What to do with spare £1500 per month?

ThinkingOutLoud_2

OK, so lots of people saying you did right and wrong.

The fact is that you have as you say got yourselves mortgage free by being disciplined enough to focus on that. The "after the event" fact is that with mortgage interest rates so low and historic and current returns on monies invested via a pension - your true wealth would be much higher had you directed some of your past income into a pension. The gap is significant. So be it.

The good news now, as you say, is that you can suffer some unforeseen income set back and survive without a mortgage to pay.

First priority IMHO, you should build up an adequate but not excessive emergency fund. Then, you can survive any immediate "shocks" without having to access you house equity at a time when it might be difficult to get a another mortgage. That can of course sit in an ISA, so untouched growth avoids tax.

Once secured with a safety net - you can and should focus on getting the maximum you can into a pension. As noted, your £200 pct plus state pensions will likely not match your retirement desires and won't give you any option to retire a bit earlier than your eventual state pension age. Maybe you want to work for ever?

As noted, it is very tax efficient if you utilise your limited company as the vehicle to pay into your pension. If you can put in £1500, then as % of your income again as noted, this would start to make amends for your pension paucity. The tax your "get back/save" from HMRC will ensure each 80p you put in gets a good up front boost.

I think as you are now looking to the future, it is worth you understanding how much you need in your pension pot (whatever form that takes) to retire as you would want. Then you can know why you are saving that amount and feel content with your plan and your aims. There are lots of calculators out there that will give you a sense of what you need to put in to get out what you desire - see the many other forum posts or MSE's own pages on this.

As to the car - the question is what you want and how much of your hard earned cash you want to splurge vs other things. The car will lose value (significantly) and cost you money to run / insure, but no doubt give you pleasure and a way to get around. Decide what you want / need and then sit the various ways to acquire that side by side and see what the real total costs of ownership are.

As to investing solely in gold - there are several posts on this forum decrying why this is not a good things - especially as the mainstay of your investments for the future. Don't!

Happy planning!

ColdIron

Whether you lease or buy a second hand car is a secondary issue, personal to you, life is for living. But you should look at your tax and pension situation. There is no earthly reason why hubby should pay higher rate tax in your circumstances and pensions are a very efficient way of structuring your affairs with a lot of upside. Do you have an accountant? This is their bread and butter. I would be worried if I had no pension provision, living off the state pension plus £200 a month split between you will be no bed of roses. Your older self will thank you for sorting this out early

[Deleted User]

AnotherJoe wrote: »

Shockingly bad financial priorities. You aren't the only ones, there are many people on the mortage free wannabes forum proudly proclaiming how they plan to be mortage free, turning down free money from employers and HMRC that could be in their pension.

Pension should be first, mortgage second (not putting that money in your pension instead of mortgage has long term cost you literally many tens of thousands of pounds ) and now you intend to splurge your next lot of money on a car ?

Start saving into a pension unless you think £200 a month gives you a sustainable life style?

Do not save up £20k to buy a car.

Credit card as emergency savings works until you get made redundant.

Yup, how reckless of you to be living mortgage free and how dare you enjoy your life as time passes.

Far better to earn buttons completing surveys locked up exclusively in pensions for your old age should you need a care home

Cheers

Bravepants

My partner and I are also mortgage free, but we are mid to late 40s, have workplace pensions and additional retirement savings.

I think being mortgage free is more about a feeling of security rather than having financial good sense. No-one on God's earth can take our house away from us, and that's a good feeling!

Regarding cars...I bought a second hand Mazda 6 for £7.5k 10 years ago, it had 36000 on the clock. It's a good, big reliable car and it's still going strong today with 136000 on the clock. OK it's getting a bit rusty round the edges but it has been so reliable! Yes, it's worth about £400 if you look at Autotrader, but £700 a year for reliable, debt free, motoring is pretty good in my view.

We are thinking of buying a "modern classic" car next, cheap and less prone to depreciation. The aim would be to look after it, so that when we sell it we lose little if no money, and maybe it even appreciates.

Anonymous101

Bravepants wrote: »

My partner and I are also mortgage free, but we are mid to late 40s, have workplace pensions and additional retirement savings.

I think being mortgage free is more about a feeling of security rather than having financial good sense. No-one on God's earth can take our house away from us, and that's a good feeling!

Regarding cars...I bought a second hand Mazda 6 for £7.5k 10 years ago, it had 36000 on the clock. It's a good, big reliable car and it's still going strong today with 136000 on the clock. OK it's getting a bit rusty round the edges but it has been so reliable! Yes, it's worth about £400 if you look at Autotrader, but £700 a year for reliable, debt free, motoring is pretty good in my view.

We are thinking of buying a "modern classic" car next, cheap and less prone to depreciation. The aim would be to look after it, so that when we sell it we lose little if no money, and maybe it even appreciates.

I'd like to be in that position 10 years from now. I'm doing my best to make sure that happens. :money:

With the cars I think that's the best approach if you're able to stick with one car. We have followed a similar approach with my mrs' car buying a 6 y.o. Toyota Rav 4 three years ago. However in my case I receive a car allowance from work in lieu of a company car and that allowance comes with restrictions on age and mileage so I need to play the game a little bit more. Being sensible and looking for value is always the way forward whatever your scenario though.

Bravepants

Anonymous101 wrote: »

I'd like to be in that position 10 years from now. I'm doing my best to make sure that happens.

With the cars I think that's the best approach if you're able to stick with one car.

Good luck to you! :j


I tend to keep cars and run them into the ground. I had a Fiesta Mark 2 from 1992 until 2002, and when I sold it for £100 it had 180,000 miles on the clock. It was a great car, always started first time. My mechanic told me I would have to change it the following April as there was only so much welding he could do...I lived by the sea and sea air has a habit of accelerating corrosion. Engines run and run these days.

Malthusian

jeepjunkie wrote: »

Far better to earn buttons completing surveys locked up exclusively in pensions for your old age should you need a care home

The OP is in her early 30s. Her pension will be accessible (as things stand) when she is in her late 50s, i.e. middle-aged.