Maximizing my income

Tyler2020

Hi guys, 

First of all, apologies if this post is in the wrong place! although I have always used this forum to get answers to questions, I have never posted!

I'm on a modest salary of £25K and my partner £18K  -  due to the ongoing COVID19 situation, it's unlikely there will be many opportunities at work, although I want to stay where I am, because I feel over time the opportunities will come again! 

My partner is due to give birth in the next 7 weeks and i'm very lucky to benefit from 6 months paid leave. I want to, if possible, use this time to make sure i'm maximizing my existing income in the best way/exploring new income streams.

My arrangements are currently as follows:

Pension - Personal contribution 6%(£125) Company Contribution 12%(£250) per month. 

Company 3 year SAYE - £100 per month @ -20% option price

Company Matching Share Plan - Personal contribution £40 Company Contribution £80 per month

Stocks and Shares ISA £175 per month (split across 2 providers)

Cash savings £200 per month + my partner around £300 per month.

No existing debts other than Mortgage of £117,000

Obviously with a baby on the way, my income will be more strained than ever, but advice would be appreciated on how I could make my money work harder/other potential income streams. 

Once again apologies if this is in the wrong place. 

Tyler 

Thrugelmir

Ensure that you have an adequate emergency fund. Secondly in these difficult times the mortgage is the largest single outgoing that you have. Chipping away and reducing your level of debt provides a form of insurance against the unexpected. Not all about maximising returns in the short term.

Sailtheworld

What's that £940 of savings and investments each month? Take home of, say, £3000?

To me that seems like a decent savings rate and your employer is doing some of the heavy lifting for you on top. If you wanted to save more it needs to come out of the remaining £2k monthly income. Can you save more?

Would your employer double the pension contribution if you put in more? That would be the gift that keeps on giving all year round and definitely worth scraping some more money together for (or diverting from the cash savings etc).

Or you need to earn more; more hours / a promotion / second job / a new job (remembering to account for the employer doubling your pension contribution). Simple but not necessarily easy.

Tyler2020

Hi guys - thanks for the replies! 

@Thrugelmir - I haven't got large amounts of money sitting in savings accounts by any means, give or take £15K, however i'm confident it's a large enough emergency fund, especially as it is getting topped up around £500 per month. Existing mortgage is for £117,000 (roughly 50% equity in the property). 

@Sailtheworld Although I could save more at the minute, once the baby arrives, the extra I could save will be eroded by the drop in my partners income and increased costs. I could increase pension contributions, but for further increases my employer will just match every 1% I put in. 
I do plan to add 2 £100 per month SAYE plans over the next 2 years, as the money that goes in to them is protected and in theory means I have a lump sum payment of at least £3600 every year, obviously this should be more as the SAYE is given to me at a 20% discount. 
Overall, I just want to make sure i'm not missing a trick! 
thanks 
Tyler

[Deleted User]

Thrugelmir said:

Ensure that you have an adequate emergency fund. Secondly in these difficult times the mortgage is the largest single outgoing that you have. Chipping away and reducing your level of debt provides a form of insurance against the unexpected. Not all about maximising returns in the short term.

Don’t fall for this advice of paying off the mortgage. It’s only useful if you can push your LTV into a lower bucket, for example from 51% to 49% or 41% to 39%. 

Don’t waste your money by repaying mortgage that saves you 1.5%, instead invest them in passive (or active, if you are young and can take risk) funds long term. 

Hopingforthesimplelife

You sound like you have covered your bases quite well.

Some people will advise to invest, others to pay down the mortgage, others top up pension (your company sounds generous in this regard) among other ideas.

For me, I decided to split my spare cash a third/third/third between cash/investments/mortgage OP (after I was comfortable my pension contribution was high enough as this is the ‘optimum’ route for returns for most scenarios).

It probably won’t give me the very best return, but is a good balance between the different desires/results. 

Albermarle

Deleted_User said:

Thrugelmir said:

Ensure that you have an adequate emergency fund. Secondly in these difficult times the mortgage is the largest single outgoing that you have. Chipping away and reducing your level of debt provides a form of insurance against the unexpected. Not all about maximising returns in the short term.

Don’t fall for this advice of paying off the mortgage. It’s only useful if you can push your LTV into a lower bucket, for example from 51% to 49% or 41% to 39%. 

Don’t waste your money by repaying mortgage that saves you 1.5%, instead invest them in passive (or active, if you are young and can take risk) funds long term. 

It is never so simple as that . In pure financial terms it is often better to stick to minimum mortgage payments and invest instead.
However if your job or future income stream was not very secure , then better to work on the mortgage debt to make sure you still have a home in future. Also as seen from the numerous threads on this issue it also comes down to what feels right for you .
No point following the rational financial advice and then staying awake all night worrying about the mortgage.

[Deleted User]

Albermarle said:

Deleted_User said:

Thrugelmir said:

Ensure that you have an adequate emergency fund. Secondly in these difficult times the mortgage is the largest single outgoing that you have. Chipping away and reducing your level of debt provides a form of insurance against the unexpected. Not all about maximising returns in the short term.

Don’t fall for this advice of paying off the mortgage. It’s only useful if you can push your LTV into a lower bucket, for example from 51% to 49% or 41% to 39%. 

Don’t waste your money by repaying mortgage that saves you 1.5%, instead invest them in passive (or active, if you are young and can take risk) funds long term. 

It is never so simple as that . In pure financial terms it is often better to stick to minimum mortgage payments and invest instead.
However if your job or future income stream was not very secure , then better to work on the mortgage debt to make sure you still have a home in future. Also as seen from the numerous threads on this issue it also comes down to what feels right for you .
No point following the rational financial advice and then staying awake all night worrying about the mortgage.

Scenario 1: mortgage of 50k. No cash in bank
scenario 2: mortgage of 100k. But cash in bank / easy access investments 10k. 

Which one would make you feel better if there is job insecurity?