the frugality, cut back on the nice-to-haves, go majorly into frugal nun mode.

I’m caught in a first world dilemma – carry on throwing my spare cash (assuming I’ll have spare cash after all increasing costs) at the ailing stock markets so that I can continue to build my pot and aim for FIRE and hope/wait for a recovery? I have faith that it will recover…

Or throw the spare cash at my mortgage as overpayments, to cushion the blow of increased future interest rates/pay off my mortgage quicker?

Note – my FIRE plan does not include me being mortgage-free from the outset, it’s always been part of my retirement budget.

Anyway, with no overpayments currently being made, all things being well, by the time my two-year deal comes to an end, I should be at 60% LTV, which usually unlocks deals with better rates.

However, we know that things are not going well, that UK house prices are likely to fall drastically and assuming my property is revalued when I come to remortgage, (although I’m not sure if this is still the case if I stay with the same provider?) there’s a chance I might not get the coveted 60% LTV.

So, throwing more at my mortgage could be worth it, but even then, I’m not sure I can pay off enough really in one year to make a real difference.

As with many things in my life, I’ll probably just do something in the middle, not committing to one or the other, just muddling some sort of balance which I’ll be mostly comfortable with, and which will allow me to sleep well at night.

What are people doing to cut expenses/keep costs down?

25 thoughts on “Getting Smarter With Money

  1. Smug warning!.

    I broke an already 10 year fix at 2.5% with 5 years to go last year to fix my mortgage at 0.99% in October till Jan 2027.

    A ( sad ) £150k inheritance has left me effectively ‘mortgage free’ with enough in isa and cash to clear my mortgage at any time.

    The bit I’m umming and ahhing about now is I have kept 100k in premium bonds ( split between partner and I) at the moment .do I risk investing this for 4 years or do I put a good chunk in a 4.3% fixed rate in cash with a view to paying the mortgage off ( which will also add the added bugbear of having to fill in a tax return because of the interest ) . Or leave in premium bonds and gamble on a decent win!

    4 years feels short when I can make 4 or 5% in cash but they do say this is the time fortunes are made by being brave.

    A recent job.change also means I need to be mindful of tying up too much cash just in case it doesn’t work out

    My current plan is I’ve wacked up my pension to get me used to living on a lower salary in case the job doesn’t work out as that’s the salary I’ll likely get elsewhere.

    I’ll probably put 30k in a years fixed rate account part in mine and part in partners name to stay under the interest allowances . I’ll invest 15k over the next few months and leave 50k in premium bonds

    Lifestyle wise we’ve installed smart meters for gas and electricity. We’re mindful of using tumble dryer . Cutting back on shops and batch cooking . Not going out for dinner as much , less expensive holidays .

    Very much first world problems compared to alot of people I know Lower down the Income scale who are really struggling . It is going to be a Torrid 12 months I fear if not longer

    • Is there a four year Index-Linked gilt that pays a positive real interest rate? No CGT and the interest payment small so that it might well avoid income tax.

    • Hey FBA

      Thanks for the trigger warning and well done to you securing that fix until 2027! I don’t think we’ll see the likes of 0.99% in a long time!

      Think your plan to mix up the premium bonds and fixed savings is probably the best one.

      Indeed, it’s going to be a challenging 12 months, likely to get worse before it gets better.

  2. Thanks for your post weenie. I will have to watch that show about the GameStop drama.I was following it at the time and had been lurking on wallstreetbets just for the fun of it for a while. I stayed well clear as it really is just gambling to me.

    As for costs increases. I use the trolley app to compare prices and usually do my big shop at Asda as get 10% NHS discount and Tesco for certain things I like from there. I tend to bulk buy when there are deals for things you can, I bough 4 bottles of Malibu recently when at £14 and 10 lots of Branson beans x 4 packs when at £1.25. Most my bills are at really good deals so I haven’t had much increases as of late although going out costs and eating out certainly have increased. Fuel and energy are the big ones that have affected me however. I had more of a buffer though as I still work from home twice a week and I kept my fuel budget the same.

    On the mortgage front, I am so grateful for being mortgage free and it makes me feel great relief. I would be concerned on that for sure. I had a feeling rates would rise overall but that it would be at a far slower pace. I hope you don’t have to go into nun mode weenie, fingers crossed.


    • Cheers TFJ and hope you find the programme entertaining – I think the whole saga was quite entertaining as long as you weren’t risking everything on it!

      Yes, it’s great that you are mortgage-free so you can be on the sidelines watching the car-crash that is mortgage interest rates and house prices! A colleague of mine announced that she had just paid off her mortgage (she’s in her mid-30s with a kid) – not following FIRE but following her mum’s footsteps I believe. I’ll let you know if I ever get the chance to talk to her about FIRE!

      No, I don’t fancy going into nun mode – I’ve tried it and it was miserable!

    • Don’t bother; absolute rubbish. Even the people who took part in it said it was no reflection of what really happened.

  3. Weenie, it seems like we are in a similar boat.
    The cost of living challenges are an opportunity to try cooking all the spare tins in our cupboards, our heating bills are just numbers in a spreadsheet and mortgage costs are an inconvenience rather than an impoverishment.
    The public mood when I listen to Radio 4 or 5 live is one or total dejection, hopelessness and misery.

    So keep you chin up and your thermostat down!

    • Hey GFF (missed this comment for some reason)
      Agree – there are a lot of folk who are in a hopeless and desperate situation but from radio and news, they make it sound like it’s the majority of the population when I think it’s more like the minority.

      Thermostat is still down and I’m still using my summer duvet!

  4. What are people doing to cut expenses/keep costs down?

    Well, not much really…I’m already living fairly frugally, so just sucking up any cost increases. For example, on the cooking front I rarely use the oven anyway (a couple of times a year?) and often cook enough to last 3-5 days. It’s handy that I don’t get bored of eating the same dish several days running 🙂

    At present, I’m in a house move (due to complete on Friday), so I’m spending money like it’s Monopoly money anyhow. Thankfully no mortgage as I decided months ago to draw down a significant chunk of my savings/investments to top up the sale proceeds of my current house for the next house. It’ll be good to get moved so I can get back into the habit of “proper” saving and investing again especially as things are much cheaper now.

    • Hey NewInvestor
      All the best with the house completion on Friday and congrats on you purchasing it mortgage-free. I found for a few months after moving, I was still spending a lot of money, kept seeing things that needed doing around the house, etc. I still haven’t gotten round to putting up any pictures etc on the walls yet! Hope you get settled in quickly so you can go back to your habit!

  5. Thanks for the link, glad you enjoyed the documentary and hope it didn’t give you too many WSB flashbacks haha.

    I thought the rappers were kind of canny, in that it’s surely the most publicity they’ll ever get for free 🙂

    Re: the mortgage, well I would have fixed for five years in your situation but I can’t be too clever because my five-year fixed is up for renewal in February. I am finally on the cusp of the renewal window and my payments are going to more than double (interest only!) I could see myself sitting on the APR for six months and seeing where we are next summer. It’s not much more than the fix now! 🙂

    Re: FBA’s deal, well done and I would have taken a 0.99% 5-year mortgage rate in a heartbeat. Alas my crazy mortgage circumstances mean I’m effectively stuck with one bank (and we’ll even see about that) as documented on the site. 😐

    I had two friends last year who bought and took a lot of urging to take out five years fixes; in both cases they thought less than 2% “might get cheaper”. Well it might but (a) that’s not why you fix and (b) there’s a lot more space above than below!

    I personally suspect mortgage rates have likely peaked, but I also don’t think we’ll see a 0.99% five-year fix again in our lifetimes. What a deal!

    • Hey TI

      Wherever my head was at back then, it/I decided to go for the 2-year rather than the 5-year – c’est la vie! Ouch on your interest only payments doubling! Hopefully Rishi at the PM helm will stabilise things, so it won’t be as mad as predicted next year when the fixed deal ends, although as you say, we won’t be seeing 0.99% again!

  6. Yeah, something on the likes of a 50/50 balanced split is what I would probably do if I were in your shoes. I would not break contributions to your fire fund, it’s when the market drops that we should be buying more in theory. You can get variable mortgages with a 3.5% discounted rate for two years today. Rates should be slowly returning to more normal lower levels buy. End of 2023. Also, 4-5% may seem like a lot, but it’s still below the average 8% annual historical return you can get from equities. I would stick to the numbers. Nothing is sure for certain but the historical numbers tells what’s the “safer” bet to take.

    • Hey Tony

      Yes, with the markets low, I don’t want to stop buying more but at the same time, concerned about the mortgage so want to overpay some. With hope, the markets (and mortgage rates) will stabilise a little this time next year when I’m due to remortgage.

      Hope all’s going well with your house hunting!

      • Thanks weenie, today I had the first appointment with the mortgage firm, best current rates are at 3.5% above, 2 years discounted flexible. Despite higher I remain more optimistic about finding the right place than back when I was in the South. 🙂

  7. Hey Weenie, “what are you doing to keep costs down?” … normally I find we are identical in our strategies (ages, net worth, FIRE age) but with the mortgage we are different. I completed in June 2021 (offer accepted Dec 2019, long story). However I liquidated most of my investments to be 60% LTV, and each year I pay off 10% of the mortgage using my company share plans. I’m now 30% LTV (at today’s prices anyway). I took out a 5 year fix at 1.29%, it expires June 2026, and I will then pay off the whole mortgage, insulating me from interest rates. I’m not sure if th is the best strategy financially, vs keeping my investments, but I prefer the feeling of no debt and I’m very risk adverse the nearer I get to the finishing line.

    • Hey Starla

      You made a massive decision to liquidate your investments but it looks like it worked for you – well done on getting your mortgage down to 30% LTV, with a plan to pay it off by 2026! I did consider taking a bigger chunk from my ISA investments to bump up my deposit but just didn’t feel comfortable with it at the time. I do have a plan to pay the mortgage off but that’s way in the future (around 2034) and who knows what the interest rates will be like in the meantime, so I need to include overpayments as part of my plan.

  8. Just wondering why you do your main shop in Morrisons/Tesco and then the top-up in Aldi, rather than the other way round? Recent article had Aldi as the cheapest supermarket and Morrisons as the third most expensive (Tesco in the middle).

    I’ve discovered an ‘out-of-date’ wholesaler near me, and that’s saving a fortune. A lot of the stuff is junk food, but there are lots of basics (pasta, rice, passata, tinned pulses, etc) incredibly cheap; £3 to £5 for an entire case! I’m beginning to feel a bit like one of those US preppers.

    • Hey Tina

      I shop at Morrisons/Tesco 1) because convenient location and 2) because of their fresh meat counters/bakeries. Aldi is by far cheaper so I get stuff like pasta, tins, toilet paper etc. It also choice, the Aldis near me aren’t big so there’s not a lot of choice or things have often run out.

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