Baby boomers struggle to pay off debts

treliac

IveSeenTheLight wrote: »

It's not such a bad thing really.
It should be an option to MEW / sell of property you own to fund your retirement lifestyle.

An excellent idea provided the safeguards are in place and the property is yours in the first place. But if mewing means only ever increasing your mortgage but never paying for the property.... to the point that you get into difficulties, which I think has been happening in recent years, I don't see that as being so good.

IveSeenTheLight

dopester wrote: »

Sounds like you're putting your ideals of generosity ever further in to the future. Not when they're 18, or 21, but after they've mortgaged up to buy a house, settled down, married.... when exactly?

My bet is you'll still be 'planning' to part with some money to help your kids when you're in your striped Scrooge night-robe and hat, with your 11's are up (on the back of your neck - reference to a Mel Brooks film.. old guy about to kick it, in Life Stinks).

It's not a scrooge mentality and theres not an exact time to give it to them.
I simply plan to help them out when they most need it (i.e. after having children) and when they have learned the value by making it on their own in the first place

IveSeenTheLight

dopester wrote: »

There you go again. You admire the other guy buying, restoring and planning to give a really hip restored Jeep of value to his grandchildren to use, but you're readying yourself to choose all the free options.

Nothing wrong with the free options at all... but again it's not some massive out of your way act of financial generosity.

What's the 'free' options in life in retirements and the amount needed for retirement got to do with the financial generosity?

They're two different aspects

RenovationMan

IveSeenTheLight wrote: »

It's not a scrooge mentality and theres not an exact time to give it to them.
I simply plan to help them out when they most need it (i.e. after having children) and when they have learned the value by making it on their own in the first place

I'm assuming that this is after you have also paid for them to be educated and supported them through the first tenative steps of their career? Its a nice thing to do, but I dont think they will thank you for it if it then means you beggar yourself in old age and they have to bail you out in the future.

Please note: I dont necessarily think you will go down this path, but thought I would play devils advocate to further the debate.

Percy1983

I have actually asked 2 boomers close to home (my parents) about where there finances are upto (being old enough and an accountant they actually talk to me about it these days)

To put it short they bought a £25k house on a 25 year mortgage just over 25 years ago, so its cleared now of course... nope there is 9 years left and 36k outstanding and my dad is kicking off that he is paying it until he is 65.

Good bit of cashing in the equity there.

RenovationMan

Percy1983 wrote: »

I have actually asked 2 boomers close to home (my parents) about where there finances are upto (being old enough and an accountant they actually talk to me about it these days)

To put it short they bought a £25k house on a 25 year mortgage just over 25 years ago, so its cleared now of course... nope there is 9 years left and 36k outstanding and my dad is kicking off that he is paying it until he is 65.

Good bit of cashing in the equity there.

Did they tell you what they spent the money on?

Mine had to MEW in order to pay for repairs to their property.

ukcarper

I bought a house for £60k 26 years ago mewed once for double glassing and have been mortgage free for almost a year and I am 60 now. Most of my friends the same age are also mortgage free. I’m not sure mewing is any more common in baby boomers than any other generation.

Percy1983

RenovationMan wrote: »

Did they tell you what they spent the money on?

Mine had to MEW in order to pay for repairs to their property.

They did say a new Kitchen was part of it and the rest was to pay off credit cards/loans. In short they have been living beyond there means for the last 25 years. Dare I say 2 Children probably play a big part in that sum but however you cut it it was living beyond there means to which my mum accepts that, my dad doesn't understand that. I did see some 'keeping up with the Joneses' when growing up (EG the houses on either side had a sky dish... next thing we have one, new cars appearing not long after next door).

In short if I had a loan, paid it for 25 years and then it was more than it started at I would be pretty annoyed.

Personally it just shows me what not to do. I am going to get a 25 year mortgage and pay it in 25 years or less all being well.

IveSeenTheLight

RenovationMan wrote: »

I'm assuming that this is after you have also paid for them to be educated and supported them through the first tenative steps of their career? Its a nice thing to do, but I dont think they will thank you for it if it then means you beggar yourself in old age and they have to bail you out in the future.

Please note: I dont necessarily think you will go down this path, but thought I would play devils advocate to further the debate.

I certainly don't plan to go down that path.
That said, it's worth considering passing on the inheritance before you die so that you get to see the benefits they reap from it.

Lets say for example, that I downgrade from the 5 bed place I have now to a smaller 2 bed and am able to give £50k to my kids for their mortgage.
They then due to smaller mortgage payments are able to go on regular holidays (which I may be able to join on occasion).
Isn't that better to see earliers than for them to receive the inheritance after I die and the grand kids are grown up and on their own path.

I don't plan to go bankrupt but it's worth considering redistributing my wealth earlier so I can leave the planet with the same as I cam in with.

I'll definately be looking to ensure my estate value is less than the inheritance tax threshold (currently I'm over it)

IveSeenTheLight

Percy1983 wrote: »

In short if I had a loan, paid it for 25 years and then it was more than it started at I would be pretty annoyed.

There are many businesses that work that model, including BTL.

you could borrow £120k on a £150k property and mortgage it for the 25 years.
Each opportunity, you MEW the equity back to the £120k and invest it else where.
You have the benefits of tenants servicing that loan so it doesn;t in reality cost you anything, but of course you get the regular MEW factor.

Adter 25 years, you still owe £120k on the loan, however as a percentage of the value it's significanty lower.

Debt is interesting as it's effect is erroded away with inflation.
As long as the business is covering the operating costs, capital appreciation is always shown in recorded history to improve