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.
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?