[Closed] Financial Milestones

Very few people getting on the housing market now will be paying off mortgages by 50. Unless they take it out at 15 years old.

a lot of peole paying the mortgage on their house off at 50 now took them out when they were in their early 20's.

People in their early 20's now struggle to rent a flat! Take my grandparents as an example, in the 50's at my age they were married with a kid and a house by now, my parents had to wait till they were 30ish in the 80's, I'm earning considerable more relatively, yet none of my peer's are even contemplating buying a house!

As above, people have only been able to pay off mortgages because of the rising values so if you ever downsized, you could easily pay the balance off.

Anyway, the main advice would simply be not to ever get in debt (Mortgage excepted because typically your investment increases in value) unless you know exactly how and when you'll pay it off - eg not the "never, never".

If I had any financial advice to hand out it would be 'Do not get a credit card, ever'. You'll thank me for that one later.

I'd also suggest getting on the housing ladder as soon as is humanely possible. You don't have to live in a mansion for your first house. A 2 bedroomed terrace will do for starters.

Totally agree with above re. credit cards. And put store cards on that list too. Got myself in huge sh*t at 18 with a Burton's Card. I owed something like £150. Believe me, at the time it was all the money in the world as far as I was concerned 🙂

If I had kept my first house (bought it at 29) I reckon it would have been paid off or very nearly so by now - I could overpay the monthly repayments so heavily. But as it is, we decided to move house so will be saddled with a mortgage for a while yet.

+1 for the credit card.

I intend to have paid off my mortgage by the time I am 54. When I retire.

Its not just down to rising values of properties and downsizing. Some of us did the same as those grandparents above. We met a girl, settled down, saved and bough a house early on. Stayed together (Important and not the norm these days) and payed the mortgage off. Up until the last 6-7yrs it was still possible to live this kinda life and be mortgage free by 50 on 'normal wages'.

Trouble is

1) People dont/wont save
2) People want everything now so wont put a good deposit down
3) People jump in and out of relationships so any equity gets split
4) People are more concerened with showing off how much money they can spend on a wedding day and not on how they should set themselves up for their future
5) People treat houses as investments. What happened to homes?

IMO Joe Bloggs earns way to much money these days. I dont know wether i qualify as some kinda communist but i have to say that the average man does not seem to be happy with his lot these days. Take for example the simple postman. He is no higher in the foodchain than an overage paperboy but he is now fighting tooth and nail for his money and privelages. Is this because he should be paid more? I suspect not. It is probably more down to the fact that he has a huge mortgage on a big house, a caravan on the drive, 2 cars and his kids have every electric gadget under the sun. If the bottom of the chain has all of this, there has to be something wrong with the system.

Joe average now EXPECTS to have all of this gear. Hell, i am not that different and aspire to do better than i am. However, Joe Average also deems it their right, even if they havent got the necessary tools to back it up.

Joe Average are spending more than their abilities can support and will quite often just be spending money their grandparents/parents have worked long and hard to obtain. I have lost count of the people i know who go cap in hand to their relatives for hand outs to bail them out of situations. Or even to pay for improvements on their own houses.

What happened to owning homes appropriate to your abilities/income?

'Do not get a credit card, ever'.

I never used to have a credit card, but I wouldn't be without one now, especially when buying online. The Consumer Credit Act offers a lot of valuable protection that you just don't get with a debit card.

So my less-straightforward advice would be more like "Get [u]one[/u] credit card and [u]always[/u] pay off the balance in full every month"

"a two bedroom terrace will do for starters...."

ooop norf, maybe, down here thats a pipedream.

Our house cost us 35k 😉

Our house cost us 35k

die in debt.

My father is a Finance Director. He said to me at a young age - "money is merely a tool for acquiring value"

Thanks for that pearl of wisdom dad...now about that loan! 😆

If all goes to plan, I'll be mortgage free when I'm 50...I reckon my outlook on financial life is rather old fashioned - I don't like owing money and try to make sure I have the cash to spend...has served me well so far but I'm no angel, but I'm also very much aware of how bad I am with money so steer very clear of anything that could convince me to spend money I don't have!

£35k or £45k may have got you a terrace house "oop north" 15 or 20 years ago, but since the house price bubble of the early noughties you need to triple those figures. Not sure I would recommend busting a gut to get on the housing ladder to my son - houses are overpriced and will remain so for quite a few years it seems.

I never got any financial advice from my parents but I learned not to do what they did. So, no credit card, do not keep borrowing against the house to pay off other debts, etc. It's not free money, you have to pay it back one day.

The other things I have learned the hard way myself are:

1) there's no such thing as an independent financial advisor
2) endowments were a crazy idea
3) many pension schemes aren't much better

It all seems very complicated when you're starting out with houses and pensions and stuff in your twenties and you tend to listen to advice. I would now advise not to take advice, but to find out everything for yourself - it's not as complicated as the financial industry likes to make it sound.

Marry a rich bird 😉

I'm retired at 40 😛

I'm working on the assumption that we'll see another (smaller) dip in the UK next year (things always slow down in January). which makes getting on the property ladder tempting.

However............
As someone said, relationships these days don't last, so why should I pay over the odds now just to lose it sometime (statisticaly) arround 35?

+1 credit cards.

Best advise I could give would be to never ever get a credit card or store card. Use Debit Cards only.

Never go beyond your means. Start a personal Pension plan at the earliest opportunity.

-1 for credit cards.

In addition to my point about the Consumer Credit Act, [url= http://www.lovemoney.com/news/credit-reports/improve-your-credit-score-the-quick-dos-and-donts-3222.aspx ]not having a credit card can effectively lower your credit score[/url].

Yeah, I don't see the credit card itself as the issue - just the owner's view on using credit. That's really been the issue hasn't it?

Debt is a tool. It should only be used for productive purposes rather than indulgences.

Kids seem to understand the message in "The Richest Man in Babylon", so it may be worth giving them that to read and discuss.

Disposable income is something kids find hard to understand, so you may have to let them burn their fingers first, or at least starve for a week 🙂

It is important to realise that once you have more debt than you can repay or are willing to repay, then you have entered into enslavement. Were those objects you bought really worth it?

not having a credit card can effectively lower your credit score.

That's not true, if you read the link it says that having a credit card which you always pay off can increase your credit rating. Nothing about not having one decreasing your rating.

Besides, the idea that you should borrow in order to be more likely to be lent to is a bit circular, isn't it?

Are there any "good" credit cards?

i.e. ones that give cashback, air miles, money off petrol, nectar/clubcard points etc etc

I have no ballance to transfer, no intention of borrowing etc etc etc

Okay, it doesn't [i]lower[/i] your credit score, but your score is "less raised" than everybody else. 🙄

Besides, the idea that you should borrow in order to be more likely to be lent to is a bit circular, isn't it?

Demonstrating that you can responsibly manage a little monthly credit means you have a lower risk score than someone who has never had any credit and is an unknown quantity.

Seems obvious to me.

Would you hire the guy with experience doing a smaller scale version of the same job, or the guy who has never done it but is very sure that he can?

earn it to burn it?

(i think hobo makes a very good point about our expectations

i expect that my oop-north 2 bed terrace will be the first and last house i ever buy)

or, you could suggest that there's a massive economic correction coming, and that they might as well borrow like kings today, because the impending financial armageddon will bury us all in hyper-inflated debt, a few thousand now will be meaningless when we all owe billions...

or, you could suggest that there's a massive economic correction coming, and that they might as well borrow like kings today, because the impending financial armageddon will bury us all in hyper-inflated debt, a few thousand now will be meaningless when we all owe billions...

Er, it's here. In spite of governmental interjection. It really is here.

Demonstrating that you can responsibly manage a little monthly credit means you have a lower risk score than someone who has never had any credit and is an unknown quantity.

True. But like saying that if you have proved you can run on a treadmill at 5 mph they're more likely to let you turn up the speed, and again and again until you're running flat out (but still not getting anywhere).

Another option is not to get on the treadmill.

Not sure why all the anti-credit card posts. Get one but use it sensibly, it's not rocket science.

sensible financial advice
- a mortgage is the cheapest (non parental)loan you will ever have.
- you're never too young to start saving for retirement.

But like saying that if you have proved you can run on a treadmill at 5 mph they're more likely to let you turn up the speed, and again and again

but they also have some evidence that you won't collapse and fly off the back of it when they do.

Another option is not to get on the treadmill.

a nice sentiment, but most people will need some credit at some point in their life. Especially if they want to own their own home.

a nice sentiment, but most people will need some credit at some point in their life. Especially if they want to own their own home.

I have a mortgage and no credit card (never have had) so don't see the connection.

You're right of course that if you have a credit card and only use it for certain things (travel, buying off the net, etc.) and pay it off every month then that's fine. However I also know people that have got into bad debt because of credit cards.

However I also know people that have got into bad debt because of credit cards.

Ditto because of mortgages.

porterclough: your credit score was obviously sufficient without needing to boost it by responsible credit card use. More borderline cases [i]could[/i] end up not getting a mortgage because they've never owned a credit card.

Yes irresponsible credit card use can lead to bad debt, but there are clear benefits to using one responsibly, which is why I wouldn't advise against one.

Moderation and living within your means without requiring credit - that I support.

From my experience doing things the wrong way, I would say, don't waste time and money at university. Get a job, save and try to get on the property ladder sooner rather than later.

As for credit cards, they're fine but I would say the golden rule is don't leave anything on them at the end of the month!

At the moment there is a divide between the richest and poorest people as you would expect, and I agree with Hobo's point about people's expectations often being above their means. There are people with money and people without - there's a theory that if all the wealth was evenly distributed amongst all the population after a few years the people who used to have the money would have it all again, and those with none will end up with none - it all comes down to peoples ability to acquire, manage, grow and spend money.

Anyway, that's all just my belief.

Onto my advise - I use a credit card, but I just use it as a way of consolidating expenditure into a single monthly repayment. It gets paid off each month without fail. If you can adhere to this simple principle then a credit card is a perfectly acceptable tool. You should know what you can afford, and as long as you don't use a credit card to buy things you can't really afford then they're fine and they do improve your credit score if this is important (wanting to get a mortgage for example)

Budget. It's a bit of a boring activity, but it's worth it's weight in gold. Understand exactly what comes in, what NEEDS to go out and how much is left over for saving or toys.

Accrue money (ie save) for unexpected events. Save when you're flush, dip in when you're poor. I have a number of savings buckets (it's only one physical account but I track a virtual balance for several different types of expenditure) I accrue money each month for motoring expenditures (maintenance/servicing etc), holidays, and house expenditure (repairs, new furniture etc). When I need a couple of new tyres on the car or the washing machine blows up, I can take the money out of the bucket and not worry about feeling the effects of that unexpected expense for months afterwards - being proactive like this is infinitely better than being reactive and having to rely on credit.

If you can be bothered, use accounting software to monitor and review all your expenses and financial transactions (ideally against budget), see if there are areas where you are spending a surprising or increasing amount each month, and then either address the spending, or re-plan your budget.

Those would be my bits of advice on managing your money. Other than that the comments about getting on the property ladder as soon as you can applies, but be realistic and only buy what you can afford.

Set up a regular savings plan (ideally through a standing order) - small amounts build up into large amounts over many years, especially if you can do it with a tax-free savings product.

Don't borrow money except for a mortgage, and always get a repayment mortgage (wish I had). If you can't afford it, you shouldn't buy it.

Don't always believe what an IFA tells you about specific products or funds - they are are there to sell products and most have about as much clue about the future of the economy as you or I have.

Have one credit card - pay it off monthly. Do not get a store card or Amex type card.

Buy stuff when things run out. Use stuff till it wears out.

Don't borrow money to buy things. If you have to borrow money to buy things make sure you are able to pay it back and that the item is essential, like a bike.

Use a credit card but understand how they work and look for ones that will give you something back. We use a flybe card for all our purchases and pay it off in full monthly. By doing this we get to fly to Jersey to See my partners brother for free.

Just because you are offered credit doesn't mean you should take/spend it. Student loan, credit cards, overdraft etc.

Have 6 months wages in easily available funds. Things go wrong, and it's good to have a backup plan if you lose your job so you don't lose the house.

Stocks go down and occasionally up.

The most useful things I learnt were how to use banks and their services. Know what they offer and what the positives and negatives are. Things like savings accounts, isas, overdrafts, current accounts. I had a post office savings account from an early age, nothing in it really but I knew that saving money was good.

I remember picking up one of those little books they have on the counter in book shops years ago - something along the lines of 'how to get rich'. I flicked through a few random pages but one always stuck with me: "Never buy a boat"

Theres a lot of good advice above along the lines of 'living within your means' which is about right. I'd add that when you do buy anything buy the best you can possibly afford - "Buy cheap, buy twice" - quality lasts.

Have 6 months wages in easily available funds.

Really?

That seems quite a lot of money to have sitting around "just in case". I guess it maybe depends how rocky your job is and if your partner is working?

my dad taught me well i think-

i wanted to buy monster Ts for my downhill bike age 14 - paperround earning 14 quid a week ....

i saved up 100 quid and took a loan off my dad for the remaining 150 quid - it took ages to pay back that 150 quid. (bought second hand)

at the last installment my dad said - now thats what debt is like - was it fun ?

I come from a long line of cheapskates. The rule of thumb I was taught is don't take out a loan on anything that depreciates.

Can anyone tell me why house prices are going up again? Homes have certainly not become anymore affordable over the past year as the prices may have dropped but wages certainly haven't increased, many people are still losing their jobs, and reposessions have only slowed down because people are being givn more time to pay.

The fact that interest rates are low now and debt is affordable doesnt mean its always going to be and I think we're just building up more bad debt for the next dip of this double-dip recession. Banks are again too keen to lend cash which is falsely propping up prices.

We need a massive property crash to settle things down, and I think we've only seen the start of it.

Just do what my parents did...get into massive debt and have lots of arguments about money....it made sure I didn't follow in their footsteps

The fact that interest rates are low now and debt is affordable doesnt mean its always going to be

From a housing point of view debt's only affordable right now if you've already got equity. Even a 10% deposit doesn't get you very far buying a house these days.

Like someone earlier said, by far the best thing for me to have done would have been to get a job instead of going to university. A couple of my friends managed to save up a deposit and buy a house pretty quickly, 3 years later when I'd finished university house prices were well beyond my reach and only continued getting further away.

I'll admit "don't go to university" is probably not sound financial advice for everyone

Banks are again too keen to lend cash which is falsely propping up prices.

They are?? Tried getting a mortgage recently?

Some excellent advice there.

Not having a credit card balance seems to be common wisdom.
I just wondering how many people on this forum are paying off their bikes that way though.

I did some reading on the subject about a year ago and a recurring theme was that wealth was not about how much you earned really but more about what and how you spent.

Obviously, if you're on susistence wages, income is what it'a all about. However, I can see the sense in trying to have a surplus each month which can be used to start saving and investing.

I would really like my kids to get out of uni debt free. Then, save a decent deposit for a house and if they get married, not to have to take any debt other than the mortgage into marriage.

agree with the credit card stuff; also worth setting your limit on them to help to that end. They may offer you 2k limit, but do you really need it? it is there to encourage you to spend which is not what you want to do - drop it to a 'reasonable' level; there are very few instances when you need more than 1k in 'emergency' credit, so why have a higher limit? if/when you NEED to up that limit, your rating will still likely have gone up to allow you to up it.

ALWAYS over pay debt when you can; focus on the small ones first - eg if you have a credit card that gets paid until zero; then a car or education loan, then the mortgage. The chances of you paying off a 250k mortgage in say, 5 years, are next to zero, but paying off a 20k car loan in that time - and not therefore not paying interest and fees on it - is very do-able.

Mortgage wise; always be able to pay it, but don't worry overly about it - paying it off in itself is not the point per se; having a home that is worth enough that when you do finally downsize again after having had your own family etc you will/should be able to pay it out.

set up a pension plan of some sort ASAP once working and always pay into it; standing order as mentioned above is a good way to do this. even 20 quid a week will be a lot of money for retirement when you've worked 40 odd years, especially once you add any interest back in. The days of the Govt taking care of you with an OAP are over TBH

Oh, and although advisers may not be independent, go see one every couple of years; they are usually at least up to date on the products available, a chunk of which you may not otherwise hear or know about. It may be you need to change nothing; but an hour of your time can pay off significantly if you do find out something useful.

I'd never profess to be a financial mastermind, far from it, i've made plenty of mistakes that have cost me a small fortune over the years, but i suppose from this at least i have learned from my mistakes a bit.

I'd say the good advice from above includes:

never get a loan on something that depreciates.

and

Pay off debts as fast as possible.

My wife is a bit fast and loose with the cash, so i payed off her cards for her (she even had an MS store card for crying out loud!).

I'd also say if your young, or got other debts then never ever ever buy a new car, my father in law sold finance on cars, he always told me it was easy to do, as people that went for it were not the brightest. We used to get some great cars from his garage for very little as they were trade ins.

I'm not convinced about property and being on a property ladder now-a-days thou. It just doesn't seem good value, and a value has to be finite, and when it is it can only go in one direction when you account for inflation. Long term renting served the French OK for many generations, maybe it's time for it in the UK. In New Zealand where i now live house prices are mad, we live in a 4 bedroom detached shed (yes it is basically a garden shed.) that would cost more than 200,000 pounds to buy in todays market and interest rates are going up all the time now, so renting would be a cheaper option for sure if compare it to the cost of a mortgage. The trouble is when people rent is that now-a-days they don't always save, which now seems to be a cultural thing.

I'm 35 now, and haven't had a mortgage for a few years, we've discussed moving to a bigger house, nicer area etc but weighed up the pro's and con's and figuered that the happyness that a bigger house might give you would be more than offset by the stress of debt - which kind of sums it up for me, debt often gives you stress, so try to have as little as possible, then the chances are you'll be happier, which is more important than having a stupid german car with some f*ck off big alloy wheels.

my 2 cents worth.

Oh and try not to aquire either a gambling or drug habbit. 🙂

I admit I've skim-read this thread as I'll be late for work, but:

Me: Had credit cards from late teens, always paid the full balance off, I now have quite a few and they are used regularly, but the direct debits are set to pay the full amount off each month.

Gf: Didn't have credit cards, when she eventually got one, it was the same provider as her current account. They didn't upload any data to the credit agencies so her credit score was 'standard' i.e poor. She was joint holder on several of my cards, financially linked through bank accounts etc but this wasn't helping to bump it up. Which meant that mid twenties, she suddenly found applications for credit cards/mobile phone contracts were being refused. Obviously the more you apply for stuff, the more your rating takes a hit. After giving up and getting a prepay phone, we waited a year or so, then she bought a bike on cheap finance from Wiggle, once that was paid off we had no more problems.

So, get a credit card or two, set up a full direct debit and you should be OK 🙂

The absolute golden rule of finance, and the single most important is:

Pay yourself first

Simply, the first thing you do on pay day is save a proportion of it. This money is then what you use to create more money, leave it in a savings account for example, invest in the stock market etc etc.

Don't advise your son to buy houses etc etc, this isn't the important part. He can discover himself if this is important if you guide him to not be scared of money and encourage him to learn about it. Most peoples attitude to money comes from a combination of both their parents teachings and school.

The people who aquire money so easily understand it and don`t fear it like many do, they break free from the norm.

Don't bother with a pension.

The retirement age keeps rising, by the time i'm allowed to retire i'll be 70. - i'll be dead by then.

if i'm not dead, i'll sell my house, move to tijuana and spend it all on tequila and mexican women.

you know it makes sense...

I've mixed feelings about credit cards - I got one in my early 20's after Uni - over a couple of years I was about 15k in debt with nothing to show for it other than a %^&* liver, ticket stubs and a few holidays (it was a good time of my life though)

After a lot of scrimping and saving and luck, I managed to pay it all off but for a while I became resigned to the fact that I'd be stuck with an overhanging monthly debt for the resyt of my life. I remember the day when I cleared my balance, its difficult to put into words just how free I felt.

I swore I'd never have one again and that I'd live within my means which I've done for a good few years now; However, I do have an AMEX card that me and the wife use for most things, shopping, holidays, meals etc but it always get paid off in full each month and we get 1.5% cashback on everything we spend (it was 5% for first 3 months). There are a lot of benefits to using one if you are strict; I like the fact that now they pay me and I've never paid any interest or fee's since having it (a couple of years).

I have learnt my lesson with money that isn't your own and appreciate how things can go wrong. Unless you have strong will power and are very strict with yourself, pay it off in full each month, then steer clear of credit cards and save for the things you want - its true that you actually appreciate things more that way (never use one as a temporary loan, it will go wrong in most cases!).

As for mortgages, I reckon most pweople would be happy to be oaying them off around your mid-fifties, I know I will be.

Finally, don't try to keep up with the Jones's - it's not going to make you any happier having a house full of 'stuff' and a huge debt that keeps you awake at night! save up, buy quality and get maximum use from it