Becoming debt free
Discussion
untakenname said:
There's a FIRE person at work and I feel slightly sorry for them and the lifestyle they lead, they have the same packed lunch everyday and won't socialise after work either which is counter productive as they miss out on opportunities.
You don't have to be that bad. At 45 I decided I wanted to retire at 55. I moved from a reasonably well paid secure job to one that paid more but came with some risk. All earnings that would attract a high rate of tax are put into a pensionI remortgaged my house to fund BTL's (buying run down places and doing them up) and that gives me a reasonably passive income.
We're economical without being ridiculous. We don't have the latest phones and we drive old cars. I stopped buying lunch every day at work, and started making my own early morning coffee. That alone saved about £150 a month. I do socialise outside of work, but I keep it sensible both for my health, and my pocket.
I'm on track to retire in two years time and I'm very happy. You can't buy time so the ability to stop working is very important to me.
sambucket said:
Re FIRE, it really all comes down to your personality. If you are the kind of person who is content with free/cheap stuff like books, cycling, gardening, 10 year old sheds, camping, state schools, perfectly possible to live a good life, save up, retire in your 40s.
Whether this is 'sacrifice' entirely depends on the person. Not everyone enjoys the same stuff. One person's dream life is another person's nightmare. It goes both ways.
If you like holidays, new cars, private schools etc you will be working till your 60s either way, so you might as well 'live for the moment' and load up on debt as you will be not retiring either way!
I think it's an all or nothing deal for me. There is no point scrimping and sacrificing to retire at 63 instead of 65. But a shorter period of extreme austerity in exchange for retiring at 40 into a hobby job? Could be worth it. Certainly worked out that way for me.
But getting to FIRE by 40yo is some going especially if you have a family and want your kids to partake in sports clubs etc. Kids clothes shoes school trips school diners (or even packed lunches) are not cheap. Add in kids birthday parties - cards gifts etc (cannot imagine a FIRE parent would say no attendance to any party....) then multiply it up with more and more kids - we have 3 Whether this is 'sacrifice' entirely depends on the person. Not everyone enjoys the same stuff. One person's dream life is another person's nightmare. It goes both ways.
If you like holidays, new cars, private schools etc you will be working till your 60s either way, so you might as well 'live for the moment' and load up on debt as you will be not retiring either way!
I think it's an all or nothing deal for me. There is no point scrimping and sacrificing to retire at 63 instead of 65. But a shorter period of extreme austerity in exchange for retiring at 40 into a hobby job? Could be worth it. Certainly worked out that way for me.
Edited by sambucket on Saturday 16th March 13:39
As others have pointed out, I’d be inclined to knuckle-down to get rid of that 9%APR debt. Those numbers compounded over time produce eye-watering figures.
If that means a simple existence for a few months, so be it. If a mildly more enjoyable lifestyle can have it eliminated in 18 months, perhaps take that option. Any longer and I’d certainly be inclined to take out finance at a lower rate to pay it off.
If that means a simple existence for a few months, so be it. If a mildly more enjoyable lifestyle can have it eliminated in 18 months, perhaps take that option. Any longer and I’d certainly be inclined to take out finance at a lower rate to pay it off.
RichTT said:
Well, there's good debt and there's bad debt. Being debt free is probably not only unrealistic but probably not good in the financial long run.
I'm quite happy to take 0% finance deals when I know I have the cash sitting in a savings account earning me money. I'm also more than happy to have a credit card as long as it's cleared each month. We're refurbishing a house we've bought. For example, we've bought sofas, furniture, windows, roofline, and other big ticket items on 1-3 year 0% finance. I know that the money is safe in the bank and earning interest. Even the paltry amount is worth it over paying up front. The rest we've bought and cleared with the credit card and received 0.5% cashback. All of that is debt, but I wouldn't consider it bad debt.
Bad debt would be keeping large sums on credit cards for extended periods of time at extortionate rates. Taking payday loans or buying items on anything but a 0% deal.
I'm quite happy to take 0% finance deals when I know I have the cash sitting in a savings account earning me money. I'm also more than happy to have a credit card as long as it's cleared each month. We're refurbishing a house we've bought. For example, we've bought sofas, furniture, windows, roofline, and other big ticket items on 1-3 year 0% finance. I know that the money is safe in the bank and earning interest. Even the paltry amount is worth it over paying up front. The rest we've bought and cleared with the credit card and received 0.5% cashback. All of that is debt, but I wouldn't consider it bad debt.
Bad debt would be keeping large sums on credit cards for extended periods of time at extortionate rates. Taking payday loans or buying items on anything but a 0% deal.
How can ''being debt free probably not be good in the financial long run''??
mike74 said:
How can ''being debt free probably not be good in the financial long run''??
Or, I already have my house and rather than overpaying the mortgage at 2% you invest in a variety of things with long term growth of 5-7%. By the end of a 25 year mortgage you would be substantially better off than someone who had overpaid the mortgage over those 25 years (even taking into account that due to paying the mortgage off early they would be able to invest larger sums in the later years).
sambucket said:
They can sleep in cardboxes fine, right?
They do in Sweden apparently!Having kids isn't something you can really spreadsheet things for.
The most valuable thing about children that a lot of people tend to forget is the time spent with them.
It's all very well having two good incomes and pawning them off to childcare at the earliest opportunity but they are only young once.
Is working all them extra hours at the expense of seeing your children just so you can afford a range rover really worth it when you'll barely see your children and when you do you'll be too tired to do much with them? Especially when a less 'prestigious' car will do the same job at a third of the cost.
Maybe I'm not wired that way career wise, but whilst I hate my job i love the fact that i see my little boy a lot more than I would in a better paying and more demanding job.
Sorry for going completely off topic.
FIRE is, IMHO, a great tool for people who want to retire early but some people do get a bit obsessed with it. FIRE works best for people who have a high income but are willing to live on a low income. This allows them to live on a small income and quickly build their FIRE pot which will in turn return them that same small income when they RE which they are willing to live on, forever.
I think the hardcore guys are probably a small % of people who subscribe to the idea.
I think we can all learn something but FI and RE are 2 different things and the actual FIRE movement / idea is to be able to RE within 10 years so long as you save 70% of your income every month for 10 years. That's not for many people.
I think the hardcore guys are probably a small % of people who subscribe to the idea.
I think we can all learn something but FI and RE are 2 different things and the actual FIRE movement / idea is to be able to RE within 10 years so long as you save 70% of your income every month for 10 years. That's not for many people.
Welshbeef said:
Re beans on toast
The average U.K. 2 adult weekly grocery shop is just over £50. So that’s a steer for you.
You might be having steak many times a week - reduce that (not necessarily with beans on toast) it will make a difference.
Make meals from scratch and make big batches - freeze them (a curry gets better if it’s cooked frozen and then re cooked
. ).
However if your only spending the U.K. average on food already or the amount you could save by having bread and water is such a low saving go back to the budget list what do you spend where why do you have to or do you choose to.
You might think hey I spend £300 pcm on petrol if I had a diesel it might be half of a smaller engine But the cost to change cars would mean it will take years to recover then it’s not worth it.
Fix gas and electric to as low as you can and fix it as far as you can.
Have a shopping list without one we are all human we pick up things as we go round the shop that’s things you don’t need.
Fill up with fuel at the cheapest place always.
Don’t buy a Costa or a bottle of water each day - but a cup/water bottle and reuse it (coffee make it at home )
Do you need a £148pcm sky subscription?? No you don’t you choose to.
Do you need to have the latest iPhone every cycle? No instead on the next cycle keep the handset and go sim only for a year or two or until the phone gets a bit unreliable then maybe do a contract again but don’t get the latest one get one a few years older (but brand new) you’ll save thousands.
Don’t buy and change cars often you’ll lose thousands
Don’t keep changing TVs 10 years is nothing for a TV so keep the one you have and make it last (or when you change have in your mind omit will be your main TV for the next decade ++).
Holidays cost a fortune U.K. or overseas — camping however is MUCH less and is a lot of fun (kids love it) BBQs every night
Get a national trust annual family pass c£100 - then days out anywhere in the country are only cost of fuel + take a picnic.
Instead of random gifts ask for specific things you really need. Or actually say don’t do gifts to adults.
Instead of going out for meals host dinner parties. A meal out for 4 lots of wine beer 3 course will be way over £200... do it at home to the same level firstly it’s more fun/(can be) then the cost is a fraction of the meal out and the booze well beers in a meal out are what £3-5 each a crate of beer 24 is below £20 or Prosecco a bottle is from £6 but on a meal out it would be that for one glass etc.
Cinema can burn a lot of cash parking drinks baby sitter vs Skybox office or equivalent.
If your going to do something next year say Silverstone classic then buy the early bird tickets save the ticket price a lot and then instead of £7 burgers and a take away meal there for a family into he £40++ territory take a picnic (it’s not inferior instead it can be way way better).
Planning things saves money vs erratic
All of this ^^^^The average U.K. 2 adult weekly grocery shop is just over £50. So that’s a steer for you.
You might be having steak many times a week - reduce that (not necessarily with beans on toast) it will make a difference.
Make meals from scratch and make big batches - freeze them (a curry gets better if it’s cooked frozen and then re cooked
. ). However if your only spending the U.K. average on food already or the amount you could save by having bread and water is such a low saving go back to the budget list what do you spend where why do you have to or do you choose to.
You might think hey I spend £300 pcm on petrol if I had a diesel it might be half of a smaller engine But the cost to change cars would mean it will take years to recover then it’s not worth it.
Fix gas and electric to as low as you can and fix it as far as you can.
Have a shopping list without one we are all human we pick up things as we go round the shop that’s things you don’t need.
Fill up with fuel at the cheapest place always.
Don’t buy a Costa or a bottle of water each day - but a cup/water bottle and reuse it (coffee make it at home )
Do you need a £148pcm sky subscription?? No you don’t you choose to.
Do you need to have the latest iPhone every cycle? No instead on the next cycle keep the handset and go sim only for a year or two or until the phone gets a bit unreliable then maybe do a contract again but don’t get the latest one get one a few years older (but brand new) you’ll save thousands.
Don’t buy and change cars often you’ll lose thousands
Don’t keep changing TVs 10 years is nothing for a TV so keep the one you have and make it last (or when you change have in your mind omit will be your main TV for the next decade ++).
Holidays cost a fortune U.K. or overseas — camping however is MUCH less and is a lot of fun (kids love it) BBQs every night
Get a national trust annual family pass c£100 - then days out anywhere in the country are only cost of fuel + take a picnic.
Instead of random gifts ask for specific things you really need. Or actually say don’t do gifts to adults.
Instead of going out for meals host dinner parties. A meal out for 4 lots of wine beer 3 course will be way over £200... do it at home to the same level firstly it’s more fun/(can be) then the cost is a fraction of the meal out and the booze well beers in a meal out are what £3-5 each a crate of beer 24 is below £20 or Prosecco a bottle is from £6 but on a meal out it would be that for one glass etc.
Cinema can burn a lot of cash parking drinks baby sitter vs Skybox office or equivalent.
If your going to do something next year say Silverstone classic then buy the early bird tickets save the ticket price a lot and then instead of £7 burgers and a take away meal there for a family into he £40++ territory take a picnic (it’s not inferior instead it can be way way better).
Planning things saves money vs erratic
Do people really spend that on sky/TV and eat out every week? Is that "normal"?
monkfish1 said:
Welshbeef said:
Re beans on toast
The average U.K. 2 adult weekly grocery shop is just over £50. So that’s a steer for you.
You might be having steak many times a week - reduce that (not necessarily with beans on toast) it will make a difference.
Make meals from scratch and make big batches - freeze them (a curry gets better if it’s cooked frozen and then re cooked. ).
However if your only spending the U.K. average on food already or the amount you could save by having bread and water is such a low saving go back to the budget list what do you spend where why do you have to or do you choose to.
You might think hey I spend £300 pcm on petrol if I had a diesel it might be half of a smaller engine But the cost to change cars would mean it will take years to recover then it’s not worth it.
Fix gas and electric to as low as you can and fix it as far as you can.
Have a shopping list without one we are all human we pick up things as we go round the shop that’s things you don’t need.
Fill up with fuel at the cheapest place always.
Don’t buy a Costa or a bottle of water each day - but a cup/water bottle and reuse it (coffee make it at home )
Do you need a £148pcm sky subscription?? No you don’t you choose to.
Do you need to have the latest iPhone every cycle? No instead on the next cycle keep the handset and go sim only for a year or two or until the phone gets a bit unreliable then maybe do a contract again but don’t get the latest one get one a few years older (but brand new) you’ll save thousands.
Don’t buy and change cars often you’ll lose thousands
Don’t keep changing TVs 10 years is nothing for a TV so keep the one you have and make it last (or when you change have in your mind omit will be your main TV for the next decade ++).
Holidays cost a fortune U.K. or overseas — camping however is MUCH less and is a lot of fun (kids love it) BBQs every night
Get a national trust annual family pass c£100 - then days out anywhere in the country are only cost of fuel + take a picnic.
Instead of random gifts ask for specific things you really need. Or actually say don’t do gifts to adults.
Instead of going out for meals host dinner parties. A meal out for 4 lots of wine beer 3 course will be way over £200... do it at home to the same level firstly it’s more fun/(can be) then the cost is a fraction of the meal out and the booze well beers in a meal out are what £3-5 each a crate of beer 24 is below £20 or Prosecco a bottle is from £6 but on a meal out it would be that for one glass etc.
Cinema can burn a lot of cash parking drinks baby sitter vs Skybox office or equivalent.
If your going to do something next year say Silverstone classic then buy the early bird tickets save the ticket price a lot and then instead of £7 burgers and a take away meal there for a family into he £40++ territory take a picnic (it’s not inferior instead it can be way way better).
Planning things saves money vs erratic
All of this ^^^^The average U.K. 2 adult weekly grocery shop is just over £50. So that’s a steer for you.
You might be having steak many times a week - reduce that (not necessarily with beans on toast) it will make a difference.
Make meals from scratch and make big batches - freeze them (a curry gets better if it’s cooked frozen and then re cooked
. ). However if your only spending the U.K. average on food already or the amount you could save by having bread and water is such a low saving go back to the budget list what do you spend where why do you have to or do you choose to.
You might think hey I spend £300 pcm on petrol if I had a diesel it might be half of a smaller engine But the cost to change cars would mean it will take years to recover then it’s not worth it.
Fix gas and electric to as low as you can and fix it as far as you can.
Have a shopping list without one we are all human we pick up things as we go round the shop that’s things you don’t need.
Fill up with fuel at the cheapest place always.
Don’t buy a Costa or a bottle of water each day - but a cup/water bottle and reuse it (coffee make it at home )
Do you need a £148pcm sky subscription?? No you don’t you choose to.
Do you need to have the latest iPhone every cycle? No instead on the next cycle keep the handset and go sim only for a year or two or until the phone gets a bit unreliable then maybe do a contract again but don’t get the latest one get one a few years older (but brand new) you’ll save thousands.
Don’t buy and change cars often you’ll lose thousands
Don’t keep changing TVs 10 years is nothing for a TV so keep the one you have and make it last (or when you change have in your mind omit will be your main TV for the next decade ++).
Holidays cost a fortune U.K. or overseas — camping however is MUCH less and is a lot of fun (kids love it) BBQs every night
Get a national trust annual family pass c£100 - then days out anywhere in the country are only cost of fuel + take a picnic.
Instead of random gifts ask for specific things you really need. Or actually say don’t do gifts to adults.
Instead of going out for meals host dinner parties. A meal out for 4 lots of wine beer 3 course will be way over £200... do it at home to the same level firstly it’s more fun/(can be) then the cost is a fraction of the meal out and the booze well beers in a meal out are what £3-5 each a crate of beer 24 is below £20 or Prosecco a bottle is from £6 but on a meal out it would be that for one glass etc.
Cinema can burn a lot of cash parking drinks baby sitter vs Skybox office or equivalent.
If your going to do something next year say Silverstone classic then buy the early bird tickets save the ticket price a lot and then instead of £7 burgers and a take away meal there for a family into he £40++ territory take a picnic (it’s not inferior instead it can be way way better).
Planning things saves money vs erratic
Do people really spend that on sky/TV and eat out every week? Is that "normal"?
The biggest gains to be made are focusing on increasing your income. And together with that, reviewing your attitude to risk. That will have a far bigger effect than trying to micromanage some of the more trivial aspects of day to day living costs.
EddieSteadyGo said:
The biggest gains to be made are focusing on increasing your income. And together with that, reviewing your attitude to risk. That will have a far bigger effect than trying to micromanage some of the more trivial aspects of day to day living costs.
Agree. But not necessarily that easy to achieve.EddieSteadyGo said:
A slightly different viewpoint, Firstly I agree, not being profligate is important. But it is hard trying to save yourself rich.
The biggest gains to be made are focusing on increasing your income. And together with that, reviewing your attitude to risk. That will have a far bigger effect than trying to micromanage some of the more trivial aspects of day to day living costs.
I disagree. I changed roles about four/ five years ago and took a £20k pay cut. At the same time my wife stopped work.The biggest gains to be made are focusing on increasing your income. And together with that, reviewing your attitude to risk. That will have a far bigger effect than trying to micromanage some of the more trivial aspects of day to day living costs.
Serious budgeting was needed. We cut a load of unnecessary crap out -(eating out, Sky, better electric/ gas deals, cleaner, nice (expensive) cars, expensive phone contracts, changed to camping holidays). I was amazed how much we could save and still have a great life style.
Now my wife has gone back to work and my earnings have crept back up again. But, we still have the same routines (except the eating out bit
) All our cars are over ten years old (this is my weakness and owning/running four vehicles is not wise!!). Sky is never missed. Cheap phones are fine. Camping holidays are great with the kids. Undoubtedly earning more definitely helps, but spending half your waking hours doing something you don't enjoy or stresses you out is also not the best way forward......
A weeks camping holiday - pitch for a family of 5 will not be much more than £100-150.
Then you can do BBQs every night salads/picnics or even eat out.
I cannot see you spending beyond a thousand pounds in Aug peak season. Likely much much less & many of the camp sites are very close walking distance to the beach which is ideal.
Kids love camping too.
Then you can do BBQs every night salads/picnics or even eat out.
I cannot see you spending beyond a thousand pounds in Aug peak season. Likely much much less & many of the camp sites are very close walking distance to the beach which is ideal.
Kids love camping too.
mike9009 said:
I disagree. I changed roles about four/ five years ago and took a £20k pay cut. At the same time my wife stopped work.
Serious budgeting was needed. We cut a load of unnecessary crap out -(eating out, Sky, better electric/ gas deals, cleaner, nice (expensive) cars, expensive phone contracts, changed to camping holidays). I was amazed how much we could save and still have a great life style.
Now my wife has gone back to work and my earnings have crept back up again. But, we still have the same routines (except the eating out bit ) All our cars are over ten years old (this is my weakness and owning/running four vehicles is not wise!!). Sky is never missed. Cheap phones are fine. Camping holidays are great with the kids.
Undoubtedly earning more definitely helps, but spending half your waking hours doing something you don't enjoy or stresses you out is also not the best way forward......
I think far too few people are aware of the quick easy and painless changes they can and should all do re utility mortgage rates high interest loans credit card debt. The basics should be taught in school this is real life skills and it sadly harms the lower income families is it’s a perpetual cycle as their guidance comes from parents who with the best willl in the world are not graced with the knowledge Serious budgeting was needed. We cut a load of unnecessary crap out -(eating out, Sky, better electric/ gas deals, cleaner, nice (expensive) cars, expensive phone contracts, changed to camping holidays). I was amazed how much we could save and still have a great life style.
Now my wife has gone back to work and my earnings have crept back up again. But, we still have the same routines (except the eating out bit
) All our cars are over ten years old (this is my weakness and owning/running four vehicles is not wise!!). Sky is never missed. Cheap phones are fine. Camping holidays are great with the kids. Undoubtedly earning more definitely helps, but spending half your waking hours doing something you don't enjoy or stresses you out is also not the best way forward......
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