What to do with spare £1500 per month?

unitedwestand

californiagirl wrote: »

Wow, I'm so surprised. I would have thought the general consensus would be that leasing is a total waste of money, especially when I think of how it is half of what our monthly mortgage payment was and yet we give it back at the end of the term.

So buying a second hand car is a dumb idea?

Paying for something you'll never own is always a sure way to burn money.

I'd opt with buying the second hand car and putting your surplus in a diversified range of low fee passive funds in a Stocks & Shares ISA. If you're still only 20, you have time to go for slightly higher risk funds for a better return in sectors like emerging markets and the technology sector with a mix of lower risk/ reward accumulation funds.

greenglide

We are self-employed so won't be made redundant, and if we do lose our jobs, at least we won't lose our home

we both have limited companies so

So you aren't self employed, you are employed by your own company.

Pension contributions under these circumstances should normally be made by the company as employers contributions. Making employee contributions would negate the tax benefits that this has.

You should set up pensions for each of you. You have some catching up to do.

I assume you pay yourselves just over the lower earnings limit to get the qualifying years for pensions without actually paying NI?

unitedwestand

greenglide wrote: »

So you aren't self employed, you are employed by your own company.

Pension contributions under these circumstances should normally be made by the company as employers contributions. Making employee contributions would negate the tax benefits that this has.

You should set up pensions for each of you. You have some catching up to do.

I assume you pay yourselves just over the lower earnings limit to get the qualifying years for pensions without actually paying NI?

Good advice, you can also use your pension to invest in commercial property as well, it doesn't just have to be conventional pension funds.

DiggerUK

OK, you have been put in your place by some of our resident financial snobs. Don't be so silly again please.

Like you we are mortgage free, best financial move we ever made, we're about twice your age with final salary pensions, which are the only pensions worth having.
Saving for retirement does not require a pension, in our opinion it is the most ridiculous way to put by for retirement. You can't draw down on these savings in an emergency, as rules stand you can't access funds till your 55.
If you get enticed by someone whispering 'free money' in your ear, well, each to their own. There are more practical ways to put by for retirement. Our favoured vehicle is gold, might not interest you, or even have crossed your radar. Happy to answer any questions on the subject ( I'm MSE's resident gold expert by the way)

https://www.gov.uk/marriage-allowance/how-it-works Really will give you access to some tax free money.

Car....do you not have the option to buy the car you currently lease?
Best of fortune..._

Lrimas

What if I told you that your husband (and you) could retire in 17 years time with minimal changes to your lifestyle and 12.5 years with a few more?

I'm going to use calculations assuming he is a full time employee simply because I know nothing about limited companies. You will have to reculculate based on the info you have.

Your husband earns £50k. This works out to £3039 net per month. I'm assumig another £1k from you.

You spend £2.5 pm, meaning savigs of £1539 giving you a savigs rate of 38%.

According to MMM you can retire in +-23 years. (http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)

If your husband pays £7k into his pension per year (£583pm) it decreases the tax you pay. His net pay will decrease to £2701 but your savings increases by £583 giving you a savings rate of 41%. (savings+pension / net income+pension) meaning you can retire in 22 years.

If you stop buying stupid cars you can save an additilnal £300 pm increasing savings rate to 49% - 15 years to retire.

If you cut your expenses by another £300pm (giving you £1.9k per month to spend. Should be more than enough) you increase your savings rate to 55% - 14.5 years to retire.

And if you inrease your income by £500pm (e.g. by doing matched betting) you can increase it to 60% - 12.5 years until retirement.

So if I were you I would do that and invest my money in a stocks and shares Isa (and a pension off course). I personally just use a multi asset fund with a high equity percentage as it is easier. Buy smarter investing by Tim Hale and make sure you understand the basics.

I also didn't include state pension in any of my calculations. With it you should be able to retire much sooner.

Good luck!

[Deleted User]

Wow, matched betting - swimming with sharks....


Unfortunately it's very time consuming and after a couple of months you will find all the offers run out and your accounts will start to get blocked/limited very quickly. Repeat offers, if any, are few and far between with silly hurdles to jump through.


Plus if you make a mistake it can cost you big time.


Cheers

Anonymous101

jeepjunkie wrote: »

Wow, matched betting - swimming with sharks....


Unfortunately it's very time consuming and after a couple of months you will find all the offers run out and your accounts will start to get blocked/limited very quickly. Repeat offers, if any, are few and far between with silly hurdles to jump through.


Plus if you make a mistake it can cost you big time.


Cheers

I've been match betting for over 10 years. Its no where near as lucrative as it used to be. You'd be very hard pushed to make anywhere near £500 a month now I suspect.

Still worth doing but maybe as a means for the odd luxury or a holiday every now and again rather than as reliable second income.

Lrimas

I did say e.g. Matched Betting

There are other ways to increase your income including renting out a room, renting out parking, surveys, ebay, etc.

I personally make more via matched betting mainly through casino offers but i won't recommend it to beginners.

Either way, we are getting a bit off track from the point of my post

californiagirl

Lrimas wrote: »

What if I told you that your husband (and you) could retire in 17 years time with minimal changes to your lifestyle and 12.5 years with a few more?

I'm going to use calculations assuming he is a full time employee simply because I know nothing about limited companies. You will have to reculculate based on the info you have.

Your husband earns £50k. This works out to £3039 net per month. I'm assumig another £1k from you.

You spend £2.5 pm, meaning savigs of £1539 giving you a savigs rate of 38%.

According to MMM you can retire in +-23 years. (http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)

If your husband pays £7k into his pension per year (£583pm) it decreases the tax you pay. His net pay will decrease to £2701 but your savings increases by £583 giving you a savings rate of 41%. (savings+pension / net income+pension) meaning you can retire in 22 years.

If you stop buying stupid cars you can save an additilnal £300 pm increasing savings rate to 49% - 15 years to retire.

If you cut your expenses by another £300pm (giving you £1.9k per month to spend. Should be more than enough) you increase your savings rate to 55% - 14.5 years to retire.

And if you inrease your income by £500pm (e.g. by doing matched betting) you can increase it to 60% - 12.5 years until retirement.

So if I were you I would do that and invest my money in a stocks and shares Isa (and a pension off course). I personally just use a multi asset fund with a high equity percentage as it is easier. Buy smarter investing by Tim Hale and make sure you understand the basics.

I also didn't include state pension in any of my calculations. With it you should be able to retire much sooner.

Good luck!

Thanks, Lrimas. I hadn't heard of that website before, but now going to sit down with a coffee (home brewed rather than shop-bought, ahem) and have a good read.

The car thing is confusing me. We lease a new car every 3 years, but now that we have paid off our mortgage and debt, I'm becoming addicted to slashing as many outgoings as possible. I'd be perfectly happy with a used car a couple of years old (nothing flash - preferably Japanese as I know they are efficient, big enough for a family of 4 and all the crap that requires), and I thought saving up to buy one would be the best thing to do. I would never buy a brand new car outright as it's a total waste of money, but the camp seems divided in terms of whether to save up and buy used, or simply lease. I have some more research to do...

Lrimas

You are right that leasing a car is a waste of money. I think the comments come from you saying that you want to buy a car for £15-20k. That's a huge amount to spend on a car.

I fall in the "don't spend more than 1k on a car" camp, but there is a middle way. You should be able to get somehing really decent for a few thousand.