Category Archives: money

Just run the numbers

One thing I’ve learned from the LessWrong/CFAR/SlateStarCodex rationalist crowd is the power of sketching something out with rough numbers. Indeed, there is a whole blog called Put A Number On It! in this space.

I’ve recently felt a divide appear between myself and my friends relating to increased ability with strategic thinking and increased future timelines, and I think sketching out rough numbers when making decisions has helped to precipitate this.

An example is my partner wants to switch career. He achieved a temporary job in an office, doing something other than what he normally does in offices. This is providing him short-term relief from his crap old job. But his real short-to-medium term goal is to labour on building sites for slightly more money. The office job is full-time under the normal tax system, which means higher taxes and lower pay but paid holidays and sickness days. While the labouring job would be self-employed, meaning higher paid and lower taxes but unpaid sickness or holiday and potential gaps in work contracts.

One day he told me that the labouring job would pay less per day than we initially thought, but had the “potential” to increase to the amount that we assumed initially.

I immediately grabbed a scrap of paper and ran some numbers.

  • yearly salary in office job – minus nothing for 4 weeks holiday and 1 week sick. Calculate total.
  • potential yearly salary on labouring job minus 4 weeks holiday and 1 week sick. Calculate total.

The difference between taxes is harder to do in a simple way so I decided that any reduction in tax when labouring would probably be offset by the loss created by a gap between contracts, where you’re off work but don’t want to be.

I  did quick check of how many working days there are per year (220) to get the daily rate into a yearly one. I then decided to check on a local job website for the yearly salary of an inexperienced office worker vs. an office worker in the same job with more experience – because we needed to check the “potential” figures as well for that job and we already knew the “beginner” and “experienced” numbers for the labouring job.

I then ran the same calculations as above.

The whole process took precisely 4 minutes with a pen and paper and one internet search.

The numbers came out very strongly in favour of the office job, both now and in the “potential” future. Which was a surprise.

This little exploration of the options available quickly using easy numbers that were already known was an automatic reflex on my part, it showed a very stark difference between the two options, and covered a time span of 1-6 years. It was incredibly simple and incredible clarifying.

And did not occur to my partner in the slightest.

In the rationalisty space, there are of course more complex extensions of this method that can involve probabilities, ratios, or deducing an unknown number from known ones (e.g. how much would I have to earn/save to make this plan viable?) however just the basic write-it-all-down premise is extremely powerful on its own.

So, this is short post to remind / tell everyone: put a number on it!


Symbols of being poor

I’m notorious in my household for coming out with terrible comments about my childhood.

Famously, a friend asked the room: “did you guys have awkward silences and really bad communication about feelings with your family around the dinner table?”

And I replied “we didn’t have a dinner table”.

The dynamic that is actually playing out is simply that I live with middle class people, who had middle class problems, but I was raised in a working class socio-economic way and had entirely different problems. Those problems are possibly more tragic in some ways and are shocking to my middle class friends becuase it involves so much that they take as given.

Anyway, I sometimes speak in more detail about the long-term consequences of being poor. An example struck me today that is adjacent to the Vimes Boots Theory of Socio-economic Unfairness and it is about shoeboxes.

When I was a kid and watched Blue Peter (and only Blue Peter, because the walk home from school took so long that I only managed to watch the last show of the day in children’s programming) and they often had a segment on crafting.

The crafting would be “make a house for your hamster” or a “build a rocket outfit” or some such and always used the same household materials: cereal box, tinfoil, loo paper tube etc.

I would always be pumped to follow along and try to make one of the craft pieces and unleash my childish sticky tape creativity. However, each and every week I was deeply disappointed because the crafting involved using a shoebox.

We weren’t exactly too poor to have shoes but my family certainly only bought shoes when the others fell apart. Even cheap shoes have a cost. Many shoes could outlast more than one school year. I’m fairly certain my mum replaced her shoes even less often. And we also went to shops that didn’t even sell shoes in boxes, they were off-the-rack that you carried home in bag. I felt as a child that I had never had access to a shoebox in my whole life and yet Blue Peter acted as if these things were as common as toilet paper.

Now, in 2019, I have been buying good quality shoes for about a year. I didn’t really realise until today, when a new pair of good quality hiking boots arrived and I couldn’t fit the box into my usual space for shoe boxes, that I had been saving the shoe boxes as a rare and highly prized item and had a space especially for storing shoeboxes. I looked at the huge pile of shoeboxes and realised I don’t have a hamster, or a desire to pretend to be a rocket, and will almost certainly not use these shoeboxes for anything at all.

I don’t need them for anything, but I haven’t thrown them away yet. Not just yet.