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Original poster

We want to be wealthy! A thread to share ideas on how to achieve financial independence

285 replies

ilyana · 26/07/2023 22:53

I asked a question in another forum about how to get wealthier and improve my lifestyle and financial situation in my late thirties, and I got some really helpful advice.

Several posters were keen to set up a thread to talk about topics we don't get taught about at school, such as investing in stocks and shares, lucrative side gig ideas, and air miles on credit cards, and so here we are!

This is a positive thread about encouraging other women to aim high and reach their goals, so please only contribute with positive, relevant advice. Of course, questions are very welcome too!

OP posts:
Thread gallery
7
BeastOfBODMAS · 28/07/2023 08:06

I haven’t read very deeply into the FIRE ethos yet, but I wonder if it is borne out of the longest bull market in history, and will lots of people soon be frantically redoing their calculations and going back to work? Can anyone who’s researched it more fully confirm?

I know Mumsnet loves a low cost index tracker fund but actively managed funds historically perform better in a downturn so I use a split between the two.

SpaceRaiders · 28/07/2023 08:18

@RegentCafe Hence why there’s been a massive shift to investing within an SPV/Ltd company. Avoids S24 and allows you to utilise that investment without affecting your personal tax allowance.

I meant the FIRE U.K. subreddit for those asking.

BarbaraofSeville · 28/07/2023 08:19

@burnoutbabe assuming you mean stoozing?

I've always just used balance transfer offers that are completely free or where the fee is very low, up to around 1%. They've always been available, although money transfer deals could also be worth it.

Another option is the 'slow stooze'. Often the offer will be 1-2 years interest free on any purchase made in the first three months. So if you put all your spending (food, petrol, eating out, anything you buy) during this period on the card, and save the money you would have spent, it could add up to a few thousand in that period. Put the money you would have spent on these things in a savings account.

Original poster
ilyana · 28/07/2023 08:25

Netaporter · 28/07/2023 05:12

What a great thread, thanks for starting.

Re: the Amex BA card for those asking above. It used to be very good and the companion voucher would match the class being booked. Now it can only be used for your free ticket in economy. You also earn far less points on your spending and have to spend more to get one (from memory was £9k spend now £12k). We are now looking elsewhere for our card spend as we run all household spending through it - grocery shops, the lot. We’ve found avios gives actual value in services you would’ve booked anyway - hotel rooms or short haul flights rather than long haul business class.

To simplify, there are a few elements to the Amex Avios scheme if you want to get free/cheap flights

  1. Companion vouchers - irrelevant how many avios you have in your account, it is achievable through spending. The voucher is a basic 2for1 flight but does not include taxes. You cannot combine the companion voucher with one paid for using Avios, one seat must be paid using £.
  2. Avios spending. You can use Avios to upgrade to the next class, save money on your booking, use to pay for a hotel room or use to purchase flights.

Spending avios for flights, here’s what you need to know:

  1. For the best chance of bagging ‘big ticket’ flights such as NYC business class/Maldives/whatever you need to be ready 365 (might be 360?) days ahead of the date you want to fly as BA release those seats then. Usually 2 per class. You’ll need substantial air miles for these seats (think 180,000 for business class return to the Maldives) You’ll need to pay for the taxes though and these are ££.
  2. The most effective use of avios are the short haul ‘flight savers’ which are also released 365 days ahead but you can still find flight easily for this week (popular destinations such as Marbella in July/August excluded) and can be used on business or economy. Flight savers are all taxes included but you pay a nominal £1. We use these a lot. Usually 9000 avios gets you a return in econ but 18000 will bag you a business class seat which doesn’t have any extra leg room but does come with lounge access, Priority boarding and two checked bags. These are worth having for sure and there are more than 2 per class.
  3. flight upgrades - tend to be 2 per class and booked 365 days in advance. You can only bump up one class and only once per flight (you can’t buy an econ ticket in long haul and bump up to business for example)

Spending avios for a night/couple of nights away can also be a good use of them and you can stay in top hotels providing you have enough.

Thanks for the info! I think I understand more, although I'm still a bit confused!

I would be using the Companion Voucher myself - I think it's a 50% discount in this case, but it seems very restrictive if I need to book that far ahead - I usually travel pretty last minute, as in I rarely book more than 4-6 weeks ahead, and it's often a matter of days.

It seems like my goal should be to earn Avios through spending rather than worry about spending the £12K a year for the Companion Voucher? I still need to do lots of reading (I don't know why I find this topic so confusing) but it seems like you can book very last minute flights using Avios for much less than the cash price would be? If that's true, that would suit me! It seems like they also offer OK value for things like upgrading to Business from Premium Economy. I'm not sure if you also need to book this way ahead but it seems like it.

Spending them on a hotel also sounds good - how do you go about that? Can you use them on Booking.com and so on?

OP posts:
Hedjwitch · 28/07/2023 08:29

Stoozing! This is new to me but am on it!

Luckydip1 · 28/07/2023 08:33
  1. Pay off your credit card bills
  2. Pay off non mortgage loans, such as car loans
  3. Set up a SIPP and an ISA with a low cost platform such as AJ Bell
  4. When you get paid immediately transfer whatever you can afford, however small, equally into your SIPP and ISA
  5. Invest you savings in the SIPP and ISA into low cost global index funds, which are low risk
  6. With the remaining money in your account, budget, so that you never spend more than the money you have
  7. Don't be tempted to dip into your savings, they are for your retirement
Good luck!
Original poster
ilyana · 28/07/2023 08:36

What are people's thoughts on overpaying your mortgage? A friend advised me to overpay for the first few years to try to get the interest down faster, but at the moment I'm concentrating on building up an emergency fund after the flat purchase decimated my savings. Is this the right thing to do?

My mortgage repayment is already very high - I overstretched myself to buy when I did because the insecurity of renting was seriously damaging my health. I could just about afford to overpay £200 or so a month if I absolutely had to, but it feels like it might make more sense to put that money into savings at my current earnings level?

OP posts:
nannynick · 28/07/2023 08:50

I paid off my mortgage 9 years ago. Looking back, my pension suffered as I was not paying much to that. However on the plus side, in those 9 years I was made redundant 3 times, and not having a large outgoing makes periods of low income easier.

When cash interest rates were low, over paying mortgage made sense as the mortgage interest rate was higher. Now that may not be the case for those on a low fix. If fixed rate is coming to an end soon, then having a pile of cash to put towards mortgage at the end of the fixed term may be a good move, to help change the loan to value, thus more remortgage options may be available.

@BarbaraofSeville Thanks for mentioning the Meaningful Money podcast.

doubtit · 28/07/2023 08:52

Great thread!
I second the Netflix doc recommended above.

I've had some thoughts lately about doing something crazy... no idea how we'd actually go about it or what the rules are.

We were first time buyers 4.5 years ago. Bought for 144k, renovated it and now worth 240k. 120k left on mortgage.

We want to move soon. Id quite like to keep our current house, rent it out, and save up a second deposit to buy a second home to live in.

Has anyone else done this? I think it's probably quite a common idea people have. Any tips/ advice?

nannynick · 28/07/2023 08:55

@ilyana Emergency fund first. Then any unsecured debt.

I like the Ramsey approach: starter emergency fund, pay off debts other than mortgage, full emergency fund, 15% to pension/ISA/LISA, something for children for higher education costs, then overpay mortgage.

watersprites · 28/07/2023 08:57

@ilyana I personally think it's good to have an emergency savings pot first and foremost.

I'm not currently overpaying but I got a 5 yr 2.5% last yr so am putting the money into savings. If my interest rate was higher or a shorter fix i'd overpay.

Luckydip1 · 28/07/2023 08:59

@doubtit I think you would be better off selling and buying a doer upper and doing that up and selling for a profit again, that way you don't have to pay tax.

CirreltheSquirrel · 28/07/2023 09:02

I have overpaid mine a bit in the last 5 years but not particularly aggressively and only after I was already making decent pension/SIPP contributions. I'll end up having paid it over 20 years instead of 25 but for most of that time (or at least the part when I was able to pay - rates were higher when I first took it out but I had no spare cash) interest rates have been low enough that investing instead made more sense.

MaterMetella · 28/07/2023 09:10

Regarding 'stoozing' - you have to pay tax on the interest earned don't you? So if you are a higher rate tax payer you'll only actually see 60% of the interest.

Still probably worth doing if you are getting a lot of interest on large amounts.

CirreltheSquirrel · 28/07/2023 09:12

Yes, you have to pay tax unless you put it in an ISA. But it's still worth doing.

SpareL · 28/07/2023 09:12

This is an amazing thread. As someone starting from scratch, am following the Dave Ramsey approach. I find it helpful having set steps to follow. Have also discovered the Meaningful Money podcast by Pete Matthew which is very helpful & it's also great that he is UK based.

Tjit · 28/07/2023 09:13

Watching

LiloP · 28/07/2023 09:16

I am looking to change cc to one with airmiles. Is BA the best? We pay our CC every month and spend 1-2k a month on average.

RegentCafe · 28/07/2023 09:24

LiloP · 28/07/2023 09:16

I am looking to change cc to one with airmiles. Is BA the best? We pay our CC every month and spend 1-2k a month on average.

You need to wait for a bonus sign up offer and then get a referral as well. Follow headforpoints and they flag them all up

virgin is easier and cheaper but their routes are vey limited

Netaporter · 28/07/2023 09:26

@ilyana you book hotels directly on the ba website using ‘pay with avios’ and ‘hotel only’ options. Available anywhere in the world as long as BA has an agreement with them.

re:companion vouchers, unless I misunderstood you, you cannot use it for yourself for a 50% discount. It is a BOGOF.

The rules are indeed deliberately opaque. Just when you think you understand it, there is some other hurdle to jump 😂

For us, we’ve mainly used avios for the fare saver flights - 3 of us going London to Edinburgh for say university open days for £3 is far cheaper than 3 second class rail tickets or the cost of fuel. Or hotel rooms necessary because of rail strikes etc. everyday expenditure we would have incurred paid for by buying stuff we need IYSWIM. That said, pre covid DD and I went business class to NYC one October HT and used the companion vouchers to fly business on the overnight leg but economy on the day leg and got upgraded for free on that section which was a right result!

RegentCafe · 28/07/2023 09:28

Netaporter · 28/07/2023 09:26

@ilyana you book hotels directly on the ba website using ‘pay with avios’ and ‘hotel only’ options. Available anywhere in the world as long as BA has an agreement with them.

re:companion vouchers, unless I misunderstood you, you cannot use it for yourself for a 50% discount. It is a BOGOF.

The rules are indeed deliberately opaque. Just when you think you understand it, there is some other hurdle to jump 😂

For us, we’ve mainly used avios for the fare saver flights - 3 of us going London to Edinburgh for say university open days for £3 is far cheaper than 3 second class rail tickets or the cost of fuel. Or hotel rooms necessary because of rail strikes etc. everyday expenditure we would have incurred paid for by buying stuff we need IYSWIM. That said, pre covid DD and I went business class to NYC one October HT and used the companion vouchers to fly business on the overnight leg but economy on the day leg and got upgraded for free on that section which was a right result!

You can use them for 50% the rules changed a while back

Pammela · 28/07/2023 09:41

Could someone explain stoozing to me? This sounds like something I could do but I’m not totally sure what it is.

Original poster
ilyana · 28/07/2023 09:42

Netaporter · 28/07/2023 09:26

@ilyana you book hotels directly on the ba website using ‘pay with avios’ and ‘hotel only’ options. Available anywhere in the world as long as BA has an agreement with them.

re:companion vouchers, unless I misunderstood you, you cannot use it for yourself for a 50% discount. It is a BOGOF.

The rules are indeed deliberately opaque. Just when you think you understand it, there is some other hurdle to jump 😂

For us, we’ve mainly used avios for the fare saver flights - 3 of us going London to Edinburgh for say university open days for £3 is far cheaper than 3 second class rail tickets or the cost of fuel. Or hotel rooms necessary because of rail strikes etc. everyday expenditure we would have incurred paid for by buying stuff we need IYSWIM. That said, pre covid DD and I went business class to NYC one October HT and used the companion vouchers to fly business on the overnight leg but economy on the day leg and got upgraded for free on that section which was a right result!

Thanks for the info!

You can use Companion Vouchers alone now, although they still don't seem worth it to me. If I end up getting a BA credit card, I think I'd probably just use the avios for hotels or reward saver flights. I don't think it's really going to make a whole lot of difference, but I may as well save a bit of money here and there on trips I'd be doing anyway!

The price of travel in general has really shot up, and I'm finding it harder and harder to find bargains like I used to. I used to regularly find return economy fares for NYC for £350ish as a normal price and as low as £200 in flight sales. A return fare of £550ish now seems very good, and that felt very expensive a few years ago! I guess with companies like Norwegian Air pulling out of the route, there isn't the competition there used to be to keep the prices really low.

OP posts:
BeastOfBODMAS · 28/07/2023 09:47

doubtit · 28/07/2023 08:52

Great thread!
I second the Netflix doc recommended above.

I've had some thoughts lately about doing something crazy... no idea how we'd actually go about it or what the rules are.

We were first time buyers 4.5 years ago. Bought for 144k, renovated it and now worth 240k. 120k left on mortgage.

We want to move soon. Id quite like to keep our current house, rent it out, and save up a second deposit to buy a second home to live in.

Has anyone else done this? I think it's probably quite a common idea people have. Any tips/ advice?

I did the costings on this for our current move, spoke to a couple of mortgage advisers, got a couple of letting valuations done on our house and decided against for the following reasons:

  1. we’d break even on the rental income/mortgage after fees, so would only ultimately benefit from the house price growth
  2. if I was investing for house price growth, our home is not the property I’d choose for reasons including area, layout, lack of potential to add value. Great starter home, less great investment vehicle
  3. The time and mental energy it would take being a first time landlord, I could better spend on professional qualifications to increase my earnings, or a side gig

Run the numbers, your mileage may vary!

Original poster
ilyana · 28/07/2023 09:48

I mentioned a Stocks and Shares ISA to a friend who knows a bit about investing, and he told me it's not really worth it when savings rates are as decent as they are now. He reckons it would be silly to take on risk for a possible 5-6% return when I could get a guaranteed 4-5% from a savings account with zero risk.

He reckons the best thing to do is to put the majority of my money into high interest savings accounts and then put an amount I can afford to lose into high risk investments like Bitcoin or certain higher risk stocks, i.e. if I'm going to 'gamble' with investments, it may as well be high risk, high reward.

Is this right?

OP posts: