Wealth and Glamour - the "Chelsea" Effect

I had a rare (and brief) "reality shift" into the high life last weekend whilst visiting my son in London. We went out for a fantastic Sunday lunch at a semi-exclusive establishment which cost much more than I've spent on eating out for a very, very, long time. We had champagne cocktails to start with, a bottle of good wine and all the extras. I really enjoyed myself. Strangely, and a little uncomfortably, the large bill almost added to the enjoyment. After the "high" of the experience died down I began to wonder what it was that I had actually paid for?

Like anyone who makes a habit of being aware of how they are spending their money I automatically question the value of what I buy and weigh up if it's "worth" what I'm paying. I admit that this calculation, for me, is not always as simple or as "pure" as it is for some FI'ers. I'm quite happy to add factors into the equation that could be regarded as self indulgent or self-defeating from a FI point of view - time being a frequent consideration. For example, I might buy something at one supermarket that I know I could get cheaper elsewhere, just because I am already in the shop and it would take a chunk out of my free time to save the difference. Not worth it, in my view. Similar calculations about value might include stress-reduction, health, quality and social responsibility. It's not as simple as pennies and pounds.

But when I think back about the meal at the weekend I realise that one of the things that I must have been including in my calculation of the "value" of the meal was the glamour of the whole experience. "Glamour" is an interesting word. The archaic meaning is "a magic spell, enchantment or charm" but modern definitions refer simply to "exciting" or "attractive" and current usage of the word definitely tends to overlay associations of the excitement and allure of wealth. Was I happy to pay more purely because I was seduced by being part of all that affluence, was I paying to be "glamoured" (anyone a "True Blood" fan?) - I suspect so. That's not a comfortable realisation.

Co-incidentally "Made in Chelsea" is back on Channel 4 this week. It is a (very) guilty pleasure of mine, watched alone and in secret, seldom talked about or admitted to :-).  For those who haven't come across the series it is a structured-reality show featuring a group of very attractive twenty-something year olds living in London with more money than they can handle, no responsibilities and no grip whatsoever on what life is like for the majority of their contemporaries. Strangely enough, despite all the champagne-swilling, holidaying in Barbados and shopping in exclusive boutiques they seem no happier than "ordinary" people and they spend as much time obsessively discussing and dissecting relationships, crying, falling out and making up again, as young adults in all walks of life.

However the overiding theme of the show is "glamour" and the cult of the mystique of wealth; not what money can do, or buy, but what having money makes us into. Somewhere along the line we seem to have bought into the delusion that this equates to attractive, charming and happy. And that, apparently, includes me .... (or at least a small part of me :-))

Made in Chelsea cast (Facebook).
Mark-Francis (second from the right) expresses his disdain for the sort of people who would order beer-battered fish and chips: "You'd leave before they'd even finished the sentence!" he gasped, his face contorted into utter disgust.(digitalspy)

Paying For Supplements

This week I bought something that I swore several years ago, pre-FI days, I would never buy again. I bought a dietary supplement.

I dread to think how much I have spent on vitamins, minerals and "wellwoman" products throughout the years. I took a lot in my 30's and 40's. I wasn't exactly swayed by every craze that was doing the rounds, but I did subscribe to the "insurance policy" idea of being able to swallow a pill and not worry too much about what I was eating. I would also try to self-medicate for minor illnesses and conditions using vitamins - skin problems, digestive troubles, tiredness, wrinkles, weak nails, I tried "cures" for them all.

My parents have always taken multivitamins and they are now both into their 80's, so I didn't see any harm in them, and possibly quite a lot of good. I knew the case wasn't sealed but I was prepared to give it the benefit of the doubt (something like being an agnostic). Thinking back I probably spent about £8 a month on supplements over the course of 25 years, along with the occasional splurge on an expensive course of designer supervitamins, some of which I never even took. That's a lot of cash which, at the time, we didn't have available to waste.

It was probably about 4 or 5 years ago that reports in the media about the "myth" of the multivitamin started to appear and I had a re-think, did some research and decided to stop taking supplements. I already knew that my diet had improved, as more information about how to eat for good health, and the importance of doing so, became available. My husband (who is the cook in our family) was making sure we had home cooked food and lots of fresh veg every day. I had stopped eating sandwiches and crisps for lunch and was concentrating on salads, lean protein and fruit. I knew what I was doing and I was being a lot better about actually doing it. There was no need to swallow a pill "just in case". I haven't felt the effects of going cold turkey on vitamins one little bit.

However, for the last 4 months I have been suffering from a painful neck and shoulder along with pins and needles and numbness in my right arm and thumb. The doctor tells me that I have a trapped nerve due to "wear and tear" in the vertebrae at the top of my neck which has irritated the nerves and caused inflammation. It is basically a form of arthritis and there isn't a lot that can be done, apart from wait for the inflammation to subside and try to keep positive. I am sick of taking pain killers, wearing heat pads and having disturbed sleep, so I turned to Google to see if there is anything else I can try.

I discovered that there there has been a lot of interest in curcumin (turmeric) as a natural aid to the reduction of inflammation in all kinds of ailments. It has even come under investigation as something that might help in depression, which some scientists are now suggesting is a result of inflammation caused by the body's immune system. So, after doing my due diligence, I decided to give it a try and ordered 60 tablets (two months' supply) for £20.

I must admit the FI part of me is struggling to justify this spending. The whispers in my ear go something along the lines of : "But aren't you supposed to be cutting out unnecessary expense, not adding to it and in the course of doing so also supporting unproven quackery". On top of having the slightly sick feeling that I could be throwing money away, I also hate the way that people are routinely taken for a ride and deprived of their money by the supplement industry. At its worst it is guilty of raising false hopes of miracle cures, instilling guilt in parents for not giving their kids the latest "brain-boosting" vitamin combo and generally making big business out of selling unproven products to under-informed consumers.

However, I'm still going to give my curcumin a go. Despite the fact that if things improve I will never know if it worked, or my body just mended itself and even if it doesn't work I run the danger of getting locked into the mind-frame of "give it a bit more time" and then "well, you might be worse without it". We'll see. But it does look as if I'm committing myself to £120 a year more spending. Maybe the best thing to do to make myself feel better about this is to find something to cut back on to balance this out. As part of my January detox challenge (thanks TFS) I have decided that drinks after work on a Friday will be of the non-alcoholic variety and therefore far less pricey. If I keep this up all year my health will benefit even more and I can stop feeling guilty about the curcumin.

Maybe sometimes we need to indulge our need for something just because it makes us feel better, even if it isn't strictly necessary or even justifiable and allow ourselves to silence that FI imp on our shoulder. I'm counting this as one of those times.

(Image courtesy of Rogue Fitness)

Beating the Banker (Or At Least Putting Up a Fight)

Spending wisely is just as important as investing well or saving hard.

This is something that has only just started to dawn on me and I would love to be able to provide myself with some hard facts and figures to back up this newly discovered and enlightening realisation. So I've been working on a few calculations based on our previously rather chaotic monthly budget and tried to assess how the changes I have started to put in place are making a difference.

Firstly - How we pay for things:

We have no mortgage but pay most other regular bills via Direct Debit or Standing Order from our two joint current accounts (Halifax and Santander 123). I set up the Santander account a few months ago to hold some of my husband's pension lump sum (3% interest) and to take advantage of the cashback it offers.

We tend to put most of our shopping (food, household stuff, clothes, cosmetics, travelling expenses etc) onto credit cards. I currently have a M&S 0% interest card as I spend a fair amount there on a regular basis. This is a recent acquisition (part of my drive to get "value" out of my spending) and I also took up a M&S current account which came with a 6% regular saving account at the same time. I'm making a real effort to get back at least some of the profit I've leaked into M&S over the years.

Additionally we have a Halifax Platinum card with a high credit limit (£14,000) for larger purchases and my husband has just started using a Santander CashBack card for everyday groceries (1% cashback) and petrol (3% cashback).

We pay back all cards in full each month (in effect, although I am using the M&S deposit account to hold some of the money eventually destined to pay off the card when the 0% interest period comes to an end, so I am running a balance on that one -  my small stab at "stoozing" as I like the idea of turning things in our favour a little, rather than the banks', once in a while, but I don't have the nerve for the heavy stuff).

What this all means

It is difficult to put an accurate figure on the changes I have made to maximise the "value" of the current accounts and credit cards and what they can give us in terms of points, credit and 0% interest but I've done a very quick and dirty on the figures and I reckon we're about £785 a year better off:

Extra Interest from Santander 123 as compared to Halifax Online Saver: £500
Interest from M&S Regular Saver: £85
CashBack from Santander cards/account: £100 (after charges)
Points/vouchers/discounts from M&S: £100 (after charges)

That may not sound much but it would actually go a long way towards paying for an extra week's holiday or, if I add it to my investments at the rate of £65 per month it gives me:

After 6 years, you would have £96,553

How much will you invest each month? * 

For how many years? 

Is there an initial lump sum? * 

What is your expected rate of return? 

So, it actually pushed me up past my target :-)

Already I'm looking at being able to reduce the time that I have to stay at work to 5 years, I just need to find a little more to save. I really don't think that this should be too difficult.

After 5 years, you would have £86,180

How much will you invest each month? * 

For how many years? 

Is there an initial lump sum? * 

What is your expected rate of return? 

(Thanks again to motleyfool.co.uk for providing the calculations).

Plugging the Leaks

When I reduced my working hours this year I was determined that, as a household, we would not be any "worse-off" for my having done so. This objective was given a large boost by the fact that my husband had just taken his pension (in part, he is currently in flexible retirement working 20 hours per week) and so we were able to pay off the remaining mortgage we had from his lump sum. Although I know that paying off a mortgage is not always the best plan in our case I think it was the right thing to do as we were tied into a fixed-rate of 5.99%.

Two hundred pounds a month of the £600 that used to go into the mortgage now goes into AVCs. The rest was meant to just take up the slack from the decrease in my salary. However, by going through our accounts carefully and making a conscious effort to stop spending money without being sure of the value of what it is buying, I am finding that, despite the fact my income has dropped by about £600 per month (including the AVCs), we still seem to be several hundred pounds a month in the clear. It's early days yet and I'm pretty sure there won't be extra around every month but the effect of simply introducing "mindful" spending is quite incredible and very empowering.

Waste is a big block to the process of growing savings because it means that, over time, you only grow a proportion of what you could have done and so only end up with a fraction of what was possible. That £6 a month which I spend on a nail varnish that I then use just once and leave to languish in the drawer with dozens of others, could instead have been earning me interest.

Saving £506 per month instead of £500 (along with my £40,000 pre-existing savings) for the planned 6 years gives me £91,756 instead of the £91,268 in my original calculation. £488 extra (£56 of it in interest). The possibilities for increasing my chances of success seem immense, for very little pain, just by adding small ammounts that won't really be missed. This deserves careful thought. Every penny I save from our monthly budget I intend to add to our existing regular S&S ISA contributions. My account at iii allows me to transfer funds from our current account and change regular payments as and when I choose, so adding what's left in at the end of my accounting period should be simple.

Not spending without thinking is an important part of my strategy which is supported by my determination to keep a very close eye on what we actually do spend. I feel quite ashamed that I haven't done this before. Up until now there has always been "enough" so I didn't take any notice of where the money was going. Now I need to be sure because I want to steer our future, not just drift into it.

Keeping a tight ship, not dozing on-board a leaky vessel is very much part of the plan.

(Thanks to http://catinthepumpkinmoon.blogspot.co.uk/ for the picture)