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 😂

So when you do start your pension at 35 you/your employer need to aim for 17.5% of your income. If you had started at 22 it would have been 11% to get the same amount.

Happy with the 0 rating as some people would indeed feel very uncomfortable in my position currently with low savings and the debt but I'm not sure how paying for care had anything to do with it or paying the banks forever
In regards to a financial advisor, I don't see much point in seeing one currently. Maybe at the point when I've paid off debt and got an emergency fund and started paying into the pension. At that point I may have spare cash that I want to save and invest that might need some expertise but I'm not sure it would be worth paying for a financial advisor at this stage

That's fair enough. I kind of see it as a trade off. I may have to put more into pensions when I start paying in at 35 Vs 22. But it has meant I could afford to pay to get the house earlier. My employer pension may fall below the 17.5% needed but it would just mean I'll need to make up the rest in some other way, another private pension or investments I guess .I think 17.5% doesn't sound too bad at that point to be honest

A workplace pension is literally free money and the government pay in too (via tax relief). It's false economy not to join a workplace pension.

Like PP, the lack of long term savings/pension would be my worry. Not contributing to the workplace pension scheme means you’re missing out on matched contributions and the impact of compounding but also (all?most?) schemes are calculated based on age and also years in plan, so if you could be penalised if you fall short of the membership/vesting periods…

As someone under 40, you could also / alternatively give your pension boost with the LISA (for retirement), maybe even just the small amounts left over from the ‘buffer not needed’ category on your itemised list?

maybe consider income protection insurance?

There isn't a financial advisor in the world that will tell you to ignore pension until your 35, especially one where your employer contributes.

If there's a workplace pension, there will be a pension firm that you should be able to contact and get them to run the numbers if you start it now vs waiting to 35.

Then make a fully informed financial decision. I will bet anything that you will see the benefit of it after talking to them.

Thank you for your very precise rating 😂

I've answered the pension stuff a few times, CBA to repeat on that one
The buffer category is to cover birthday presents, unexpected vet visit, small repair on house/car so used fairly often, I don't want to get out anymore debt to cover these, any left over at the end of the month is to be added to savings/debt currently
I don't want to pay for income protection due to my sick policy at work being decent and if I got made redundant I would be paid redundancy money and hopefully emergency fund would be looking a bit healthier by then

Your reasoning is based on the fact that you have time.

I am pointing that you might or not. You falsely assume that you have time because you are 30ish. I certainly wish for you to remain healthy but a lot of people feel very differently in early 30s, early 40s, early 50s…etc. Retirement is to be bumped 67?68?

My point in talking about care : evident long term needs and my point in « paying the bank all your life » : paying a mortgage which includes the fees but fail to secure being able to pay this mortgage if loose job/accident. Yes, in 2 years you will be able…etc and I hope nothing happen in the next 24months but who knows? You simply put could loose the house and a big part of the equity as the bank won’t care about « leaving you some ».

I think that it is quite clear what I say. Yes, you are working at it but I would seriously make some change now and not wait later.

Join the retirement scheme now could be a start. But someone whose job to talk you through this and with a better assessment than mumsnet would be a financial advisor. They aren’t just for people with extra money…a reshuffle of budget is also something they do.

You must, must, must start a pension. Now.

Having only £45k left to pay on your mortgage at the age of 33 is amazing, but make sure you’ve got £20k aside for emergencies and ensure 17% of salary is going in to a pension - that’s a combination of your contribution (pre tax so isn’t that noticeable), employer contribution and Govt tax relief.

I mean even if the bank forced me to sell the house for 150k they would still have to give me back 100k they don't get to keep my equity and there's if I fail to pay the mortgage. If I lose my job through redundancy I would get about £10k. I would also have a couple of thousand in savings as redundancies usually takes a few months before you actually stop work. So I could get by for a few months without the world ending, banks will also let you pause payments for a couple of months usually and at one point I was overpaying the mortgage (not any more) so that would probably get me another month or 2. If I got very sick I would get 6 months full pay, 6 months half pay so again would give me some time, if I was desperate I could sell the house in those 12 months. I agree my position with debt and savings isn't good but I'm am currently doing something to improve my position and payijg into my pension from today instead of 18months-2 years wouldn't immediately made this position less precarious so I'm not sure what you think I should do about this except for trying to save and pay off my debt, which I am

In regards to paying for care, like I said I understand paying towards care al ot better than the average person, possibly in more detail than some financial advisors. It was literally my job at one point. I have explained why paying for care is not a concern for me whether that be in 5 years or 40 years

There is literally nothing I would like from a financial advisor at the moment as I am comfortable with my plan and I don't want to pay for one. I am happy in my choices and it is fine you disagree but it doesn't stop me being absolutely fine with my choices

Look up Dave Ramsay baby steps - the plan works brilliantly to clear the debt and get financial stability. There's a whole community on Facebook dedicated to the plan

I've seen a fair bit of Dave Ramsey stuff, I agree with some of it. I think his $1000 emergency fund to start with and then clearing the debt before saving anything else, I'd rather have more in savings before going crazy on debt repayments but I agree with the principle of some of it albeit I find him a bit preachy and obviously it's aimed at American economy. I quite like Caleb hammer as well tbf.

I'm not a fan of Dave Ramsey but I actually agree with him and the op that starting the pension payment along with emerg fund and debt payment is trying to do too many things at once and it can be hard to get anywhere and maintain motivation. A liquid emergency fund more than $1k is important for peace of mind and in the case of job loss.

I listen to another financial person (Jill on money) and she advocates having access to your money, and not having it all illiquid in a house. (NB her callers tend to have a higher net worth so some people tend to be a little annoyed by that.

Yeah sure.
you are so comfortable you are here asking mumsnet?
or was it all a scam to self indulge in how smart you are in handling your bad situation?

the average person knows how to get by but a smart and knowledgeable person would know how to not end up there except if life accident.

It's not too bad and it sounds like you have a solid plan. Open a cash ISA and allocate a bit of the money you're using to pay off debts to this. You can then use the interest to help pay the debt off.

As someone who bought a house on her own in the South East, I completely understand where you are at.

When you have a single income and have to deal purchasing and fixing/maintaining a home, it can be hard to save as much as you want or to pay into a pension.

I am rebuilding my savings every month after buying my property and having to do some expected work on it.

I put money every month in my ISA, but I simply can't afford to pay into a pension.

I think many people answering here are from two wage household and don't quite understand how difficult it is when you are on your own and that you have to prioritise bills and mortgage over anything else...

I think it'd you read my OP you will see I think people's view on financial situations is pretty polarised on here. I asked people to rate my situation. I've accepted people's ratings and answered questions to how I'm in this position now, the good and the bad. I haven't said they're wrong if they prioritise their pension, I've explained why I'm okay to put it on the back burner for another 18 months - 2 years. But I am comfortable with my plan going forward. I don't have to agree with you and you don't have to agree with me.

I'm not sure how you think this post is a scam? I have clearly stated in my OP what I was asking and have seen some people like yourself, say how horrible my situation is. Others think I'm doing really well. Some have rated me where I personally view myself at a 3/4 and with potential to get into a fairly comfortable position in a couple of years. I haven't said anyone is wrong. I think it highlights how differently people can view the exact same financial situation.

I don't think think it's self indulgent for me to say I've taken into account the pros and cons of a plan and I'm happy to stick with the one I have.
I corrected you when it came to paying for care and that banks don't take all your equity if you're not in negative equity in the event the house is sold because you haven't made payments. I'm assuming you've taken offence to that for some reason, but I don't think it's necessary to scaremonger people into thinking there house equity is worth nothing and a bank or council could steal it from them at any moment either.

Yes I think in some cases it may well be the case that they are looking at it from the perspective of a 2 income household. If I was sharing the bills with another person I would very happily start contributing to my pension and paying the debt down slower if needs be as the risk of losing income is mitigated a little by having someone else earning.
Well done on getting on the house ladder in the south east, I imagine that's a lot harder than doing the same where I am, so well done you for achieving that on your own.
Are you hoping to join the pension once you've got a savings cushion behind you?
I do think knowing you'll have the house paid off in retirement does also protect you a little as you haven't got to worry about paying rent out of your pension and there aren't as many council houses available nowadays so I don't think you can rely on having a house with cheap rent.
It's scary how much rent has gone up even in the last few years. So my theory is my pension pot doesn't need to be quite as large as someone who needs to pay for rent each month as that's one less expense

If you’re a public sector employee and have opted out of your pension then opt back in Immediately! You’re missing out on so much free money.

Suggest investigate your company pension, because some give free contributions & free life insurance

Example

You put in X amount
The company also puts in X amount
Compound interest

Plus the tax savings

Definitely 10. In the greater scheme of things.

I’ve suggested same. Have been ignored.

we don’t know what %age the company offers or if there are any perks associated.

OP you might like to follow this thread about what might happen to the state pension:

https://www.mumsnet.com/talk/am_i_being_unreasonable/5370270-what-do-you-think-will-happen-to-the-state-pension-in-the-future?utm_campaign=thread&utm_medium=app_share

You haven't been ignored I've answered why I'm delaying contributing to a pension for the next 1.5-2 years, feel free to read my previous comments to find the answers. I understand how pensions work, lack of knowledge about how compounding interest works, employers paying in, free money etc etc is not the issue

Speculating about what may or may not happen to the state pension is very off topic. Please see my OP and previous posts. I haven't asked if I should join a pension or asked for any advice although I have responded numerous times about my plans for starting contributing to a pension in the future