First Steps to Solvency

Jellytotts

The change in your perspective in such a short space of time is fantastic, once you get the "debt free" bug it becomes the "buzz" you are looking to find.  Keep it up 

alt80

@Jellytotts tbh think it’s helped some on here pointing out I could make more money if I stopped having massive personal debt commitments every month lol. Not going to stop wanting a five figure/m net income but realised I’m not going to get there being addicted to spending. Get addicted to making instead lol and time with family. 

getmore4less

alt80 said:

@getmore4less is home 1/3 literally just mortgage or mortgage + running costs?

So I would account for the comm property I have, development block and BTLs etc - at MV or just the part I own? Surely if I were doing that I’d also take into account the value of the main business if sold too? Actually makes it look a lot less dire counting that lot but I wouldn’t sell any of the property / business so hypothetical assessment.

Not going to lie I have very little diversity business is comm / res property all investments are res property with one comm thrown in nothing else. Some cash in companies tbf but that really is it. Have no clue about anything but property tbh so always stuck with what I know. Personal life have always been so desperate for the cash I’ve no standard pension investment either but know it’s very tax efficient accountant thinks I’m an idiot sure. Now in the position of not being able to make ends meet without all my income so thirds not going to be possible for me for a long time just dreaming I may someday apply a bit of sense to my personal life rather than spaffing the lot on cars etc haha.

I lost a longer post early this morning on the phone.
These 1/3 1/4 models are just super simple ones that build on the how much to put into pension models (like % saved 1/2 your age etc)when you look at various serious retirement models they are full of all sorts of calculations and small variations give lots of variance.

The idea is you need assets that can create income
The growth is over inflations so todays money works, the pot grows at least inflation and retains your buying power

4% is on the low side for safety margins, shares and property tend to do better long term.

If you save what you spend it take 18-20 years at around 4% to build a pot big enough to cover the spending.

Your property portfolio value is in what it can create in income, some currently getting extracted. 

enthusiasticsaver

alt80 said:

@Jellytotts tbh think it’s helped some on here pointing out I could make more money if I stopped having massive personal debt commitments every month lol. Not going to stop wanting a five figure/m net income but realised I’m not going to get there being addicted to spending. Get addicted to making instead lol and time with family. 

I think that is a really good perspective.  I have nothing against people wanting to move up to the next level of income, house or car if that is their priority but you will never do it by leveraging yourself to the hilt and glad you have seen the light. Getting those cards down to   £25k or £22.5k would be a great achievement over next few months whether from selling stuff or cutting back. Getting the unsecured debt gone, the RR balloon saved up and getting to a point where you can continue to invest in BTL or pensions or whatever will help increase the income which in turn will allow you to buy more cars or a bigger house if that is your goal.  

alt80

@getmore4less thanks. Surely better off investing gross rather than net income though? Ltd lends spv money for property type model? That’s what I’ve done before works well. Possibly conflating one thing with another here though. I want to increase income sustainably rather than outright retire.

Some of my property yields are 11% gross yeah for a reason tbh lol but wouldn’t recommend that type investment for someone retiring / looking for fairly hands off investment. Good for income though.

@enthusiasticsaver Thanks. Can’t keep going through the stress of working just to service my personal debts not even buying stuff with my head. I’ll be really pleased to see cards under £25k mark tbh and if I can throw £1400/m at them with no new debt looking at just under 18 months to say goodbye to the cards. RR balloon feels like a mountain to climb tbh but certain I don’t want to give it back/ refinance it/ swap it for another RR on new pcp deal so need to get the cards gone and get the money saved.

Increasing income really important to me - I still want a good standard of living. Tbf would actually have £32k/a disposable just going off net if I wasn’t servicing all the debts. Let’s just say that’s a massive wake up call in itself.

DayDreamerandGeneralWaster

Trying to pay down debts is definitely addictive. I've got a pretty tight baseline budget at the moment but l keep putting stuff on ebay every week. I can't believe l have so much 'stuff'. Bloody stupid. But it's got to the point where getting rid of the debt is more important than the shoes in my wardrobe l have never worn or the coats l have for different occasions that never materialise. I always pick my Barbour, had it for years, always keeps me dry and warm. l'm never going anywhere fancy enough to wear a fancy coat 😂

alt80

@DayDreamerandGeneralWaster know exactly what you mean about the stuff. We keep finding things we’re asking each other ‘actually want this’ ‘not really’. We’ve got a load of occasionwear too. Ha I’ve got a load of Barbour jackets go to winter work/ weekend wear lol likewise don’t go out much anymore.

ryanm8655

alt80 said:

@DayDreamerandGeneralWaster know exactly what you mean about the stuff. We keep finding things we’re asking each other ‘actually want this’ ‘not really’. We’ve got a load of occasionwear too. Ha I’ve got a load of Barbour jackets go to winter work/ weekend wear lol likewise don’t go out much anymore.

You’ve just reminded me I’ve got loads of suits and coats I don’t wear...might stick those on eBay. 

alt80

Had an enquiry on an item, hoping it sells now. Reviewed prices so hopefully some buyers start coming through. Impatient to get some more cleared off the cards tbh.

Fed up not being able to really walk anywhere. Wife and son been out walking twice today. Reminder I need to get the sleep under control. Awful night last night sleep for about 1 hour then awake until past 3am can’t carry on like that. Hopefully will be better with the FA out of the way. Too tired for anger haha.

@ryanm8655 amazing what we do have when we start looking ha. I’ve found stuff I’d forgotten I ever bought. 

getmore4less

@alt80,  gross is always good, for many  pension/salary sacrifice is the only option.

For them the pay off is 40% relief on the way in and 25%tax free on the way out  £10k tax free per year 20%tax on up to £40k a year. 

You have the option to grow the business through retained cash flow and diversity through gross into pension wrappers.

ISA have the advantage of tax free on the way out including capital gains so can be a good source of tax free future income

As you are looking at 40%+ tax for life geting some into tax free wrappers is worth considering.

With 2 very cash generative businesses you can probably hit the pension annual /lifetime limits so not a bottomless alternative for your money. 

You still have the wife tax diversions to factor in.
Long shot, there may be options to leverage the sons income allowances to cover school fees and build him up some funds for university/first house. 

Growing the property business needs to keep its cash(even with the gearing) as it is asset based for bigger income. 

Presumably the main business has a significant service element so can grow with less finance up front.
If you can do that can you reduce your dependancy on the property business.