I blogged last year that I was thinking of investing some money into Premium Bonds as I felt I had enough in equities and not enough ready cash – but I couldn’t stand the thought of cash just sitting in a bank or savings account, earning virtually nothing. Arguably Premium Bonds had the chance of earning me something.
To my delight, my numbers came up last week and I won twenty five quid! Now that’s the kind of prize I like, because it’s total treat money. It’s the kind of sum I can spend without guilt or perceived “opportunity cost” that a win of say, five hundred quid, would bring about. If I won that amount, I’d probably invest it, although possibly in a speculative punt on a single share purchase like Rolls Royce. And if I won five thousand, most of that would definitely be squirrelled away into further investments.
I once actually did win five thousand pounds, on the Littlewood’s football pools. I was young then, just married a year, and we blew it all on a fly drive holiday to California. What a fantastic experience that was. Do you realise, however, that if I’d invested that cash wisely enough to return me 10% over all those years, that five grand would now be worth £60,278.73? Well, to quote those Californian legends, Metallica, so ****ing what? I didn’t regret spending that money then, and I don’t pine over that “lost” sixty grand today (I tell myself in my most adamant, and hopefully most convincing, tone of voice!)
I do sometimes wonder about the common story on FIRE blogs about the Starbucks Latte – you know the one, that if you didn’t spend that three pounds every workday then you’d save fifteen quid a week and over seven hundred pounds every year. Well, you can’t argue with the arithmetic, but it depends on how your coffee adds to your quality of life, doesn’t it? What would you pay to brighten your day? If that Starbucks latte floats your boat, then surely three quid a day is a bargain compared to going without it? Of course, if it does nothing for you whatsoever then why in God’s name are you buying it in the first place?!
In a way, I’m glad I didn’t discover the concept of FIRE until about five years ago, because I think I might have been swayed by that Starbucks analogy had I thought about it. These days I actually have the opportunity to indulge in this habit on a daily basis because there’s a Costa Coffee in the small market town where I work. About twice a week, I leave the house early, drive to work before the traffic becomes annoying, park up, head into the near deserted coffee shop, order up my latte, download The Times to my Ipad and enjoy some quiet time before work. It’s great, and I could easily do it five times a week – except for the fact that I’m thinking “Seven hundred quid a year! On coffee!?”
So I do have some spending thresholds these days that might prevent me from spending a five hundred pound prize on myself. Twenty five quid though, that’s a totally manageable windfall, arriving without fear, guilt or loathing. That’s a bottle of seriously nice wine for Saturday night. Or two (I can’t tell the difference between wine at a tenner a bottle and wine at twenty, except psychologically). Mind you, I couldn’t drink two bottles of red these days in the same evening without totally ruining the next day. Or maybe a it’s trip to The Fisherman’s Wife in Whitby with my DOH on a quiet evening, with its view out to the sea and an effectively free fish and chips? Or it’s a few decent books on the Kindle or, even better, a hardback book to fuel retirement dreams? A Moleskin notebook would be another guilty pleasure to indulge in, without the feeling that I was being ripped off and a bit of a pseud to boot. Perhaps a more manly purchase would be this handy wee Leatherman C33 with its twenty five year warranty? I’d want to spend it on something that I might otherwise apply the twenty four hour rule to, but at this level I don’t find the challenge too difficult. It seems to me that I’d agree with The Beatles that the best things in life are free, but the second best things aren’t really all that expensive either.
sex health money death 
Congrats on your win, Jim.
As I’m still accumulating, my last few premium bond wins have been chucked into the investment pot. Never thought of seeing it as ‘treat money’ – maybe I’ll change my tune next time I win!
Ah the football pools – I remember my Dad did them and the ‘pools guy’ would come round and collect the money. Spot the ball too – did anyone ever win those? I dabbled a bit when the pools went online but stopped a couple of years ago when I clamped down on my gambling. With time on my hands though, I may end up making a few more punts again.
Anyway, enjoy your winnings!
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My dad was a collector for Littlewoods and when I told him I’d got twenty four points – the maximum pay-out available – he fell off his seat. The most he’d seen in all his years was twenty two and a half points. He was sure I’d won tens of thousands, minimum, and probably more. As it was, loads of people got twenty four points that weekend which axed my payout, but I was relatively sanguine. After all, my stake had been 74p! I think I calculated I could continue with that bet for the rest of my life and still “beat the bookies” at the end. And I’m still doing it, the same Standing Order still running!
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I’ve just dug out some premium bonds from the late 70s and early 80s – in the process of trying to link them with my online NS&I account.
I imagine that when they appear, I’ll have one a million or two
I’ve read a few articles recently on the old frugal vs cheap debate.
It reminded me that frugal is just getting good value for your £
So if you can afford it, you’ve thought about it and enjoy it then a £3 costa is all good
Its bad when you’re in debt, go without thinking, herdlike, to join a queue and then struggle to find a seat, then drink dubious coffee in a volume totally unsuited to the product (costa two-handle buckets)
The only reason the latte factor is such a common meme is that most people spank too much money on shit thats not really doing it for them.
But in FI circles, I think you see the smaller demographic of people that have the opposite problem. And its just as serious. Those that find it hard to justify the spend, even when the value is there.
Unless I’m really careful, I’m going to die with a pile of cash and not having done enough stuff, even worse, I will have prevented those around me doing enough stuff, because I’ve got this issue, the flipside-latte-factor.
Maybe you have it too? Or possibly a milder version where you can still spend, but just with a bit of guilt thrown in afterwards?
I remember that inverted U curve in YMOYL, indicating an optimum spend with quality of life tailing off either side. Most need to move from the right to the left to move toward the peak. I need to move from the left to the right..
PS on the epic bike rides book, I’ve got a fumiciono to pescara ride lined up for may – can’t wait (its part of my anti-flipside-latte-factor programme)
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Absolutely, I suffer from the flipside-latte-factor. I blame years of saving, saving, saving as being bad preparation to go to spending, spending, spending which, once you’re living on your investments and not earning, earning, earning, is excruciating. You start eyeing up your gains thinking you need to reinvest them. You begin to think that a fiver is a sum of money worth putting by, in a jar, until it reaches a sum that will buy some more units in an Index Fund. It’s mental. I’m determined to get over it.
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my premium bonds appeared in my online ns&i account today.
I think there’s been some sort of mistake as I haven’t won millions of pounds and I’ve been waiting since 1978 when my gran bought them for me aged 0 (that was my age at the time, not my grans)
I seem to have only won £25 back in May 2014.
So in many ways I am in the same boat as you.. I don’t remember receiving the payment, but I’m going to spend it now as though I did.
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I think you meant a Moleskine notebook (it’s a brand), rather than moleskin, which is a fabric.
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If it was made of fabric it’d probably be cheaper.
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So you put your cash into Premium Bonds, because you can’t bear the thought of it not earning anything in a deposit account, but when you do earn some ‘interest’ you just want to blow it?
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Yes.
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Congratulations on the win! Never thought of splurging it, at the minute my PBs just keep getting reinvested (apart from if I ever win anything major).
I haven’t won for a little while, but this year I should still get about a 1% return.
Enjoy the money, and enjoy the nice bottle of wine (I can think of a few in the £25 range ;-))
Cheers,
FiL
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Today I bought half a dozen bottles of red out of Morrisons after trying a bottle at the weekend that I really liked. It came to about forty odd quid for the six, but money well spent!
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That’s not at all bad – sometimes my local supermarket / majestic has some great offers on which I will buy up and as you say – money well spent! My best find to date was at under 3 quid a bottle when it was on offer for some really good Romanian wine (I’ve been wine tasting around there so know some good ones) – I took a gamble and it paid off. An entire bottle of wine for less than the price of a pint – bargain!
Cheers,
FiL
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These days when I find a wine that I like I tend to buy half a dozen. I often wonder how much I’ve paid for the wine is influencing my judgement of it? I’d be loathe to buy a bottle at thirty quid and find I didn’t much like it – I might not be able to admit it to myself! Hence I don’t do it that much.
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I am a big fan of buying on the offers – 6, 12 or even more bottles if it is a good offer – its much cheaper than buying when you need it!
One of the advantages with the Vintners I use is that I get to try it, so if I do blow the budget on some bottles, I know if I like them or not which does help remove that feeling – and I taste them blind without knowing the price, but they know my taste and so its usually a fairly good hit ratio, but that makes it a little harder!
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@the rhino. That sounds like a result! My £10 in premium bonds bought for me (aged 0) in 1964 have so far returned me £0, nil, nada
On the latte factor, I started enjoying the posh coffee more when I got it from time to time rather than every morning. The free coffee at the office does the job of providing the caffeine injection just fine, but some mornings it is nice to have a treat.
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What has the source of the funds got to do with the destination of the funds? By which I mean: why spend 25 just because you won it? Why not spend 25 if you want to spend 25 and add 25 to the pot if you get it?
I’ll reading the blogs sipping my nespresso (30p).
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@Mathmo – you do know that nespresso is an abomination right?
for the love of god, sell it/give it away to someone you hate and buy a stove-top espresso pot
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The smell of freshly brewed coffee, or freshly baked bread, or bacon in the morning. What a start to the day (although my experiment with napalm didn’t go quite as well.)
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I won 5k once on a sports bet and it was just before me and the Mrs went traveling. Spent the lot while we were away (but came back not in debt, more than can be said for most people that do that sort of thing I would say!) and it helped make the trip extra special.
Needless to say I will not be regretting not having the extra 100k or whatever it would have compounded into when I’m finally sitting on my death bed!
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When you’ve saved for years to reach FIRE, spending the pile of cash becomes a real challenge. You wonder if it would have been easier to spend, spend, spend, live every day like it was your last and “je ne regret rien”! Mind you, I lived a bit like that when I was a student and still have a basic fear of approaching a cash machine.
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