Month-end: April 2021

This post is coming about 2 weeks late and given the blip in the markets recently, our April gains have been eroded – but looking back, it’s steady as she goes.

April was a decent month for us and our family finances. Net worth was up by almost 2% on the month and 20% year on year. Our spending was controlled, despite some increased spending from a bit of travel that we have coming up. Spending was around £4,200/m over the last 2 months of which about £1,800/m is nursery costs and £900/m household costs.

Our stock investments did well, VCTs did amazing and we’ve received all of our money back from RateSetter (around £30), which saves me about 30 seconds each month when updating my spreadsheet – so wins all round.

One thing that I’ve noticed is that our FIRE funds are again lagging behind our pension funds. Not a problem in my mind as I reckon with around 20 years to go before we’ve access to pensions and since we are still earning, we can choose between pension/ISAs/mortgage…

That spending is more or less covered by our take-home pay, but we don’t have much slack, and I pumped a lot of money into our pensions in the last tax year and filled up our LISAs already which has lead to the following problem:

Cash-flow Crunch

Within the next month I have an £8,000 corporation tax bill, £5,000 stooze credit card bill, plus the usual £4,000 per month of living costs to pay. We don’t have much in our current account and income from work won’t cover the full cost – so we are suffering a cash-flow crunch. I’m not too worried about how I’ll solve it as I think that I can liquidate some investments (some VCTs are coming up to maturity), maybe re-stooze, take out a loan or just use the overdraft for a few days.

Alternatively, I have some opportunity to use the side-hustle for cash but it’s not guaranteed. My Youinvest ISA is not a flexible ISA which is a bit rubbish as I have about £1,000 sitting there waiting for investment – if I could access that and redeposit when I have the funds, that would go a long way to solving our problems.

If only someone could have told me that you shouldn’t spend all your money and have nothing left to pay the tax man! Contractor secrets mostly concern spending money and not saving money.

Annual Uplift

The 2% increase in net worth in April is flattered by annual uplift in 2 specific investments; my old final salary pension and the state pension (not included in net worth). Each year these increase (the amount we’ll get per annum once they are payable at 60 and 68 respectively. For the state pension, it is not only the amount payable but the number of qualifying years which stands at 20 for me and 11 for the Lady. Conservatively that’s already worth about £100,000 – but because I’m a pedant, it’s not in our net worth. The final salary pension however is included which was about 0.6% of the increase.

The double edged sword of the annual uplift is that our council tax, phone and nursery bills have all gone up as well. Inflation is not really a good friend – more like a two-faced asshole.

Politics & Scottish Independence

While there was an election in Scotland, remarkably little changed by way of seat swapping hands or even vote share changing. The SNP are the biggest party and it’s full steam ahead for an independence vote. I’m in favour of the union as Scotland’s economy is unsustainable (spending >> taxes) and in an independent Scotland they’ll go after anyone with any money which is me and my family. If the public finances were a bit more evenly balanced, it would be an easy decision to support independence – but the financial reality is unpleasant. Unfortunately, I’m in a minority position – and in the event of an independent Scotland, we’ll consider our options. It’s not for a few years yet, so there’s time. Ultimately, it’s only our home which is a sunk cost here – and that’s only about 20-25% of our net worth – everything else can move.

On the property front, our local area is going crazy with people paying way over the asking price on houses. Hopefully we can offload our house in the future to similar panglossian patriots!

Preparation for School

The Master is going to school in August, a concept that he is onboard with but fills me with trepidation. One problem is who looks after the kids once they finish school at 3pm. We don’t have a solution yet but this is an area where I’m beginning to feel bitter. If we were eligible, we could have the government pay 70% of after-school club fees. These are around £10 per day – so it all adds up. But we aren’t eligible and will have to pay for it ourselves. The cost and funding of after-school activities skews things a bit where we live. Our local school is considered good and the parents are probably well-off (or not-deprived) and the school has only 2 after-school activities – football and the after-school club. In worse parts of town (or deprived areas) their schools have multiple clubs to choose from – tennis, football, dancing, music… All things that we’d have to pay for the privilege.

I’m considering running an after-school class in the school myself in something like “builders’s club”, where the kids would play with Lego or Meccano and things like that. Conceivably, you could make a good bit of money doing it but I don’t know about the red tape that’s involved. From what I see, in the deprived areas there are multiple outfits of professional after-school clubs that have impressive turnovers (think £10 a day (underwritten by HMRC) from 200 kids with the adults getting min. wage and directors making out like bandits).

The Look Ahead

At the start of the month I was expecting more hours from work but I was told this week to limit myself to 20 hours from now on. I’m fine with that – it might mean I can cook more instead of take-aways and get more exercise – maybe I’ll even clean the house. Finances-wise, I’m happy with 20 hours; it covers our spending and gives me something to do and suits my “work optional” aspirations which is a whole lot better than “work please” of around 6-9 months ago.

Thanks, GFF.

7 Comments

  1. At our age it’s not investing for growth that interests me, but investing as insurance against calamities. Maybe we should buy some inflation-protection: an ETF of TIPS, maybe? If there were a market for insurance against the cost of “care” I think I’d be a buyer. But firms offering such insurance have found they can’t make a living from it so it is, I believe, unavailable.

    As for “Independence”: what independence? The damn fools want to join the EU.

    Liked by 2 people

  2. I had a similar cash flow crunch and bridged the gap with a short term ( 1 month ) money transfer from a credit card. It was painful as the rate on the money transfer was 3.9% per annum but it was better than liquidating some of my ISA holdings. I’m going to have to break emotional attachment to my invested funds as I’m starting to plan my decumulation phase.

    We finally managed to get our son into after school club after being on the waiting list for 2 years. Prior to that he had wraparound care from a childminder who was a little more expensive.

    Liked by 2 people

    1. The wrap around option might be ok if we could find an au pair type who could inform, educate and entertain. However that might not be realistic.
      We don’t know much about after school clubs – are you paying for anything worth paying for or is it just to keep your kids busy until you decide to pick them up…

      Liked by 1 person

      1. It’s my understanding that they get “educational activities” for example, We will provide a wide range of social activities suitable for the age and stage of
        development of your children. Activities include:
         Colouring, drawing, board games, jigsaws
         Computing and computer games
         Art & craft activities
         Cookery
         Outdoor activities (weather permitting).

        He currently has wraparound care with a childminder but a place came up in Breakfast and After School club and he decided he’d like to go there instead from September.

        Being at a financial stage where you don’t get any support that other households potentially get can feel a little galling. It may be worth seeing how long the waiting list is for you school as it took us 2 years to get to the top of our list.

        Liked by 2 people

  3. My retired neighbours used to pick up a friend of a friend’s daughter, feed her snacks or sandwich and entertain her with reading etc, until daughter was picked up by a parent a couple of hours later, at a rate I’m sure was below £10 a day. Understand that a formal, educational solution is better but annoying that you don’t qualify for government support.

    Liked by 1 person

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