Prosperous soul in the making

jwil

savingholmes wrote: »

Thank ES. I have 2 x DB pensions - however in this method I am hoping to leave one untouched until 67 and draw one at 60. DH's current DC pension we are planning to leave until 67 currently. That leave us 4 small pensions which we are planning to transfer into a SIPP each to help mitigate tax. Because DH's current pension is so much smaller - we are likely to build the SIPP up in his name initially for tax reasons as you say. Assuming we are lucky enough to live to 67 and beyond - both of us would be in the lower rate tax bracket.

Definitely look into it JWIL. Remember I am currently planning for what I want to start doing a year from now. I'm reading all I can on it. JL Collins offered the simplest explanation of the stock market for me - you can watch him on you tube or get his book.

Thank you, I will have a look. Might see if I can get the book from the library.

savingholmes wrote: »

Thanks Crystal and DIA - wishing you all the best for you and yours - and the same for my other readers.

I have set myself some challenges which cover the first quarter of the year:

Health and wellbeing
* I aim to lose 14lb by 31/320 and DH aims to do the same
* I plan to build up to averaging 6000 steps per day - and then hopefully build it up further in the summer closer to 10000 steps. Hopefully this will include lots of walks with pooch and the family
* I plan to undertake craft activities at least once per month
* Write 8000 words of one of my books each month
* Arrange to see friends at least once per month
* Low cost alternatives to eating based date nights for me and DH - at least 1 x per month, preferably twice

Low spend January
* I want to spend £50 or less on food between now and my payday on the 15th. Our freezers are full - so that is just for fresh food.
* I want to pend £50 or less on fuel between now and payday. DH just filled up and mine is just under half full. I might have to put in half a tank.
* I want to avoid takeaways or eating out in Jan and see if I can reduce our spend the rest of the year too. I currently allow £150 for days out and eating out- ideally want to drop it back to £50 and throw that money at debt now - and in future the mortgage. I feel in the last few months I took my foot off the intensity meter
* I want to reduce my reliance on junk food to SW recommended limits for my weight which would be more like 400-500 calories per day. instead of the over 1000 calories I currently have

Debt reduction goals
* Plan to pay off £5605 by the end of March payday period

Home improvements by the end of March
* Finish off gloss work in each bathroom ideally by 5/1 or worst case by 31/1/20
* Repaint kitchen and utility in February (already have 1 tub of paint although likely to need more)
* Finish glossing our bedroom (4 wardrobe doors!) and skirting (I think I already did the outer door and the ensuite door
* Finish painting walls in our bedroom (tiny section left )

Great targets, good luck with them

savingholmes

Thanks Jwil and Honeysucklelou

Well yesterday I pretty much just chilled including binge watching youtube vids on FI. I made an evening roast dinner and played a couple of different games with DH and DD. DH and I also took pooch for a short walk. I paid DD to tidy our room and put our clothes away for us. I'm good at one-off tasks but struggle with maintenance LOL. Bless her she has been doing homework or revision nearly every day. I would be worried about her but she also went to a party over the Christmas period and saw friends 3 or 4 times. DS did a video call from Oz at 2am on his New Year's Day.

Today I am chilling at home while DH went back to work - using his motorbike today. A parcel should arrive for DD soon and then we are planning to take pooch for a short walk. I then want to carry on painting. I am conscious too that I want to use the next 4 days to tidy and declutter - there's no point painting if everywhere is too messy to enjoy it. Our cleaner has had 2 weeks off and I really miss her!
We need to sort my study again as it became the dumping ground over the last few weeks. If I get it cleared again - I want to measure it up for perhaps putting a double bed in there and redecorating.

I am also looking into themes for my website as it isn't up and running yet as it seems more complicated to start that it was last time I did it. I am hoping that if I can get it up and running that blog posts could form a future book and draw an audience.

savingholmes

£85.47 paid off a CC today. So good start to the year.

DancingInTheRain

Happy new year, hope it's a successful one for you & the family. Great start so far x

clearmydebts

savingholmes wrote: »

£85.47 paid off a CC today. So good start to the year.

A really good start to the New Year and so close to being under the £25K mark!

savingholmes

Thanks CMD and Dancing.

I've spent the last few days binge listening to Choose FI and similar youtube podcasts on FIRE and then added my own British spin on it. We turn 55 in 2025. If we pay into a sipp - we could get 25% uplift in tax relief. Even if you are not earning you can pay in (gross value) £3.6K p.a. until 75 to get tax relief. If I don't fatctor in repaying the mortgage - and if we got a 5%+ return on investment I think we could retire just before we turn 56.

If this became our goal - I still need to sit down DH and get him to listen - I would potentially pay £4K into a sipp between now and March. That would give us an extra £1K tax relief - and allow the money to start earning interest. We would then carry on as planned with debt repayments for the rest of the year - however they would then take a few months longer. We would then aim to put in a further lump sum / drip feed it in before the the end of the 20/21 tax year. We would then build up our EF and potentially do stuff in the house before commencing regular payments of £2K pcm into a SIPP from July 2021. (Our longest card is due to be repaid no later than July 21). If we successfully reduce some of our current discretionary spend on food, eating out, holidays, days out, clothes etc - we could reduce some of the impact of those moves on our DFD and on our EF - and long term hopefully be able to pay more into pension.

If we succeeded - and a stock market crash didn't wipe off too much value - and instead it increased - we could be FI other than the mortgage by age 56. I have no desire to literally do nothing - so the plan would be to earn some extra money during that period and put it into my SIPP and then potentially take the value of that around age 60. Any remaining money could go towards any outstanding mortgage. I think I could do consultancy or contracting work as well as potentially writing to earn extra money. The SIPP would be the safety net that would allow our move to the country/coast and give us breathing room if we couldn't get jobs immediately.

DH currently has £107K across 3 pensions. The plan would be at some point to amalgamate them into a sipp - and then withdraw them as a 25% lump sum and then on a drawdown. I've gone back through our figures and reduced some of the discretionary spend post fi - and think we could manage on £29K or less even with the pension recycling (£2.7K pa.) For the first 2 years - we could pretty much live off his lump sum I reckon. There would be a tax impact - if it was all in his name - however from age 60 I plan to withdraw enough to use my whole tax allowance from my sipp and one DB pension so still think this is the right call. You are limited on what you can put in a SIPP once you have taken a lump sum / started draw down.

4 years of my second DB pension was earned prior to April 2014 and I have a protected right to those benefits from age 65 if I wanted. I am unclear whether I can take the two separately ie part at 65 and part at 67 but if I could that would mean that it wasn't reduced. Otherwise may wait until 67 unless I have health issues.

hugglemonster

Happy new year savinghomes, sounds like you've got some great plans ahead and are very busy! I wouldn't know where to start with our pensions, really burying my head in the sand over that at the moment.

Enjoy your relaxing day, H x

savingholmes

In this latter scenario - I would get a lump sum of around £15K from the second sipp (based on £ put in prior to retiring and any recycling of the £2.7K) plus £35K from first DB lump sum. We could then put that either towards the mortgage or a newer car or a bit of both. This could mean that by age 61 - we have reduced our pension by say £50K from the lump sums and a further £14K from small OPs. This would reduce our mortgage from £145 to £81K. We could then either put that on interest only indefinitely or move to a repayment mortgage - if by then we hadn't downsized.

savingholmes

Hi Hugglemonster - I've been trying to learn all I can - as I don't want to live my life on auto pilot and wonder where it's gone. If we make changes sooner rather than later loads of options would open up for us. I imagine it would be the same for you.

I am currently doing the Frugalw00ds ultra frugal challenge this month so will see how we get on

savingholmes

DH has agreed that we should aim to pay £4K into the SIPP before the 31/3/20. We will then get £1K tax relief on that so a pretty immediate return. Just waiting for V@n....d to finish setting theirs up (and pay day) before I can start. That means I will pay about £500 pcm off our CCs for the first 3 months. After that will prioritise CCs again. Hoping to then make a further overpayment to the SIPP in the 20/21 financial year out of savings we plan to accumulate in our EF. This may mean that our DFD spills into 2021 - however the goal would be to create some extra income or reduce our budget so that we meet our goals in year.

DH believes he is due to get a 2% payrise - not sure when. If it materialises that will help. I should get something at some point too. I also have some tax to reclaim from packaged bank account and ppi reclaim. Need to see if we can sell anything this year. Also need to see if I can start creating an income from writing. Planning to use my personal spends for Jan on a software package for my website - it comes to around £67 for the year. I've started reading more fiction again - a 99p deal for 3 months on K1ndl3 unlimited - and my dreams are already getting more vivid. I am hoping that will then help with me writing my book(s).

I want to ensure that if we do get to FI in 2026-30 that we are:
a) financially prepared and have at least our base expenses covered
b) fit and healthy (a long way to go!!! - want to lose at least 1 stone per year before then)
c) have plans in place for the time to be productive including potential income earning passion projects

Some of those who earn money from blogs / podcasts / youtube - say it took 3 years before that started in earnest. If I start now - I could earn money to accelerate our plans - and have a continuing activity to do once we are financially independent. DH would love to work outdoors more so he hopes to pursue something like that once we are FI - and earn income from that if he can at that point. It is likely to be a major pay cut but that wouldn't matter if we were FI.