I wrote this post about money during Covid and never posted it

[Middle Class Caveman 963]

In the group chat today @Macca89 and I were having a civilised discussion about money (unit @Greboth decide to intervene with a 'mum' joke...) and it reminded me about a post I wrote back in March 2020. I never posted it because after asking @GazzaGarratt to proof read it we both agreed that the timing was poor.

 

Sadly, I think considering the economic climate right now, I should have posted it. However, I am posting it now and I hope it lands well and that it sparks some discussion?

 

I'd love to do a full in-depth post about money and wealth etc but I'm also aware that this is a gaming forum! So...let me know?

 

Enjoy!

 

Covid-19 What can we learn?

 

I’m currently sat in my garden smoking a beautiful Lancero cigar soaking up the sun and reflecting on something my sister said to me this morning. ‘We aren’t getting any wages until May’.

 

With the current global pandemic there has been a real shift back to what I would consider ‘socialist ideals’. People clapping for the NHS and demanding they get more pay and resources, the government offering to cover 80% of wages etc and the outrage of the self employed not getting anything. My sister and brother in law fall into the third category, they are both self employed - a hairdresser and a stone mason.

 

One of my reflections and the purpose of this article is to make people think about their financial security and position because unfortunately the government response hasn’t been what some people had hoped.

 

Here is an unpopular opinion and I apologise if I offend anyone BUT it is not the governments job to pay for you in times of crisis. We live in one of the most prosperous economies in the world, if you aren’t prepared for tough times then you have been negligent.

 

I’m known as the money guy, so i’m going to play that role today and offer some practical advice you can apply once the world is back to normal that will hopefully remedy the opinion I stated above.

 

Firstly, lets start with some of the issues that people have been facing. A lot of people have been laid off as a result of this situation because they are non-essential, others have been home bound and unable to do their self employed job. This has put a serious financial strain on the whole world, people are hurting. Lets examine the reasons why.

 

People are living pay cheque to pay cheque

People don’t have any savings

People are laden with debt and this is soaking up their financial resources

 

My sister and brother in law both fit all three categories, I fall into the third as I have two mortgages and a car to pay for. The combination of these three issues have meant that even just staying at home for 3 weeks has become a very daunting task for significants amount of people.

 

So what’s the remedy?

 

Well, i’m going to give you some advice that you can begin to put in place after this is all over that will hopefully help you become more resilient to global downturns (I’m thinking about the next recession!).

 

Have an emergency fund

 

I’m sure you’ve all heard of this before but i’m going to spell it out here. You should have 8 to 12 weeks worth of living money saved up somewhere that you can fall back on should you find yourself out of work. This took me a long time to commit too as a younger man but now that I have it, I feel very safe. It’s stored in a cash isa that my wife and I have access to at any time but not with our current banking provider. We both bank with Santander, so it’s in Lloyds. The reason being is that when I log into my internet banking if I see a fair wedge of money just sitting there, i’m going to find a way to spend it. Try to build on this once we get back to something of a normal economy.

 

Reduce your spending and/or save first

 

Again, this one is a tough one because we all generally live to the means we have. When I first started teaching I was earning £800 a month and I spent it all! I’ve been teaching for 17 years and I earn 5 times that now, I could easily spend it all too. This was something I had to help my wife with when we decided to have children because she would get to the end of the month and have nothing left in her account, when we talked about having a baby I suggested that she could save almost £1000 a month (once I took a look at the maths) before the baby was due to make sure we were flush during maternity leave. She didn’t believe me but after a few conversations about making her see where she was wasting money she took my advice. On payday she took £600 (a compromise) straight out of her account and put it in a separate savings else where. Low and behold she managed to save £5000 before the baby was born. What was she missing out on? Takeaways, costa coffees, random trips to shops on the way too and from work. Everyone wastes money, even me - i’m sat here smoking a cigar! Making spending cuts doesn’t have to be drastic but a small change can add up to a big reward.

 

Ice cream in the freezer…..

 

My economics lecturer taught me this saying and it has some truth to it. If I had a tub of ben and jerry’s in the freezer - it wouldn’t stay there long. Like, a week at most? I would eat it, why? Because it makes me feel good! Money is the same, if you have money in your pocket, you will spend it. Companies have become surgical in their ability to separating you from your money. So if you have it to hand you will spend it. So my last suggestion is simple. Have many different accounts for different purposes and only carry the card that you have allowed for disposable income. Here is a list of my accounts for illustration:

 

Barclays Wages - my wages go in here and this is where I pay for my phone, insurances, my car etc. I have set up standing orders on payday that separate my pay into various other accounts and my savings. I don’t carry the card for this account.

Monzo - this is my disposable income, every month I transfer in £400, thats £100 a week. I use this account for my petrol and anything else I want. Once it’s gone, it’s gone.

Joint account - this is where the wife and I put money in together and its where our mortgage, council tax and utilities come out from. We don’t carry the cards for this account.

Teacher discount card - this is a card we load up with £300 a month to go shopping with, we get 3% cash back from shopping at major supermarkets. This is the only card we will use for shopping etc, once it’s gone, it’s gone.

 

This means that all of my savings are in place and I never overspend because I know EXACTLY how much disposable money I have - Monzo is a great bank for that as it’s all online and works well with apple pay etc, even gives you a little progress bar that tells you how much money you have left for a certain period of time and is colour coded.

 

Hopefully this article has been useful and has given some of you some ideas that you could use to make yourself crisis/recession proof.

 

Much love,

Elliott

[Macca89 493]

Great read tbf mate, actually opened a Monzo account the minute I read this! 

 

Very informative 💪💪💪

[Lurchzy 1,470]

Good read. I will however disagree with the statement 'it is not the governments job to pay for you in times of crisis' when they were the ones responsible for closing down businesses and making it so you couldn't work. However with that being said, I do agree having a fail safe in place for situations like that is a good idea. I personally have a general savings account (one I can dip into if needed), a help-to-buy ISA (only allowed £200 pcm), and a CBS ISA (which I can't easily withdraw from). All of which help me save money in different ways. One of the things I like most about monzo is you can create 'pools' with names of things you want to save towards. I tend to make these pools if I have something small, like a game or event I want to save up for.

[phil bottle 9,589]

Its a gaming site, if you start with the politics you open a can of worms and we don't really need to read you telling people they are negligent. I'm not offended I just find your point of view around the government stupid and selfish. 

All good with the financial advice but yeah leave out the politics👍

 

[GazzaGarratt 10,887]

Yep, if we can sidestep the politics, there's some good financial advice about generally helping yourself here. I know Elliott was trying to help people understand the financial side of this post way more than the other bit.

 

My own experience from my job but also my own life growing up tells me that money will always revolves around 'priorities'. That's where most of us differ because we ultimately see different things in life more or less important than the next thing.

 

You'd be so surprised that how many people out there have a mortgage but don't see it as the highest, top priority to pay. If you don't pay that, you would end up not having a roof over your head or your family.

 

I tend to separate the absolute must direct debits out, get them as cheap as you can but then make sure they're always paid no matter what. Everything else then is optional...but clearly then self-control is needed if you want to start saving alongside spending.

 

There's something about routines in this somewhere. The more regular you can save on a consistent basis means you will also having a spending pattern to match it.

 

Monzo is awesome btw. Functionality is amazing in their app.

[Lurchzy 1,470]

13 minutes ago, GazzaGarratt said:

Yep, if we can sidestep the politics, there's some good financial advice about generally helping yourself here. I know Elliott was trying to help people understand the financial side of this post way more than the other bit.

 

My own experience from my job but also my own life growing up tells me that money will always revolves around 'priorities'. That's where most of us differ because we ultimately see different things in life more or less important than the next thing.

 

You'd be so surprised that how many people out there have a mortgage but don't see it as the highest, top priority to pay. If you don't pay that, you would end up not having a roof over your head or your family.

 

I tend to separate the absolute must direct debits out, get them as cheap as you can but then make sure they're always paid no matter what. Everything else then is optional...but clearly then self-control is needed if you want to start saving alongside spending.

 

There's something about routines in this somewhere. The more regular you can save on a consistent basis means you will also having a spending pattern to match it.

 

Monzo is awesome btw. Functionality is amazing in their app.

 

Well said 👏

[Middle Class Caveman 963]

10 hours ago, Macca89 said:

Great read tbf mate, actually opened a Monzo account the minute I read this! 

 

Very informative 💪💪💪

I love my Monzo, you can use it abroad with no fees

[Middle Class Caveman 963]

2 hours ago, Lurchzy said:

Good read. I will however disagree with the statement 'it is not the governments job to pay for you in times of crisis' when they were the ones responsible for closing down businesses and making it so you couldn't work. However with that being said, I do agree having a fail safe in place for situations like that is a good idea. I personally have a general savings account (one I can dip into if needed), a help-to-buy ISA (only allowed £200 pcm), and a CBS ISA (which I can't easily withdraw from). All of which help me save money in different ways. One of the things I like most about monzo is you can create 'pools' with names of things you want to save towards. I tend to make these pools if I have something small, like a game or event I want to save up for.

Sounds like you’re nailing it!

[Luseth 1,757]

Similar to others, I think my political view may differ from yours in the first few sentences Elliot.

 

That said the post / thread does open up some potential for some great discussion, I know personally growing up the biggest issue is nobody teaches you how to look after your money really. I have always been quite frivolous with money, in fact it's only been the past year or so that I have started trying to develop some better habbits, it's difficult to change how you have always been though. In fact this year's holiday was the first time I paid it up front rather than putting it on a credit card or paying it monthly installments beforehand.

 

The other thing is that everyone's circumstances are incredibly different and I think it would be wrong to assume everyone is wasting money, admittedly a lot of people are but then if people suddenly cut back and started being sensible what does that do to our economy ^_^ I think a big thing is at what point in your life you are, it's quite easy to see the average savings someone under 30 has to someone say over 40. Straight away if you are paying a mortgage odds are you are paying less than if you were renting (which is something you are far more likely to do when you are younger). Your salary is likely to be higher if you are getting into the second half of your liife if you like as well.

 

Emergency savings are something we should all strive for but that is not always possible, I mean if you are on a minimum wage job in the current climate, single parent of a couple of children I imagine it's not easy to do if at all possible.

 

As for general money advice to help with budgeting, different accounts are great and transferring money over to another account at the start of each month and getting into that habbit is great.

 

Another thing to note is that there is a sensible way to use credit, being good with your money does not mean never have credit, it's about using it sensibly. Running up debt is not great but say buying an item on interest free credit is not necassarily a bad thing if you are comfortable paying it off, you might want a mortgage one day for example and having no credit history would not help in that regard.

 

Something I now do is budget at the start of each month, I think knowing where your money is going is very important (like Elliot say's above) there is every possibility you might look at where your money is going and say hey I have not used netflix for a few months let's cancel it as an example.

 

I think the one thing I have always been a little adverse too is investing and that's mainly down to lack of knowledge and not really having the time to invest in obtaining that knowledge, I am sure there are a million books out there but life is hectic.

 

That said I have recently set up a stocks & shares ISA and just put £20 a month in, it's not a lot but it's something and the hope is to increase that in the future. I also now have a private pension in addition to my work one, that see's £25 added to it each month as well, these are both for the future so I have no plans to dip into these, when I reach each £100 in the stocks and shares ISA I will put it into some companies, likely to be banks & construction companies (as that's what I work in so I already have some idea of what businesses are doing well and which aren't).

 

 

[Macca89 493]

I mean he's only giving his opinion, he apologised before he said it and it I mean it's not the first time someone has given there opinion on here on something outside of gaming 🤷🤣🤣

[phil bottle 9,589]

31 minutes ago, Macca89 said:

I mean he's only giving his opinion, he apologised before he said it and it I mean it's not the first time someone has given there opinion on here on something outside of gaming 🤷🤣🤣

 

This is true enough, I'm certainly guilty of giving my tuppence on plenty of occssions... and to be fair, me spouting off on politics is what we're mostly trying to avoid here, because i could do so very easily multiple times a day, on a daily basis lol

[Plumbers Crack 4,033]

14 minutes ago, phil bottle said:

 

This is true enough, I'm certainly guilty of giving my tuppence on plenty of occssions... and to be fair, me spouting off on politics is what we're mostly trying to avoid here, because i could do so very easily multiple times a day, on a daily basis lol

I soooo wanted to put a comment up about this Phil but thought "No, nothing to see here, move along" 😘😂😂😂

[cyberninja2601 1,103]

 

I can't comment much about the UK (or Europe) but I can about Canada/USA since I have lived there

 

1) Interest is your worst enemy. So do what ever you can to keep it a low as possible. People have the realize that credit cards charge about 20% interest around here. So do not keep a balance on them.

- Around here we have secured line of credits which is give you about 60% of the equity of you home on credit. The rate is prime +  2% (mine anyways). Which means 7.2% instead. So if you carry you credit on on a credit card and have do not max out your credit card, transfer that to the line of credit which will save you about 13% a year

2) Payoff the mortgage as fast a possible. Due to the amortization period (25/35 years) you will pay a fortune in interest. The sooner you pay it the better. Get a mortgage that allows you to pay it down faster and put the extra money you have at the end of the month into it. Also get a mortgage that has payment forgiveness if you over paid. Meaning that if I "prepaid" 2-3 months of mortgage when something like covid happens my bank will give me mortgage forgiveness and not impact my credit score. 

- When I was 30 with 2 kids and a wife who was stay at home we paid off the mortgage in a little over 3 years. We accomplished that with a lot of discipline and by buying a rather modest home. Then we saved that money that we were putting into the mortgage (as we had not missed) and 4 years later bought a home that was 3x the size. 

3) Invest in the equivalent of 401K, resp, RRSP.  Those give you a tax incentive on your return. So I always max it out because the government returns my money and it's tax free

4) Invest in tax free accounts if you have them. In Canada you are allowed to invest about $6500 tax free every year. So put your savings that you plan to leave alone in there so you are not taxed on their returns

5) We have a tax free education account for the kids. Look into it

6) We have a tax free first home buyer account to buy your first home. look into it

- those are all ways that the government does not take the money you work hard to earn

 

 

I have used all of those. If you want further advise PM me. Won't be able to help much with Europe but by doing those with a single income most of our lives we were able to be financially secure by the age of 50.  I just work because I like it

 

[J4MES OX4D 9,798]

The pandemic was a once in a generation situation which brought on many exceptional circumstances and the treasury was ultimately called upon to ensure the continuation of the economy and for the sake of the public. Welfare makes up a huge portion of taxpayer funding and this is something people and businesses relied on, en masse during this time. The entire economy would've hit a brick wall and people would've been burning through any and every penny they had to their name irrespective of savings and future earnings. 

[techno 3,476]

Some great advice etc throughout this thread. I hold my hands up to spending years just wasting money and to a point the wife and I still do, Starbucks and takeaway food at breakfast time and my growing alcohol consumption which I blame squarely on COVID probably the worst. What turned it around for me is when work dropped off I realised if it happened long term I'd be screwed so I sorted it, that took a year but really helped. COVID then came along and I was fortunate to work through it and with not being able to do the things I enjoyed my bank balance grew and I now like Elliot suggested have a few months savings in hand. Now we did get credit for house improvements because of wife's disability and my car but I'm buying a new motorbike and instead of getting more credit I've ordered it for next year so I have chance to hopefully save enough to buy it and still have my buffer. 

I struggled when I was younger financially but got through it, 37 years and most on nights at the same company helped but it  means that now I'm "ok" I don't mind a few wasteful decisions but I am forward planning more especially with the mortgage as paying that off would help me to retire early. 

Sorry it's so long 🤦

[McNasty 260]

Did somebody say politics?