Buying On The Sound Of Gunfire

This might seem a particularly odd time to be making a long term commitment to equities, but this week I signed up for a new pension plan.

I've been focusing on paying down the mortgage but since I'm tied to a long term low fixed rate, reducing my debt isn't an imperative in the current market situation.

Added to that, I've finally tired of handing over a huge proportion of my income to the tax man.

The nature of my work as a freelancer means that my gross earnings are subject not only to employee, but also employer, National Insurance contributions. Meaning personal pension contributions attract an effective tax relief rate of 48%.

That's quite a few BBs!

In addition, I've been rather lax about pension planning. My last contribution was a bottom-fishing lump sum some time around early-2003. At least I got my timing right!

This way I need to wait a long time to get my hands on the money, but at least more of it stays mine.

Winding Down

Mega project live. Defects under control. Propped up in front of the TV - glass of red in hand - watching Euro 2008 quarter finals, and skimming hundreds of unread Bloglines entries.

One of the sizeable backlogs belonged to Las Vegas and Poker, and I was genuinely astounded to see WSOP Event 33 had already been won.

Event 33!! I was dimly aware the WSOP was underway, and I've noticed a marked upturn in search hits for live webcasts or streaming, but Event 33. I just can't get my head around it. I've lost a month somewhere.

For the first time in several months I can contemplate an almost free weekend.

Plans so far encompass - repairing the long neglected lawn, ironing(!), and family time.

E is growing up so fast right now, and I do feel terribly guilty about missing a lot of time with her. Some days our only communication has been by phone - which leaves me feeling like a character from some 3rd rate Hollywood cheese fest.

One of her fascinations is aeroplanes. When she sees one flying overhead, I'll ask her where it's going.

She looks at me like I'm daft. 'To the airport daddy.'

I've taken her over to Edinburgh Airport a few times since it's possible to get really close to the runway and the taxiing planes. Close enough for her to wave to the pilots.

There's also lots of open ground for a kickabout when she gets bored with the planes. If there's one thing she has, it's energy in abundance.

Which is partly why this story really struck a chord.

The Royal Highland Show is held on the land beside the airport. This unfortunate little boy was playing in the same area where we are happy to let E run free.

Stories like this always make me feel terrible for the family, but it's a discomforting feeling to have such a direct link to our own activities.

I'd hate for E to become a McDonalds guzzling couch potato, but at the same time she can scare the living daylights out of me with her fearless approach to play. She always want to swing higher, spin faster, or come down the playpark chute head-first, backwards, or both!

While we always try to make sure she is safe, I think I'd rather have an energetic and independent child, pushing her own boundaries, than a cosseted, over protected, cotton wool child.

Like so many things in life, it's all about striking a balance, and finding the right compromises. Which is earier said than done.

Calm Before The Storm

In a slightly surreal place today. After six months of hard grind the mega project I've been working on passed it's final development cut-off today at 2pm.

Green for go. No more IT Iron Man for me.

Which meant a comparatively leisurely afternoon in work, and a generally satisfied feeling inside, coupled with some unease about the impending go-live.

I amused myself thumbing through a brochure on drugs that had been distributed to every desk.

It's supposed to be a guide to parents on how to deal with discussing drugs with their kids. High production values, glossy pictures, details of drug types, nicknames, modes of usage, side effects, etc.

If anything I thought it looked just a bit too glamorous.

Given that at thirty seven I'm the second oldest person on the team, and the average age is under thirty, it was receiving a less than reverential reception.

Many comments along the lines, 'There's a fault with this catalogue. They forgot to include the order hotline number, or website address.'

It should be fortuitous timing that Saturday is supposed to be a lads day out - drinking commencement scheduled for 1pm, with an end date likely to be some time in the wee small hours.

Unfortunately mega project is deployed into the production system at 10am on Sunday morning, and my attendance is required. No all day session for me.

We bed it in on Sunday, roll it out to the users in time for the Monday morning call surge. I'm anticipating a couple of days of frantic activity whilst hoping for a swift return to a more rational lifestyle.

So I'll need to content myself with a few afternoon beers and an early night. Partying can wait for a little while.

Contentment tonight came in the form of Euro 2008. The protagonists Holland and France; the football sublime; the atmosphere rocking.

The Dutch are on fire right now, but I can't see them winning the tournament. Teams that come out the blocks so quickly have a tendency to burn out in the knockout stages.

Another highpoint of the tournament is finally getting some value from my Sony HDTV system. Much as I could merrily strangle John Motson, the picture on the BBC HDTV broadcast is fantastic.

Ultra clear, vibrant colour, no smearing, and there's an appreciable depth to the picture. Just a pity there's so little HD content available right now.

No doubt that will be changing over the rest of this year, and with many more people gaining exposure to HD during Euro 2008, there's likely to be more demand for additional content as the difference in quality becomes obvious to non-geeks.

Oil Crisis Hits Home

I've been feeling a little smug as the credit crisis wreaked havoc on the financial markets.

Unlike our esteemed PM, I not only talk the prudence talk, I walk the prudence walk too. So our finances have been pretty much oblivious to the unfolding crisis.

Mortgage woes. Increasing rates. Declining choices.

No problem. We are on a long term fixed rate mortgage that's already overpaid.

Negative equity worries.

We paid a big deposit on the house.

Job security fears.

I'm freelance, so perpetually at risk. No change there. The mortgage over payments would give us a couple of years repayment holiday if required.

Reduced opportunities for credit.

We don't have any need for loans, and I've got enough credit on my cards to buy a very decent car. Mainly courtesy of Egg who gave me a £15,000 credit limit without offering me the chance to request a limit during the application process. A sign perhaps of the root of a lot of the current problems.

So, from a purely selfish perspective, all good. If anything the credit crisis might be a chance for me to exploit a buyers market.

The oil crisis isn't quite such a non-event for me. We are a two car household so rising prices are bound to have some effect.

Yet the big car is a very efficient diesel, and the little car is primarily used to get me to the train station for the commute to work.

Which means a relatively limited impact on me so far.

That may be about to change!

I'm pretty keen on environmental issues, so I should be glad that some people seem to have reached a tipping point and are ditching the car in favour of public transport.

The only problem being on my route to work there's already no spare capacity. The last thing I want after another crap day at work is a rugby scrum just to get on a crowded train for the journey home.

You might think the obvious solution is to run more trains, but there are track capacity constraints.

The best solution is to make the existing trains longer. A lot of the trains on my route are three carriage, when the platforms are built for six carriage units.

I suggested to the rail company they might want to lease more trains. They told me they can't afford it. Which makes me wonder what it takes for them to make a profit, when they've already got the punters crammed in like this...


If the oil crisis means more of the above, I might finally start to have some sympathy for the average motorist, so long as they promise to stay in their cars!

Happy Thoughts

Work has been killing me recently, so there's been little time for much else.

By this Friday, I'll have worked 19 straight days, and often a fairly extended working day. I feel like I'm running an IT Iron Man competition.

Which isn't great for family life, especially when I get home after E is in bed, and it's pretty wearing in general. On the plus side, I work on a day-rate, so the Div family coffers are swelling.

It's a grind though, so tonight I thought I'd post a couple of small but happy things...

Firstly, remember this bet? Turns out it wasn't so bad after all.

Secondly, happy birthday to Kylie, who turns forty today. Forty!!

The newest pop princesses are all well and good, but as late thirties loom, it's nice to know there are women older than me who I'd still like to do scandalous things to.

Be honest, you would, wouldn't you?

Manifesto

The May election campaign in Scotland is well underway, and the polls are pointing to an uncomfortable time for the ruling Labour Party.

The suggestion is the Scottish National Party – proponents of independence for Scotland and the break-up of the United Kingdom - are on course for victory.

Not the outcome Labour had in mind when they introduced devolution after Tony Blair's first election victory.

With the campaign in full swing, the papers are full of predictions of what an SNP win would mean - ranging from the optimistic to the alarmist, as might be expected in a partisan campaign.

The truth is, I suspect, it doesn't much matter who wins the election. Nor does it matter who wins the impending Labour leadership campaign, nor the next UK election.

I've come to the conclusion that no politician, or political party, has the capacity to impose any meaningful good or harm on the electorate or the economy any more.

Such are the timescales for change, and so great the mechanisms in place to restrict the rate of change, that any political movement is a spent force long before any significant impact of their policies can be felt.

An excellent example of this comes from the world of transport. I am writing whilst travelling northwards on an ageing GNER 125 train, a model first introduced in 1976 – during the last Labour administration - and still in full service.

On arriving at Glasgow Central, the train will terminate – unable to travel further due to a missing link in the Scottish transport network – Glasgow Crossrail – which has been mooted for over ten years, still awaits approval, and probably won't be completed for another five years at least.

Similarly, should I wish to drive around the outskirts of Glasgow, I'd be unable to complete the circuit on motorway alone, since the 'missing link' – the final phase of the M74 – is once again mired in bureaucratic delays caused by endless legal challenges.

The projects are not flights of fancy, but core elements of the Scottish transport infrastructure.

The lifespan of these projects eclipses the lifecycle of any political movement – whether it be the Thatcher or Blair years.

Compare and contrast the fortunes of UK (or Scotland) plc with that of recent UK commercial success stories such as Tesco, Royal Bank Of Scotland, or the recovering Marks & Spencers, and it's clear that big organisations benefit from clear and decisive leadership where freedom of action is paramount for the success of the executive team.

Governments no longer have that freedom of action. Much as Tony Blair may be condemned for his Presidential style, he doesn't have the clout to force through change – whether good or bad – at a rate rapid enough to induce transformative changes on the course of the nation.

There are back benchers, pressure groups, unions, and lobbyists, all with sufficient clout to wield legal challenges and other tactics with enough vigour to bring the most radical ideas to a grinding halt within a morass of legal, financial, and administrative restrictions.

The planning system in particular slows progress to a grinding crawl.

Even if the SNP do win the Scottish election, and the inevitable independence referendum that would follow, the likelihood is Independent Scotland would simply inherit many of the legal and administrative mechanisms of the UK.

British civil servants would become Scottish civil servants, the judges would remain the same, the laws may change over time but would be founded on the same framework upon which UK law was built.

All of which lends the entire exercise an air of fruitlessness and wishful thinking.

For any change to be a success would require the sort of extreme surgery that veers so far from the accepted democratic norm it simply would be unthinkable for any mainstream politician.

What is needed is a root-and-branch reform of the entire political, legal, and administrative systems,

A wiping of the slate and rebuilding from the very foundations of the nation. The introduction of a political system where those chosen to govern were empowered to govern with the same powers of decision making and speed of implementation that a modern Chief Executive wields over their organisation.

Furthermore they should be given a mandate to govern not for four or five years, but for a minimum of ten. Enough time to make a genuine difference.

All of which may be music to the ears of Jack McConnell or Alex Salmond, but they are not the sort of people I have in mind for the post of First Minister, Prime Minister, President, or whichever other term would be chosen for the political head of an independent Scotland.

Instead, I'd want to see someone with the proven acumen to run a huge organisation successfully and innovatively. A Fred Goodwin, Terry Leahy, or Tom Farmer – given a framework to operate within and incentivised by clearly defined economic targets.

Take for example national Gross Domestic Product. The trend rate is about 2.0%. Why not a £1m bonus for each tenth of one percent the GDP exceeds trend by during each of their years in office?

Sure they would earn enormous amounts over their term should they beat the target by any meaningful margin, but the rewards for the nation would be dramatically in excess of their bonus, and spread throughout the land.

A good chief executive knows when to make decisions, and when to delegate them. The running of the major departments such as health, education, and policing would be delegated to professionals with the appropriate expertise, bought in from wherever necessary.

All of which sounds, I'm sure, more than a little fanciful, perhaps even delusional.

'So what?', I say. Years of mundane leadership, and mediocre thinking have dug us into a pit from which there appears little hope of escape at present. I find myself agreeing with David Blunkett when he says the world we live in is sinking under the weight of its own vomit.

Is what we have now the best we can genuinely aspire to? Is there not a better path to be followed?

What I'm proposing would be seen by some as dangerously close to an elected dictatorship, but in some ways that's just what is needed.

Politicians have an overwhelming imperative to get re-elected. When the initial medicine tastes bad, and the public patient baulks at the treatment, they lose the will to persevere with the full course.

Tough love isn't on their agenda; winning votes is.

A longer term, more empowered leadership would be able to force through initially unpopular policies with longer term beneficial effects. It could be bolder, more decisive, and unafraid of short term electoral demands.

Alas, I don't expect any of this to come to pass. Which means for now all I can do it continue to make the most of my own lot.

For now that means persevering with my own life plans to enable my family and I to set our own course outwith the traditional career and financial milestones.

At the moment I'm happy that I'm doing a pretty decent job of that, but it doesn't stop me wishing the country as a whole could step up a gear and improve the quality of the society we live in.

Life Plan

This is a post I have been planning to make for quite a while. The delay in doing so, perhaps symptomatic of the reasons for making it.

In modern jargon K and I are doing a bit of what might be termed 'downsizing'. A financial advisor might describe some aspects of it as 'retirement planning'.

Neither of those terms sits comfortably with me. I don't see it as some sort of retreat from modern life, nor is it about plotting a comfortable descent to the grave.

Rather I see it a life plan. One which structures our priorities in a manner that will give us quality time with E - and any kids to come - whilst ensuring we are not shackled to the grindstone until our twilight years.

Last week K left her job, having handed her notice in soon after the New Year. We are a single income household for the foreseeable future.

This was not a spur-of-the-moment decision, though the timing is more rapid than we had previously planned.

She will be devoting more time to bringing up E, and simultaneously removing the burden from my parents. My dad's episode at Christmas a reminder that we sometimes place unfair expectations on them - which they would never dream of refusing to meet.

K and I have never been the most ostentatious of spenders. I can recall numerous occasions when my gadget and car oriented techie workmates have teased me for my unwillingness to splurge on the latest must-have item.

I was called 'tight' long before I took up Limit Hold 'Em.

Yet we can hardly be counted as frugal either. We've got a nice house; two cars - albeit very much from the sensible range; and we do like to travel and have fun.

Thus our plans are more a formalisation, or evolution, of our existing lifestyle, rather than some sudden Damascene conversion to a new lifestyle.

Work-to-live, not live-to-work, has always been my approach.

Coupled to a pragmatic grasp of how finances work, I have generally been relatively cautious with debt - avoiding running up big credit card bills, whilst accepting the inevitability of the mortgage payments.

This attitude no doubt influences my conservative approach to bankroll management.

We now find ourselves in the position that the mortgage is the sole remaining debt on our balance sheet, and as I said previously, killing it off is financial goal number one.

Progress has already been made in that area, and I expect more to follow later this year. All of which has laid the foundations for K's early withdrawal from the workplace.

Whenever friends or family seek financial advice from me, I tell them that reducing debts in order of expense should take priority over investment.

While shares may go up or down, the bank will always expect their payment at the start of the month.

Investment returns are uncertain; interest charges are certain. I continue to maintain that philosophy.

So far, no real change then. Where the life plan comes in is in setting more definitive long-term goals.

One area that has attracted much attention in the financial press recently is the pensions crisis.

As people live longer, birth rates decline, final salary pension schemes disappear, and a culture of instant gratification and cheap credit overpowers more traditional values such as moderation and saving, the nation is heading towards an economy where people will carry their debts far beyond traditional pensionable ages.

Working into your seventies will be the norm, rather than the exception. Already the government has set in motion the raising of retirement ages in the UK, and this trend will certainly spread across the rest of the old economies of Europe and the US.

That is NOT my plan.

I've always been somewhat of a contrarian when it comes to financial planning. When others were fleeing the stock market as it languished in the lower 3000s, I plunged in with a big lump sum contribution to my pension. I saw it as a chance to make my money work harder over the next thirty years.

Now as many of my fellow citizens resign themselves to an extra ten or fifteen years of work, to pay for their current excesses, I am again aspiring in the opposite direction.

While K looks after family business, I have set myself a target of transitioning out of my current lucrative but time-consuming and unfulfilling job within roughly ten years.

The aim being to replace it with some as yet undefined work that will be less stressful and time-consuming, whilst paying whatever bills remain.

To put things in context, I recently turned 36, and the broad-brush plan looks something like:

- mortgage cleared by 40
- current job ended by 45
- part-time by 50
- effectively retired by 55

All of which does sound awfully like a terribly dull retirement plan at first glance.

Where I see it differing is that what we are aiming for is to reduce our fixed and non-negotiable outgoings rapidly, to give us more freedom to expend as we see fit in the future.

It also gives us the freedom to make more time for ourselves. As a contract worker I am very much a slave to the demands of the current customer.

We are not plotting a comfortable path towards the grave; we are planning on enjoying life to the full.

I want to be in a position where deciding to spend a long weekend in Barcelona or Rome is something we can do on a whim, not something that necessitates three months advance planning.

Where attending school sports days, and the like, is a given - not a big ask.

All of which means surrendering a few frills and luxuries now, in the expectation of more rewarding pleasures a few years down the line.

In the more immediate term, I'm also making some other changes for the better.

Over the last year I've been aware that my health and fitness isn't all it should be.

For the first time since I was a teenager I've moved up a waist size. Much as I was never any good at sports, I was generally active until the last few years. Whether it be hacking shins on a 5-a-side court, shifting some weights in the gym, or even just walking to work.

I'd hate to be too infirm to enjoy my kids growing up. There are things I didn't do when I was young that I'd like to learn with them. Skiing for one!

I'd love to take them to interesting places. K and I honeymooned in Africa, and went on safari. That was an incredible experience that I'd love to share with them.

South America and the Far East are still on our list of places to visit. They aren't trips I'd inflict on a toddler but it would be great to take them when they are old enough to appreciate the experience.

While I don't ever see myself existing on salad and lentils, I will be making a more conscious effort to eat healthily, and I'll be aiming to get more value from my gym membership - presently my most wasteful investment.

K is already well ahead of me on this path, so hopefully her success will spur me on.

From a psychological perspective, discussing the above with K, and even writing up this post, has made me feel more content than I have for quite a while.

I'm happy that I've regained a sense of purpose in life, and can see some rewards coming from the pressure I've put myself under over the past ten years.

At one point I presumed my career would be a gradual progression through the ranks of some firm to the point where I was a manager or executive.

That isn't going to happen now. I'm happy pursuing my narrower motivations as a contractor without becoming embroiled in the office politics of promotion and empire building.

This realisation is relatively recent, and if I'd been told that ten years ago I wouldn't have believed it. People change. We adapt to circumstances, and get on with things.

My first serious job application was to the RAF. I wanted to fly fast jets.

I passed the aptitude tests, and failed the medical due to dodgy eyesight. So I've undergone a fairly dramatic switch of career ambition already.

All of which means I've managed to knock off over a thousand words with barely a mention of poker. Which is as it should be.

I don't see poker as playing a great part in these plans. Rest assured that is not the career change I have in mind!

Which isn't to say there won't come a point where any surplus winnings are reinvested towards the life plan.

For now I still see my aim as building bankroll to let me play higher, but I suspect there will come a time that the sums get so large, and the quality of opposition improves, to the point where I feel uncomfortable playing any higher and will be happy to cream off any excess profits for reinvestment elsewhere.

Wouldn't it be nice to buy some boring high yield ISA shares, or raise the deposit on an investment property, from some steadily accumulated poker winnings?

Though there would have to be one hell of a property crash before my winnings equated to 15% of a house!

For now I think that's enough of my manifesto for a happy life.

K and I won't be changing our names to Tom and Barbara; our eggs will still come from the supermarket; but hopefully there will be fun and rewarding times ahead.