Do you have £100 in savings?

Yes, but some people had to die to get me there…

I worked at a big Citizens Advice Bureau, typing ‘000s of letters about people’s affairs during the early 2000s – while I was at uni. I later became a member of the trustee board there for 6 years.

Just typing those letters taught me a huge amount about life and how things can go wrong. Life is sometimes precarious and painful for people; often things change quickly and – when it comes to money – it can be unexpected or small events or sums that tip a balance.

To lend a recent story to this: a close friend recently suffered a major trauma and is going through neuro rehab, but with very slim chance of regaining a “normal” life. With that, goes the potential to support his wife and family – who will now have to care for him. I know that they have a large interest-free mortgage, so his wife and 2 kids will have a big challenge ahead. Not what they expected at the age of 35… 🙁

I am concerned that, in addition to personal changes in circumstance, wider economic changes will one day bite a debt-normalised society hard. Money is very cheap at the moment (since 2008) and it’s hard to see how this would continue for ever.

From the age of 26 (10 years ago), I’ve followed the advice of my now father-in-law when it comes to savings.

I don’t want to share personal details on a public forum, but I will say that compound interest works both ways. I intend to stay on the savings rather than debt side of that.

Phew, I got a £105.

I don’t understand this ‘it’s not worth saving cos interest rates are so low’ – it’s utterly foolish… you save so you have some cash aside for emergencies or so you can eat if you lose your job – you don’t save so you can earn interest!

In the days when banking worked properly, you were given interest to encourage you to save, as it was those deposits that the bank then gave out as loans and mortgages – which happily prevented banks lending out too much – so back then houses were affordable, we weren’t in a debt crisis and we lived within our means and steady economic growth was a realistic expectation… but we decided against that and decided a debt binge on shiny stuff was a better idea!

The big problem with bailing the banks out in 2008 was that it bailed us out too – not calling in all the debts, and keeping interest rates on the floor to stop mass bankruptcies has saved us from our own foolish behaviour and we’ve just carried on getting into more debt.

As and when the next recession hits (which it will soon enough, they’re a regular feature of capitalism) and people lose their jobs I really dread to think how people will cope – if people don’t have £100 and they lose their jobs then they’ll be unable to pay for food within a couple of weeks…hard to see how we’re going to get ourselves out of this mess…

I don’t understand this ‘it’s not worth saving cos interest rates are so low’ – it’s utterly foolish… you save so you have some cash aside for emergencies or so you can eat if you lose your job – you don’t save so you can earn interest!

In the days when banking worked properly, you were given interest to encourage you to save, as it was those deposits that the bank then gave out as loans and mortgages – which happily prevented banks lending out too much – so back then houses were affordable, we weren’t in a debt crisis and we lived within our means and steady economic growth was a realistic expectation… but we decided against that and decided a debt binge on shiny stuff was a better idea!

The big problem with bailing the banks out in 2008 was that it bailed us out too – not calling in all the debts, and keeping interest rates on the floor to stop mass bankruptcies has saved us from our own foolish behaviour and we’ve just carried on getting into more debt.

As and when the next recession hits (which it will soon enough, they’re a regular feature of capitalism) and people lose their jobs I really dread to think how people will cope – if people don’t have £100 and they lose their jobs then they’ll be unable to pay for food within a couple of weeks…hard to see how we’re going to get ourselves out of this mess…

I used to have £10 left every month (after deducting fixed expenses) as saving many years ago. It was hard. Very hard.

As and when the next recession hits (which it will soon enough, they’re a regular feature of capitalism) and people lose their jobs I really dread to think how people will cope – if people don’t have £100 and they lose their jobs then they’ll be unable to pay for food within a couple of weeks..

Locally during the current oil downturn we got folks turning up to food banks in porsche panameras……….

“I know people with terrifying mortgages at our age, a £40k car on PCP on the drive and loaded credit cards……”

There’s a new estate that’s been built on the outskirts of our village. It’s a very typical new build estate with houses priced between £250-450k. Outside nearly every house is a new Evoke, Discovery Sport, BMW, etc and they’re there during working hours so not company cars.
It’s absolutely frightening what people are prepared to borrow.

Mates keep adding 1000s to their 40 year mortgages for non essential upgrades seems crazy to me.

This.

My mortgage will be done in 5 years, when I’m 46. I’ve been overpaying for a number of years now, also sunk a big chunk of my voluntary redundancy into it. Once that’s done. I’ll be the best part of a grand a month richer, just in time for the wee yin to be doing her exams, so I’ll need it for student digs shortly thereafter.

I must look into these 6% ISA’s, as at the moment my savings are wallowing in a pishy RBS savings account. Would be as well having it under the mattress.

deleted post

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

I’m familiar with the various regular savings accounts (I’ve got 3 on the go at the moment) and while you’re correct that it’s 6%, you get that rate for a whole year only on the first month’s deposit. Plus it’s only open to people holding other accounts (which won’t be 6%) with the provider. They’re worth doing though, and if you’re short of income to put aside but have an existing Cash ISA it’s worth plundering that to feed them, then plonking the money back when they finish.

This is another interesting article – not a surprise I think though

Wealth of people in their 30s has ‘halved in a decade’

Mates keep adding 1000s to their 40 year mortgages for non essential upgrades seems crazy to me.

Assuming we’re talking house upgrades, it’s probably not as daft as you make out.

I’m 30, we bought our house last year and have a 27 year mortgage in the order of about £370k.

The odds of me still living in this house when I reach retirement are vanishingly small, the odds of me spending my retirement here are smaller still.

Which means the size of the mortgage remaining when I come to sell it (in lets say 10-15 years) is irrelevant as long as the repayments are affordable. The only number that matters is the equity, which would likley determine the size of the next house if I wanted a smaller/no mortgage to be able to spend more time with any kids we have.

So, in a couple of years and a few pay rises time I could either

1) Overpay the existing mortgage and bring the balance down and increase my equity by that amount + interest.
2) Do nothing, just let the repayments be effectively diminished by inflation.
3) Re-mortgage with MORE debt, spend £20k on a flash extension and add £40/60/80k to the value of the house.

Even if I don’t want 6 bedrooms and 3 bathrooms, and I quite like the big garden, financially in my position it makes far more sense to spend money on the house getting multiples of what I spend back in equity than it does on the mortgage getting a few percent.

I guess non-essential upgrades means nice bathrooms and kitchens – doubt they had much to value.

may increase saleability?

I hate having debt, sometimes it’s a must – mortgage for, well, a house. Short term load to complete our building work.
In the above case the building work has paid off dividends, adding £2-3 for each £1 spent on the works…

I’m contemplating adding an extra £40k to our mortgage in order to add a further extension, but this will likely add only £1 per £1, as we’re getting towards the ‘limit for the street’ so to speak…

I suppose, as long as you have a plan and a means, sometimes debt is OK.

For flash cars and bling trainers, maybe not so..

DrP

(re: kitchens / bathrooms)

“may increase saleability?“

If you’re selling now, or in the near future, sure. But if you’re staying 10+ years then by that point it’s just an old/ unfashionable kitchen. Long-lasting value would be from major changes like an extension.

I guess non-essential upgrades means nice bathrooms and kitchens – doubt they had much to value.

Guess it depends on the house/area, what was there before, how much you spend and how long you’re going to be there for. Unless you get it horribly wrong though I suspect it’s hard to lose money on home renovations, especially if you intend to sell in the short term. So many people just seem to want a house that looks straight out of the Next catalogue that they can just move into. Textured wallpaper and orange walls must have saved us £80k at least!

If you’re selling now, or in the near future, sure. But if you’re staying 10+ years then by that point it’s just an old/ unfashionable kitchen. Long-lasting value would be from major changes like an extension.

Depends what’s there, but I’d rather have a nice kitchen for 10 years than live with a crap one before doing it up to sell. Whether that was funded by cash (which would otherwise probably have been put into the mortgage) or a bigger mortgage is a different matter, it’s just an illustration that spending money you don’t have isn’t always the path to poverty.

Well also it depends on how much you spend relative to the value of the house as well as how much they appeal to potential buyers. Some people have strong ideas on what they want and will want to redo everything anyway – better off people mostly?!

Well also it depends on how much you spend relative to the value of the house as well as how much they appeal to potential buyers. Some people have strong ideas on what they want and will want to redo everything anyway – better off people mostly?!

Wouldn’t have said better off, we’re not (relative to the street), hence we bought the cheap house we could decorate how we like.

Unless you’re so rich that money isn’t a consideration, or the house’s value is derived from something other than its decorative state (location, or somewhere where few houses come up for sale) I’d bet most people who want to decorate themselves also want a bargain.

Your own enjoyment <> adding value.

The previous owners of our house enjoyed artex on the walls, purple & yellow panelling, and strongly striped wallpaper hung ever so slightly wonky so that all the furniture looked like it was leaning to the right ! It did not add value (luckily for us).

DIY can sometimes end up costing you money in the end – the 1st house I bought had all it’s sockets at a wide variety of interesting angles.

I have £4k in savings but also have £4k on a 0% credit card (being paid off monthly so it will be at £0 when the introductory rate ends next June).

So you’re at 0 then 🙂

Err, yeah LOL

This time next year, though, we’ll be millionaires!*

*£1,800

15 years ago I was in debt to around 17k. No mortgage at the time, this was just money spent of shit and going out getting hammered.

I knew I needed to get out of the rut so made a real effort to sort to rot, stop being so exstraviagnt and save.
The biggest Turing point for me was finally getting into the black/ positive number is the bank account.
There was a real mental switch seeing that number increase …… and I’ve been a saver since. Yes, I still gave a splurge now and again BUT, it’s rare and a real treat.

Your debit card plays for things with past hours of your life.
You credit card pays for things with future hours of your life.

6% return is pretty conservative for a stocks shares isa

Last year the FTSE All Share returned 0.98% including dividend reinvestment and excluding charges. The year before 1.18%, and the year before 20.81%. The FTSE-100 was worse in all three years.

Over the past 10 years the All Share has grown 21%, or 2% per year (excluding dividends and charges). The FTSE-100 11% over 10 years.

£3k of credit card debt on a 39 month interest free card that will be paid before the period ends. 2k in savings and a mortgage, so roughly -91k at the moment. Card debt is due to missus quitting work to be a full time mum and the subsequent loss of earnings coinciding with bits of the house dying. Luckily my job is pretty stable and I’ve recently had a decent salary raise.

Doesn’t really worry me tbh, life is too short to worry about money IMO. I’ve been debt free and in more debt at various points in my life. If things go pear shaped I’ll find a way to deal with it. There are plenty of people who’s lives are a lot worse than mine.

How did you guys decide it’s best for you if Mum stopped work? My wife wanted to stay in work and it’s working out OK – just one kid though.

Last year the FTSE All Share returned 0.98% including dividend reinvestment and excluding charges. The year before 1.18%, and the year before 20.81%. The FTSE-100 was worse in all three years.

Over the past 10 years the All Share has grown 21%, or 2% per year (excluding dividends and charges). The FTSE-100 11% over 10 years.

Yes, but much higher returns have been available elsewhere, with a similar level of risk.
Many people won’t even consider stocks and shares as an investment though. It’s seen as far too risky. Not surprising really, as the only time share prices hit the front page is when they fall 20% or whatever. People are, though, bombarded with the “good” news that house prices are rising rapidly.

Did have, not any more. I’ve currently got about £8K worth of loans and credit cards. My partner lost a well paid job but didn’t have any savings herself so I’ve had to prop us both up for a few months and there’s been a family funeral to chip in for recently but that should be rock bottom really. Onwards and upwards from here.

On the flipside I’m 7 years into my mortgage and have a workplace pension so my net worth is probably about £0.01.

The problem with stock market investments is that they require more knowledge for many people to be comfortable with what they are doing and mostly people don’t want to commit the money for appropriate lengths of time. To be comfortable investing you need to be happy with seeing significant paper losses at times and not panic. There was some panic selling after the Brexit vote and those that got out of the market lost out on the later gains.

Anyway, if you don’t have £100 in savings this is all irrelevant!

How did you guys decide it’s best for you if Mum stopped work? My wife wanted to stay in work and it’s working out OK – just one kid though.

We both wanted to stay at home until he reached school age. She won as I was earning more. It’s just something, that for us, was the right thing to do. Appreciate everybody is different. Missus loves spending every day with him and I actually get quite envious at times. Would have been completely debt free, but decided to take extended leave from work due to the baby being ill when he was born. Then our roof decided to die, hence a bit of debt.

My wife returned to work when ours had just turned 1 yr old and she has regretted it ever since (feeling like she had missed out on bonding time with them) but at the time it was too good a job to turn down – part time, term time hours walkable from home and at the secondary school we want them to eventually attend (not LEA controlled so staff members get the benefit of their children getting automatic places).

So she’ll go back when he starts school? We manage with mix of breakfast and after school clubs, gets to do loads of extra activities which is a bonus.

Yeah, possibly part time depending on how things progress with me. She was a self employed driving instructor before Funkmaster Jr came along and is thinking of doing something new. I’ve recently taken on a very different role, on a site nearer home, in order to get home quicker. More toddler time 🙂

If she wants to work full time I can possibly flex my hours for the school run. We’ll see what suits when the time comes though

After a horrid childhood spent with a single mother hiding behind settees from the next debt collector, I swore to myself I’d never have any debt.

I was successful in that aim.. actually that’s not quite true.. I had one debt, a mortgage.. the thought of it gave me sleepless nights so I worked my balls off to pay it off in about 10 years.

I now have substantial savings.. but at 50 years of age wonder what the hell the point of saving it all was. I have a comfortable lifestyle and a house that’s already too big for me. My kids were spoilt to death and wanted for nothing but are now adults. I could have blown the lot on fine wine and hot women.. Now I’m too old to cope with anything more than a hot chocolate.

So I spend my life looking at digits on paper.. too afraid of a life without that safety net to actually spend any of it hehehe

I’m comfortable with debt if it’s against an asset.

Mortgage, fine. Unsurprisingly.

I’ve had loans a couple of times when I’ve needed (wanted) a car, but always well below the purchase price of the car, so that if things really turned sour I could sell the car, clear the debt and have enough left to buy a banger as a replacement. And always paid off the loan before its term.

Taking a loan to pay for a holiday…. that’s the kind of thing I can’t understand.

You know, this is a funny one. I think it just has to be how you want to live your life. I hate managing money, hate it. It should just facilitate things. However I have friends for whom it is an all consuming hobby.

elzorillo, interesting point – a father of a friend worked his hole life in Standard Life, and over a few beers one night many years ago (we were just out of uni) he told us “I’ve followed religiously the advice I’ve been giving to clients all these years: save, invest, insure, plan for the future. Now, I’m retired, very wealthy, but I’m 70 years old and look back on all the things we could have done when I was younger. What the hell am I going to do with all the money now?”

I have a little savings but I earn very little compared to most on here. Good thing about not having money is you don’t spend it on things you don’t need (I only use credit card on foreign holiday, which is one week a year), I’ve only bought two tyres and brake pads in the last year and a half, oh actually some shorts because my other ones had such a big hole the saddle nose would get stuck in it.

Almost all my income goes straight out on rent and bills, hopefully be able to find a permanent job soon so can spend it on a house instead of someone elses.

It should just facilitate things. However I have friends for whom it is an all consuming hobby.

Indeed, I know folks for whom money is an all encompassing part of their lives, it’s accumulation, where it’s kept, and how “hard” it works for them, it seems like it’s almost a second job in their lives. One chap in particular I know has quite a fortune, he’s also bloody unhealthy (overweight, poor diet, too much stress etc etc) he’ll die before he gets to spent any in his retirement