Spanish (and other) Practices

When I was in holiday in Krakow, we were with another couple, one Spanish, one Polish, who met and married in London. They’re quite far off retirement and were talking about how hard, financially, it is for them to live and work in the city. Saving for retirement is not top of their list of priorities.

“I envy my parents in Spain”, my mate stated, as we sat in some cellar bar. “They are on the state pension. Both were teachers. They retired in their early sixties and receive 1,800 euros a month each.”

I checked the beer I was drinking to see if the alcohol level was so high that it was affecting my hearing. Or was it affecting my arithmetic, because I was calculating that at around 22 grand a year in Sterling, at current exchange rates. Net. Each. That couldn’t be right.

“You mean 1,800 euros between them, surely”, I said, before adding “which will soon stop once you aren’t getting £8 billion in subsidy every year from the UK!” (well, I thought it was funny.)

“No, no, no. That is 1,800 euros a month. EACH. It is a good arrangement.”

I was trying to get my head around this when his wife joined in. “It’s a good arrangement when you consider the average salary in Poland is 350 euros a month. So their pension is almost six times what the average Polish worker earns.”

“That can’t be right either”, I said. “That must be 350 euros a week”.

“No, no”, she tutted. “It is 350 euros a month.”

I decided, as in all pub arguments, to go into Google for a quick search to see who was pulling my leg. Seemingly neither of them were. The state pension level in Spain is over twenty grand a year. Greece isn’t far behind, and Sweden is actually ahead of this amount.

Average monthly salary is a bit more difficult, but the Wikipedia page I checked states the average monthly salary in Poland to be around 750 euros a month – but that’s in the “enterprise” sector. My Spanish friend had actually challenged his wife’s number at the time, and she had replied that her number was correct, if you took into account all wages, not just cities like Krakow. (There is quite a bit of evident wealth in Krakow, which was why I was also struggling to believe her assertion.) Either way, however, it’s a pretty low number.

Now, this blog post could go off in a variety of ways, but the way it’s not going is any further in the direction of Brexit. It was quite a shock to me, however, to have two friends whose families are experiencing two totally different financial worlds within the European Union. Obviously I’m “aware” that different countries within Europe have different standards of living, but talking to people who have a real, live experience of it is a different thing entirely. It must throw up some challenges – for starters, you can guess which half of the couple is sending money home to their parents every month, and which one isn’t.

It’s all very complicated, so much so that I’m not even sure what the point of this blog entry is. Originally I was going to muse over the size of the British state pension and whether or not it’s enough in comparison to Spain’s, but that’s a pretty puerile exercise. And anyway,  I don’t have any of the other factors that might play a part In the argument – I’ve no idea what the Spanish tax system is, nor welfare system, nor National Insurance system (if they have one). As for comparing the average wage in Poland with that of the UK, really, what can you say?

Writing this post, however, has brought home to me just how astonishingly rich Britain is in the grand scheme of things. Okay, that wealth isn’t distributed fairly throughout the country and we could do a lot better at spreading it around, but that’s a massive debate that I hardly even have the energy to consider. Spread it around where, for a start? In Britain? Poland? Africa? It reminds me of the Mr Money Moustache post about how lucky we are to live the way we do and why we should stop and think about that sometimes. It might help put our “retirement dreams” into perspective.




Holiday in Siberia

Isn’t it a shame that now we have an opportunity to travel almost anywhere in the world, increasingly when we get there it’s just the same world as the one we left? I’m just back from a four day break in Krakow which, as far as European cities go, I suspected might be a bit different from the usual modern metropolitan experience that sees a McDonalds and an Starbucks on every corner. Please note that I’m not saying that I “hoped” Krakow was a bit different from every other city across the world in that respect. I like my home comforts, and sometimes that includes a good dose of globally branded outlets and hotels. But I did hope that Poland had retained an old world charm that corporations hadn’t fully snuffed out yet. Well, “yes and no” was the answer.

In terms of differences, I liked using the Zloty and my “cabbage rolls stuffed with rice and mince in a tomato sauce” was more satisfying in a number of ways than a Big Mac, although I knew this wouldn’t be the case every day. The centre of town was picturesque for sure, but it was bordered by McDonalds, Costa Coffees, United Colours of Benetton and the like. The underground bar and cafe scene was a bit different, but I suppressed a groan at hearing Coldplay playing over the speakers in the Black Gallery and what, exactly, were Polish pubs doing selling Grolsch and Heineken anyway? Their own beer is far superior. 

I liked the old Jewish Quarter in the city where, thankfully, Starbucks hadn’t arrived. Yet. But on the other hand the old coffeeshop/bookshop concepts felt just like that: concepts. Coldplay were absent, but only because they hadn’t ousted Dylan.

What has this got to do with early retirement I hear you ask? Well, at the top of the list of a lot of early retirees is the desire to travel and see a bit more of the world. To be fair, I’m noticing a couple of bloggers are acknowledging that this ain’t necessarily so, and that whatever it is they’re looking for might not be found on a Goan beach, the Australian outback or upon an old Patagonian Express. These travellers tend to be more the “long haulers” in terms of both time and distance, however, and I’m thinking more about those that are planning fewer, shorter breaks nearer to home. That weekend in Gothenburg or Pisa perhaps, taken on the ultra cheap Easyjet and Ryanair tickets on a Tuesday afternoon and maybe returning early Saturday morning on a half empty flight? Snaffling up some cheap hotel deals when the weekenders are missing and the businessmen are in the Hiltons and Marriotts?

Ha! Easyjet and Ryanair don’t do half empty flights, or not for long anyway. Bums on seats is what they’re about and they’d rather not fly at all as put up with three quarter full ‘planes. The probability is that you’ll be going City breaks on a full flight or you won’t be going at all.

Meanwhile the hotels are at a similar game. Occupancy is what they want and they’ll drop their drawers on price to get it. I booked my hotel through about four months ago and our friends, booking two weeks ago, got in for almost half the price we paid and were upgraded to a suite! Of course they risked not getting in at all, but luck and the algorithms were on their side. Either way the hotel is doing what it has to do: sell rooms. That’s ALL their rooms, every last one, and the internet helps shift them on a global scale. We think sites like Trivago are there to benefit us, and that’s true, but I’m beginning to suspect they benefit the hotels more. York has about three mid-budget hotels being built as I write, so the projected demand is clearly there. And increasingly full ‘planes arrive from across Europe to fill them up.

If Krakow is anything to go by, the future of city breaks in Europe is going to guarantee one thing: everywhere is going to be mobbed full of fifty and sixty something tourists. (And, of course, millennials). That includes your continental breakfast where you’ll be queuing with ten other grey-heads for a coffee out of an increasingly exhausted machine.

Krakow was unbelievably busy with tourists, but I travelled via Edinburgh which made the former town look like a dust bowl. I know it’s The Fringe, but ye Gods, doesn’t it portend badly when millions flock to the city desperate to find some “experience” that they hope will brighten their Tuesday? The Fringe is shit, take it from me. Not that I’ve ever been, by the way, I just find the whole concept to be shit. If I saw one “comedy” poster with a smart arse quip about Trump, I saw ten. Every comic sported a beard, including the women, and I wondered why they bother advertising with a big picture of themselves? Is their appearance one of their stronger jokes?

As for the theatre types, they are worse than corporates. They strut about Edinburgh wearing their backstage passes around their necks like they’re something to be proud of while the newly under-unemployed arts degree graduates wear “Road Crew” T shirts with the same smug expression I sported at their age when I wore a “Solidarnosc” one. But at least I wasn’t yapping down an iphone as I strutted the streets. Honestly, I couldn’t get out the place fast enough.

You might not have guessed it, but I did enjoy my weekend break. This, however, was because I felt I was learning lessons and building my mental retirement database, helping to shape my post-work dreams into more focus. Frequent city breaks abroad, I feel, have dropped down the priority list and I’m thinking more about farther flung and more isolated places. I’m going to be heading far from the madd(en)ing crowd, where the streets really have no name and the biggest brands are those that are burnt on a cow’s arse.

Siberia, anyone?

Willfull Ignorance

I was listening to a podcast from MoneyBox called the Death of Retirement the other day with a growing sense of annoyance and, possibly, outrage. There were a variety of reasons for this, most of them boiling down to ignorance, most of it my own.

For a start, the podcast kicked off with a panel of “experts” interviewing a “millennial” who was in her early twenties and was looking for some advice on pensions, as she suspected she wasn’t saving enough into her plan at the moment.

“How much do you currently contribute?”, asked the kindly host.

“Well, I looked at my last wage slip and I’m putting in nine pounds a month”.

“FFS!!! Are you raving mad!!!???”, screamed the host. “You’re heading for abject poverty!”

Oh sorry, that wasn’t the host screaming. It was me. You see, the host and panel, in a fantastically polite and paternal BBC fashion, were far too sensitive and non-judgemental to make any such uncontrolled outbursts. Instead, they gradually tiptoed toward the suggestion that maybe, possibly, depending on her circumstances and an uncertain future, this might not be enough.

“Do you know what your employer is contributing?”, gently prompted the host.

“Well, unless it’s about five hundred quid a month I’m totally screwed”, joked the young girl. No, sorry, that was me again, and I wasn’t joking.

When it comes to this stuff I think I’m in a state of willful ignorance, because I kind of assume that, by now, surely, 99% of the country are aware of the financial catastrophe that old age is going to bring with it and are taking steps to avoid it? Okay, maybe not 99%, but 75% must be?

Alas, a quick Google search on “What is the size of the UK average Pension Pot?”, pours cold water on this notion. It’s currently sitting at 50k, according to the This Is Money website. (Pause to remind myself that this is the TOTAL POT and not what it’s going to give as an income every year). A 50k pension pot currently pays an annual annuity of about £2,500 a year.

I’ll admit, I find this frightening, but then I do live a rather gilded financial life. Many people have to survive on incomes of around £10,000 a year so, if you combine a 50k pension pot with the state pension, then you’re heading for that amount. Plus (I believe) there are other government support mechanisms available to supplement this income, such as housing benefit.

This is a good thing, I think. I want to live in a society that provides a social security net for all, providing everyone is contributing in a fair manner. (I did try to expand on what I would define as “fair” in this context, but that turned into a bit of a rant that included dreaded words like “Brexit” and “NHS”.)

So, setting a lot of political issues aside, I see “fair” as being a bit of “give and take”. You put something in as does your employer and the government. That’s pretty much what we have at the moment. It’s not a perfect system but it’s better than nothing. The key, for me, is the first part of the sentence, “YOU put something in.” Part of the reason why a lot of people are heading for a State Pension and very little else is because they failed on that first step – they put nothing in.

The BBC seemed easily enough to find young people who are still bridling against the notion that they need to contribute to a pension. “I just don’t trust pensions”, says one. Another “Just can’t afford it”, and objects to the fact that her employer can decide where her pension money goes. Against this, perhaps the young millennial putting away nine pounds a month is to be congratulated –  at least she’s doing something!

How can this situation be changed? Well, if you listen to this series of podcasts, it seems that enrolment of employees in company pension schemes has been a success. There clearly needs to me more of this kind of thing. But, for me, the pensions “industry” has to become much simpler, transparent and fair. And it needs to have the same attraction that investing in property has. It should be publicised as being just as safe and just as beneficial as having a roof over your head. But, at a nine quid a month contribution to a pension, the roof will be falling in as opposed to holding up.



As I settle into my fifties, counting my cash, it’s comforting to find myself in the fortunate position of thinking that, financially, I should be pretty set. I look at my personal pensions, investments and tell myself to relax, it looks sorted. Even if we go through another 2008 and everything drops by 40%, I’ll probably survive.

That’s the upside, sitting warming my hands by this financial fireside. But there’s a downside. I’m stuck! Okay, I can survive a 40% decrease in my pile in any given year, I suppose, but I’ll probably NEVER see a 40% upside over that year in those same funds. Why? Because to get that return, I’d have to risk a sizeable element of my funds to get it. And risk is not something I want to entertain when it comes to the money I’ve amassed to date.

I find this quite sad, in a way. I think I’m thinking this way at the moment because I’m reading “Shoe Dog”, the autobiography of Phil Knight, the founder of Nike. His story of building the company up from nothing is exciting, dramatic and full of life. It feels like he never had a dull moment, although his early days of building the business were mostly full of stress, flirting with bankruptcy, dealing with corrupt suppliers, ruthless competitors and even more ruthless banks. He risked everything to build his company, and now – he’s worth over $28 billion dollars – he’s sitting on the rewards.

In my current job, I’m dealing with quite a few start-ups and spend a bit of time with the “entrepreneurs” behind them. Generally speaking, they’re a colourful bunch who are driven to get things done. There’s always a way for them to continue to move forward, get what they want and they’re prepared to put their money where their mouth is. They have to. Most of their money goes into their business and not many of them are living flash lives – as neither did Phil Knight for decades either. I don’t envy them the stress of what they’re trying to achieve, but I do envy their willingness to take the risk.

I don’t know too much about their personal circumstances – have they a pile of cash sitting somewhere they can fall back on? Do they have a pension? Is their partner a secret millionaire? Are they secure in the knowledge of a big inheritance eventually coming their way? It’s possible, but even if this was the case, why not live a cushy life instead of throwing bundles of cash at something that has a damn good chance of ending in misery?

Now, in my fifties, I wonder if I’ll ever know that excitement that I feel must be involved in throwing yourself into trying to build a business? In my career, I chose the corporate life and can’t knock it for the relative security it gave me, and the perks I enjoyed too. And I often asked myself just what kind of business I’d have to build to pay me the kind of benefits I eventually enjoyed in that role? It would have to have been pretty damn successful, I know that.

Over my career I used to think and chat about having the chance to build my own business, but latterly I used to qualify this dream by stating I’d loved to have had the chance to “build my own really successful business!”  There was no guarantee of that, which makes all the difference. I have two personal friends who pretty much ruined their lives trying to realise their own dreams on their own terms. Phil Knight is a winner, I suppose, so it’s their histories we read about and envy. Real life for the rest of us is often very different and it was partly the “real life” that I saw that helped keep me where I was.

I have the option, of course, of scooping some money out of my savings and plunging it into a new venture that, potentially, could pay me millions in ten years’ time. Or at least will give me an interest and side income in my next shot at “retirement”. After all, the brilliant podcast, “How I Built This” showcases loads of people who have done just that, often with a lot less than big bucks to start with. I don’t have to risk a massive amount – the first “How I Built This” interviews the first female billionaire business woman who, I think, started with an idea and five thousand dollars she’d saved. The rest was hard work, more hard work and a bit of luck.

So, that whelk stall down the front of Scarborough could be in for a new owner soon.


Vested Interests

Homer Simpson once asked himself, “Kill my boss? Dare I live out the American Dream?” That particular dream is not exclusively American, of course, but generally, and unfortunately, it’s the boss who’s funding our dreams one way or another. Even if you’re self-employed, the customer is the boss, and I know many small businessmen who’d love nothing more than to nuke their customer base.

I remember reading Paul Allen of Microsoft telling of one of the major problems he and Bill Gates encountered as their company began to really take off. In order to attract the best software engineers, they’d offered potentially incredible share option packages to lure employees to rainy Seattle from sunny California. In addition, to make these options even more attractive, they gave them a relatively short time frame to mature to a point where they would become the employees’ property and could be sold on the market. In American parlance, when an employee gained their shares, they’d be “vested”.

Allen and Gates became concerned that when the first big tranche of options they’d given out became tradable, many of their key employees would become multi-millionaires overnight. Perhaps they’d all leave and retire? How could they continue to retain them?

Soon, however, they had an almost bigger problem when their employees started cashing in their options. These key people didn’t leave or retire. They became a different type of employee. Allen turned up to a meeting once to meet an engineer wearing a T Shirt stating “F*** You, I’m Fully Vested”. The message couldn’t have been clearer.

This may well be where the phrase “F*** you money” originated from. As far as I remember, Microsoft started firing any employee demonstrating what they saw as this “Couldn’t care less what you think” attitude. It was a real problem and probably still is. When you don’t need the money, do you need the boss and his crummy opinions?

Biting the hand that feeds you can become an option as you near your FIRE goals. In retrospect, I was affected by it in my own employment but it had a slightly different effect on me because it’s such a gradual process and, psychologically, I never fully believed it (probably because, unfortunately, I wasn’t made a multi-millionaire overnight.) I’d admit, however, that as the salary became less of a life support for me at work, I became more cantankerous, more prepared to say what I really thought in meetings and more critical of how things were – or how I perceived them to be – in the office. In retrospect, I think I made it quite obvious that I didn’t need, or want, to be there and that, as I’ve blogged before, is the quickest route out the office.

Most of us will take years to reach a position where we can walk out of a job and never look back, but increasingly as we stick to our saving strategies we will be approaching that point. This brings about a “So near, and yet maybe so far” frustration, because our calculations are based on an uncertain future which might mean we DO need to work a little bit longer. There’s a line that we hope to cross, but as we near it the line becomes a lot more fuzzy and indistinct. Worse, we are relying on our employer to give that line a more solid definition. You begin to spend time wondering how you could negotiate a severance package to sweep you over, and that is a dangerous road to travel. Your mind morphs over from doing a good job to focusing on what a good job it would be not to have to work. You become increasingly unsettled and discontented and it begins to show. You don’t wear a T Shirt, but you start to focus on when you can buy one.

This “Should I stay or should I go now?” question promotes the  “Just one more year” promise that you make to yourself when you feel that you could probably retire today, but begin to feel that maybe a further twelve salary cheques will provide a financial buffer to seal the deal. The buffer, however, is more likely to be in your head as opposed to the bank. Really, if a year is going to make that much of a difference then you don’t have enough to make the move, regardless of the money in your bank. Something else is holding you back.

These are things to bear in mind as you work toward your FIRE goals. The journey will be easier if you continue to appreciate the people other than yourself who are enabling it – your customers, your workmates, your employer. This would be an appropriate point for me to thank all my own previous employers for the help and money they gave me in realising my ambitions.

But you know what, I put a lot of that salary into index trackers, so *@*! ‘Em, because I’m fully (in)vested. 😉