Money suggestions

[dangerman]

It occurred to me that I'm rubbish at managing money and I've got a bad habit of buying things I don't need. That financial crisis hoax we recently discussed on here made me feel very vulnerable. Couple that with all this talk of 'Brexit' and the indication that there is no 'plan' or foreknowledge of what's next for Britain is making me uncomfortable. I think it's time to start being sensible. I imagine a lot of you on here may have already thought about this kind of stuff so I want to clue myself up on the best options.

At the moment this is a long way to go since I need to clear debt first, but I want to start to develop a cushion of cash so as to 'prep' for the daily surprise expenses and also to protect me from the potential for the loss of my job or illness.

In about five years, presuming everything stays the same and I'm not hit with any massive expenses, I'll be completely debt free and will own my house outright.

By then I'll hopefully have developed my small savings fund - I've heard that about three months of essential outgoings is the number to aim for, does that sound about right?

But what then? What happens if I'm able to save more than that by then? What if I get some inheritance or something? What's the best place to stick money?

Basically, what's the right amount of money to have in savings. The more money one has in savings the more vulnerable I feel they are. I've never had money and I've never saved, so I just don't know. I don't trust banks, property doesn't seem to have the security it used to, cash is obviously not a good idea to keep around the house, precious metals come with high buying and selling fees... Where is a good place to keep savings? How do ordinary savers stash their cash are is there a sensible limit of the amount of money you should save rather than invest?

Basically, I've got my five year plan - I'm trying to look at a ten year plan.

[preparedsurrey]

Property is (or can be) hard work, on the other hand they aren't making anymore land and long term prices are unlikely to fall, if you can buy a rental place and be prepared to deal with the hastle they can provide excellent returns, for example I got offered a place returning nearly 20% per annum, if you're prepared to look in unpopular areas 10 to 15% is achievable - obviously you will have ten ant issues sooner or later though.

Interest rates are poor for the amounts of money I have, so I've got some in premium bonds - I seem to be ahead on winnings compared to what I would receive in the bank.

I would try and develop an interest in common things made of silver you can pick up as and when you see them, a relative used to do reasonably well buying silver spoons at markets and sales. Its portable and pretty much untraceable,

Edit fit a hidden fireproof/ resistant safe too, while you are at it put a cheap one (or even a lockbox screwed to the wall) in somewhere easily found
Edit 2 about a years take home wages is a decent financial buffer.

[Jan Smits]

Debt and mortgage free is a great situation, whether shtf or not. I think it's about not putting all your eggs in one basket - you wouldn't want a huge bank balance only for hyper-inflation to wipe it out, or to have a ton of gold only to find every other person that thought of it is trying to sell it at the same time. Cover yourself for as many scenarios as you consider likely, wodge of cash stashed away, yeah why not some precious metals, but think about 'everyday' value too, possible barter goods. Food security is a good one, as is education.

Not that I'm an expert on all this, just someone asking themselves similar questions. My plan is to get a safety buffer in the bank too, then think about home improvements, and getting valuable skills. Little bit here, little bit there, huge amount of what I'm certain about.

[ForgeCorvus]

At the moment this is a long way to go since I need to clear debt first, but I want to start to develop a cushion of cash so as to 'prep' for the daily surprise expenses and also to protect me from the potential for the loss of my job or illness.

I can only speak from where I stand. I'd go with a three pronged attack on this problem.
You need to kill your debt, build up an "Oh Shite" fund and a Cash-Cushion at the same time

In about five years, presuming everything stays the same and I'm not hit with any massive expenses, I'll be completely debt free and will own my house outright.

You're a Prepper FFS , whats the worst case ?

By then I'll hopefully have developed my small savings fund - I've heard that about three months of essential outgoings is the number to aim for, does that sound about right?

Three months savings for a start, and at least a month in cash

But what then? What happens if I'm able to save more than that by then? What if I get some inheritance or something? What's the best place to stick money?

For me, a sock-under-the-mattress.... You are not me though (try googling Money saving expert, for some free advice)

Basically, what's the right amount of money to have in savings. The more money one has in savings the more vulnerable I feel they are. I've never had money and I've never saved, so I just don't know. I don't trust banks, property doesn't seem to have the security it used to, cash is obviously not a good idea to keep around the house, precious metals come with high buying and selling fees... Where is a good place to keep savings? How do ordinary savers stash their cash are is there a sensible limit of the amount of money you should save rather than invest?

£73.000 per financial institution http://www.moneysavingexpert.com/saving ... ings#facts

Investing is a form of gambling, you can loose it all. So only gamble what you're willing to give up on

Basically, I've got my five year plan - I'm trying to look at a ten year plan.

Good luck

[bobble]

There are lots of ways to save money so that you have more available to save/ clear debts.
We moved out into the suburbs, where we were able to get a bigger house and good sized garden for less money.
Weve also saved on council tax and water bills as we are out of the city area.
Weve started growing stuff and keep hens for eggs and last year saved over £300 on our food bills.
We save on heating by collecting wood for fires.
I read that after the Wall St crash the USA gov made it illegal to hold gold/silver (except personal jewellery) and people had to give it to the gov in return for an iou. Ive started to buy gold jewellery, rings etc so if shtf its not as likely to be confiscated. Spread your investments like Jan Smits said. Good luck!

[sethorly]

It sounds like you're spot on already with your financial attitude and preps (I'm an ex-finance-professional and an investor in shares).

3 months' worth of outgoings (amount you spend rather than earn) is the first milestone to financial security, along with paying off high-interest debts.
Next is getting rid of normal debt and extending your cash to yearly earnings.
Don't forget to pre-save for certain future expenditures like replacing cars, kitchens, holidays, etc.
The key, which you appear to have realised already, is to live like you're earning less, and to maintain (rather than increase) your lifestyle after a payrise.

Beyond cash, things start getting more complicated and you'll need professional independent advice. I'd suggest that commodities such as gold and silver are not worthwhile (risk far too high relative to reward), and I can't see how they'd be worth anything in a SHTF situation (you'd be better off investing in mini-sawyers!).

[Arzosah]

Debt and mortgage free is a great situation, whether shtf or not. I think it's about not putting all your eggs in one basket - you wouldn't want a huge bank balance only for hyper-inflation to wipe it out, or to have a ton of gold only to find every other person that thought of it is trying to sell it at the same time. Cover yourself for as many scenarios as you consider likely.

This! Totally agree. And if people are serious about trying to get their finances under control, then yes, as ForgeCorvus mentioned, go to moneysavingexpert - the advice on the main website is great for getting all utility and even optional spending under control, updated with the weekly newsletter (there's no selling, but you don't have to sign up to read it, its available on the right hand sidebar every Wednesay - over a million people in the UK get that newsletter). Then go to the forum -
thousands of people on there at any one time, go to the Debt Free Wannabe section, and people will help you even more, personalised, they (we!) do it to pass on the help we've all received at various times.

There are prep considerations that clash with some attitudes - stocks of food, for example, or having backups - but as long as you stay aware of that, it's a brilliant resource.

[dangerman]

Thanks you lot, great to get thinking about this kind of thing.

That's a great idea @preparedsurry - scrap silver. I've looked at things like that before, never occurred to just buy a load and keep it, and there must be loads of silver around in different forms. I've seen one of the youtube lads posting about junk silver coins, but they seem to cost a fortune on eBay. I do like the idea of spreading my money around to guard against losing it. One of my mates only deals in bitcoins at the moment. Might read up a little on that and see what the crack is.

Regarding investments - I've actually already got a second house. I rent it out and all the money goes back into it, hopefully the equity is what I'll be using to clear the mortgage on the house I live in. If I can access the money and still keep the second house as an investment then I may just do that, but as you say, there is little hope of me getting anything like 10% return, never mind 15% and so probably won't be worth it. At least if I get all the money out of it first I'll have nothing to lose. I don't generally like investments, they worry me. I'm not worried about making a load of interest, but I do want my money to grow with inflation.

@ForgeCorvus - you make it all sound so simples! I'm not in a position to think of the worst case scenario really. I doubt there is much I could do being a pauper and all, but I've got a crap ton of knives, emergency ponchos and water filters. Not sure how much good they will do me though, unless I get lost in Formby woods again. I've also got a caravan now for any quick evacuations my family may need to do. But really, these are investments I've already got in place only for the most extreme preppy type things. Like power cuts, riots or natural disasters.

Financially I've got to start from scratch, and this will definitely take time and so I need a plan. The idea of even possessing £73000 fills me with anxiety. That amount of money just sitting in a bank account could be milked any time the authorities see fit. I feel that if the government machine knows you have a load of money, then somewhere along their contingencies, you'll be on the radar. There are adverts on the radio all the time from FSCS telling us all that our money is safe in the banks... Why are they trying to convince us so much? Someone told me once that you know when the banks are about to go into crisis because just before they do, they say that won't. And with all this Brexit stuff what's to stop them printing a shed load more sterling and devaluing all that cash? I think I'd rather a house or something tangible than savings that high. Even an 8% rental return (about what I get on mine) would be better than a kick in the balls from a bank.

If a cushion is about three months worth of expenses, how much would a SHTF fund be? This would be an individual thing I'm sure, but what things should be considered to work it out do you reckon?

[Bad Wombat]

I would recommend holding cash, property and shares. It sounds like most of your wealth is already tied up in your house, so that leaves cash and shares. I'm self employed so I keep at least enough cash in the bank to survive a year without work. Once I have that I would put the rest in shares.

Low cost index tracker funds can be held very cheaply and are capital gains tax free if held in an ISA. Halifax share dealing do a share dealing ISA that charges £12.50 a year plus £12.50 per trade, and you can use that to buy the Legal and General or Black Rock index tracker funds that charge an additional 0.1% per year. Peanuts! That should give you about a 10% annual return over the longer term (5 to 10 years). Those fund charges can be compared to the average high street financial adviser who will probably want a 5% initial fee and 2% of your total fund value per year (honestly - I went to one. That's what they wanted)!

If you want to drip feed money into a shares ISA then maybe save up and trade just once a year to keep the per trade charges to a minimum.

Please note that I am a computer programmer not a financial adviser!

[Deeps]

I've got pretty much all my eggs in the property basket. I've got the right insurances etc and I use good agents (letting not secret ). Personally I can't see past property as an investment, especially as a 'non gambler' (no such thing when it comes to investment, there's always risk). The way I look at it is even if there's a a serious incident of some description then if we pull back from it and order is restored then I've got my insurances and things will be restored one way or another. If we end up knees deep in zombies then its going to be irrelevant. We're trying to be debt free while overpaying our mortgage, for us there's no real shortcut, like the vast majority we have a mortgage (4 including the rentals) and it would have been impossible for us to go from no house to our own(ed) house without a mortgage

I can see the logic of diversifying and if you have enough money and the knowledge (or blind faith or whatever) to have a go then fair play but I'm too much of a jessie to toss my hat into the stocks markets or precious metals field. I would guess that like other aspects of prepping its easy to want to do too much too quickly but ultimately we only have a finite amount of money. Real life claims a large chunk of that money too, I take my hat off to those that have big savings, property, investments etc, like the no house to our own house example above it applies to other investments too, unless you end up with a hoofing big inheritance then you have to make your own fortune and if that involves borrowing then so be it. Most of us will need to speculate to accumulate, even if its just a mortgage.