Sail with New Freebooters

by Mike K-H

A new category

Whether you live in France or just go there for holidays, the exchange rate affects you. During what Bank of England governor Mervyn King called the NICE (no inflation, consistent expansion) decade, the rate has been so steady that we haven’t really thought about it. That’s all over now.

I’ve created the new Category ‘Money’ and this is the first of what promises to be a steady stream of posts in that category, commenting on things that affect our ability to survive abroad on UK-based earnings or wealth.

The end of the NICE decade

We’ve had near-zero inflation and steady international currency exchange rates for so long that people started thinking that economics had finally become a science and that politicians understood it.

Sorry. As Bank of England governor Mervyn King said recently, the UK’s NICE(no inflation, consistent expansion) decade is over. Among the acronyms suggested for the next few years are VILE (volatile inflation, less expansion) and withering on the VINE (volatile inflation, no expansion).

That’s bad news for many people, including me. I’m retired, and I’ve been used to getting almost 1.5 euros for every pound of my pension. Now I’m lucky to get 1.25, and energy prices seem to be rising daily.

When I was working for my living, inflation and high interest rates didn’t seem too bad a thing. If I borrowed money, the repayments would get less painful each year as my salary rose. If I owned something durable, such as a house, its value went up steadily. However, if I owned something short-lived, like a car, the cost of replacing it went up every year - so if I hadn’t budgeted for that (and I never did) I would need to borrow more for the next one.

Whenever my debts looked as if they were getting out of hand, I would look for ways of earning more money, cash in on my assets if I could, and consolidate my debts. In retirement, I should really follow a different star, but that would mean changing part of what it means to be me.

We’ve just about cleared our overdraft, and we only use credit cards for short-term (like months, not years) borrowing. We’ll need to take a look at how we transfer money, too. If we transferred a bigger sum every quarter, we might pay less in commissions and transfer charges - but exchange rate fluctuations could easily wipe out any gain.

The next couple of years is going to be tough. Earning more seems to be the obvious tactic, and the Web is where I’ll be looking. It’s time to put into practice all the free advice I’ve picked up so far, and become a Web Entrepreneur rather than a Web Hobbyist. Wish me luck.