Ideas on life financial direction?
Discussion
You have a 10k ISA that earns 3%, yet you're paying a loan of a similar amount at 5.7% interest... theres your first answer. Your financial situation is earning you minus 2.7% interest. Unless you plan to buy a house soon switch these around and get to saving, in 2 months your loan is paid off and your money is yours. Do you want to buy a house? I get the impression if you did you'd be doing it and not asking about it. Is it because you dont feel settled yet, or dont want the commitment... or that you want to save for longer?
You have plenty to get a deposit at the moment, and even if you pay your loan off and save you could have enough within a year.
What was the £15k loan for? The deposit on your PCP?
Ps, what's the car?
You have plenty to get a deposit at the moment, and even if you pay your loan off and save you could have enough within a year.
What was the £15k loan for? The deposit on your PCP?
Ps, what's the car?
Edited by Peperami on Monday 6th March 14:47
Edited by Peperami on Monday 6th March 14:49
Peperami said:
You have a 10k ISA that earns 3%, yet you're paying a loan of a similar amount at 5.7% interest... theres your first answer. Your financial situation is earning you minus 2.7% interest.
What was the £15k loan for? The deposit on your PCP?
Let's say tomorrow I set my heart on mortgaging a house. £10,000.00 extra sat in my bank account available for use as a deposit makes far more impact than saving the £557.50 it costs me in interest this year (using your figures).What was the £15k loan for? The deposit on your PCP?
Obviously it'd be better to be loan free. But for now, it gives me options, at a net cost that doesn't bother me in the slightest.
What I was hoping to discuss is a broader life direction, the loan situation if I so wish could be paid off in about 2 months and then I'm still sat with no direction just less options to exploit.
edit: I think I quoted you prematurely, sorry if the above sounds a little miffed, you toned yours down too.
Peperami said:
Unless you plan to buy a house soon switch these around and get to saving, in 2 months your loan is paid off and your money is yours. Do you want to buy a house? I get the impression if you did you'd be doing it and not asking about it. Is it because you dont feel settled yet, or dont want the commitment... or that you want to save for longer?
You have plenty to get a deposit at the moment, and even if you pay your loan off and save you could have enough within a year.
That's the thing, personally I'm not that interested in buying a house, I can't afford anywhere that excites me particularly and unless it's somewhere I love then I know I'll want to move soon anyway, maybe too soon to even see any financial gain from the whole charade. But if someone was to have some brainwave involving property that captures my interest, I might suddenly feel the urge.You have plenty to get a deposit at the moment, and even if you pay your loan off and save you could have enough within a year.
Edited by Bernoulli on Monday 6th March 15:04
Edited by Bernoulli on Monday 6th March 15:04
Sargeant Orange said:
You've had £2.5k a month spare for the last 12 months minimum, but only have £10k in savings (if i'm reading the OP right).
You need to hammer the savings a bit more imo before you consider anything else, get yourself a £50k buffer before deciding on any investments
I've been spunking it on a few (in retrospect) stupid enterprises that backfired, but it meant I wasn't really paying attention to how much I was wasting as I went along until very recently when I did the maths and saw what I was pissing away was enough to actually do worthwhile things with instead!You need to hammer the savings a bit more imo before you consider anything else, get yourself a £50k buffer before deciding on any investments
Bernoulli said:
Let's say tomorrow I set my heart on mortgaging a house. £10,000.00 extra sat in my bank account available for use as a deposit makes far more impact than saving the £557.50 it costs me in interest this year (using your figures).
Potentially the repayments will reduce your affordability though, and result in the lower mortgage offer. On the wider question - why do you keep moving, or wanting to move, just wanting a change? Presumably you move between shared houses and get a new set of housemates each time. That is the opposite of what people usually want really, most people hate moving all their stuff and want to stay put.
You can't really change that, so I'd say max out your ISA limits and put the rest into other savings, so that you will be able to look at higher priced places when you want, and if you never end up buying somewhere you can blow it all on a supercar
edit: Just to add, the number of people who lose out when buying a house is pretty small - I think you are remembering the bad stories and forgetting the majority where people buy somewhere and like it and don't lose money. The main financial gain in buying a house is over a long-term, it's hard work to make a profit buying and selling your main home.
Edited by Gareth79 on Monday 6th March 15:18
Gareth79 said:
Potentially the repayments will reduce your affordability though, and result in the lower mortgage offer.
On the wider question - why do you keep moving, or wanting to move? Presumably you move between shared houses and get a new set of housemates each time? That is the opposite of what people usually want really, most people hate moving all their stuff and want to stay put.
You can't really change that, so I'd say max out your ISA limits and put the rest into other savings, so that you will be able to look at higher priced places when you want, and if you never end up buying somewhere you can blow it all on a supercar
A fair point, although the brokers I've spoken to advise me that my offers are capped by only being able to use say 35 hours a week multiplied by my rate, compared to my 50+ hours that I actually do. Big chunk of income that I do make but we can't use.On the wider question - why do you keep moving, or wanting to move? Presumably you move between shared houses and get a new set of housemates each time? That is the opposite of what people usually want really, most people hate moving all their stuff and want to stay put.
You can't really change that, so I'd say max out your ISA limits and put the rest into other savings, so that you will be able to look at higher priced places when you want, and if you never end up buying somewhere you can blow it all on a supercar
Regardless I'm only within range of circa 200-250kk property at the moment but my tastes are for 350k+ to find somewhere I'd actually be really interested by, as you've said I'm not someone that grows particularly deep roots so the property would have to be really special to grab me.
I seem to move frequently because either I change my life direction or I otherwise get unhappy with the location or property. Once I wanted peace out in the countryside and a garage for a project, another time I wanted to live in town for a bit and didn't care about the garage anymore, this time I wanted to cohabit again, etc etc...
I live pretty light as a result so moving isn't a huge stress for me
As others have said given your lack of conviction re buying a house I can't understand why you don't pay down all your existing debt ASAP. You're pi$$ing money down the drain each month on interest for no good reason. Without the debts that money could be invested, compounding away to make your future self richer.
Once you're debt free I'd concentrate on filling up your ISA each year (20k limit per year from Arpil), S&S and/or cash depending on your risk appetite.
There's nowt wrong with not buying a house, especially if you're renting cheap places. Think of it like this:
...an ISA with £90k in it returning 7% (rough average total return of the stock market over the long term) would pay for your £520 rent & bills each month. Ignoring the ISA limits, if you're saving £2.5k per month it would only take you 3 years to amass that and you'd theoretically never have to worry about your rent again.
Once you're debt free I'd concentrate on filling up your ISA each year (20k limit per year from Arpil), S&S and/or cash depending on your risk appetite.
There's nowt wrong with not buying a house, especially if you're renting cheap places. Think of it like this:
...an ISA with £90k in it returning 7% (rough average total return of the stock market over the long term) would pay for your £520 rent & bills each month. Ignoring the ISA limits, if you're saving £2.5k per month it would only take you 3 years to amass that and you'd theoretically never have to worry about your rent again.
You are in an enviable position, but you want a plan.
Well a plan leads to an objective. Perhaps you should start with the objective?
For example, what financial situation would you like to be in in 5 years time?
My own objective has recently come into focus very clearly - it's to achieve financial independence, ie no longer needing to work, when I reach 55, which is 8 years away for me. Having realised it's within reach and worked out how much more wealth I need, I'm finding its making financial decisions much easier to make because I can see how each one moves me closer to my goal. I also look back and am thankful for starting a pension from day one in employment, for getting onto the property ladder in my 20s and for being relatively frugal with my spending. I think my unconscious objective back then was simply to build wealth.
It may be that all you can say is that you want to be in the strongest financial position you can be in 5 years time. In which case, take the earlier advice about the loan, Set aside some cash for hobbies or whatever interests you and choose how to invest your spare cash - property, stocks and shares, or any other asset class. That keeps your options open for now.
Hope that helps
Well a plan leads to an objective. Perhaps you should start with the objective?
For example, what financial situation would you like to be in in 5 years time?
My own objective has recently come into focus very clearly - it's to achieve financial independence, ie no longer needing to work, when I reach 55, which is 8 years away for me. Having realised it's within reach and worked out how much more wealth I need, I'm finding its making financial decisions much easier to make because I can see how each one moves me closer to my goal. I also look back and am thankful for starting a pension from day one in employment, for getting onto the property ladder in my 20s and for being relatively frugal with my spending. I think my unconscious objective back then was simply to build wealth.
It may be that all you can say is that you want to be in the strongest financial position you can be in 5 years time. In which case, take the earlier advice about the loan, Set aside some cash for hobbies or whatever interests you and choose how to invest your spare cash - property, stocks and shares, or any other asset class. That keeps your options open for now.
Hope that helps
Thanks for those excellent replies, exactly what I was after.
Plus in addition to effectively then living for free, I still have 90k completely liquid available to be used should anything take my fancy. In reality of course the rent-cancelling investment income is just sitting in the account compounding for the better, since I don't miss the cost of the rent month to month anyway.
On the other hand I've taken a few risks lately, perhaps less well thought-out ones, and wasted money on things that didn't even give me much personal benefit - and I resent those poor choices.
At the moment for example I know I'm wasting money on an expensive car, but, it genuinely brings me happiness on a daily basis & I would be paying for a car anyway, so I'm at peace with that cost.
Perhaps it would make sense to only take risks on things that will give me direct personal benefit as well as potential financial reward; then if it goes well that's great, and if it goes badly I'm not too upset since I've enjoyed it in other ways.
The "fear of missing out" element I'm concerned is basically just greed, though, which I don't like to think of myself as.
ramblo93 said:
As others have said given your lack of conviction re buying a house I can't understand why you don't pay down all your existing debt ASAP. You're pi$$ing money down the drain each month on interest for no good reason. Without the debts that money could be invested, compounding away to make your future self richer.
Once you're debt free I'd concentrate on filling up your ISA each year (20k limit per year from Arpil), S&S and/or cash depending on your risk appetite.
There's nowt wrong with not buying a house, especially if you're renting cheap places. Think of it like this:
...an ISA with £90k in it returning 7% (rough average total return of the stock market over the long term) would pay for your £520 rent & bills each month. Ignoring the ISA limits, if you're saving £2.5k per month it would only take you 3 years to amass that and you'd theoretically never have to worry about your rent again.
Great food for thought especially "lack of conviction re buying a house" - that's definitely an apt description. Particularly though your point on the returns on a 90k investment cancelling out my rent costs. That's an attractive, attainable goal that doesn't involve making any commitments I'm unhappy with...Once you're debt free I'd concentrate on filling up your ISA each year (20k limit per year from Arpil), S&S and/or cash depending on your risk appetite.
There's nowt wrong with not buying a house, especially if you're renting cheap places. Think of it like this:
...an ISA with £90k in it returning 7% (rough average total return of the stock market over the long term) would pay for your £520 rent & bills each month. Ignoring the ISA limits, if you're saving £2.5k per month it would only take you 3 years to amass that and you'd theoretically never have to worry about your rent again.
Plus in addition to effectively then living for free, I still have 90k completely liquid available to be used should anything take my fancy. In reality of course the rent-cancelling investment income is just sitting in the account compounding for the better, since I don't miss the cost of the rent month to month anyway.
rpm1969 said:
You are in an enviable position, but you want a plan.
Well a plan leads to an objective. Perhaps you should start with the objective?
For example, what financial situation would you like to be in in 5 years time?
My own objective has recently come into focus very clearly - it's to achieve financial independence, ie no longer needing to work, when I reach 55, which is 8 years away for me. Having realised it's within reach and worked out how much more wealth I need, I'm finding its making financial decisions much easier to make because I can see how each one moves me closer to my goal. I also look back and am thankful for starting a pension from day one in employment, for getting onto the property ladder in my 20s and for being relatively frugal with my spending. I think my unconscious objective back then was simply to build wealth.
It may be that all you can say is that you want to be in the strongest financial position you can be in 5 years time. In which case, take the earlier advice about the loan, Set aside some cash for hobbies or whatever interests you and choose how to invest your spare cash - property, stocks and shares, or any other asset class. That keeps your options open for now.
Hope that helps
Okay, interesting ideas. If it's no too vague, my main objective I can see at the moment is that I don't want to look back and think I made poor financial choices. Recently in my life I've had a few low-risk (but still a risk) financial decisions which I was hesitant towards for a long time, but when I finally made the leap, everything was fine and the risk was essentially minuscule compared to the rewards- and I look back and think, I wish I did it sooner. I fear that getting on the property ladder could turn out to be one of those things and an opportunity I regret not taking. Well a plan leads to an objective. Perhaps you should start with the objective?
For example, what financial situation would you like to be in in 5 years time?
My own objective has recently come into focus very clearly - it's to achieve financial independence, ie no longer needing to work, when I reach 55, which is 8 years away for me. Having realised it's within reach and worked out how much more wealth I need, I'm finding its making financial decisions much easier to make because I can see how each one moves me closer to my goal. I also look back and am thankful for starting a pension from day one in employment, for getting onto the property ladder in my 20s and for being relatively frugal with my spending. I think my unconscious objective back then was simply to build wealth.
It may be that all you can say is that you want to be in the strongest financial position you can be in 5 years time. In which case, take the earlier advice about the loan, Set aside some cash for hobbies or whatever interests you and choose how to invest your spare cash - property, stocks and shares, or any other asset class. That keeps your options open for now.
Hope that helps
On the other hand I've taken a few risks lately, perhaps less well thought-out ones, and wasted money on things that didn't even give me much personal benefit - and I resent those poor choices.
At the moment for example I know I'm wasting money on an expensive car, but, it genuinely brings me happiness on a daily basis & I would be paying for a car anyway, so I'm at peace with that cost.
Perhaps it would make sense to only take risks on things that will give me direct personal benefit as well as potential financial reward; then if it goes well that's great, and if it goes badly I'm not too upset since I've enjoyed it in other ways.
The "fear of missing out" element I'm concerned is basically just greed, though, which I don't like to think of myself as.
Edited by Bernoulli on Tuesday 7th March 07:02
I wouldnt beat yourself up about the waste of money on a car, its no a waste if its improving your quality of life and bringing you happiness as long as its within your means and not hugely effecting other life choices, which it would seem it is not. You have to spend your money on something.
Bernoulli said:
Okay, interesting ideas. If it's no too vague, my main objective I can see at the moment is that I don't want to look back and think I made poor financial choices. Recently in my life I've had a few low-risk (but still a risk) financial decisions which I was hesitant towards for a long time, but when I finally made the leap, everything was fine and the risk was essentially minuscule compared to the rewards- and I look back and think, I wish I did it sooner. I fear that getting on the property ladder could turn out to be one of those things and an opportunity I regret not taking.
On the other hand I've taken a few risks lately, perhaps less well thought-out ones, and wasted money on things that didn't even give me much personal benefit - and I resent those poor choices.
At the moment for example I know I'm wasting money on an expensive car, but, it genuinely brings me happiness on a daily basis & I would be paying for a car anyway, so I'm at peace with that cost.
Perhaps it would make sense to only take risks on things that will give me direct personal benefit as well as potential financial reward; then if it goes well that's great, and if it goes badly I'm not too upset since I've enjoyed it in other ways.
The "fear of missing out" element I'm concerned is basically just greed, though, which I don't like to think of myself as.
I use mindmap software for long term planning - don't look at things bottom up, look top down. Try and think of how the 'you' of 2027 and 2037 might look at things too. Suggested 'bubbles'? Wealth, health, death, happiness, contentment, excitement, family, people, career, materialism, life, tax, morality, altruism, charity, hedonism, DNA, spending, saving etc etc.On the other hand I've taken a few risks lately, perhaps less well thought-out ones, and wasted money on things that didn't even give me much personal benefit - and I resent those poor choices.
At the moment for example I know I'm wasting money on an expensive car, but, it genuinely brings me happiness on a daily basis & I would be paying for a car anyway, so I'm at peace with that cost.
Perhaps it would make sense to only take risks on things that will give me direct personal benefit as well as potential financial reward; then if it goes well that's great, and if it goes badly I'm not too upset since I've enjoyed it in other ways.
The "fear of missing out" element I'm concerned is basically just greed, though, which I don't like to think of myself as.
Edited by Bernoulli on Tuesday 7th March 07:02
Ginge R said:
I use mindmap software for long term planning - don't look at things bottom up, look top down. Try and think of how the 'you' of 2027 and 2037 might look at things too. Suggested 'bubbles'? Wealth, health, death, happiness, contentment, excitement, family, people, career, materialism, life, tax, morality, altruism, charity, hedonism, DNA, spending, saving etc etc.
I'll take a look into that, thanks. I'm conscious that being still young I'm not good at predicting my future self; I know I've changed a great deal in the last few years let alone the last decade.Consider putting anything in the 40% income tax band into a low-cost SIPP.
I don't know the rules for contractors but it should also let you avoid the employer/employee national insurance. (Works that way for PAYE)
Work out your effective marginal tax rate, you may find it is ~55%. Saving via pension can reduce this to 15% if you are a basic rate tax payer later on.
Bernoulli said:
I'll take a look into that, thanks. I'm conscious that being still young I'm not good at predicting my future self; I know I've changed a great deal in the last few years let alone the last decade.
At your age there is no rush, am not much older but since getting married and more recently the arrival of our daughter my out look in life has changed alot. At the end of the day a big fat bank account counts for nothing compared to some experiences in life. Your lucky enough to have a big income providing you don't crazy with spending you really don't have to worry about money.
Live life and enjoy it, spend time to make the numbers work but don't make that your reason for living!!
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