Thoughts on Commuting

More and more people are able to telecommute as technology improves and employers come round to the idea, but chances are you’ll have to spend at least some of your career travelling to and from work. At first it may seem best just to rent near the workplace, but over time that may become less practical - it costs a lot of money to rent a large house with a garden near a good school in London, for example, so if you want those things you may have to look elsewhere.

Lots of studies have been done on the disastrous impact of commuting on mental health, but they tend to be US-based works where ‘commute’ is synonymous with ‘driving’. It doesn’t have to be that way. Here’s my tips:

1. Don’t drive to work. Really, don’t. I tried it. You’re at the mercy of traffic, so can never consistently arrive on time. You’ll always hit congestion on the day when it’s really important you arrive on time. You have the illusion of control without really being in control, which sends the blood pressure through the roof.
2. Trains are also out of your control, but you know that in advance and can be at peace with it. They are also more consistent, despite the hysteria about declining standards. Furthermore, since you aren’t driving you can just get your head in a book and the time flies.
3. Check out the train service where you want to live. In 2014 the c2c service through Laindon is great - punctual, comfortable, not too crowded, not too expensive. The line through Billericay, on the other hand, is an overpriced uncomfortable sack of crap.
4. Live near a station where a service starts and get a seat. It makes a world of difference - an overcrowded rush hour train seems remarkably civilised when you have a nice window seat.
5. Don’t sit next to the aisle - you’ll get jostled to hell. Don’t sit in the priority seating if you have a choice. If you have no choice, don’t be an asshole about it. Give it to someone that needs it.
6. Try variations to your journey that minimise changes, or that make changes easy. It’s better to have a 60 minute commute with one change than a 50 minute commute with three changes. The less disruption the better - keep your seat, read your book.
7. Personally, I find commuting more tolerable in the morning. Try to get to work early and leave early, if you can.

How Much Education?

One of the trickiest questions a young person faces is how much education they should get. It is a fact that people with a degree, generally speaking, earn more than people without one. And that pay advantage is there from day one, so it compounds over your entire working career and can make a huge difference to your wealth.

On the other hand, education is expensive - and making the wrong decision can be disastrous. In the early 2000s, law school became an incredibly popular path in the US. Legal careers were seen as safe, lucrative and glamorous. As I write in 2013, there are far too many people at law school for far too few available positions, so unless you are at a top school, or are top of the class in a good school, the best companies won't be interested. For all the other unlucky graduates, they will have racked up student debt that will take them decades to repay, and will not have the high income they anticipated. Result: misery, debt, disillusionment. By the time you read this, it may be some other subject that traps students like this, so beware and think carefully.

There is another factor. You have probably heard from many people that getting a degree is a 'must'. For a lot of careers it's a really important first step (you won't get anywhere in the medical field without one), but for most careers it's much more flexible than you might think. I got my degree in computer science before starting my career as a programmer, but a lot of people did just as well by spending the years from age 18-21 working on open source software, building a portfolio of work, and then joining a company or even starting their own. An entrepreneur who has built a successful company is never going to miss that certificate.

If a degree ever does become a necessity (e.g. a promotion at a large corporation might require one) it can be obtained later in life, when you have more money and real-world experience behind you, which will make it easier on both your wallet and your brain. Countering that is the fact that it may put the brakes on your career while you study; that may not be acceptable if you are reaching expensive milestones in your adult life (buying a house, starting a family, etc) during that time.

Finally, there are many well-paying careers that don't require a degree at all, though might require other study/certification. Apprenticing for a skilled trade - carpentry, plumbing, electrical etc - before gaining some experience and ultimately setting up your own firm can be a tremendously rewarding career. What's more, getting a head-start on graduates (i.e. earning from age 18 rather than 21) can offset some or all of the additional earning power degree-holders have - you'll be 3 years more experienced than your peers, with potentially 3 years of raises and promotions behind you - but with a greater risk of topping out your salary earlier, which is why starting your own firm is probably the best way to go.

You may have noticed that I haven't actually answered the question that this entry posed - how much education? The truth is, I don't know the answer. I know what worked for me, but circumstances change all the time and what was right for me in the 1990s might not be right for you. The key thing to take away from this is that there isn't a single right answer to this, so anyone who's told you that there is one true way ("you must get a degree") can be disregarded. That isn't an excuse to not go to university though, it's simply a reminder to consider your options seriously. You'll have to work hard, either way.

Hitting The Credit Wall

Personal finance is all about psychology. If you start carrying a balance on your card, you are teaching yourself to spend more than you earn. You will become accustomed to spending salary+credit every month (lifestyle inflation - where your spending increases in step with your available funds - is a real thing), until you hit the wall.

The wall may be when your credit runs out (and you can't get a new card or an increased limit), or it may be when your minimum payments have grown to the point where you can't afford them. Either way, suddenly your salary+credit equation will break down. You will have to switch overnight from living on more than your salary provides to living on far less, because your monthly income will have to be used to pay the money back as well as pay for you to live.

Adapting to a major lifestyle downgrade is really, really hard - so hard that even rich bankers and footballers get caught out by it if they don't get their bonus or retire from the game. Seriously, read up on the bankruptcy rate for retired sportsmen.

Never carry a balance on your credit card - it's the first small step along a road you never want to walk down.

You Are Not The Centre Of The World

As a child you have always been at the centre of family life, with people who care for you and put your needs first as often as possible. The world, however, does not and will not.

It can be a difficult wake-up call to realise that, sometimes, perfect strangers are quite prepared to stab you in the back. All your life adults - e.g. parents, teachers, etc - have by and large wanted you to succeed, have encouraged you, have helped you out when you have faced failure. As an adult yourself, though, you will occasionally run into people that want you to fail, will hold you back, and will stick the boot in when you most need a helping hand.

Fortunately not everyone is like that, but be prepared to deal with it. Some people will want to make you look bad to further their own career, to drive a wedge between you and someone else, to get something they want, or simply because they're assholes.

Always be polite and civil to people you meet, but make them earn your trust. Conversely, be prepared to give them your trust when they've earned it, otherwise you'll turn into a cynical loner. Protect yourself and your identity and your privacy at all times, in person or on the internet. Don't give anyone ammunition they can use against you, unless and until they have your trust.

There is a corollary to this - people will not put up with your bullshit. You may, at times, get away with things among your close friends and family. You might be late to meet your friends, and they won't mind. You might borrow a few quid from someone and pay it back later than promised, and be forgiven. You might throw tantrums to get what you want, or you might be excused for some failure or other by the people who love you. The rest of the world will not extend the same courtesy. People have to earn your trust, but by the same token you will have to earn theirs.

Don't Expect A High Standard Of Living Immediately

At the time I write this, the world is still in the aftermath of the credit crunch and many are still struggling. During the housing boom that preceded the crunch, a lot of people were borrowing far too much money to buy houses and then taking loans against their equity when house prices rose again. This money was spent on flash cars, exotic holidays, new gadgets, expensive furniture, and so on. People just out of college were living in bigger houses and driving newer cars than their parents, and thought this was the way of the world and the natural order of things, that the standard of living increased with every generation.

Post-crunch, this view flipped and a lot of people complained at length that the 'boomer' generation (born  in the years immediately after WW2) had it easy and ruined the economy for everyone else. They pointed out things like inflation-adjusted salary comparisons and so on to argue that the standard of living had dropped. They rarely conceded that the boomer generation when young had smaller houses, no computers or consoles or washing machines, one car per household, one TV per household, and so on. They argued that people were 'forced' to live beyond their means in order to have a 'normal' standard of living.

If you were so inclined you could spend your whole life arguing about stuff like this. It isn't worth it. I want you to take from this a sense of perspective. When you move out of the family home, you should not expect to maintain your standard of living immediately. You shouldn't expect to move straight into a similar-sized house or drive a fancy car. Your mum and I bought our house at age 34, not at age 23. We both owned houses before buying this one. I had savings, your mum had equity from the housing boom of the early-2000s. We had a windfall earlier that year, which we saved instead of spending. We had no debt, and good credit ratings. A lot of things had to align for us to move here, it didn't just fall into our laps - and the ideal home won't just fall into yours. It takes time.

When I graduated, I lived in a shared ex-council-house in Crewe, with two strangers who relied on housing benefit for rent. One of them used to secretly pawn my N64 games to pay for tobacco. There was no upstairs bathroom. The power was on a meter, and every other month we either forgot or couldn't afford to top it up and had to sit there in darkness with no electricity until the corner shop opened. The kitchen was an unusable mess, so I used to eat crisps for breakfast and get takeaway doner meat and chips for dinner, every day.

When your mum got her first house, her neighbour was mentally unstable and used to put dogshit through people's letterboxes.

It sucks, but that's what you have to put up with when you're starting out.

When you get your first house, you will have less space than you are used to. You will have to put up with annoying neighbours and dickhead housemates. You will be less comfortable and have fewer amenities than you are used to. You will also have a great deal more freedom and fun than you have had before, and that will make up for it.

That's all OK, it's part of the process. Do not feel like your salary is inadequate, and do not feel like you ought to have all these fancy gadgets and must go into debt to get them. You cannot expect to have the same standard of living in your first year of work as people who have worked and saved and learned from their mistakes for 30 years or more - but you can get there as long as you don't bury yourself with debt to start with.

Always Pay Your Credit Card In Full

Credit cards are a financial chainsaw - a very powerful and useful tool that can eviscerate you if not used properly. There is a golden rule for using them: ALWAYS PAY THE BILL IN FULL, EVERY MONTH, WITHOUT FAIL.

This is not a joke.

I mean it.

It is very tempting, when you get your first credit card, to spend lots of money on it. You can spend a month's salary, and when the bill comes you only have to pay an hour's wage. When you hit your credit limit, the card company will probably increase it for you with a single phone call or visit to their website. Brilliant, eh?

No. Elsewhere in these notes I will talk a lot about compound interest and how it will make you rich. Well it works in reverse - the credit card company will get richer at your expense if you carry a balance. You will get poorer at an even-faster-and-ever-increasing rate than compound interest makes you richer. You don't want that. Come and ask me if you want to work through some numbers to see just how bad it is.

I've been there and done this. Through my 20s I racked up debt on a credit card, bought movies and videogames and wine and so on. I imported consoles from Japan. I went skiing every year on the bank's dime. I bought fancy Lego Technic sets that I never built. Small things, but they all add up. I was lucky enough to catch myself before it got out of hand (total debt topped out at about half my annual salary at the time) and was lucky enough to be earning a decent salary that allowed me to make my payments without having to live on beans on toast for a decade. Not everyone is so lucky. It's far, far better never to dig yourself into a hole than it is to be good at climbing out of it.

Learn from my mistake. Always pay the full balance every month.

Introduction

This blog is my ongoing, infrequently-updated collection of notes and advice that I am collecting over the years to give to my children. It is public right now; I may or may not make it private in the future. In it will be many of the things I have learned throughout my life and wish I knew when I was a teenager - the aim is to give the URL (or possibly a printed-and-bound copy if I'm feeling nostalgic) to each of my children when they turn 16 so they can read and absorb it at their leisure rather than suffer some sort of meandering lecture on adulthood from me. They won't agree with everything I say, but that's OK.

If you're my kid and reading this, happy birthday!