Live fast, die in poverty

dunstonh

I'm not sure the pressure has increased much. Housing costs are in relation to income are back to around 1991 ratios so its not something new we are seeing here. Whilst we arent talking about property being at £50k anymore, we also dont see average income at £10k either.

I am posting this as a 36 year old but I know it will make me sound older

Looking back to the 90s when I bought my first house, we didnt go out and buy new furniture and get top end furnishings. We had a few gifts from parents and gradually built up over time. That was generally the norm.

Now, you see first time buyers (in general) spending more on credit to buy more expensive items quicker than before. That increases the monthly commitment and makes it harder for things like personal savings and retirement provision.

The "must have it now" menality is the problem. I think a bit of hardship in your 20s after your first purchase is a good thig. It teaches you to use your money wisely which can put you into a better position when it comes to budgeting for things like retirement etc.

totmalysh

Pension schemes are great the way they are advertised to everyone. Are they?
The current retirement pay out can start when one is at least 45, due to be raised to 55 in a couple of years. I am 26 at the moment, what is going to happen in 10-20 years time? I do not know.
Do I want to lose the money I paid in to the pension scheme and be told "Oh, we had a credit crunch and it is lost." The answer is a clear NO.
Whilst I am not saving for me to live on a pension (I do not think that I will get even a state's one, not because I do not qualify, but I am not sure I will live to see it), I do not live in credit either. I have no loans or credit cards that I cannot pay off, my mortgage will be paid in 5 years time. And I have savings to last me a few years, should I lose my job.
I am not saying that pensions should not be looked into. They are not an option that I would consider. Maybe, my life experience is at fault. I am but a former USSR citizen, who lost their homecountry overnight, and that was not thought possible.

dunstonh

The current retirement pay out can start when one is at least 45, due to be raised to 55 in a couple of years.

Its never been 45 (unless exempt profession, like professional footballers). It was 50 and increasing to 55 from 2010. The increase is to prevent people unlocking or starting their pension early for purposes other than retirement provision. it also reflects an aging population that is living longer.

Do I want to lose the money I paid in to the pension scheme and be told "Oh, we had a credit crunch and it is lost." The answer is a clear NO.

Why would that happen in a pension?

farhad1965

dunstonh wrote: »

The "must have it now" menality is the problem. I think a bit of hardship in your 20s after your first purchase is a good thnig. It teaches you to use your money wisely which can put you into a better position when it comes to budgeting for things like retirement etc.

Dunstonh - MUST HAVE IT NOW - that is exactly the problem. It really pains me to see what some people do to themselves. Being a keen SME'er, I have just downgraded my car costs from £300/month to £215/month (I hire lease brand new cars on 2 year only contracts). Now I dont have any debts, loans and have plenty cash if I need toget to it. A friend who was telling me about his credit card debts reaching £90k in the past month, has gone from a £360/month car to £400/month. The only logic I see is that he is trying to balance the pain of the mounting debts with the pleasure of a car that is the dog's dooda! Why do people do such stupid things??????

Pobby

farhad1965 wrote: »

Dunstonh - MUST HAVE IT NOW - that is exactly the problem. It really pains me to see what some people do to themselves. Being a keen SME'er, I have just downgraded my car costs from £300/month to £215/month (I hire lease brand new cars on 2 year only contracts). Now I dont have any debts, loans and have plenty cash if I need toget to it. A friend who was telling me about his credit card debts reaching £90k in the past month, has gone from a £360/month car to £400/month. The only logic I see is that he is trying to balance the pain of the mounting debts with the pleasure of a car that is the dog's dooda! Why do people do such stupid things??????

I started a post regarding this topic.It had some good replies.

http://forums.moneysavingexpert.com/showthread.html?t=759787

Pobby

margaretclare wrote: »

Pobby, you're in a similar state to DH and I, approx £24K a year from all sources but because it's split between us it doesn't fall into the tax clawback trap. Also, remember that tax allowances are a lot higher for 65+. We shan't be paying any tax for the coming year.

I agree about the 'gotta have it now' mentality and this, I think, is what the article quoted was saying.

Margaret

Margaret,question please.Lets say i have a pension from the state plus a private pension, is 20% taken from my private pension regardless or can I use my tax free allowance against some of my private pension?

chesky369

Pobby, the tax and pension people very sweetly let your major pension provider know what tax to deduct, after they have added both lots together and decided what your coding is - so it doesn't really matter which one is which, they get you anyway.

ALIBOBSY

The reason why the tax is taken from the private pension if you have one is that they will have a decent computer which can handle tax deductions as opposed to the old systems the pension service have which can't lol. They add up your total income take off the allowance and get the tax to be paid direct off your private pension or if you have alot of other types of income/investments they may ask for a tax return each year.
ali x

seven-day-weekend

Your tax is calculated and deducted against your total income.

Our example:

My husband gets his Teachers' Pension, and also Incapacity Benefit , both of which are taxable.

His tax code is calculated on his total income (minus his personal allowance) and then the tax is taken from his Teachers' Pension.

Hope this helps.

Pobby

Thanks all.It does help.For some reason I thought that after getting the 25% lump sum no matter what the income for a private pension the whole lot had 20% deducted.So a bit of good news there.