Discussions in the pub

Inevitably at work, you will find situations where you end up in the pub with a number of your work colleagues (if you are lucky, you may even get a tab or expense account in play which makes it an even greater pleasure!). Hopefully these are at least some form of fun and you have something in common with your colleagues. It normally ends up talking about work, but when its someone’s leaving drinks, then plans for the future often come up, and occasionally, very occasionally, the money or finance discussion starts up. This happened to me when we went out for drinks a little while ago, with a large variation of ages represented in the group, and there were a couple of key items that came up, from two different perspectives. It was the similarity in the view of money however is what struck me – since when did it become a big thing to be proud of the amount of debt you have?! [Note: You may need to subscribe for that link but it is talking about Kanye West’s $35 million debt]. Whilst people in the UK seem to have an aversion to talking about wealth and money (I hold my hands up of being guilty of this as well – only a very few know roughly what I earn, never mind the exact amount), let alone any form of wealth – should we be? Surely being able to say you have £X,000 in a pension account should be something to be proud of?  I’d certainly rather have an ISA producing me £1 a month than the latest Apple Watch, that’s for sure (especially watching people trying to use it to pay for a bus ride in London!).

Individual 1: They have fairly recently retired, and so enjoying their time out of the office – mostly doing things with friends “for free” – something that anyone can do even when working. Asked what the biggest transformation was going into retirement, the answer was the inevitable “cut in income”. What amazes me is that this doesn’t come as a surprise (before retirement they had mentioned the same), but that rather than try and do something about it, they just shrugged their shoulders and ignored it. It was just accepted that you have to take a pay cut in retirement, and so need to be prepared for it. Surely its better to try to not have a cut in income? If you knew this was coming why not try and scale back a little? Granted I don’t know if the individual still has a mortgage or not, or any more details of what they may get up to in their private life, but I for one don’t intend to take a cut in expenditure (i.e. my lifestyle) when I retire – if anything I want it to go up!

It never ceases to amaze me that people think that you don’t have an option but to take a pay cut when you stop working. If you know you will take a pay cut why not get used to it? Lets face it, when you retire you should have no need for a Starbucks (unless you need to rest those tired legs and put your walking stick somewhere, but there are plenty of free benches around the world…). It was a great reminder to me as to why I am tracking my spending and generated returns to make sure that the lifestyle I have in retirement will be, at worst, the same as I have now. Simple spreadsheets can give you all the predictions, and yet so many people seem to stick their head in the sand when it comes to money.

I really struggle to get my head around why people are happy to assume that they will have to take a massive drop in income when they retire – especially when they seem to know this is coming 40 years or so away! Maybe the human mind is not able to grasp that concept in general and it is us freaks in the FI community who can?

Individual 2: They were moving home – granted for a sensible reason (to be closer to work), but it was interesting to hear about the impact this would have – higher mortgage (although no idea the exact numbers, and didn’t ask, it could be £2 a month more or £500, I will never know!) and less outdoor space, and a smaller property. The interesting thing was the view that the bigger mortgage was required, “and you have to do it, don’t you”. Do you? Why? Who says so? I totally get the needing to be nearer work, but I honestly can’t see that there wasn’t somewhere cheaper that would have fulfilled what they were after. I think London can be seen as the exception as if you work in central London and want anything less than about an hours commute then its likely to be over £500k for something reasonable both in terms of a place to call home and a location – but that is my opinion 🙂 For me, I tried living outside of London and commuting it. Yes it saved me money – but 5 hours a day on the trains and tubes, no thank you. I lasted one month at that before I decided to move up to London.

Why is taking on a much bigger mortgage a badge of honour?  You hear a lot about people buying McMansions (ok, partly guilty) and having more space than they “need”, but its finding what you need – for us, technically we could downsize. We won’t, and we will work longer for it, but we have the space we want. We lived in a 2 bedroom flat for some time, and it was just too small for what we wanted. Now we have a much better place – it’s still not what I would want from the bottom of my heart, but in London for that sort of pad, that may well even be out of reach of FvL!

Individual 3: This was probably a more eye opening one. They are a successful person within the company. Over beers one evening (I can’t remember now how we got onto the topic!) we had got onto the topic of retirement (the others around were somewhat older than I am – at a guess at least a decade or more). They were talking about having a dream of retiring by 50 when they started out, but then work, home expenses, kids all prevented this, and here they are still working. I managed to keep my mouth shut and nod along, not revealing that actually they could still have retired at 50 despite everything else. It seemed that once the “M” word happened then things went off the rails. I have no idea why, and they didn’t elaborate, but they are still working now a long way the other side of 50!

Since I first drafted this post, I was lucky enough to meet up with a group of friends we often go pub crawling with. To be clear – this isn’t a run as fast as you can and throw a pint down your throat type of pub crawl, but usually some really good ales, and some historic and interesting pubs or walks. With the amount of time we spend on the crawls (usually a good 12 hours), we tend to eat in the pubs as well, so it isn’t a cheap day but it is huge fun. Last time I had a long chat with the youngest member of the group who was having some challenges and we had a long chat about life in general. When we met up this time, it was clear that this message had sunk in and he has acted on it – he has really turned things around, thinking about setting up his own business and was generally much more “with it” and focused. I don’t know if this would have happened anyway, or if it was because we chatted and I wasn’t a family member or close family friend, I have no idea but it was a huge buzz to see their change. This time I dropped in the idea of savings 50% of every pay rise they get. Will they take that on board? I have no idea, they really are just at the start of their journey (still under 21, so some pubs are a bit of a struggle), but I will find out next time – I really hope they do!

Its always interesting to see what conversations come up when you are down the pub, and its interesting how fast you can clock who is clued up on their money, and who is the one blowing it. What about you – what do you ever cover off in discussions in the pub around money, if any? Or is it limited to who is getting the next round in?

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Author: fireinlondon

Fighting the high cost of living in London

8 thoughts on “Discussions in the pub”

  1. Hi FiL,

    Really entertaining post – it’s good to see that on one side you’re mentoring the young ones but on the other end you’re learning from the mistakes of the older generation. Sometimes like you describe in your post, I also feel like I’m undercover when with colleagues on a night out. Nice clothes, cars and houses but in significant amount of debt.

    One way I like to look at it is that life gives you two glasses of wine, one sweet the other bitter. You have to drink both but it’s your decision which one to drink first. By creating passive income at a young age we’re choosing the bitter (it’s not that bad!) one first. Our colleagues may be “enjoying” life more in the mainstream sense but the significant drop in their income and longer working lives will have a detrimental effect on happiness no doubt.

    Have you ever considered moving out of London? Friends who have been there and done that all tell me the quality of life improved when they left.

    Rory

    Liked by 1 person

    1. Hi Rory,

      Thanks for dropping back in, and glad you enjoyed the post! Yes – sadly I wasn’t really listening when I was younger so I didn’t save as much as I could have done, however the money was mostly spent on travel, something I most definitely do not regret ever doing. Maybe one day I will put a post on travel up and show where I have been lucky enough to have travelled to.
      I totally get the millenial wish to travel, but make sure they do it with the understanding that it is a fine line between the two.

      I like the analagy with the wine although maybe not the bitter glass 🙂 How about the difference between Tesco value wine and a rather fine St Emilion – start on the tesco wine and work your way up 🙂 Don’t get me wrong, when I see colleagues going on holiday I do have a pang of jealousy, but knowing that I will be able to do it whenever I feel like it once I am retired then I will have the last laugh!

      Moving out of London? Yes it is an option certainly, and we could probably FIRE now if we did, however I do like London and the museums, but we could come in, stay somewhere nice. We also looked at properties outside of London throughout the UK and what we could get and there are some lovely places indeed. For now we will stay in London as for me that is the best place for £ for working! In another 3 or 5 or even 8 years I may feel differently, but lets see.

      Cheers,
      FiL

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  2. Interesting post! I tend to be very cagey about this sort of thing. I certainly hear people going on about how expensive their mortgages are, but I just keep quiet. I’m single and don’t have kids so I can’t possibly know just how necessary the huge mortgage and private education fees are. I do get the feeling people are just assuming they “have” to do these things – perhaps there’s a feeling of “well, what else are you going to do with the money? You can’t take it with you”. Saving and investing to build up a fund for retirement seems like such a huge and impossible task I guess it doesn’t feel like it’s worth bothering with. But I don’t really know and I’m probably being a bit biased here.

    I know your question was rhetorical, but I’d never proudly say I have £Xk in my pension or ISA. I’m sure I’d just be told I was lucky to earn so much/be able to save so much and/or that I was a tax dodger. I do find it annoying that if you earn a lot of money and save it you’re a fat cat and it’s not fair, but if you earn a lot of money and p*** it all up the wall on mortgage interest, cars and fancy holidays you still get a certain licence to whinge about not having any money and never being able to retire. Sorry for ranting though. 🙂

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    1. Hi Steve,

      Thanks for dropping by and glad you found it interesting! I think most people who are financially savvy are cagey on this – like you say keep quiet about it. I have a very good friend who has kids but has managed to still be sensible with money, so it is not vital to spend huge amounts of money. We don’t have kids but I can understand people wanting to give their children the best possible opportunity in life, but a nurtured homelife and support counts for a lot if you ask me.
      I don’t think you are being biased – as you say building up the funds for retirement, when the numbers are so huge I can understand why people get put off. I read recently that the average pension pot currently stands at £75,000. That really isn’t going to buy much.

      Sadly I think you are right – people would look at it with jealousy rather than realising what you have done to save up that amount. If you earn a high amount then in general it is because people have worked hard and put in the hours to get promoted and work their way up, or invest their time in their own company. It is not always easy. As you say – spend it all on mortgage interest, cars and so forth you can whinge about the money! We pay far more on mortgage interest than I would like but that is London for you!

      No problem on the rant – do you feel better for it? 🙂

      FiL

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      1. Thanks, I do feel a bit better. 🙂 I think to some extent what’s helpful about the FI blog scene – especially now there’s a few UK bloggers – is that it’s a little bit of “head space” where people are mostly on the same page. Unlike in real life where everyone’s short of money and it’s all about the bling, whether they earn four figures or six figures a year. I do enjoy feeling a bit smug and “ha ha, I’ll be out of here in a few years, unlike you suckers!”, but at the same time it’s important to have people who you can be honest with, even if only pseudo-anonymously like this. 🙂 So thanks!

        Liked by 1 person

        1. Hi Steve,

          Glad to hear it 🙂
          Yes – it is really rather nice being able to openly talk about these things now that the UK blog scene is opening up more. If you are London based you should also consider joining the London FI Facebook Group (https://www.facebook.com/groups/FILondon/) – great to meet up with people at all stages of FI.

          I have to say that little bit in the back of your mind knowing it’s only X more years and you should be free is great. Would I rather have another stupidly overpriced car on loan for god knows how many hundred a month that I won’t even own at the end of it, or put that into my retirement pot and know its buying me a few quid every month of freedom!

          It is defintely really refreshing to be able to talk openly about these things and know you are not alone – and it’s a pleasure 🙂

          Keep up on the savings, tucking away the cash and letting it build up!

          Cheers,
          FiL

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  3. Having just started my blog in 2014, after a few drinks too many, I blurted out to friends that I was planning on retiring early. The response was laughter and hilarity, with comments of “Why, are you planning on winning the lottery?” and “Are you going to find a rich old man?” etc. One friend said I’d be so bored retiring early and that she was likely never going to retire.

    Fast forward to a recent outing and after the usual large amounts of alcohol imbibed, said friend who said I’d be bored revealed to me that she had come to the realisation that she did not want to continue slogging into her 60s (she’s in her early 40s), she was going to take a leaf out of my book by ‘being careful with money’. She has no pension whatsoever but her mortgage will be paid off in a few years’ time. I suggested to her that after paying off her mortgage, that money could go towards a pension and shockingly, she agreed that that was a good idea. Starting so late, she’s never going to have an adequate private pension but will be happy to work part-time. With her mortgage paid off, she still has a bit of time to build up some funds.

    As you say, interesting what conversations come up when you’re in the pub – I’m not sure I’d have such discussions if alcohol were not involved, such is our British way of not talking about finances!

    Liked by 1 person

    1. Hi Weenie,

      Ah the dangers of the demon drink – our truths come out! It’s telling that their comments show that people think that retirement early isn’t possible!
      I always used to think I wouldn’t want to retire, but I am lucky that even in my earlier days I was overpaying the mortgage and so building up my net worth, and it has paid off.

      Interesting to see that she has finally come around that she doesn’t want to work for ever, but no pension or savings at all is going to make life difficult, but with 20 good years of saving it should stave off poverty I would hope, at least she listened, and will hopefully take it on board!

      Alcohol is a great lubricator of conversation at times, I’ve learnt a lot down the pub over the years 🙂

      Cheers,
      FiL

      Liked by 1 person

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