Wealth update – 31/12/2020

It’s the last day of 2020! Here’s a quick update of the last two months as I forgot to do one for November due to being extremely busy with work.

Gas supply saga

I still have no clue what’s happening with my gas supply switch. The new provider has confirmed they have made the switch but I’m still being charged by my old provider and haven’t had a closing bill…

British citizenship saga

Both me and my girlfriend have received an email from the Home Office notifying us that our British citizenship applications were successful. My email came a few days after my girlfriend’s – even though we submitted everything at the same time. I was worried for a little bit but am very pleased with the outcome.

In case you’re wondering, it took us 10-11 weeks to get the emails about the Home Office’s decision from the point we first made our applications (and we gave our biometrics a month after the application).

The final stage of the process is to attend a citizenship ceremony. However, coronavirus has made it difficult to arrange these and there seems to be a bit of a backlog. The councils might be able to arrange virtual video conference ceremonies… we shall see. I expect us to be British between March – May 2021.

It feels good to have one thing less to worry about.

Lifestyle inflation?

I have been shopping! And it feeeeeeels gooood.

I bought a new pair of pants for myself from Lululemon. Yep, it’s that overhyped expensive yoga pants shop. I bought office/work pants from them. These bad boys set me back £118 and are easily the most expensive pair of pantalones I’ve ever bought.

The main reason to buy them was the anti-ball-crushing (ABC) technology, which they promoted on their website. I was sold and immediately bought them.

You must be curious whether the ABC actually works as expected. Sadly, I don’t feel like there’s much of a difference and my crown jewels can totes be crushed when I wear my Lululemons. I wear them every day and it’s not because they’re my only pair of trousers… #ExtremeFrugalism. Seriously though, they are decent trousers but I would recommend going for something cheaper if you can.

The shopping spree didn’t end there. My 4 year old Pixel phone’s battery life was poor and the device felt slower by the day. Therefore, after lots of debating and online researching I decided to upgrade to the new Pixel 5 for £599. I thought this phone would last me another 4 years as it’s got 5G. So far, I’m very happy with the new phone.

Now for Christmas we also bought something for the body. As it’s cold outside and the pandemic is still roaring about (gyms are closed), we decided to buy an indoor exercise bike. We got the JLL IC400 Pro bike for £519.99. Neither of us knew anything about bikes so we bought something in the middle of the expense range hoping that it’s not crap. So far so good. I am totes getting a six-pack in 2021! 🙂 My only gripe is a sore bum from the seat.

Counting my beans

OK. Numbers! My wealth has gone up in both November and December 2020.

November 2020: My net worth as at 30/11/2020 was £142,616 – an increase of £25,064 or 21.3% from Oct 2020.

December 2020: My net worth as at 31/12/2020 was £161,239 – an increase of £18,623 or 13% from November 2020.

In both months I made a £1,600 ISA top-up and £292 pension top-up and £50 was paid into Premium Bonds.

So, both November and December have been positive months and my net wealth is closing for the 2020 year at an all time high. I’ve calculated that my wealth increased by £90,379 (from £70,860 on 1/1/2020) in the 2020 calendar year – of this £26,515 was new money and £63,864 was the investment return – that’s more than £5,300 of gains each month in 2020! Wow! I am very happy with this.

2020 has been a great year for my portfolio, I’m also almost British now and will get a six pack very soon! Pandemic aside, I hope you had a good year too and I wish you a fantastic new year!

How I managed to get a refund for my cancelled Ryanair flights

Less than two months ago I booked a trip to Germany for a holiday during the Easter weekend. There was a festival/congress I wanted to go to. The plague wasn’t that big of a deal back then and it looked like it would all blow over by the time my holiday would come around. I also have a travel insurance policy and therefore felt relatively safe making the bookings. At least, so I thought. History has proven me very wrong.

image of the word cancelled

First, the event in Germany got cancelled as it had more than a hundred participants. Then the flights got cancelled and then the hotel booking got cancelled – all due to various lockdown reasons in response to the Covid-19 pandemic.

I requested refunds for all my travel bookings and didn’t have much trouble with the event and the hotel refunds. I also got a refund from Stansted Express as I no longer needed to travel to the airport. Only Ryanair was difficult as you may have heard from the media. It seems the company, along with other airlines, is at risk of going bankrupt if it refunds the money it owes to its customers.

My flights got cancelled on the 24th of March and I got an email from Ryanair with instructions on how to apply for a refund. I did that on the very same day. I was notified that it would take up to 20 working days to get a refund. My understanding is that legally they have two weeks to refund a cancelled flight, but given the plague, I thought giving them more time seemed reasonable.

A few days later on the 28th March, I got an email that said
“Due to the high volume of flight cancellations due to COVID 19, we are experiencing an unprecedented high volume of requests. We are currently working through the backlog and ask that you please bear with us. Please do not resubmit your request.”
OK good, it’s being worked on but it will take a little longer, which is reasonable.

9th April I get another email from Ryanair, which states
“As previously advised, our Customer Services Team are experiencing an unprecedented high volume of requests due to the COVID-19 crisis and we are prioritising our most vulnerable customers. This has been compounded by government public health restrictions on non-essential work travel which means we have less staff available to us during this busy time. Please rest assured your refund request is currently in the queue and will be processed. If you have selected new travel dates and would prefer to move your booking, please contact us. We appreciate your patience at this time.”
The please rest assured part sounded good to me and so I continued to wait.

On the 20th April instead of a refund Ryanair sent me a voucher, which I never applied for. The email read:
“Over the past months the spread of the Covid-19 virus has caused many EU governments to impose flight and/or travel bans which grounded over 99% of Ryanair’s flights. We are doing everything we can to support our customers, our people and protect jobs. We are ready to return flying when Covid-19 is defeated, hopefully sooner rather than later.
We regret that these Government travel restrictions have forced the cancellation of your Ryanair flight(s) under booking reference:: [my booking reference].

Please see below details of your travel voucher for [£££.££]GBP, the full value of your unused booking. This amount can be used for the purchase of Ryanair flights and other services at any time over the next 12 months. It is simple to use this voucher when making a booking on the Ryanair website or app.
If you do not wish to accept this voucher option and wish to move your flight or request a refund, please click here to contact us. Please note that as our customer care agents are required to work from home to limit the spread of COVID-19 virus, payment security restrictions prevent us from processing refunds as quickly as we would like to.

We invite you to use your voucher to book your next trip and we look forward to seeing you again on a Ryanair flight in the near future. Passengers who made their bookings using travel agents, or on line travel agencies should contact these companies from where they purchased their tickets to find out more about their options. Our priority always remains the health and well-being of our people and customers.”

Naturally, I was unhappy about receiving the voucher. I followed a link from that last email to see what I can do to request a refund. I found a small blurb which said:
“Can I receive a cash refund instead of voucher?
You can request a cash refund however bear in mind we will place your request in the cash refund queue until the COVID-19 emergency has passed. We highly recommend using the refund voucher as these are readily available and you can book flights on all Ryanair Group airlines in over 200 destinations in Europe and the Middle East.”

I have zero interest in using the voucher as it’s impossible to say when I will be travelling again. Also, the voucher would be worthless if Ryanair goes bust. I would also avoid flying with Ryanair whenever possible. No thank you, I want a refund.

There were no guidelines on how to request the refund on Ryanair’s website but they had a chat function, where I decided to try my luck (there was no phone number to call). That did not work as the chatbot (not even an actual human being) was not very chatty. After receiving no response to my query for more than an hour and I gave up on “chatting” with an algorithm to find a solution to my problem. This is a great example of appalling customer service.

Enter section 75 of the Consumer Credit Act.
“Under Section 75 of the Consumer Credit Act, your credit card company is jointly liable if something goes wrong with a product or a service you’ve paid for by credit card. You can potentially claim for any breach of contract or misrepresentation by the company from which you’ve bought your goods.” [according to Which?]

I called my credit card company (Bank of Scotland) and asked what I need to do to lodge a section 75 chargeback claim. They gave me a claims phone number I needed to call – they weren’t that useful as they could’ve just transferred me to the claims number, but I guess they just wanted me off the phone.

I called the claims number, explained my situation and was given an email address to which I needed to send evidence to support my claim. I emailed them all the email correspondence I had (I printed pdfs of each email I had), the flight itinerary and the voucher email that same day (20th April).

A few days later on 23rd April, I got a “temporary” credit applied to my credit card. The bank refunded me the money and said Ryanair has 45 days to dispute this transaction. If they do, the temporary credit might be removed, if they don’t it will become a permanent credit.

I was surprised by how quickly the bank worked. A part of me was sceptical as I thought the section 75 claim wouldn’t work. Normally this claim is used where a company is refusing to make a refund, however, Ryanair never refused – instead, they vaguely said it will happen in the future after the pandemic. However, Ryanair also misrepresented in the refund process – they said my refund was being worked on and then sent me a voucher, not a refund. This is misrepresentation and therefore the section 75 claim should stick. I will let you know if anything changes on this front.

However, for now, things are good as I got all of my holiday bookings refunded. It took about a month, a few emails and a section 75 chargeback claim – but it was worth it.

Happy days!

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How to build a strong foundation for financial independence when you’re at the beginning of your career?

The maths of financial independence is simple: build a portfolio of 25x of your annual expenditure and you’re done. So, if you spend £20,000 p.a. then you will need a nest egg of £500,000 in an investment portfolio. Each £1 of annual expenditure increases the size of your retirement portfolio by £25 – this makes it important to know what your expenditure is.

Here’s what I would tell myself if I was 10 years younger (i.e. 22) and just starting out:

1) Earn more money

FIRE is definitely easier to achieve for people who are on higher incomes than it is for minimum wage workers. That’s how the world works. However, financial independence can be achieved on all incomes.

Your first job is likely to pay low wages. Your focus needs to be on improving your career prospects – as this will lead to the biggest return on investment you could make. Forget investing in the stock market, forget bitcoin, forget P2P. You need to earn more and you need to aim high!

Your best investment to make is in your education and skills, skills, skills. You need to develop skills, which can increase your salary. This might mean taking industry exams and passing additional professional qualifications. You should be happy to pay for these qualifications/exams/study-materials etc as they will have a direct impact on your income. I think the future is bright for anything to do with technology, programming and AI – you might want to consider to reinvent yourself and change careers completely.

About 6 years ago, when I came to the UK, I had zero industry knowledge or qualifications in the financial planning sector. I started as a receptionist in a small Independent Financial Advisor (IFA) office and was earning circa £15,000 p.a. After investing c£2,000 on exams to acquire new qualifications and a job change I was making £30,000 p.a. two years later.

It cost me £2,000 to increase my salary by £15,000. That is a fantastic return on investment! You can’t expect that from the stock market. I didn’t stop there as I aimed higher and have managed to substantially increase my salary over the next couple of years to just over £50,000 p.a. This, in Central London, is relatively comfortable but far from luxurious.

You can do it too. In fact, you can do far better than me as I feel that after hitting my £50K salary I’ve become complacent and stopped learning and hustling – I’ve only taken two exams in the last three years and failed both.

It makes sense to allow an amount for education and skill development in your monthly budget. It could be £50 or £100 per month set aside for online courses, learning to program or to host impactful PowerPoint presentations etc – the world is your oyster.

Also, think about joining clubs that can help you develop professional skills – this could potentially be the cheapest option to start with.

woman with shopping bags

2) Don’t overspend

The biggest thing you can do is fight lifestyle inflation. Avoid the temptation to increase your spending every time you get a raise or a bonus. Fight the temptation for as long as you can. You should aim to spend the same amount as you always have. You don’t need to buy expensive junk, clothes or toys. Try the supermarket branded items and see if they taste any different from the more expensive alternatives. Stop buying expensive clothes when there are budget options.

people on a crowded train

Transportation is insanely expensive in the UK and you need to minimize these costs. I have colleagues who pay £5,000 p.a. for the privilege of riding a crowded train for an hour twice a day to get to work and back home. Not only are they £5,000 out of pocket but they also spend circa 8.8 hours a week commuting (254 working days p.a. minus 25 days of annual leave means 229 working days where people commute for 2 hours – 2 x 229 = 458 hours p.a. = 8.8 hours p.w.). That time and money could be used in a way to obtain further skills and knowledge, which could massively increase earning prospects.

Depending on your job, you could look into how many days per week you could work remotely from home. You should also consider walking or cycling to work as these are the cheapest ways to get around. I’ve been walking to work for the majority of the last 6 years. I used to drive a lot when I was backpacking in Australia. Since 2014 I’ve driven exactly on two occasions. Now I am somewhat scared of getting behind the wheel as it’s been so long.

Don’t spend too much on haircuts. I have a friend who went to get a haircut in a fancy part of London. They made him comfortable, offered coffee and snacks and cut his hair. Then they billed him £120. Wowzer! He never went back to that salon.

The most I’ve ever paid for a haircut is £35, which is mad when I think about it. Now I get it cut for £10 and it looks exactly the same.

There are many other areas where you can reduce your costs. You get the point – don’t spend more than you need to. However, don’t forget to enjoy your life and your youth – you will never get it back. You are allowed to treat yourself. Invest in experiences!

I mean I backpacked in Australia. It was a horrendous decision financially, but a fantastic one in terms of experiences, stories and adventures. Go have some fun!

two people cooking

3) Learn to cook

I challenge you to buy a cookbook and make every single recipe in it. What do you have to lose? You will learn to make (hopefully) tasty food and get to eat it. It’s also a great project you could do with your partner or housemates. Some recipes will turn out great, others will be a disaster, however, you will improve with time. You will also discover a few things which work for you and will continue to make the dishes over and over again. I am no master chef, but I am able to make the world’s best waffles, pancakes and tofu nuggets.

Cooking at home is much cheaper than eating out at cafes/restaurants and you will be able to take lunch to work. These savings will add up.

4) Avoid bad debt

There’s good debt and there’s bad debt. An example of good debt is a mortgage for your home or a loan to expand business operations. Bad debt includes credit card debt, hire purchase agreements and payday loans.

Student debt can end up in either category – you need to weigh up the cost of a university degree with the future employment prospects. For example, I think it’s OK to spend say £30K on a degree and fund it with loans if you can realistically earn £50K+ p.a. a few years from graduating. Don’t spend big money on a Mickey Mouse degree. Racking up a load of debt and not having a viable career is a sure way to the poorhouse.

I’m fortunate that I don’t have any debt and didn’t have to pay any tuition fees at university (I had to keep my grades above a certain threshold to qualify for “free” education). In all fairness, I don’t think I have ever needed to use my academic degree knowledge at work… five years of study and two degrees which I didn’t care for. I’m glad it didn’t cost me any money but I will never get my five years of youth back.


5) Save your money

Now that you’re earning nicely and have more coming in than going out each month, you can start to save some money. First of all, you need to build up an emergency fund of at least 3 months’ worth of living expenditure. Then build up a cash reserve for upcoming big-ticket items. I have linked to my previous posts about these two topics.

Set up standing orders to automatically transfer money into your savings on a recurring schedule. Many finance gurus call this paying yourself first. You will quickly get used to living on what remains in your bank account. This will help you stay on track and keep saving on auto-pilot.

6) Start investing

Albert Einstein reportedly said “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” Investing is all about compound investment growth i.e. growth on previously achieved growth and repeat.

Saving is a long term game. It’s a marathon, not a sprint. The younger you are when you start investing the more years of compound growth you achieve. I wish I started investing earlier – I would be in a much better position financially. Circa ten years ago was when we got out of the previous financial crisis and it would have been such a good time to start my investment journey.

Consider investing in passive index funds (trackers) to keep your costs low. Don’t do anything fancier than that, unless you have too much money. Stay away from stock options, futures contracts, CFDs etc. It’s possible to trade anything successfully, but if you’re just starting out, do not attempt trading anything other than passive index funds. Keep learning and reading about investing – things will get easier.

As always, this article is not financial advice. Your capital is at risk when you make investments – you can end up with less than you started with. Seek financial advice if you don’t know what to do in your circumstances.

Now go get cracking!

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Everything you need to know about having a short term capital reserve

Now that you know the importance of having an emergency fund, we can move on to talking about your upcoming big-ticket purchases. Remember, you need to have your emergency fund sorted out first!

car keys

Most of us have some kind of an idea of what we want to spend our money on. Every now and then we like to treat ourselves and buy something more expensive – it could be the latest smartphone, a new Vitamix blender or a new car. Other times it could be some repair work on your home or home renovations. These expenses need to be budgeted for and appropriate savings set aside. As mentioned earlier, you should not dip into your emergency fund for this kind of spending money or more formally for this kind of capital expenditure.

I think most people tend to “wing it” when it comes to budgeting. This can work for some but it isn’t always the best route as you might overlook one expense by paying for another one and can run into trouble later. This post will tell you what you need to keep in mind to effectively manage your upcoming big-ticket expenses.

What do you mean by short-term expenditure?
A good rule of thumb is to think ahead of the next 3-5 years and think about what upcoming expenses are on the horizon. Going any longer than that will make your estimates less accurate and therefore less useful. However, we can get a relatively good idea of what the future holds for us in the next few years. This could be an upcoming dream holiday, saving for a mortgage deposit or a new car purchase.

Short term can mean less than 3 years and also for more than 5 years. It depends on what you have planned for the future and where you are in your life. For example, a young couple might be thinking about buying their first home but their parents would be thinking about repairing the roof or building an extension.

How much should you set aside for your short-term capital expenditure?
This is an impossible question to answer as everybody has different upcoming expenses. Simply work out what things will cost over the next couple of years and add it all up. Simples.

Should you borrow?
In short, no. I’m anti-debt, especially against consumer debt. If you need to borrow money to buy a smartphone, then you shouldn’t be buying that smartphone. You can’t afford it. Stay away from debt wherever you can and consider alternatives such as buying second hand or opting for cheaper goods and services.

Where should you keep your short term capital expenditure?
One option would be to simply keep it in cash, similar to your emergency cash. However, the key distinction here is that you know when the big-ticket expense will happen. You also have some control over the expense as you may decide to delay it, bring it forward or cancel altogether.

Because of that added control, you can now think about using safe short term investments for this type of expenditure. If you have a £10,000 expense coming up in one year’s time, then you could put £10,000 into various bank accounts to earn some interest. You can even decide to lock the money away for 6 or 12 months or even longer to earn better interest.


There are many banks and building societies who are more than happy to take your money and pay you a bit of interest. There’s no point in recommending a particular bank’s account as the offers keep changing all the time. Make sure to check a particular account’s terms and conditions as quite often they’re something like “earn 5% interest on up to £2,000 of your savings”. You might need to open a few accounts with several banks to maximise your interest. This is not for everybody – especially not for people who hate opening accounts and can’t be bothered. I know my girlfriend would rather earn zero interest or even pay for the privilege of having her money held in an account if it would prevent her from having to fill in a form which asks for her address details covering at least the last 3 years (speaking from experience here).

person holding coins

I’m sure you’ve noticed that interest rates are very low right now. The Bank of England lowered its interest rate to 0.1% and the Federal Reserve (in the US) lowered it to 0.25% only a few weeks ago. Inflation is at 1.7% and 1.5% in the UK and US respectively right now. You might think that keeping money in cash will guarantee a loss in real terms as you are unlikely to beat inflation with your cash savings. This is very true and I think it’s unlikely to change any time soon. However, this does not mean that they do not have a place.

Investing your money in the markets will introduce risk to your capital and you can end up with less than you started with. This is especially the case over the short term. To be clear, when I say short term I mean anything below 5 years. There will be a post in the future shining some more light on this but the gist of it is that the longer you’re invested the lower the probability of suffering a capital loss. This is because markets have an upward slope as they tend to go up over time.

One option is to consider using a savings platform. These are essentially cash management platforms, where you create one account (a hub account), deposit your money and then select various bank accounts to deposit your money into. The benefit is that you only open one account with the platform and then pick the various bank products you wish to split the money form your main hub account. This removes the need to fill in forms to open new accounts with new banks and building societies. You will also have an easy overview of where all your money is held and how much interest you are earning. Bigger savers will also benefit from added security as UK deposits are FSCS protected up to £85,000 per bank, building society or credit union – you can increase this by spreading your savings over several institutions.

The only downside is that these savings platforms charge for their services. This tends to be 0.25% p.a. or similar on anything held on the platform. So, you should expect to earn slightly lower interest than going directly to the providers with your savings.

Taking the above into account, if you choose to invest some money which you need in say two years’ time, then you might actually end up with less than you have today. There’s no need to risk your hard-earned cash like this.

You can also look at the savings products offered by NS&I for your short term investments. These are backed by the UK government and its printing presses. Therefore, your money will be as safe as the UK government.

To be clear you should not invest money in the stock market where you intend to access it within the next five years. Also, avoid any peer-to-peer (P2P) investments as it can take ages to get your money out of these platforms (speaking from experience).

Interestingly, I heard of a creative/unusual way of earning more interest on your money. This example is from Sweden where the local central bank i.e. Riksbank has kept interest rates at zero or below (yep negative) for the last five years. However, it is possible to overpay your taxes in Sweden and earn a minimum of 0.56% p.a. interest on these payments. This has resulted in massive overpayments and a budget surplus a few years ago. They changed the rules and now Swedes don’t earn any interest on their overpayments and many received refunds.

That example is not an attempt to encourage you to think outside the box to increase your interest. There’s plenty of scams out there. If it sounds too good to be true, then it’s probably a scam. For example, anybody who offers to take your money in exchange for a guaranteed 10% annual return, is full of it. Stay away!

I hope the above has convinced you to keep your short term capital expenditure in cash or low-risk cash investments. You now understand why it’s important to keep this money separate from your emergency cash and why it should be in safe investments. I have shared some of my ideas on how to invest your short term money and what kind of investments to avoid. Go ahead and check out some of my ideas (Google is your friend).

Short-term capital expenditure includes your future big-ticket expenses which will happen within the next 5 years. You have control over this type of expenditure and that’s why you can choose to invest in safe cash investments to cover it (as you will be able to access your money when or before you actually need it).

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Pandemic benefits

I had a think about whether there was anything positive about this pandemic and I actually came up with a few things. These don’t have a lot to do with finances though.

Pollution. There’s a lot less of it. There are hardly any cars in Central London and I think the air quality here is the best it’s been since I moved here. This is true for most areas in the world now.

Peace and quiet. I live above a pub… or to be more precise the pub is on the ground floor in the building, which is diagonal to where I live. This pub gets crowded and there’s almost always an overflow to the little square outside of it. The chaps at the pub tend to get loud, especially when they’re watching football or something. There were plenty of Covid-19 parties down there until they closed the pubs in the London lockdown. Now it’s super quiet and peaceful at home. I really like it.

More quality time with my girlfriend. I get to spend all day with my lovely girlfriend as both of us are working from home. It’s very nice! Yes, there’s the usual bickering where both of us are in a phone conference and someone is too loud and other stuff… but overall it’s a positive experience.

Saving money (and investing). We’re not going out, no restaurants, no brunches, no nothing. This pandemic thing is a great opportunity to save money… but as everybody is doing that the economy will suffer. Markets have corrected quite a lot and seem to present a good opportunity to add more to my portfolio at low prices.

It’s not all bad. See ya!