Part 2: Mortgages glossary and tips

Mortgages are typically the biggest financial decision that people will make in their lifetime. One of the most common situations is when people will determine what they can afford to spend each month, pick a very expensive house and then pay for that house over the longest duration they can in order to achieve that monthly payment and get the lowest interest rate possible. This is not often the best way to go and can often leave you stuck in your job and “house poor” where you no longer have savings each month just to repay your mortgage.

This will go through some features of a standard mortgage for a home and tips afterwards and next chapter will go through mortgage types and an affordability calculator.

Check out Part 1 if you haven’t already where I discuss budgeting and share a budget template you can use for yourself.

Features of a mortgage

Feature	Description
Down payment / Deposit	Your down payment, or deposit, is the amount you put up front to secure the mortgage loan from a bank or building society. The lowest amount for a standard mortgage in the UK would be a 5% down payment meaning 5% of the property value for example a £200,000 home would have a 5% deposit of £10,000 (200,000*5% or 200,000*0.05). A 0% down payment is only available under a guarantor mortgage in the UK which relies on someone becoming liable for you should you fail to pay your monthly payments.
Principle	The principle is the amount you borrow from the bank or building society. Using a £200,000 home with the 5% down payment again would mean the principle would be £190,000. This £190,000 is what you borrow from the bank and this will vary depending on the property value and your down payment.
Interest	Of course banks do not lend for free (as nice as that would be). The interest is the additional charge that the bank adds to your principle amount and is calculated monthly. However, the value that will be on your mortgage will be a yearly value. For example, a 3% interest rate would be a 0.25% monthly rate (3/12 months in a year). In the £200,000 example this would mean you pay £500 in the first month in interest. You may think this would mean you pay less each month after the first as if you pay £1000 in the first month on a £200,000 house with 5% down payment then you only owe £189,500 (£190,000 principle minus £500 due to the other £500 paying the interest). Surely next month you should only pay 0.25% interest on the 189,500 (£473.75 in interest)? Well not exactly… Mortgage payments are fixed each month because of something called Amortisation which will be explained next.
Amortisation	This is what causes your monthly payment to be consistent over the life of a mortgage (assuming no changes in interest rate occur). Simply put, the principal and mortgage interest payments are divided in each monthly payment as a ratio that declines over time. As a rough example, your first monthly payment may be £1000. 40% of this value (£400) will pay off your principal and the other £600 will pay only the interest. Over time this ratio changes as you pay off the principal amount so that near the end of the mortgage you pay more of the principal than the interest ie. 90% principal payment and 10% interest payment at year 28 of a 30 year mortgage. In short most of the early mortgage payments you make are just paying off the interest on your loan and not the loan principal itself which is why overpayments are critical.
Term	This is the duration of the mortgage. Typically people get a 25 year mortgage however these can be longer or shorter. With the increasing house prices longer terms are seen with a rise in 30-40 year term loans.
Arrangement Fee	Can be zero fee or over £2000. This is the fee to complete a mortgage application and can be paid separately or added onto the mortgage. See below for some further tips.
Booking Fee	An application fee that some mortgage providers will charge just to apply for a mortgage with them. This can be a few hundred pounds though sometimes this is included in the arrangement fee.
Valuation Fee	You may choose to do your own survey to assess the property (there are a few options depending on how extensive you wish the survey to be) however, the bank will do their own survey to confirm the value of the property is equal to the loan. They will only look at the value of the property and not the problems that may be included with it. This can be free on some mortgages or they can charge up to £1500 on average for this. This can be added onto the mortgage cost so is worth confirming.
CHAPS (Clearing house automated payment system)	This is the fee that your mortgage lender charges to transfer the mortgage funds to your solicitor and is usually a maximum of £50
Early repayment fee	For most people this is not something that is considered but is important. This is the fee to repay your mortgage early either in full or in part. This is worth checking if you ever plan to overpay on your mortgage on a monthly basis. Some lenders will allow a certain percentage of the mortgage principal to be paid each year without a fee but some will charge up to 5% of the amount you pay extra. It is recommended to avoid mortgage providers that do this as you will be locked in to pay the interest for the full mortgage term and repaying will cost you the same, if not more, than just making the normal payments each month.

TIPS Section

There are some recommendations to be made for the terms above and mortgage in general.

Down payment	I would advise getting as much of a deposit as possible but 10% should be an initial goal. Understandably this is a large amount to many people however the benefits of 10% is that this is often an optimum down payment for the lowest interest rate. Below 10% the interest rate gets much larger but above 10% the drop in interest rate becomes less significant unless you reach the big whole numbers such as 20%, 30% and 40%.
Interest	When thinking about interest it is important to think about this only being valid for a few years. UK mortgages are limited in terms of fixed interest with 3-5 years being most available however recently some providers are increasing this to have a fixed interest for 10-15 years now. You may have a low interest rate that looks very affordable initially but this can quickly change especially in todays environment. 3 years may seem like a long time however in 3 years time you will be, most likely, switched to a variable rate which is controlled by the mortgage lender and influenced by the Bank of England interest rate. Your fixed rate 3% mortgage may very quickly double to 6%, or even higher, anytime after those 3 years depending on the economic environment. It is important to remember that interest rates can increase when considering fixed interest mortgages when the fixed year rate runs out.
Amortisation	This is important when thinking about overpayments which can be checked online here https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/ . This can greatly reduce your interest payments and bring your loan to a shorter term saving you both money and ensuring you will have a home in your name.
Term	The term is an interesting one. The duration is always up to you with a maximum 40 year term possible however most go for a 30-35 year mortgage. This is affected by your age and how far you are from retirement age. In my experience a longer term works out better in almost all cases. A shorter term mortgage will increase your monthly payments but you can reduce monthly payments with a longer term and make overpayments to repay the loan faster. This way the additional payment is optional, allowing for more flexibility in your finances. It is important to consider early repayment charges in your mortgage as mentioned above!
Arrangement fee	These can be a bit tricky but a mortgage advisor can help point out the best deals. To get to the top of the recommended list, when doing an online mortgage comparison search, a lot of lenders will have this as a separate fee in order to keep the interest rate lower. When the fee is added onto the mortgage it typically will raise the interest so by taking this off it looks like the deal is better than it is and should you add this arrangement fee to the mortgage you may find the interest rate is higher than other mortgage lenders.

Hope this helps you a little bit to understand some terms while you search for mortgages. My next post will be a mortgage affordability calculator which will give you a good idea of what size of house you should be looking at and whether or not you can afford a change to your interest rate.

Stay tuned and check out some of our other posts in the blog!

Advertisement

Part 1: Start Saving Small – How to plan your finances

With inflation reaching all time highs not seen for decades, it is now more important than ever to plan out your finances. As a result I have put together this to help those that are struggling to get visibility on their income and outgoings by sharing how I manage my own. I know for many this a huge task and causes a lot of stress so I have tried to make this as clear and easy for many. I will also be posting a video for those that prefer to follow along visually without reading. This can be a great way to check your payslips so you can be share you aren’t overpaying when you shouldn’t be.

All of the below is focussed on UK tax laws but the principals apply everywhere. None of this can be considered financial advice but this is how I manage my own budgets. If you want to make this a joint budget calculator with your partner you can copy the first 2 columns in the table below and enter each persons salary and tax bands though I find keeping separate budgets makes life easier overall.

The spreadsheet, explained below, is available here: https://docs.google.com/spreadsheets/d/159qN5FkvDbbBFEXynNjwZcta8ifzyIrT/edit?usp=sharing&ouid=100841825636158668949&rtpof=true&sd=true

You can download this by going to File -> Download. There are multiple options for file formats if you do not have Excel to use. OpenOffice is a free alternative to Microsoft Excel.

Snapshot of what a budget calculator would look like for someone who only needs to consider the lower tax bracket

The first block relates to salary. Where there are green boxes this just refers to an area to fill in yourself. As an example I put a salary of £26,000 annually before tax. The table below shows where your payslip information comes from and is important to understand where your money goes and how taxes work.

Salary / wage	Put your annual income before tax into this cell
Basic Monthly / Basic Pay	This is your salary divided by 12. What will appear on your monthly pay slips.
Hourly rate	This is important to understand exactly how much you get per hour. This can be a great way to budget yourself based on how many hours would I need to work to pay for something. This thinking really helps prevent wasting money by quickly working out if something is worth doing yourself rather than paying someone else (think DIY). I have this as = salary wage cell / 52 / Hours worked per week
Tax Allowance	Not every country will have tax allowances so you should check your own countries tax rules, but in the UK there is a tax allowance on earnings. In 2021/2022 this is currently £12,570. Meaning you pay no tax on the first £12,570 you make. Every £1 you make above this gets taxed at the tax rate (currently 20%) until the next bracket is hit which this year is at £37,700. Example: If you make £40,000 then you will not be taxed on the first £12,570; be taxed at 20% on the next £25,130 (taking you to £37,700 total); then taxed at 40% on the next £2300 (taking you to your £40k salary). The link is at the bottom of the page for the gov site to review each year as this changes.
Taxed on	This is the proportion of your salary a month that gets taxed by the income tax. In this case only the 20% tax on additional money over £12,570 applies. An additional formula applies here for anyone who makes over £37,700 a year which is included in a second link for a spreadsheet at the bottom of the page. = Basic monthly – (Tax allowance / 12 (months)) – (any extras that come out before tax ie pension, student loan, cycle 2 work schemes etc which are covered below)
Tax Paid	This is the taxed on cell multiplied by the tax you pay on that income. In this case 20%. =”Taxed on” cell value x 0.2
National insurance paid	This varies depending on tax year and in April 2022 will be increasing by another 1.25%. For 2021-2022 however this is similar to taxed on income. You do not get taxed on the first £797 per month but get taxed on additional income by 12% up to £4,189. Any additional income you make above £4,189 is taxed at 2% for National Insurance. Example: You make £2000 a month before tax. You pay no National Insurance on £797 of that £2000. You then pay 12% on the remaining £1203 (2000-797) leaving you with a national insurance contribution of £144.36 (1203 x 0.12 (12% in decimal form)) each month. Important: Using this method it really helps you understand the impact that government changes will have to your finances. If you take the 1.25% increase planned for April 2022 then in the example above your contribution would go from £144.36 a month to £159.40 a month. Leaving you short £180.45 over the next year.
Pension	Pension will of course depend on your workplace. I’ve estimated around 4% as this is quite typical for a base contribution. This comes out of pre tax salary so this is not taxed by income tax and as such can be a good place to store extra cash especially if you are moving into higher tax brackets. Speak with your employer to raise contribution amounts. =Basic monthly x 0.04
Student Loan	Student loan is more complex depending on when you studied. The spreadsheet has a Plan 1 student loan in place. This means any income over £1,657 a month has 9% taken off as a repayment fee. Plan 1 Example: If you make £2166.67 a month then you subtract (2166.67 – 1657) to give you 509.67. You then repay 9% of the 509.67 as your student loan giving you a repayment fee of £45.87 a month. For Plan 2: The same applies as plan 1 however the threshold is now £2,274. In this case if you made £2166.67 a month you would not pay anything back in student loans. For Plan 4: The threshold is now £2,083 however you now pay 15% back in student loans. So if you make £2166.67 a month then (2166.67 – 2083) gives you £83.67. So you then repay 15% of this leaving you with a student loan repayment of £12.55 a month. PLAN 1 =(Basic monthly – 1657)*0.09 PLAN 2 =(Basic monthly – 2274)*0.09 PLAN 4 =(Basic monthly – 2038)*0.15 There are links at the bottom of the page where this information comes from as well as how to know which plan you are on.

It is important to check in April if the values have changed. It is also good to understand the impact that government changes have to your finances by using this template to update values.

The table below is a good summary for the 2021/2 tax year. Be aware this changes every April.

Screenshot of the Gov income tax details for 2021/2

Bills and budgets

The next 3 tables I use for planning outgoings ie bills, loans, insurances etc. I filled it out with some examples but of course this varies depending on you for example you might not own a car or house therefore car payments and insurances relating to these do not apply to you (yet!).

Starting with the left table; I use this for my fixed bills that I cannot just cancel (mortage/rent) or get rid of without being very risky (insurances). Most explain themselves. Things like a TV license are in here if you watch Freeview TV (in the UK) or subscribe to a TV package as these are legal requirements. I will likely do topics in the future on each item where good advice is available on bringing some of these costs down.

The most important topic in this left table is insurance. This is one of the most important ways to manage risk and prevent bankruptcy.

The middle table is what I use for Non-fixed bills and services. These are either fixed recurring, or annual, payments such as Netflix, Amazon Prime and Microsoft Office for example or they may be credit card debt that may vary each month. The services I have added are mostly nice to haves but depending on your circumstances could be cut out of your bills.

A good tip is to pay the annual fee instead of subscriptions including annual car insurance rather than the monthly payment as this avoids any added interest. So you can take the annual one time fee and divide by 12 and budget this into your monthly payments that way on renewal you have the money saved already.

The third table is arguably the most important one. This is where I add the topics I plan on budgeting for as explained below.

Food	I put quite a large amount in here for one person (if you have kids this may seem low) per month as it includes going out a couple times a month. This varies a lot but my personal spend is quite accurate now as I have been recording each month how much I spend so I can be confident (excluding events like christmas) how much I need each month.
Petrol / Diesel	Unless you have an electric car then you will need to consider Petrol / Diesel budgets. This is usually quite predictable each month as filling your car is usually 2-3 times a month. In the future I may do a cost comparison of buying an electric car vs typical combustion engine car but this may take some time as there is a lot of variables to think about.
Investing	NOTE: If you do not have savings already it is a good idea to have 3 months salary saved up at an absolute minimum (or whatever you may need to survive 3 months) for emergencies before investing everything. The split between investing and saving is up to you but without good emergency savings you will be more at risk. This is one of the critical steps to building savings. Typically most will store their money in the bank for bank interest however this interest rarely comes close to inflation which increases the price of goods and services each year. This means every year you may gain 1% in interest from your bank but if inflation is 5% for that year then you lost 4% of the money in your bank account (Potentially a similar thing to annual pay increases in your job). Ideally 20% of your total monthly salary after tax, pensions and student loan should go into investments. This may be difficult for a lot of people but it is important to try to get as close as possible to this value. The example shows a 10% investment each month but even 10% a month will put you in the right direction to getting on top of your finances and building good habits even if it may be hard at first. The easiest for most people will be having a stocks and shares ISA. This allows you to put money in (up to a certain annual amount) without being taxed on any profits you make. The easiest way, for a beginner, in these ISA accounts is picking reliable and safe ETFs or Mutual Funds (which are bundles of stocks around a specific topic such as S&P 500, technology, growth stocks, dividends etc) to invest in. These have very low entry requirements as you buy portions of shares rather than whole numbers (so you don’t need to have £1000 to buy one share of Tesla). There are many investment types such as stocks, real estate, art, wine, classic cars etc so owning a wide range of these is preferred should big changes occur in certain investments (2008 real estate market crash for example). This is too big of a topic to cover in this post alone so hopefully I will be able to give more detail on these if there is demand for it.

The final cell in the bottom right just totals up these 3 columns to tell you how much of your salary each month will go to bills and services.

The final table is the one off costs and the “total left” value. The “total left” value comes from the totals from the first 2 columns regarding salary minus the total of the 3 centre tables for bills and budget. So in the above example this is £1672.44 – £1,589.36. Giving us the £83.08 left each month. This is where one off costs get accounted for such as needing some new clothes. The main focus of this cell is save whatever is remaining each month. If I don’t have to use this remaining money I won’t. In this case I will transfer this to a savings account as backup savings for important occasions / travel / date nights etc.

I would like to end this hoping you all manage to get through any difficulties you may have ahead. If this did help you out I really encourage you to share the information and help someone else you know. Helping someone else will always make both of you stronger in the long run and we need each other more than ever.

Later on I will put a post focussing on how to get rid of debt and what to prioritise. This is something I feel many people get wrong and they try to pay off the wrong debt first which only makes their situation worse. As well as a post regarding the importance of insurance.

LINKS BELOW

For taxable allowance you can see this link for the government document https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past

To know what your student loan plan is see this link: https://www.gov.uk/repaying-your-student-loan/what-you-pay

To understand how much your student loan costs see this link: https://www.gov.uk/repaying-your-student-loan/what-you-pay

• Facebook
• YouTube
• WordPress
• Patreon

That Little World with my Sisters

Being the first born in an Asian family means a lot of responsibilities. I am the eldest and I have two sisters. We were all born two years apart from each other. I remember, when we were kids, one of my main responsibilities is to teach my sisters. My mom expects that I will help them with their homework, teach them how to read, write and help them with their maths. Whenever my sisters do not know something about a topic in school, my mom would always say “paturo ka sa ate mo” (ask your eldest sister to teach you). I hated it because when you are a kid all you want is to play outside or watch TV but unlike other kids, I am there acting as my sisters private tutor.

Me and my sisters 16 years ago. I (middle) was 12, Lady(left) was 10 and Chevy(right) was 8.

One of the things, that my mom is so obsessed with, is for us to be together ALL THE TIME when we were kids. There are so many occasions when I wish I can go to school and go home with my friends like most students do. But I never did. Mom wants us to go to school together even it means getting to school late because one of us doesn’t wake up on time. After school, we always wait outside each others’ classroom and ride home together. If there are school activities, my mom always says that we should accompany each other and I should be looking out for my sisters while at school.

Funny story about this photo is that me and Lady is already late to school but Mom still wants to take more photos of us so she can use all the film before sending it to photo shops to be printed. We both came late to school. Our teachers aren’t happy. But I guess, that is a memory now where no one cares anymore but this photo still brings us smile.

My mom also hates it when we fight. She always scolds us and blames me most of the time when I fight with my sisters and tells me that I’m the eldest so I should be patient, understanding and giving to them. One thing she does for us not to fight over certain things is to buy us similar stuff, especially me and Lady since our ages are closer to each other. We both grew up having same clothes, same bags, same shoes, etc. If we are lucky we can have it in a different colour otherwise it is very much alike. That is why some people thinks we are twins. One day, we went to school but grabbed each others bag instead. We only found out when we opened the bag and saw each others names on the notebooks. When I found out about it, Lady is already outside my classroom, frowning and annoyed while carrying my bag. This story cracks us up every time we remember it.

I grew up sharing same bedroom with them. So we always sleep together and talk about things happen in school or about this show we watched on TV. We always laugh a lot before we sleep but sometimes we end up fighting. We were always asked to share each others stuff because we are sisters. I used to think that if I don’t have sisters then I do not need to share things with anybody and I can have my own. I wished I’m an only child.

As we grow up, things changed little by little. Our fights became lesser. They started to read and study by themselves that I don’t have to teach them every time. We eventually had different school times so that we have to go to school and go home alone or with friends. We started to have our own stuff. But one thing is left unchanged: we still sleep together in one bedroom, just with three different beds. We still talk about how our days have been or what mom and dad fought about that day or who has the period and used all the tampons. But because we were used to being together all the time, our closeness did not change. I started to enjoy hanging out with them and and wait at home until they finish school and eat dinner with them. We always laugh about crazy stuff, sing and dance like we are in a concert and nobody’s watching or can hear us. We still fight sometimes like who is much better, Miley Cyrus or Taylor Swift or the K-pop music. Ha.

Taken 10. years ago during Christmas Eve

Our parents are poor and can only give us what they can. I remember whenever we want something that my parents cannot afford, they always tell us to study hard so we can get good jobs and get good salary and be able to buy and do anything we want. That is why we always dream of finishing school so someday we can buy all the things we want. The three of us started to dream together. We dreamt that someday we will be able to eat out in a fancy restaurant, that we will be able to go out on vacation together and ride a plane and stay in a fancy hotel.

I built my dreams with my sisters and they were there when I was starting my nursing school until I finished it. I remember times when I asked them to help me study and ask me questions about a certain chapter in the book. I asked them to pray for me when I was taking my nursing exams so I’ll be able to be a Registered Nurse so I can work abroad. I still think up to this day, all their prayers helped me passing those exams.

Our holiday photo taken last year in Palawan.
All of us are adults now and have our own jobs. We can finally go for travelling, eat in restaurants, stay in fancy hotels like we used to dream when we were kids.

Of all the people I know the ones who know me the most will be my sisters. Whenever I think about those old times when we fight and cry and hate each other, all it brings back now is laughter. I might have hated having sisters when I was little but now I am very thankful to have them. I felt like they were one of the best part of my childhood and life will be so tedious without them. I thank my parents, especially my mom for always bringing us closer together and now I understand why she did that.

A sister is a gift to the heart, a friend to the spirit, a golden thread to the meaning of life.

-Isadora James

Now that I am living abroad, far away from them and have my own room and stuff like I always wished, I often miss my sisters. I miss sleeping with them and having those late night talks. I miss going out with them and planning the weekends. I always think my life abroad will be so much better if they are here because I know they are the family I will always have no matter what life brings. The bond I have with my siblings is always an irreplaceable one.

The Real Estate Issue – A Profit or a Home?

I would firstly like to mention how housing has become more about making money than about being a home. Although I believe the term housing needs some differentiation between the house and the land it is built on. While I do agree it is financialised I also don’t believe this was an issue until the housing bubble of 2007 (and onwards). One of the biggest concerns over real estate I have is the ability of a house to be an asset or a liability. Which of these is the case is often decided by the household income which can be very fluid. One other issue is inheritance where properties can be passed down the family and, at least in the UK, this often is a benefit to those with greater wealth. As long as a house has no mortgage still remaining it can be inherited up to £325,000 with no tax and this can increase due to tax allowances for direct descendants. As of 2020/2021 in the UK a direct descendant couple can inherit a £1,000,000 home with no tax payments. Since the average UK home is around £230,000 this covers a huge percentage of property in the UK. You also pay no capital gains tax if you choose to move into the property as a main residence and sell it later, as well as stamp duty not being levied for the majority of inheritance. While the baby boom years are getting older this is taking more affect into the market. By doing this the inequality, as stated in the OHCHR, increases massively between the wealthy and the working classes. Source: [https://hoa.org.uk/advice/guides-for-homeowners/i-am-managing-2/inherit-a-house/] This is highlighted even further as a problem as many capitalist countries after the second world war introduced many new policies to boost home ownership as a way to build communities and morale which raised ownership to around 70% in both the USA and UK by 2000. [Source:The great mortgaging: Housing finance, crises and business cycles by Òscar Jordà, Alan Taylor and Moritz Schularick]. The housing bubble was partly a result of this huge boost to home ownership creating a speculative market that thought a never ending demand was possible. Of course as inheritance is so easily done without taxes this creates a further issue as the demand for homes for those not old enough to benefit from the 1940-2000 home ownership boom is not as required. Therefore property prices drop as the demand for new homes drops. In 2017 Market Financial Solutions did a survey of 2000 adults in the UK stated that 36% were set to inherit a home. If the population keeps ageing as it currently is then property will be held onto for longer and longer forcing more people into rental accommodation due to high deposit requirements from lenders.

Looking back at the global level it was around 1950 when property really started to show an increase in the global average house price in real terms [Source: No price like home: Global house prices 1870-2012, American economic review, Katharina Knoll et al; https://www.aeaweb.org/articles?id=10.1257/aer.20150501]. In the early 2000’s the largest boom happened and even after the housing bubble popped the average prices show a very miniscule drop compared to the previous climb. Although some countries felt the impact most with a large drop in prices on a global level you really don’t see the mean reversion that you do in countries such as the USA and UK however, as the market has returned it has been estimated that the average house price is still overvalued.

As mentioned in previous lessons in this course the cost of building over the years has remained relatively stable in relation to house prices. One thing to consider is actually the value of land. Although the construction has remained rather stable the construction only contributes to the actual structures built. A great bit of research was done using the ONS site to gather this data [https://jamesjgleeson.wordpress.com/2017/04/03/historical-housing-and-land-values-in-the-uk/]. Although this only considers the UK you can see that the structures themselves didn’t actually increase and follows a similar trace to the construction costs mentioned in this course. However the rest of that house price could be attributed to the land it contains. In the UK especially, around the 1950’s, new laws came into play which protected certain areas of land (green belts) where building permission was extremely difficult if not impossible to obtain. By doing this you effectively raise the price of the remaining land available. As mentioned in the previous paragraph it was around the 1950’s where house prices in real terms started to increase. In addition to this many countries were now heavily rebuilding and developing their cities after most were bombed during the wars. This lead to a large amount of housing / industrial construction around cities. Ever since then people have increasingly flocked to large cities in search of work as the rural areas are often stripped of jobs or heavily specialised in one industry which attracts a smaller percentage of workers. 

Data taken from the UK HM land registry website for 1990-2020 for the north east region

An excellent example of which is the UK. Looking at the HM land registry [https://landregistry.data.gov.uk/app/ukhpi/browse?from=1990-01-01&location=http%3A%2F%2Flandregistry…] it can be shown the differences in regions for average house price and growth year on year. Taking the north east as an example although it suffered from the same growth during the 2000 – 2007 the drop from the 2007 bubble wasn’t as significant as other areas. I find it hard to believe that the price of land wasn’t a factor in this region as during the 1980’s the government started to rapidly deindustrialise regions in the UK with the coal mining of the north east being the biggest employer with employees coming from all across the UK. As such a lot of miners were out of a job and therefore left the region or required new work which now comes from the automotive industry. There are still few markets to work in outside of automotive in this region and a lot of “brown belts” which allow for construction but require some demolition of existing buildings to build on. Due to the massive deindustrialisation there was a lot of construction land now available to build on. This availability of land is one of the reasons why house prices are cheaper in these affected regions than in the south east as many flocked to the rapidly expanding cities like London and the surrounding areas where the government wanted to centralise the economy. Areas up north who were mostly affected and furthest from the new centralised economy city of London did not see the same increase in costs which is still increasing in London and the South East. 

London does also suffer from another problem. A tax haven for local and foreign investors. As an area which is in desperate need for cheap and good quality housing due to the huge population looking for work; it has an increasing problem with wealthy investors using the city to hide large sums of money. This report highlights the significance of the issue [https://www.transparency.org.uk/faulty-towers/#.WipwcbTQrBI]. Real estate in large city centres with high property prices have become an excellent way to hide wealth and avoid taxes by the global elite. The report states across 14 developments in London 80% were owned by overseas investors with 40% from high corruption countries or secrecy companies. In the UK it is perfectly acceptable to create a company name for little cost (around £12 at this time) and use this to tie up money as assets to that company. Due to the enormous wealth trying to be hidden, property developers have proceeded to build luxury homes to cater to that market inflating the supply over the demand at a time when affordable housing in London is at it’s worst. The report from the London government site shows the amount of affordable homes actually being built since 2008. [https://www.london.gov.uk/sites/default/files/affordable_housing_starts_and_completions_-_end_of_mar…]. It should be noted however that affordable for London is on average around £300,000 where the average salary is approximately £37,000 in 2020. Despite this property has become a profit target rather than a necessity for the huge amount of people who will simply never afford a home in this area and instead suffer from the increasing cost per square meter issue under rental markets.

As investment and economies continue to centralise around large developed cities the financialization of housing is likely to continue as the cost of land and the tax policies will proceed to allow developers to take advantage of profit margins of the extremely wealthy while the lower classes will continue to feel the effects of increasing rental costs and sub par living standards. 

I’ll leave you all with a question. Do you think this is likely to get better or worse and why? Let me know in the comments section.

The Call to “Protect Our NHS”

In light of recent events, I’ve been thinking a lot more about how we arrived at the current situation. I don’t believe anyone truly has the answers yet so here are a few questions to ask instead. There will be a few posts coming covering certain questions to inspire you to not only think about the world but also to go out, try to understand it and dig deeper than the first answer.

We have all now seen the effects that the current pandemic has had on the world. The topic for this is post is to highlight the reduction in funding for the NHS and why the people are being asked to save it.

Is it right to ask the retired and civilians to help the NHS?

Before raising points for this question it is probably right to start with some facts from Fullfact.org (an independent fact check charity), IFS.org.uk (Institute for Fiscal Studies) and ONS.gov.uk (Office for National Statistics). After the 2008 housing bubble the economy was in a bad state and government borrowing skyrocketed in order to bail out a lot of the banks that were on the verge of collapse. Due to this collapse government borrowing rose to 10% of GDP (Gross Domestic Product). GDP in this case is measured as the total of; Household spending + Government spending + investment + net exports. Household spending making up around two thirds of this. Since then the austerity period has reduced this to less than 3% of GDP in 2016 but has continued to drop as the austerity period was extended. Austerity being the rate of day to day government spending for public services.

The above chart from Fullfacts.org shows some data on the spending on health over the years. The lines represent the government parties average growth. One thing to note is that this a growth chart and therefore spending is naturally higher every year than the previous. This is often a proud statement mentioned by MPs however, this is no surprise. Even a 0.1% increase per year would be the most ever spent (only 3 years have shown negative growth since 1979) so to really understand this you need to look at the demand and population increases.

Another thing to note is that public health spending from 2009-2016 is the lowest on record in the UK and averaging at a 1.3% per year increase. When including previous years; for 1955-2016 the average jumps up to 4.1% increase per year (Source: UK health spending BN201 by IFS). If you consider an ageing population, which is estimated to be 1 in 4 people over 65 by 2050, then this spending gets hit even harder as the spending increases massively for older people.

Source: Office for national statistics

Looking at the above graph for population up to 2018 you can see the large rise in population from early 2000’s. In 2000 the estimated population was 58,886,100 and in 2018 this rose to 66,435,600. Between 2009 and 2018 this was an increase of 4,175,100 people in the UK. When you consider the below table showing age distribution this becomes an increasing problem.

As stated before the older a population gets the more spending is required to account for the increase in costs to the NHS. Also note that although the increase in over 65s seems like a small percentage (2.1% increase from 2006-2016) the population increased as well. So this is a bigger percentage of an even bigger population and it is predicted to get much worse. The graph below (Source: UK health spending BN201 by IFS) shows this impact of cost cutting on the department of health’s budget. When you look at the cost per capita is it even and stable with population however, when you include age as a factor you can see the decline in funding.

Source: UK health spending BN201 by IFS

It unfortunately doesn’t get much better when you look at the staffing of the NHS. The graph below shows the amount of staff in NHS hospitals per month over an 8 year period. When you calculate the numbers, over this 8 year period, it roughly comes to around a 1% increase in staff in 8 years despite an additional 4,175,100 people in the UK and an estimated 2% increase in over 65s. A lot of this is due to almost the same amount of people joining the profession as there are leaving each year. Facts which have been reported by the NHS digital. Why so many people leave the NHS I will leave for a separate post.

Source: NHS workforce statistics – December 2018

To circle back to the initial question; Is it right to ask the retired and civilians to help the NHS? If you take into consideration the above nothing that has happened in recent events should be a surprise. The NHS has been driven down to the bare minimum it can run on day to day (see my previous post on efficiency!) and is now in a worse situation seen since before the financial crash of 2008 and austerity cut backs were put in place. The funding that is currently supplied to the NHS and the poor response of the government to the pandemic is being criticised by governments and countries across the globe.

Personally, I believe it seems unfair to ask the most of those who are victims of these problems. The nurses asked to work without the full equipment they need to fight these issues; the retired who are being asked to come back to work where they are at higher risk; the younger working and middle classes who are being asked to put their lives on hold and risking losing jobs as companies collapse due to the lockdowns (which could have easily been prevented or reduced if mass testing was introduced early enough) and tax payers donating money to the NHS from their own pockets.

I hope you have found some of this interesting and it has questions you haven’t thought of or maybe inspired you to think of your own questions. So I will leave you with one final one.

Do you think this will create a reform of the economy and spending policies or will it be ignored and carry on as before?

Stay tuned for the next post and sound off in the comments what you think!

Efficiency Across the Board

In light of recent events, I’ve been thinking a lot more about how we arrived at the current situation. I don’t believe anyone truly has the answers yet so here are a few questions to ask instead. There will be a few posts coming covering certain questions to inspire you to not only think about the world but also to go out, try to understand it and dig deeper than the first answer.

We have all now seen the effects that the current pandemic has had on the world. The topic for this is efficiency and how it has lead to a complacency in every country.

Are We Too Efficient?

The current state of the world is an unusual one and one that many have not have seen in their lifetimes. Supermarkets running out of stock and having bare shelves; ventilators being in short supply; personal protection equipment that can’t meet demand; NHS staff being brought out of retirement to fill gaps in hospitals and a national call for assistance asking us to “help protect the NHS” (which I will cover in a separate post). Why did supermarkets, medical equipment and PPE providers / manufacturers run out of stock. I believe the answer lies in efficiency.

The current global market almost entirely relies on “just in time” manufacturing / delivery and lean processes. This effectively means the minimum amount of stock is held at any one time and is only produced and delivered when the demand is required. Looking back at my previous post “The Cost of Panic Buying” this just in time marketing plays a large part. As I mentioned, the more likely factor of a lot of people shopping more regularly and picking up a few extra items each time is more likely the issue. This is where “just in time” process comes into play. A rapid change in demand across all items from a large population can really change supply lines. If unprepared for such an emergency it is easy to see why shelves are empty and governments, globally, are pushing for ventilators. When systems are running at 95% capacity it doesn’t leave much headroom for error. Tiny changes in shopping habits result in a huge impact as 95% capacity becomes 105% as an example.

However, you might be thinking if they can see or predict an increase in demand why can’t they just change their order to bring in more stock within a few weeks. Enter “lean process”. Lean process is, fundamentally, similar to efficiency and describes the minimum amount of people (a resource) in order to produce a result (in this case products and services). For perishable items such as food or PPE masks (which do have expiry dates) this makes sense to minimise waste and stock counts in order to save money. The limiting factor here is the people. Without the right quantity of people the amount of raw materials is meaningless. This type of business works great in the good times but falls apart rapidly in the bad. In some cases Brexit may have helped in as large medical suppliers began stockpiling goods in the UK, at a cost, in order to protect against worst case trade deals. Depending on the capacity margin this can cause the problems that we have seen over the last few months of different severity. As soon as demand spikes even if there are enough resources to produce the required products there is often a lack of people available in order to produce the final products in time.

As all the products are still available the issue of capacity never seems to be a problem. We all assume we will have enough and this leads to complacency that these safety nets can be scrapped without consequence.

I hope you have found some of this interesting and it has questions you haven’t thought of or maybe inspired you to think of your own questions. So I will leave you with one final one.

Should we reduce efficiency if it means the impact in difficult times can be reduced? Perhaps holding emergency stock that can be sold and replaced before the expiration date is something we can take away from this crisis.

Stay tuned for the next post and sound off in the comments what you think!

To my ‘the One’

Thank you for coming into my life.

Thank you for not stopping on asking me out when we first met.

Thank you for asking me to be your partner in all the dance classes and cooking classes you want to go to.

Thank you for still sticking by with me even I refused to hold your hand before because I’m shy.

Thank you for always waiting for me.

Thank you for accepting the differences in our culture and embracing it like its your own.

Thank you for driving me out and seeing the positivity of living in simple things.

Thank you for letting me see that humanity is not too bad like how it is shown by the media.

Thank you for showing me the beauty of world.

Thank you for taking me to my dream destinations.

Thank you for all your silence and simple hug whenever I become emotional and cry.

Thank you for making me happy by bringing me to my favorite restaurants.

Thank you for driving me to places I never been to.

Thank you for making me see that the place we are living in is not as bad as I thought and I can make my dreams happen.

Thank you for talking to me even I sound senseless at times.

Thank you for keeping up with my ‘what ifs’ in life.

Thank you for being funny especially when Im not expecting you to be.

Thank you for trying to be part of my world, knowing my friends and getting along with them, even it feels different, even it might be hard.

Thank you for getting me back to my feet.

Thank you for asking me to be your girlfriend.

Thank you for being my bestfriend.

Thank you for always telling me Im beautiful even I dont feel like I do.

Thank you for every unexpected flowers that never fails to brighten up my day.

Thank you for the unending best days you are giving me.

Thank you for introducing me to your world.

Thank you for being proud of me.

Thank you for accepting and loving my weirdness.

Thank you for respecting my faith and supporting me on it even yours is different.

Thank you for the promise to walk and hold my hand along.

Thank you for being my answered prayer. Thank you for all the love.

Yours truly,

Lucky girl ❤️

The Fashion Capital of Milan

Welcome to Milan. Home of the famous Duomo and (some say arguably) the fashion capital of the world.

Where we stayed: As this was my second visit to Milan we stayed in the same hotel I did on my first visit. This was the Da Vinci Hotel which is a 4 star hotel on the outskirts of Milan. Due to the location the hotel is actually very well priced for Milan and is right next to the Milano Bruzzano Parco Nord which is the last stop on the city boundary for the train. This means the Milan 24 hour train ticket applies which costs only €4.5 for the 24 hours and can be used as many times as you like in that time. They also have a 48 hours ticket. This is quite good if you don’t expect to be in the city past midnight as the trains frequency starts to slow down. Often at night only the over-street trams run excluding times between 2-4am however they do not have the best reputation.

Weather: Arriving here at the start of October the weather had begun to change seasons. Especially since we travelled north from Rome. Milan is very close to the mountainous border with Switzerland so temperatures here are colder than the rest of Italy. Even though this is the case the temperature was still in the highs of 20°C and lows of 8°C through the night. There was some rain in this time but it was mostly overcast. It is often the end of October when the temperature really drops and the rain sets in for winter. Weather here doesn’t change much until April when the summer starts to arrive. One thing to note is in Italy it is very rare for it to snow here.

Galleria Vittorio Emanuele II

First thing I would like to mention is we used Milan as a home base to travel to other areas of Italy such as Venice, Verona, and Como. Train transport in Milan is very good and tickets are very cheap with quite short travel times (Venice being 2.5 hours). For our first day, after having an amazing breakfast, we decided to go straight to the centre and see the Duomo. Famous for being made of marble with the gold Madonnina at the top, it is the largest church in Italy (with the Vatican City being a separate country) and 4th largest in the world. It’s an incredible building both inside and out and you can buy a ticket to get to the top of the cathedral to see the Madonnina closer up. The views of Milan up here are not that great however, due to all the spires and taller buildings nearby.

BE CAREFUL OF THE LUCKY LEG: On the door of the cathedral you can see a section like the image below. Italians say rubbing the left leg of Christ will bring you good luck. However, note the other mans leg is also showing the brass underneath. This is where uninformed tourists rub the leg of the soldier who is beating Jesus with a club. MAKE SURE YOU GET THE RIGHT LEG OR YOU'LL HAVE AN AWKWARD PICTURE!!

Door of the Duomo Milano.

Fun fact the Madonnina is to remain at the highest point in all of Milan. Once skyscrapers were built they created smaller replicas of this statue to sit on the top so that she would always remain at the highest point.

Nearby to the Duomo is a very amazing place called Galleria Vittorio Emanuele II which is a prestigious mall housing some high brand stores and restaurants. Every store here must have a black background with gold lettering and at the top of this building is one of the very few hotels in the world which have a 7 star rating! President Obama actually stayed in this hotel on one of his presidential visits. You can see it in the image further up. There are also symbols in the centre representing different cities and the bull (which represents Turin) is said to bring luck and fertility if you place your heel on the bulls testicles and spin 3 times. A great little restaurant here is Restaurant Savini which is one of the oldest restaurants in Milan and has some great food but can be expensive. There is also a Da Vinci statue just outside the Galleria and a Da Vinci exhibit inside but we didn’t go into this as the Da Vinci science museum is exceptional.

Cheesecake from Restaurant Savini.

Something worth seeing is Da Vinci’s Last Supper. This is housed in Santa Maria Delle Grazie which was actually a monastery for monks. It can be very difficult to book tickets to see it in advance as only 15 people are allowed in at a time. If you prefer you can get a tour which will avoid the queues and plan your visit for you. They will also tell you some history about the painting such as why the centre of the painting has a section missing. Nearby is also the Sforzesco Castle which is a large fortress in the city centre with a huge park behind. There are often a lot of musicians and performers here but beware of the people holding bands of string as they are con artists who will try to tie it to your wrist and then demand money after. The castle houses one of the sculptures of Michelangelo and an excellent Egyptian museum which is worth a visit if you are interested in history. If you are a fan of the Arc de Triomphe there is also the Arco della Pace which was designed at the request of Napoleon and shares many of the same traits. The area around the arch is often used as event space so there may be an event here depending on when you visit.

The Santa Maria Dell Grazie also has another surprise! If you head around the side of the building there is a little gate which is my favourite spot in all of Milan. You can see a bit of this small garden below.

If you are a fan of Opera or dance it may be worth a stop by the Teatro alla Scala. One of the best theatres to visit and you can only enter the inside by seeing a show as there are no tours for the theatre room. For fans of aperol spritz you can taste the place where Campari was invented at Camparino. Another great place is the Pinacoteca di Brera which is a very popular art gallery however we didn’t visit as the queue to go inside was huge (over certain holidays all museums in Milan become free such as Easter which makes lines very long).

Inside the Duomo

One thing I recommend if you are a fan of science, Da Vinci or have children is to visit the Leonardo da Vinci National Museum of Science and Technology. There are a lot of interesting things in this museum such as original ideas from Da Vinci but also a huge room filled with airplanes, boats etc all life size.

This is everything major that I can tell you about Milan! Most importantly remember to walk around the side streets here as there are so many interesting places hiding in every corner. Also, visit the Jollibee!

The Beauty of Rome

So you are thinking of going to Italy? Well, welcome to the stunning capital of Rome!

Where we stayed: We spent a few days here at the start of September 2018 and stayed on a side street along Via Cipro which is near Vatican city. We chose an Airbnb for this as it is cheaper than the hotels in the main city and the area is on the outskirts which kept the cost down. Rome is also quite large and public transport is not the best. Train stations are around the outskirts of the city, and quite far away from the centre, and buses are not always on time. This area is very close to Cipro station which allows much easier access to the big tourist spots.

Via Cipro is also near a great place called Bonci Pizzarium which is very popular for some of the best Pizza in Rome.

Weather: Around September the weather was still high from the summer. Highs reaching 30°C with lows around 23°C. This can feel hotter than this due to the lack of shade in the city centre due to the wide streets and plazas. This weather lasts from end of May to end of September. Outside of these months the temperature doesn’t get very cold aside from December / January.

View from top of Saint Peters Basilica

We started with the closest spot to where we stayed which was Vatican city. Since we were within walking distance we were able to go very early morning. There was no one here early morning which makes it a great time to get some good shots or just admire the city without the tourists. The plaza gets busy around 11am onwards so try to get here early. This will also work in your favour if you plan on going up Saint Peters Basilica (which I recommend!) as the path near the top of the dome gets very narrow and the ceiling slopes over. Not the best place to be in a crowd! As a benefit to the long climb you’ll get some amazing views of Rome including the classic pictures above. You’ll also be able to see the great Castel Sant’Angelo at the end of St Peters Square up here. We visited the Castel however didn’t go in as museums are not so much our thing. The building alone from the outside is very impressive and as it was used as a fortress it certainly makes you feel small!

Vatican City

A great place to eat near here is RIONE XIV Bistro which is close to the Castel and is a very small restaurant but all the pasta here is made fresh each morning so really makes a great place to taste some great Italian pasta.

From the Castel Sant’Angelo we walked over to the Spanish Steps. This is quite a walk however there are no really good transport links from this area. You will find you will walk a lot in Rome so be prepared shoe wise and check the weather before you leave. Heatstroke here can come very quick if you aren’t prepared. Something we enjoyed more than the Spanish steps was the Villa Borghese which is nearby. Still home to the Borghese family, the total grounds actually encompasses an area larger than Vatican City. This is a very beautiful place and actually based around an English garden. It is also very historic to Rome as the Borghese family were once one of the most powerful families in Rome and the Villa was once the home of the upper classes with many parties being held here.

For those who are on a Hard Rock café exploration this is also located near the Spanish Steps.

Next day we made the trip to the world famous Colosseum and Palatine Hill. A good tip is to pre-book tickets for both of these as you can get good bundles online on places like Viator. I would recommend you spend a day here as there is a lot to see especially if you do a tour of the Colosseum. We chose to see only the general Colosseum as you have to book a tour in order to see the below stage and upper most area. Palatine Hill can take a full afternoon as the place is quite large and there is a lot of information packed in here for those who are interested in history. If it is a sunny hot day bring a hat / umbrella (good tip from Asia) and a lot of water as it is an open area with very little shade.

To follow from this day we decided to explore and see the remaining part of Rome right in the city centre. This is popular for the location of Fontana di Trevi and the Pantheon. For the fountain I definitely recommend coming twice; once in the day and once at night as the fountain changes massively when it gets lit up at night. It gets very busy here almost 24/7 so expect a very big crowd. You can’t come to Rome without making a wish at the fountain! The Pantheon is about 5-10 minutes walk from the fountain. One of the best preserved ancient buildings in Rome but is actually not the original. Originally designed around 30BC but burnt down, this version is still almost 2000 years old. Since it has been in almost constant use since then it has remained in excellent condition and stepping inside is truly a marvel. We also stopped by Gianicolo which is the highest point and Rome and a good place to stop by to see the highest viewpoint of this amazing city.

Nearby to the Pantheon is Antigua Tazzadoro La Casa del Caffè which is a great coffee shop to stop by and grab a pastry.

If you are now on your way to Rome have a great adventure! Most importantly… TRY THE GELATO!!

Other thing you can do while in Rome:

• Visit the Musei Vaticani and Cappella Sistina below the Vatican City but remember to book in advance!
• Domus Aurea. Emperor Nero’s impressive house. Currently under construction but you can take a weekend tour.
• See an opera or dance show at Teatro dell’Opera
• Grab food at the Testaccio Market.
• Galleria Colonna. A private palace turned art gallery. Frankly the building artwork alone is worth a visit!

Part 3: Mortgage affordability. How do you know how much you can afford?

Probably one of the most thought about question when it comes to buying a house is how do I know how much house I can afford? Typically mortgage providers will say 2.5x your total income (combined if there are 2 or more of you) but I believe this is the wrong approach and can be misleading. The reason for this is that you do not make your total income each year as you receive less than this paid into your bank account, monthly, over the year. So why would you decide how much house you can afford based of an income that you don’t actually receive?

The best target I have found is 33% of your NET income however I prefer to take 5% off of this for extra safety margins and includes all taxes, utilities and insurance. Now net income is different to total income as net income is minus all taxes, student loan repayments, pension contributions and many other schemes that get taken out before your salary is paid to your bank account. Essentially your NET income is your take away pay and is the money that is remaining on your pay slip that you receive each month. Below is a spreadsheet that I used when deciding on what property I could afford with my partner. I have put some representative numbers in just to make this easier to see how it would look.

So let’s take a look and you can find the spreadsheet link at the bottom of this page…

Mortgage affordability

I have this broken down in different sections. So the left is the mortgages calculations along with deposit calculations to determine how much is left to save. The next column to the right determines the Net income affordability with the utilities and mortgage combined to be a percentage of the income. The next 2 tables are for each person on the mortgage (assuming there are 2). This allows each person to see how much of their income is left after the mortgage and fixed bills which can be taken from part 1.

The bottom right is an additional factor that most people forget about when saving for a house deposit. That is the cost to get a mortgage itself. This comes from Part 2 released earlier and will vary depending on your location but this gets added to the left to save cell.

Mortgage calculations

The table above has yellow shaded cells which are values that you need to enter. These are quite easy to understand however there is some work needed for some of them to get the right numbers. House price is just the value of the property you are looking at. The next 2 yellow cells are related to the mortgage and in this case you would need to request some quotes to get an idea of how much this would be. This can be done through a solicitor or a mortgage comparison site would be good enough for the early stages of looking for a property. This would give you a typical interest rate at that time and the life of loan is just the duration you wish to pay for. There was more information on this in part 2 mortgage glossary which I posted earlier on. I have put the down payment as 10% from the last post however you can edit this to be whatever you feel is necessary.

Taxes and insurance are also more complicated and require some research on your side. Taxes for most UK properties means council tax which varies depending on which area you are looking to buy a property in. Fortunately, it is normally easy to find as most house searching sites will detail this amount for you otherwise you can search on your local council site and use the property post code to get an accurate value. Insurance here just counts as buildings insurance. This is required by law on your property and typically £150 is a good enough estimate on the cost of this.

I determine utilities to be your gas, electric and Wifi costs each month.

The total of the mortgage payment each month, annual taxes and annual insurance is your total mortgage payment. Now in addition to this I like to include utilities on top so that the majority of the costs of owning your own house is covered. You can make this accurate to yourself by using your current budget and costs for utilities and adjust the additional value but for this example I have left it at £200 a month assuming 2 adults.

The sum of payments and the interest cost is one cell I would like to mention which is not shaded yellow. This shows the amount of interest on the loan and leads well onto the next post which will be Part 4: mortgage amortisation calculator. This will show you how overpayments can give you a guaranteed return on your loan.

The help to buy ISA value is only relevant if you have one running already as these no longer exist. However, a lifetime ISA is an option and gives you the same benefit when buying your first home. The only main difference is that within a lifetime ISA you can no longer move money as freely without incurring a penalty ie once you put money into this account you cannot transfer it to another account whenever you like, without paying a fee.

For the last 2 yellow cells you can enter the amount of savings you have per person for the mortgage. This will then allow the green cell to tell you how much you have left to save in order to buy a property of your specified cost.

Mortgage affordability

The next section is the main value from this spreadsheet. The first 2 yellow cells here are for the total salary for each person while the 3rd cell is for any additional income that comes in. For simplicity I take the value of combined total income however, if you are buying a property on your own then you can just make one of these £0 to make it easier. To determine the net income I minus 31% of the total combined salary which for me is around the right number when I remove income tax, student loan repayments and pension contributions for both of us. The green cell here then determines how much of this net income each month is taken up by the utilities and mortgage costs from the left side table mentioned previously. As you can see here this value is 29.55% meaning that 29.55% of your combined net monthly income would go towards paying utilities, mortgage repayment, taxes and insurance. In this case it would be above the 28% recommended but less than the 33% actual. This would be a risk tolerance measure for you to decide. For people in riskier work or with kids you might want to go even lower than 28% however for a younger person with a solid career going to 33% may be viable as your other living costs may be less.

The cells beneath this determine how much would each person have remaining each month once all the house costs have been paid for. This leads to the next tables.

Personal budget costs

I like to add these tables in as it can give you an idea of your risk tolerance for your monthly costs. Taking some of the values from the budgeting spreadsheet I shared in part 1 you can add these values into this spreadsheet. These columns will give each person an idea of how much they would have left once house costs and fixed bill costs have been taken out. This is very helpful for budget planning and also gives you something to evaluate against. For example, you may decide that the house you are looking at is actually much closer to work for person 2 and you no longer need a car per person and you would just share the 1 vehicle. The same would apply for things like childcare if you are moving closer to family who are happy to look after children. This way you can split your monthly costs and really evaluate benefits of a property. For example, if the house costs 38% of your net income but you save 10% elsewhere consistently then this would be functional.

Mortgage fees

This is often forgotten about when saving for a property, as most only thing of the house deposit, but is important to understand before you put in offers. This takes some of the terms and fees from Part 2 which you should read for more detail. The cost here will be varying depending on your approach. Mortgage advisors, extensive surveys and solicitor choices will all have different costs. The total value here is added to the amount left to save cell in the first table explained above so you know there won’t be unexpected costs. There are further cells here to add any other costs you may need to consider.

I hope this has helped you in some way understand where you are at and to make the best financial decision for yourself and your family. Feel free to share the spreadsheet but if you could like and share this post it would really be appreciated and there is a donate option should you like to leave one.

https://docs.google.com/spreadsheets/d/1Q-9vZ5WoJ1JLnqc6Jmia6-ePE26IPTua_4ZHYJXiiBw/edit#gid=535021146

Gambling in the UK

Is the Prevalence of Gambling a problem and what problems do we expect in the future as children are exposed at an early age?

With the country in a lockdown people have been spending far more time at home than ever before. After seeing a lot of new stories about how prevalent gambling in the UK has become I thought it about time to ask if it was a problem or not. However, when you dig deeper, there is far more to it than you might expect.

The state of Gambling in the UK

Let’s just look at how much the gambling industry makes in the UK. In the year April 2019 to March 2020 the gambling commission reported a £10.2bn (£10,200,000,000 to put that in perspective) gambling yield which is the profit they make after paying out winnings but before operation costs. (Industry Statistics – November 2020 – Gambling Commission). It should be noted that this just covers the profits that are shared with the gambling commission by the companies it regulates. This is also not including the lottery which is by far the biggest form of gambling in the UK with 30% of the UK population taking part in the lottery in 2019. That works out at, roughly, 20.4 million people. Gambling statistics 2020: Learn more about how Brits gamble | Finder.

This value above is actually less than in previous years partially due to a maximum bet restriction which came into place in 2019 which reduced the maximum allowable bet from £100 to £2 on fixed-odds betting terminals (referring to electronic betting machines ie electronic roulette or poker etc.

The gambling commission currently estimates that 0.7% of the population are problem gamblers which would mean approximately 476,000 people would have gambling addiction. Some others do report a figure much higher than this with YouGov reporting it at 2.7%. One of the more concerning problems is the discrimination of the issue among the demographic of the country. The black and other (including mixed) ethnic groups have the highest prevalence of gambling addiction as a percentage of the individual groups. The study also showed that the unemployed or economically inactive have the highest gambling addiction prevalence along with the North East and West Midlands areas of the country. Gambling behaviour in Great Britain 2016 (gamblingcommission.gov.uk)

Source shutterstock

Currently, the UK is the leader in online gambling; a title we likely should not be proud of. A report by the Edison Group showed that Europe is responsible for 54% of the worlds online gambling market of which a sizeable 15% is contributed by the UK alone. GamingSectorReport2019 (edisongroup.com). One of the biggest issues is the lack of controls over the online space. As TV adverts have been focusses on to prevent gambling related marketing before the watershed, (a time in the UK where the TV rules change to prevent children from being exposed to bad language, gambling, graphic/violent shows etc. In the UK it is 9pm), there are virtually no restrictions in adverts online, in mobile apps or social media. This has made the UK the home for online gambling. The gambling act from 2005 is one of the main reasons for this. The act made many things legal such as certain adverts on TV but also made it very simple and easy for online betting companies to get a license under the gambling commission. This act is one of the most freely obtainable industry regulations in Europe. The intention was to regulate the gambling to prevent addiction by making it easy to get a license to operate however this then flooded the UK with many online sites. A search on the gambling commission website shows that there are currently 719 active remote (online) licenses that they are regulating and worryingly this is increasing year on year Find licensees (gamblingcommission.gov.uk).

What about the effect in young people who are exposed to the unregistered gambling in video games. Are we setting them up to fail?

One of the biggest things flying under the radar at the moment is the prevalence of gambling (although the companies would disagree as argued by EA who say they are “surprise mechanics”) in the video game industry. By far the biggest issue is not only the loot boxes affecting younger and younger generations by making them accustomed to gambling, but the video game companies specifically target and manipulate their games in order to make sure that these mechanics are the only options. A good example is the FIFA ultimate team mode which requires you to purchase loot boxes (in the form of card packs) in order to play the mode. The latest controversy comes from a leaked internal document where they clearly state they are pushing people from other modes (ie the free to play modes) and into the ultimate team mode. fifa_doc.pdf (documentcloud.org).

On top of this gaming companies are also increasingly hiring psychologists and neuroscientists who are focussed around cognitive development in children. Recently income from in game purchases makes up the majority of revenue of many gaming companies. Activision Blizzard reported that over half of their yearly revenue is now microtransactions Over half of Activision Blizzard’s $7.16 billion yearly revenue came from microtransactions | TechSpot. If the money is good and outperforming all past revenue it will only get worse from here.

There have been many studies such as Gaming_and_Gambling_Report_Final.pdf (begambleaware.org) which have highlighted the links between loot boxes and microtransactions in games and gambling addiction. It is only reasonable to link the increase in “whales” in the video game industry to the targeting of gambling in games and manipulation of gameplay to encourage people to spend in addition to the original game price. Creating “pay walls” in order to prevent people from progressing (or making it increasingly difficult to progress) so they will purchase loot boxes, time savers or progress skips.

Whales - People who spend an extreme amount of money on video game in game purchases. They can often spend their whole salary on a single game. There are various other terms for low, medium and high spenders.

Many countries are researching this topic further and countries are putting additional laws in place to control and regulate these. Countries such as Japan, China, Netherlands and Belgium are already ahead in terms of regulation. The UK is currently debating on how to handle these concerns and the House of Lords has already discussed and proposed laws against companies using loot boxes.

If you feel the same about gambling targeting children I would recommend writing to your local MP or council and push them to do something. The best way to be impactful is to be consistent.

If you enjoyed reading this article please rate, share and check out some of our other posts!

Credit to Pixabay for title image

Credit to Epic games, EA and Activision Blizzard for the images

⭐⭐⭐⭐⭐

Rating: 5 out of 5.

The Cost of Panic Buying

In light of recent events, I’ve been thinking a lot more about the effects of media on the public and how misinformation or control of information can lead to disastrous consequences. I don’t believe anyone truly has the answers yet so here are a few questions to ask instead. There will be a few posts coming covering certain questions to inspire you to not only think about the world but also to go out and try to understand it.

We all have experienced (or at least heard of) the panic buying in the country over the last few months just as we are all aware of the totally irrational behaviour of doing so. But what leads to this state?

Did the media have an effect?

Looking back on the stories, published near the beginning of the year, it seems clear that panic buying was not being performed by the majority. It wasn’t until media stories highlighting the panic buying in other countries and, highlighting the smaller minority doing this in the UK that we suddenly saw a huge spike in demand at supermarkets. Naturally, this changed the mentality of the population who went from their usual state of buying food as usual for the week to feeling as though everyone is rushing out to buy food and if they don’t do the same they will be left without. This is one of the dangers of media. The embellishment of a story in order to pull you in (Commonly called “Clickbait”) unfortunately leads to the emotional response that these stories are designed to induce. Therefore, the more likely you will spread it to followers, friends and family members and react in unusual ways. It seems fair to assume that the more stories people read about the lack of essential items in supermarkets the more people will be willing to buy excessive quantities for fear of there being none the next day.

Once this idea has taken hold it is very hard to revert back. The government, experts, supermarkets and online stores have repeatedly stated that there is no need to overbuy as they have enough food for everyone yet none of these statements had any positive effect. There are a number of reasons why this may be the case.

1. Some felt that the rest of the population wouldn’t comply so they chose not to either.
2. The strength of social groups which is where stories shared amongst close friends / family members are more believable than those coming from external groups regardless of the experience or evidence.
3. The necessity of food overruled the facts. People wouldn’t take the risk that these bodies could be wrong.

There is always the issue that the media publicises what it wants you to see. Although the media showed many examples of the extreme excessive buying it is likely that this necessarily isn’t the case for the majority. It is far more likely that people are shopping more regularly (due to the lack of products varying one day to the next) and picking up a small amount of extra items each time. This is something I will touch on in my next post regarding the problems with efficiency.

As of writing this it does appear that supermarkets are releasing statements noting a decline in these excessive purchases. Although some of the essentials might still be a challenge to get as stock supply ramps up. Is this due to the efforts of the experts saying there is no reason to panic buy? Is it due to the media publicising and shaming those panic buy? Or is it simply that those likely to panic buy have now filled up on stock?

I hope you have found some of this interesting and it has mentioned questions you haven’t thought of or maybe inspired you to think of your own questions. So I will leave you with one final one.

Should we hold accountable the media for what it spreads as part of a social responsibility or allow them to continue using free speech to make money?

Stay tuned for the next post and sound off in the comments what you think!

Michael

Photo by David Veksler on Unsplash

Five differences being a nurse in the UK from the Philippines

I worked as a nurse in the Philippines for more than 2 years specifically in medical wards and Emergency Department. In 2016, I moved to the UK where I also initially worked in wards before moving to ICU. I would say there are few differences in working as a nurse in both countries aside from the salaries. Here are some of those:

1.Free Training, Seminars and Courses in UK.

This is one of the things I liked the most about working in UK. There’s loads of opportunities for learning and growth provided by the hospitals for free. Going for training and study days are very much encouraged here for nurses to be updated of new policies and practices and to refresh our knowledge. Best part of this; it is not just free but you are also being paid for it as it is included on your working hours!

Whilst it is a must to go for specific trainings in the Philippines like Basic Life Support(BLS), and Venipuncture/Cannulation, we have to pay for those trainings to be completed. I have not experienced going for any courses or seminars for free back home. Some of these are even being deducted from our salary if we have to go for such.

2. In Philippines, we are expected to do and know everything. In UK, we got the whole healthcare team with us.

When I started working in UK, I am so amazed by how many people I have to work with while caring for my patients (the consultants, residents on duty, physiotherapists, dieticians, social worker, occupational therapists, pharmacists, nurse specialists, healthcare assistants, etc). You work as a team with them and you need to know when to refer to them. In the wards, there are also multidisciplinary meetings which happen once or twice per week. This is where the whole healthcare team discuss the plans for patients and decide right away when is the possible discharge date.

In the Philippines, we don’t have all these healthcare team with us. So, most of the time, it will just be you as a nurse, our head nurses, the residents on duty and the consultant. The consultant is the main person to decide what is the plan for patient’s care. Consultants stay in the hospital for less than an hour and visit other hospitals as well. So if there is any problem with our patients, we have to rely on the resident on duty. Sometimes, even the residents are busy and cannot attend right away and so you have to work it out yourself with other nurses. This where your independent nursing skills and judgement gets put to work. You auscultate the patients, do ECG, you put an iv cannula and catheter if needed. You don’t have to be told by doctors to do this if your assessment warrants so. Sometimes we are the one calling and referring the patients to the consultants whenever patients become poorly and thus your assessment skills are very vital.

Personally, I feel more valued as a nurse here in UK as I feel like my voice and opinion regarding my patient’s care is being heard; You are a big part of the team. Speaking up for patient and approaching the doctors about what you think is best for patient’s care and interest isn’t a difficult thing to do, less intimidating and never frowned upon.

3. Nursing in Philippines is very medical. Nursing in UK is very compassionate.

As I have mentioned previously, we have to be knowledgeable medically. Thus even during our nursing school, we are taught to memorise the anatomy and physiology, the different diseases, its signs and symptoms, the medical management and nursing interventions. We are expected to know most of the important drugs and their common effects and interactions. Working as a nurse in the Philippines, you have to work independently. The doctors expects you to know the case of your patient really well. We tend to work more of the clinical side.

In the UK, nursing is not just looking at a patient medically as we have the rest of the healthcare team to help us with that. We are always encouraged to provide a compassionate care not only towards the patients but also for their families. It is very important here to be kind, to respect the wishes and opinions, and to listen and empathise with the patient and the family whilst meeting their needs. You just don’t attend to a patient medically but you also look at them as a whole. You question; how is the mobility? Are the pressure areas intact? How to manage their incontinence? Will they be able to manage at home? Who is going to be looking after them when they are discharged? Is there any safeguarding issues to address? And there are so many more.

4.There is a good work and life balance in UK.

I think this is the best thing that I get from working as nurse here in England. We are required to work only 37.5 hours in a week compared to 48 hours I do in the Philippines. Hence, I am able to get 3-4 days off if I won’t be doing any extra shifts at work. We do 12-hour shifts here so that means you will only be doing either day or night. In the Philippines, I barely can do overtime as I only have 3 days off for 2 weeks since we work there on an 8-hour shift basis. Although this can vary on which hospital you are actually working. Work in the Philippines can either be 6AM-2PM, 2PM-10PM, and 10PM- 6AM. Sometimes, you have to do 12 hours especially if it is understaffed or someone went off sick.

Annual leave is also much better in the UK. I am entitled to 255 hours, or 6-7 weeks of paid annual leave, when I started my nursing career here. Getting the annual leave here isn’t as difficult compared to back home. So planning for holidays is easier and better. In the Philippines, I can only get 5 days of paid leave in my first year of working although additional 2-3 leave days are being given every year.

5. Nursing in UK is the ideal.

I remember when I was in university taking my nursing degree, most of the books we actually used in our nursing subjects are similar to those they use in America. Thus everything we were actually learning in the university is slightly different from what we see in the hospitals. This is understandable because we have very different set up here in the Philippines than in America. There are a lot of things we are lacking here especially in public hospitals thus we have to be resourceful, flexible and adaptable.

When I started to work as a nurse this is still true. We try to maximise all our resources especially that the healthcare in the Philippines is not free and many families don’t have health insurance. Aside from this some facilities are not available in some hospitals like CT Scan, MRI, ABG machines or ICU. Thus many patients have their treatment delayed. Sometimes it also takes a while for some patients to be seen by specialists because of financial issues.

In the UK, I would say, it is very ideal. You see what you actually read in the book. The healthcare is free and they have complete facilities. It is called the National Health Service or NHS. I would say that it is not actually free because a percentage of our salary actually goes here and that is where they get some of the funding for this. NHS have good referral systems between hospitals and their Emergency services are very efficient. Therefore, emergency treatment and procedures are being done right away. Every citizen here gets an equal service, and it doesn’t matter if you are homeless or poor. You will get the same treatment and services that you need like everybody else. There is a standardised guidelines as well in every trust that they follow which are being reviewed and updated every time.

I can only imagine that the citizens in my home country will get the same treatment and services we are giving here in NHS. Even though many people criticise it for its loopholes, I would say, it is not perfect but it is still something to be proud of. It saves a lot of lives, gives excellent care, without you thinking where to get the money or if you’ll lose your house the next day. I can only imagine that Philippines will also treat their nurses like they do here,with proper benefits and salary, where working abroad will not be necessary anymore.

And there you go!

Those are the five main things that differs between the nursing in the Philippines and UK. Of course, all of this is based according to my own experience and my colleagues experiences who worked in different hospitals (Just in case, some of you may have different experience as listed above). Some of you maybe looking to see how different is the salary here compared to the Philippines. Well, I think it is already given that the salary here is better than the latter, so I did not include it on my list anymore. But if you want to know how different it is then keep following this page as I will make another post about that soon!

What are your insights about this topic? Let me know! Comment it below.