The recession, benefits, the safety net, and the learning curve

Dithering_Dad

PasturesNew wrote: »

I thought stocks dropped 40%. Gold is up/down and there are warnings not to buy as much as there is ramping to buy. As for cash under the mattress, I don't even have a bed.

The best time to buy stocks is when they have fallen 40% (not before)

However, you don't have to buy equities, you can put your money into government bonds or into a cash fund that are safe as houses (especialy if you put £50k in one cash fund and £50k into another run by a separate company). If it's true that the government only look at savings and not investments, then this would be the ideal. Get a Halifax (or whatever) trading account and put your savings onto bonds and cash funds.

I did this when I thought the stockmarket looked iffy. When it was crashing and people we losing their shirt, I made about £100 on the cash fund. Once the market hit bottom, I went back into equities. I'm now back in cash because the market is looking iffy again.

The alternative would be to buy a small house with zero mortgage (or a small mortgage that's fixed) because home equity is not means-tested. I've though for a long time PN, that whatever 'gains' you make from drops in the housing market, you're losing because you can't claim benefits.

pawpurrs

They do actually ask about any stocks or shares on the income benefit forms. So presumably these do count.
You can sell your house and they dont count the capital for six mths, if your intention is to buy another home.
The person who said any one who owns should be made to sell, thats ridiculous! We all need somewhere to live, and those that dont own their own home, and falls on hard times, is actually in a better postion, in that they are then eligable for housing benefit from day 1.
I want to sell my car, to enable me to pay my mortgage, but if I do I will have to declare it as savings? No win situation!:o

Max_Headroom_3

I'm afraid the "put your money into stocks/funds/whatever" theory is flawed.

They ask you if you have any, they actually question you specifically about things like shares, bonds, etc etc.

So unless you lie (in which case you may as well lie about the money in the bank in the first place) the suggestion of moving it out of cash won't work.

The only advice I can give in relation to this is that I spent 2/3 of my payoff (PILON and redundancy) on a decent used car (I'd had a company car that of course had to go back), and a bit more on paying off the last bit of my mortgage. No one (yet) has asked me about this, only about how much money I have now.

So whilst this won't help the likes of PN with a large fund to buy property, my advice would be, if you're made redundant (or likely to be) then pay off debt or mortgage with any substantial chunks of cash and make it "disappear" that way. Not sure buying a car is a good idea financially speaking as it's depreciate of course, unless you need to get one anyway as i did.

However if you're at all MSE, you won't have debt and savings of any great amount anyway as it's a pointless exercise, always better to pay down debt before saving anything substantial.

Max_Headroom_3

pawpurrs wrote: »

They do actually ask about any stocks or shares on the income benefit forms. So presumably these do count.
You can sell your house and they dont count the capital for six mths, if your intention is to buy another home.
The person who said any one who owns should be made to sell, thats ridiculous! We all need somewhere to live, and those that dont own their own home, and falls on hard times, is actually in a better postion, in that they are then eligable for housing benefit from day 1.
I want to sell my car, to enable me to pay my mortgage, but if I do I will have to declare it as savings? No win situation!:o

Beat me to it!

I'd be inclined in your position to sell the car and put the money straight into your mortgage account, then it'll have never been savings, just clearing some debt.

Dithering_Dad

I thought it was strange that they would ignore shares, but I've never claimed benefits so I had no idea.

All my money is either stored in my pension pot (which is not means-tested and cannot be taken away from me in case of bankruptcy) or is being/will be used to overpay my mortgage, with £6k held in my offset account for emergencies.

I purposely structured my finances in this manner so as to make us as 'safe' from a recession as possible. Certainly, if I lose my job I will qualify for benefits ASAP, and if I keep my job then with all this pension saving and debt repayment I'll emerge from the recession in great shape to take advantage of the upturn. Well, that's my plan/hope anyway.

PasturesNew

Dithering_Dad wrote: »

However, you don't have to buy equities, you can put your money into government bonds or into a cash fund that are safe as houses (especialy if you put £50k in one cash fund and £50k into another run by a separate company). If it's true that the government only look at savings and not investments, then this would be the ideal. Get a Halifax (or whatever) trading account and put your savings onto bonds and cash funds.

Really? So stick the money into investments and it's off the radar? I'd like to see links to proof of that, just out of interest. Probably wouldn't get round to doing it, but it's useful to mull over.

Dithering_Dad wrote: »

I did this when I thought the stockmarket looked iffy. When it was crashing and people we losing their shirt, I made about £100 on the cash fund. Once the market hit bottom, I went back into equities. I'm now back in cash because the market is looking iffy again.

The alternative would be to buy a small house with zero mortgage (or a small mortgage that's fixed) because home equity is not means-tested.

All the investment side of stuff, for somebody that's never invested and NEEDS the money to be safe for a future house purchase (1-3 years/unknown) is too scarey for me.

I couldn't buy a house, I don't even know which county I'll end up in.

Dithering_Dad wrote: »

I've though for a long time PN, that whatever 'gains' you make from drops in the housing market, you're losing because you can't claim benefits.

Benefits I can't claim are quite minimal really. I do have an income from online earnings, which are touch/go on the threshold of WTC... so I never have absolutely £0 income.

Even if I had claimed full benefits and sat on my 4rse for the last 2 years, I'd have received about £800/month, which is about £18k. As it is, I've had random earnings (temping + online income) along the way - and the house I sold would sell today at least £80k less than I got for it. It would also have cost me 2 years of mortgage payments and maintenance and insurance etc over that 2 years, so cost to me would have been £12-15k or so there.

Also, as I've been self-employed for 2 years now, trying to sign on I'd probably hit the "not enough NI of the right sort in the past 2 tax years" too...

I'd rather just stay off the radar. Form filling and me aren't a good combination. I feel oppressed when The Man owns me.



I'd rather forage for my own £5 and do without, than have The Man give me £6.

sdooley

There should be a distinction between 'unemployment insurance' (contributions-based job-seeker's allowance) for the first year or two of unemployment and means-tested benefits.

At the moment they are paid at the same rates which is crazy. The problem though with a system like in bits of Europe where you get 60% of your previous salary for a year is that it dulls the incentive to get a job. After a year you're long-term unemployed and it's that much harder.

Dithering_Dad

PasturesNew wrote: »

Really? So stick the money into investments and it's off the radar? I'd like to see links to proof of that, just out of interest. Probably wouldn't get round to doing it, but it's useful to mull over.




All the investment side of stuff, for somebody that's never invested and NEEDS the money to be safe for a future house purchase (1-3 years/unknown) is too scarey for me.

I couldn't buy a house, I don't even know which county I'll end up in.


Benefits I can't claim are quite minimal really. I do have an income from online earnings, which are touch/go on the threshold of WTC... so I never have absolutely £0 income.

Even if I had claimed full benefits and sat on my 4rse for the last 2 years, I'd have received about £800/month, which is about £18k. As it is, I've had random earnings (temping + online income) along the way - and the house I sold would sell today at least £80k less than I got for it. It would also have cost me 2 years of mortgage payments and maintenance and insurance etc over that 2 years, so cost to me would have been £12-15k or so there.

Also, as I've been self-employed for 2 years now, trying to sign on I'd probably hit the "not enough NI of the right sort in the past 2 tax years" too...

I'd rather just stay off the radar. Form filling and me aren't a good combination. I feel oppressed when The Man owns me.



I'd rather forage for my own £5 and do without, than have The Man give me £6.

Sorry PN, people can't hide savings in investments, which makes sense really.

I'd check your benefits to make sure you're not entitled to more. I think the most important thing would be that your NI 'stamp' would be paid, which ensures that you're not going to miss out on your state pension or state second pension. If you're self-employed you don't qualify got S2P and if you're not paying any NI you won't qualify for a state pension - though you will receive pension credits.

I appreciate what you're saying about 'the man', but I would ask how you're going to support yourself through retirement - will you refuse pension credit, reduced council tax, heating supplements and other benefits you'll be entitled to?

I agree that your STR decision was a master stroke and has benefitted you immensely financially (I just wish Mrs Dither had let me do the same ) but does it still make financial sense to STR? especially given that the %age falls are slowing down and that you're missing out on benefits that you're entitled to.

I really don't see any shame in receiving benefits to which you're entitled (and to which you have contributed to with taxation) and I'd certainly be applying for them if I were in the same boat.

lostinrates

Dithering_Dad wrote: »

I agree that your STR decision was a master stroke and has benefitted you immensely financially (I just wish Mrs Dither had let me do the same ) but does it still make financial sense to STR? especially given that the %age falls are slowing down and that you're missing out on benefits that you're entitled to. .

If she gets a job a few weeks after buying and has to move 100 miles I think it would be a PITA having paid fees etc, to risk the small bumps along the bottom many feel we are at and have to do it all again. In PN's position, personally, I'd get employment first, then the house.
In fact in PNs position I'd try and remain self employed and up my income another way that she is obviously skilled at and live somewhere cheap and nice. But if she needs employment, she needs employment.

wolvoman

Surely if you get made redundant and immediately decide to pay off a large chunk of mortgage with savings then the DSS will find this out and still treat you as if you had savings above the benefits threshold?