Saturday 27 June 2020

My Brilliant Financial Advice

When I was working in a Canadian government office, lo, twenty years ago, I was given the first piece of serious financial advice that I ever remember receiving. It wasn't very good, as it was merely "Never buy a home because then you'll be trapped!" The giver of this advice was a Scottish immigrant to Canada who very much disliked our job and wanted to quit but could not because of her mortgage.

Personally, I love our mortgage. I was going to say it's a child-substitute, but that would add a note of unintended melancholy. Having run out of Polish graduate students, I have made the vegetables my child-substitute. The mortgage is more of a sport. The object of the sport is to save up as much as much as possible to put down the biggest allowable annual overpayment on the mortgage, thus making monthly mortgage payments smaller. It's like golf--the smaller the number is, the better our game.

One of the reasons that I love the mortgage is that it represents Benedict Ambrose's and my successful, if rather late, rooting in financial reality. Before I returned to full-time employment, we were advised that Benedict Ambrose alone should apply for a mortgage, for as a freelancer I would significantly lower the sum the bank would grant us. This was the principal reason why, after B.A.'s first life-saving operation, I seized upon the first full-time writing job I thought I was at all likely to get. This meant that my salary, too, would be factored in by the banks.

Our principal dread was that we would be thrown out of the Historical House and into the rental market, where B.A. was adamant he did not want us to be. Therefore, we began to save, and kept on saving when I got a job and when B.A. was deathly ill. When his sick pay ran out, I cut my expenses. We continued to put all our savings into a first-time buyers' "Help to Buy" Investment Savings Account (ISA).

This proved to have been the canniest thing we ever did because when we were thrown out of the Historical House, we had enough saved, and we were earning enough, to get the mortgage that enabled us to buy a two bedroom flat in a safe and convenient, if humble, neighbourhood. Needless to say, we do not feel trapped. We feel very fortunate, doubly fortunate that this flat has a private garden instead of the usual shared "[laundry] drying green".

This is not to say I have not cried a tear or two of regret over the many years I did not work full-time and did not save. When I scan past decades, my greatest financial regret is that I did not save 50% of everything I ever earned and put it into some investment vehicle that returned even just 3%. If I had done that, we would not be living in Safebuthumblehood but in Edinburgh's New Town.

I had some inkling of the importance of saving and investing young when I was in my late twenties, but I basically forgot it to pursue my dreamy-dreams. Then, the summer we bought our flat, I came across a book in the Stockbridge Public Library called The Escape Artist. It was a life changer, not  because it explained how someone could retire before 40, but because its principles work for over-40s wanting to retire before 80.

The interesting thing about the concept of the millionaire is that many, many, many employees earn over a million pounds or dollars during their work lives, but they aren't millionaires at the end. They aren't millionaires because, of course, they have spent the money. Much of this spending is absolutely necessary: taxes, shelter, food, heating, electricity, work clothes, medical insurance or fees. However, much of it really isn't. Financial Independence for Early Retirement (FIRE) people are brutal about automobiles, and Mr. Money Mustache, for example, is a great fan of bicycles. My maternal grandfather rode a bicycle to work. B.A.'s maternal grandfather walked to work. FIRE people are also  brutal about restaurants, which are a greater temptation to Mr and Mrs B.A. than cars.

When scanning past decades to see where my earnings disappeared, I inevitably conclude that Life Happens and that the inner flame lit by going out for sushi with my richer classmates after evening theology lectures was worth the money.  All the same, I think the very wisest thing a young person can do, after leaving college or university without debts, is to work as hard and earn as much as possible, living as cheaply as possible, for five years. All savings should be invested as cheaply (look out for bank or brokers' fees) as possible, taking into account your comfort with risk, as obviously some investments are safer bets than others. If the young person was able to save £/$20,000 a year, in five years he or she would have £/$100,000 plus whatever interest they had earned.

To put this into perspective, a full-time Starbucks employee in Canada seems to make about $26,000 a year. The lowest annual wage I've seen for a farm hand in Vermont is over $27,000. I am deliberately choosing low-paying jobs here. Have a look for likely salaries for American college graduates here.

Ideally, my hard-working young person gets along well enough with his or her parent/s to continue living with them as he or she grows his or her £/$100,000+ nest egg. If the parent/s wants a financial contribution to household bills, etc., then better the money goes to family than a stranger. Richer parents may just be impressed by their offspring's canny financial goal and cheer him or her on.

This initial $/£100,000 is a form of financial insurance against life's little difficulties. Even in a so-called "high-interest" savings account, it will grow all by itself over time. As traditional Catholics very often marry young, I suppose they would gladly spend it on real estate. However, I initially formulated this plan for young men hoping to become diocesan priests.

As a journalist, I keep coming across stories about young priests who are abused in a myriad of ways by bad or badly advised bishops. One of the problems is that bishops have enormous power over their priests, including financial. Another problem is that bishops die, and the good bishop who is a loving father to his young priests may be replaced by a serial sex pest or anti-trad ideologue. No matter how much money the priest has invested, he will still have a lot of sorrow, but at least he will not be completely financially dependent on his bishop.

Fictional example

Young Stan Kowalski is a whizz with computers but suspects he has a vocation to the priesthood. His parents, though devout, beg him to go to college and maybe work a few years before going to seminary. So Stan puts his head down, gets a degree in computer science by age 21, continues living with his parents and saves most of his $60,000/a salary. The day he has $100,000 nicely invested in something safe but steady, he calls Bishop Saintly's vocation director. He is now 23.

Young Stan goes to the diocesan seminary and is ordained to the diaconate at age 29 and then to the priesthood. He loves good Bishop Saintly and his parishioners, and his bishop and parishioners love him. Sometimes Fr. Stan feels uneasy that he has this great sum in index funds, snowballing away at 7%, but his parents have assured him that they will kill him if he tries to give it away to the poor. So instead Fr. Stan gives the poor almost all of his salary, saving only $100 a month to give to his mother. His mother promptly puts it into his index funds.

Then disaster. Bishop Saintly, whose traditionalism has put him into no little conflict with people who wish to sing a new church into being, has a heart attack and dies. Fr Stan, now 39, says a Traditional Latin Requiem Mass for his beloved ghostly father within the hour and weeps at the official funeral.

Then second disaster. Bishop Eric McTed is appointed to the diocese. Whereas Fr Stan is now too old to be of particular interest to the notorious "Uncle" McTed, the new bishop is keen to sing a new church into being. And just as you can't make an omelette without breaking a few eggs, you can't establish the New Pentecost without throwing an orthodox priest or two into the diocesan funny farm.  And balding Fr. Stan, who is known to say the TLM for a stable group, to serve a flourishing society of rigidly orthodox young people, and to lead rosaries outside the local PP, looks just like the egg that has to be broke.

A faithful priest, even one with no political talents, can be hard to crack, though. Indeed, it is two more years before Fr. Stan comes to the attention of a Marxist identitarian group, and one more before their campaign against him leads to what the parish still calls The Homily That Did For Him. It gets 50,000 hits on YouTube.

"But I don't want to go to St Dymphna's," says Fr. Stan to Bishop McTed over the phone. "I'm not unhappy. I'm not sick. I didn't say anything that was uncharitable. I didn't say anything that was untrue."

"I want you out in six hours," says Bishop McTed, scratching his pointed tail.

"He wants me out in six hours," Fr. Stan tells his aged parents over Skype.

"What a lucky thing you have $265, 919.21 in your index fund," says his mother.

"If you live frugally, you'll be able to live on the interest alone for the rest of your life," says his father.

"But what about my ministry?" wails Fr. Stan.

"Well, I guess you follow the canonical procedures," says his mother. "Meanwhile, your Auntie Mary says Bishop Goodman over in Wisconsin is a saint."

By the way, if you think you recognise Fr. Stan, you are wrong; his woes are a composite of the kind of woes traditional young priests risk these days. When I was a child, I never dreamed men like a certain former archbishop of Washington (or another of Milwaukee) existed, let alone could ever become priests. I wish there was something more I could do about it.

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