Prosperous soul embraces creativity & mortgage neutrality

LadyWithAPlan

2 Db's nice! Maybe there will be a change in law to help but the levels of scammers at present is frightening.
So maybe you will have to use the lack of access as a push to be extra frugal for a few years to get this mortgage paid down. The current you vs future you debate

I now have 2 fridge freezers as wanted a second freezer only last year but my neighbour gave me his double f/f. I did have both running til I went away a few months ago so I ate it down. So now one is just standing in my study !!
I dont need 2 fridges - just the extra freezer is useful with batching but with elec costs at present I cant justify the YS food savings vs the freezer running cost as I live alone.

Do you have a goal with your AVCs? Cant you use some of that to build a mortgage OP or offset account?

jwil

If you can't transfer the DB then you've got an additional guaranteed c£3k(iirc ?) per year for life.   If you add this on to your current DB and SP, would that mean that you have a decent amount to live on when you get to retirement age?

If that is the case, like others are suggesting, is it worth getting rid of the AVCs and then focus on savings, or perhaps a SIPP so that you can get the tax relief but also get access to it once you get to 57?  How far away would you likely to be from the £46k that you might be able to get if you transfer?

savingholmes

Hi @LadyWithAPlan and jwil.  Waves at Lucielle.

If I resolve the mortgage (e.g. downsize or get lump sum to help repay) I am set for post 67. What I want to do is find a way of reducing the hours I work well before I get to 67 - particularly given none of us are guaranteed reaching that age anyway! If I wait for both pensions until age 67 - I am already at around £14.3K per year plus SP so sorted (if mortgage gone). But I want to be able to retire early for which both pensions would take a chunk off my annual entitlement if I drew them early. I have 4 years service where age 65 applies - so would have less of a reduction on that element - but 8 years so far where age 67 applies. With my older DB - my pension age is 65 I think but was originally 60 - I'm not sure what reductions apply - just assumed it will be similar. 

Number of Years Paid Early	Pension reduction
0	0%
1	5.10%
2	9.90%
3	14.30%
4	18.40%
5	22.20%
6	25.70%
7	29.00%
8	32.10%
9	35.00%
10	37.70%
11	41.60%
12	44.00%
13	46.30%

I can't take AVCs independently of current pension - but the whole amount would potentially be tax free and therefore much better than putting into a SIPP where I could only get 25% tax free. I haven't paid any money into AVCs yet. I have about £3.6K in a sipp (after recent market instability). 

It also changes your pension investment rules if you start drawing a pension versus taking a tax free lump sum. I can take a TFLS and still be able to invest in wider pensions - if my circumstances change later. If I start drawing my pension - I'm limited to £4K investment in pension a year from then on unless it's a DB pension in which case I can still invest in that. (Recycling rules). I might be able to take my existing DC as a small pot without triggering that future investment clause but would be reluctant to risk it - plus I want to minimise tax.

I know from my discussions a couple of years ago re possible DB Transfer - that you have to show you have a) adequate provision for your retirement and b) that there is some urgency to you taking your pension. E.g. disability, terminal illness, imminent retirement plan etc. I went to 12ish providers who all said no - come back post age 55. They were also very concerned about attitude to risk. They would be okay with my Aviva fund as that's managed but didn't like actual 'sipp' where you managed the money. Target date funds could be okay. They were also concerned about our lack of EF. They were not concerned re inheritance - as they felt that was better covered with insurance. Luckily I never ended up having to pay for the report last time as they gave my hypothetical scenarios similar to mine and said the answer was usually no. With now being divorced - my case would have changed - as last time I was dragged down by Ex's poor pension provision in how they viewed my case... 

savingholmes

jwil said:

If you can't transfer the DB then you've got an additional guaranteed c£3k(iirc ?) per year for life.   If you add this on to your current DB and SP, would that mean that you have a decent amount to live on when you get to retirement age?

If that is the case, like others are suggesting, is it worth getting rid of the AVCs and then focus on savings, or perhaps a SIPP so that you can get the tax relief but also get access to it once you get to 57?  How far away would you likely to be from the £46k that you might be able to get if you transfer?

Hi Jwil - AVCs would be the last money I draw - so would be great for an 'end of working life' top up but not for funding the journey along the way. I need the 25% uplift for it to be a meaningful amount of money.

I can't easily access the SIPP/DC pot without jeopardising my future ability to put into investments. 

Time will tell how successful I am at saving. It's also dependent on how much and how long I get P1p as well as for how long I continue working full time etc - and any pay awards that come my way.

One option would be to save for now - and potentially put a lump sum from my savings into AVCs later if desired. However that misses a vital ingredient which is 'time in the market' but would give me tax back. Which saving method is most desirable could depend on where I sit in relation to HR tax - with them having frozen the thresholds I'm pretty close. As I understand it buying leave and my pension is taken off before the ni and tax band is calculated... (salary sacrifice) - but AVCs would just be pre-tax. All that factors in as well.

I am in a very fortunate position pension wise... however mortgage wise at £196.2K it's not as pretty a picture. I'm hopeful with the rising market I have a £100K+ equity but no-one knows until it's time to sell. Over the remaining period of my fix I should increase my equity by £35K or so... but if nothing changes - would still be stuck paying my mortgage until age 73+ - hence my keeness to explore alternatives... but preferably ones that have limited impact on my standard of living... (i.e. space and setting).   

Blackcats

Wow - lots of complicated scenarios to think about.  

Do you have lump sum amounts that you will get with any pensions?  That could help with mortgage repayment. 

savingholmes

My current pension doesn't really offer a lump sum. The older one does but it's minute.

WelshmansDaughter

It does really seem like everything centres around your mortgage. Is it perhaps that you would like a certain amount of time in your current house enjoying the space etc then downsize? Perhaps a smaller mortgage free property with space for a studio for your art? 

savingholmes

Moving on to what should be more controllable. Working out spends (later in the month I'll review life energy required for their purchase).

• Good news £200 of the £700 planned reg saver £ has now moved across.
• Elec payment has gone out £113. This is on a fixed tarriff so not really building up credit just level peg

• Paid SW for 6 weeks last night £29.75. I'd put 3lb on. For it to be worth my life energy to pay - I need to recommit to healthier eating.
• My scales have broken. Can't get DS's scales to work. Need to find the old set of scales (buried in the understairs cupboard...??) as I don't want to spend out on scales if I can avoid it. 
• Yesterday I spent £5.29 on treat food - on top of the £2.25 I spent the night before. I'm starting to see why my grocery budget is stretched thin despite it being a healthy amount. Given that Thursday - I spent £5.25 on cake and flapjacks!!! Treat food is accounting for roughly 29% of my grocery spend!! Self sabotage health wise and costly. Quite eye opening. This method of facing up to my spends may prove more effective than the scales!! (I have 2 bags of treacle toffee left, some choc fudge, 4 packs of skips and 5 sets of choc toffees but still!!! Why did I buy them / so many?). Perhaps targeting NSD's could be health as well as money saving!! I've always looked at PADs as 'unaffordable' but this is highlighting a different reality!! Food for thought (excuse the pun).
• I plan to cook some beef I defrosted from there - so should have some lovely meals this week.
• Yesterday I had mackerel, jacket spud and salad at lunch, veg soup from the freezer at 5pm and then around 10 I was still hungry so ate 2 chicken legs, roasted parsnips, carrots and peas. Yet I still stuffed myself silly with treat food??
• I need a reset so today I'll try TRE again.
• I missed an in person medical appointment yesterday as I'd thought it was telephone. Rearranged for Sept.

• I'm nursing my FF along. I put some stuff in the garage one much to DD's annoyance. I've moved some of my stuff up my freezer where it's cooler!
• I went into work yesterday and had a lovely day - catching up with two work colleagues in particular. It was really positive. I did identify an issue that needs fixing - and that was relevant to both of them - so not all social. I also got something 95% done that I'd been struggling to start at all so was pleased with that and ticked a few other irritants off my to do list. I am back in the office on Thursday. 
• DD loved the peace without me yesterday while I was at work. She's working at home again today. I don't have the energy to go into today though - but do need to hurry up and start work!!
• Spent a whole 79p on a pencil sharpener (and eraser) so I can sharpen my eye liners and use them again.

Will aim for an NSD today.

savingholmes

WelshmansDaughter said:

It does really seem like everything centres around your mortgage. Is it perhaps that you would like a certain amount of time in your current house enjoying the space etc then downsize? Perhaps a smaller mortgage free property with space for a studio for your art? 

Thanks WD. I'm tied in here due to the fixed rate for about 4.5 years but after that may do something more radical. I want to gradually re-decorate as too much is still magnolia and hasn't been painted for years. Changing window dressings or adding them where they are missing will also make the house look more modern and finished again. I need to tame the garden - but will pay for help with that. I hope to build up my savings and then replace the kitchen as it will help with the house sale once I'm ready. It would be nice to get some use out of it myself too. I also need to radically declutter.

Although I feel like my mortgage is huge - apparently it's less than that of the average first time buyer now which is shocking.

What my current spending analysis is showing is that I could free up more money to OP the mortgage if I cut down on junk food spends... So will do detailed spending diary this month - and try to refocus. An extra £20 sent consistently to my mortgage (or mortgage neutral pot if that's better interest) knocks 6 months off the term. 

My current focus is on building up my regular savers - ideally by £700 a month - but current thinking is that £200 of that is towards car replacement, £200 towards home improvement and £300 towards FI. I also want to put £ into AVCs towards FI. It will take very strict discipline and a dose of good luck to achieve that.

LadyWithAPlan

savingholmes said:

WelshmansDaughter said:

It does really seem like everything centres around your mortgage. Is it perhaps that you would like a certain amount of time in your current house enjoying the space etc then downsize? Perhaps a smaller mortgage free property with space for a studio for your art? 

Thanks WD. I'm tied in here due to the fixed rate for about 4.5 years but after that may do something more radical. I want to gradually re-decorate as too much is still magnolia and hasn't been painted for years. Changing window dressings or adding them where they are missing will also make the house look more modern and finished again. I need to tame the garden - but will pay for help with that. I hope to build up my savings and then replace the kitchen as it will help with the house sale once I'm ready. It would be nice to get some use out of it myself too. I also need to radically declutter.

Although I feel like my mortgage is huge - apparently it's less than that of the average first time buyer now which is shocking.

What my current spending analysis is showing is that I could free up more money to OP the mortgage if I cut down on junk food spends... So will do detailed spending diary this month - and try to refocus. An extra £20 sent consistently to my mortgage (or mortgage neutral pot if that's better interest) knocks 6 months off the term. 

My current focus is on building up my regular savers - ideally by £700 a month - but current thinking is that £200 of that is towards car replacement, £200 towards home improvement and £300 towards FI. I also want to put £ into AVCs towards FI. It will take very strict discipline and a dose of good luck to achieve that.

It was a real eye opener for me on doing the Grocery Challenge when I wrote down what I spent on food. I realised quickly that  what I spent loads on each week and broke my NSDs was crisps, sweets etc.
I started tracking the amount I spent on such stuff and gave myself a monthly blow pot so I had £20 a month on stuff I wanted and this included crisps etc.

Maybe 'treats' should have a different descriptive phrase  like 'those things stopping my weight and house goals' We all do it but seeing how focused you are on the financial they do seem to be slowing you down so maybe allow yourself X spend a month on them and when you spend that stop And the NSD's which I am failing at 

I also the other day stopped myself walking to the local shop to get Haribo and crisps as was exhausted before starting a big task. I then put the £2 I would have  spent in my mortgage pig so I could reward myself  seeing the money go to a better place

My first time mortgage will be £375-390k I think and my pensions are not as good as yours so you are doing well.  Wherever we are at in our journeys we all want to get there quicker and attention to goals creates results.

savingholmes said:

• Paid SW for 6 weeks last night £29.75. I'd put 3lb on. For it to be worth my life energy to pay - I need to recommit to healthier eating.
• My scales have broken. Can't get DS's scales to work. Need to find the old set of scales (buried in the understairs cupboard...??) as I don't want to spend out on scales if I can avoid it. 
• Yesterday I spent £5.29 on treat food - on top of the £2.25 I spent the night before. I'm starting to see why my grocery budget is stretched thin despite it being a healthy amount. Given that Thursday - I spent £5.25 on cake and flapjacks!!! Treat food is accounting for roughly 29% of my grocery spend!! Self sabotage health wise and costly. Quite eye opening. This method of facing up to my spends may prove more effective than the scales!! (I have 2 bags of treacle toffee left, some choc fudge, 4 packs of skips and 5 sets of choc toffees but still!!! Why did I buy them / so many?). Perhaps targeting NSD's could be health as well as money saving!! I've always looked at PADs as 'unaffordable' but this is highlighting a different reality!! Food for thought (excuse the pun).
• 
  

Will aim for an NSD today.

What is PADS?

Your home food sounds lovely. I can only buy one pack crisps and one pack of sweets as they are gone by nightfall.  I can keep copious quantities of alcohol in without touching it for weeks but sugary treats I just devour 

Good luck on your NSD and finding your scales - research says that people who are trying to lose fat when they  weigh themselves daily  - they lose 1/3rd more...