Wednesday Reads: Regrets and Sunk Costs

A round up of interesting or cool stuff I’ve read.

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Image by MARIA VANEGAS from Pixabay

 

Regrets and Sunk Costs

I recently read an interesting post by the Financial Panther – My Legal Career And The Example Of Sunk Costs

I’ve written before that I’m considering a career change to something completely unrelated to my current role and education background. So I can certainly relate to the thoughts of “was it all a waste of time?”

Instead of the normal path of a three year degree followed by joining the world of work that most of my undergrad friends took, I did a four year undergraduate degree followed by a four year PhD.

One arguable con of my life’s choices to-date was highlighted when (yet another) friend shared that they had just paid off their student loan in our WhatsApp group.

I thought of my remaining ~£20,000 balance with the knowledge that I’ll probably be paying that off until it gets wiped out in another ~15 years. I’ll admit I felt a pang of envy!

Of course, as far as loans go, it’s not a big deal. The interest rate is  low, I only pay back ~£100 per month, and when I finish my current contract in a few weeks, I won’t have to continue paying it back until I get another job. So, all in all, whatever.

But, I still couldn’t help compare our situations, and how the choices they made contributed to this achievement.

Firstly, a shorter degree meant reduced tuition fees and loans. This probably saved them around £7,000 compared to me.

Secondly, they started earning (and therefore paying back the loans) four whole years before I did. So by the time I even started paying it back, they had already made a decent dent in their repayments.

How does this relate to sunk costs?

Well, as I said before, I’m considering a career change. I’d like to give financial planning a try, so I’m in the middle of studying to take a few exams to get my foot in the door.

Of course, financial planning has nothing to do with either a Masters or a PhD in a STEM subject. So it can feel like a waste to think that I could have simply followed a similar path as most of my friends, going straight from undergrad to a trainee role in a financial services firm.

It can almost feel like, having completed the PhD and then worked in various research roles since, to move on to something else now would be throwing away all that progress.

 

No regrets

Truth be told, despite my occasional pangs of envy when I see a friend with a big house, paid off student loan, fancy holidays, etc, I have no regrets about my life choices so far.

For one thing, no PhD = no working abroad, and all the fantastic, unique experiences I was able to take part in.

More importantly, no working abroad = no Mrs FIRE!

Even though I’ll be starting over in my career, I won’t be starting completely from scratch. I’m a different person compared to me 10 years ago (more experienced and knowledgeable? Or just more stuck in my ways and harder to train! Lets hope the former…).

If nothing else, I have a better idea of what I want than I did ten years ago. I essentially fell into doing a PhD and the subsequent career path I’ve taken, whereas my decision to leave and try something new is much more deliberate and active.

I’ll finish with a quote from the original post that inspired these musings:

“I try not to worry about that too much though. I learned long ago that the decisions we make in our past are already done and can’t be changed. And since we can’t change those decisions, there’s no point in worrying about them now. “

Financial Panther

 

Interesting links that caught my eye this week:

• The Woke Salaryman – We started a business during the pandemic. Here’s what we learnt.
  I’ve always liked the way TWS combines info with some unique, snazzy drawings. This post details some of the lessons they’ve learned as they’ve turned TWS into a growing business.

 

• The Subtle Investor – The Racial Wealth Gap
  You hear a lot about the gender pay gap, but very rarely about the racial wealth gap. I guess this will start becoming a bigger issue over the next few years.

 

• FIRE for One – What if the whole world was on FIRE?
  FIRE for One ponders what might happen if more people worked towards achieving financial independence.

 

• Life After the Daily Grind – Sadiq Khan’s rent controls are a boon for AirBnB
  I’m a bit of a lefty, so my first reaction to a policy like this would probably be “Great! Restrict those rents, make it cheaper for people to live in London, sure, why not.” This post goes into what the unintended effects of such a policy might be.

 

• One Million Journey – What the UK has taught me about life and money
  As Tony approaches the end of his time in the UK, he shares some of the things he has learned. It’s a great read that sums up some of the many advantages taking the opportunity to work abroad can offer.

 

• Zen Pencils – A Cartoonist’s Advice
  A great philosophical quote from Bill Waterson combined with a Calvin and Hobbes inspired comic.

 

• iNews – How I Manage My Money: A couple on £5,000 per month who plan to retire at 40
  One of many articles in the news about a couple planning to retire early.What caught my eye about this one in particular is that they have nothing invested in equities!They have two properties and are currently in the process of paying down both mortgages as fast as possible. Any extra money they have is simply kept in premium bonds and savings accounts.

  Once they retire and start travelling the world, they intend to rent them out for an income of approximately £2000 per month.

  I guess the maths roughly stacks up, but this strikes me as the opposite of  “don’t put all your eggs in one basket.” Further, by prioritising their mortgage over investing elsewhere, they’ve certainly lost out on a huge gains.

  But, what do I know. They’ve obviously done well to acquire two properties and are on course to pay off the remaining mortgage very soon, so I can’t fault their drive or the outcome!

 

• This Is Money – Banks begin sharing locations
  I think this is a great idea, and hopefully will lead to more banks returning to areas that they have previously left.

 

• Sign up to Trading212 via this link and we both receive a free share.

 

Letter to your future self

• FI Scribbles – Keep Moving Forward
• Mr MedFI – Message in a bottle
• FIRE and Wide – Living Life To The Fullest

The above contributions to the latest Sovereign Quest writing challenge are all excellent and share a similar message:
– Keep moving forward.
– Don’t stand still and stagnate.
– And make sure to keep living life to the fullest!

 

Thanks for reading. Hope you’re all having a great week!