Quote notes.. Friday 18th September 2015

“A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do.”

– Bob Dylan (From the “Inspiration” app)

This one really resonates with me, because it’s how I’m coming to define what success would mean for me.

Notice that it contains none of the markers of success that are commonly used: wealth, cars, good exam results, a successful relationship, job promotions, stuff… Nothing material, in fact, and nothing apparently arbitrary (e.g. a job promotion).

However, that said, in saying “he does what he wants to do” Bob is saying that any of these traditional markers of success *can* still be used, if appropriate. For example, if you’re blissfully happy in your work, then you are probably successful – because you are doing what you want to do.

In essence, I think Bob is saying that you must be true to yourself; if you are true to yourself, you will be doing what you want to do (not something else, for somebody else, or for another reason, e.g. money). This is why I don’t consider myself completely successful at the moment, because the work I do (and hence a large proportion of the things I get up to between getting up in the morning and going to bed at night) is not something I want to do; I do it, quite shamelessly, for the money. The question for me is: how long can I keep it up for?


Opportunity Knocks!

This is the first in what will probably become an ongoing series of very basic and loose guides to Economics theories, concepts and terms.


I’ve never studied Economics, and am only just starting to learn more “formalised” concepts at the ripe old age of 36.


As I go about my learning, I’ll be writing these pieces as a reminder for myself – consider them my course notes.


Today’s Lesson

 So let’s get going! Today, and for no particular reason, I’m starting with Opportunity Cost. This is a phrase you will see littered around personal finance and investing blogs, but what does it mean?


Even if you’ve never heard the term before, I guarantee that you know what it is. Almost every one of us is weighing up Opportunity Costs all the time. I mean, several times a day, every single day of our lives.



Let’s start with a definition, from Wikipedia:


“.. the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. Assuming the best choice is made, it is the “cost” incurred by not enjoying the benefit that would be had by taking the second best choice available.”


Hmmm. I don’t know about you, but I find that a bit hard to get my head around, at least until I’ve read it a couple of times. Let’s see if we can put that a bit differently.


In A Nutshell

  •  Decisions that we make involve either time or money (or often, both time and money)
  • For every use we can put to each pound coin that we possess, there are many other options available to us for that pound coin
  • Or, for every minute of our day we spend doing one particular task, there are many, many other tasks we could be doing instead
  • Those other options that we had? Each one represents an Opportunity Cost, because in not choosing them, you’re missing out



You buy a new bike. The bike costs £500. In addition, every year you will spend £50 on maintenance.


Now, you had plenty of other options for that initial £500. You could have put it in a bank account and received, say, 5% interest from the bank. The £500 would be “earning” £25 a year. That’s an Opportunity Cost, because you didn’t put that money in the bank, you spent it on a bike – so you’re missing out on an “income” of £25 a year.


Add that £25/year that the bank would have “rewarded” you with, to the £50 a year you’re also now spending on bike maintenance, and you’re effectively £75 a year down on your money because of buying the bike.


(As a good trainee economist, hopefully you went through a thought process along these lines before splashing the cash on the new wheels, even if you weren’t aware of the name for what you were considering: The “Opportunity Cost”)


Taking it a bit further though, maybe you plan on riding the bike to work 3 days a week instead of using the car, and thus you worked out that you’ll save £15 a week in petrol and maintenance costs by doing this? In a 47 week working year, that’s £705 a year that you’ll be saving on petrol. So even after accounting for the missed bank interest and the bike maintenance costs, now the investment in the bike is returning more than the first alternative that we’ve considered.


Let’s take it a bit further.. in riding the bike to work 3 days a week, you’re improving your overall health and getting fitter. This should hopefully pay long-term dividends in that you probably now have a lower chance of suffering from obesity, and maybe you’ve reduced the chances of suffering something like a serious heart problem in later life too. So now, buying the bike also becomes a good punt on reducing health care costs (not to mention the time off the road!) and maybe even buying you more life-time further down the line.


On the other hand, you’re chances of getting knocked off a bike are now infinitely greater than they were previously, so maybe you need to take that into consideration too…



Don’t Let It Get You Down

By now we’re seeing that this thought process could go on and on, and it’s a reason why some people can find the idea of Opportunity Cost rather depressing! Most of us are afraid of making the “wrong decision” or even just a “bad decision”, where actually, often the worst thing you can do is not making a decision at all. (Incidentally, my philsophy is that, generally speaking, there are no “right decsisons” and “wrong decisions”, but that’s for another day.)


An alternative to over-extrapolating the thought process of considering Opportunity Cost is just to follow Danny Wallace and become a Yes Man, but conventional wisdom would probably suggest that the best solution for most of us lies somewhere in between the two extremes. With the bike example then, maybe the process would go something like this:


  • Realise that you want the bike
  • Decide if you can afford it (and I mean without borrowing dosh)
  • Think about how much you’ll use it, if there’s another use for the money that you consider a more-preferred option at this time, and if it’s “worth the money” (that’s quite difficult to do, assessing the value of something – I’ll no doubt write about it later on in this series)
  • Make an informed decision and get on with life


Time Is Money

Like I said, we’re all doing this, all the time. That’s because there’s an Opportunity Cost to the things that we do, including those that don’t necessarily involve money.


Whenever you do “a thing” there are plenty of other “things” that you could be doing instead. You just spent 5 minutes reading this blog. Maybe you could have spent that 5 minutes doing star jumps, or making a sandwich, or making love (twice), or ringing the gas company about that funny smell, or reading someone else’s blog. You did none of those things – unless you’re making love whilst reading this, in which case, I salute you, and I somewhat pity your partner(s) – and so there’s a “cost” involved with that spent time (and if you should really have been ringing the gas company, let’s hope you’re not about to pay the ultimate Opportunity Cost).


So when people use an over-worked phrase like “That’s an hour of my life I’ll never get back!” what they are really saying (whether they know it or not) is that they are considering the Opportunity Cost. They are saying “Oh, the things I could have been doing in that time!” [1]


Enough For Now

Right, that’s it for Lesson One, thanks for your time. The sun’s back out, time to get out on that bike! [2]








[1] More often than not, I hear this phrase used in an office environment, and usually when people come out of a meeting. In which case, the list of alternative options for their time probably extends to “Checking Facebook 27 times” or “Fetching a round of coffees and having a bleat about the roadworks/the spouse/the PM/the state of English sport”.

What these people are usually forgetting is that they work for The Man, and if The Man says you go to the meeting, well, sadly, most people go.


[2]  I should probably fess up at this point that, coincidentally, I’ve just bought a new bike 😉

As a quick justification to my more frugal side:

  • I considered the Opportunity Cost – and I probably hung around a bit too far on the non-Danny Wallace end of the scale
  • My previous bike was way past its best, was becoming downright dangerous, and I didn’t consider it worth fixing up. I ride a bike instead of using any fossil-fuelled vehicle wherever possible
  • I waited and waited for what I would consider a real bargain to present itself
  • And I’m considering calling the new bike L’Oreal, because I’m worth it


Justification over.


When I retire, I will…

Last Sunday, whilst watching Germany pip Argentina to take the World Cup home for the first time as a unified nation, I started off on one of my usual end-of-weekend monologues. Mrs JAL is very patient when I get going on these, and I suppose it proves that we’re on the same page regarding where we are, where we’d like to get to, and why.


The oration was along the same lines as my usual Sunday evening wine-induced vocalised daydreams:


“Once I can stop working, I/we will be able to…”


I guess plenty of us do this, but it’s good to dream a little, at least just to keep the motivation – especially if the end goal still feels “a bit far away” (all relative of course).


Usually my list(s) involve a combination of travel and spending time with JAL junior, getting him out there to see the world with us. This time though, I had decided that if I didn’t have to go out to earn the daily bread the following day, I would be able to get much done around the house. We only moved back in earlier this year after renting it for 5 years, and there’s an endless list of things to be done. As my father told me: “it’s just the usual maintenance tasks that go along with home ownership, but they’ve been stacking up for the last 5 years so you’ve got them all at once”.


Apart from meaning that I get less time with junior, I don’t complain about this stuff and I’m really enjoying “doing it myself” and learning some skills that hopefully will serve us well when we pop a cap in the ass of the office life and try to survive (or even thrive) without job income.


I like the fact that when something needs doing, there’s often more than one way to do it. I’ve always had quite an analytical, technical mind, and I love problem-solving. These are useful enough traits in my career, but the fact that I can transfer some job skills that I do actually have – designing and building computer software to solve a specific problem or meet a specific need – into my new world of DIY, makes it more fun. I only have to learn the technical elements – how to handle the tools, which bits to use for which jobs etc. My Dad has always been so good at this practicaly stuff, he always did it himself and I never really got much of a look in as a kid (Note to self: let junior go wild with the circular saw if he wants.. or maybe not.)


Yep, I’m really getting into this DIY lark, and along with this increased confidence in “doing stuff” is growing an ever-stronger feeling to aim for efficiency, re-use, reduction of resources, and making the most of what’s available. By the time I jack in the job, we’re aiming to be able to provide roughly 35-50% of the food that we eat ourselves, by means of a small-ish vegetable patch, greenhouse and pots. We’ve started on this mission this year – our “trial” patch is going pretty well now, but whilst the endless supplies of lettuce and peppery rocket are pretty cool, we’re eager to start reaping some proper rewards! (AUBERGINEs, I’m looking at you!)


So, anyway, back to last Sunday’s sofa waffle, and combining the 3 things I’ve just alluded to:

1) Growing your own veg
2) Making the most of the resources you have
3) Designing and building systems to bring things together

Out of nowhere I heard the following words coming out of my mouth:


“You know, if I had the time – if I didn’t have to go to work – then I could build an automatic irrigation system for the veggies”


Wow. Eh? Dear 30year old JAL – did you ever think you’d be saying that in 6 years’ time?!

I expanded on that strange outburst:


“Yeah, we could harvest the rainwater, store it at the top of the garden, and then pipe it back down the garden to be released along the way, watering all the vegetables.”


Ok.. actually, this sounds kinda cool. And not really that difficult. Probably.


I wasn’t done:


“I’d build it as a modular system.”


Ohh, get me!


“Start with the basics.”


Now we’re talking.


“Collect the rainwater off the house roof and store it in one or more butts, depending on some calculations I would make about how much we need. Then we could fill the watering can from the butts, rather than the mains tap.”


Sounds sensible. We’re actually metered for water these days (i.e. not a fixed bill) so every drop counts. Not that we’ll save much ££ here – on the contrary, it’s gonna be years till we can hope to break even – but that’s not the point. We’re going “green” remember. Water is a vital resource, despite what many people in this “green” and pleasant land may think.


“Then, I would work out a way of getting the water to go “uphill”..”


(Ok, this could be the wine talking now.. good luck with that..)


“.. so we could store it at the top of the garden – get the butts out of the way of the house, out of junior’s way. From there, it will be a nice, easy, gentle downhill journey passing all the plants along the way. So I’d build an irrigation system that works directly from the butts.”


Ok, a bit lazy maybe, but hey, I’m really going on this now..


“Then… then.. I guess we could add a timer of some sort to automatically turn the taps on to water at the right times, morning and night, and we wouldn’t have to rely on Nan and Granddad to come and water for us if we’re away.”


Actaully, they’re thoroughly enjoying their own retirement and are rarely around these days, so we can’t really rely on that!


“And by the way, if there were pressure problems..”


… what, like with getting water to run uphill, for example..?


“… then a small pump would sort us out, you know, like the one we had in our campervan for the sink.”


Yep, that would do it.


“And of course, we could power it with a small solar panel and a generator – which I could knock up!”


Could I?! Hell yes, I’ll learn!


“Obviously we’d need some sort of system to keep track of the water levels, and maybe adjust the inflow and outflow accordingly..”


Amazingly, I already had something in mind for this. Once you get going with the creativity, it really flows. In my mind, it was already flowing like that water off the roof.


“And maybe a soil moisture monitor – no point turning the tap on at 9pm when it’s been raining all day..”


Ok, possibly a bit much, but this is the beauty of a modular system. You get to keep adding bits and improving things.


Well, Mrs JAL’s eyes were lit up. Who was this dynamic, creative, green-thinking man sitting (actually, standing at this point) next to her?


An automatic watering system to take care of our food production, using 100% natural resources (sunlight and rainwater) that are in plentiful supply to us and going to “waste” almost every day?


I finally slumped back on the sofa, regaining my former Monday-is-coming blues.


“If I didn’t have to go to work, that’s what I’d do. Anyway, back to the real world.”


I got up, went out the back of the house, filled the watering can from the tap and started the evening watering. As I padded back and forth, enjoying the warm dusky air and lubricating the leaves and soil – a pre-bedtime activity which I’ve really begun to enjoy – I started picturing the system of pipes and containers that I’d just been raving about.


I could do that shit, definitely.


If only I didn’t have to go to work tomorrow…










PS – To be continued..!



Since I’ve started writing this blog, I’ve noticed I’m getting REALLY good REALLY quickly at dishing out advice and orders. But how good am I at listening to others’ advice and orders, or even my own?


Well, I’m self-employed these days – so that probably answers the one about orders; I take ‘em from nobody except myself 😉


And the advice? Well, I generally do try to practice what I preach. But in the last week or so I’ve noticed I’ve started to slip in a few areas. Since one of the main reasons for starting this blog was to make myself accountable, I feel like ‘fessing up to a few things. Hopefully I’ll shame myself into action (or in the investing case – inaction)!


So, here goes.. In the last 10 days I have…


1)      Done resistance exercise only ONCE (it should be 3 times in this period)

2)      Been running a grand total of 0 (ZERO!) times (I should have been once or twice really)

3)      Caught myself researching funds that AREN’T INDEX TRACKERS! OH THE SHAME!! 😉

4)      Considered buying a motorbike (not instead of the car, but as well as the car)

5)      Looked at long haul flights to take a decent break over the other side of the world


Stop, stop, that’s quite enough! Ok, so nothing really serious – we’ve still been socking the savings away, living under budget etc. – but you gotta nip these things in the bud early, or else! This time next year I could find myself still sitting at this desk, 2 stone overweight and invested in the latest Neil Woodford fund.


Better get back to it!



PS – As there always are, there are “reasons” for the things in my list having happened (or not). But since “reasons” is just another word for “excuses” I’m not even going to go there. There’s always a way to squeeze in some exercise, as Mrs JAL has shown in the last couple of weeks. She’s put me to shame!


Verti-GoPro goes loco, doh

Responsible for – amongst other things –  all manner of funny “sports fail” videos, potentially assisting people with insurance claims, helping to catch thieves, allowing us mere mortals some mouth-watering first person perspectives of what it might be like for elite extreme-sports men and woman (and/or nutters) strutting their stuff right in the sweet spot, and one of the most gorgeous videos I’ve ever seen, sports and leisure camera maker GoPro went public last week with a $24-a-piece IPO.


Falling into the infinitesimally small group of companies that I feel I actually “sort-of” understand – I know what their products are, what they do, who uses them etc. – I almost considered trying to get hold of some of these shares. However, I resisted because of one of the many reasons why I have steered clear of buying individual shares in any company thus far;

I have no idea what their “business model” is, what their accounts look like etc. and I’m not the sort of person (yet) that has the time or desire to look into it too much and try to make a call on whether I consider them “investable”.


It’s fair to say then, if I were to buy shares in any given company, it wouldn’t be the most well-informed decision, given my uber-lazy attitude in this respect. It could be said that it would be “a bit of a gamble”, and gambling is not high up on JAL’s “how to get rich” guide.


So, I stuck to my conservative guns, left all my investment dough in the confines of my warm, fuzzy passive index trackers, and let GoPro go pro without me. And what did I notice last night? In their first 4 days of existence on the NASDAQ, their stock pretty much doubled in price.


Whilst my initial reaction was obviously “Oh f***! If only I’d listened to my instincts and taken that punt…!”, at least I have re-affirmed something in my mind – even though occasionally I think I’m just starting to get a grip on the absolute basics of how “the stock market” works, it is still an entirely unpredictable place that scares the living crap out of me.


Maybe I’m wrong though? Maybe someone can explain this behaviour that we’ve witnessed in the first few days of GoPro’s IPO? If so, please let me know! Although I guess if anyone really did understand it, then they’d have also seen it coming, and thus have probably retired to their private island by now. In which case, don’t forget to send us a link to your GoPro scuba diving video 😉



Owning your home

I mentioned in Introduction To.. Wealth that money is an extremely emotive subject. So it stands to reason that if you stick absolutely truckloads of money into the place that you and your family live, then we’re on seriously dodgy ground! Strap in.


There’s plenty of people out there that will tell you that:

“owning your home is a terrible idea”

and there are people that will tell you that:

“owning your home is a great idea”


So, first up, my personal viewpoint; I don’t think there’s anything inherently wrong with owning your own home (and yes, in the interests of complete transparency, I’m biased because I currently do own my own home!). But it does depend on the circumstances; everybody’s situation is slightly different.


Run some numbers; it might be evident that it’s not the right thing for you to do, not at this point in your life anyway.


Alternatively, after running the numbers, and depending on what’s happening in your life, then owning your home might turn out to be a great idea.
Looking back, it was right for me to buy, it’s served me well. Paying off the mortgage last year felt amazing, and now we sleep at night safe in the knowledge that no landlord or bank heavy can come-a-knocking and tell us to “get orf their land”  (yes, yes, my house is freehold). And of course, we also have a much higher savings rate than before as we’re not currently paying rent or mortgage.


But here’s the thing – for people looking to become financially independent as soon as possible, you may be able to use your house as a way to reach FI earlier than you had previously thought possible.


Imagine that you’re planning to move towns, areas, or even better – countries. Or maybe you weren’t actually planning to move, but you are able to move, and you would consider it if that brings your FI date closer. Now then, if your current house (the one you own, or part own) is worth more than houses where you are going, then that could obviously work in your favour. (If you currently own a house in London, then I guess this applies to you if you’ll consider moving just about anywhere else!)


And things could be even better if the rent-houseprice ratio where you’re going is low too.


Here’s an example, and it’s a real life one; it’s our situation.


Our house is a 3-bed semi on the outskirts of town, with a current value of about £160,000.
Where we’re planning to move to, a similar sized house could be bought for €100,000 (or possibly even less, at the moment). At the time of writing that is about £80,000.


OR, here’s another idea – we could rent a house there for about €5,000/year (currently about £4,000).


So our £160,000 house sale would give us about €200,000, which is 40yrs rent money to stuff under the mattress. (Yes, that’s in “today’s money”.. obviously rising rentals would bring that number down.. although if the €200k was wisely invested then we’d hope to at least beat that nasty inflation).


OR, another idea – instead of selling our current house, we could rent it out for £600/mth (€750/mth) and bingo, it now pays our euros-rent, plus currently gives an extra “left-over” income of €330/mth. So that’s the food bill and the ‘leccy paid for. And assuming that rents rise fairly evenly in both countries, our rent (plus hopefully that extra bit for food and lights) would be covered for life.*


I would say it’s worth thinking about! Like I said – everyone’s situation is different, but there’s always more than one option, and I think that the process of thinking through these options – and thinking of new options you hadn’t previously considered – will stand you in good stead for this financial independence lark.








* Hopefully we’re talking about a period of at least 40 years here, and obviously the currencies could do all sorts of wacky things over that period! But again, if you’re willing to look at options, be flexible, “think outside the box”… then I think you’ll always find a way to make things work


Oh Lord, won’t you buy me.. some shares in Mercedez Benz?

What’s up world? How’s it going?


This afternoon I sat through a 2 hour on/off conversation between some guys in the office I’m working in today. I didn’t participate, for two reasons:


  1. I would have probably upset a few people (which is something I don’t generally like to do)
  2. I was making notes on the conversation because as soon as it started I could smell a nice, freshly roasted blog post ready for carving!


Basically, these chaps – all very nice, decent lads I should point out, nothing personal whatsoever here – were discussing cars, as work colleagues often do. To be more precise, they were discussing new cars.

– Which new car should employee (a) now purchase to celebrate his recent bonus (even though the bonus comes nowhere near paying for any of the cars in question)?

– How much has employee (b) been recently offered for his 3 years old motor by his friendly local dealer, in part-exchange for a new one? (62% of the price he paid for it just three years ago, by the way.)


Now, one of these fellas has only recently started work at this place. He used to work for a similar company that have offices literally right over the road from the office we were sat in. He and his (ex-)colleagues all became casualites of the ever-popular trend of outsourcing. Sympathy not really required though, it matters not to them – they all quickly got new jobs, and they all got not-at-all-insignificant redundancy payouts – miniumum £30,000 by all accounts. Tidy.


So anyway, this guy made it known that he’d just seen his old colleagues as they’d all been back to their old office for a lunchtime farewell. Three of his old colleagues, he told us, had just bought new Mercedes cars with their redundancy money. The group of guys involved in the conversation all then toddled off together for a look – and sure enough they came back 10 minutes later with a photo of the three new Mercs parked next to each other, shining and resplendant in the midday sun.

Now..(brace! brace!)..

I’m not criticsing these three people at all – it’s quite obviously their money to do what they want with. But…

By golly, if I had that sort of lump sum paid to me.. Well, I reckon I would be quite a bit further down the line to financial independance, whichever way you look at it. That £30,000 (the lowest sum received, remember!) would fill two people’s nISA for the year. Or maybe it could become a decent deposit on a buy to let property.


Having scribbled down some notes and drafted out the blog post thus far, I went for a quick walk. And I thought “I wonder what would have happened if, instead of purchasing one of the rapidly-depreciating and completely-unnecessary-to-them products of the company, they had instead invested in shares in the company ?”


Well, let’s see.. Here are Daimler’s share prices:


14th March 2014 (when these guys got their big cheques and P45s):



25th June 2014 (today):



So.. wait.. If they’d have bought shares in Daimler instead of the car itself, they’d each now be looking at a minimum…

– £2,268 increase on their initial capital?!

– Almost 7.6%!!



Hands up anyone who would like to see that sort of return on their money?


However, back in the real world… Instead of looking at that 7.6% INCREASE on their money, they now have a car. A car which, if they took it today to a dealer to “trade in” or just “get rid” then I reckon the dealer would be offering them.. what?.. at the absolute top-end.. 80% of what they paid for it? A 20% LOSS.
Now, ok – this is all a tad contrived, because back in March I almost definitely wouldn’t have said to them “buy shares in Daimler!”. Also, of course, they could have invested that money and lost 7.6%, or even more. But then, I wouldn’t have recommended they sell an investment after 3 months anyway (except, perhaps, if they had seen a 7.6% return on it in that time..!). No, had they asked me, I probably would have just recommended they bought “some sort of investment” with it, and then left it there for a minimum of 5 years. Keep the current, perfectly serviceable motor vehicle, take up your next job, and seriously get to think about winding things down a bit in 5 years time, aged 45.


So, as I said, I almost definitely wouldn’t have recommended buying shares (regardless of the company – I just don’t do “shares”) – I just had that thought on my walk and thought it would make for an interesting point (and I think it did!). But how’s about if they’d have invested in something which I might well have recommended? What if they had just stuck that money in one or more passive investment vehicles, index trackers?

Well, let’s look at an example:Vanguard LifeStrategy 80. It’s currently up 3.2% in those 3 short months. Not quite the awesomeness of 9%, but what would you choose :

3% increase, or

20% decrease


Again, I must point out that the tracker could have quite easily lost value in this time too, but that’s not the point because I wouldn’t be recommending they sell for quite a while anyway. The JAL investing plan isn’t based around buying one day and selling the next. We buy an investment with a view to keeping it for at least 5-10 years.


Also, we haven’t mentioned dividends either. Those guys would have been getting a little bit of that too, a nice bit of extra income as well as the capital gain. That income, compared with the outgoings of motor vehicle ownership..


Hey ho, enough already. I hope those dudes enjoy driving those cars, ‘cos I reckon they’ll be driving them (if not even costlier replacements for them) for another 20-30 years. Driving them to some office or other. Rather them than me!