Nearly 40 with no pension or mortgage

bigmaz

Hi

Just wondering if I could get some inspiration in here. (I say this in the most polite way possible, but before you read, I am not looking for any lectures about my situation, or anyone having a go at me for asking this, if so please don't reply )

My question is: If others were in my shoes as below, what would you do? Just looking for inspiration, I will also talk with an expert at some point to go through my options (if I have any).

I am nearing the big 40, separated, paying child Maint. For 2 kids that live with my ex. Living in rented accommodation. No pension set up, no savings, I am a LTD Company Contractor. I have a decent income, my goal for the next 2 years is to save as much as I can, I spend as I earn, my goal is to stop that, and save.

I am conscious I am heading closer and closer to retirement age, and looking at ways to invest for the future. With regards to property, I am in a flat that I really do not want to move out of, the landlord doesn’t want to sell, and I could not afford to buy it anyway. If I was to buy something, I would have to downgrade. So that is not an option I want to go down. (But may have to if I want to invest my money into something)

I would love to buy a cheap place and rent it out, but looking at the criteria to get a Buy to Let mortgage, I won’t qualify….

Thank You

PuzzledDave

You seem to have come to long term goals -- get pension and if I read between the lines - have your own home that is of equal quality to your current flat. However, I think you need some medium term goals ... a roadmap on how to get there. You seem to suggest you have little or no savings/assets right now.

Assuming I have understood correctly, I guess:

Step 1) Look seriously at your outgoings, what are you overspending on and where can you cut back. If you don't know where you are overspending - then urgently review your bank accounts & credit card statements. Add up ALL spending and make "pots" as to where it went -- e.g. I spent £10 at Subway -- so that is the "eating out" pot, £20 on shoes -- so that is the "clothes" pot ... e.t.c. Get a really good idea who is taking all your hard earned money. Use this site if it helps http://www.stoozing.com/calculator/soa.php

Once you have done that, you should have a much better idea how much you can save. Each month, put this money away as soon as you are paid (or pay yourself via ltd company). If you wait until the end of the month and save whatever is left over -- then it sounds like you will spend it.

If you come up with monthly savings with less than 20% of your current income, then you are not really trying..

Step 2) Use your new monthly savings to pay off all debts over 0%.

Step 3) Build a cushion you can fall on should you fall on hard(er) times.

Step 4) Decide which is going to come first: home or pension. You can do both at the same time if you desire - but depending on the price of the home you are aiming at, doing both might significantly telescope the time you can come up with the deposit.


LTD company is a great vehicle to build a pension, but from what you describe (no secure home, no savings) I would suggest there are more urgent matters to attend.

squirrelpie

Decide which is going to come first: home or pension.

No need to do this immediately, I think. Instead open a LISA and put all your spare cash in there. Gets free money added to it and can be used either for a pension or to buy a first property.


If you're serious about saving though, then buying some place you can afford and living in it whilst paying off its mortgage is likely to be a better bet than continuing to pay rent for a nice flat.

xylophone

I am a LTD Company

Post 4

https://forums.moneysavingexpert.com/discussion/comment/75049267#Comment_75049267

justme111

squirrelpie wrote: »

No need to do this immediately, I think. Instead open a LISA and put all your spare cash in there. Gets free money added to it and can be used either for a pension or to buy a first property.


If you're serious about saving though, then buying some place you can afford and living in it whilst paying off its mortgage is likely to be a better bet than continuing to pay rent for a nice flat.

LISA may be good but on its own it is likely to be seriously inadequate as a vehicle to save for a mortgage and pension with a limit of 4 k yearly .
I am not familiar with btl mortgages in detail but there must be some for non home owners - how much research into it have you done?

atush

I agree you need a full MOT with your finances. I am 100% sure you will find places to cut back. And cut back hard- short term pain for long term gain.

Save all you can into a current account that pays interest. You need a safety cushion if you have no current savings. Do you have debt?

Open a pension thru your limited company. It will save you loads of tax and you will begin your retirement savings. An LISA is a good idea too.

As for your flat, eventually you will need a place to live that you own. You can buy one in an area you know that has a good rental market (university towns and near hospitals is good) and then rent it out until you can either move there, or sell it to afford to live near where you are now.

bigmaz

Thank you so much everyone, I really appreciate the time you guys took to write these replies. I'll have a good read over them, an amazing start

crv1963

I would suggest a couple of things-

1) Follow the advice about reducing your outgoings, but don't live like a pauper!
2) Separated so not divorced, so depending on how this pans out you should make a certain amount of preparations for this; whoever issues the divorce petition is in the driving seat for how fast this goes through; don't let emotion create problems- I spent more on letters arguing over the dog than the children! You will be paying child support until they are 18 so factor that into your plans; whatever you do go for a clean break so that you are separated financially forever.
3) Pay down credit cards first in case you then need to use them to cover legal fees.
4) Then do all three things at the same time, pay down debt, save deposit for property and contribute to a pension.

BobQ

atush wrote: »

Open a pension thru your limited company. It will save you loads of tax and you will begin your retirement savings. An LISA is a good idea too.

As for your flat, eventually you will need a place to live that you own. You can buy one in an area you know that has a good rental market (university towns and near hospitals is good) and then rent it out until you can either move there, or sell it to afford to live near where you are now.

Two comments, As I understand it a LISA is for 18-39 so if poster is nearing 40 he should not delay. Also using a LISA to buy is fine he has never bought a property. Not clear if family home was once owned.

The above suggestion to buy a flat and then rent it out is fine if he gets a BTL mortgage but buying a flat and then deciding to rent it out may be problematic if the mortgage provider does not agree to it or loads the rate. Also BTL mortgages will require significant capital for the deposit.

That said its important the OP starts saving into a pension or ISA asap to actually start saving and getting the tax benefiits from it.

justme111

Well seeing he is separated and not divorced he would be better off to accumulate debt now buying what he would need anyway and stashing money in the mattress.:D:o

atush

Probably. But I am not a fan of hiding money from a wife and children. Not cricket.

My comment on HTB or Lisa/BTL was IF he hadnt owned a house before, and guessing from his thread title i think not. And doesnt own one now.

As he wont have to pay the extra you have to now on a second home. He'd still need a BTL mtg, but they still exist.