Finances, Life, Midlife gap year

Financial update: Feb and Mar 2020

While it’s been a good 2 months since my last update, it feels like the world has truly changed since. Around mid-Feb, the Pacific excluding Japan index had been falling reflecting the impact the Coronavirus was h, and I topped up this fund along with my US and UK index funds a total of £1k. This turned out to be premature. We then went to Tenerife, and experienced both their worst sandstorms in 30 years, leading to the sight of face masks being quite common, and one of the early European cases of Covid-19 that affected 4 Italian tourists, leading to a hotel lockdown some 45 minutes by bus from our all inclusive. Given that we had a few high-risk family members with us, it became a slightly concerning time but we still had fun, returning early March.

On return, we were due to fly to France for a big friends reunion. Of 17 of us who had planned to go, 5 arrived at our 17-bed villa to a national lockdown. We postponed the flights til May at a small cost, knowing full well the flights may be cancelled. Meanwhile, I developed a cough, not a dry one, so I felt confident it wasn’t ‘the virus’. I struggled a little to get through work in the coming days without spluttering everywhere though, to be honest. I started preparing for work from home. By the Wednesday, under work orders, Mr Firelite and myself had “set up shop” at home. By Friday, Boris had concurred. We were lucky – We had 3 days of enjoying a rare lunch together at local eateries until they closed end of Friday. We also met with friends in the pub, all sat a metre apart – our last social occasion. My cough gradually improved.

By the Monday, schools and nurseries has closed. Firelite Jnr was with us full-time, so the fun began with our exhausting new schedule. Mr Firelite’s work (which relies on the aviation industry) moved to hourly wages, plus a 15% deduction in hourly wage, and a first raft of redundancies (thankfully, not Mr F). My work was business as usual but in the new world of online meetings and supervision, my workload had increased. Everything has become more work. Uni students have to graduate. Then just over a week ago, my cough suddenly took a turn for the worse. It felt different. I put it down to exhaustion, but as I developed other flu-like symptoms, we needed to self-isolate. Neighbours helped with shopping. And that just about brings us to present day! I’m just out of isolation (which in effect just meant no shopping), but Mr & Junior still are.

My financial health

Meanwhile, world markets have been shaken by the coronavirus (see charts below). My portfolio was not immune. While I saved over 50% of my income in Feb and Mar (see table below), my FI stash has continued to fall below the 100k barrier that I’d surpassed just the month or so before! (Oh, isn’t monitoring cruel sometimes?!) In effect, I’ve lost just under £4k since January (if I cashed in today, of course). Ouch.

I put £1k into the market at a “bad time”, but hey ho, I’m relieved at times like this that equities remain a relatively small proportion of my ‘portfolio’, with more in fixed-rate cash accounts and £24k as most of a buy-to-let deposit. While buying a flat to rent out continues to be my aim (and I did go to a free property seminar in early Feb, which inspired me), I will delay buying now until at least late this year (original plan was Julyish). I can then hopefully ‘cash in’ on some index bargains in the new financial year. My UK FTSE all share and Pacific ex Japan have both fallen a quarter or more, so may be ripe for a bargain?

MarchFebruaryJanuary 2020DecemberNovember
Cash accounts5047049070481904640045300
Cash at 2-year+ fixed rates2860028600285002820028200
Equity index funds (ISA)1310014560*160001580015500
Bond index fund (ISA)40004000400040004000
Peer lending29102910320032003200
Total FI stash (see here for pension and other assets)9908099140100,0009760096000
Savings rate: (incl. my work pension contribution)53%55%56%46%65.%

*This includes £1000 added in mid-February into US, UK and Pacific ex Japan funds, which continued to drop. A total of £16k of equity funds were bought this financial year and none sold.

In case you were wondering, I don’t intend on selling any equities until they bounce back, but rather, tentatively drip feed more in. Meanwhile, my bond index fund has held up well, and I’m grateful for my fixed rate accounts. With interest rates at an all time low now, cash may be king in a possible recession, but at a cost.

As I’m not one of those FIers who counts every spend, I’m not quite sure why my reasonable savings rate is not higher the last 2 months! Right now, probably like you, we’re not doing much. In February, we were still paying off our one-week holiday, and we’ve had quite a few birthday celebrations in the family. I recently ordered an indoor wooden climbing frame (aka a large Pikler triangle) for Firelite Junior as I was a little concerned about the lack of suitable preschool equipment for him at home. At over £300 (and probably some import tax to pay), I really hope he likes it. I’m definitely aiming for over 55% for April’s savings rate.

Life 1.2. aka my ‘midlife gap year’: A very easy decision

Given that I’d been grappling with whether to quit my job and take a ‘midlife gap year’ after this summer, it came as a slight surprise to myself that it now seems a no brainer. Given the change in routine I’ve been wanting for a while (albeit to a new one at full throttle!) and the market uncertainty for the foreseeable future, it was easy to decide to carry on another academic year. It seemed doable… perhaps when I compared it to THIS. Where before I saw personal creative projects lying in the dusty compartments of my brain for years, now I saw only stability in both of us working. Where before I was arguably pawing at the ‘self actualisation’ pinnacle of Maslow’s hierarchy of needs triangle, now my brain had reset itself to ‘security’, a much more basic/base need that I seem to have an instinct for. No longer was I pining for change, but looking forward to the day I return to my office!

When I shared this information with Mr Firelite, he had not expected it at all! But how can you quit a career to pursue something for self-fulfillment when there’s financial uncertainty all about you and you might worry about your other half being made redundant? I wouldn’t want to be too invested in one buy-to-let and worry about tenants paying the rent. Instead, I can work another year and buy a second property, or at least have a larger financial cushion under my belt (not sure I should mix those metaphors!). If there’s one thing I’ve learned about myself since starting my blog, it’s that financially I’m pretty cautious.

Adjusting to our lockdown lifestyle

I can only describe my weekdays as like three quarters of my maternity leave (i.e. constantly on the go, but with an older child with preschool needs) and three quarters of my work life (managing around 35 hours’ work a week; before, 50 hours wasn’t unusual). The result is like having 1.5 jobs. This is the only way we are able to (as close as possible) meet our various demands. I’m erring on the side of not burning myself out since I got ill, and am accepting that some aspects of work will just get sidelined. On the plus side, Firelite Jnr is thriving educationally and enjoying our attention, and for me, there’s little room for boredom or work fatigue. We pretty much fall asleep when Firelite Jnr does. It definitely feels like life is on hold for now; we just have to plough on. Without a car, life is simple in a very small radius.

Today, over 700 deaths from COVID-19 were recorded in the UK – the highest since we started counting. I’m writing this not to scare, but hopefully to look back on and think, woah, those were surreal times. We’re not yet ‘in the thick of it’; while parts of China seem to be over the worst and are reopening, our UK government are preparing for it. There will be many weeks yet. So, while I can say we’ve adjusted okay to our new lifestyle, fine even, I keep reminding myself that the accumulative effect of this way of life will be psychologically wearing after a while, and we may yet again have to find a new pace or rhythm.

Meanwhile, I’m glad to be well again and can at least enjoy eating food again, laughing at my 3-year-old’s jokes as he whacks me in the face, a full-time salary, the privilege that my health affords me, and a nice home with my loved ones.

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