I have too much money, what should I do with it?

[Loki]

I agree with neil about rental property, but I still say that for long-term security, investing in a property you're going to live in is a good course of action. Paying rent is for mugs, if you can possibly avoid it.

[Chest Rockwell]

I'm not too fussed about security tbh, and have no intention of paying rent. I would certainly buy somewhere before moving out.

 

But given that I don't know where I might want to live and what my requirements for a place will be, it'd be hard to buy somewhere I would want to live now.

 

And I figure there's no point being half in half out, so I'd be best of buying somewhere completely looking at it as an investment with no consideration for it ever being somewhere I'd want to live... and that pushes it more to the "not great idea" side.

 

But it's also the reason I think that I would need at least a deposit's worth amount of my money in a reasonably accessible position for when I get to that stage.

[Loki]

You need 25% really to avoid shitty mortgage rates.

 

I definitely advocate the "pot" system of money management. Have different accounts or "pots" for different things, and move money into them every month by standing order the day after you get paid. That way, what's in your current account is what you have to blow on paintballing and rohypnol.

 

I have a savings account into which I deposit a sum every month, and that savings account then gets poured into my ISA every 6 months. I also have an "emergency" fund into which I build up 3 months worth of wages, in case I lose my job. I finally deposit a massive chunk into the joint account with my wife that everything household-y comes out of. She in turn ferrets away anything excess in that into another savings account that I don't have access to.

 

Altogether we can save ten to fifteen grand a year without having to actually consciously make the effort to remember to save something.

[Ant]

You need 25% really to avoid shitty mortgage rates.

 

I definitely advocate the "pot" system of money management. Have different accounts or "pots" for different things, and move money into them every month by standing order the day after you get paid. That way, what's in your current account is what you have to blow on paintballing and rohypnol.

 

I have a savings account into which I deposit a sum every month, and that savings account then gets poured into my ISA every 6 months. I also have an "emergency" fund into which I build up 3 months worth of wages, in case I lose my job. I finally deposit a massive chunk into the joint account with my wife that everything household-y comes out of. She in turn ferrets away anything excess in that into another savings account that I don't have access to.

 

Altogether we can save ten to fifteen grand a year without having to actually consciously make the effort to remember to save something.

 

This will appear a stupid question to a saver, but I am definitely a non-saver so please excuse my ignorance.

 

Once you allocate money to the various saver accounts in your mind (and of course practice) is that money completely off limits?

 

For example if you and your wife see a holiday that costs a bit more than normal or a piece of furniture you really like but haven't budgeted for do you hold off until the "day to day" pot has enough to cover it as the savings are completely ringfenced?

 

Essentially my existence is based on 1 current account with no structured savings (if there was anything to save).

[deathrey]

I use the same system as Loki and his wife, but being single I'm only saving between seven to ten thousand a year. Personally, once money goes in the saving pot, it doesn't come back out unless its for the purpose the saving pot has been created for. I would never spend savings money on things like holidays, that would go out of my current account, and if I didn't have enough for something like an expensive holiday, I would wait till I had the money in my current account to use.

[Loki]

As deathray says, generally speaking that money is off-limits. Unless you're saving for one big thing, like a house deposit or a new kitchen, when you have to go all-in (though even then I tend to keep 3 month's salary just in case).

 

The furniture thing is a really good example. That's the sort of purchase that people end up getting really in debt for, as they stick it on credit card or get store credit, and suddenly end up servicing 5 or 10 grand of debt every month. I'm a bit overly-cautious, but I pretty much never buy anything unless I can afford it from my current account.

 

Worth pointing out - it's a bit pointless to save if you've also got huge debts. Your interest on your debt will exceed interest gained on a savings account. Consolidate all your debts into a single one, and structure a regular repayment of that, and then just ferret away a nominal sum into savings, just to get the ball rolling. Paying off your debt is first priority.

 

I don't make a massive wage, but besides my mortgage I carry no debt, and haven't done since I left home.

[scotboy15]

You sound like you're in a similar position to me in that you are a limited company, have heaps of money in your business account but don't want to take it out for personal use as you'd then automatically have to keep 25% of it aside for tax.

 

Do you not use an account for your money management? I do and he gives me advise on all the kinda of things you're asking about as part of his monthly fee

[Stylin_and_Profilin]

You need 25% really to avoid shitty mortgage rates.

 

I definitely advocate the "pot" system of money management. Have different accounts or "pots" for different things, and move money into them every month by standing order the day after you get paid. That way, what's in your current account is what you have to blow on paintballing and rohypnol.

 

I have a savings account into which I deposit a sum every month, and that savings account then gets poured into my ISA every 6 months. I also have an "emergency" fund into which I build up 3 months worth of wages, in case I lose my job. I finally deposit a massive chunk into the joint account with my wife that everything household-y comes out of. She in turn ferrets away anything excess in that into another savings account that I don't have access to.

 

Altogether we can save ten to fifteen grand a year without having to actually consciously make the effort to remember to save something.

 

This will appear a stupid question to a saver, but I am definitely a non-saver so please excuse my ignorance.

 

Once you allocate money to the various saver accounts in your mind (and of course practice) is that money completely off limits?

 

For example if you and your wife see a holiday that costs a bit more than normal or a piece of furniture you really like but haven't budgeted for do you hold off until the "day to day" pot has enough to cover it as the savings are completely ringfenced?

 

Essentially my existence is based on 1 current account with no structured savings (if there was anything to save).

 

You'll get higher interest rates on accounts which give you less chance to access your money. For example i am allowed to make two with drawls maximum per calendar year from my ISA which has a better rate than a similar account which gives you access as much as you like.

 

Obviously it's all about circumstances; in my case i wanted the option of withdrawing for absolute emergencies. Only ever had to dip into it once and it was for the boiler in my flat which packed in on christmas eve two years ago and needed replaced ASAP so i was lucky i had the option to dip into that.

[quote the raven]

You sound like you're in a similar position to me in that you are a limited company, have heaps of money in your business account but don't want to take it out for personal use as you'd then automatically have to keep 25% of it aside for tax.

 

Do you not use an account for your money management? I do and he gives me advise on all the kinda of things you're asking about as part of his monthly fee

 

 

You will get taxed if you take it out or not. If the company made it then you have to pay the tax at 20%

 

My end of year just came back.

 

The most tax efficient way of drawing funds from the limited company is by paying a low salary and the balance as dividends.

[Chest Rockwell]

Yeah, I do pay myself a lower salary. But if you draw less than

[neil]

Paying rent is for mugs, if you can possibly avoid it.

It really isn't. There are a lot of scenarios where buying a house is for mugs. It's all about your current and future living situation, I laid that out pretty clearly before. This is quite a good site to see what I mean about length of time in renting vs buying, http://www.nytimes.com/interactive/busines...lator.html?_r=0

[quote the raven]

Paying rent is for mugs, if you can possibly avoid it.

It really isn't. There are a lot of scenarios where buying a house is for mugs. It's all about your current and future living situation, I laid that out pretty clearly before. This is quite a good site to see what I mean about length of time in renting vs buying, http://www.nytimes.com/interactive/busines...lator.html?_r=0

 

 

I have to agree to a point with Neil. If you dont know where you will be and what you will be doing in 2 years time its a tad bit risky to buy a house. Example the young couple brought a house from me 3 years ago, chucked alot of money at it and now its back on the market as they want more room for upcoming kids.

 

At a rough guess i think if they sell at the asking price they will be 20k down. Without all the set up fees and legal end of the deal.

 

Im glad im out of that game.

[Loki]

Paying rent is for mugs, if you can possibly avoid it.

It really isn't. There are a lot of scenarios where buying a house is for mugs. It's all about your current and future living situation, I laid that out pretty clearly before. This is quite a good site to see what I mean about length of time in renting vs buying, http://www.nytimes.com/interactive/busines...lator.html?_r=0

 

New York

 

Completely different rental systems and average rent prices in this country. I'm paying less on my mortgage than I was in rent in a similar house, here in the south of the UK.

 

I did say "if you can possibly avoid it". If you're not sure what you'll be doing in 2 years time, then obviously buying into property isn't wise. If you're settling down, possibly in a long-term relationship or even (whisper it) married... different story.

 

And, yeah, people overspend on doing up houses. It's not a given though! If you're sensible, and not a fucking idiot, and buy what you need.

 

I have to say as well, owning your own home is a proper manly feeling. Make you feel like you've made it. Something very British about it.

[Sergio Mendacious]

Neil's right, although your mileage may vary, obviously. I don't recall seeing too many two-family houses in the UK, but that's what I'd do if I wasn't borrasic.

[Loki]

It would be interesting if they brought New York style rent control in over here though, wouldn't it.

 

http://en.wikipedia.org/wiki/Rent_control_in_New_York

 

Would certainly shake things up. As you say though, Tuxedo, the housing stock is so different over there.