Month-end April 2020

Admittedly, this post was written a few weeks back at the start of April but not posted. In that time both everything and nothing has changed. Most of all, we misjudged the government’s “Stay at home” message which turns out was actually a bit more nuanced.

Here’s what I wrote a few weeks back (most of it is still relevant)

Whilst the world is still in lockdown, the markets appear to have been on the mend (for now?) and we’ve clawed back some of our losses from the last 2 months.

I’ve been a bit quiet recently but that’s because I think that the world is so crazy, nothing I say will probably be as crazy as what’s happening in your life. But we live in strange times – but at least the weather is good.

Work Front

Both the Lady and I have got less than perfect work news. The Lady’s company will cease to employer her by the end of year. She will get about a extra 4 months pay as part of the redundancy.

I managed to move job to a new company in the middle of March and have been working from home since my 3rd day. But have a 10% pay cut starting Monday now.

Overall, I don’t think that we are in a bad position. Having 8 months guaranteed work and 90% pay is better than a job that might disappear in a few weeks and a 100% pay cut.

I’m taking an optimistic view of it give the current climate. I personally think that I could reach Early Retirement this summer – through no choice of my own!

Opportunity Knocks

Ideally for the Lady, I would like her to get a company to work at which is as good as she is. I think that she’s very capable and being in her place for 8 years has meant that she has stopped learning as much as she could be. But, the job is close-by, flexible around childcare and interesting enough without being stressful – if it ain’t broke don’t fix it.

Her current company was in retrospect not very good. Just like my old company which looked like nobody cared about it.

She’s actually got an interview tomorrow (end of May) with a company in Edinburgh that work in a super swanky office in the West End. The sort of place that is a million miles away from where she works now (tin shed in an industrial park).

Near the Lady’s potential new office

Most likely, she’ll get another job in Autumn/Winter but that might be in Edinburgh which is about an hour away by train or car.

If she gets this one, then I’ll need to tell her all about the latté factor because her current place just has a needle exchange nearby and there’s an abundance of caffeine choices around the potential new office. But forget the latté factor, there’s a sushi bar down the street which means I’ll be writing the book “the sushi factor” to explain how the Japanese love raw fish and seem to live a long time but never pay off their mortgages!”

Where the Lady’s money will disappear at lunch time.

Getting to work is another question. Futurologists told us that in 2020 we’d be able to work from home half the time and fly to work wearing silver jump suits in our robot cars – so my hope is that for 2021 we’ll be half way there.

Location Location Location

There’s questions in my mind about what opportunities you have in life you compromise for job/family/house prices – Edinburgh might be a bit of a stretch but it’s where the good jobs are in Scotland (although the house prices are ridiculous) – but we’ll probably not move there (even though we’d like to).

Family Finances

After a terrible February and March, April was kind. We recovered some of our losses and in £ terms we are back where we were at the end of Feb. Still down a lot but given all the death that there is around, I can’t really complain. I’ve topped up our LISAs for the year and one ISA. I also sold some VCTs – maybe at a bad time but if the main attraction is the 30% tax relief and the fees are  2.5% a year, then holding them any longer doesn’t make much sense – especially if the money released could be reinvested to gain the tax relief again. I won’t subscribe to any VCTs this tax year though – I am not sure on our tax position so I won’t just yet, also we don’t have the free cash at the moment as I wrote about here.

Family Income

That was helped by strong earnings from my work and a nice cheque from the HMRC for my Self Assessment tax return. I also starting paying into pensions for the Lady and myself from our company. It’s a very tax efficient method – although it’s trapped in SIPPS for the next 20 years or so.

We also made a lot of money from P2P lending this month. I’ll not say too much but I’ve been trying a few new things recently and I think that I’ve finally found something that has a decent pay-off without too much effort.

One interesting thing is that our “passive income” comes from a range of sources, P2P lending, ISAs, non-ISAs, VCTs and so on. The recent market turmoil has meant that previously “safe” dividend streams are looking unreliable.

Family Spending

Thanks in part to the lock down and reduced nursery fees, our family spending is collapsing! From May our nursery will charge Zero fees (April was 50% but kids are at home) and other costs are down too – no travel, holidays, hardly any petrol and the like. What has increased in food shopping and we appear to spend over £120 a week for a family of 4. Is that too much? Hardly any of our food is manufactured/ready type stuff – I do the shopping and I can see that the biggest costs that we have are meat and processed foods plus booze. The higher the trophic level you go, the higher the cost I guess.

Without being able to travel we’ve saved a lot too. We even have a holiday booked for August but chances are we’ll get refunded and not go – but fingers crossed we will go (but who knows?)

Summary

In lockdown, with both of us earning and without nursery fees or even mortgage payments our savings rate must be fantastic. However, all of those things will change in the future. One take away is that having a bit of FI (or FU) money can at least mean that if your income disappears or your spending jumps that can just ride out the storm. Where you are in a situation where you are earning to finance your spending then anything which tips the balance the wrong way will have your wrong footed.

Thanks, GFF

Month-end April 2020