Nice people thread part 7 - a thread in its prime

Spirit_2

michaels wrote: »

I very much like the thought of being mortgage free, not so much that I don't believe in debt but because I see it as giving me choices over how I choose to balance my life between consuming (taking the kids to see their Caribbean relatives, pursuing after school activities etc) and enjoying a better lifestyle working fewer hours and spending more time with the family.

1)Living frugally this position in about 4-5 years.

2) incentive to cap my earned income whilst diverting money to my pension. This would result in big increases in my pension pot at the cost of small reductions in my take home pay

3)13 years is how far back I would be pushing my mortgage free date which psychologically I am uncomfortable with.

4)I know that whilst the mortgage remains I will continue to be a tight ar*s and perhaps that is unfair on the kids.

If I am reading this correctly 1 & 4 are linked, your current position aiming to be mf in 4-5 years leads you to be " a tight 4rse" - who is saying that you are tight? Mrs M? The children? A voice in your head?

What are the children going without now? What extra would make a difference to the quality of family life?

2 was my choice 12 years ago when I contracted to buy added years in my FS pension scheme. My best ever financial decision and my only vehicle for 'long term savings'.

3 When we needed to ( OH lost his job post the pension decision above) we pushed our mortgage term out a long way so that we could protect key parts of our chosen way of life.(against all my previous convictions - like your psychological barrier). When times were better we reduced the term down again. I was tempted to be frugal and be mf quicker, however DH did not want that as he wants us to have discretionary spending power. We have gone his preferred path and it works for us.

We have 3 years to go on our mortgage and if I was frugal it could be gone a lot sooner.

My thought - the key thing is to listen to your wife and if being mf is not the thing you both want most, then you need to take her preferences into account.

chewmylegoff

michaels wrote: »

This is more a question for Mortgage Free Wanabee but they are rather messianic in their true faith so I thought I would ask NP for their advice.

I very much like the thought of being mortgage free, not so much that I don't believe in debt but because I see it as giving me choices over how I choose to balance my life between consuming (taking the kids to see their Caribbean relatives, pursuing after school activities etc) and enjoying a better lifestyle working fewer hours and spending more time with the family.

Living frugally now I hoped I might achieve this position in about 4-5 years. However the govt has put a large spanner in the works with the removal of child benefit (and no I don't think it was right that I was getting it but I had budgeted it in). The main issue being is that it gives me a large incentive to cap my earned income whilst diverting money to my pension. This would result in big increases in my pension pot at the cost of small reductions in my take home pay. However it would also push back any potential mortgage free date into the future. In theory just looking at my net asset position I should be able to ignore the temporal effect but I am still 13 years (under current rules) from getting my hand son the pension lump sum so effectively that is how far back I would be pushing my mortgage free date which psychologically I am uncomfortable with. I know that whilst the mortgage remains I will continue to be a tight ar*s and perhaps that is unfair on the kids.

Thoughts?

My thoughts are that it is not sensible to pass on the offer of free money, so I would be chucking cash into the pension.

If you pay off the mortgage then presumably your attention will then turn to your pension and you'll still be tight because you'll be worrying about whether your pension pot is big enough- you'll also have missed out on the compounding of the money you could have put into your pension.

chewmylegoff

To some extent it does also depend on what the interest rate on your mortgage is though. If you're on a low cost tracker that strengthens the argument for shovelling into pension.

lostinrates

Brrrr. On an afternoon when it's so warm the horses are sweating in the sun dh and I had to be in the east facing garden.

Still, worth it, seeing it start to take shape. My neglected white border was a holding bed for some stuff that we always planned to have elsewhere in there, and the triffid like mock orange was taking over. I have planted this next to a Mexican mock orange, which I have never grown before, for continued scent through out the summer. Hope it likes it here.

michaels

Thanks everyone - just the sort of responses I was after from people who have been there and got the t-shirt.

The mortgage is 2% over base tracker offset (effectively IO) currently I have about 60% saved elsewhere at higher rates, it runs for up to about 15 years at the moment. I have been trying to save about 20-25k per annum out of income as 'mortgage repayment. Next year I could give up 4500 of net income and pay 12k in to my pension. At 55(?) I can get back 25% of my pension pot tax free if current rules continue. I have paid about 9% of salary in to my pension for about 17 years but I suspect it is worth little more than the contributions currently.

My thoughts are split between PNs and Chewies with Spirit and the SSS providing useful real life counterpoints.

(The is also the full Chewie option of giving up 20k of income for a 53.5k boost to the pension fund...!)

chewmylegoff

sss555s wrote: »

Ok so you have to change your plans as things will be tighter but why consider making them even tighter still by diverting more of your salary to your pension considering your probably accounting for every penny as it is.

i think the point is that child benefit is assessed on your taxable income, i.e. your income after making pension contributions. so michaels is thinking that he will reduce taxable income by making larger than planned pension contributions so that he can continue to receive child benefit - the trade off is that he will not overpay the mortgage as planned - so not making things even tighter, but just saving in a different 'vehicle'.

sss555s

chewmylegoff wrote: »

i think the point is that child benefit is assessed on your taxable income, i.e. your income after making pension contributions. so michaels is thinking that he will reduce taxable income by making larger than planned pension contributions so that he can continue to receive child benefit - the trade off is that he will not overpay the mortgage as planned - so not making things even tighter, but just saving in a different 'vehicle'.

That was the "wooosh" part.

All makes sense now :beer:

PasturesNew

michaels wrote: »

I have been trying to save about 20-25k per annum out of income

I'd like to start EARNING that much

PasturesNew

Trying to look at broadband. I want enough (unlimited) broadband to be able to use it for TV viewing
-AND-
I want to get that Android phone thingy - no idea how much that is.

SO

The big question that occurred to me was whether I have to have a landline.

It all starts to add up to a bit too much. BB is about £13, a landline would be about £13 and the phone thingy is ... er, dunno, but let's say £30. That's £56/month!

I need to drop one of those really .... and get proper figures.

silvercar

vivatifosi wrote: »

Does anyone know how to make a complaint about a political circular?

Whoever is running the election. So if it is a council election, it is the elections office at the council.