Money Mage

Name: Cheap. Cheerful. Problems Ahoy.
Item: Fruugo
Rating: 2
Author: Money Mage

February 2020 Savings Report

2020-03-08T00:00:00+00:00

Welcome to our February 2020 Savings Report. Alternatively known as COVID-19-panic. Get your Coronavirus here. There is a case in Dundee, so it’s only a matter of time before filthy jobby-hands kill us all.

If you frequently watch BBC News as we do, I’m surprised you are not running for your bunker with your Doomsday Prepper boxsets under your arm.

I am sure most in the Personal Finance community will have felt some contractions during February. The other-MM and I are among you.

I hope you’re all singing Happy Birthday whilst scrubbing your bits with hot soapy water. Just like BoJo said to.

Jesting aside, if you are directly affected, thoughts with.

We are relatively conservative with our investments. So our net-worth hasn’t taken a significant dive. Yet.

The wider economic outlook looks poor, and you can understand why the markets are reacting as they are. Supply chains globally are going to be affected. Those supply chains are going to be pressured with panic buying especially in food and health products. There hasn’t been paracetamol on the shelves of our local Tesco for about 6 weeks. Productivity will bomb with more home working and more time off. The aviation and travel industry is going to face serious turbulence with work-enforced travel bans, with Flybe already failing this week. Deals that businesses thought were going to close, will not, putting pressure on cashflow and runways.

I am expecting the volatility to continue well into Q2. Here’s hoping a bit of warmer weather stems spread.

It won’t change our saving & investment approach. All of our investments are 10+ year horizon. We’ll just carry on as we always do.

I am concerned if there are work shutdowns or isolations in Scotland. Whilst I can work from home, the other-MM can’t. If we’re told to self-isolate it will impact income. We also both have autoimmune conditions, the other-MM more serious than mine. This puts us more ‘at risk’ than most. It moves your thinking from single-digit probabilities to double-digit. Especially for the chance of serious complications.

Anyway, let’s see how COVID-19 impacted this months Savings Report. You can get all Savings Reports at the best of Money Mage

February 2020 Savings Rates

Date	SR	SRp
February 2020	60.7%	77.9%
January 2020	64.3%	72.0%
December 2019	71.0%	77.8%

SR = Savings Rate
SRp = Savings Rate inc. Pension

Savings Rate was slightly down as more funds were put into our pensions. But overall savings rate including pensions is unaffected, if not slightly up. This was planned. As it’s nearing the end of the tax year we wanted to make use of our Pension Allowances.

Towards Financial Independence

Our Financial Independence number is quite conservative. This table shows the number of years to achieve Financial Independence in various cases.

Date	FIh	FIp	FI
February 2020	4.3	12.5	17.4
January 2020	4.2	12.5	17.5
December 2019	4.3	12.6	17.6

FIh = Years to FI based on Total Assets.
FIp = Years to FI excluding the house, but including illiquid pensions.
FI = Years to FI excluding the house and other illiquid assets.

There is an expected stagnation in FI numbers this month as our net-worth dropped due to COVID-19 market corrections.

We’re only talking about a month delay though. Let’s see what happens through March and into the summer.

Contributions to my S&S ISA continue, though it’s been impacted in February with a drop in the markets.

February 2020 Recap

February is the first real market blip I’ve paid any attention to. I blame these Savings Reports!

All of our Savings & Investments are 10+ year horizon. Usually, both of us just squirrel away and pay little attention. We might look once a year at pensions. With these Savings Reports, I’m looking at least once a month.

This brings a big risk: Tinkering. Emotional Tinkering.

The other-MM and I have a general principle of Keep Investing Stupid Simple. All investments both inside and outside of pensions are in simple low-cost passive funds.

Yet I have tinkered a little in February: Opened a Vanguard SIPP which finally became available. I also consolidated two group personal pensions into one.

The Vanguard SIPP is still washing its face through February given the tax relief. I opened the SIPP because we wanted to top up pension contributions this year, making use of my Pension Allowances and higher rate relief.

Trying to make a single contribution to the four group personal pensions we have between us was like going back to the stone ages. Cheques, paper forms, and Financial Advisors. Utterly nuts. I literally had my work-appointed Financial Advisor email over a scanned-in form with a section they had to fill in. No thanks!

At least with the new Vanguard SIPP I can just pop in a debit card and shove it in a low-cost passive fund.

The pension consolidation is likely to work out in my favour as it’s a cash-transfer. The transfer certificate showed the transfer happened at the top of the market in the middle of February. Amazing luck. Certainly not intentional timing. But a bit of timing that will likely work out a few grand in my favour when Scottish Widows finally complete the transfer and buy some equivalent units cheaper.

We’re looking forward to our holiday in a couple of weeks. A cheap self-catering let. We’re going to stay on the edge of the Trossachs and Loch Lomond national park. It’s about a 70-minute drive from home. If I am honest, I think living so close to such beauty trumps the low cost of living. I am a fan of small, cheap holidays as you know. This year it looks like we may get in 5!

As mentioned, we also ploughed a couple of grand into pensions this month to make use of our Pension Allowances. Additional tax relief which will come through in May/June I expect.

The other-MM had a change in working hours, as the bus route to his work got altered. This led to us both being a bit knackered for a week or two as body-clocks adapt to the change.

The other-MM’s exercise regime fell on its ass. We now have a mostly unused exercise bike. Remember if you want to shed the weight, build a habit, not a fad.

Going Well

Stress levels are still way down. I am actually enjoying work at the moment. Just finished up a project that I’ve been leading. Rolling onto a new project next week.
Money Mage continues to go well.
Reading! I’m back into reading. At least an hour most nights. This is really helping me wind down. I finished the first book* in the Confederation Series by Peter Hamilton. I am now onto the second, which is The Neutronium Alchemist*

Should do better

My mom died at this time of year 3 years ago. It always gets me down. I don’t really know why. It’s mostly subconscious.
On the drinking front, I got pure steaming at an ex-colleagues leaving night. Other than that, pretty sober.
Still eating a bit too much. The latter half of February was much better though!
Stop thinking about tinkering with savings & investments!

February 2020

February hasn’t been too bad, considering the chaos in the markets.

I will warn you, paying attention to net-worth fluctuations during periods of volatility is a fool’s game, so please just hang up now. Carry on traveller? Kill Jester?! Very well, let us begin…

Month on Month net worth was down by -0.63%. Considering the drop in the markets this month I think the diversification of our portfolio has shielded us quite well. At least so far.

You can see the biggest hit is in pensions. Despite contributions this month they are down nearly 3%. Our pensions have a 20+ year horizon though until we can even drawdown as we are only 36. So frankly who cares!

A 0.63% drop this month pales into insignificance compared to the nearly 4% drop when we bought the house. But look how that worked out. We are really quite pragmatic. If anything, we can buy more units in our pension & investment funds next month. Cheaper units for us! Yay! Unit Cost Averaging for the win!

The drop this month is just a blip on a much longer journey.

Year on Year is still up a very healthy 19.71%. You can find more details in the review of 2019.

Type	MoM%	YoY%

Asset Allocations

Here you can see asset allocations this month compared to February 2019.

Whilst equity exposure appears very low, all pensions are in global trackers funds. Investment in equities is almost solely via pensions. Although I am now also contributing to an S&S ISA via Vanguard LifeStrategy 80 and a small holding in Vanguard’s FTSE All-World High Dividend Yield $VHYL.

Lifetime

This chart shows our net worth growth since the other-MM started work and I graduated.

Net worth is growing well and as expected.

Whilst we’re mortgage free, and on the path, FI let alone FIRE still seems a very long way away. Subscribe now and follow me on Twitter @moneymagery. I hope you like the charts, I am a fan of Tufte*.

How is your journey to FI going?

Flybe Collapse. How to get a refund

2020-03-05T00:00:00+00:00

Overnight Flybe the largest regional airline in Europe has failed. It’s only a few months ago since I was writing about the collapse of Thomas Cook and how to protect yourself and your travel plans.

Flybe was a major sight at every UK airport.

Flybe operates 36% of UK domestic flights. I am personally a heavy user of Flybe out of Edinburgh and previously Dundee. Frequently to London, Southampton, Birmingham & more. Getting to Southampton from Scotland is not fun without a Flybe flight, I can tell you!

Flybe at London City Airport with a Westerly Departure

Flybe was used by millions of UK business and leisure travellers to quickly get around the UK regions. Airports like Aberdeen, Exeter, Southampton, Belfast City are going to be severely affected by this collapse. At some regional airports in the UK, over 70% of scheduled flights are operated by Flybe.

Given the current situation, a buyer might be difficult to find.

Advice this morning is to not travel to the airport. Instead, you should make alternative arrangements and seek to claim your losses back.

Follow these 3 easy steps. You may be able to claim your losses back. Or at least, avoid the consequences of another collapse in the future.

1. Check your Travel Insurance

Not all Travel Insurance covers you for the failure of a company. Most don’t. You need to check the policy wording before buying.

There are a couple of travel insurance policy terms to look out for. Scheduled Airline Failure Insurance (SAFI) and End Supplier Failure.

Often these are not included by default and are a ‘bolt-on’. You will need to check your policy documents.

If your travel insurance does contain clauses for SAFI or End Supplier Failure, get in touch with your travel insurer to make a claim.

2. Consumer Protection

Be aware of how to keep your money safe. If your travel insurance doesn’t cover you, there is other protection.

In this collapse of Flybe, you are likely best to seek a Section 75 refund via your Credit Provider, or via your Bank’s Chargeback scheme if you paid with your debit card. You are more likely to be refunded if you paid via Credit Card. Speak to your Bank or Credit Provider.

Here are some ways to protect your travel plans:

Pay on Credit Card

If you pay more than £100 on your Credit Card, you are covered by Section 75 of the Consumer Credit Act. This means that your credit provider is jointly liable for the provision of goods and services.

If your airline or travel agent has gone bust, submit a Section 75 claim to your bank or credit provider. You will be refunded in full. This can take time. You will have to provide documentary evidence, like receipts.

Pay on Debit & Chargeback

If your purchase is less than £100 or you purchased on a Debit Card, you may be able to use Chargeback.

Visa, Mastercard and AMEX operate Chargeback schemes. They are not law but may cover you.

Talk to your bank in the first instance.

EU Regulation 216/2004

If your flight is leaving or landing in the EU, you are covered by EU Regulation 216/2004. This provides cover for flight cancellation and delays based on flight duration.

This ranges from food, drink, accommodation, to full refunds for cancellations. It’s important to note that this regulation does not protect you in the event of airline insolvency.

Avoid Gift & Prepayment Cards

I am not a fan of Gift or Prepayment Cards. You are placing your money into an unprotected business which may fail. Rather, place your money into protected savings. Use accounts protected by the FCSC (Financial Services Compensation Scheme). Your money is then protected up to £85,000.

0%-fee Travel Card

Some accounts offer 0%-fee transactions. These credit cards or bank accounts that will save those excessive foreign-transaction fees. This means you won’t need to carry cash. Don’t use prepaid, get an account with a card from an FSCS-covered bank.

3. Get Holiday & Travel Protection

Check that you have government & industry protection for your holiday. You may be travelling on Flybe as part of a package holiday. This is somewhat unlikely at this time of year, but maybe you have a holiday booked later in the year where the flight was with Flybe.

If you don’t book your flight and hotel together you can run into issues.

Check with your provider of your ATOL or ATBA protected holiday if so.

You don’t need to book a traditional ‘package holiday’ to get protection.

What is ATOL?

ATOL (or Air Travel Organiser’s Licence) is the UK government protection scheme. It covers your travel if you book your Flight, Accommodation, and/or Car Hire via the same provider. The cover protects if you book:

flights and accommodation (including a cruise), or
flights and car hire, or
flights, accommodation and car hire.

The UK Government operate ATOL via the Civil Aviation Authority.. Under EU Regulations, for what it’s worth.

Be careful when booking with ‘cheapest deal’ sites. Often you can book flights, hotel and car hire on these sites, but they are not booked via the same operator. You wouldn’t be ATOL protected. Some online sites do offer strong ATOL protection if you book flight & hotel together. Expedia being one.

You can also use online travel agents who provide cheap deals with ATOL and ABTA protection. I have used Dial A Flight in the past for overseas work travel which offered protection.

What is ABTA?

ABTA or Association of British Travel Agents is a regulated industry body. They provide cover and dispute resolution. It is useful for holidays that do not involve a flight or when ATOL protection is not available.

If you booked your holiday via an ABTA member, your holiday will be ABTA protected. ABTA provides cover in the event of company failure. If a company goes bust ABTA protection will enable you to continue your holiday or get a full refund.

ABTA also helps you resolve other problems or complaints about your holiday. You can use ABTA for dispute resolution. The operator has to abide by a code of conduct, and ABTA will help enforce.

Was Coronavirus responsible?

Flybe is blaming the Coronavirus outbreak this morning, but Flybe has been troubled for years. With the UK offering state-aid earlier in the year[]. Reduced ticket sales from Coronavirus was likely just the straw that broke the camels back.

It’s been a bad couple of years for the travel industry. Six tour operator collapses and thirteen airline collapses in 2018[].

The current coronavirus outbreak isn’t just hitting your investments, it’s hitting your travel plans.

It’s also terrible for the getting on 2,000 employees of Flybe who are now facing uncertainty.

I’ve used Flybe hundreds of times over the years, especially in and out of Edinburgh and Dundee. They used to operate a Dundee to London City flight which had two of the coolest approaches possible, both east and west approaches into Dundee are an awesome sight with the Tay bridges and river, and eastbound approaches into London City are also an amazing sight flying below the height of Canary Wharf. I am going to sorely miss their service, not just for the sights but the convenience.

If you are affected, my thoughts are with you. Stay safe.

Subscribe now, follow me on Twitter @moneymagery, plan a cheap holiday for 2020 and you’ll be mortgage-free in no time.

Fruugo Review

2020-02-26T00:00:00+00:00

This is the first in a new series of reviewing online services & retailers. This series will only review services and retailers I’ve personally used.

Fruugo is an ‘online marketplace’. You may not have heard the name before, but Fruugo are growing quickly. They’ll start popping up more on searches for goods.

There are no affiliate links in this article.

What is Fruugo?

Fruugo is a relatively new ‘online marketplace’, initially founded in Finland. They now have operations all over the world.

Although they had a bit of a troubled start. arcticstartup published an article in 2012 titled “Nearing Bankruptcy, Fruugo Burned Through €40 Million to generate €100K”

They are a small player in the online retail space. But Fruugo is now growing, with growth of 100% over the past 5 years.

Fruugo does not self-identify as an online retailer, but a ‘marketplace’. They are a middleman. Like Amazon’s Marketplace, but without the logistics & customer-obsession.

Fruugo advertises the goods, performs the transaction, and provides a sprinkling of customer service. That’s about it.

They don’t hold stock.
They don’t dispatch stock.
They don’t handle initial customer service.
They don’t handle returns.

Fruugo are just a middleman. As they say nowadays, a ‘marketplace’.

Fruugo does not self-identify as an online retailer, but a ‘marketplace’. But they are the retailer in the eyes of the Consumer Contract Regulations, even their Terms of Service state so.

In the UK, Fruugo is the trading name of Fruugo.com Ltd, operating out of Ulverston, Cumbria. A private limited company of 34 employees with a loss of £4.7m in 2018.

This Fruugo review will give you an overview of what to expect when you buy from this online retailer.

How does Fruugo handle orders?

All orders are fulfilled and dispatched by a third party, not by Fruugo.

You don’t buy from Fruugo, you buy from the ‘merchant’. Fruugo are at pains to say they are just a marketplace.

The kind of lorry your goods might be delivered on. If they arrive at all.

The problem is you don’t know who the merchant is when you buy.

Your order will be fulfilled by, dispatched by, handled by, serviced by, and everything by this unknown-at-point-of-checkout ‘merchant’.

How does Fruugo handle complaints?

Fruugo customer service is handled via non-realtime chat messages on the Fruugo website.

Initially you deal directly with the merchant, so chat messages are between you and a third party.

There is the option to escalate the chat to Fruugo. If you do this, you can no longer speak to the merchant, and only to a Fruugo customer service representative. They take over everything from there.

I found the customer services polite and professional. But very slow and entirely reactionary. You won’t get any movement from them unless you chase.

How does Fruugo handle cancellations?

Fruugo claims they are just a marketplace and not the retailer. Instead, they say the ‘merchant’ is the retailer.

This means you’ll initially be negotiating a cancellation with the third party ‘merchant’ & not Fruugo.

This is their stance. Their standard operating procedure.

But it’s not the law.

Don’t forget your statutory rights & point them out if Fruugo doesn’t agree to your cancellation. Fruugo is the retailer in the eyes of the law. They are the ones with whom the transaction was placed. They are the ones the contract is with. Their Terms say so despite their employees saying and behaving otherwise.

Under the Consumer Contract Regulations, you cancel any time from point of purchase up to 14 days from receiving your goods. You will be liable for the cost of returning the goods & any damage incurred during that return. There are some exceptions. Which has more about your rights.

If your goods do not turn up after 30 days, you have the right to a refund.

I found the whole cancellation process obnoxious. Especially with Fruugo not adhering to UK Consumer Regulations and hiding behind their ‘merchant’.

How does Fruugo handle returns?

You will be returning goods to the merchant and not to Fruugo.

You will likely be responsible for arranging the return. You may well find the cost of return deducted from any refund.

My Experience with Fruugo

I bought quite an expensive item of Fruugo in 2019. It was a relatively big-ticket item worth about £700.

The other-MM and I had done plenty of research. We’d found the item we wanted, but not many places stocked it. We’d found it stocked in one small mom & pop outfit which we’d rejected. We could buy from Wayfair for about a 15% premium.

Then we found the item on sale on Fruugo.

In stock: check.
Dispatched in a couple of days: check.
Pay by credit card: check.
Dispatched by Fruugo, what appeared like a big online retailer: check.
Cheaper than their competitors: check.

Oh how high my hopes were. It all looked great.

Card transaction goes through. Then an email comes through. Dispatched by: mom & pop shop. The one we’d previously rejected. No mention of mom & pop on Fruugo’s website all the way to point of checkout & accepting payment.

Mom & pop promptly email me telling me the item isn’t in stock and they have no idea when it will be.

A few chases later, and 30 day have elapsed. I still don’t have my goods. Worse, I have no date for when I will have my goods. All ‘negotiated’ with mom & pop. Mom and pop, who may as well be a front for the mom and pop maffia in Bulgaria. Fruugo are nowhere to be seen.

I escalate to Fruugo. I may as well have escalated to a cadaver. Utterly useless. Fruugo basically claim it’s not their responsibility. It’s mom & pops. ‘We’re just a marketplace’ they whine like a petulant child.

So pull the cord.

I politely point out they are the retailer under the Consumer Contract Regulations and they need to fulfil it within 30 days, which they have failed. I give them 7 more days for it to be at my door, or I expect a full refund.

7 days pass, no item, and Fruugo still refusing to refund.

After more kicking up (emails & letters) I am finally refunded after around 45 days since the point of purchase.

I buy the same item from Wayfair for a 15% premium and it arrives the next day.

What are others saying about Fruugo?

Fruugos reviews are mixed.

On Trustpilot, around 18% of reviews echo my experience. Goods do not arrive. Refund process is impossible to navigate. Customer Services polite but useless. Generally terrible.

The rest of reviews however are positive. Cheap. Items arrive. No need to interact with Customer Services.

Seems to be 80/20. If you are lucky to be in the 80% of people, it looks like your order will be fine!

However, if you are unlucky enough to be in the 20% where your order has problems, the reviews have in common:

Orders not fulfilled on time
Slow support contact
Having to deal with a third party
It’s difficult to get a refund

Can I trust Fruugo?

We’re all used to customer services being at the forefront of online retailers minds. Customer first. Customer centric. Avoiding the bad reviews.

Fruugo are different. Fruugo treat you with contempt. Like it’s your fault. Get back in the workhouse!

Fruugo’s dog has just evacuated its stinking bowels in the middle of the pavement. Great news: the wee plastic bags are in stock. Dispatched in 7 days! Oh wait, no they are not. 45 days later and it’s still your fault for treading in it.

‘Did we advertise your goods as in stock and dispatched within 7 days? Oh? Really? Oh well. Sorry, we can’t help you. It’s the merchants fault. Here you go, speak to them.’

You have to push their customer services hard. Much harder than with other online shops. All communication will need to be initiated from your side.

This contempt runs deep. Throughout their customer services. Even in responses to my letters, which were completely ignored.

If you’d asked me ‘Can I trust Fruugo?’ just after dealing with them, I’d have said no way.

They eventually refunded me. They do have that going for them I suppose.

How can I protect my Fruugo order?

If you do buy from Fruugo, you can protect yourself with the following simple steps:

Purchase on Credit Card so you are protected by the Consumer Credit Act. Enabling a refund under Section 75 from your credit provider.
Be aware of your rights under the Consumer Contract Regulations. Specifically regarding distance selling, delivery, returns and cancellation.
If you need your item by a particular date, state the required delivery date on the order or immediately after placing the order via Customer Services. It is reasonable to do this, especially if the order says ‘in stock’ and ‘dispatched by’. It also gives you additional protection under the Consumer Contract Regulations.

I expect BoJo will rip up the latter two points in January 2021 though. As the Consumer Contract Regulations is one of those bloody-laws-from-Brussels.

Make sure you order your wee plastic bags with plenty of lead time.

Should I buy from Fruugo?

Fruugo are one of the cheaper retailers out there, by all means buy from Fruugo If you don’t:

Need the goods urgently
Mind dealing with problems with the dispatch, delivery or returns
Mind having to deal directly with a third party seller who might just be a one-man band

On the other hand, if you are buying a big ticket item that you need by a date, or if you just used to an ounce of customer service, go elsewhere.

There were no affiliate links in this article.

Subscribe now, follow me on Twitter @moneymagery, stick by your principles, be careful of high-risk investments like subprime P2P and you’ll be mortgage-free in no time.

How wealthy am I?

2020-02-15T00:00:00+00:00

An angry £80,000 earner on BBC Question Time during the 2019 UK General Election campaign sparked up a bit of a row about income tax and median earnings.

There was an outcry at whether £80,000 was or wasn’t in the top 5% of earners. Does earning £80,000 or more put you in the top 5% of UK earners?

Median earnings in the UK are £29,500. So this gentleman earning over £80K is quite a long way off thinking he is not in the top 50%. In fact, he’s in the top 5% of UK earners.

Median earnings in the UK are £29,500

I mean if you’re earning £80,000, you can probably afford to pay your fair share of tax.

For the public services you and your loved ones use every day. Right?

This character’s lack of self-awareness was a highlight of what was otherwise a thoroughly depressing General Election.

Does earning £80,000 put you in the top 5%?

The Mirror[] named the audience member Rob Barber. A company director, who runs PBT Racing with his father. He has multiple podium finishes in the TT Zero Isle of Man TT Motorbike races.[]

He came out with quite the spiel. It was almost certainly politically motivated, but it demonstrated quite a common Egocentric bias.

Yes Rob, earning £80,000 a year puts you well and truly in the top 5%

Full QT Transcript

For those not in the know, BBC Question Time[] is a late-night ‘serious’ politics panel program, where UK politicians and journalists face pre-selected questions from a ‘representative audience.’

Here is the QT Transcript of the conversation.

Rob Barber: I’d like to call out Labour as liars. I am one of them people [sic] who he will tax more, and I am nowhere near in the top 5%. So I’m calling you a liar right now. That 5% is a lie. I am nowhere near that. And you are going to income tax me as an employee. You are not going after the billionaires you are going after the employees Where it’s easy money because it’s PAYE I have no choice.

Richard Burgon: I’m afraid on that you are mistaken We are not going to raise income tax for anybody apart from the top 5% of earners

Rob Barber: I am not in the top 5% of earners

Richard Burgon: So we are not going to increase your income tax

Rob Barber: But you are, because I’ve read your policy. It’s above £80,000, and I am nowhere near in the top 5% let me tell you. I’m not even in the top 50%!

Richard Burgon: And that’s why we are not going to increase your income tax, and I..

Fiona Bruce: Sorry let’s just be clear. So you are suggesting you are going to raise income tax on those earning over £80K You are saying that will affect you as you earn over that sum?

Rob Barber: Yes

Richard Burgon: So you earn over £80K?

Rob Barber: Yes And I’m not in the top 5%

Audience: Mumbles But you are Mumbles You are!

Fiona Bruce: I think that is the top 5% isn’t it?

Rob Barber: I’m not! I’m not! Every Doctor in this country earns more than that! Every doctor, every accountant, every solicitor earns more than that! That’s not 5%!

Richard Burgon: It’s not true that every solicitor earns more than £80K. When I was a solicitor I earnt just over £40K a year. The fact is….

Fiona Bruce: So let’s just be clear. Let’s settle this once and for all, or certainly let’s hear from you. If you earn over £80K are you in the top 5%? Categorically?

Richard Burgon: Yes

Fiona Bruce is the presenter. Richard Burgon is Labour MP for Leeds East and in the Shadow Cabinet. Rob Barber is the character in question.

UK Earnings and Wealth Distribution

Let’s just put this in some kind of perspective. What is the average UK salary? The average UK family earns £29,500 per year and has a net worth of about £105,000[]

But the 90% percentile is around £60,000 per year income and £670,000 net worth[]

That means if you earn £80,000 per year, you are well and truly in the top 5% of UK households. The above chart shows the income-earning distribution for 2016/17 which is the latest percentile data available.

Taking politically motivated bias out of the picture, why can’t this character see that? Bloody Doctors. Saving people’s lives.

Why Perspective is Everything

This Egocentric Bias[] is typical of us who are privileged. I don’t seem to be earning that much, how could I possibly be in the top 5%?

There are 50-odd Billionaires in the UK, they have way more than me. I can’t be that wealthy!

Our brains are evolved to rely on our perceptions. Of what we have experienced. Of what we know. Of what our ancestors knew, wired into our DNA.

Familiar things are familiar for a reason. They are things we have perceived time and time again. Sometimes through the generations.

This wiring makes it naturally difficult to look at a situation from a different perspective. Or to understand things that we don’t usually perceive.

Very large scales are a great example of this.

Our brains are honed and evolved to easily perceive the spaces we are used to.

If I ask you to guess the size of the room you are in, you’ll probably get it, down to a few metres. The size of the paths we often walk or roads we drive: You’ll get it down to a few tens or hundreds of metres. Even the size of a city, I bet you can guess to the nearest few kilometres.

Now guess the distance between where you are sitting and the centre of the Andromeda Galaxy?

Our evolutionary and perception biases make it difficult to perceive very large scales.

Large scales and large numbers.

Perceiving Billionaires

Billionaires should pay their fair share of tax, right? But what exactly is a Billionaire, and what is that fair share?

Michael Bloomberg is worth $54bn or £42bn in GBP. He and his family outright own Bloomberg L.P, one of the wealthiest and most successful companies on Earth. Finance making money from finance. I’ve had the pleasure of working in Bloomberg offices around the world. Bloomberg looks after their people and their offices are stunning. More importantly, Bloomberg staff are extremely loyal.

Mike Bloomberg must be doing something right to be worth £42bn.

Compare that to the average UK household, which is worth just £105,000.

The average UK family has just 0.00025% the wealth of Bloomberg. Even that number is a little bit tricky to comprehend. You end up just going ‘zero zero zero zero’.

Think of it another way: it’d take you 78,000 years at the median UK income to get to £42bn if you spent nothing and invested at 3%. But what does 78,000 years feel like? 963 average lifetimes. I can barely comprehend the next few days let alone a thousand lifetimes.

Try another way I suppose: Bloomberg is worth 400,000 average UK families. But what on earth does 400,000 average UK families look like? Cardiff?

It looks like this:

See that tiny 1 pixel when the square is at it’s smallest? That’s you that is. Average Joe.

Even £1m, which is more than enough for most to retire on frugally, is a tiny 3.3 pixel square.

Michael Bloomberg has so much wealth that it’s still hard to comprehend just how much wealth he and his family have.

Even when we use analogies.

Do you agree you can grow your net worth about 3% a year?

Our household grew by over 23% last year, so I say 3% is a pretty conservative figure.

3% growth per year on £42bn is £1.26bn.

£1.26bn is still an incomprehensibly big number. £1.26bn was about 23% of the UK’s Budget Contributions to the EU every year.

A 20% tax on £1.26bn of income would yield £252m for public services.

It’s fair that Billionaires pay something that we can comprehend in tax per year? 20% of their income from any source? That’s what us plebs have to pay.

And £252m per year is a drop in the ocean for Bloomberg.

Check your wealth and your privilege.

Everyone should check their privilege once in a while.

Not just to avoid ending up looking like a tit on Question Time, mouthing off about how unfair life is whilst sat on your top-5% perch.

But so you can do the right thing. The principled thing.

It’s on everyone to do just that. Everyone: from low income to people in the Personal Finance community right the way to Michael Bloomberg. Pay your fair share: around 20 to 25% of your annual income.

In Scotland, we have a more progressive taxation than England. This means Scotland can invest more in public services. NHS Tayside where I live has the lowest A&E waiting times in the whole of the UK. Maybe Rob Barber should consider paying 1% more tax get the NHS out of Tory-austerity-imposed crisis?

The Money Mage household income is also in the top 5%. Our net worth is over 4 times that of the average UK family. We know our privilege. It’s our principles, hard work, saving and investing, and a huge sprinkle of white, suburban upbringing that got us here.

However, wealth doesn’t come from what is in your bank. It comes from how much you are enjoying your time alive. How healthy you are, who you surround yourself with, what you do with your time, what you contribute to society. Ultimately how happy you & the people you care for are.

Look up & smile next time you are out and about. That’s a wee bit of wealth in itself.

Subscribe now, follow me on Twitter @moneymagery, stick by your principles, be careful of high-risk investments like subprime P2P and you’ll be mortgage-free in no time.

January 2020 Savings Report

2020-02-08T00:00:00+00:00

I can’t believe it’s well into February already, where is 2020 going? We had a great start to the year, and I hope yous all had a great start to 2020 too!

January is one of those get-things-in-order months for many. Tax returns due. Planning for the year. Shedding Christmas bloat. Getting back into good habits.

Given my OCD & programmer-autism, I also thoroughly enjoyed the little bit of order that Sunday the 2nd of February 2020 brought.

The first palindromic date for over 900 years. 02022020 == 20200202. 02022020 is also Base 4 for 248.

Lovely… furiously rubs thighs like Vic Reeves.

With that little bit of order out of the way, let’s get into this months Savings Report. You can get them all the best of Money Mage

January 2020 Savings Rates

Date	SR	SRp
January 2020	64.3%	72.0%
December 2019	71.0%	77.8%
November 2019	66.9%	74.3%

SR = Savings Rate
SRp = Savings Rate inc. Pension

Towards Financial Independence

Our Financial Independence number is quite conservative. This table shows the number of years to achieve Financial Independence in various cases.

Date	FIh	FIp	FI
January 2020	4.2	12.5	17.5
December 2019	4.3	12.6	17.6
November 2019	4.7	12.9	17.6

FIh = Years to FI based on Total Assets.
FIp = Years to FI excluding the house, but including illiquid pensions.
FI = Years to FI excluding the house and other illiquid assets.

All to plan. I am also increasing my contributions to my S&S ISA throughout 2020 to hopefully build a Liquid Bridge faster, which should bring down FIp and FI.

January 2020 Recap

January has been a pretty good start to the year.

We had a wee stay-at-home holiday! I had a couple of days holiday as carry-forward from 2019. We had a super-long-weekend over the last bit of January, which was awesome. We are both feeling super refreshed as January can be a bit of a cold, dark & miserable time in Scotland.

We’ve booked another wee break for the end of Q1. A cheap self-catering let. We’re going to stay on the edge of the Trossachs and Loch Lomond national park. It’s about a 70-minute drive from home. If I am honest, I think living so close to such beauty trumps the low cost of living. I am a fan of small, cheap holidays as you know. This year it looks like we may get in 5!

Ate too much through January also. The increased waistline is still there. At least it’s stable. We’re both going to cut down over the next couple of months.

I got some more free shares from Trading212 & Freetrade worth over £30! If you sign up to Trading212* you will get a free share in a global company worth up to £100. I also have a second free share worth up to £200 to give away from Freetrade* but you need to email me mm at moneymage.net to get that one. Doesn’t sound like much does it? You’d need £28K in a Marcus account for a year to earn that!

I’m now walking to work three days a week. It’s about a 25minute walk which is good for the health and mind. The other-MM has a bit of a disaster pending as the bus he gets to work is getting cancelled. We’ll figure that out through February.

I’ve received an effective 1% payrise as the firm I work for has increased matched pension contributions. I’m expecting a pay review in the next couple of months as well.

The other-MM has suggested he wants to join me in exercising. I’ve been running most weeks since 2017. These are words I never thought I would hear uttered. They certainly haven’t been uttered in the 18 years we’ve been together. Remember if you want to shed the weight, build a habit, not a fad.

Going Well

Stress levels are way down. Job still isn’t bothering me. End of the project I am on is coming up in about 6 weeks. Ordinarily, I’d be working longer hours and thinking about work all evening. Not anymore. The change was totally worth it.
Running. Back into running in January! I’ve been out pretty much every week in January, and some weeks more than once. Yay for Strava!
Pension Contributions are going well. I salary sacrifice 20% of my salary, and the company now match 5%. With NI savings as well it should top 27%.
Money Mage continues to go well.
Reading! I’m back into reading. At least an hour most nights. This is really helping me wind down. I finished the first book* in the Confederation Series by Peter Hamilton. I am now onto the second, which is The Neutronium Alchemist*

Should do better

On the drinking front, I’ve been pretty stone-cold sober throughout January. I think I’ve had two pints.
Still eating a bit too much. We’ll both deal with this over the next couple of months.
I took a little bit of a blog break for a couple of weeks in January. Had some content queued, and I just didn’t have the motivation. I was enjoying doing other things.

January 2020

January has been a pretty good month.

Month on Month net worth increased by 1.16%. This was a little lower as one of my pensions underperformed. It’s one that seems to be consistently underperforming. I’m probably going to take a look at why and look to get it out of the funds its in.

Year on Year is up a very healthy 23.28%. You can find more details in the review of 2019.

Type	MoM%	YoY%

I am really pleased with my increased S&S ISA contributions. I had a windfall from HMRC which went straight into my S&S ISA.

Asset Allocations

Here you can see asset allocations this month compared to January 2019.

Lifetime

This chart shows our net worth growth since the other-MM started work and I graduated.

Net worth is growing well and as expected.

How is your journey to FI going?

5 Steps to get out of Debt

2020-01-30T00:00:00+00:00

We all suffer with debts. Many debts are a form of control, and the sooner you are clear of your debts, the sooner you will be free.

Debts can turn into an endless negative cycle.

You struggle one month, so you take out debt to get by. That debt costs next month, so you struggle even more.

The Money Mage household has cleared over £160,000 of Debt over 5 years.

You can too.

These Five Easy Steps to Debt Freedom can help you be debt-free too!

#1 - How to stop the Debt Cycle?
#2 - How to budget?
#3 - How to avoid Future Debts?
#4 - How to Clear your Debts?
#5 - How to Make More Money?

This is the first post in the Money Mage Debt Series. Money Mage is personal thought and opinion on a personal blog, provided for information and entertainment only. Money Mage should not be construed as advice. Please read the Disclaimer. Debt is a serious problem, and if you are struggling, Seek Help.

Step 1: How to stop the Debt Cycle?

Many Debts are a cycle.

Especially ‘bad’ debts like:

Credit Cards.
PCP Car Finance
Payday loans.
Guarantor loans.
High APR personal loans.
Rent-to-own retail.
Catalogues.

These debts turn into a negative cycle. You are paying more - often twice as much - for the goods or service. This keeps you locked into a debt spiral. You borrow more, repayments stack up, and your finances suffer further next month.

Stop. Get out of that whirlpool dragging you down.

Your first step is to stop. Stop as many of these kinds of debt as possible. Now.

Some you can’t cancel, and you’ll have to repay. Others you won’t be able to cancel as you need the goods or service. But as many as possible cancel today and aim to never use again.

Stop Immediate Debts

If you can, stop, return, cancel or arrange repayment plans for these debts:

Credit cards.
Future holidays on finance.
PCP Car Finance. If you are struggling to pay, look to Voluntary Terminate. Unless the market value of the vehicle is worth buying & selling on second-hand.
Cancel or get out of any rent-to-own or catalogue items if you are able.
Cancel high-cost mobile phone contracts.
Cancel high-cost broadband and TV contracts.

Cut up your Cards

If you are making interest payments upon any of your credit cards or if you are only making the minimum payment. Cut up your credit cards now. Phone up and cancel your cards so you can’t add more to the debt.

Do not put another penny on credit cards.

Stop Debt Habits

Shortly, you will cold-turkey your debt habits.

If you borrow money from friends, family, or colleagues. Stop.
If you use your credit cards to get by. Stop.
If you use short-term loans or payday loans. Stop.
If you buy from catalogues or rent-to-own retailers. Stop.

This may sound brutal. But the next steps will work through a plan.

If this idea has you anxious or worse not sleeping: Seek Help.

Step 2: How to budget?

Budgets are bullshit. Seriously. Let me hear you say it: Budgets are bullshit. Again! Budgets are bullshit!

You want to work from actuals. What you are actually spending. And on what.

Measure. Measure your spending.

Measurements over Budgeting

This will be boring. Warning: If you can’t use a spreadsheet, learn a new skill today! Or do it on a piece of paper!

But it’s going to fix your debt crisis.

Here’s what to do. It’s simple.

For the last month do the following:

Gather your bank statements for the month
Gather your paychecks for the month
Create a spreadsheet:
1. Create a section for ‘Income’
  - Under ‘Income’ put your income.
  - Summate income into a total income.
2. Create a section for ‘Expenditure’
  - Under ‘Expenditure’ create buckets for your main spending habits: Rent/Mortgage. Local Taxes (Council tax in the UK). Food. Energy. Entertainment. Eating Out. Clothes. Toiletries. Makeup. Whatever ‘top-level’ categories your spending is under.
  - Comb over your bank statements. Assign every line item to a category. If there isn’t a suitable category, make a new one. ‘Cat costumes’ can go under ‘Pets’
  - Summate expenditure into total expenditure.
You now have a basic Income & Expenditure sheet. At this point, your Income should be greater than your Expenditure. Create a row that subtracts your Expenditure from your Income. If you are struggling with Debt, your Expenditure might be greater than your Income. That’s OK. You can fix that.

You need to get every last expense. Every. Last. Expense.

Bills: Council Tax, Rent.
Credit Card Bills.
Food
Gas & Electric
Mobile Phones
Subscriptions like Spotify, Netflix
Cash withdrawls - what does it go on? Shops? Taxis? Down the pub?
Presents
Holidays
Cars
Fuel
Insurance
Drinking
Smoking
Gambling
Eating Out
Takeouts
Childcare

Think of everything. Go through every line in your bank statement and figure out what it was. Capture it all in the spreadsheet.

For the last month at the very least. If you want to fix your debt crisis, do this for the last 3 to 6 months.

Brutally Cut your Expenses

Next is not going to be fun. But you need to do it.

And you’ll need to keep on doing it. If you are struggling, Seek Help.

You now need to comb through your Expenses. You are going to brutally ask: Do I need this? Really need?

Start with the ‘easy’ things:

Do I need that TV package?
Do I need that expensive phone on £40/mo contract?
Can I pay less for food? Shop elsewhere? Don’t buy brands? Eat healthy for less?
Can I stop or cut back smoking?
Can I stop or cut back drinking?
Can I really afford to go on holiday this year?
Can I not eat out or get takeaway for a month, or 3 months, or 6 months?
Can I find cheaper car insurance, house insurance, or energy provider?
Do I need to pay for a gym membership?

But start to think brutally:

Is my rent too high because I am renting a place that’s too big? Too nice? Could I move to a cheaper property or area?
Do I need my car? Can I walk, or bike?
If I need my car, can I downsize it to a cheap second-hand car?
Can I cancel the holiday I’ve already booked?
Can I sell or cancel the new TV I’ve bought on finance?

You want to get your expenses as low as possible. For a few months at least.

Why? So you can build up reserves to never enter the Debt Cycle again.

Step 3: How to avoid Future Debts?

You need to have brutally looked at your expenses in Step 2 before continuing. If you have not done so, go back again.

You need a few quid left every month. Even £20-40 will help. The more leftover, the better.

You will now build up a reserve of readily available cash to mean you can avoid Debt in the future.

Build an Initial Emergency Fund

First, aim to save £500. This £500 will be your initial Emergency Fund

Only use your Emergency Fund for Emergencies, i.e.:

Your car breaks down
Your washing machine breaks down
You lose your job
You or your partner is off sick

You’ll aim to have an initial Emergency Fund of £500 - and keep it at £500 at all times. If it ever dips below. Top it back up.

That’s about £40-50/mo for a year. Or 5 months if you can stash away £100/mo.

That £500 will let you avoid Debt in the future. Rather than having to borrow from friends, family, or loan companies.

Open a Cash Savings account (Instant Access) with a bank. Start saving as much as you can until you reach £500.

Remember Step 2? You are going to have to stick at it.

Keep your emergency fund at £500! If it dips below. Top it back up.

Step 4: How to Clear your Debts?

You should now be in a position where you:

Have saved an Emergency Fund of £500
Have slashed your expenses as low as you can
Have stopped getting into more Debt

This is an awesome place to be. Congratulations! Treat yourself!

It’s now time to start obliterating your debts.

If you only make the minimum payments, your debts will never go down.

You need to start clearing big chunks of your debt.

Debt Repayment

Talk to who you owe money to. Is it a company like Energy, Mortgage, Bank Loan, Credit Card or even Payday Loan? If so, the company must provide you with support if you are struggling. They must agree on a repayment plan if you are struggling to repay.

You may be able to negotiate a payment holiday, interest holiday, or lower repayment plan on some of your debts. Speak to those who you owe money to find out.

If you are struggling & talking to those who you owe money to doesn’t work, Seek Help.

Debt Management

Some debts have higher priority than others.

Think about the consequence of non-payment. Non-payment of your rent or mortgage means eviction or repossession. Non-payment of Council Tax can lead to court, wage arrestment, or a criminal record.

Debts that will put you on the street or in court are ‘high priority’. You must pay the minimum on these. Find a way.

All other debts are ‘lower’ priority.

Once you have paid your high priority debts this month, and the minimum on all other debts, focus on reducing your overall debt as quickly as possible:

Pay the smallest debt off first. Then clear the next smallest debt. This is the ‘Snowball’ method.
Pay the most expensive debt off first (by interest rate). Then the next. This is the ‘Avalanche method’

If you are the kind of person to give up on something, try the Snowball method.

If you are the kind of person who wants to make the most out of something, try the Avalanche method.

Whatever suits you. Pick one of your Debts. This will be your Target Debt.

You are going to focus on paying off your Target Debt.

Ensure your Emergency Fund is full. Now put any money you were saving for your Emergency Fund towards clearing your debt. And some more. Get that debt paid off. Pay off as much of your Target Debt you can, every month. As quickly as you can.

Go back to Step 2. Sacrifice nice-to-haves and spend any money you can find on clearing your debt. Takeaways, restaurants, holidays. They need to go until your debts are under control.

Once you have cleared one debt, you’ll have more money next month. Then focus on the next debt.

Debt Consolidation

Do you have a large amount of debt? High thousands into tens of thousands? You may want to consider consolidating your debts.

Consolidating means taking out new low-interest debt to pay off your higher-interest debt. You can do this with low-interest debt like remortgaging. Or a low-interest secured personal loan from a bank. If these are unavailable, a Debt Management Plan with a charity like Step Change. Seek Help here.

If you are lucky, you can move some of your debt on to 0% credit cards. If you do this, you need to make sure you have a solid plan to pay off the debt within the 0% period.

Consolidating is a way of reducing your monthly outgoings. This lets you clear your debt faster.

If you have a large amount of debt & can’t work out if consolidating is right for you, Seek Help.

Seek Help

There is no shame in asking for help.

Are your debts are spiralling?
Is having to repay keeping you up at night?
Are you struggling month after month?

Debt Charities like Step Change can help.

Debt Charities can arrange advice, counselling, and talk you through your best options.

Debt Charities like Step Change can arrange Debt Management Plans and repayment options. They can also help arrange insolvency and bankruptcy.

Step Change can help with all aspects of debt, and solutions to debt, including:

Debt Management Plan - a monthly payment to Step Change, and they deal with your creditors.
Debt Relief Orders, Individual Voluntary Arrangements and Bankruptcy. Depending on your situation these can pause, reduce or void your debt.
Equity Release. If you own a property you can release the value of that property by remortgaging.

Which option is best very much depends on your situation.

Reach out to Step Change for help or counselling.

Step 5: How to Make More Money?

You should now have brutally sorted your expenses, saved an initial Emergency Fund, and have your debt spiral fixed.

The fastest way to debt freedom and future wealth is to increase your income. Any extra income goes to clearing your debt.

Increase your income

Promotion or Job Hop

If you are in a salaried job, test the market. Look for a new job in a similar company. This is the fastest and easiest way of increasing your income.

People who job hob every couple of years often earn a 10-20% salary increase. You are often no longer rewarded for staying at the same firm for long periods.

This will depend upon your job, industry, and location.

Job-hopping is not for everyone. Are the internal transfers or promotions that can earn you an increase in salary? Ask your company.

A Second Salaried Job

Lots of people have more than one job. Especially over the weekend or evenings.

This can be a simple way of supplementing your income. Even something simple like being a delivery driver for a local takeaway. It can earn you some extra money.

It’s not for everyone. It’s a lot of extra hours. Could it make the difference between spiralling debts, or clearing them years quicker?

How to make more money Online

This article isn’t going to teach you ‘How to make more money Online’.

There is plenty out there to learn from. But, everyone can make some extra cash online. Use every penny you earn to pay your debts down quicker.

Here are some rough ideas:

Buy and sell goods on eBay
Make arts & crafts in your spare time and sell on Etsy.
Use TopCashback* or Quidco* to earn hundreds every year when you change suppliers. Especially your energy supplier, insurance or internet provider,
Use TopCashback* or Quidco* on your usual spending. But don’t spend more than you need.
Make use of Bank referral and Switching offers
Carry out surveys online, with sites like PanelOpinion.
Use get-paid-to-signup sites like 20 Cogs* - Sign up with a different email address.
Sell your time online. Can you write? Can you design? Freelance. This is like taking a second job!

You can make £1k/year tax-free under the Trading Allowance

How to make more money with a Sweaty Startup

Rather than take a second job, why not start a ‘Sweaty Startup’. These are service businesses that do not need skills or training. And importantly do not need a huge outlay to get going.

You’d work for yourself, becoming self-employed. You could do it just in the evenings and weekends. The first £1K is tax-free under the Trading Allowance.

Business ideas like:

Lawn care
Garden care
Cleaning or Maid services
Pressure washing/cleaning
Deck fixing & staining
Residential painting and decorating
Gutter cleaning
Car washing/valet
Dog walking
Delivering firewood
Manage holiday lets / AirBnBs
Oven cleaning
Residential Laundry
Seasonal: holiday decorating

You can take this further if you have skills, like plumbing, electrics, joinery, networking & AV, computing and IT.

These aren’t ‘cool’. It’ll be a lot of hard work. But if you:

Dress well
Are professional
Turn up on time
Provide quick quotes
Do a good, timely job
Setup a cheap website
Pick a service that is under-represented in your area
Build an initial client-base
Get and encourage word-of-mouth recommendations, by offering discounts

…you’ll be able to get going and earn some extra money!

The idea with Step 5 is to increase your income.

You then use that extra income to increase the size of your Emergency Fund to 3 to 6 months of your net expenses.

Once your emergency fund is at 3 to 6 months, every penny goes towards clearing your debts faster.

These five steps will help clear your debt. But, are also rooted in the Principles of Financial Independence. This means once your Debts are under control if you stick to these steps you’ll be set for life.

Money Mage is personal thought and opinion on a personal blog, provided for information and entertainment only. Money Mage should not be construed as advice. Please read the Disclaimer. Debt is a serious problem, and if you are struggling, Seek Help.

Subscribe now, follow me on Twitter @moneymagery, stick by your principles and you’ll be mortgage-free in no time.

The following Articles from the Best Of Money Mage can help you with your spending, saving and money making.

Money Mage plans for 2020

2020-01-13T00:00:00+00:00

This time of year is Burns night in Scotland, where we celebrate the bard with a sacrificial haggis and a wee dram.

‘To a Mouse’ always reminds me to plan. Without fail. It’s become a bit of a habit.

I am a software engineering leader. A manager of technical and creative people. In software we plan. We plan a lot. We design a lot.

But we know that the design - the plan - is not the point. It’s the act of planning and designing that is worthwhile. Not the artefact.

It’s all about getting the creative juices flowing.

The Cardboard Programmer

You probably haven’t heard of the term, but it’s apt. The cardboard programmer. A metaphorical cardboard cutout of a colleague.

As a software engineer, you can quite often get stuck. Code and systems quite often pan out as you expect. Components have to evolve and change. Certainly not to a fixed ‘plan’.

You can get in a bit of a rut that might take an hour or two to get out of. Sometimes you can’t see the wood for the trees.

If I am stuck, I will often stand up and ask for a ‘cardboard’.

Someone to come and sit at my desk. Pretend to be a cardboard cutout. A literal sounding board. They sit and listen. They don’t speak. I talk through what I was doing. Importantly, I talk through what I was planning on doing.

That act of just thinking, talking, and planning is often enough to unblock your thought process.

If I’m stuck I’ll ask the cardboard to come to life and help. But more often than not, they’ll leave without speaking.

There is no artefact. There is no document. It’s just the thought process.

So I plan. I plan a lot. I design a lot. But the plan itself - the artefact - is not worth much.

To that end, here is my review of 2019 and sounding board for 2020!

Thank you for being my cardboard today!

2019 in Review

Health & Wellbeing

This time last year I was 86kg. I was stressing over hell-work & working 50-60 weeks. I was spending too many brain cycles worrying about what others’ thought. I wasn’t doing well.

I needed to change.

I spent the second half of 2019 focussing on me.

I took a new job, and it’s been the biggest improvement in my state of mind.

This year after Christmas I am 81kg, I didn’t quite hit my 2019 target but got down to 77kg. My weight has been pretty stable all year, which is great.

It’s great to lose weight and save money at the same time

My alcohol intake is way, way down. I’m not quite teetotal and have the odd blowout, but it’s now once a quarter rather than once a week. I now don’t like the smell of beer!

Running has been OK, but could be better. Something to work on through 2020.

One area of stress has been looking after an elderly relative at a distance. This looked quite bleak earlier in the year. As the summer progressed the situation improved. With some gentle nudging and a couple of visits. If anyone is in the same situation, happy to talk through!

Hours Worked

The first half of last year was terrible.

Hell-work was truly hell work. I was being treated terribly by the owners of the business, bullied, backed into a corner.

It was clear they were done with me, despite strong performance. I was bringing in millions of dollars of work - and overseeing the development & delivery of those contracts.

The new owners didn’t like how I worked. I was too blunt. I was too people-centric. I was too bottom-up. I didn’t fit into their do-as-you-are-told model.

And I didn’t like them.

I resigned at the end of April.

They say people quit their boss and not their job, and this is so true.

I loved my old job. Too much. I was one of the first employees, I felt the company was part of me, and I was part of the company. I helped build the place.

The company changed owners and the new Chairman was a nasty, nasty piece of work.

I did everything in my control to work with him, to find a way to make the situation work. But he wanted me out the way.

It was the end of the road.

Rather than fight - mentally, verbally, or even legally, I decided to deal with the situation positively.

Many would have said to have taken them to court. Claim constructive dismissal. I contemplated it, but I decided instead to spend my positive energy to get to a better place.

I found another job within 60 days. For the same take home but none of the responsibility. I resigned as soon as I received the signed contact.

This was the best move I have ever made. I love my new place of work for several reasons.

I have the same motivation but none of the irrational attachment, it’s not ‘mine’. I’m surrounded by super-intelligent colleagues. The work is challenging. I still get to deal with customers. I still get to travel.

I have more time.

I wish I’d done it earlier.

Holidays

We hit our four holidays in 2019, and we plan to do the same through 2020. One overseas to Rome. One stay-cation in the beautiful Scottish borders. One awesome Christmas with the other-MM. And one at-home staycation. We’ll carry on with one holiday per quarter, it seems to be working well.

Sounds like a lot. But two are staycations. The other two are about £500 a pop, although we did spend a little more in Rome this year. Renovation

I had a couple of weeks gap between jobs earlier this year, so we renovated the hallway.

This cost next to nothing. I did the work apart from laying a carpet. The inside of Castle Money Mage is now complete after 6 years chipping away. Major renovation work is paid for with 0% finance, with the bathroom due to be paid off next year.

This is the only debt we have. The debt is 1.5% of our net worth, so tiny.

Savings Rate

We had a goal of 60% savings rate last year.

Smashed it.

2019 savings rate averaged at 68.33%. In the last quarter, it was up to 75%.

One month hit a whopping 91.82%!

The lowest was 35% due to renovation spend and booking flights & hotel for Rome.

We are now completely mortgage-free. This means we can save and invest even more. I know this is privileged, but we’ve worked at it. We started jobless, with nothing in the other-MM Mom’s council house. Financial Independence is for everyone.

Net Worth

Net Worth increased a respectable 22.5% in 2019.

This was helped by clearing the mortgage, a bonus from my old job, and salary sacrificing into my pension for tax relief.

We could be financially independent in 4.6 years taking into account all of our assets. This would give us a near-infinite £17K a year to live off.

This is unrealistic, as it includes our house and pensions we cannot access accessible for another 19 years. This means there is more to work on!

Money Mage

I started Money Mage exactly 12 months ago. Starting with How to be mortgage free and retiring early.

It turned out we delayed clearing the mortgage as Nationwide was going to charge us an Early Repayment Charge despite agreeing to not charge us. So we delayed until August.

Money Mage has been growing steadily, and thank you for reading. If you are not already subscribed, please do so!

You can also find me on Twitter, Facebook and Medium.

I’m not looking to boil the ocean, as with everything good in life, incremental steps forming a long term habit will lead to success!

Reading

In the early part of 2019, my reading habit had died off.

I had a lot going on. I was dealing with hell-stress at hell-work, finding a new job, and an ill elderly relative.

I needed reading. I use it to chill in the late evening just before bed.

Devices off. Read.

I wasn’t doing it.

Happily, I’m back into reading in the evenings. Currently, I am reading a science fiction series, Peter Hamilton’s Confederation Universe Series. Starting with The Reality Dysfunction*. I am a fan of Hamilton’s work.

Plans for 2020

Health & Wellbeing

I am aiming to increase my running habit. I expect I’ll sign up for a 10K or half marathon in the second half of the year as forcing-function. My weight seems pretty stable. Through 2020 I am planning on maintaining the stability around 77-80kg.

I have some Christmas pounds to shed, but don’t we all!

Savings Rate & Net Worth

The journey the other-MM and I have been on with our joint finances for the past 18 years will continue into 2020.

I am so lucky to have a like-minded partner and will be eternally grateful for it.

Our path to Financial Independence is on track.

I plan to open a SIPP with Vanguard as soon as it opens, to kick off non-company pension contributions.

I am aiming to get as close to the £40K Pension limit and £20K ISA limit this year, but my income means it’s probably not going to happen. I’d need a pretty big bonus or bump at work, or a significant increase in other income!

Savings Ninja is on track to achieve this feat this financial year, which is a massive achievement. The closest I have been to the pension allowance was £36K back in 2018, due to an unexpected bonus at old hell-work.

Early Retirement Planning

With our finances on track and 19 years until I can drawdown my pension, I am going to work with with the other-MM to figure out an early retirement plan.

I see this a as rolling wave:

Passive Income / Liquid Bridge at N?
Pension Drawdown at 55 (maybe 57)
Full State Pension at 67

My FI number predicts N at 17.6 years. Which is close to Pension Drawdown age!

This is because a lot of our Net Worth is tied up with our house and pensions. So for 2020, I’m going to work through a plan of getting 17.6 years down.

You can keep track of progress in the Savings Report series. You can keep track on the Best of Money Mage

Holidays

We plan on continuing the trend of four main holidays per year. Once a quarter as a break. This year will also have a bonus small 5th staycation at the end of January as both the other-MM and I had some left to spend days.

We already have the time booked for our first holiday-let getaway at the end of March. We just need to book.

We also need to decide upon another European capital. Brexit may mean it’s on the fine island of Great Britain. Sad. Face.

The other-MM struggles with travel and Rome was a bit of a push. We might do something a little closer this time.

Renovation

With the inside of Castle Money Mage now complete, we are turning our attention to the outside.

Our house was a bit of a wrecked student let, and it needed work. Which we’ve been chipping away at over the past 6 years.

When we bought the outside of the house was in OK condition but not great.

I did some immediate repairs after we bought: to guttering & flashing boards to reduce water damage. I also painted the windows. They are old wooden windows, sigh. We also have a crappy wooden balcony. The balcony is an utter pain as it needs painting every two years. Some of the rendering is cracking and flaking off due to water damage under the balcony.

This year I need to get outside and deal with some of the water damage before it starts getting worse.

The windows will need replacing at some point over the next 5 years. I am hoping another sanding, filling, and a coat of paint will make them last a wee bit longer. I’m going to try and sort the balcony out with some roofing, drainage and bitumen.

Money Mage

This year I am planning on continuing to tick Money Mage along, it’s growth is where I want it. I’m going to continue doing more of the same!

I expect you’ll see some of the content aligning to my own goals - around growing additional income streams. I also plan on expanding the ‘What Is’ financial information series, as financial education is really weak. I hope it helps!

I expect I’ll do a series on batch cooking recipies, and also touch on debt this year.

2019 was an awesome year, and I hope you enjoy Money Mage into 2020 and beyond!

Investing

I started contributing a regular amount to a Stocks & Shares ISA with Vanguard for low fees. Investing in Vanguard LifeStrategy 80 and a small holding in Vanguard’s FTSE All-World High Dividend Yield $VHYL.

I expect to continue this and not tinker.

The other-MM and I tend to have quite large cash savings which is not ideal. I plan on talking through with the other-MM other investment opportunities this year.

Income Streams

To diversify income, I am looking at additional income streams through 2020. One action has been to make money when spending with sites like TopCashback* and my BA AMEX. This basically is an inflation beating trick. I plan to beat my 2019 of a few hundred quid.

I have a couple of other product developments on the go which may or may not work! I am also looking at building up investment income from dividends within an ISA wrapper.

The odd bits of ‘beer money’ help as well. Here is one bit of beer money for you right now: A free share worth up to £100 if you sign up to Trading212* Happy New Year!

I am hoping 2020 goes as well as 2019. 2019 was an awesome year for our household, and I hope it was for you. What are your plans? Do you have anything big coming up?

I wish you the very best health & wealth throughout 2020.

Subscribe now, follow me on Twitter @moneymagery, stick by your principles and you’ll be mortgage-free in no time.

December 2019 Savings Report

2020-01-06T00:00:00+00:00

Happy New Year lovely readers! I hope you had a awesome break over the festive period.

We had a complete shutdown in the Money Mage household. We did nothing, and it was bliss.

This post marks the 1 year Birthday of Money Mage. I can’t believe this Savings Report marks 12 months ago since I wrote How to be mortgage free and retiring early! It’s been an awesome year!

This is the next in my Savings Report series. You can get them all the best of Money Mage

You may be wondering where my 2019 review is. It’s coming - Next week! Subscribe to make sure you don’t miss it!

Here are this months savings figures.

December 2019 Savings Rates

Date	SR	SRp
December 2019	71.0%	77.8%
November 2019	66.89%	74.25%
October 2019	65.9%	73.4%

SR = Savings Rate
SRp = Savings Rate inc. Pension

Towards Financial Independence

Our Financial Independence number is quite conservative. This table shows the number of years to achieve Financial Independence in various cases.

Date	FIh	FIp	FI
December 2019	4.3	12.6	17.6
November 2019	4.7	12.9	17.6
October 2019	4.9	13.1	17.7

FIh = Years to FI based on Total Assets.
FIp = Years to FI excluding the house, but including illiquid pensions.
FI = Years to FI excluding the house and other illiquid assets.

What’s pretty awesome is FIh is tracking down really quickly - this shows the overall plan is well on track.

FI is tracking down slowly. This is expected as I am aiming to fill my personal £40K pension allowance so FIh and FIp will be affected first. The other-MM’s earnings are not big enough to hit their £40K pension allowance.

December 2019 Recap

December rounded off an awesome year. I’ll do a separate roundup of our year early next week.

It’s been a pretty quiet month all round. We both rounded off a bunch of work, and then rolled into an extremely lazy festive period.

We stayed at home with the dog. Walks every day. Computer games. TV. Food. It was honestly one of the best breaks I’ve had. I actually managed to completely shut down for 2 weeks for the first time in a decade. It was awesome.

Finance wise, some additional deferred expense came through from October’s Trip to Rome. There was also some increased expenditure on food due to the Christmas break. Increased the wasit line too. Remember if you want shed the weight, build a habit, not a fad!

I made my first blog income! A huge milestone that I am over the moon about!

I also got some free shares from Trading212 worth over £20! If you sign up to Trading212* you will get a free share in a global company worth up to £100. Doesn’t sound like much, but you’d need £7K in a Marcus account for a year to earn that!

The first monthly direct debit for regular investment into a Stocks and Shares ISA came out this month. It’s to build a liquid bridge over the next 10 years. It’s in Vanguard for low fees. Investing in Vanguard LifeStrategy 80 and a small holding in Vanguard’s FTSE All-World High Dividend Yield $VHYL.

I’ve met my minimum spend on my AMEX, so I now have a companion voucher and nearly enough air Avios for an awesome free first-class flight to Tokyo for both of us. We’re planning this for 2021. If you want a referral to the BA Premium AMEX get in touch mm at moneymage.net. You can get 3,000 Avios worth over £30 if you spend wisely.

Going Well

Managed to completely shut down and rest over the festive break. Which is a first for over 10 years! The new job was the primary reason.
The new job didn’t bother me at all over Christmas, which is a first. Usually I am working, even if I am not working.
Stopped tinkering. I’d been tinkering.
I made my first blog income. Slow like the tortoise.
The other-MM was gifted a bottle of 12 Year Suntory by one of his customers. Worth over £95! I’ve been to Tokyo, and they love their Whisky! I had a customer out there who worked so hard he used to leave the office at midnight, go for a wee dram, then sleep in the internet cafe….
Money Mage continues to go well. I’ve hashed out a plan for 2020 which you’ll start to see ticking in. I won’t divulge you’ll just have to wait and see!
Reading! I’m back into reading a little more. I’ve been reading some science fiction in the evenings as a wind-down. I’m still on the Confederation Series by Peter Hamilton.* - Both the other MM and I are avid Sci-Fi readers, the other MM more than I!

Should do better

On the drinking front, I had another blowout on the last day before the holidays. I’m going to have a quarter off the booze.
Running was still poor in December. I managed to get out once over the break.
Ate too much over the festive period, but don’t we all?

December 2019

December has been a pretty good month, with increased pension contributions hitting our accounts.

Month on Month net worth increased by a whopping 3.12%. This is due to Nationwide showing a house price rise, a big uptick in pension contributions and pension growth.

Year on Year is up a very healthy 24.59%. More detail in next week’s review of 2019.

Type	MoM%	YoY%

I am really pleased with the Pension situation in 2019. I am utilizing my Pension Allowance as a way to accelerate RE at 55. Over 30% of that growth is solely down to growth and not contributions.

I am also really pleased with my S&S ISA contributions which are now even visible, but only as a sliver, on our asset allocations. This will increase quite a bit through 2020. I am using this to accelerate my FI number above. Compared to Pension contributions, this is tiny, but when my Pension pot is looking on track to grow to the near the lifetime allowance I’ll dial back pension contributions.

Asset Allocations

Here you can see asset allocations this month compared to December 2018.

Lifetime

This chart shows our net worth growth since the other-MM started work and I graduated.

The little bit of bump earlier year was due to a change in my job. This meant reduced pension contributions during probation. It’s now starting to tick up again as expected.

How is your journey to FI going?

Merry Christmas and a Happy New Year

2019-12-21T00:00:00+00:00

Merry Christmas and a Happy New Year

2019 was an awesome year for the Money Mage household. I hope yours was too.

You can find a roundup of 2019 in Money Mages’ plans for 2020

Money Mage has been quite a success as well, and the end of 2019 marks this blogs first birthday. Time to celebrate. Some of the most popular posts in 2019 were:

Money Mage and the Other Money Mage wish you health, wealth and happiness this Christmas.

I hope you have a very Merry Christmas, and a Happy New Year 2019.

Money Mage

What is a Personal Allowance?

2019-12-14T00:00:00+00:00

Tax is boring. I know. This is the second Tax post in the last couple of weeks. But it’s important!

Understanding the various tax-efficient earning, saving and investing approaches is a way to accelerate your financial independence. The UK provides a great environment for tax-efficient earning, saving and investing.

In the UK, everyone is entitled to earn a certain amount of money without paying tax on those earnings. This is called the Personal Allowance.

The Personal Allowance for 2019/20 is £12,500. This means the first £12,500 you earn in the year is completely tax free.

The Personal Allowance is considered the first tax band, the nil rate or 0% band

Your Personal Allowance can go up and down depending on your tax situation. Some Taxable Benefits reduce your Personal Allowance. Some Tax Rebates or other Allowances increase your Personal Allowance.

Reducing your Personal Allowance:

Taxable benefits from your work, like Private Health Care
Earning over £100K
Previous year(s) underpayment of Tax

Increasing your Personal Allowance:

Allowable expenses, like if you work from home
Relief from Pension Contributions
Marriage Allowance
Some benefits, i.e. Blind Person’s Allowance.
Charitable Donations via Gift Aid
Previous years(s) overpayment of Tax

What are the other Allowances?

There are other Allowances that enable you to earn without paying tax. In some cases, you will need to contact HMRC or complete a Self Assessment to benefit.

Check gov.uk for more information, or consult an accountant.

Here is a non-exhaustive list of other Personal Tax Allowances:

Personal Savings Allowance
Individual Savings Account Allowance
Dividend Allowance
Trading Allowance
Property Allowance
Rent a Room Scheme
Pension Allowance
Marriage Allowance
Capital Gains Allowance

What is the Personal Savings Allowance?

The Personal Savings Allowance allows you to earn up to £1,000 tax free interest.

If you are a ‘higher-rate’ taxpayer, this is reduced to £500. If you are an ‘additional-rate’ taxpayer this is reduced to £0.

Some taxable accounts now pay better interest rates than Individual Savings Accounts (ISAs). This is especially the case with introductory offers. It can make sense to have some funds in taxable accounts. If you are a basic-rate taxpayer, you can earn up to £1,000 before paying any tax on that interest. If you earn more than £1,000 you then start paying tax on any interest earned above £1,000.

Any interest earned in an ISA is tax free.

What is the Individual Savings Account Allowance?

You can save or invest £20,000/year in an Individual Savings Account.

You do not receive tax relief when you contribute, so the £20,000 will come from your net pay.

However, all earnings and growth within an ISA are completely tax free.

ISAs are too big of a subject to cover here. I will cover ISAs in a future post.

What is the Dividend Allowance?

In 2019/20 you can earn £2,000 per year from Dividend from company shares before paying any tax.

There are also different bands for dividends. What you will pay will depend upon your Income Tax Band, but the rate is different for Dividend tax.

Band	Tax rate on dividends over your allowance
Basic rate	7.5%
Higher rate	32.5%
Additional rate	38.1%

Any dividend earned within an ISA is tax free.

What is the Trading Allowance?

Everyone is able to earn £1,000 tax free from ‘Trading’. Not Bitcoin or Stock trading! Self-employment, casual services, or hiring out equipment or tools you own.

This is ideal if you are bootstrapping a self-employment side business in your own time. You can earn £1,000 without even informing HMRC. Allowing you to get the business off the ground before worrying about tax!

If you earn over £1,000 from self-employment or casual services you need to inform HMRC. More information is available on gov.uk

What is the Property Allowance?

You can earn £1,000 per year tax free from property or land income. The obvious is buy-to-let, but other tax changes has made buy-to-let less attractive. You can earn income from land, such as renting out your driveway as parking.

Some exclusions apply. Especially if you have earnt property or land income from a company.

What is the Rent a Room Scheme?

The Rent a Room Scheme allows you to earn a whopping £7,500 tax-free from income from letting a room to a lodger in your home. Or £3,250 if you share the income with a partner or spouse.

You can also use this scheme if you run a B&B or Guest House.

Bringing in a lodger is not for everyone. If you can manage the disruption, you can earn quite a sum tax-free.

What is the Pension Allowance?

The Pension Allowance is a great retirement saving benefit. It’s one of the reasons the UK is an amazing place to live if you are planning to retire early.

If you earn less than £110,000 per year, you can invest the full £40,000 per year in your pension completely tax free.

You won’t be able to access this money until you retire - currently, the earliest is at age 55, but this may increase. The Pension Allowance is a solid way to build your retirement savings in a tax-efficient way.

If you earn over £150,000 per year your pension allowance starts to taper down to £10,000. This will only affect you if you are a very high earner.

What is the Marriage Allowance?

If you are married or in a civil partnership and your spouse or partner earns more than you, you can transfer £1,250 of your personal allowance to them. This is called the Marriage Allowance.

You cannot do this if your partner earns the ‘higher rate’ of tax.

This tends only to be a gain if you earn less than £12,500 and your partner less than £43,430 in Scotland, or less than £50K elsewhere in the UK. It’s a gain of around £250 per year.

What is the Capital Gains Allowance?

Capital Gains Tax (CGT) is payable if you sell (‘dispose’) something (‘an asset’) that has increased in value.

Disposing of an asset includes:

selling it
giving it away as a gift, or transferring it to someone else
swapping it for something else
getting compensation for it - like an insurance payout if it’s been lost or destroyed

Say I buy a painting at the local gallery for £7,000. Years later I sell it for £25,000. It was a good painting. I’ve had a Capital Gain of £18,000. You have a Capital Gains Tax Allowance of £12,000. So only £6,000 is taxable.

You do not pay Capital Gains Tax on:

Your main property, unless you have used it for business reasons or let it out.
Gifts you make to your spouse or partner
Personal possessions worth less than £6,000
Assets held in an ISA
UK government gilts and Premium Bonds
Any betting, lottery or pools winnings

For most, holding shares in an ISA or SIPP means you are not liable to capital gains tax. Given the threshold, you have to be disposing of quite a large asset in the year to be hit by CGT.

What could I earn Tax Free?

You can make tax-free earnings in the UK by combining these allowances:

£12,500 Personal Allowance
£1,000 Personal Savings Allowance
£2,000 Dividends Allowance
£1,000 Trading Allowance
£1,000 Property Allowance
£7,500 Rent a Room Scheme
£40,000 Pension Allowance
£1,250 additional Personal Allowance from Marriage Allowance
£12,000 Capital Gains Allowance

Remember that interest and dividend earned in an ISA is completely tax-free!

Letting a room in your house, renting out your driveway, or a weekend side business is a great way to increase your income!

Subscribe now, follow me on Twitter @moneymagery, stick by your principles and you’ll be mortgage-free in no time.

Money Mage

February 2020 Savings Report

February 2020 Savings Rates

Towards Financial Independence

February 2020 Recap

Going Well

Should do better

February 2020

Asset Allocations

Lifetime

Flybe Collapse. How to get a refund

1. Check your Travel Insurance

2. Consumer Protection

Pay on Credit Card

Pay on Debit & Chargeback

EU Regulation 216/2004

Avoid Gift & Prepayment Cards

0%-fee Travel Card

3. Get Holiday & Travel Protection

What is ATOL?

What is ABTA?

Was Coronavirus responsible?

Fruugo Review

What is Fruugo?

How does Fruugo handle orders?

How does Fruugo handle complaints?

How does Fruugo handle cancellations?

How does Fruugo handle returns?

My Experience with Fruugo

What are others saying about Fruugo?

Can I trust Fruugo?

How can I protect my Fruugo order?

Should I buy from Fruugo?

How wealthy am I?

Does earning £80,000 put you in the top 5%?

Full QT Transcript

UK Earnings and Wealth Distribution

Why Perspective is Everything

Perceiving Billionaires

Billionaires Should Pay Their Fair Share. Like Everyone.

Check your wealth and your privilege.

January 2020 Savings Report

January 2020 Savings Rates

Towards Financial Independence

January 2020 Recap

Going Well

Should do better

January 2020

Asset Allocations

Lifetime

5 Steps to get out of Debt

Step 1: How to stop the Debt Cycle?

Stop Immediate Debts

Cut up your Cards

Stop Debt Habits

Step 2: How to budget?

Measurements over Budgeting

Brutally Cut your Expenses

Step 3: How to avoid Future Debts?

Build an Initial Emergency Fund

Step 4: How to Clear your Debts?

Debt Repayment

Debt Management

Debt Consolidation

Seek Help

Step 5: How to Make More Money?

Promotion or Job Hop

A Second Salaried Job

How to make more money Online

How to make more money with a Sweaty Startup

Other Related Articles

Money Mage plans for 2020

The Cardboard Programmer

2019 in Review

Health & Wellbeing

Hours Worked

Holidays

Savings Rate

Net Worth

Money Mage