2008 - Live on £4000 for a full year.

DdraigGoch

That's odd, DD, I went to entitled.com and entered in our family income, put everything but the basics & £4K into the Pension contributions bit, then it kept saying that I had the full income and wasn't entitled to anywhere near as much as your posting implied .... or have I done something wrong?

Dithering_Dad

DdraigGoch wrote: »

That's odd, DD, I went to entitled.com and entered in our family income, put everything but the basics & £4K into the Pension contributions bit, then it kept saying that I had the full income and wasn't entitled to anywhere near as much as your posting implied .... or have I done something wrong?

you put the wrong value into the pension contribution bit. If you earned 20k, you'd put 20k in the income bit and then 16k into the pension bit. his would reduce your actual income to 4k and so the CTC & WTC are based on 4k income.

Basically, tax credits are based on income AFTER pension contributions. This is to allow people to put money into a pension without impacting their tax credit entitlements.

Sorry to hog the thread with this. It just occured to me me that this may be useful to anyone who is doing the 4k challenge and doesn't have a pension.

georgiasmum

Right, count me in. My figure is £5200 (£100 per week). For countless, boring reasons £4000 is not doable but this figure is! I hasten to add that I shall being privately challenging myself to shave bits off this figure as and when!!!

Prudent

Isn't there a limit on the amount you can pay into a pension and then get it discarded as income for tax credits purposes?

Buffythedebtslayer

I think I may have just ht upon why I am so hopeless with money. I just read all that stuff to do with pensions and tax and I didn't get any of it.

Georgiasmum? I to have a figure - 4560 and I am going to challenge myself to spend as little as I can too.

Happy Christmas everyone!

xx

Frugaldom

This isn't going off topic at all, DD, I am finding it really interesting, as I don't have a pension fund, only ISAs. It is certainly something I would look into as soon as I can complete my 'buy a house without a mortgage' challenge. I need at my money once it's saved, which is my main reason for doing this challenge again. However, as a self employed person, it looks to me like paying into a pension would be a far better option that paying a percentage of earnings to the tax man, regardless of how little tax it may be. I also work part time employed, paying tax on anything I earn. Depending on what the ratio of employed to self-employed work is, I sometimes even get a tax rebate. I may not have fully understood this yet but does that mean if my self employed income was capped at the personal allowance and profit above that was transferred into a personal pension fund, I wouldn't pay any tax plus I'd be entitled to working tax credits and the Govt would make up my pension fund by 20% (or 22%, not sure which it is)?

87p

For the messages of support. I have given myself a good shaking! and realised for me.. this is just a challenge. I am allowed to learn as I go along and I'm allowed to fail.

So. I get paid on the 15th of the month, so my 2008 year begins 15th Dec. I've stated my position as where I'm at I need to spend as little as possible before 15th Jan to start catching up with myself. And at least I have lots of magazines to read since I don't seem to be able to stop buying them! :-)

As for the £20K challenge - it's not all real money, some of it it vouchers and points, but it's going ok so far. I'm certainly astounded that I had all this money in my life and never realised it. Tracking it makes it feel more solid - maybe that'll work for spending too.

87

Chaddee

This is entirely possible. I've lived off £350 per month for the last year which is only £4200 per year. Of that £350, £100 was for my car payment, £50 was budgeted for my mobile phone bill (which was usually less) and the remaining £200 paid for everything else.

Of course I am in the lucky position of having no rent or other bills due to my job!! (Live in staff in a boarding school). But would those not have been included anyway?

Frugaldom

Hi Chaddee, shall I add you to the list at £4000? I'd just discount the rent/council tax part as you'll be paying for it somewhere along the line through your salary and the 4k challenge is excluding rent/council tax/water rates and essential work travel. It's just for essentials so that everything else can be used to either pay off debts or save for something in the future.
Welcome to the challenge and I hope you'll be joining us. Just let me know what figure you'd like to set as your target budget

Frugaldom

87p wrote: »

And at least I have lots of magazines to read since I don't seem to be able to stop buying them! :-)

87

You can always take up a free hobby and turn all your old magazines into paper mache animals after you have read them :rotfl: There's been such a great response to this in the sealed pot challenge that I've started a separate thread for it Or you could sell them, or give them away as pressies - make and/or save even more in 2008