Savings in an Absolute Mess

LondonZ17

Hello everyone,

What would you if your finances looked like this at age 50?

-pensions £52K (belatedly paying in 20% via salary sacrifice, including employer contribution)

-Savings (including premium bonds): £15K

-Investment ISA: £2.7K

-Jewellery (conservative resale figure, including £3K of scrap gold instantly resellable): £26K

-Debt: £16K

I get wild ideas about how to make money and I suppose it's a bit like gambling. I did make £18K in profit from a side hustle reselling antique jewellery (but £9K of that was from two very lucky finds). I have no idea where that money went…It's an addiction which I've practically managed to kick, but means I got into debt to buy things I thought would make a profit, and it's really hit and miss now.

I have jewellery which I hardly wear, because it no longer feels safe, in a vault so it's a hassle to get it out. I keep thinking I should keep hold of the scrap gold as it's practically money and worth far more than I paid for it. And that it's good to have these types of assets in the current climate.

Another example of the gambling tendency is that I often truly think I will win in the Premium Bonds (so far I've won £1.1K in 3 years). So I never take that money out, and instead keep extending my debt with balance transfers, always 0% but with a fee ranging from 2.4 to 3%.

I used to think I was good with money and a genius at spotting resellable pieces but realise now what a bad situation I am in. I also took an ADHD test recently and might be on an ASD spectrum, which explains the weird & obsessive finances…

Any advice appreciated, or should I see a finance adviser? Thank you!

LHW99

Two probems come to my mind, first the debt and secondly how to avoid piling up more if you get rid of what you have now.

Have you had a look at the Debt-free-wannabe forum?

https://forums.moneysavingexpert.com/categories/debt-free-wannabe

jimjames

I wouldn't panic, on the plus side it's better than some people are able to do.

First thing is you've got debt and savings, unless the debt is 0% it makes no sense to get little interest on savings and pay more interest on debt so would clear that if you can. Paying fees for that still eats into your returns.

PixelPound

Have you looked at pension calculators to work out how much you would need each year? How much you have saved and whether it's enough all really depends on what you want to get out of retirement. Some people will want multiple cruises and trips abroad, others might just relish having the extra time to spend with the grandkids.

ellenvan

Maybe if you wanted to post an SOA ( that's a statement of affairs) basically listing your outgoings and income.We could see if you have the capacity to start chipping away at the debts. I would definitely want to start repayment on the debts somehow. Zero offers can dry up and why keep paying someone fees up to 3 %

LondonZ17

Thank you, lots to think about already!

@LHW99 and @ellenvan, my plan is to use the Premium Bonds if I really have to when the credit card balances stop being 0%. At the moment, I can afford £270 a month towards the debt. I've cut down my savings to £60 to investments and another pension. I have a ruthless budget but prefer to leave £400 for shopping & hairdresser costs and £250 for holidays. I always have an impulsive element that wrecks my finances, so if I leave myself enough for that, it might help to control it.

Thanks, @Jimjames, that's reassuring. When I look at pension calculators, it says I should have 200k in there at my age, but maybe that's for high flyers..Yes, I really need to clear the debt!

@PixelPound, in theory I would be OK with the second retirement tier. Not having to work will be great. I don't go on that many holidays and would probably take tons of classes and pursue my interests.

Vitor

One big missing piece is housing. If you own a home with manageable mortgage or no mortgage, this situation is much more recoverable. If you rent privately and have little pension provision, then clearing debt and building retirement savings becomes much more urgent.

Another missing piece is household position. Are you single, partnered, supporting anyone, or sharing housing costs? The answer matters regarding options.

So I’d separate the problem into two parts: first, stop the debt/jewellery/Premium Bonds loop; second, work out the long-term retirement position based on housing costs. At 50, housing security matters as much as the pension figure.

tetrarch

You have recognised that there is a certain behavioural change required.

£15,000 of debt at £270 p.m. is likely in excess of 5 to 6 years to pay off. Your likely PB winnings will probably not offeset your stoozing efforts (borrowing cheap on CC's)

My advice would be to get non-mortgage debt down to zero and selling your jewellery sounds like it may kill two birds with one stone. The best thing is that, once paid off, you have a newly created red line to never cross again. You can then throw your credit card away and be a debit card person (I know that Section 75 is valuable, but it may be best to remove the temptation to get into debt completely)

Best of luck

Regards

Tet

enthusiasticsaver

I would definitely address your pension which is too low considering you are aged 50. Have you considered upping pension contributions?

If you have £15k premium bonds and have only won £1100 over 3 years that is a little over 2% a year so I would not be bothered about removing some of that to tackle the debt.

How fast are you repaying the debt? If it has been around £16k for quite a long time and you don't have a plan to repay quite quickly I would use some of the jewellery and the premium bonds to get rid of it.

I would up the Investment ISA contributions with a view to using that as an income stream in retirement.

What about housing? Do you own a house? Are you employed?

Gambling is a mugs game and I would resist strongly. If you have ADHD that often does mean a seeking of dopamine so I would look into ways of doing that without spending money or gambling. It requires strong discipline so look for ways to help you like saving at the beginning of the month and really budgeting tightly.

Smudgeismydog

I agree that we need to know more about your background to offer meaningful suggestions, but depending on your salary level, increasing pension contributions through salary sacrifice is likely to offer the most effective return.

Can you post an SOA to give us a clearer picture?

LondonZ17

Thank you so much for the latest replies.

Yes, it makes good sense to sell most of the jewellery. I hate using the premium bonds to pay my debt but I suppose that's the gambling addiction kicking in…

I read somewhere that the brain can't let go of unfinished things, so that's why I keep worrying about my debt even though I have enough in other pots to pay it all off, so I shouldn't even think about it, but it's always in my mind...

Here is my SOA (£600 of my income might stop at any time, because I am freelancing part-time for a company that is not doing too well). I know the clothing and hairdressing costs are high - this includes simple but good quality clothes, all beauty products, colour and haircut at a good salon. I work in a wealthy environment, interacting with snobbish people. I find that 'looking good' is half the work and I've been able to negotiate good perks and I don't work very hard. Also, I'm not ready to go grey yet...Entertainment includes classes, gym, theatre, etc. I don't go on many holidays as it's not my thing, but at the moment, when I go, I pay for an unemployed relative, so it costs far more.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0[b]

Monthly Income Details[/b]
Monthly income after tax................ 2762
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 2762[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 730
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 35
Gas..................................... 35
Oil..................................... 0
Water rates............................. 42
Telephone (land line)................... 24
Mobile phone............................ 10
TV Licence.............................. 15
Satellite/Cable TV...................... 14
Internet Services....................... 0
Groceries etc. ......................... 270
Clothing................................ 140
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 75
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 54
Other insurance......................... 84
Presents (birthday, christmas etc)...... 70
Haircuts................................ 310
Entertainment........................... 100
Holiday................................. 250
Emergency fund.......................... 10[b]
Total monthly expenses.................. 2393[/b]
[b]

Assets[/b]
Cash.................................... 17335
House value (Gross)..................... 0
Shares and bonds........................ 2700
Car(s).................................. 0
Other assets............................ 32384[b]
Total Assets............................ 52419[/b]
[b]
No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
All CC Blances.................16163.....260.......0[b]
Total unsecured debts..........16163.....260.......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 2,762
Expenses (including HP & secured debts). 2,393
Available for debt repayments........... 369
Monthly UNsecured debt repayments....... 260[b]
Amount left after debt repayments....... 109[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 52,419
Total HP & Secured debt................. -0
Total Unsecured debt.................... -16,163[b]
Net Assets.............................. 36,256[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]