Worrying about money unnecessarily?

[StarcourtMall]

I’m really struggling with balancing living for today and planning for the future. I can’t quite get my head around if we’re doing okay or not saving enough. I am nearly 50 and in our married life have gone from redundancies and not being able to pay rent to being comfortable. Some serious illness a few years ago has given us a bit of YOLO mentality, but I also have to think of the future.

Positives:
Household income of £115k gross with secure jobs
Both have pensions - paying in approx 20% of income
No debts other than mortgage and 1 car lease
Savings of approx 6 months income (although some of that is for home improvements this year)

Negatives:
Mortgage has another 20 years to go!
Two teens - one approaching driving lessons / university age and one with severe learning disabilities who will never hold more than a minimum wage job and will always be dependent on us. Teens have a few thousand each in savings too.
Pensions were only started in last 10 years so aren’t particularly big yet.
We love travelling and spend thousands each year on this - feel quite guilty about that but also feel really unhappy if we don’t - like what’s the point in all the hard work if you can’t enjoy it?

I don’t know what I’m after really - reassurance that we’re doing okay? I often feel that we should pay more into the mortgage (and will do with my next pay rise) or pension, but the figures are so large it just feels pointless! Any suggestions for small changes that can make me feel like I’m doing something positive (without losing the holidays 😂)?

This in spades

always wonder what draws a fairly high earning mature poster to turn to anonymous posters on mumsnetters to discuss large figures and give a few bits of info.

financial advisor

Because

1. MN has a large number of highly intelligent professionals who post and can give good advice
2. if posters are invited to throw their ideas around then mostly they are easily googleable concepts and can give totally different angles for the op to ponder
3. and I for one am very pleased ops start posts like this to give me food for thought and a chance to reevaluate my financial decisions free of charge, as are many others I’m pretty sure

I agree - it’s food for thought and the detail can come later.

It’s threads like this and the many others, based on all different salaries and circumstances, that have made me less bothered by my mortgage and strengthened my resolve to max out my pension to pay it off later, rather than throw every penny at it now just so I can say it’s gone. It’s been hugely helpful for me

“The detail can come later”

By which point lots of advice given based on a scanty OP. Hence why a IFA does a very comprehensive fact finding before giving any thoughts / views / advice

because the detail can completely render advise without that particular detail completely reckless

We did overpay our mortgage but that was because pension contributions were maxxed. The pension attracts tax relief so will likely be a better option than overpaying the mortgage, even though psychologically the mortgage is a drain.

I would say start little regular mortgage overpayments whenever you get a pay rise once you have ensured pension is as good as it can be. Over the course of the next 20 years, the mortgage will feel smaller and smaller and you may be able to dramatically increase payments in 10 years or so.

I would also allow myself holidays too.

The fact you have started thinking about this now is excellent and with a bit of tweaking and saving and watching the numbers closely, you should be able to achieve your financial goals.

Don’t underestimate how exhausting work is as you get into your late 50s and early 60s.
A small mortgage or no mortgage means the freedom to reduce earnings as outgoings reduce.
Holidays and travel are fabulous but need to balance against financial independence
We have been mortgage free for some years now and have dropped to 3 and 4 day’s employment which is so much less exhausting

I'm not sure that's good advice if they owe so much on their mortgage and don't have much in savings, plus a car on tick. A pension is no good to you if you need access to the money before the age of 57 or whatever it will be, and you know yourself that life could throw up anything, and one of you may then be unable to work. And you need a secure roof over your head. A lump sum off a pension that was only started a few years ago isn't going to pay off a mortgage that large.

OP, that's a BIG mortgage to have for someone at your age. Did you extend because you needed the space for your disabled child? And what are the home improvements you're talking of? I think if it were me, and I am the same age as you, the huge mortgage would be the main worry. You are going to get a shock when it comes to university expenses as your child won't be entitled to anything beyond the minimum maintenance loan which is £4k something a year. That doens't go very far at all.

If it were me, I would live a simpler life for a few years. If you don't REALLY need the space the extension brought, I would look at downsizing now. Energy bills would hopefuly be lower too, as well as your mortgage, possibly council tax etc. I realised too late that the time to get an extension is when children are young and they need space for toys and to run around, have play dates and parties etc. When they're teenagers they just tend to sit in front of a screen and there are not many belongings lying around family spaces. Then they go off to uni and you're stuck rattling round a too large home but feel too attached to it to leave.

What healthy savings? They've got 6 months worth of outgoings. That is fine for a temporary blip like illness or redundancy, and what most people should have really.

OP, could you describe the type of holidays you spend on? Are we talking an all-inclusive to Tenerife for a week every year, or are we talking big expensive road trips to the US or luxury hotels in Dubai or to the Maldives etc? Could you make a pact to only go on a big holiday every third year, and maybe just go on a couple of weekends away in this country for one year, a week self-catering in France the next year, and then a bigger holiday the third year, on a rotation like that?

Our mortgage will run until we are 68, my plan is to really start overpaying in 40s and 50s. Our kids will be 20s by mid 40s so different to you but our household income isn't as high. I've very much taken the view of prioritising "life" over mortgage whilst we have kids (public sector pensions), given your income I would look to see how much sooner you could do, you'll be surprised how much impact a modest overpayment can make.

You have a niggling worry or you wouldn't be asking. It will wat away and eventually seep into those lovely holidays if you spend thousands on them. I would sit down work out your budget on holidays for the year and half it. Still go away and enjoy life dont have no holiday. But there must be a compromise. 70 is too old.... if you realistically can search the market and find something you would be happy in considering your disabled child as well and it means you can be mortgage free then fine. If you cant its pie in the sky and not a realistic option. Just be honest with yourself.

@CurlyhairedAssassin taking into account their income I guessed their savings are about £50k. That is substantial to most people.

I assumed it was 6 months worth of expenses, not actual 6 months worth of income

Yes, I rounded it down a little. It could be £30k, which is still a good chunk of money. Also, they may have insurances for illness etc.

After covering your day to day expenses, I'd split the remaining money into thirds:

A third to overpaying your mortgage
A third to saving for the future, eg pensions, DC university etc
A third to 'now' eg holidays and other non essentials, including saving so you can replace your cars, do home improvements etc

You could tinker with the percentages, but with decent pensions, a secure income and a realistic prospect of releasing money by downsizing, I see no reason to live like monks in the short to medium term to throw it all at what is an affordable mortgage even if you chose to cut your hours by a day or two in the medium term.

What sort of disposable income do you have each month? Our joint income isn't as high as yours and we are able to save quite a substantial amount each month. We've tried to avoid lifestyle creep though and our monthly budget has been around the same amount for a good few years now. We do go abroad every year for two weeks but just to Spain and book early to get the best deal. Holidays are important to us but we don't prioritise cars and both drive old cars bought outright. We do both wfh though so there isn't much need for expensive cars.
I think we live well. We don't spend frivolously and don't eat out a lot or grab coffee. We do spend a lot on food shopping and kids all do clubs etc
I think in your position I'd get a proper budget in place. We put money aside for holidays, xmas, car insurance etc every month
We roughly know what we spend on food and diesel and we have a rough monthly additional spends amount for things like clothes, entertainment etc
We know exactly what our monthly bills are
Once you've worked out a good budget that allows for treats and ad hoc expenses you need to see how much is left
Then put half to overpaying the mortgage and half to savings
Continue paying into your pensions and I'd still go on holidays to be honest if this is possible

Can't you move into your dads flat?? Then you'd save some rent?

@Cantstandsmugness

your father managed to pay £250k in his care home fees over 3 years without selling his property? He must have very sizeable savings!

@OhIdoLike2bBesideTheSeaside
Yes it did cross my mind but it's too far from where I work and it's so hard to get another that pays well enough at my age.

@Gigglechop
Yes he sold my childhood home to go into assisted living! It's nearly all gone now so all his saving for retirement and down sizing is paying for the care home. It's part of my point really.

I am 59, have similar income and probably spend 20k a year on travel, plus thousands for pet care while I'm away. Life is short.

That said, i have good pension and only owe about 25k on the mortgage. No other debt. No kids so no uni costs. Parents gone so inheritance not coming.

Is your income split broadly evenly or is one of you a higher earner. If the latter are you maximising tax breaks. if you’re paying in 20% and only really started in your 40s that probably isn’t enough especially if you’re likely to need a lump sum from pension to pay for mortgage.

Different situation, but we overpaid on mortgage when I got a high paying job, which enabled me to 'retire' at 55 and have the money to do what we want when we want.
I have a campervan and bugger off at every opportunity with my dogs and 'DH' ( and yes, the quotation marks are deliberate), does his own thing, but we do travel abroad, eat out, enjoy life.
For me, it was worth penny pinching for a few years to get what I have now - and I have known real poverty.
Having no mortgage will give you so much freedom - just think about downsizing and what you could do with that lump sum 😁

MN is obsessed with paying over mortgages but you should speak to an IFA to determine what is best for you.

We prioritise pension and savings because our fixed mortgage rate is so low. We have a similar income and mortgage but more savings, DH and I earn pretty similar amounts (both ~£60K) and put everything over £50K into our pensions to maximise tax relief, it also helpfully means we still get child benefit. We also save into S&S and cash ISAs each month - cash ISA is just short term savings. We don't currently overpay our mortgage because it's on such a low rate it makes more sense to put money into the mortgage and S&S savings (actually, even my cash savings are now getting a higher % interest than we are paying on the mortgage at the moment). We'll review that when the fixed rate comes to an end, and will put a lump sum from our savings in if the interest rates are over 5%.

sense to put money into the mortgage

This should say pension.