Next Move Financsilly & SMP Help

[NCWalking03]

Looking for an outsiders perspective, opinion & advice on our next financial move, should we continue as we are, make changes, enjoy life today abit more or invest elsewhere or in other methods like BTL

Were a couple 31yo with a newborn baby. We bought a new built house 5 years ago.

Our current strategy is to reduce our salary’s to under 50k through salary sacrifice into pension & put 1k a month each into our ISA each (although we both maxed allowance last year)

All funds in VTSAX (US total equity’s) or S&P500

After that we both spend guilt free, but does feel like we don’t ’do much’ day to day, although, we holiday abroad about 4x per year but ‘do it on the cheap’, but where a lot of our money goes.
Last year holidays: Lisbon (4n) Spain & France Cruise (7n), Albania (10n), Romania(4n), Malta (5n Winter), Dublin (3n)

Ok… our Current Finances are:

• Home Value 300-320k. Remaining Mortgage 170k (overpay £0) - 4.19% rate
• location: North Manchester (Outskirts)

• Cars are 07 & 13 plates. 1-2k each Ford Fiestas

Person1

• ISA - 52k
• Pension - 46k
• HISA - 6k

monthly incomings (pre tax salary £60k no bonus)

• 1500 to pension (16% + 4% employer)

salary 3200

• 1000 to ISA

Person 1s goals are to retire & travel the world. Had remote job & can do work abroad today. Would live nomadic life if they could

person 2

• ISA 30k
• pension 100k
• HISA - 20k

monthly incomings (will reduce to £780 SMP from August)
(pre tax salary £60k, around 10k bonus)

• 25% + 10% employer to pension (unsure of monthly amount)
• salary after tax 2800
• 1000 into ISA

Person 2 - more of a home bird, though parents are 2 hours away wants to spend a lot of time with them while baby is young. Job doesn’t allow for remote work only from UK.

Outgoings

• 1000 mortgage
• 200 council tax
• 150 gym
• 200 water, gas broadband phones
• 50 prime Netflix iCloud apple care
• 90 car1 - tax insurance
• 50 car2 - insurance
• 40 fleece hold & home insurance
• Maybe 150 petrol

Nice to haves which would improve out lives

• Garden - ‘Get it done’ professionally, more shade, get rid of new build clay soil
• Campervan
• 4WD car for Baby’s stuff

The reason for me posting is after the trump traffifs out strategy hasn’t made us a lot of money. I’m always concerned we put too much into pensions.

Also SMP from August has got me questioning what we should do for this period to make it fair for both

AMA else, I can answer if I’ve missed them

I’m not sure what you are asking. Why are you trying to get first income under 50k? Does partner 2 plan to return to work and when? Are you claiming child benefit? Are you married? If not how is the property owned?

There are plenty of cars between a Fiesta and a 4wd which can accommodate a baby. Your dc will benefit from a safe garden but whether you need to do it professionally is difficult to judge. Most new-builds have fairly bland but safe gardens and need minimal landscaping. Tbh I’d get used to life with a newborn first and take your priorities from there rather than thinking too far ahead.

Do you not eat? In your budget you’ve not included food. As the pp said - what exactly are you asking?
Your earnings are not that high, you’re not in a position to consider retiring early as yet, the value of your house is irrelevant, it’s the equity that’s important. You drive old cars that will need replacing quite soon - how do you plan to do that? Plus, you’ll pretty soon have the expense of childcare to consider.

Looking for advice on what we should change. Life is changing for us as you say with a newborn, so thinking we should maybe prioritise today more.

Questions I think I have:

• Should we reduce our pension contributions?
• Should we get a Buy to Let rather than just using an ISA
• Should we have different ISA/Savings Pots so we can get different things done.
• or, are we doing everything right already

Both our salary’s we put into SS to reduce our incomes below 50k to save on the 40% tax bill. So agreed anything above 50k including bonuses go straight to pension

Person2 will return to work in April next year so 6 months of us being SMP. We’ll then have childcare costs after.

True of our garden, it’s just a small patio & grass but the grass is bumpy as they just ‘put it down’ so maybe we need.

We aren’t married but own the house 50/50.

who advised you to reduce income below 50k , you only pay hr on earnings above and you will need more for child-care costs(have you investigated that yet? ). Not sure you can afford a btl and the rental income would be taxed at hr anyway. Have you seen a Financial adviser?

Yeah we eat but no idea how much we spent. Maybe £100 a week. Maybe another 50-100 a week between us on coffees or eating out

Looking for advice generally on are we doing & are we doing the right things
and more specifically, should we be doing anything else like BTL, other investments or even reducing our spending or reducing/increasing our savings.

Or is the heavy pension investing a good or bad idea. like you say we have childcare costs in 9 more months, should we eat them costs or save now etc

Just a ‘what would you do’ sort of post based on our situation

When I say reduce our income. We earn 60k, we put into pension salary sacrifice so our taxable income is 50k. (So we don’t pay 40% tax on that 10k)
Person2 also gets around 10k bonus, which goes into pension too. Again to avoid 40% tax.

Nobody advised but seems like a bad deal when the government steals 42% of anything esrnt.

Haven’t seen a FA, could be worth it maybe

If it was me, I would get a bit more into the cash cushion right now. Your disposable income is going to go down for several years now with child expenses, so you want to make sure that you've got enough to handle car breakdown/job loss etc. and leave those stocks just sitting there gaining value.

The government does not steal money it takes a proportion from those who have income to fund services for all. The cost of your maternity provision will be far more than the tax you save.

Using legitimate tax avoidance, which is what most of us do, is fine. I think you need to really look into the tax impact if a BTL as I think you maybe surprised.