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Net Worth and Balance

Including Financial Independence and Retiring Early (FIRE)
TAllen
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Re: Net Worth and Balance

#392605

Postby TAllen » March 5th, 2021, 9:31 am

MyNameIsUrl wrote:As there are no repayments until earnings over £27k, many will pay very little back, so your potential funding of all fees would be throwing money away. For example, I know a self-employed potter who will never pay a penny of her loan. I also know a young commercial lawyer who paid his off (because of high earnings) in just a few years with very little interest paid. Anything in between you need to consider carefully. After all, you can still give them a cash lump sum after they graduate.


xxd09 wrote:I told my kids not to take any loans and I would fund them through uni for 5 years
I did expect them to pass their exams in return
How can children finishing education at 23+ buy a house ,get married and have kids in a reasonable time frame if they start out after college with massive debts-a situation to be avoided if at all possible
Debts are an extra pressure on girls whose ability to have kids successfully declines rapidly as they age-time is not on their side
My parents did not let it happen to me and I didn’t let it happen to them
All the kids now qualified in good jobs,all married and all have children
Probably cost upwards of £25000+ each in the 90s
It’s a tough one for parents
xxd09


I can understand both viewpoints. My instinct would be to help get them on the housing ladder as soon as possible. So much depends on circumstances though - where they are living, their employability, relationships, common sense, lifestyle etc. Perhaps this is a decision that needs to be deferred for now and reconsidered closer to the time. In the interim, we just put aside as much as practicable to the inevitable cost.

genou wrote:It's at a tangent to the thread, but that's a very bad mistake. Talk to your children about money, about what they already have and may well inherit. Get them to think about what they want to do with it before they have it. When the JISAs mature it's free money to your children. Might be nice if they had a plan for it.


This is a really interesting perspective. I guess my approach was to make them feel they are starting from nothing and thus having the desire/hunger to work and save - and appreciating the value of money. It was also affected by a friend's experience when he and his wife decided to take their first holiday without their teenage son. They gave him £1k with the instructions to just go somewhere, anywhere, on holiday himself. They got back two weeks later and found he had been nowhere other than the record shop where he spent the whole £1000. :)

While the kids are very savvy with money, you are right though that I should talk about the money sooner. Particularly as they are very sensible.

Moosehoosenew wrote:As we have been nursing 2 ageing parents who saved like we would al do in their forties. Can I nicely suggest spend a little more on yourselves, it is an absolute shocker when fit an able realise they have saved to much.......................


A very important point and a cause for more reflection and discussion. As I mentioned, we have done very well against our bucket lists for extensive travel and adventure, dived, climbed, partied, eaten at the best restaurants, volunteered, interesting careers, etc. On the one hand, perhaps my ambition is arguably waning, but on the other hand, we feel exceptionally fulfilled. We want for nothing in terms of material possessions, we live in a beautiful place.

The highest value things in our lives right now are the precious time we have with our kids, our family health and security. What makes me happiest right now is experiencing childhood again through the kids, seeing them have experiences and grow. I guess that makes us very wealthy in being so fortunate.

airbus330
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Re: Net Worth and Balance

#392761

Postby airbus330 » March 5th, 2021, 2:40 pm

Since there are a few opinions on financing kids thru Uni, my perspective was that whilst the student loans remained outside of scope when it came to mortgage affordability checks, I was happy for them to load up on them to the max. No chance of being chased to repay the debt either, it either disappears via taxation or it does not. It is utterly pointless looking at the Student Loans Co. account with its ridiculous interest rate because the vast majority of students fail to pay back their loans. It is an unfortunate fact that not all of our children will thrive (in a financial sense) in the world, those that don't will have the loan written off. The super-successful will pay it off quickest and with the least interest. My only grumble is that the moderately successful pay the most for the longest time. But, my anecdotal evidence, is that students are incredibly chilled about student loan debt because, to them, it is largely invisible. I suspect that also they are jaded by learning that their Bachelor Degree is largely worthless and a paid for Masters or Phd, is the way up the greasy pole. So, debt is built into the educational cake, and the young just seem to accept it.
The caveat to this is, it is highly likely that the loans for subsistence will not cover all their living expenses. I cannot emphasis enough the living cost difference between London and and regional Uni's. So the danger lies in easy loans and credit cards. Here I did educate and step in so that both mine came out with zero debt other that student loans. My plan is currently to monitor their progress, if they fail to thrive I will let the loan expire in 30 years time, if they are super successful, I have no moral objections to paying a little more taxation and if they fall in the middle I will repay the loan debt in a lump sum to reduce the reduction in their take home pay at a time when I will be needing less spending money myself.

Adamski
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Re: Net Worth and Balance

#392815

Postby Adamski » March 5th, 2021, 4:28 pm

All looks good to me as well. I'd overpay the mortgage, as cash interest rates so low. Personally like not having a mortgage. Balance looks good, although as others indicated spending perhaps low side for a family, if high earning, job secure and not planning for early retirement.

TAllen
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Re: Net Worth and Balance

#392845

Postby TAllen » March 5th, 2021, 5:46 pm

airbus330 wrote:Since there are a few opinions on financing kids thru Uni, my perspective was that whilst the student loans remained outside of scope when it came to mortgage affordability checks, I was happy for them to load up on them to the max. [...]


Thanks airbus330 - that is good reasoning and I will follow that strategy.

Adamski wrote:All looks good to me as well. I'd overpay the mortgage, as cash interest rates so low. Personally like not having a mortgage. Balance looks good, although as others indicated spending perhaps low side for a family, if high earning, job secure and not planning for early retirement.


Your feedback, and that from others on this thread, has been very helpful and reassuring. Thank you all.

I have started a 30% mortgage overpayment (£1k instead of £680) from next month. It may be possible to go higher but there is a ceiling on annual additional repayments. Hopefully the interest rates in 2 years time will still be benign, but if not we should be able to pay off a substantial lump sum.

Getting the right balance of cash (emergency funds) : investments : fixed assets : pension funds was a concern that promoted me to make the initial post here. It sounds like we are broadly getting that balance correct.

TAllen
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Re: Net Worth and Balance

#393153

Postby TAllen » March 6th, 2021, 5:17 pm

Update: following your excellent advice here I realised that I could just pay a lump sum of £11k off my mortgage (2.14%) immediately rather than overpaying monthly. I would feel more comfortable bringing my mortgage balance down given that I've got enough accessible cash reserves and other investments.

xeny
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Re: Net Worth and Balance

#393200

Postby xeny » March 6th, 2021, 8:36 pm

TAllen wrote: It was also affected by a friend's experience when he and his wife decided to take their first holiday without their teenage son. They gave him £1k with the instructions to just go somewhere, anywhere, on holiday himself. They got back two weeks later and found he had been nowhere other than the record shop where he spent the whole £1000. :)



Two weeks at home without your parents and a stack of new music. That doesn't sound such a bad holiday, and he's still got the music.

Better that than two weeks drunk in Magaluf.

Sounds as if he did something they didn't want/expect rather than anything wrong.


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