Turning Straw into Gold: Creating Long Term Security & A Solid Home

MillQueen

@Chocolatefund, no I haven't included the pension, but it would probably make me feel better if I did, as I have been paying into it for my whole career. Though I'd have no idea how to work that out. Mine is just the assets I have in my accounts and the equity I have in the house (the portion I've paid off the mortgage and the deposit I put down). Then I subtract the debts I have, which are what I owe on the mortgage and the remaining balance of the two loans. It's a bit depressing to be minus hundreds of thousands of pounds.

If you have a better version, feel free to share.

in_need_of_direction

mill queen you’ve forgotten to add the house value in as a positive.

MillQueen

@in_need_of_direction, do you mean the whole thing? I paid £250,000 and I owe £221,000 on the mortgage, so I have added in £29,000 as an asset.

Chocolatefund

https://forums.moneysavingexpert.com/discussion/comment/81984827#Comment_81984827

This is correct. Change your £29,000 into whatever the house value is if you sold it today.

For example. My house values at £290,000 so I'll list that as an asset. Then I'll use my mortgage left (£143,000) as a debt/liability.

You'll definitely want to work out your pension somehow and add that also and that will go up every year as you add to it.

MillQueen

If I add up the worth of the house (£250k) and the money I have in accounts, then subtract the total of the mortgage balance and the loans, it tells me that my actual net wealth is £18,778.

That's a much better picture, but feels strange to me when I owe hundreds of thousands of pounds, that the figure wouldn't reflect that. Not sure what to call whatever the minus number is that I've been using. I've been seeing it as working towards making that neutral over time, so I don't owe money more than the money I have.

ETA: I guess what I originally calculated was more like "net debt".

Chocolatefund

The hundreds of thousands figure that reflects what you owe on the house is your mortgage.

I'll let you know how I work out the pension. There's a lot of conflicting information online as no two have the same situation and pensions are pretty complicated as it is.

MillQueen

https://forums.moneysavingexpert.com/discussion/comment/81984867#Comment_81984867

I'm updating my signature to the more positive figure and will keep the debt one just for my spreadsheet.

Pensions are indeed complex - even navigating to see how much is in it is a challenge.

MillQueen

An update is that I have looked on my pension accounts and when I add up the forecasts together they say I will get £34,000 per year (if I continue paying as much as possible in, which I have done religiously for my entire working life). That sounds ok by today's standards, assuming I have paid off the mortgage by then, but that will probably be worth peanuts with inflation and I bet the state pension will be a distant memory by then. I truthfully don't understand a lot about pensions or how they work other than it's best to pay in like crazy. I will at some point go back to paying in my self-employed income when I can, to offset tax, but that won't be for ages.

ETA: Not sure how much is actually in there right now, as it gives forecasted figures of what I could have at retirement age, but not the current totals. The websites are difficult to navigate as financial things often are.

MillQueen

On this topic, I have been thinking differently recently about pensions, as an old colleague passed away recently. He was only in his late 30s and a few years ago we had argued about pensions. I had shared about how seriously I took mine and how I always paid into it as much as I could and he laughed at me because he didn't have one. He said there's no point, as they won't exist when we get to retirement and it's a waste of money and that his house was his pension and he liked having the extra money in his pay cheque. We had a whole heated argument about whether pensions are a waste of time. To be fair, I think the argument came from him perhaps having a bit of fear that he should have saved after all, plus my own worries that I might not end up with the fruits of all my efforts, But the conversation came back up when he was diagnosed with terminal cancer before even reaching middle age. I guess he was right to enjoy his money while he had it.

MillQueen

I woke up early this morning, so I have given myself a hair cut. I used to waste so much money on this, but you can’t even tell I did it myself for free 😂.