The financial side of my brain has been programmed over the last few years to make quick and beneficiary financial decisions (at least in the sense that they aid my quest for financial independence).
Sure, there are some circumstances that require deeper thought, a bit of prodding about inside my grey matter,to come up with a sound decision. But for the most part (read: 99% of the time) it’s a quick and easy choice, the same situations come up time and time again.
It boils down to: make decisions that lead to happiness in the long run, ignore instant gratification. Financial Independence and a higher savings rate are a side product of this. It seems so easy, put like that.
So why is it that I stumble across so many Forons?
I bite my tongue when overhearing others making idiotic financial choices. After all, it’s someone else’s finances, not my own. Rummaging around in someone else’s financial underpants is just rude. Still, I find it frustrating hearing bad financial choices being made.
A few examples of some real life Foron’s I’ve encountered recently.
Employees where I work are offered a recurring Save As You Earn Scheme (an option to purchase shares at a discounted price). I am quite fond of this, it’s an especially good deal. Save some money with all the upside of leveraged equity investing, with none of the downside? Yes-fecking-please.
As I wandered to the bathroom, trying my best to avoid eye contact with any of the drones lest a work conversation starts up, I overheard something;
A Foron :- My holiday to the Far East is going to be more expensive than I thought, so I’ve cashed in my share options early. I only get the cash back, but it’s paying for my holiday.
Someone Else :- Well, you’ve got to reward yourself.
I resist the urge to throw them both over the bannister to a marble-floor induced splattery demise.
Perhaps I’m a miserable bastard, but keeping the cash in the scheme is the far better option here. Forego the expensive holiday, if you can’t afford it, you should have planned better. There’s so much going on in this one small example that it probably deserves a post all on it’s own. Poor cashflow planning. Instant gratification over delayed gratification. Keeping up with those bastards, the Joneses. An over bearing sense of self entitlement.
There’s a structured remuneration package where I work. Get a promotion, get a payrise. Pass some exams, get a payrise and a small bonus.
One of our new graduates passes a couple of exams and gets a promotion. Nice.
I head over to say ‘Nice one, you legend‘, because the exams are tough and studying can be a lonely place. I walk through the open plan office, passing multiple banks of desks, each exact copies of one another, the same depressing grey colour. As I approach I notice someone else congratulating them;
Someone Else :- Sweet work on the exam, mate. A well deserved payrise and promotion.
A Foron :- Thanks. I’ve eyed up this payrise, I’m going to head out this weekend to have a look at a new car. Thinking about one of the new VW Gulfs.
My hands unconsciously go together and I feel the heat of a Ryu-style fireball beginning to form, with the express intention of being launched into the Foron’s face. Not wanting to cause a scene, I cease the formation of the projectile and congratulate the Foron.
100% lifestyle inflation right there. The payrise had been mentally spent before it was earnt. Ever hear people saying that the problem with payrises is that your spending just expands to fill the gap? It doesn’t just happen, it’s a choice. For some reason as our income expands we feel entitled to more and more ridiculous luxury.
Admittedly any of us chasing Financial Independence are way out in the tails of the distribution here, but I try to achieve 0% lifestyle inflation with any pay rises. Just keep it the same, any thing else would be an indicator that I’m not happy…which is not the case. Somewhere in between the two might work better for others, but hitting 100% lifestyle inflation every payrise is a direct path to financial meltdown.
Housing represents a minefield of possible mistakes for the Foron.
I work in the centre of a large(ish) city in the UK. There’s plenty of accommodation to choose from in the city, much of it within walking or biking distance from the office. With plenty of accommodation comes plenty of people, and plenty of people looking to buy houses.
Mr Z :- How’s the house hunting going, dude?
A Foron :- All done, pal. We’ve managed to get a 5 bed detached house in <some location at least 20 miles away>. We’ve stretched ourselves to the max on this, drained all our savings to get a deposit and the monthly payment is pushing us. But it’s a sweet pad. It does mean going from a 20 minute walk to a 45 minute drive, but it will be worth it. Besides <insert another Foron’s name here> lives out that way. And we got way more for our money.
I must resist the urge to ask if they have considered the cost of commuting. The monetary cost, the drain on their time and the negative impacts on their health. On top of that, chowderhead, you’re now in a small village and you’ll be heading into town whenever you need groceries or to go shopping or to catch up with friends.
What happens if one of you loses their job? I’m guessing you won’t be able to afford the mortgage.
Why do you need 5 bedrooms? It’s just you and your partner. What creepy stuff are you keeping in them?
There’s plenty more opportunities for mistakes with housing. Moving to the expensive desirable area and paying a premium to be across the other side of an invisible divide. Renting a brand new flat over looking the city centre park or river and paying a savage premium for it. Buying a house with way more space than you need, extra bedrooms for when guests stay, you know, like, 0.01% of the time we own the house.
As my irritation builds I find myself taking a couple of steps backwards, getting ready for a burst of speed followed by a dropkick to their temple.
Of course I don’t unleash the dropkick, I still need the job. For now.
Any Foronic things you’ve heard lately?