Rate my financial situation

[Juniperberry55]

Everything finance wise on Mumsnet seems to be very polarised, either those on £100k+ income with tens of thousands in savings and a holiday home, or not having 2 pennies to rub together

I'm quite curious to see how people would rate my financial situation on average for my age

So I'm 33, live alone
I own a house worth roughly £220k with around £45k mortgage left to pay
Around £14k in debt on 0% credit cards and a low interest loan all due to be paid off in around 2 years
Income around £42k a year
Almost no money in savings, currently trying to build up an emergency fund of a couple of months pay
£0 retirement

I'm guessing there will be the odd comment about this being a stealth post. It is not, I am in debt, I think my finances are not great in some areas, in others I think they're not too bad

Score me 0-10 on how you think my financial situation is for my age 0=awful 5= average 10=Jeff bazos level 😂

To me it’s a 5/10, ok you’re doing good mortgage wise, but the debt and lack of savings outweighs it a bit for me. Somewhat along the lines of asset rich…cash poor situation. I would feel uneasy about that. Will your pay increase, do you have room for promotion etc?

As a single income mortgager payer I'd be concerned about that amount of debt and no savings. Really concerned.
If you earn £42k and have a £500 a month mortgage there's no reason not to be saving or contributing to a pension.

This is bad advice unless your parents are very wealthy and you know you will inherit. The median inheritance is very low and care fees if needed can eat into them.

There is likely to be a retirement crisis in the future as most people don’t prioritise this enough until it’s too late.

Employer contributions and the tax relief are ‘free money’ which you need to take advantage.

I do have student loan deductions of around £100, pay roughly £600 a month on the debt, obviously normal bills, council tax, gas electricity, petrol, groceries, then also saving a few hundred pounds into a savings account at the moment to build a bit of an emergency fund
Loan is low interest around 3%

Is your strong housing position as a result of inheritance?

I’d be careful not to let that make you think you’re in ana amazing position - £12k on credit cards suggest you are living beyond your means.

No room for promotion. May get a 3% pay rise this year, which I will be chucking at savings/debt and pretending I haven't had it

It's not advice, but I have seen others paying sooo much into their pensions, only to drop down dead in their 50s and 60s. There is no guarantee of retirement and there has to be a balance. I think paying off debt should come first, in my opinion.

Nope, no inheritance just got on housing ladder in early 20s

Yes I wouldn't be surprised if I do pop my clogs before retirement tbh. I won't be depending on any inheritance as part of my plan and do want to get pension started but it comes below my priority for debt free and emergency fund

You need to be aggressive about seeking out money. Remember every pay rise you don't get now is not just you losing that money for that year. If you fail to get say 1K this year that will lower your salary by that for the rest of your working life so 65-33=32x whatever you fail to get.

Your debt position does not really look job re your job security tradeoff. It's people who are confident of their debt position that can negotiate most aggressively as losing their job has less fear/impact.

Always remember that storing money in say a savings account gives you more flexibility than paying off a mortgage or putting in a pension, even if it costs you more in terms of interest.

Because your ltv is small in terms of mortgage can you consolidate your debt onto the mortgage and reduce interest payments that way ?

So how much savings do you have if you are able to save a few hundred each month?

Get a sipp open now with 100 and leave it .
When you can start to add bits here and there
25 a month now can make a big difference with the time lapse.

Absolutely this. You mention company pension scheme. Does that mean you are effectively missing out on “free money” by not joining now?

find a way to join now please.

I’m another jumping in to say start the pension now. As someone just reaching pension age, and in a number of pension focussed groups, it’s awful reading about people who worked hard all their lives, but neglected starting a pension.

It really is a case of the sooner, the better, even if you do start with a small amount.

Other than that, do you have any scope to rent out one room for a year or two? It could really help with your plans to knock down that debt.

My mortgage rate is very low so I wouldn't want to remortgage
My pay rises are set nationally, so there is no negotiation to get a higher pay rise.
Working on my emergency fund now

About £600 currently should have about £5000 in there by this time next year

Because your ltv is small in terms of mortgage can you consolidate your debt onto the mortgage and reduce interest payments that way ?

Its usually a bad idea to move unsecured debt to debt secured against your house, better to work aggressively at paying it down.

Yes I will be missing out on free money, however I live alone with minimal savings, so I want an emergency fund before I start paying into my pension as I'm in a position if I lose my job and don't find a new one instantly I could lose my house, go into more debt. So pension contributions currently on hold. J would possibly consider paying into my pension now and start paying into my pension if I had another person's income to fall back on if I lost my job. But that isn't the case. So working on making myself a bit more financially secure now and then start paying into a pension in a couple years, where I'll still have 32/33 years to contribute

Not bad but would be much better with a cushion of savings. Harsh reality is you are possibly one job loss/redundancy away from seriously at risk of needing to sell your house to pay debts. 6 months living expenses saved would give you a buffer to get another job, or a lodger in etc if the worst happened. It's not just about saving for good things, it's about coping with any bad unexpected things. Forgot to add no pension at your age is dangerous. The longer you leave it the more you have to put in monthly for the same income up to a point where you can't catch up.

Not having a pension at your age is crazy. Your company would pay into it and you would contribute too. I'd start that immediately and pay off the debt slower.

Yep, that's basically how I feel I'm doing. Not bad but not great and the single income, lack of savings and debt is what's concerning me at the moment if I was ever to lose my job. So prioritising debt payments and emergency fund. Hoping in 2 years, I'll be debt free, emergency fund sorted and can join the pension. I would then only have around £37k on the mortgage and would feel very secure financially

Get a pension sorted now, you'll thank us later

You are not listening.

It's free cash though as the employer pays in too. It's not just a savings account!

I've not said 'don't ever pay into a pension', have I??

I do have one, I'm not an idiot.

What if I lost my job and couldn't pay my bills because I hadn't paid off my debt or created an emergency fund to get me through the rough patch? The pension pot wouldn't help me through
I'm happy to join the pension once I'm stable but not at the risk of being able to survive a job loss
I feel like I'd rather lose the £100 a month extra pension once I'm retired than risk losing my house for the sake of waiting a couple years to join the pension fund