How much to live on

Bravepants

gambleruk said:

RetSol said:

I salute anyone who exposes their expenditure to detailed scrutiny on here.

I have considered asking for views on my portfolio in the savings and investments forum but I'm too scared! 

I once many years ago asked what to do with our extra money as had just paid our mortgage off and got some very negative answers on how I should have never have paid my mortgage off and invested the money instead, all I will say on that is if I had not have paid my mortgage off I doubt I would be sat here happily retired now, I would just go ahead and ask your questions and just not take any of the answers to heart and use the information accordingly. I have been given some very good advice on the pension forum over the past 18 months so is worth doing.

It is very difficult, if not impossible, to determine intonation from text. The absence of tone of voice or body language makes text based communication sometimes rather confusing and open to mis-interpretation. (See my comment on blue.peter's reading expenditure above, where I was unsure about whether my message was mis-interpretted. ) 

Also, I believe that most people on these forums are well-intentioned, and they try to take into account a wider public readership of their responses. Any registered user can read these posts and many people have a consistent message to tell.

At the end of the day all we can do is read/listen, but it is up to us all individually what we do with our money.

Having no mortgage means there is one less thing to worry about!

I like to see others' expenditure and plans so that I can see whether I'm being sensible in my own plans. 

otb666

I will be paying mortgage off  as well I find its helpful to talk plans out here As people can be cagey about their plans in real life Its nearly like you ask them the colour of their underwear Which is not very helpful and this thread is very informative 

blue.peter

otb666 said:

I will be paying mortgage off  as well.

For what it's worth, I endorse this plan. Paying mine off was one of the best things I ever did. There are two benefits, in my opinion:

• It's a massive weight off your mind. I found it a wonderful feeling of relief. I know that I've got a roof over my head, whatever else happens.
  
• Your necessary retirement income is much lower if you don't need to find the money to pay a mortgage or rent.
  

moving_forward

For my two penny worth even though not yet 50 (getting close) we want the mortgage gone well before retirement so pay more when we can along with funding pensions and paying off consumer debt. Investments can do down as well as up and even though after time the trend is up it's just not worth gambling on the market to pay off the roof over your head. As you age isn't peace of mind the most precious commodity you can have?

hugheskevi

I gave mortgage repayments a lot of consideration from the very beginning of mortgage and retirement planning.

Initially, mortgage repayments were my lowest priority. Personal pension contributions were top of the list, and gathering enough funds to optimise those contributions was a challenge. That led to games such as 0% interest, fee free credit card borrowing to get more liquidity to put into pensions. During this time I even increased the mortgage at re-mortgaging to get more funds for pensions.

After a few years I had pumped enough into pensions. Next on the list were investment ISAs, but I also wanted a bit more liquidity, so took a year off from big pension/ISA contributions to increase cash savings a bit. Liquidity is a costly luxury, but less costly when the alternative is ISA contribution compared to a pension contribution. Of course, liquidity does give good security too however against shocks, something a pension is usually very bad at providing, and although an ISA is good for security you don't want to be taking money out unexpectedly unless essential.

Then I moved on to ISA contributions, whilst retaining the most valuable voluntary contributions to our Defined Benefit pensions. This, and to an extent in the previous period, led to a time where any additional funds I could get went towards mortgage overpayments, once pensions and ISAs had been sorted. The 0% interest, fee free credit card games continued (usually with between £60,000 - £80,000 outstanding at any given time between myself and partner, which I always thought would be ended at some point by card providers but never did).

Matched betting was also good for a while, although once I had 50-odd accounts and had done all the sign-up offers which I found interesting and enjoyable, I got bored by the ongoing offers which were lower value and stopped doing that. Living in London, it was also quite convenient to be involved in research offers, typically getting about £75-£100 for popping into a research session for an hour or two on my way home after work to participate in group research about some product or industry. Then I finally set up my own consultancy - nothing very big, but nice to take advantage of tax-free income via managing dividends, with remainder of money in business being loaned to us and eventually it will be taken out of business in salary once we leave main employment. All of these things were small beer compared to employment income, but all quite interesting and enjoyable and getting to a position where you are making money in spare time rather than spending helps a lot.

The mortgage just ended up taking care of itself as more money became available after optimising pension and ISA contributions, and was directed toward mortgage. It was also handy for unexpected income, which was sort of expected, and duly arrived in 2020 with my wife getting a small inheritance. It was a little sad that her father's life's assets vanished straight into a mortgage-sized hole, but that had always been one of the scenarios we had planned toward so as to avoid inefficient unwrapped assets.

As we are now close to leaving work, I have reduced the 0% interest, fee free credit cards, and the last of them will be paid off in March. That has meant myself and my wife working for the last year just to pay credit card balances, but again, that was always part of the plan. So in March we will have no mortgage and no other debt for the first time since 2010.

Rather bizarrely though, I do actually plan to have a mortgage in the future. Initially I didn't but due to some rather penal conditions attached to our Defined Benefit pensions, although we can take them at age 50 the reductions for doing it are excessive. Hence we had to replan to take them at 55 when the reductions are reasonable. The increase to minimum pension age will affect our Defined Contribution pensions, so we can't have them until age 57.

Hence we previously planned to sell our house, go traveling for a couple of years, return and buy a new house. Now our plan is to go traveling, but rent out house. Return after a couple of years, go back to work for a short period, during which time we will buy our retirement property with a mortgage and sell our current house. That will enable us to smooth income between retirement and State Pension age (and maybe even a bit beyond), whilst also having some contingency. We probably don't need it, but would be very welcome to have available - an offset arrangement would be perfect, depending on rates and charges.

In general however, I'd view mortgage payments as something I wouldn't want post retirement. That for me falls into the general category of de-risking by reducing retirement expenditure, enabling a lower retirement income and hence requiring less funding. Volatility can be managed by working longer or consuming less whilst working, but only by consuming less once retired.

gambleruk

As blue.peter said paying the mortgage off gives you so much freedom, in hindsight I wish I had been on forums like these and known more about pensions but apart from that no regrets what so ever. Now if only you could pay your council tax and electric off early and life really would be grand

moving_forward

gambleruk said:

As blue.peter said paying the mortgage off gives you so much freedom, in hindsight I wish I had been on forums like these and known more about pensions but apart from that no regrets what so ever. Now if only you could pay your council tax and electric off early and life really would be grand

Love it 😹

MovingForwards

For me being mortgage free is priority as it takes the slight pressure off my income and means I can reduce hours.

I try to limit my monthly bills and have a lot as annual payments. I'd really like to pay the CT as a lump-sum each year. Admittedly, I save / would save each month to cover the annual bills, but it's psychological knowing I don't have to find random amounts each month. 

I don't micromanage my spends and can't post up where every penny goes, however these are some of my figures for 2021:

Bulk-buy toiletries £100. 
Gas / electric just under £475.
CT, Inc water £1350.
Car insurance £190.
Petrol £600.
Home insurance, B&C £240.
Beauty salon £100, found cheaper place now.
Home maintenance £30.
Food £2400.
Mobile £130.
Mortgage and O/Ps £8,168 (sub-prime).
CC £2,300 (bulk was funeral related).
Car finance £2,282.
SIPP £785 (reduced due to buying car).
eBay / misc spends £500; some from savings.
Gifts £300 (gave sibling larger money gift due to circumstances).

My OH pays for the internet and Netflix £360, plus his own phone.

I have been given a lot of gardening vouchers and therefore not spent my own money last year. 

I could get cheaper home insurance, however I like not having to worry about working out how much my contents are or looking up rebuild costs and my insurer do an upto £x on both.

I'm currently very torn about moving, which is the right long-term thing, but my home is just that, my home.

scottish_lassy

I overpaid my mortgage for many years to get it paid off as quickly as possible.  I was driven by looking at the bottom line of my mortgage agreement which outlined how much interest I would be paying over the life of my mortgage!!!!  Shocked to say the least SO I overpaid as much as was comfortable and half way through the term had my capital amount sooooo low, my monthly payment was 4p, yes 4p per month!   It did take some frugal living and learning to love upcyling, reusing and minimising waste but all that interest is now MINE!

I left it running (for good credit rating, no early repayment fee and also deeds taken care of).  I often wondered why no-one at the mortgage firm realised they were spending more on postage to me each year than what I was paying them!!  ie they sent two letters to me a year (statement and instructions how to amend payments) whilst my annual payment to them was 48p.  I never felt I could actually call myself mortgage free whilst still paying monthly, albeit, so little.

Since July last year, I am officially mortgage free as the term of the mortgage ended (I had actually overpaid 17p!!) but in reality probably have been for many more years, which maybe is why I can have an OK level of living on an Admin salary

PennyForThem_2

scottish-lassy - lol we paid off mortgage ages ago and bank has the deeds for which we are not 'charged' 0.50p per year.  Really should check that they have actully got them.

HUGE relief when husband made redundant and got a lump sum to pay off mortgage.  We could put that money to other things such as paying into SIPP.  As my OH has now died I am a massive beneficary with no financial worries around my home.