Tag: mobile | David Coveney

Steps and missteps on my path out of poverty

At 18 I was skint and got made homeless. It took a lot of graft, patience and mistakes to get out of that and into a moderate middle class lifestyle. Here’s how.

When I was 18 I found myself in a weird situation. October 1987. I’d just started my first job, straight from 6th form, and was happy with that. My favourite song the year before had been The Future’s So Bright, I Gotta Wear Shades. I was optimistic and hopefull. I’d done my A levels finally surrounded by people who actually cared about education. I was no star pupil at 6th form, except at computers, but computers were the big thing so I had confidence.

All good then. I mean it wasn’t perfect, but I just had a fresh optimism. I’d lived with my grandmother since I was about 12 (my childhood memories are imperfect and I have few witnesses to refer to. I’d been casually fostered for a number of years prior, was fed up, and had been dumped with her. She was one of the few consistent things in my life and could see I was breaking in front of her. So I in effect ‘divorced’ my father and she took custody of me. She lived in a mobile home type caravan at the time. She was poor, but stability mattered more to me. I got my education. The future felt very bright.

I got through the various stages of ICI (then one of the largest chemical firms around) to get a job in their computer centre as a trainee printer operator, with the idea being to climb into a programming job. Unfortunately, a few weeks later, my grandmother had been in a lot of pain and, within a day of being admitted to hospital (this is another story to tell) where we discovered she had terminal cancer. Very terminal. She had less than a week left.

I was so very alone. My father turned up, signed over to me to handle everything, then disappeared to South America, never to be seen again. In 1986, my mother who I had some mild relationship with, had taken her family to Spain and, for some reason, me being told and having a goodbye seemed to be forgotten… so I’d accepted they weren’t a factor in my life. That was it. Me, alone, in the world.

Things got quite bad, quite quickly. Here’s what I learned, what I did wrong, and what I think I did right.

The world is not your friend

When you grow up, generally there are adults who look after your interests and needs, until you’re old enough to do it for yourself. But often you feel this interconnectedness with everything being generally good. Often in adulthood we discover things can be quite different – especially if we have some failures. I think learning that the world isn’t your friend is important. I discovered, for example, that if you have no cash, you can’t just take over a substantial asset (a house, in this case) and expect to not pay off debts that your grandmother had. The answer should be simple – I could have borrowed from another bank or building society to buy the house off my grandmother’s estate. Except her bank refused unless my grandmother’s estate was up to date on the mortgage payments. And because my grandmother’s estate had debts and no income, it couldn’t make the mortgage payments, and I was advised that if I paid the mortgage it would potentially make me liable for everything. When you’re an eighteen year old that leaves you in a bind.

The bank took the house, and I was made homeless, briefly (I kept a spare key and let myself in at night to sleep on the floor!), and I quickly organised myself and bought a tiny flat. Good job, because the council wouldn’t help me, the bank wouldn’t help, renting privately was almost impossible for me. Thank heavens I was organised and found the right combination of people.

Finance is risky and can be expensive

Because I was young with little credit history, all finance was risky. I figured that with my job and my flat I could now live a little and went stupid, bought myself a small engined sports car – a Scimitar SS1 1300 if you’re a car geek – a tumble dryer and washing machine all on credit, and thought everything was great. But I had nobody around to advise me I was being dumb, remember? No parents, and even most of my friends had gone off to university.

What happened was that when something went wrong with the car, it really stretched my finances to fix it. Then it got stolen and damaged, and I either repaired it myself or my insurance would get really expensive. Every little bad thing that came up, made life harder. But I discovered that I couldn’t just sell the car and forget about the finance – the interest and the way they did it meant that I’d need the value of the car plus another £1k to pay it off. I was trapped.

Toxic parents usually remain toxic parents

My father was still in touch with me, but for some reason thought I had plenty of money. So when he got into financial trouble in South America, he started giving me hard luck stories about how dangerous things were, that he was going blind (or a bit long sighted as we call it now), and he needed £1.5k. Or £3.5k in today’s money. I was 19, skint, and instead he banged on about how I must have had money from my grandmother’s death and my good job. “Yeah, Dad, but you’re not here and you have no idea.”

However, guilt led me to do my best. I sent him all my spare cash for a couple of months, before finally arranging a loan. I used some of it to consolidate my credit card debts, and two thirds went to him. I sent him, if I remember correctly, about £800 in total. He wrote to say he was struggling and needed more and he was in a dangerous situation I didn’t understand.

So I did what I felt was the right thing – I spoke to the Foreign Office, and eventually secured a facility for him to be able to catch a flight home, where he’d at least get benefits.

I called him, told him the good news, he was furious. And that was the last time I spoke to him. Ultimately, narcissistic, self-centred and selfish people rarely understand that other people have struggles. They just don’t get it. And they stay that way.

Stability matters

One thing I did right was to stay at ICI for many years. I kept that job. My head wasn’t in the best place, so I wasn’t the best employee, but I was useful and smart enough to keep it as well, and had some reasonable progression. For a while I’d been renting rooms after financially over-extending when I lived in my flat, and that job gave me the much needed anchor to my life. Eventually I bought a house with my then girlfriend. That stability then allowed me to think about taking a risk again… But it also established a nice final salary pension plan that will still be useful even 40 years after leaving!

I went contracting

Sometimes, income really matters. I don’t think contracting is for everyone. I hated some aspects of it, and it ruined my relationship at the time because I was away from home so much. But it really helped bring in money, which then really helps you to just establish a buffer of more than a month or two of money. Suddenly I felt like I had an actual surplus and proper savings. I got rid of the rust wreck of a Peugeot and bought a three year old Rover. I started to dress more smartly. I had nearly ten years of this solid and high income and it probably made the biggest difference of all to me.

At the end of my ten years, inflation and low interest rates made my mortgage look tiny, I had asset wealth in the house, shares, and low outgoings. When you’re in that situation, as many middle classes get born into, you can start to take risks. I decided to set up a proper web development business, now called Interconnect.

I could have lost a lot with Interconnect, and we came close to giving up. It didn’t ever give me more income than contracting – not even close. But it does give me another source of stability. And that, dear readers, is worth more than you might think.

I learned about how money and how the stock market works

There’s one book I read early one which just opened my eyes to the world of money. I’ve bought it several times, lent it to people, forgot who I leant it to and lost it! Doesn’t matter, it’s worth it. Its called How The Stock Market Really Works and it goes way beyond stocks, shares, and bonds, but into planning, risks, retirement and so on. In reading it, several times, I established a baseline of understanding that stopped me falling for scams, stopped me making bad investments, and generally helped me ensure I could make best use of the spare money I had.

I no longer pushed my finances hard

Now I understood money better, I knew that, for example, if you have assets of £100k and a debt you can’t pay of £50k, you’re in a really really bad situation. If you have assets of £10k, a debt of £100k and some short term cash flow issues, then you’re in a strong position to start negotiating. Why? Because if you have no assets and a big debt, the bank can’t recoup anything much if they send in the bailiffs. Once their costs are accounted for, they lose everything. So they’re more willing to negotiate. If you have loads of assets, you’re stuffed. That was, in effect, what the bank did to take my grandmother’s home from me when I was younger. They had no motivation to negotiate with me.

So you either max out your finances, Donald Trump style, or you very carefully segregate them. Because I value stability and security above all else, I segregate them.

I learned to think like an accountant

After ICI, I spent a lot of time working in corporate finance departments on their software.

Here’s a thought experiment. You have £10,000. You go out and buy a car for £9,000. How much are you worth? The naïve answer is £1,000. You see yourself as £9,000 worse off. But if your car helps you earn more money by opening up a job you otherwise couldn’t reach where you’ll earn £5,000 a year more, then you have two things happening:

First, your balance remains at £10k, because you have a £9k car and £1k of cash.

Secondly, you have a future benefit over, say, the five years you expect to have the car, of £25k. So over the five year period, assuming the car becomes worthless, you’ll end with £26k on the balance sheet. Or you use that £26k to put into a mortgage which, again, is generally a good move because it’s a limit liability loan secured on property which, in most economies, is a pretty safe bet.

But all accountants will say that cashflow is of utmost importance. You may have a pile of assets, but if you can’t service your responsibilities then you become insolvent – you can’t always easily sell assets without a big loss. So always think about cashflow – it’s best to be gently increasing your cash position as your wealth grows.

I learned to let go of status plays

When I was young I caused myself trouble by buying that sports car. It wasn’t, in itself, a bad buy on the surface – sports cars depreciate more slowly, the insurance on this one was the same as a similar powered Ford Escort, and it didn’t use any more fuel. And it’s not like a 19 year old needs to carry a family. Two seats was fine. Reliability wasn’t great either. But where it went wrong is that my boss therefore believed he paid me too much! My older superiors didn’t like that I had, on the surface of it, a fancier car than they did.

Of course, I was financed to the hilt, and they weren’t. They didn’t know that. They just assumed I had more money than I let on to.

Had I been in a humbler car, they’d have had no idea of my financial status.

It’s better to let people assume you’re a bit skint, and focus on reliability plays in order to establish your career. Took me into my thirties to work that one out.

Same with clothes. Stick to cheap clothes until buying them is easy. If you do what young me did and buy everything on credit at Top Man and Burton’s (yeah I know) then you’re setting yourself up for bad decisions and bad outcomes.

Adaptable accent and open attitudes

I’m actually quite Scouse yet a lot of people I meet and work with down South just think generic, educated Northerner with a light accent. The reality is I just adapt my accent to suit the situation. This means I don’t terrify upper middle class people, whilst I can still sit and have a chippy lunch with garage mechanics. Non-threatening to everyone, basically. I accept that most people know stuff I don’t, that they believe they’re trying their hardest (they may not be trying optimally, or coping badly, but I accept their belief), and generally try to learn from the people I meet.

Meet lots of people from different backgrounds

The more people you meet, the more lives you get to understand, the more mistakes you can avoid and the more opportunities can come up. Local politics can teach you how councils and Westminster works. Bankers can tell you how finance works. Medics can give you really good reasons why you shouldn’t smoke, drink, or eat too much sugar! Bin men can teach you that you can make a good living even if you’re not well educated (or are – there are some very well educated bin men and women out there). Truckers can tell you how their industry works.

Just avoid the cynical and the put upon – there’s little useful information there.

One good thing with the internet today is that there’s so much sharing online that you can virtually meet almost anybody, from African villagers to corporate board members. Just be kind and open and remember that they’re all humans, every one of them.

What about you?

None of the above is unique to me, or in any way makes me special. I just think they’re what helped me. Feel free to comment on what you’ve experienced. Everyone lives different lives and found different ways out of poverty traps. And of course, some people find themselves ground down by a system that can be unfriendly and downright hostile at times which means they can never escape, no matter how hard they work.

Images by Dall-e 2

I broke my heart in five places and got it fixed

A year ago, I was sitting, shorn of all body hair and waiting to go in for a five or six hour operation. I knew the next two weeks would be hell.

It’s hard to explain the odd calm that came over me as I sat there, waiting for the biggest operation of my life. I didn’t feel happy. I didn’t feel miserable. It wasn’t as if I’d been feeling terrible. I’d just had one bad morning two and a half weeks earlier where I felt rough, then more rough, then really really rough, then fine again.

It’s weird. You see heart attacks on TV and you get this idea of a mad bad event where you keel over, clutching your heart in agony. But it doesn’t really work like that. The night before I’d felt tired. In fact, for a few years I’d been feeling like hard exercise was a challenge. It took me an age to warm up for a sport, and then I’d be fine. But the first half hour was a chore. And if I’d eaten I was basically useless for an hour or so.

I put it down to age and asthma.

I wish I hadn’t. But thankfully, I got lucky, in a way.

So driving along to work I felt this tightness in my chest, a tiredness, and a general malaise. So I decided, as was sensible, to pick up some vitamin tablets on the way to work. That’s what you do when you’re tired. Take vitamins, and get plenty of sleep. That was my plan. But by the time I got to the counter, I felt even worse and decided to mention the chest tightness to the chemist. She very clearly said I should go to the walk-in centre and get checked out. Instead, of course, I decided I’d get it checked out at some more convenient moment. But by the time I got back to the car I realised I was very out of breath just walking slowly.

I was having a heart attack. I didn’t know it yet. I looked at my Fitbit on my wrist and it said my heart was doing a nice old 70 bpm. Normal enough for me. So why was I puffed out? Must be an asthma thing. But I decided that I would go to the walk-in centre after all. I drove, feeling increasingly out of sorts, parked quite badly, and shuffled in to reception.

A few hours later, I was hugging my wife in A&E at the Royal Liverpool Hospital. I was worried, but not terrified. The doctor dealing with me said “I’m concerned but not worried.” That was a relief. The diagnosis was swinging between heart attack and pericarditis. I was atypical. Relatively young, slim, non-smoker, evidently in reasonable health, and moderately active for someone desk-bound at work.

But they couldn’t satisfy themselves. The A&E cardiologist said I had to go in for observation. They observed me.

Observation is boring

I was sent up to a cardiac observation ward where there were a range of folk from really quite ill and very elderly to me. By then I was feeling fine, quite chirpy, and generally comfortable. My biggest complaint was that the ward was a bit noisy, with an elderly chap who was rather confused causing the most noise. But hey, I was alive, the food was tolerable, I had my Kindle and my phone. I started to obsessively read about the heart, interpreting ECGs and so on. It’s all quite fascinating. And complex. I won’t pretend a lot of it stuck. But now I knew the possibilities.

The rather wonderful Mr Fisher, my cardiologist at the hospital there, did a series of echocardiograms. He felt that I was 95% likely to have pericarditis, in which case a few tablets and I’d be right as rain within a couple of weeks. However, there was a 5% chance of something else, so he’d scheduled me for an angiogram at the Liverpool Heart and Chest Hospital. If they found something, they would be able to stent me there and then and I’d be on the path to recovery.

95% chance of some tablets and everything was fine? OK, I cried a little and started looking forward to the family holiday we had planned.

Angiograms feel weird

An angiogram is where a fine catheter is inserted up to the heart, then a substance that can be detected using x-rays is released into the heart. This allows the surgeon to get a visualisation of the heart. It’s really interesting. And a little unpleasant, but definitely not much more unpleasant than a longer dental visit. It is surgery of a sort, and done carelessly it can do damage, so they always have someone on standby ready to whiz your chest open and do some emergency surgery.

Thankfully it’s usually very safe. It just feels odd, sitting there with this big machine whizzing around you imaging your heart, a massive TV screen to your left, and a very precise talking and unambiguous surgeon on your right instructing his team. I was anxious. He noticed that, and he said “just give him the valium. Now”. At least I think it was valium. In some ways my memory is a bit fuzzy.

Because then, as he finished everything up, he explained that a stent wouldn’t be possible and I would need what is called a coronary artery bypass graft. Four, maybe five. I… didn’t like that news. I felt shocked, scared, and unhappy. I’d gone from probably just an annoying health scare to looking towards having my chest sliced open and my heart operated on.

How do you even operate on a heart? It’s not supposed to stop. Right? Stopped heart = dead. No?

The wait

So then you just wait. And wait. They wouldn’t let me leave the hospital. I was at risk of another heart attack, the blockage was so bad, and they needed my system to flush out the drugs I’d been given when I was suspected of a heart attack. Risks, apparently. It took two and a half weeks from admission to operation. Long enough to think about my mortality, prepare some things, and do weird things like have a company meeting in the middle of the ward to ensure everyone knew what to do, and how.

It was an interesting time. People came and went. I got to know some, and would chat to them as they faced their fears. Most people were older, most were as surprised as I was. What really surprised me is that the image most of us have of people waiting for a bypass wasn’t really fulfilled. Sure, you had the smokers and the fatties. But loads of us were relatively active, relatively slim people. Not that athletic, mostly, but in a line-up of people most likely to need a bypass, you wouldn’t have picked most of us.

Sometimes I’d chat with people facing the operation the next morning and they were, usually, very anxious and worried. Some said things like “well, if I die… I won’t know it. It’s my family I worry for.” Others joked about having their last cup of tea. There’s some morbid humour, but it felt like a release too. A way of expressing anxiety with a laugh.

But the fact so many of us weren’t people who’d neglected ourselves felt terribly unfair. I struggled to deal with that.

Could’ves and should’ves

One chap, about ninety years old and looking in remarkable health, was in for a new valve. He said without it he’d likely not survive the year. With it he had a good chance of another five years. Yes, there was a risk, but as he said “I’ve had a good life.” I guess by the time you reach your nineties you come to a realisation that you can’t really have that long left, no matter what you do.

I talked about my own misgivings. I’d been a bit plump in my twenties, and I enjoyed partying and chocolates. I’d also been a hard working type with little time to do lots of exercise. He smiled and said something like “Life’s full of could’ves and should’ves, but they really don’t matter. You have to deal with the present and make things as best you can for the future. The past has gone. Leave it be.”

He was so right.

Getting closer

As the date loomed I thought I’d get increasingly anxious, but it just stopped. I wasn’t aware of being pumped with chill-pills. I’d seen more frail people go off to operation, and I’d chatted with them as they recovered. It was clearly hard going for them, but they lived and they seemed in good spirits. It’s a very hard operation to go through, I knew that, but now it felt tangible. I also had visits from colleagues, friends and family, so each day I had something to look forward to.

I did do some morbid things. I wrote a note to my family, should I die. I have no skeletons in the closet, but wanted to ensure they knew where to find financial stuff. I knew that they knew that I loved them. I kept the schmaltzy stuff to a minimum. Just crack on. What needs to happen has to happen.

The day itself

Now, this is where it gets more interesting, really. First thing you have to do is shave off all body hair below the neck. You’re handed a quality hair trimmer, with a sterile trimming blade, and pointed to the bathroom. Bzzzzzz! It takes for ever! And those things bite! Once on the balls. I wasn’t really sure where to stop, and I couldn’t really do my back on my own, so I left that, assuming they knew that too.

My operation, schedule for the afternoon, meant no food or drink. I read a bit, chatted with Romana, and refused to say goodbye. I was coming back. I knew it. I was confident. I’d already met the surgeon, and he seemed confident, precise, and concise. I like that in a person. We talked a little about technicalities and how the procedure would be done one me, what arteries they were harvesting and from where. I’d also spoken to another surgeon who I assumed assisted. He poked me and checked how various bits of me worked. I had a breath test. I had a lot of tests. But the day of the operation itself was quiet, really.

So I knew the operation was going to be a beating heart one, without using a heart-lung bypass machine. The attachment of the grafts would be done using some weird sucker machine (maybe called an Octopus) that would stabilise my slowed down heart, but at no point would it be stopped. Amazing. Each stitch carried out between the beats of my heart on arteries just 1.5mm wide.

And then it comes. The porters arrive, you give everyone else on the ward a wave, they say good luck, and you go. All the stuff you have is bagged up and taken away. You don’t need it the next day, and if there are emergencies stuff can get lost, so it’s better if a friend or partner handles it.

Then you wait in a pre-operation room with clouds painted on the ceiling. It made me think of going to heaven, but it was better than white tiles, I guess. That was when I chatted with Romana, ensured she knew I loved her, again, and waited. And then they come for you. You say goodbye, and off you go to theatre.

There, the anaesthetist I’d met before, hooked me up to a skullcap for monitoring my brain, and started preparing me with those injection thingies. A theatre nurse chatted and joked with me. Clearly there to keep my mind off things and keep me calm. And the moment comes. The anaesthetic is injected and you’re switched off.

It really is like that. You don’t have any awareness.

I’m awake and alive!

Actually, I remember a vague moment of having something pulled out of my throat, being conscious, and then out of it again. According to Romana when I first woke I became agitated, so they sedated me again for a while. When I next woke I had a nurse talking to me, giving a button to press with instructions about how it delivered morphine and would ease my pain. I couldn’t overdose with it apparently.

I tried.

I clicked that button again and again! Not to deliberately kill myself or anything, but because it was so nice! However, it’s rate limited. Keep pressing and it just beeps. When it kicks in you feel this warmth, and the pain goes. It’s a very nice drug and I’m not surprised people get addicted.

Romana came in. I was… not really in the best place. I was in pain. I felt like I’d been hit by a truck. I don’t even know if I have the order of events right.

Click. Oh, that lovely morphine button.

We chatted a little, but I remember very little. I had an oxygen mask, I was uncomfortable. I realised I had a urinary catheter in place, so I could stay still. She left, and I think I slept.

Intensive care is weird

One thing I never realised from films, is that intensive care really is just that. It’s actually, in this case, Post-Operative Critical Care. A nurse is stationed at the end of your bed and watches you constantly in the first night. At one point I remember being woken.

“David… can you breathe please?”

I took a gasp.

“You’re worrying me with your apnea,” she said.

I took a few breaths. I felt as OK as I could manage.

I could only see one other person on the ward, and he would wave at me and give me thumbs up. He couldn’t take his mask off. We waved and smiled at each other. I never saw him on the cardiac recovery ward, but he could have had different conditions – they do other kinds of surgery there beyond hearts.

The next day was a bit less painful. You get x-rayed in your bed, poked, prodded and checked. My blood pressure tended towards the low side, but you could see that at the 24hr point I was getting a lot less attention, all the pipes in my chest were out, stitches put in, and I was being made to sit for a while now and again. The second night I was definitely left to my own devices for a bit.

After a few checks the next morning, it was off to recovery.

Not my best, look, just two days after the operation. But alive and happy about it!

The poo of doom

Each day you feel better. You need less and less supplemental oxygen. You start eating normally again.

I’d also heard that after a major operation, you get constipation. Had I known this I’d have been tempted to stop eating two days beforehand!

Because after a few days, you realise you have to poo. Thankfully this comes once you’re mobile again. But even walking fifteen metres to the bathroom is still tiring on the third day. The poo won’t wait. Nor should it. Because the longer it takes, the worse it’ll be.

Man, you’re giving birth.

Seriously. I sat in the bathroom. It started to come. Very very slowly. It. Was. Huge.

And a huge poo is going to be unpleasant, no matter how much time you give it. I feel for heroin addicts dealing with that. Their piles must be quite something.

I strained, but only a little as I’d been warned not to. So I had to tolerate this thing… half in, half out. Slowly but surely, little by little, it came. But it seemed to never end. I swear, I spent an hour in that bathroom, swearing, cursing, and wishing I’d never been born. And if I pushed too hard my heart rewarded me with a palpitation or to and I’d feel breathless.

The thought occurred to me… what if I died right now? A poo, half the way out of my arse and me, on the floor? That would be the last thing the world saw of me. Ew.

Deep breath.

Carry on. Wait. Be patient.

Eventually, it was over. I hobbled back to the bed, grabbed my oxygen mask, and had a nap. I’d deserved it.

Eventually you get to go home

Six days after being open and lying surrounded by dedicated specialists, I was going home. They test you to see if you’re capable of being trusted. You have to walk a certain distance, unaided, and climbing and descend a flight of stairs. A group of you go together for this test. We all did it. There was some sort of air of celebration around us. We were survivors! This thing wasn’t going to defeat us after all! Each day we were stronger!

The homecoming

Getting to leave the hospital is a joy. I’d been taking walks and stepping outside anyway. I was very keen to be moving. I felt frail and slow, but it allowed me to feel like life was going to improve.

But in spite of that, on discharge, you’re given your bag of drugs and wheeled to the door. Once you’re off in your car, you’re no longer their problem. Until then though, they have a process to follow and they’ll stick to it!

As you can see, I had the weird hospital socklets and stockings on. The compression stockings help reduce the chance of a blood clot forming in your legs, and reduce swelling. You can see from this photo that my left leg, from which a vein had been harvested, was definitely bigger than my right

And that’s it. The next phase is about getting back to full fitness, work and leading a full life. I surprised myself, and I’ll share more soon. I’m planning to discuss stress, work-life balance, family and a few more things. And this blog may even come back to life a little bit. I’m bored of helping Facebook and friends to keep their platforms populated with content that is then lost in a silo. Longer writing definitely has a place. Please feel free to join me here.

The great pension scam, how people were conned, and how young people fixed it

In my previous post, I discussed the importance of separating wealth from income, and to stop beating up a chap called Rob Barber who made the mistake of having a high income but not feeling rich. I get exactly where he’s coming from because I’ve been in the same position. In fact, it was more dangerous, because I made the mistake of thinking I was rich before having a sudden epiphany.

In the hazy distant past of my life, I worked at ICI from 1987 to 1997. It was a good ten years, in many ways, because although it started skint I acquired the skills and knowledge to make life a lot better for myself. I didn’t appreciate it as much as I should have done at the time, but in part because being skint at 18 is equivalent to trying to get out a pool of oil. Slippery and error prone.

In that time at ICI, and in the years when I left to become an IT consultant, I worked on payroll software and corporate financial software. When you code something into software, you have to know the subject intimately. Everything I code, I learned about in great detail then explained to a dumb computer. Programming is a really great way to understand things – a computer is like a very patient, dim student with fantastic memory. And when you teach, you learn. You have to.

So I remember when I was around twenty-five some of my older colleagues would always go on about how they hoped for early retirement. This seemed dreadful to me, because I remember my grandmother’s retirement in poverty. But what I didn’t know was how much things had changed.

These colleagues, you see, had a defined benefits pension scheme and ICI was a company on the wane. It needed to reduce headcount each year. One way that a department could reduce headcount was to retire people early, as young as fifty. Today I’m fifty and the idea of retiring and not being poor just isn’t there. I’d be quite hard up. So how could these guys get excited at the idea?

Defined benefit (DB) pensions vs. defined contribution (DC) pensions

All those guys retiring in the nineties onwards were born around 1940 onwards. They started work sometime around the early to mid sixties. And they won life’s lottery big style. They had two key things going for them. 1: the economy of the country was growing fast after the war, so there were lots of opportunities for work, and 2: because of a difficulty in hiring people, firms needed to find ways to attract and keep staff that was cheap at the time and hopefully kept wages down a bit.

At ICI, we were all on what’s known as a “defined benefit pension.” That means that the pension you get is defined according to a set of rules. If I remember rightly, the rule at ICI was quite simple – you got 70% of your final salary. This kind of final salary scheme exists today in only a few legacy situations or with older staff in some firms.

I remember thinking how it was crazy that a 50 year old with thirty years of experience could then look forward to another thirty years on 70% income. Given the reduced costs of retirement (no commute, no need to keep smart work clothes, etc) it was almost like having a full salary. Not only that, many would take a consulting or part time job and be on substantial incomes. They would earn more money in retirement than they would during their working careers!

I smelled a rat! The maths didn’t work out. As I then worked more and more on corporate finance I got to know a lot of accountants and some financial directors. I asked about this problem and they all said one thing: “Those pensions were promised to people by directors who are long gone, and mostly now dead. Totally unaffordable and the company now has to make up the gap… or go bankrupt.”

If you’ve ever wondered why so many of the giant companies of the UK that existed in the sixties are no longer with us, then that’s one key reason. Pensions. At one point, Rolls Royce was putting over a third of its gross profits into pensions. British Airways was once described as a massive pension company with a small airline attached.

This problem was known about in the seventies, but few people discussed it. It was brushed under the carpet. If you have some time, I highly recommend reading this 1975 letter from Warren Buffet on the subject of pension funds and likely shortfalls.

Moving on to your situation today – now you have a defined contribution scheme, if you start a pension scheme. It’s generally a good idea to have a pension scheme, especially because the UK government encourages it with generous tax breaks on contributions. Both you and your employer can contribute, within limits.

A defined contribution scheme (DC) is based on the money you put in, and that’s it. In many ways, that makes more sense. But how does saving a portion of your salary get you close the pensions your grandparents or parents got from large employers like ICI, universities, and the public sector? A hint… it doesn’t.

The great wealth shuffle

What’s happened, and it’s absolutely not the fault of the benefactors, rather than of cynical weasels that are long dead, is that wealth has been shuffled to the older generation in a very effective way. Not all older people, sadly, but those who had decent jobs in decent employers and owned their own homes did best, whilst those in more casual employment, rented their homes, and didn’t realise the importance of savings are left with nothing more than a state pension… so they did the worst and can still be in relative poverty. Unfortunately, if you’re not thinking and acting carefully today, your retirement, even if you work in a good employer, could be a lot more like that poor old person’s than you think and a lot less like your grandparents with their motorhome and three bedroom house.

So, I like charts, right? Remember this one from the last article?

That shows my wealth including the value of my property, savings and other bits and bobs like a car up to the age of thirty, with a different line for a middle class person with the same career.

Let’s see how that changes if we take into account the defined benefit pension scheme I had at ICI. I then didn’t contribute to a pension scheme until I was in my forties, mainly because I had other priorities and, well, I knew what I was up to. But for most people that would be terrible advice. Don’t do as I did!

Take a look below:

Now, do you see the change? In fact, for one glorious year in this story I was ahead of the middle class chap called Julian from the previous post! It wasn’t to last, because we’re assuming he worked in the same way I did and had the same sort of career, just a few years later.

Just so you know, I worked out the pension wealth on a simple basis – it was worth, based on my leaving salary, the equivalent of £100k if I tried to buy an annuity, because today, to give the benefits I can still expect from my pension, I would need about a £200k or so fund in order to buy an income equivalent to my defined benefit. I hope that makes some sort of sense. In essence, I count my pension scheme as being a £200k bit of wealth that I don’t think about.

Defined benefits pension schemes made people who started work before the mid-nineties surprisingly wealthy. It’s just not fungible.

What does fungible mean when it comes to assets? It means that the money isn’t readily available. A bicycle is fungible. You sell it for cash, and can sell it quickly. A house isn’t terribly fungible, but still better than a pension scheme because the pension scheme is sort of a bet. It can release some money to spouses, but doesn’t necessarily have to – that depends on that defined benefit.

So my ICI company scheme increased my effective disposable income in those years by more than 100%. I never even realised it at the time, because I only really learned properly about money in my early thirties.

So now you know how that sweet little old lady with the poor education, who worked at a factory, has managed to afford a decent pension with three annual holidays and a mobile home near Carnaerfon.

So this is good, right? We made older people richer!

It is fantastic that older people were made richer. The only slight fly in the ointment is who paid. And why. And why it could be better.

First of all, remember above I pointed out that companies had big shortfalls in their pension funds? Well, if they had to find £5,000 for each year that I worked extra, that had to come from somebody who currently works at the company, and from the dividends. But if all big firms cut dividends, all pension funds (which hold shares in big firms) would have had even bigger shortfalls! And share values would have gone down, making these firms vulnerable to aggressive takeovers.

Reality is, and this is all a layman’s explanation without too much detail, that younger people paid to make older people richer, but without having the same future benefit for themselves. The older generation, realising the problem, and now running companies, took away those benefits wherever possible.

Pension funds also being large shareholders and needing their income, also pressured companies they held shares in to return greater profits! So that meant that younger people’s incomes were pressured in another way!

At least young people have avocados now?

Well yes, they have access to avocados. But not houses – they’ve become more expensive, because with people living longer, and fighting any development that may affect them and their neighbourhood, young people can’t afford houses. A starter home in my home town of Widnes is around £200k. That’s a *lot* of avocados you’re going to need to cut back on to make a dent in the wealth differential. Relatively speaking, my grandmother bought a brand new starter house for £17,000 in 1984. Which is about £55,000 today. Good luck buying anything other than a tiny ruin in Widnes today for that sort of money.

Houses and pensions have led to the following interesting chart:

Now, this chart has its caveats, and I recommend reading the full article here, but let’s face it, with these sorts of gaps, Rob Barber is going to have to earn £85k (a lot less after tax) in order to catch up with a well established boomer. And let’s not discuss how much harder it is if you’re working class and end up supporting the boomers that didn’t do so well on the pensions lottery and had more casual jobs. Life is harder if you started poor.

Photo credit: Photo by Matthew T Rader on Unsplash

The EU are bullying the UK

A short screenplay, by me.

It’s a Monday morning at a small train station on a mainline. It’s bustling as business travellers head to London for their week’s business. The air is cool, with people blowing little clouds of steam as they head into the station from their taxis and cars.

Mr Hock, a late-middle aged man with a red face and bumpy nose caused by years of excessive alcohol and rich food approaches the ticket office. Miss Nowak, a young Polish woman living in the UK for five years now, is behind the glass, and looks up as Mr Hock sets down his briefcase.

Miss Nowak (neutrally): Good morning. How can I help you?

Mr Hock (confidently): I’d like an open return ticket to London Euston please.

Miss Nowak: That will be £193 please. Are you paying by card?

Mr Hock (with irritation): £193? I’m not travelling first class then, how much for standard class?

Miss Nowak: That *is* standard class. If you need to pay less you can travel out of peak hours. Would you like that?

Mr Hock (exasperated): That’s outrageous! How can it cost so much? I used to travel this way a lot in the eighties and it only cost £20!

Miss Nowak looks down for a moment, then regards the queue of people behind Mr Hock.

Miss Nowak: I guess things have changed. Do you want a ticket or not?

Mr Hock, squinting one eye: Why are you bullying me?

Miss Nowak (confused): What? I… no, this is just how the prices work. Do you want a ticket or not?

Mr Hock (his face reddening): Well can’t you give me a special price?! I’m a very important person you know! People in shops often negotiate you know!

Miss Nowak: I can’t do that, and look, there are other peo….

Mr Hock (interrupting): I will pay £80! Not a penny more! And it must be first class, on the next train to London as I have a very important meeting at ten o’clock and will miss out on getting a very important job if I don’t get there on time!

Miss Nowak: I’m sorry, but rules are rules and I’m not allowed to give you a discount. If you want to go to London you’ll have to try a different way. Now please pay, or go, there’s a queue.

Mr Hock, now furious, grabs his briefcase and storms away to the exit of the station. Looking at his watch, he realises that if he misses the next train he’ll be late for his meeting, and then it dawns on him! A brilliant idea! He grabs his phone and scrolls through his contacts, looking for his friend John.

Mr Hock: John? Hi John! Yes… can you hear me OK it’s a bit… yes, good… OK, remember when we used to watch Scrapheap Challenge? Great wasn’t it? Shows how easy it is to make a vehicle! I need to get to London for 10am. It’s far too long to drive, and the train company is bullying me for £193! But if we can just knock up a home made train in an hour I can make my meeting and…

John interrupted, his voice is a little distorted over a poor mobile connection: Roger? What are you on about? We can’t build a train in an hour… Scrapheap Challenge is just a show and…

Mr Hock: Poppycock! The show only ever lasted an hour and they built all sorts of wonderful machines in that time!

John: No, it doesn’t work like that. These things are carefully orchestrated to make entertainment, and in real life making a train in an hour is impossible.

Mr Hock pulls his phone away from his head and stares at it, shaking with fury, before bringing it back to his ear.

Mr Hock: I see. Well if I fail to get to the meeting, it’s YOUR fault! I’m fed up of people with a can’t do attitude! What happened to plucky English spirit eh? EH? We need to stop letting train firms bully us with their inflexibility, high costs and hatred of people like us! I am proud! I fought in two world wars and won! Well not me personally, no, John… but people like me! And we didn’t make bouncing bombs in two hour…

[muffled voice on phone]

Mr Hock: Yes I know I saw it in a film, and it lasted two hours, it was amazing. Plucky English heroes!

John: You’ve gone mad, Roger. What are you on about? You don’t know anything about bombs or trains. It’s simply impossible. And even if you do make it, National Rail won’t just let you put it on the railway… and… why am I even bothering with this?

Mr Hock: Well it’s people like you that hold people like me back! This should be easy! John… John?

Mr Hock looks at his phone and realises John has hung up. He looks around, sees a taxi, and raises his arm. He gets in. The screen fades.

The taxi pulls up outside a scrapyard, and Mr Hock looks, optimistically, at all the materials there that he can use for his project. A large man in greasy overalls, dismantling an old car, eyes him up as he gets out of the taxi and approaches.

Mr Hock: Good morning!

Large man: Alright. What d’ya want?

Mr Hock: I’d like to make a train! I have one hour. Well, fifty minutes.

The large man stares at Mr Hock, up and down, slowly, without answering. Mr Hock starts to feel uneasy.

Mr Hock: Well?

Large man: Is this a gag or summat?

Mr Hock: I’m deadly serious.

The large man starts to laugh.

Mr Hock: What? Are you one of them? Are you in cahoots with the train company? Is this a conspiracy to take away my freedom on trains?

The large man, between laughs: Fuck off!

Mr Hock turns, and gets his phone out of his pocket. He dials a number and puts it to his head.

Mr Hock: Yes, hello, is that Stephen Barclay? Well, it looks like I can’t get to London for today after all. Yes, I know I wanted the job of chief negotiator in your department… yes… I appreciate that, it’s just I have some minor things to sort out, all fixable with technology of course, and then I’ll be there… Stephen? Stephen? Hello?

Screen fades out.

Five Things Bing Does Better than Google

MS have, at last, come up with what appears to be a competent rival to Google. Here’s five ways in which it beats Google.

Microsoft (MS), quite frankly, gets a lot of grief in the internet world. Sometimes it’s fair (I never like MSN, for example, from way back in the mid nineties) and often a little unfair.

But Live Search simply wasn’t up to the job. It didn’t work well. And I know that people that found IE defaulting to it would either work out how to change it, or simply type Google.com into the address bar. In other words, many tried it, but it didn’t find the answers they wanted. The algorithm has been slowly improved with time, but the damage was done. MS knew they had to relaunch.

Bing, they felt, was the answer. And in some ways, it’s a better and more productive tool than Google:

1. It’s Prettier

While I’ve heard many question the function of the landing page photo, I personally really like it. It’s attractive, well designed, and brings a little bit of beauty into the day. You can’t sit and surf pretty images at work, so if they’re there as part of the ‘wallpaper’ of a daily tool then that’s a lift we all need.

2. Infinite Image Search

The infinite scroll facility of the image search makes it a quicker tool to use. Chunking of text related searches makes sense, because we can scan a page relatively slowly, but with images the human eye can scan a huge amount of visual information incredibly quickly which means that Bing’s constantly scrolling visual tool is way ahead of Google’s image search.

3. Video Previewing on Video Search

bingvideo — Bing Video - content owner's nightmare or benefit?

Searching for video content can often be a slow and painful process. In Bing, when you get a series of videos up on screen you can simply hover your mouse pointer over a video to preview the first 30s and get a feel for the video, rather than visiting the site and waiting for a slow load. The previews are poor quality, in order to get quick loading, but they’re good enough. I feel this is one of Bing’s most effective innovations.

One thing where they may struggle is that if you click the video and that video has an embed option, you get it on the Bing site, rather than going through to the source site. So a YouTube video search result doesn’t send you off to YouTube. Content owners may not like this.

4. Site Preview

When you hover over a search result, you’ll see a small orange marker appear over to the right. Hover over that and up pops a preview of the content you’re looking for. Again, saves a wasted visit as it lets you scan a little bit of content for relevance – something that’s quicker this way than clicking on yet another unnecessary site.

5. It’s Not Google

Bing is, purportedly, a recursive acronym that means Bing Is Not Google. But there’s something important in that – Microsoft is a highly profitable, focussed company that has the resources to provide an alternative to Google. This is important – without solid competition Google will cease to innovate appropriately. MS suffered a similar fate on the desktop – they were too dominant and rivals couldn’t compete. Apple’s OS9 was dreadfully dated when sat next to a Windows machine of the same era, yet Windows had significant flaws. It’s only lately with Windows 7 that MS have really started to get their act together properly – because OSX finally gave it some decent competition in certain sectors.

When you start seeing articles on how to change from Google to Bing on Firefox, you know something’s happened.

It Can Get Better

Microsoft Seadragon, with it’s deep zoom and mobile capabilities, and Photosynth technologies could be tied into the image search, for example. As cheap processing power expands and more and more images are geotagged, this could form an astonishing visual search capability. A shame it won’t be coupled with Google Street View – imagine what that could be like?

Search is going to become more relevant and more powerful with time. Developers (our own Interconnect IT included) are busy creating a lot of powerful geocoded databases which will allow for some amazing mashups. If Google and MS start fighting for dominance in this space the opportunities for users and information suppliers are vast. Are you looking into it?

iPhone Blogging and WordPress

As anyone who knows me can confirm, I’m always interested in the latest tech and software. So at the WordCamp UK at the weekend I was interested to learn about a new iPhone client for WordPress. And this is the result.. I’m blogging by phone.

Ok, so it’s not perfect…formatting is limited and the picture ends up browser sized rather than using a correctly sized thumbnail. But it’ll have it’s uses..both in journalism sites and for keen personal bloggers.

I’m also having a fiddle with WP2.6’s new image handling features, so what you see above isn’t exactly what the iPhone did, but close.