How bad is our financial situation??

[SailAwayy]

DH & I both work. DH is in the armed forces and I work in education, on a very low wage. We are both 34 and we have £10,000 in the bank between us.

We own a cheap run around which cost £2,000 and we have another car which we still owe £6,000 on. Unfortunately, we need two cars due to public transport issues from where we live.

We are in military housing just now, but are trying to save a deposit. Our £10k savings are in government help to buy accounts.

DH’s armed forces pension is decent. I was a SAHM for many years and so don’t have much on that front at all.

Im currently doing an Open University degree and should complete that in 2025, so I’m hopeful this will boost my earning potential.

I know we are incredibly lucky not to be in mountains of debt but I really want a stable future for our children and I really want us to afford to buy a home once DH leaves the armed forces. I’m just really worried that we won’t be able to. We were managing to save but now with inflation, I’m not sure how much more we’ll be able to save in the immediate future.

I'm just feeling like a bit of a failure. I grew up in a lovely family home and was well provided for. I’m just worried I won’t be able to offer the same to our children.

That sounds fine to me. Once you have your degree you will earn more, just now your family are housed, dh has a pension and you are saving. You are only 34. It's all good. Prioritise your pension when you earn more though.

You are both 34 - you have another 25-30 years of working life ahead of you. So time is on your side. Just try and keep saving a little each month and it will soon look better. Doing your OU degree is a good investment as well. Pensions are key here - try and get that going for yourself when you start working.

Thanks both. It’s really reassuring to hear you don’t think we’re doing too badly.

I keep wondering if there’s a way we could buy a cheap flat and rent it out so that the mortgage is being paid. I’m just wondering if that would be a better way of growing our savings so that we have more money behind us when DH leaves the armed forces, but I’m really unsure of all of the intricacies of that. Whether it would work out well in the long run or not. It’s all very confusing to me!

You are where you are.

Where you are is not "bad", not by any stretch of the imagination. It's also not perfect and you clearly have ideas how you'd like to improve it. Keep the faith, keep going.

Finances are weird. They can change suddenly in either direction and the stars align, and you can do something you didn't dream of 5 years ago. Or you blow off course, and if you don't have a good plan in place they can topple like skittles.

Get your plan in place to avoid the worst. And then keep going, and in a while everything will fall into place, if you've laid good groundwork.

Don't let the anxiety gremlin get you down. Control what you can, get your plan in place. And find a way to let go of the rest. Once you've determined your goals, and got a plan in place, I would have confidence that you will get there eventually.

I would look into buying a property to rent out,buy area is key. A university town or somewhere with high numbers of renters!

Its not the be all and end all though especially if you’re saving for your deposit.

I did have a property at 34 but I wasn’t in the forces…. And I definitely wasn’t saving money!

BTW buy to let is really tax inefficient these days. It's very hard for it to be worthwhile unless you have loads of capital. After tax, costs and void periods this approach might actually cost you money.

Look at LISAs instead, you can each invest up to 4000 each year and get an extra 1000 (20%) added by the government towards your first house. That's a great boost, guaranteed, and no tax eating into any returns.

Can your husband access forces help to buy? This is a loan from the forces that can be used for a deposit on any property doesn't have to be a new build

Thanks for the replies.

We do have a LISA. It’s in my name. He has the help to buy ISA and it’s those two accounts that our savings are in.

He can also access the Forces Help to Buy if it’s still available when we are in a position to buy a family home and put roots down somewhere, which will be in a few years time (finances depending).

Yes I don't think a buy to let is necessarily the best idea in your circumstances - you'll no longer be first time buyers so help to buy schemes and stamp duty relief and things won't apply, you'll have to pay 2 x extra legal/agents/mortgage fees (to buy the BTL, then sell it again when you buy the next one), plus potential capital gains tax, plus it could be risky if you don't have a huge amount of financial headspace - what if tenants trash the place or refuse to pay rent for months on end and the money has to be found to pay for it - a mortgage at the end of the day is just a debt, not a positive thing in and of itself. I certainly think you'd be optimistic to think a BTL will be profitable in the short-term, it will likely ending up costing you - of course the benefit is the increased capital growth of the property, so I think if it's possible/desirable that you stay in military housing longer term (thinking 10 years or so) and you choose a BTL in an area of high capital growth then maybe the benefits will outweigh the risks and costs over that period of time but do your sums very very carefully and factor in things like ongoing maintenance, void periods and the stress to you (presumably it would fall to you?) of dealing with agents and tenants and tradespeople and so on esp if you choose an area far from home...

I think your plan as it sounds sensible, obviously none of us know what the future holds but you are able to save something, a LISA is a sensible investment, you are paying into a pension too and have a plan to increase your own earnings.

The car you owe £6k on - how much is it actually worth and how much are you paying per month for it? To be honest, I'd consider selling it, paying off the loan and getting another cheap runabout car

You've got 10k in savings. It's not bad. we earn more than you but have £0. relative isn't it.

Thanks @maxelly. That’s really informative!

The car we have is a second hand, 7 seater that we bought for 3 years ago and would sell today for £9,000. I really wouldn’t want to sell it as we’ve done some major upkeep on it and it should run well for us for a number of years. (touch wood!!). We also need a reliable vehicle as we need to drive overseas to see family. The car really ticks all of the boxes and has enough space for all of our luggage and to accommodate family who fly over to visit us.

You’re totally right @Yodaisawally. do you own your own home yet?

Have you looked at what the pension will be on retirement? I can't imagine a forces pension is mean.
Will you be able to rent somewhere nice?

Definitely not BTL in your circumstances.

You are not in a bad situation if you can cover your outgoings and your housing is secure. Good pensions are also worth a lot.

Just keep focusing on putting by as much as you can each month, without getting obsessive about it, and the future will work out. Well done on your OU course.

I don't think that's bad at all for age 34 either, and especially as you're working to boost your earnings. If you took out a 25 year mortgage age 40, giving you another 6 years to save the deposit, you'd still have it paid off before a likely final retirement age? Bearing in mind that your DH may change career and move out of the army at some point but presume you're not planning early retirement?