Tidying up the mess

BabyStepper

Those who have debt that will take 10 years or more to sort out have, I believe, much more pressing problems than paying into their pensions. A lifetime of over spending can easily continue into retirement. (I should know, that's where I was headed.) All you need to create financial difficulties is to spend more than you make, whatever that figure is. Even if you have a huge pension that problem will not go away on its own.

The purpose of cancelling pension payments to contribute towards debt is to make sacrifices, to learn the difference between a 'need' and a 'want', to learn the actual value of your money and to make lots of progress quickly. Hence the 2 year time frame. In my experience, motivation, determination and drive are needed. Knowing that you're not going to pay into your pension until this debt busting is finished can INCREASE those feelings and push you forward. That's the point.

Dave does not just advise 15% towards pensions, he advises investing over a lifetime and overpaying your mortgage too. There is more than one way to build wealth, for retirement and anything else and he doesn't limit his advice to pension contributions. Older Dave R fans will already have paid into pensions for a long time (or not) so age has little relevance, the point is that we need to start managing our finances well NOW. Maybe you could learn a bit more about his advice before commenting on it enthusiasticsaver?

I don't believe Dave has all the answers. Neither does Martin. I love this website because it helps me make my cash go further, I can be pointed towards bargains and deals and we all encourage each other which is great. In terms of a long term financial strategy for life, this website has very little to offer. And that's ok, that's not what it's here for. Mostly I try to ignore the fact that the debt free roll of honour has less than 2000 posts on it in 13 years.

I've learned a lot in the last year and a bit. I don't take decisions lightly and I do take full responsibility for those decisions once made. While my hybrid Martin vs Dave plan is working so well, I'm going with it.

enthusiasticsaver

BabyStepper wrote: »

The purpose of cancelling pension payments to contribute towards debt is to make sacrifices, to learn the difference between a 'need' and a 'want', to learn the actual value of your money and to make lots of progress quickly. Hence the 2 year time frame. In my experience, motivation, determination and drive are needed. Knowing that you're not going to pay into your pension until this debt busting is finished can INCREASE those feelings and push you forward. That's the point.

Dave does not just advise 15% towards pensions, he advises investing over a lifetime and overpaying your mortgage too. There is more than one way to build wealth, for retirement and anything else and he doesn't limit his advice to pension contributions. Older Dave R fans will already have paid into pensions for a long time (or not) so age has little relevance, the point is that we need to start managing our finances well NOW. Maybe you could learn a bit more about his advice before commenting on it enthusiasticsaver?

Does he really say a pension is a "want" rather than a "need"?

Either way I found your comment rude and uncalled for so am bowing out now.

PositiveBalance

BabyStepper wrote: »

Maybe you could learn a bit more about his advice before commenting on it enthusiasticsaver?

enthusiasticsaver wrote: »

Does he really say a pension is a "want" rather than a "need"?

Either way I found your comment rude and uncalled for so am bowing out now.

Erm, that escalated!


*Feels uncomfortable*


I'm not sure if you meant that to come across as strongly as it reads on t'interweb, BabyStepper, but it does come across as rather strong. enthusiasticsaver gives out good advice although she has clearly not seen much of Dave in action. (Click here to remedy that for anyone who hasn't and wants to.)

I'm not sure if you read that wrong or if that's scathing sarcasm, enthusiasticsaver, but perhaps look at the above link and see what you think, just for your own reference? (Ignore the religious bits - it's very common sense and funny.)

*Feels extra uncomfortable so runs back to own thread, locks the door and puts the covers over her head*

enthusiasticsaver

PositiveBalance wrote: »

Erm, that escalated!


*Feels uncomfortable*


I'm not sure if you meant that to come across as strongly as it reads on t'interweb, BabyStepper, but it does come across as rather strong. enthusiasticsaver gives out good advice although she has clearly not seen much of Dave in action. (Click here to remedy that for anyone who hasn't and wants to.)

I'm not sure if you read that wrong or if that's scathing sarcasm, enthusiasticsaver, but perhaps look at the above link and see what you think, just for your own reference? (Ignore the religious bits - it's very common sense and funny.)

*Feels extra uncomfortable so runs back to own thread, locks the door and puts the covers over her head*

Thanks for the link PB and I apologise for making you feel uncomfortable. I would not want to dissuade you or anyone else from commenting on Babysteppers diary.


I am aware of DR's babysteps which really is only financial common sense but he has made millions espousing this. I have also listened to bits of his podcasts. I am not a fan though as you may have gathered but cannot argue with the bulk of his advice. He grossly overestimates investment returns though and even some US commentators have taken issue with him over this and he is obviously not a fan of pensions.

In the case of UK pensions I can understand why people would prioritise debt repayment over pension overpayments but to go as far as cancelling minimum pension payments seems a step too far (especially if the scheme is a defined benefit scheme as many public sector pensions are). Maybe US pensions are different and I am being very frank here I do not care enough to find out. I listened to about 10 minutes of the link but he annoys me intensely but I am not sure why :rotfl:. Obviously a lot of people find him funny though so each to their own.

savingholmes

Hi - I've just caught up on your diary. It's great to see your progress but as importantly see your anxiety levels drop.

I too am doing a hybrid of DR and MSE plans. I didn't stop my pension (baby step 4) at all as mine is career average salary and would feel daft to me to stop. Similarly not stopped OH's as he gets some match. In our circumstance all our debt was on 0%. I am also slightly overpaying my mortgage (a whole £79 pcm) (should be baby step 6) as it is currently on interest only and was stressing me as psychologically felt wrong not to pay anything to it.

All that to say - I would reinstate your pensions asap. I do think though that DR's plan of paying off small debts and getting gazelle intense - has helped me be much more focused on getting out of debt quicker. I sat down with my laptop and a spreadsheet - I have a year's zero based budget by month. I have worked out my emergency fund (baby step 1 & 3) and savings pots for annual bills/wants. I have worked out when I can be debt free (baby step 2) I can start investing more to get to my 15% gross investment into retirement (baby step 4). I am currently paying for my DS at uni (baby step 5).

However - for the first time I understood that I could plan beyond my debt free date to be mortgage free and then to be rich in retirement. Using his plan as a guide - I worked out that I could have £0.5M in investments by the time I was 67 if we carried on working - even just using a 5% compounded return rate.

Take the best of the advice that's on offer and work out what you want to do. By the way I bought both the millionaire books you mentioned - I prefer CH's so far - much easier to follow and I found it less boring.

HTH

warby68

I too would reinstate the pensions ASAP. You've proved you have discipline now so why not? Again, I'm in the school of thought that would never have cancelled but at least BabyStepper has always had it in mind as a priority to reinstate once her 'get control' mission was established.

She seems to have taken offence at the disagreement with DR who she loves. Hopefully she can get past that. ES makes so many considered suggestions on this forum to help and takes a lot of time to explain the rationales. I am quite simplistic - if the employer matches by 200% , I can't see much that beats that as a wealth builder.

I also actually see pension as a priority non negotiable bill like tax, NI and Council Tax and not a luxury to be sacrificed. Different mindset for sure.

BabyStepper

Hey everyone - thanks for the lively debate! All very helpful.

enthusiasticsaver I've made no secret of my gratitude for your helpful comments and advice on my diary, and that has not changed in any way. I did not mean to cause offence and I'm sorry if that happened. Looking back I have no idea what I was so wound up about, so there's food for thought right there. Please keep coming back, it wouldn't be the same without you. Here's some coffee so we can all settle a bit and maybe entice PositiveBalance from under the covers. . :coffee::):coffee:

This made me laugh...

enthusiasticsaver wrote: »

Maybe US pensions are different and I am being very frank here I do not care enough to find out. I listened to about 10 minutes of the link but he annoys me intensely but I am not sure why :rotfl:.

He can be extremely aggravating at times, I get it. :rotfl:

However, given this chat we've just had something is becoming clear. I'm not in a debt emergency any more. Emergency measures are not required. It's time to review what I'm doing and rethink it all, this time with a bit more confidence in my own abilities to not just go mad with a credit card because I feel like it. I am so far away away from that, yet I'm behaving as though I'm at risk of doing it. Weird.

Anyway, Oh has rejoined his pension and found out about a second contribution he can make that invites another match, albeit much smaller. This is a new thing that has been introduced in the last couple of months. We have the paperwork and will be looking over it this weekend. In a stroke of good luck he also gets his cost of living increase this month so we won't lose as much as we thought. Great. I'll just need to crunch the numbers once we know what's what.

We have decided that my pension will need to wait for now, but we will review this every single month as we reduce the debt. I'm happy with this for now but I expect as the debt goes further and further under £10k it will make more sense to start contributing to my pension. Maybe I could start small and increase contributions as the debt reduces. We'll see.

savingholmes I love the sound of your Dave R mashup plan, you've really inspired me to try and arrange something similar. While all my debt is now on 0% something like this would definitely work for me now. Planning beyond the debt free date has come into my mind now and then, but I've needed to focus on the debt so I put it off, also thinking I was getting ahead of myself. I'm going to start now, just need to figure out an amazing lifelong spread sheet. Thanks for the info.

I hope everyone has a great day.

enthusiasticsaver

Thank you for that babystepperand maybe I was a little over sensitive too so PB please come back. Peace is restored. :rotfl: I would miss this diary as I think it is a great example of how someone can turn their situation around so if you feel DR is partially responsible for this then he deserves credit for maybe making you see your finances differently and changing your spending behaviour. You and your OH deserve the biggest pat on the back though.

I agree 100% with your action on pensions. We have found they are the cornerstone of our early retirement plan with no mortgage and investments/savings providing the gravy (as DR would say :rotfl:).

Good luck with crunching the numbers at the weekend. I agree definitely though that you are not in debt emergency any more but it will be nice for you to see it gone. Enjoy your day and hope you don't get the thundery showers and high winds we are forecast to get later today.

enthusiasticsaver

warby68 wrote: »

I also actually see pension as a priority non negotiable bill like tax, NI and Council Tax and not a luxury to be sacrificed. Different mindset for sure.

Yes definitely agree and I have been surprised how many people don't treat it as a priority. Maybe it is the bad press pensions have got or the failure of a few schemes but we have pension protection in this country. The government keeps changing goalposts on public sector and state pensions so that doesn't help people have confidence in them. For us though they have worked 100%. We could not have taken early retirement without them and have given us a secure income. State pension is only around £650 a month each so we could not survive comfortably on that. Our council tax alone is around £200.

An ex colleague of mine on a very high salary has just taken a voluntary leaving package from the University we both worked at. Me for 20 years and him for almost 30 years. He is the same age as me, 59 and has openly said he wanted the redundancy payout to clear high debt, he has always struggled with finance. A mutual friend suggested to him as I would have done that at least he can take his very generous public sector DB pension without actuarial reduction as he is over 55 and he said he cancelled his pension soon after he started due to having debt issues and never restarted it. Madness as he was a high rate taxpayer as well. Now he is late 50s, jobless and all his redundancy money has gone to repay debt and he faces a retirement in poverty unless he gets an inheritance which I think is what he is banking on.

Sorry for the long story and for sidetracking your diary babystepper. Back to debt now

in_need_of_direction

Glad to see peace and harmony restored but must confess to enjoying the different viewpoints. My tuppence worth is to get the pensions underway as soon as possible. I had a non contributory pension until a job change at age 34. I put off joining the new employer’s scheme as I had other financial pressures that I believed would have been resolved by the time I was 40 when I also anticipated being mortgage free.
I’m now 51 with only a further 2 years’ pension contributions. It’s looking scary.