Renting In Your Fifties. 

If you are still renting a house in your fifties you have a bit of a problem. With less than twenty years to go before you can officially draw on your pension you are left with the need to spend the next few years building up enough cash to not only buy a house but to boost your pension income up to the point where you can afford to live.

Boosting your income to the point of making sure you have enough to save is a start, and then working on getting as much leverage for your money as you can – the same things I talk to my twenty and thirty-somethings about – only they do have a bit more time on their side and can, of course, work two jobs – something that is hard when you are that little bit older.

This is a problem that many are facing, yet the solutions seem far and few. 

Looking forward the size of the problem is massive both for individuals and the state.  Personally, in order to earn enough to cover rent you’ll need at least a grand of monthly of pension income, to get that you’ll need a pension fund of at least £100k – making an assumption of you living until you are 79 or so and drawing on the fund from age 78 onwards

You will, of course, qualify for your State Pension which is likely to be in the region of £130 per week or just under £7k per year. On this basis, provided you can live on £7k and with your other pension income covering your rent you may just make it.  |However pensioner poverty looks likely to be a real thing. 

Your other alternative is to work out how best to find £200k on average across the UK to purchase somewhere to live, pay cash for it. Or to find a mortgage lender that will loan money to you based on your pension income. Both of which are going to be harder than you think.

Provided you are over fifty now, there are some things you need to do urgently. 

Go get yourself a pension forecast re your state pension – this can be done online, get details of all of your pensions and review these urgently in order to work out how much these are likely to be worth.

Take careful note of any debt you may have, any future liabilities that are building up and to take note of all your expenses to see if any of these can be managed downwards.  From there you will need to make sure that whatever cash you do have is looked after as the valuable resource it is. It will need to be working very hard for you over the coming months and years.

Of course, you may not get to the final figure you need, to the final endpoint that is perfect, but you will end up somewhere better with my plan for you than not having one at all. 

It will not be financially feasible for you to just hope that things pan out, hope that it makes sense. If you are over fifty and still renting a property you have a problem looming – hoping it will go away will just not work out well.

Hope is not a plan – a plan is a plan. Once you have one, it just needs to be worked.

If you need some one on help on this, get in touch. Contact Richard

Sunday Musings – Life, Pensions, Debt.

Not sure what it is about Sunday. Perhaps it’s the only day of the week when I can truly please myself, when I can relax, watch crap TV, drink tea in my jim-jams and really be sloth like without feeling guilty.  

Question is how do you become independent enough to do more of that. What is it you need to focus on in order to have choices.  

Of course the conventional wisdom tells us that getting an education, getting a good job, marriage, kids, house, pension – will offer you the final answer to your dreams.  

Then just as you become 2/3rds dead, you retire and start your longest holiday. Just as your joints start to show the wear and tear of your life, just as you can longer play the sport you’ve loved all of your life – you end up in waiting rooms, seeing consultants about another health problem you have. 

Lucky for you, now you don’t have to be at work today and can afford the time.  

The best years with your kids have long past, your partner is now off having coffee most mornings while you grump around not wanting to do much – this is your longest holiday after all. Very soon, reading books becomes a pain and daytime TV becomes the thing. 

Your brain death comes quicker than your bodily death but you won’t notice. 

Let me give you some answers to this. 

Becoming debt free sooner rather than later allows you a build up your cash pot and frees up future income to be used by you and not a credit card company. 

Never ever use a credit card to buy something that goes down in value. Credit card interest in the UK at the moment is just over 20% a year and many providers charge double this. Avoid. 

Your housing costs are going to your largest outgoing, solving this problem by repaying your mortgage as soon as possible, buying a home in a cheaper part of the country for cash, perhaps a flat instead of a house – you will really save the money for a house at some point. Reduce your housing costs. 

Be mindful of what you pay into pensions, once money goes in – you can’t get it out again until you are just pre-zimmer, and then the bulk of it will be taxable.  

Use all of your tax free allowances, ISA’s, Capital Gains Tax and use the freedom of running a side hustle business to reduce your tax bill.  

Only ever invest for income – and be very mindful of investment charges. Even if your pension provider charges you 1% per year (few and far between) that is still 10% of your fund every ten years. Yeah really. 

Work out a way of selling your knowledge on the side, write a book, weekend consultancy – there are lots of options now – remember the internet has changed everything. 

The over riding thing about 2020, about now. Is that all we’ve relied on in the past has changed. It will continue to change. As the population grows everything becomes competitive. In India and China no matter what you want done –there are hundreds of options. 

Here in the UK a friend of mine runs a scaffolding business – he complains that there are now hundreds of firms in the county – in an industry that was once hard start up and then find work, there is now lots of competition.  

Your job for life is not safe, your business is not safe, your future pension is not safe.  You need to get things working for you. Get money on your side, learn and understand the principles  – once you do, your future is assured. 

Until next time.  

The Secret To Financial Independence

Let me give you the one thing, the simple step that makes the difference, the golden goose – the money secret, the little thing that no one else knows. The thing you must do if you want genuine independence, to have financial freedom.  

I can tell you exactly what it is you need to do, it is a formula and it is the same formula that has worked since Roman times – really, it has worked since money became a thing. 

Before I give you the step I want to explain a couple of things to you.  

Not having debt is one of the best things that can happen to you. Debt is mainly borrowed money spent on stuff that goes down in value – and very effectively mortgages your future income, ties up your future income for the benefit of someone else. The reason debt is so prolific, is because it is such an easy way of using money as a resource, as a lever. Debt, from a lenders point of view means a source of future income without physically having to turn up and earn it.  

Working, trading your time for money means your income is always going to be limited by the amount of time you have and your hourly rate. You can only work so many hours in a day and your rate of pay can only be as high as – the rate, the person paying you is prepared to pay for that work. 

Eventually, you run out of time – death. You don’t know when that is going to be nor do you have any concept of it being now or later. It will happen when it happens. Sure, you take an educated guess but really don’t have any idea when. 

Then there is running your own business. Sure, this allows you leverage, you can use ideas and processes to get your money working for you. This is a proven method and of course it works.  

Provided your business is more than a one man show – then you get the chance to boost the earnings ability of your money. 

Lastly, there is investment. Taking part or all of your money and placing that into something that will work for you. Investing in company shares for instance. Each investment you make buys part of that company, part of its workforce, knowledge, buildings, and processes. Provided the company makes a profit then you will be rewarded in the form of a dividend – if you like a payment of interest and potentially some capital growth. All you need to do for that is to sell your share at a higher price than you paid for it. 

Investment allows further leverage, you’ve traded your time for money, what doesn’t get spent on stuff and living can be invested.  

The returns from the investment (income and capital growth) is money you have not had to work for. The very best kind.  Once income is paid to you, it can’t be taken away, it’s yours forever. You can reinvest that money, combining the money you have worked for and the money you have not – and grow and even bigger pot of money that can now work for you.  

I hate this phrase – virtuous circle – but that is what the above paragraph explains. Leverage that is ongoing and never-ending.  

With all of that in mind there are a few questions you need to ask before you make decisions about your money. Before you spend it or invest it you need to make sure that you are clear about what you are about to do, what I call being mindful.  

Your money is a valuable resource, once spent it never ever comes back to you. It has gone forever and will not return. Which leads me to the one answer to the question… 

How do I become financially independent at some stage in my life? 

Ready? 

Spend less than you earn and invest what remains. 

You can contact me here to arrange a Money Workshop at your place of work.

My Free Course – Money is here FREE MONEY COURSE

Cashflow | Peloton | Shopping Lists

I first noticed the issue with cashflow when I first worked with some small businesses. It is clear that most one-man bands and micro businesses are good at what they do – but one thing holds them back. 

Cashflow 

This is the one thing that causes  much pain and angst, the one thing that at first is ignored when looking at the cause of problems within a business.  

See, money is a magnifying force in all of our lives. If we have enough coming towards us then life is sweet, we can do all the things we need to do, that we want to do, bills are paid and the future seems rosy.  

Without the right level of cashflow (more income than expenditure) there can be no happiness, no time to relax and focus on the future no time freedom to focus on new products or new markets – it’s a struggle just to move forward.  Cashflow is the one thing that makes everything different.  

For you, your personal cashflow is just as important. Without surplus income you will only last for so long before a really severe storm comes, before the proverbial hits the fan. 

Going into your future. overspending means that eventually you run out of money, or increase your debts to the point where the payments become unsustainable.  

You have to be more focused than ever on your spending and cashflow, there are more and more things nagging and poking you to spend your hard earned on – and it’s easy to slip from one good idea to the next and to forget about the real picture.  

The most recent example of this is Peloton. It is an exercise bike that costs two grand and £39 per month. Sure, I note it’s got some bells and whistles  – but really? For an exercise bike? 

You choose. 

Wherever you look there is something to attack your cashflow, something to extract your future income from you, nicely robbing you of an independent future.  It’s no different with mortgages and loans, the lender is not so much interested in the actual security of the loan and more in your future ability to make payments – all from your future income, it guarantees them future cashflow – cashflow that you will have traded your life for.  

Importantly, most of the things you borrow money for go down in value and not up. Go think about that for a couple of minutes. 

Put the price of a coffee on your credit card and don’t settle that in full at the end of month, the cost of that single coffee goes through the roof. 

Being mindful about your money, controlling how you use your cashflow (what you spend) is the key to having a future that is bright and solvent or… 

By excepting that your grey matter, your mind is not rational and does make decisions on the fly to buy stuff that you may not really need or want, but just appear and seem like a good idea the time –means you are being stolen from – robbed of a financially independent future.  

Little things, like only going shopping with a list will mean you’ll miss most impulse buys.  

Keeping a ‘to buy’ list for all those items you think you need is an easy way of slowing down your spending – instead of buying today put it on a list and see if you still want it in a weeks time.  If you do, great.  

If you don’t then your cashflow has just improved by the amount you have not spent. 

Fucking amazing eh. 

The Moneytrainers – Money Course Is Available Here – No Charge.

Happiness | Money | Freedom

Are we all just slaves?

I attended a meeting last week and observed the trains in a mess with delays and cancellations on route, got to the presentation  – small group training in a clients office, and couldn’t help but notice how miserable everybody looked. On the train, in the office everybody is seemed was a little pissed off.

Sure, I get it. With rent and mortgages to pay, a transport system at crisis and one of the warmest summers on record I understand that many people would be rattled.

The big thing for me, was this. How long have these people been tolerating this crap life? Certainly more than one I reckoned, and with many it could have been going on for years.  No wonder everybody seems stressed and anxious. Think is I get it. Not so long ago when I was working for ‘the bank’ I was in the same boat, with a very young family and one income – things were unusually tight.

It only needs an awkward manager and your life very quickly turns to hell on earth.

Happiness | Money | Freedom

Financial plans.

I think that up there in the heavens a god sits and smiles every time someone mentions a plan, a long term investment – something for the future.

As you know full well; the future is not certain and we don’t know if any of us going to get there, we assume but don’t know if we’ll arrive. This is important, sure we need to make a plan for it just in case we arrive at that time, but there is next week or next month to consider carefully – living a life now as if it’s the only time you and I have. Now is certainly the only time we are guaranteed.

Work hard, marry, buy a house, retire. This is what I was told when growing up in the sixties – it all seemed to solid with little else to be concerned about. The path it seemed was all laid out.

This no longer happens, we never saw the rise of capitalism, the damage to the environment or political systems creaking in the middle and cracking around the edges.  My grandparents would never have understood, apps, the internet, access to porn or online banking or the present situation in relation to jobs and housing.

All of use are we working harder than ever.

For me having moved through the last banking crisis and through two bouts of serious illness I realised that the financial plan I had in place was not fit for purpose.

The plan you’ll get sold by the local adviser or a bank sales person fails at almost every test.

  • They won’t make your money work hard for you.
    You won’t be able to have the mini retirements
    You won’t be in control of your own money

 

  • Financial advisers / financial product providers are acting in a disingenuous way. These are businesses that are they are solely to produce a profit and not to care about individual policyholders and all the bigger societal picture.

Sure, on the box they’ll tell you how important you are, and how they are better than all. Until, you’ve got the product and you phone with a query and find a ‘throw a six to start’ telephone system and then a foreign call centre…

Worse still after five years of investing you’ll have a review meeting with the adviser and they tell you that ‘they are really sorry, but the markets have just not performed as expected.’

That is the reality of modern financial planning.

As I keep saying if all you had to do was sit down in front of a financial adviser for a few hours a year in order to become financially independent we’d all be doing it and you’ll never be able to get an appointment to see one.

This question is important.

Let me ask you this who cares more about your money than you?

Which is why you should make sure you know all you can about what makes it work, what makes the difference between wealthy and poor – I assure you, the differences are few. Just a few principles keep people in the proverbial poor house.

Let’s consider carefully where we are now.

You buy a house –  tens of thousands of pounds tied up in equity.

Invest in a pension  – at least 30% of your fund does not benefit you because it goes in charges and your money tied up for forty years or more – and the breaking scandal is that Auto Enrolment providers are just milking consumers.

Investments – it’s exactly the same with them – returns are dire and they often lack flexibility.

The State is increasing taxes and reducing spending and this looks like it’s going to continue certainly for the foreseeable future.

And we now have all of the evidence to support another way forward – to make our money works for us rather than us working for it  – this is why the rich are rich they make their money work for them,

If you do nothing but invest it until you  retire which is what the industry wants you’ll be at least 70% dead before you get a chance to spend your money comma that doesn’t sound like a plan for financial independence full stop in actual fact it sounds a bit f****** mad.

Leverage money, make it work for you.

Take longer over financial decisions, there is no magic answer

Understand income producing investments these are the best to own.

Once income is paid to you it’s yours forever no one can ever take it away.

Understand why financial advisers and the industry hate peer to peer lending platforms and the related options.  Understand why they will not recommend exchange traded funds, or ETF’s as they are known. These products are not widely recommended, because the industry hates them, because they work, because they work for consumers, because the industry can’t get paid for recommending them unless it charges a fee, and of course we all know the story there.

We are  in a place now where we are modern money slaves, we’re all going to work every day trading  precious time for money and then giving that back via charges and fees to a handful of very well remunerated advisers and providers.

When you are ready for more, subscribe (on the right of this page)  and I’ll get you updates out and and when new content is posted.