2008 - Live on £4000 for a full year.

always_amazed

Wooohooo, thanks for the number!!! Will just get it on my sig

I feel pretty crazy even going for this, but she who dares wins....!

I had a few thoughts... none of which I actually do at the moment but anyway...

-I'll start matched betting. Somehow knowing I won't get at the money for a while is inspiring me to go ahead! Same as for clicks...
-I'll start entering comps/ doing more freebies stuff.... I've not really bothered with them much (because I am lazy and go to the pub instead); and now I'll have more free time.
-I'll exercise more, because that is free and fun (I live in a gorgeous place).

Murrell

Hi,

This sounds like a good challenge. I can't find last years thread. Did many of you make it? It would be interesting to read. Look forward to following this thread

Sandra

Frugaldom

Murrell wrote: »

Hi,

This sounds like a good challenge. I can't find last years thread. Did many of you make it? It would be interesting to read. Look forward to following this thread

Sandra

I didn't have a dedicated thread on here for last year, that's why you'll not find it. I mentioned the challenge elsewhere and it was suggested I run a thread for the same challenge this year. I am very glad I did, as I didn't realise there were as many others who would be interested :j I did the challenge last year and I have succeeded so far but still have a few days left to go. Should be in the clear though

Dithering_Dad

Did you know....

If your take home pay was 60k a year, but you paid £56k of it into a pension plan and lived off the remaining 4k, if you had children you would receive working tax credits & children's tax credits as though your income was 4k per year (your tax credits would be worth over 10k for 2 kids). Also, the government will increase your £56k pension by 20% so you'd have £67,200 in your pension pot!!

How mad is that??

hmnnn..... where do I sign up?

PasturesNew

Dithering_Dad wrote: »

Did you know....

If your take home pay was 60k a year, but you paid £56k of it into a pension plan and lived off the remaining 4k, you would receive benefits & children's tax credits as though you had take home pay of 4k per year (over 10k). Also, the government will increase your £56k pension by 20% so you'd have £67,200 in your pension pot!!

How mad is that??

hmnnn..... where do I sign up?

I have come across this before. And have thought about doing it.
At the moment I have £0 pension.

But things change too much at the moment to be able to go for it.

Right now, this year I am going to be trying to earn the equivalent of benefits.

As a single person, benefits would have been £3075.
However, for the purposes of this thread, I will be trying to earn/live on just £2696 as this thread is "after rent/council tax/water" so I have to take my water out of the £3075.

So that is £51.86 after rent/council tax/water.

I live alone. I don't sign on as I figure I must be able to earn from home as much as benefits.

But certainly I will look into it at some future point as it's worth investigating/checking.

you would receive benefits & children's tax credits as though you had take home pay of 4k per year (over 10k)

Not if you are single! But probably would get a few quid per year in Working Tax Credit, but NOTHING like that much.

Update: just checked it on http://www.entitledto.com - single, earning £4k, working over 30 hours/week, I'd get nearly £2500 extra! hmmm..... might have to look into that pensions thing. Although I bet having savings affects it. I bet having savings means you don't get to claim WTC.

whitewing

Dithering_Dad wrote: »

Did you know....

If your take home pay was 60k a year, but you paid £56k of it into a pension plan and lived off the remaining 4k, you would receive benefits & children's tax credits as though you had take home pay of 4k per year (over 10k). Also, the government will increase your £56k pension by 20% so you'd have £67,200 in your pension pot!!

How mad is that??

hmnnn..... where do I sign up?

right, ok. And am I doing this before or after paying off the mortgage (I'm not very good on the long term financial planning)

Frugaldom

No, I did not know that and it is MOST interesting! Are you SURE?? I'm not questioning your honesty, I'm just finding it incredible to believe. Savings affect your right to claim benefits but pension pots aren't classed as savings? I guess the flaw in the plan is that you really would only have the 4k plus whatever benefits to live off and absolutely no access to your 'savings' and there can't be many on 60k would live like that, especially if they are paying the 40% income tax. Still well worth knowing in the case of redundancy payments and then .... now I get it!!!! I just this minute got it! LOL Thanks

kayharcombe

"I guess the flaw in the plan is that you really would only have the 4k plus whatever benefits to live off and absolutely no access to your 'savings' and there can't be many on 60k would live like that, especially if they are paying the 40% income tax. "

You get taxed on your income after paying into your pension, so theoretically if you paid 50% of your income to pension you would only get taxed on the 50%, minus your tax-free allowance. But then you wouldnt have access to your money, and would pay tax on the pension when you receive it after retirement. It is usually not worth opting out of occupational pensions for this reason, if your deductions are 6%, you dont actually pay 6% cause of tax relief.

Also, as past few years have shown, pensions are not always a good investment, values can go down as well as up, so you could actually lose money

Kay

Dithering_Dad

just went on "entitled to" and with 2 kids and me earning 2k and the wife earning 2k (after we both put rest of cash into pension) but no childcare costs, we were entitled to:

Period:06/04/2007-05/04/2008
Tax Credit award for period:£11,799.84
Working Tax Credit:£4,139.46
Child Tax Credit award:£7,660.38

So we'd have the 4k for this challenge and a further £11,799.84 in tax credits to pay off any debts (or to live on) and I'd also have the rest of my cash in a pension.

Note: Pensions are NOT included in benefits calculations and you are allowed to have upto 6k of savings before they affect your tax credits.

Dithering_Dad

kayharcombe wrote: »

Also, as past few years have shown, pensions are not always a good investment, values can go down as well as up, so you could actually lose money

Pensions are just a tax wrapper that goes around your investments. If you have a Self Invested Personal Pension, you can put Cash, Funds or Shares in there that are free of tax when you put them in. Shares are historically proven to beat housing and savings as investments.

You do pay tax when you retire, but then I'd rather pay tax on a 20k retirement income and enjoy my last few years of life than pay £0 tax on £0 retirment income and struggle through my last few years of life...

My pensions have had their ups and downs but because the money is invested over such a long period, they always gain. Plus the Government adding 22% tax means that my investments have to drop by 22% before I lose any of my own money .

As far as the 60k example is concerned, the principle is the same if you earn 30k, 20 or 10k.