Where Is the Snowball?

It’s lovely outside. Unseasonably warm for mid-October and sunny. 700,000 people in London are marching against Brexit. I’m in bed with a nasty cold, my new love interest is in France having fun without me, and I’m in a crabby mood. If you started reading this post today looking for some cheer, you needn’t read any further. Honestly.

As for the rest of you…. read on.

When one finds oneself spending a day in bed because of two zillion common cold virus particles lodged rent free in one’s respiratory tract, the usual pastime is to mess about with net worth spreadsheets, with a view of drawing some new cool graphs. So that’s what I’ve been doing today.

The results are, frankly, discouraging.

No snowball

I thought it would be nice to see where I’m at in my FI journey. Y’know, escaping the camp, breaking free, telling The Man to engage in sexual self-gratification, aka gaining financial independence and retiring. Below are two of the graphs I made. The first shows how I’m tracking in each category of wealth that I need to accumulate before I pull the plug on work. It doesn’t look too bad, right? I’m a bit behind with my FIRE Fund, but Pension and Mortgage Repayment are approaching the midway milestone, ya?

Then I thought I’d do one of those total progress graphs I’ve seen on other people’s blogs, and … what the fuck, I’m not even halfway there??!!

What bullshit is this? This can’t be right.

But I’ve looked at the numbers, and it is right. Ok, so far I’ve only spent 3.5 years actively trying to become financially independent through a combination of saving and investing, I did plan for the whole process to take me about 10 years in total – hence the 3652 days – but somehow I thought I’d be way ahead of the plan at this point. And here’s why being 40% there is not good enough: because I didn’t start at zero! I only gained 25% – a quarter of the way! – in 3.5 years, which implies that, all things being equal, I’m more than 8 years away from my goal.

A young Apollo, golden-haired,
Stands dreaming on the verge of strife.
Magnificently unprepared
For the long littleness of life.

Although Brooke didn’t have the FI crowd in mind when he wrote this, it fits us perfectly. The road to financial freedom is – by far – not a victory march, but a long wearing trudge up a seemingly never-ending hill.

And there is no snowball, ok? Produce evidence, you say? My pleasure:

We’ve all seen calculations that demonstrate how in a regular investment scenario where returns are re-invested, each year income from investments contributes an increasing proportion of portfolio growth. Well, let’s just say this hasn’t been my experience. My total net worth is growing because I’m chucking everything I have at it. The markets… not so much.

If you’re investing steadily for 25 years into a market that’s producing a fairly constant return, it might work – on the average. But real markets don’t produce constant returns, market bull runs last longer than bear slumps, and if I wait 25 years for the markets to do their magic, then I’ll be retiring at 65! That’s not what I’d call early.

Fookin’ taxes

I should’ve mentioned at the start: one of the reasons for my crabby mood is that I paid my tax today. Could’ve waited until January. Really, I should’ve waited until January, but I hate owing money. It puts me on edge – must be one of the shit money “values” I got from my financially illiterate upbringing.

We all have unconscious value-based money beliefs, and they’re like herpes: once you’ve got them, it’s for life^[1]. Logically, I know very well that it’s stupid to not take the opportunity to borrow from the Tax Man interest-free for 4 months whilst paying interest on the mortgage, but the little crappy part of my reptilian brain that’s been infused with shitty financial dogmas by my mother (no, I don’t want to talk about that right now) immediately starts nagging me about it being dishonourable, immoral even, to not pay a debt as soon as may be.

And I’m like, “Are you fucking serious? It’s the fucking HMRC we’re talking about! They’ve been borrowing interest-free from me for years. And remember that one time when I owed them money because they forgot to tell me to do the SA tax return when my income hit the threshold? They made me pay interest on the tax I owed, even though the entire mess was due to their oversight, and they tried to fine me, made me go through a stupid appeals process before waiving the fine sans an apology!” And my reptilian brain is like, “You should always pay your debts.” Then I start to lose it: “Who do you think I am, you dipshit, a fucking Lannister?”

But the reptilian part of my brain just carries on, “You should pay your debts. You know it.” And then I just can’t cope with it anymore, and think, fuck it, if paying £400 a few months earlier than I have to buys me some peace, then it’s a good investment. And then I pay it.

As you might’ve guessed, I’m not one for stoozing, either 😉 .

 

Notes:

1. Somehow, weirdly, at this point I feel compelled to clarify that I do not have herpes. 🙂