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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