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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.