In our How I Manage My Money series we aim to find out how people in the UK are spending, saving and investing money to meet their costs and achieve their goals.
This week we speak to Lisette Davidson, 59, who lives in Nairn, Scotland, with her husband, Nick, 56, daughter Nadia, 32, and son, Alex, 30. Lisette, a sales and office administrator, has taken cash out of her pension to get her credit card debts paid off and has a part interest-only, part repayment mortgage she’s keen to shift into a repayment only mortgage. Lisette thinks older workers should be valued more and recently upped her retirement age to 70.
Monthly budget
My monthly income: I take home between £1,350 to £1,650 per month from my job. My commission can be up to £300 a month. My annual salary is around £21,000.
My children, who live at home, pay us £500 each a month for their keep. Nick, who I’ve been married to for over 35 years, is a house husband.
My monthly outgoings: Mortgage, groceries, £600; council tax – this includes water, £143, electric, £250, money into savings, anything from £1 to £150 per month, money into work pension, £35, broadband, mobile phone and landline, £50, life insurance, £18.58, home insurance, £27.32, hobbies like camping or buying magazines, £15. I walk everywhere and don’t drive so I have no fuel costs. I never eat out and for day trips out, we make our own entertainment!
I was born in America, but grew up in Scotland. My parents divorced when my sister and I were very young and money was tight. I remember often being hungry and there sometimes being no heat or lights on at home.
I started working in hotels from the age of 13, doing everything from being a chambermaid to waitressing. Later on, I got a job working for an electronic point of sale company. After working at the company for 15 years, I took voluntary redundancy in 2015. For a long time I felt rudderless. We lived on my £10,000 voluntary redundancy pay for over two years, and just before it was about to run out and we considered selling the house, a former colleague asked if I’d like to join his new company.
I now work in the same office with many of my former colleagues in my current job as a sales and office administrator. Before deductions, my salary is about £21,000 a year. On a monthly basis, my salary is between £1,350 and £1,650 per month, including commissions of up to £300 per month. It would be great to be earning £25,000 a year.
I have my dream job and recently increased my retirement age to 70. Thanks to my qigong regime (an exercise scheme) I feel fit, healthy and unwilling to give up my job. I love it and do not want to do anything else. I have no desire to stop working and stagnate.
I add £50 to my work pension each month and have about £30,000 saved up in all my pension pots. I might increase my monthly contribution to my work pension at some point. I haven’t really given the state pension a thought and have no idea how much I’d get for that.
I haven’t always made the best decisions when it comes to my finances. I never learnt to budget or manage my money as a child and believe this is part of the reason I got into debt. I was used to having no money as a child, so when I did start earning, I took on the spend, spend, spend approach.
In the past, I’ve had an adverse credit score. I used to think of credit as free money and made some very foolish decisions while acting as if I had more money than I did.
Early on in my working life, I was in more than £11,000 worth of credit card debt. It became insurmountable and I went to Citizens Advice, who introduced me to a debt charity. I eventually got an individual voluntary arrangement sorted out. I paid off all of that debt, but then it began to creep up again as I still had multiple credit cards. These were high-interest ones to start with, but gradually I began moving them over to 0 per cent interest deals and paying them off until I had paid them all off.
However, I have had further credit debt to pay off since. Earlier this year, I took out £9,000 from my pension to get £8,000 worth of credit debt paid off. I reasoned to myself that this was the most sensible use of the money. In January I was finally able to clear the credit card debts, close the accounts and cut the cards up.
I used the remaining money I withdrew from my pension to update our kitchen. It’s been a slow and soul destroying process getting my credit card debts paid off and I didn’t want to reach 60 with these millstones weighing me down. I’m pleased I’ve made progress and the sense of freedom is immense.
I don’t have any stocks or shares and only put money into a cash savings account with the Bank of Scotland. I’m not sure what the interest rate is, but I don’t think it’s very high.
The house we live in now, which is semi-detached and has three bedrooms, was a council house and we purchased it for £48,000 in 2000 while we were living in it. It was a struggle to afford it, but I’m glad we did. Over the years, we’ve remortgaged twice and added to the mortgage to do things to the house.
In recent months my mortgage has leapt from £215 to £499 per month. The interest rate on my standard variable rate mortgage is currently 7.55 per cent. I hope it will now stabilise.
In 2007, with my income at the time, all I could get was a half interest, half repayment mortgage, also known as a half and half mortgage. There are 14 years left to run on it and to this day there is still no vehicle in place to cover the £40,000 that remains on interest only. The repayment balance is only £23,000. I have recently gone to both my bank and current mortgage provider to ask if the mortgage can be changed to a repayment only one, or if an appropriate remortgaging deal was available. I passed the credit score requirements, but failed the affordability criteria, which is a source of frustration for me.
Unfortunately, no mortgage provider is able to count the keep money that our children pay to us as income. Consequently, it looks, on the surface, as if I don’t have enough income to be able to afford to pay off a repayment only mortgage. I’m keen to remortgage next year when I turn 60 and take out a 10-year repayment-only mortgage, so it would be paid off by the time I’m 70. If my affordability rating improves, I might be able to do this.
I do not find money important, but I always know exactly how much I have in my bank account. I keep a paper budget in a loose leaf folder and make a note of all my expenditure. Having made mistakes in the past, this gives me a sense of security. Money doesn’t buy you happiness, but it can bring a gilt-edged form of misery.
When I eventually retire, we might sell the family home and relocate to the Cornish coast, where Nick grew up.
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