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 😂

One of the reasons I'm aiming for the 2 years for debt repayment is due to loan payments naturally coming to an end in 2 years, can't decrease that payment and extend it to 3 years unless I get a new loan which would be a higher rate and I'm trying to clear the 0% credit cards before the 0% promotion comes to an end, I know I could do a balance transfer to another 0% credit card but that would also come with a balance transfer fee of around 3% which I'm trying to avoid if I possibly can

I would pay £50 a month now into a pension you get tax relief so it won’t be as bad as pensions take a long time to accrue value the younger you start the better.
you have done amazing on the mortgage front though. The interest free credit cards are ok as you can manage them I woukd personally pay into pension and if you have to transfer the interest free credit card debt to another card so be it.
once the credit card gone those repayments can go straight into savings and pension.

Unfortunately it seems to be a fixed 7% we have to pay into pension or nothing so I can't just start contributing a small amount now and increase it later

id probably say 4/5

house situation good

debt and lack of pension is below average I’d say.

I personally wouldn’t delay the pension. Employers have to put some money in to match your contributions so “free money”. I’ve been paying the amount my employer will match into my pension for the 10 years I’ve been working and I have over £150k - I barely notice the amount going each month as it’s such a small % of take home pay.

You need to get a pension

@Juniperberry55 being debt free is very liberating and has improved my wellbeing tremendously. I lost my partner (he died) couple of years before me getting to this point, and finally paying off my mortgage allowed me to move forwards mentally.
As regards pensions, I'd already been paying into these regularly since my late 20s but having paid off the mortgage allowed me to pay AVCs on top of what I had been paying in anyway so improved the value of these.
When I got to my early 50s I began having pension planning with an annual review so this process enabled me to have goals to work towards to achieve this. I would really recommend this for you when you can focus on your pension plans.

I agree with what you are saying. My point is that you are talking of « in 2 years » or « I will »… and I guess that I am talking about now.

So, now, if anything happen to your income you won’t be able and you will only have what you have now.
I am not super aware of the legislation but in my understanding, yes, savings first then your house…it will absolutely get sold for you to be able to make payments or they will turn to your kin to action. They won’t « not touch » your house and you can live free of charge whilst sitting on the equity. I agree that, if you can…so no accident…everyone should sell to access a « better care » but the price of it might mean that you go there first and then…in the state one if no one can keep up the payments.

Do you have a financial advisor?

In your shoes I would open a stocks and shares ISA and pay yourself 10% of your take-home first. That way it's invested but still accessible to you. Next, open a cash ISA. High rate and stick your cash savings in there.
Open a SIPP and once you have 6 months of costs saved, take each additional month saved and transfer it to your SIPP or stocks and shares. Avoid individual shares, buy trackers etc.

If your company does matched contributions you're absolutely mad to be missing out on free money. Sign up ASAP. So many tax benefits being lost out on.

I'd cut the TV/Broadband/Subscriptions right down. Your food grocery spend also seems high if you're on your own, we budget 600 for 4.

Aim to pay down say 50% of the debt on 0% and then whatever's left at the end of the term...shift again to a new 0%.

This way you achieve a better balance - debt reduction in flow, savings balanced across cash, investment, and pension. All at the same time.

Sounds like you've been very sensible and managed to get to a pretty comfortable position. Definitely an achievement. Hoping to be in a similarish position in the future.

I'm not sure what all the arrows mean, I assume it's formatting that's gone funny
In regards to the right here and now, yes I have low savings, so I'm working on it, within the next few months I'll have a couple of grand, if I got made redundant I would get some money from that to get me through a couple of months. I agree it's too little money in my savings but I can't go back in time so I'm working on it now

I'm am very aware of social care charging legislation. Home care (carers coming into your home), your home doesn't get sold from under you I can guarantee you that is not allowed and they cannot expect next of kin to contribute to your care contributions unless you want more care over and above the care that would meet your needs. In which case it isn't something the council would fund but your family could choose to pay for anything on top of what the council decides is essential, you would be means tested based on your income if your savings were below £23250.
If I was in the position to need to go into a residential home because I couldn't safely stay in my own home with carers coming in, I couldn't give a monkeys about selling the house and paying for my care in the care home of my choice. I'm not sure what point you're trying to make. Do you think I'd be better off paying rent forever or something? In fact you can even rent out your house and enter into a deferred payment agreement where the house doesn't need to be sold until you die, house can be rented out, you pay a contribution based on your income and then the difference between your contribution and the cost of the placement is charged against the property when you die and the property is sold. Effectively potentially allowing you to extend how long the house funds your care and potentially meaning there might be a bit more equity for your beneficiaries when you pass away as the rental income can help with the costs protecting the equity a little

You are consistently getting the same advice over and over. Start a pension. It won’t cost you as much as you think (ask company to run a projection for you). You are missing out on tax benefits and free money.

There’s ways you could mitigate the take home difference if you pay into your pension. I think you’d find it’s affordable and achievable, even with your other financial aims.

At the very least open a stakeholder pension. We pay £20 pcm into a stakeholder pension for DS (18) and DD (15) the Govt tops that up by £5 every month (tax relief). They won’t be able to access it until they are 57 (by current rules) but that’s ok.

You could open a stakeholder pension to get the tax benefits for now.

Your determination to clear debt and build emergency fund is blinding you to the importance of a pension right now. I’ve found that people always have a reason to put it off. In fact I read something on MN about a woman who’d put it off and off (for “legitimate” reasons like yours) then all of a sudden her retirement was 15 years away and a financial advisor told her she’d need to save something like £800 pcm to get a decent private pension.

via my work I come into contact with the gender pension gap.

I honestly believe that paying your future self first is one of the most important financial plans to have.

keep the debt on 0% where possible. Economise where possible. Slowly build your emergency fund but start a pension now, not in 2 years…because as sure as eggs are eggs, there will be another good reason not to start then.

15 years ago I encouraged all of my team to join the company pension. Using the free money angle and boy I’m glad I did, because 3 months after that the company reduced their offer of the company contribution from 10% of salary to 6% of salary for new joiners…but everyone in the old scheme got to keep their 10%. So do it now, because your company could easily change (and probably for the worse) their pension offer.

you’d be gutted if that happened. They might increase the payment you make and decrease theirs. Also please check because I think there are rules about minimum pension contributions and I think that’s at 3%.

Tbf I never actually asked for advice on how to improve my financial situation just asked how people would rate me 0-10 on average for my financial situation for my age. And to be honest it has kind of confirmed my thoughts about how people view financial situations differently to others. Some horrified about my lack of pension and savings etc and rate my situation as terrible. Some rating me 3/4 and I would probably agree with them personally, maybe in a couple of years if I'm debt free with savings in an emergency fund and joined the pension I would probably view myself as as 5/6 at that point. Some people think I'm in a great position based off my equity position with the house.
I understand the free money from contributions from your employer, I understand compounding interest. I've just chosen to prioritise differently for the here and now
I understand a pension is important and I have explained my plan, answered questions about why I wish to delay my contributions for 2 years while I stabilise my financial position to protect myself against financial issues over the next couple of years before I start prepping for retirement and paying into savings and pension.
If I'm being totally honest I'll be shocked if I live much past retirement age, but will still prepare as if I will live 20 years past that point regardless.
I mean anything could change in the next few years, the employer could indeed drop how much they contribute, state pension could be abolished, I could be made redundant. But I have as much of a plan based on what's happening now and my current goals for the future and I'm okay with that

You’re in a better position than me and I’m almost 40. Still not managed to buy a house and we are currently living on my partners wage alone as I’m a SAHM. We have savings and only 2k debt but you’re still way better off!

5

You have equity in your home (is home definitely worth that?) But the £14k debt is a lot on that income and no pension whatsoever at age 33 would worry me a lot.

You asked for a rating between 1-10, I'd say 6.5
Steady and stable. But remember 80% of wealth is held by 20% of population so at 6.5 you are up towards the top of the remaining mere mortals. Well done and keep going.

Swings and roundabouts in my opinion. Being a sahm means you've achieved differently to me, you have a child and you've kept your heads above water and savings. You could potentially return to work at some point and still have time to get on the housing ladder if you choose

How did you get to the position with such a low mortgage v value on your property?
Youd be in good shape if

1. you had no debt
2. you had 6 months savings
3. you were funding a pension with 15% of your income

Yep, slightly smaller houses on same street have gone for slightly less, houses same as mine have sold for 220k-240k over the last few years so should be fairly accurate as I'm going on sold prices rather than listing prices
The 14k debt is definitely the thing that concerns me currently, not overwhelming but high enough for me to want to tackle it asap

6.48223/10

I'm not paying into a pension fund where my employer would also contribute.

Whyever would you not?!! 🤯

Right now I think your about a 4

This is madness.

Yes was formatting.

Of course you can’t go back in time but as it is more « urgent » than to accumulate equity in your house and that effectively the bank wouldn’t care much for you to sold your house to have access to this equity in case of emergency…all these are the reasons why I said 0. that was your question.

My answer is that because of the « now » not being secured and the « future » not being secured too. Let alone if you have any accident of life. Only the « a little later may become secured ».My advice is that you speak to a financial advisor. Your situation seems very precarious.

Have a good evening.

My house value Vs mortgage is purely to do with timing on property ladder when I bought it in 2013 it was worth about 125k, mortgage has always been 2.something% and is secured at that rate for another 4 years. Its needed some pretty big repairs over the years, hence the debt.
So basically my equity position is good because of a bit of luck with house prices increasing and low interest rates. Luckily when this rate ends I will have a small mortgage so hopefully any rate increase won't cripple me as much as if i was just starting out
Definitely working on point 1 and 2 and then can move onto your 3rd point

I made the mistake of not putting into a pension fund as was temping until I was 40 and only putting minimum amount with my permanent role in a small company 10 years later made redundant - so only have £18,000 pension late 50’s - all my contemporaries have retired - I could kick myself and there won’t be any inheritance for me ! Please start now paying something into one -