The Money Thread...

[Tomous]

Hi everyone, been a while since I posted on the forum as I've mostly been in the WhatsApp.

I was hoping for some advice. With the Student Loan Plan 1 repayment interest rate now being at 5.25%, I am seriously considering drawing on savings to pay off my remaining balance. The tax on my salary doesn't feel worth it, when I'm paying off strawberry float all after the interest.

I know it is 'good debt' but I like the idea of being debt free.

Anyone else in a similar position or planning to do the same? Any advice would be welcome.

If your savings interest is less than 5.25% then paying it off makes sense to me.

[Clarkman]

Hi everyone, been a while since I posted on the forum as I've mostly been in the WhatsApp.

I was hoping for some advice. With the Student Loan Plan 1 repayment interest rate now being at 5.25%, I am seriously considering drawing on savings to pay off my remaining balance. The tax on my salary doesn't feel worth it, when I'm paying off strawberry float all after the interest.

I know it is 'good debt' but I like the idea of being debt free.

Anyone else in a similar position or planning to do the same? Any advice would be welcome.

If your savings interest is less than 5.25% then paying it off makes sense to me.

My stocks and shares ISA does okay but there's nothing that can compete with 5.25%. And the interest rate will only continue to go up for a few months still it seems...

[Grumpy David]

Hi everyone, been a while since I posted on the forum as I've mostly been in the WhatsApp.

I was hoping for some advice. With the Student Loan Plan 1 repayment interest rate now being at 5.25%, I am seriously considering drawing on savings to pay off my remaining balance. The tax on my salary doesn't feel worth it, when I'm paying off strawberry float all after the interest.

I know it is 'good debt' but I like the idea of being debt free.

Anyone else in a similar position or planning to do the same? Any advice would be welcome.

I did exactly that in November when I had just under a year left to go on Plan 1 and the interest rate had just changed to (I think) 3.25%.

Had no other debt apart from the mortgage and wanted that great feeling of being rid of it.

Unless you expect to use the lump sum for something else in the short term or it wipes out your savings, it's definitely something to consider.

[Clarkman]

Thanks David and Tom. I'm going to do it.

[Rocsteady]

Chase interest rate up to 3.8% from the 3rd.

[Curls]

Chip and Tandem are already higher. I have so many empty open savings accounts right now trying to keep up!

[Curls]

Just been hit by a hefty car bill for an AdBlue tank. 1600£. I'll also need new breaks soon.

I'm gonna be broke.

The garage offering me all kinds of finance deals etc but I ignored.

Anyway tonight I applied for a NatWest credit 0% credit card. I already have an M and S one.

The M and S one has 6k limit but I only have 1.5k left on it. (This 0% expires Sept 2024)

Fortunately the NatWest one have accepted me and it's got 23 months 0% and an 8K limit.

May the stoozing continue then.
Fix my car now, continue to use the credit cards for stoozing and gaining interest and whack all the money in savings accounts.

In Sept 2024, pay of the m and s (or search for a cheap/free balance transfer!) And in may 2025 pay off the NatWest.

Also when the cards are maxed I'll let the minimum payments continue and not use them again ....this should mean that I'll probably be paying back a good deal less than I've originally stoozed. It's funny how there are wise ways and unwise ways to spend money now that interest rates are souring.

FYI - Stoozing linked below for those who don't know.

Not for the financially silly among us.

https://www.moneysavingexpert.com/credi ... dit-cards/

[Green Gecko]

I'd probably need access to the credit if needed tbh;- I have 3 cards with the best APR still being below 20% (19% or so I think) with HSBC and other actual banks (none of the dodgy ones).

My credit rating fluctuates between Excellent, Good and Fair (a few points off Good) depending on whatever is happening, but if you do make those payments it will continue to build or maintain your credit rating. Having all of the cards maxed out can hurt you though - say you're using somewhere between 30 to 45% for you limit continuously or maxing it out at some stage. If they're all maxed (although I understand you have a mortgage that's getting paid off as well) then that might not be great.

Your current account balances will also appear healthy so maybe you have nothing to worry about, just game the system.

Just don't repeatedly apply for cards (and don't apply to cards supplied by the same parent bank, they will reject you if you're already a client - I did this once - M&S bank is HBSC ). And stay at the same address and on the electoral register if you can. Some utilities (including a mobile contract) can also help but I went SIM only forever ago and try to avoid utilities that use credit reporting for strawberry float all reason.

CCs have been helpful for me as business loans and overheads/cash-flow vehicles;- it's basically impossible to get a loan as a new business 9 years ago and even the ones that are OK have terrible interests rates. But for whatever reason at the time I had a good credit rating from being granted an emergency overdraft when I first put a deposit down on a home (renting) myself, and never borrowed before that (having a few thousand in my account and then spending through that, which was actually student finance anyway;- then my only and oldest bank account was more likely to approve me for 0% (I think it was 24months). I took me strawberry floating forever to pay off the overdraft "on demand" though (probably because of the CC balance which was only about 2k;- this was dumb because Nationwide gave me both an overdraft and a credit card, so they basically wanted me to use the credit card rather than an interest free overdraft once that deal was up). Yeah I shouldn't have been in my overdraft and I don't have one anymore. Rent is insane here and we were strawberry floated for bills as well.

Each balance transfer I've kept the card open at £0 or used it for short term borrowing on the lowest APR and I haven't missed a payment in 8 years - had some problems and forgetfulness (I think I bought ice cream or some gooseberry fool and empted my current account in a pay lull which meant a payment couldn't go out) so my first CC got nuked from orbit but that's it I think. I'm not 100% sure but having a card with a high limit on it that you're not using is an indicator you don't just buy a gooseberry fool load of things you don't need because the credit's available. But there's a theoretical limit on how much total limit you can have, based on your means. So if you needed another % card or just wanted a new CC for whatever reason you might have to close or lower the limit on one card to free up "credit worthiness" for another.

I know for a period between 2008 and 2012 or so (I studied for 4 years during the financial crisis, great timing...) basically nobody would touch credit cards (including me) so after that they were practically throwing them at you. It would cost the equivalent of under £200 to borrow thousands of pounds over 2 or 3 years which was better than any other kind of loan for me;- you just had to not strawberry float up managing them, which is kind of hard now with direct debits generally being set up automatically, and you can of course pay chunks off whenever you want (which I do).

Unfortunately it's the nature of running a business out of a recession (and then Covid) that you generally need a credit facility of some kind but if I was ever cash rich I'd maybe do it. Now there's a cost of living crisis I think the only people buying anything are businesses or business owners funnily enough (probably on credit or loans...).

With no PAYE or chartered or company accounts, it's pretty much the only way for me to build towards a mortgage too, or whatever is next for my business. I also wanted some financial independence even if I meant I had to be straddled with a small amount of debt;- no private loans or unwanted "business partners" (financiers meddling in things, the whole strawberry floating point was to take control of my own life).

[Curls]

Funnily just did the lowering of the limit before I applied. I have a nationwide card for foreign spending with an 8k limit. I just logged on and lowered it to 2k before applying for NatWest.

It's amazing how much credit these banks give you, and its no wonder that those who are not financially savvy get themselves in trouble. Is this gooseberry fool being taught at schools yet???

[BTB]

Chip and Tandem are already higher. I have so many empty open savings accounts right now trying to keep up!

I've also seen Kroo bank are now offering 4.1% from 1st July.

I've not heard of any of Chip/Tandem/Kroo, has anyone used them and would they recommend?

Also getting to the point where I have some old accounts that were at one point a better offer, already got Chase, Marcus and an easy access Santander e-saver

[Curls]

As someone in the generation who's never experienced high interest. I'm unsure how fixed savers work. Google is giving me mixed reviews.

Can I added to fixed savers during the term? Or do I just deposit one lump sum at the start and then that rate is locked in?

The former would be very useful but I assume it's the latter.

Also imagine if I'd actually managed to do my loan trick I'd mentioned a few pages back. I'm sure rates were around 2% back then. Shame it was waved away even though we all the huge interest rate rises were coming!!

[Green Gecko]

It's amazing how much credit these banks give you, and its no wonder that those who are not financially savvy get themselves in trouble. Is this gooseberry fool being taught at schools yet???

Definitely not.

I would only ever use loans from a position of investment and I would make sure I have sufficient assets to pay the debt off in full at any time (whether that's in goods or cash or whatever).

To be honest it's probably worse if you grow up with money and then that goes away for some reason and you never learn fiscal responsibility or budgeting or just generally balancing income/outgoings. I think people from the poorest households do pick that up somehow because they have to learn to make do, however tempting it may be.

Whereas if money just grows on trees you never have to do that. It's complicated.

In cash stripped or stricter households, not only do you have to make do, but you often have to be enterprising and multiply things. Money is just an instrument like any thing else; a resource. I treat it the same way as I might make something interesting out of a pile of cereal boxes. It has to do a job or its pointless.

It's unfair people don't have enough money to live a basic life anymore but they typically won't have access to credit anyway. The crazy high interest rates are probably what's worse (and the most tempting for people with no other means to spend); and yes, some banks give you limits you would have to consciously decide not to spend.

[Knoyleo]

Just checked my most recent pension statement, and nearly 15% of what I paid in last year was lost to fall in investment value and fees. What the strawberry float? I'd be better off chucking this stuff under a mattress if it wasn't for the employer matching and tax benefits.

[Green Gecko]

My dad has a final salary pension, it's what everyone thinks a pension is, and if you have one, nobody else is touching it

Sorry to hear it went down. My mum had a lot of bad luck in investment with it being what was left of her settlement from a massive car accident that disabled her for life. It's hard to see money that could just sit there doing nothing be squandered in the "care" of someone else (it's just a financial instrument).

I may no pension whatsoever but a £ is a £.

[Squinty]

I agree about the need for students to be taught this type of thing.

I know CCEA maths at GCSE level does contain a part about household finances/loan interest rates. But most of people looking at it don't have any experience of this stuff and CCEA aren't the only examination body. I have no idea what the other bodies do.

[Rocsteady]

Just checked my most recent pension statement, and nearly 15% of what I paid in last year was lost to fall in investment value and fees. What the strawberry float? I'd be better off chucking this stuff under a mattress if it wasn't for the employer matching and tax benefits.

It sounds counterintuitive but as this stage that's what you want. Value fell so you're buying more stocks subsequently at a lower price. Those will bounce back and more in the next few decades. You've only gotta be para about the drop at or near retirement age.

[Knoyleo]

Just checked my most recent pension statement, and nearly 15% of what I paid in last year was lost to fall in investment value and fees. What the strawberry float? I'd be better off chucking this stuff under a mattress if it wasn't for the employer matching and tax benefits.

It sounds counterintuitive but as this stage that's what you want. Value fell so you're buying more stocks subsequently at a lower price. Those will bounce back and more in the next few decades. You've only gotta be para about the drop at or near retirement age.

I am aware of this, but that doesn't stop the anxiety I get from seeing "number go down" on these statements. It just feels like I've made some massive mistake, and if I'd monitored it more closely or invested it in a better fund, I'd be better off now, and then being better off now will result in an even better situation down the line. But I know these things are unpredictable and unknowable and it's impossible to predict things right all the time, or even to spend the time constantly monitoring the funds I've put money into.

Anything about uncertainty with money gives me serious horrid anxiety, even if it's not going to put me in a bad financial situation, or just means I might make less than I could have. I had some share options mature this year, so got to buy them at a 30% discount on market rate, then decide to hold or sell. I knew our annual results were coming, and indications seemed to be that they would be positively received by the market, ahead of expectations, so I held for a bit, but almost immediately, the share price started dropping. I start kicking myself for not selling immediately, feeling like a massive idiot, and as soon as there was some recovery, I sold because I couldn't handle the uncertainty. Then a few weeks later, the results were announced, and I checked the share price, and sure enough, a nice healthy bump that would have netted me a couple of hundred extra if I'd held my nerve, and that sick feeling's back in my stomach because I've done the wrong thing.

Investing is not for me.

[Grumpy David]

If you're in the default workplace pension chances are it'll auto adjust over time to reduce the equities exposure and increase the exposure to less volatile government bonds so any drop closer to retirement is minimised (and bonds are usually negatively correlated to equities too).

Certainly a lot nicer to have a defined benefit pension and not have to worry about market performance but they're pretty much only in the public sector.

Also imagine if I'd actually managed to do my loan trick I'd mentioned a few pages back. I'm sure rates were around 2% back then. Shame it was waved away even though we all the huge interest rate rises were coming!!

I ended up doing this. Borrowed at 2.7%-ish. Stuck in Chase earning 3.8%. NIM of 1.1%.

I'd just finished my student loan so that eliminated cost matched what the personal loan now costs so no difference to the cash flow.

[Dowbocop]

Brother in law suggested my wife and I get a Lifetime ISA before we hit 40 in a couple of years. We've already got a mortgage so would be entirely for retirement planning to supplement our NHS pensions. I'm not averse to the idea of a stocks and shares product.

Any recommendations?

[Dual]

Brother in law suggested my wife and I get a Lifetime ISA before we hit 40 in a couple of years. We've already got a mortgage so would be entirely for retirement planning to supplement our NHS pensions. I'm not averse to the idea of a stocks and shares product.

Any recommendations?

You just want a low cost index tracker. I use Vanguard Global All Cap and my kids have got the HSBC version.

https://monevator.com/low-cost-index-trackers/

I would suggest it's too late for you to make the most of a LISA, as I think there's an age limit which stops you adding funds to it. Not 100% on this but I seem to remember there was a reason I didn't open one because I was already a home owner.

Have a look at Stocks and Shares ISAs which will be the same fund but you'll have the advantage of being able to sell it all if there's an emergency.