Help someone trapped on the wheel understand
Discussion
I've just posted this in reply to another subject and realised its probably worth its own post over here.
When it comes to work and money i have always been very basic/ignorant. I have always been a high rate tax payer and have never taken advantage of schemes or even pension payments. Have always been PAYE and just contribute a standard amount into a pension pot. In all honesty my understanding or lack of in CGT, income Tax etc embarrasses me.
Were in the position now where we want to make a lifestyle change, can anyone provide any thoughts on the below. I think we have an out from the big hamster wheel but not sure if its realistic.
As an aside I did a small development a few years back so own one BTL in a ltd company but the others unfortunately are in my personal name. I.m assuming they cant be gifted to a company?
Both me and the Mrs are 38 years old, no kids or anything tying us down apart from houses. Have both worked hard forever and to be fair have played hard spending most of what i have earned on racing and toys. Now were getting old and i think i just want a more simple life (but do i really)
We have 4 rental properties, about a million in equity if we sold them all (capital gains would wipe out a fair chuck of that) but they make us a steady income of about £3k per month.
We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
We also have a large static home on a lake where we water ski. Im considering letting our house out and giving up our careers. However is it really possible to live in England all year round in a static home, Surely at some point we will want more space, if we give up on our careers now and decide to go back i think we will almost half our earnings. Then moving back into the main house probably isnt really an option.
The problem im having with the situation is that until we try it we just dont know if its the lifestyle we want. Would we miss the challenge and stress of work? Would the lack of creature comforts and space become an issue? Never being able to have a dinner party or a gathering could be something we would miss. Would we just get bored?
Im considering doing it but not giving up work, its a 80 minute drive to work from our lake so just about manageable but not pleasant. Waking up in a static home at 5:30am in the winter and having a shower before an 80 minute drive to work could get tiresome very quickly and then not getting back until 7:30 in the evening.
When it comes to work and money i have always been very basic/ignorant. I have always been a high rate tax payer and have never taken advantage of schemes or even pension payments. Have always been PAYE and just contribute a standard amount into a pension pot. In all honesty my understanding or lack of in CGT, income Tax etc embarrasses me.
Were in the position now where we want to make a lifestyle change, can anyone provide any thoughts on the below. I think we have an out from the big hamster wheel but not sure if its realistic.
As an aside I did a small development a few years back so own one BTL in a ltd company but the others unfortunately are in my personal name. I.m assuming they cant be gifted to a company?
Both me and the Mrs are 38 years old, no kids or anything tying us down apart from houses. Have both worked hard forever and to be fair have played hard spending most of what i have earned on racing and toys. Now were getting old and i think i just want a more simple life (but do i really)
We have 4 rental properties, about a million in equity if we sold them all (capital gains would wipe out a fair chuck of that) but they make us a steady income of about £3k per month.
We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
We also have a large static home on a lake where we water ski. Im considering letting our house out and giving up our careers. However is it really possible to live in England all year round in a static home, Surely at some point we will want more space, if we give up on our careers now and decide to go back i think we will almost half our earnings. Then moving back into the main house probably isnt really an option.
The problem im having with the situation is that until we try it we just dont know if its the lifestyle we want. Would we miss the challenge and stress of work? Would the lack of creature comforts and space become an issue? Never being able to have a dinner party or a gathering could be something we would miss. Would we just get bored?
Im considering doing it but not giving up work, its a 80 minute drive to work from our lake so just about manageable but not pleasant. Waking up in a static home at 5:30am in the winter and having a shower before an 80 minute drive to work could get tiresome very quickly and then not getting back until 7:30 in the evening.
My understanding - no you can't gift property into the Ltd company, it would still attract capital gains.
Your biggest liability / opportunity concerns the main house. Roughly where is it / description that is definitely going to get long term trustworthy tenants at £6k a month? A few voids will really hurt.
When you say it's too big for you, but you want to host dinner parties.... not convinced you really think it's too big. Are there no adaptions that would make it work better for your lifestyle? Hobby rooms, wine cellars etc.?
How long term is water skiing as a hobby?
Why not downsize to somewhere with access to water / sailing etc. but a proper house not a lodge. No CGT on selling your main property.
Your biggest liability / opportunity concerns the main house. Roughly where is it / description that is definitely going to get long term trustworthy tenants at £6k a month? A few voids will really hurt.
When you say it's too big for you, but you want to host dinner parties.... not convinced you really think it's too big. Are there no adaptions that would make it work better for your lifestyle? Hobby rooms, wine cellars etc.?
How long term is water skiing as a hobby?
Why not downsize to somewhere with access to water / sailing etc. but a proper house not a lodge. No CGT on selling your main property.
My main take would be the fact you are "getting old" at 38, when I was approaching 40 I felt the same. But it came and went and I look back and laugh at my outlook.
You are still young, and keeping fit it seems, fingers crossed you're going to be just fine and dandy for at least decade or so!
Still time to pivot and build a career/income you will enjoy.
You are still young, and keeping fit it seems, fingers crossed you're going to be just fine and dandy for at least decade or so!
Still time to pivot and build a career/income you will enjoy.
Thanks for the reply.
The property is a 5300 square foot house with just over 3 acres of land in Kent just outside the M25.
Your absolutely correct in saying that i don't really believe it is too big. Its great we have a pool room, games room, simulator room, cinema room everything you could ever need in a house. However i know its more than we need to be content..... I love living there and dont want to let it out. However, im being drawn into the idea of being able to have an easier life. During the summer we are only there 2 to 3 nights per week as we stay at the lake.
We have been sking for years and i for-see us doing it for at least another 10 or so years.
The problem with selling the main property is if we decide we didn't want to live in something smaller after the fact i don.t think we would ever be able to get anything similar as it is so unique. We built the property ourselves so really is perfect for us. Just fed up with working 5-6 days per week to pay to live in it.
The property is a 5300 square foot house with just over 3 acres of land in Kent just outside the M25.
Your absolutely correct in saying that i don't really believe it is too big. Its great we have a pool room, games room, simulator room, cinema room everything you could ever need in a house. However i know its more than we need to be content..... I love living there and dont want to let it out. However, im being drawn into the idea of being able to have an easier life. During the summer we are only there 2 to 3 nights per week as we stay at the lake.
We have been sking for years and i for-see us doing it for at least another 10 or so years.
The problem with selling the main property is if we decide we didn't want to live in something smaller after the fact i don.t think we would ever be able to get anything similar as it is so unique. We built the property ourselves so really is perfect for us. Just fed up with working 5-6 days per week to pay to live in it.
Just a few observations...
38 isn't old, you're half way through average age and, assuming in reasonable health, got at least a couple of decades of active and productive time ahead.
At your age going from what sounds like being fully engaged with a high paying (assume rewarding) job to the exact opposite will likely get very boring very quickly. Key for me would be whether its poss to reverse things if it doesn't work out. Could you go back to the same job (or get similar elsewhere) cos, if so, that's a massive safety net.
If not, instead of going from 100 to 0 regarding job/lifestyle/home, can't you pivot in a less extreme way? If you're seriously thinking of jacking in the job, could you engineer doing it say 2-3 days pw instead? What's the worst that can happen? It'd be a much less extreme transition.
Have you run your own business? If not, that might be worth exploring. I went from high paid employment to owning a small biz and, whilst it was hard work, I loved every minute.It was in an entirely different sector too, so it was a complete change.
Good luck deciding - its a nice position to be in.
38 isn't old, you're half way through average age and, assuming in reasonable health, got at least a couple of decades of active and productive time ahead.
At your age going from what sounds like being fully engaged with a high paying (assume rewarding) job to the exact opposite will likely get very boring very quickly. Key for me would be whether its poss to reverse things if it doesn't work out. Could you go back to the same job (or get similar elsewhere) cos, if so, that's a massive safety net.
If not, instead of going from 100 to 0 regarding job/lifestyle/home, can't you pivot in a less extreme way? If you're seriously thinking of jacking in the job, could you engineer doing it say 2-3 days pw instead? What's the worst that can happen? It'd be a much less extreme transition.
Have you run your own business? If not, that might be worth exploring. I went from high paid employment to owning a small biz and, whilst it was hard work, I loved every minute.It was in an entirely different sector too, so it was a complete change.
Good luck deciding - its a nice position to be in.
Ezra said:
Just a few observations...
38 isn't old, you're half way through average age and, assuming in reasonable health, got at least a couple of decades of active and productive time ahead.
At your age going from what sounds like being fully engaged with a high paying (assume rewarding) job to the exact opposite will likely get very boring very quickly. Key for me would be whether its poss to reverse things if it doesn't work out. Could you go back to the same job (or get similar elsewhere) cos, if so, that's a massive safety net.
Unfortunately once i'm out i think getting back in at the same level would be very difficult. I would expect to end up earning around 50% less
If not, instead of going from 100 to 0 regarding job/lifestyle/home, can't you pivot in a less extreme way? If you're seriously thinking of jacking in the job, could you engineer doing it say 2-3 days pw instead? What's the worst that can happen? It'd be a much less extreme transition.
My position and sector require me to be available 7 days a week, no part time options available. It would be an extreme pivot and i think that concerns me.
Have you run your own business? If not, that might be worth exploring. I went from high paid employment to owning a small biz and, whilst it was hard work, I loved every minute.It was in an entirely different sector too, so it was a complete change.
No just run a few small housing developments on the side. With regards to setting up my own business the only expertise i have is in people management and sales. Don't have a clue what i would actually do which dosn't seem like a good start!
Good luck deciding - its a nice position to be in.
Agree and thanks for replying
38 isn't old, you're half way through average age and, assuming in reasonable health, got at least a couple of decades of active and productive time ahead.
At your age going from what sounds like being fully engaged with a high paying (assume rewarding) job to the exact opposite will likely get very boring very quickly. Key for me would be whether its poss to reverse things if it doesn't work out. Could you go back to the same job (or get similar elsewhere) cos, if so, that's a massive safety net.
Unfortunately once i'm out i think getting back in at the same level would be very difficult. I would expect to end up earning around 50% less
If not, instead of going from 100 to 0 regarding job/lifestyle/home, can't you pivot in a less extreme way? If you're seriously thinking of jacking in the job, could you engineer doing it say 2-3 days pw instead? What's the worst that can happen? It'd be a much less extreme transition.
My position and sector require me to be available 7 days a week, no part time options available. It would be an extreme pivot and i think that concerns me.
Have you run your own business? If not, that might be worth exploring. I went from high paid employment to owning a small biz and, whilst it was hard work, I loved every minute.It was in an entirely different sector too, so it was a complete change.
No just run a few small housing developments on the side. With regards to setting up my own business the only expertise i have is in people management and sales. Don't have a clue what i would actually do which dosn't seem like a good start!
Good luck deciding - its a nice position to be in.
Agree and thanks for replying
Darlo74 said:
You could always give it a go for 12-18 months and see how you find it? Rent out your main house, live in the lake house and if it works for you make it permanent. If it doesn't you always then have the opportunity to move back into your main house?
Yes this is looking like the best option. The problem being i would have to stay working as i wouldn't be able to get back into the position of earnings that i am. At least i would get to experience what its like living at the lake property. Although i feel the 80 minute drive would taint the experience some what.itsallyellow said:
We have 4 rental properties, about a million in equity if we sold them all (capital gains would wipe out a fair chuck of that) but they make us a steady income of about £3k per month.
We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
Does a 3.6% return on a million of equity across the 4 rental properties make sense? We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
What equity do you have in your main property?
There must be something about being 38….
I’m 42 now and four years ago I spent hours and hours watching guys on YouTube living off-grid in Alaska and various places. I dreamt of the same simple life; building a cabin, living off the land, quitting my job and freelancing a bit to keep some money rolling in……the usual stuff.
I think it’s just a phase you have to push through (unless you REALLY want it). I’m back on the wheel, although I take quite a lot of time off these days. I think, like with everything, moderation is key - the answer is somewhere between the two extremes.
I’m 42 now and four years ago I spent hours and hours watching guys on YouTube living off-grid in Alaska and various places. I dreamt of the same simple life; building a cabin, living off the land, quitting my job and freelancing a bit to keep some money rolling in……the usual stuff.
I think it’s just a phase you have to push through (unless you REALLY want it). I’m back on the wheel, although I take quite a lot of time off these days. I think, like with everything, moderation is key - the answer is somewhere between the two extremes.
itsallyellow said:
Darlo74 said:
You could always give it a go for 12-18 months and see how you find it? Rent out your main house, live in the lake house and if it works for you make it permanent. If it doesn't you always then have the opportunity to move back into your main house?
Yes this is looking like the best option. The problem being i would have to stay working as i wouldn't be able to get back into the position of earnings that i am. At least i would get to experience what its like living at the lake property. Although i feel the 80 minute drive would taint the experience some what.1) the expectations of someone paying £6k/mth rent; and
2) just how much people can neglect/damage a property in 12-18 months.
Last thing I’d do is rent out a property I’d called home.
itsallyellow said:
We have 4 rental properties, about a million in equity if we sold them all (capital gains would wipe out a fair chuck of that) but they make us a steady income of about £3k per month.
We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
The BTL party ended a long time ago. Sell up and swallow the CGT. You can't hide for ever.We then have our main property, its amazing but way to large for the two of us. The running costs are large, council tax £506, Bills at around £650 on average, almost £1200 per month before we get started. Three weeks ago we had it valued for rental and the numbers that came back shocked me. The lowest from 3 estate agents was 6k. Sounds great but there is a 2k mortgage and we would pay income tax.
Why have you got a mortgage on main home and £1m in equity on BTLs? Are the BTLs mortgaged as well? Is the income stream you mentuioned gross or net?
£1,200 pcm isn't out of order for running a decent sized home these days. Yes, if you downsize to a small bungalow you'll save some money but do you really want to?
If you sell your tax free main residence what will you do with the "change" after downsizing? There's a risk you'll be shifting from an "untaxed investment" into taxed investments.
Have you been doing your ISAs religiously at £40,000 p.a? (£20k + £20k) If not, why not? The tax free returns are not to be sniffed at.
A proper look at pension would be recommended. Again, does SWMBO have a pension? If not, why not?
On balance your situation looks to me like a suitable case for talking to a competent financial adviser (IFA). There are some who post on here. Try to avoid getting sucked into an ongoing annual percentage fee. 1% doesn't sound much but after 25 years a quarter of your money has disappeared into somebody else's pocket....
bennno said:
Does a 3.6% return on a million of equity across the 4 rental properties make sense?
What equity do you have in your main property?
I've just quoted benno to emphasise what a fundamental issue this is. We're both saying the same thing. Get the big numbers right and everything else should be able to fall into place.What equity do you have in your main property?
Speaking from my point of view, I'd be bored out of my mind within five years. I'd need something on the go to give me a focus. 38 isn't particularly old - still in your prime really.
A big change is good but I recommend a plan that involves something else to get your teeth in to, albeit voluntarily.
A big change is good but I recommend a plan that involves something else to get your teeth in to, albeit voluntarily.
Consider the tax implications on the cgt relief from selling your home in the future if you have rented it out. If you are sitting on a paper profit comparing build to market value you could end up owing cgt in your home instead of it being cgt exempt if you didn’t rent it out at all.
Scenario:
- you owned the home for 5 years and then decide to rent it for 18 Mths and then sell after two years (so rented for 18mths of 7 year ownership). You make a paper profit of £1m. You will now be in the situation of owing material tax on the % of time you rented the house out. I didn’t do the exact tax calc but you could wipe out the rental income in this scenario. The calculation won’t consider that the paper profit happened prior to renting, it’s a crude % of time calculation.
Scenario:
- you owned the home for 5 years and then decide to rent it for 18 Mths and then sell after two years (so rented for 18mths of 7 year ownership). You make a paper profit of £1m. You will now be in the situation of owing material tax on the % of time you rented the house out. I didn’t do the exact tax calc but you could wipe out the rental income in this scenario. The calculation won’t consider that the paper profit happened prior to renting, it’s a crude % of time calculation.
itsallyellow said:
Were in the position now where we want to make a lifestyle change, can anyone provide any thoughts on the below. I think we have an out from the big hamster wheel but not sure if its realistic.......
Both me and the Mrs are 38 years old, no kids or anything tying us down apart from houses. Have both worked hard forever and to be fair have played hard spending most of what i have earned on racing and toys. Now were getting old and i think i just want a more simple life (but do i really)
This could be the health section rather than finance. As someone who is also in mid-life I find it fascinating to read about both the psychological studies but also objectively (MRI and DNA database) studies on the topic, but which ever approach you take, it something that's been recognised in human society for a long time.Both me and the Mrs are 38 years old, no kids or anything tying us down apart from houses. Have both worked hard forever and to be fair have played hard spending most of what i have earned on racing and toys. Now were getting old and i think i just want a more simple life (but do i really)
https://royalsocietypublishing.org/doi/10.1098/rsn...
https://www.nature.com/articles/s42003-021-02206-x
I asked Copilot to summarise the two articles and you either find the conclusion depressing or interesting......
The two articles together offer a rich, complementary view of the midlife experience: Jackson s piece traces the cultural invention and evolution of the "midlife crisis," arguing that it s less a biological inevitability and more a social narrative shaped by post-war demographic shifts and consumer culture. In contrast, Kiesow et al. s neuroscience study dives into the biology of midlife, showing that brain regions like the medial prefrontal cortex structurally adapt in ways influenced by lifestyle traits especially social connection, personality, and socioeconomic status. Together, they suggest that midlife isn t just a time of crisis but a dynamic period of neurological and cultural reinvention.
If you really start looking into it your realise money, cars, houses, stuff have little mention in academic theory as either enablers or solutions. Self actualization is something that Socrates mentions and follow through to this day. But the on earth does it mean??? i have no idea.
Given it's 2025 I thought I ask Ai..... reassuringly it demonstrates just how bad Ai is at giving useful actually advice. If you followed it's suggestions of meeting a new women, forgetting about all your current commitments in life, and than legging it out of the house all the time.....I suspect the divorce settlement will force you to focus on finances like it or not
.Good luck with deciding what to do and learning to adapt to physical changes in the brain, sadly I suspect what ever you do with finances isnt going to be answer you are looking for. But at the very least know the rest of us are in the same position, but with alot less material goods/financial prowess.
omniflow said:
Could you take a sabbatical for 3 - 6 months? That should help you figure out how important work is to you.
I did just that when I was mid 30's. Sabbatical was standard in our Swiss office, but not in London so I was crapping myself for the meeting with my boss. Blurted out my request for 6 months sabbatical to my boss who surprisingly inform me he just did the same too (he was going to NY to attend an acting / theatre course!!).
Had the best time of my life back/flashpacking on a RTW trip to Vietnam, NZ, Australia and Vegas! Apart from a fabulous time, I realised "work" wasn't the main driver and I wanted a better life balance. On my return to work, I began selling my Company shares while ceasing all further share option contributions as I was planning my exit. One of the best financial decision of my life as I sold up almost all my holdings except for a few £'000 just before 2008....I remained in my industry for a further decade, but I eventually left for good at 47. Haven't done a stroke of work since then (apart from volunteering and parenting my kids)!!!
Thanks for all the replies. Very interesting.
To pick up on a few points raised.
Yes when i typed this up yesterday i realised how pathetic a 3.6% return is with that much equity. However with the CGT im not sure how to exit. That coupled with the fact that house sales arn't exactly at a peak. One of them is only let as i couldn't sell it quick enough when we built it. Not really sure what other options i have in the short term.
The main property has approx 1.2m of equity.
The main house has a mortgage as does all of the BTL's. When i did the development i borrowed against the properties rather than a commercial loan. Then one hasn't sold hence i still have some of the debt.
Embarrassingly neither of us have eve done an ISA. We haven't ever explored anyways of saving on our PAYE tax. Agree about an IFA being a good idea. Hadn't really thought about it before. I didn't think we had enough complication in our finances, maybe i was wrong.
Also agree about the medical section comment, a very interesting post!
Unfortunately a sabbatical would not be possible.
Its amazing the power of writing a situation down. Up until i typed this yesterday i didn't realise half the issues / opportunities we have. I've just been bumbling along not putting enough thought into any of it.
We don't have any children and are not planing to so don't need to worry about what we leave behind selfishly. I want to try and enjoy my next 12 years before 50 rather than getting there as a burnt out wreck. Yes we are active and healthy but we certainly drink our stress away and im on 4 different medications for stress related blood pressure issues. Not that im that bothered by that as I know i could easily fix that with lifestyle change.
To pick up on a few points raised.
Yes when i typed this up yesterday i realised how pathetic a 3.6% return is with that much equity. However with the CGT im not sure how to exit. That coupled with the fact that house sales arn't exactly at a peak. One of them is only let as i couldn't sell it quick enough when we built it. Not really sure what other options i have in the short term.
The main property has approx 1.2m of equity.
The main house has a mortgage as does all of the BTL's. When i did the development i borrowed against the properties rather than a commercial loan. Then one hasn't sold hence i still have some of the debt.
Embarrassingly neither of us have eve done an ISA. We haven't ever explored anyways of saving on our PAYE tax. Agree about an IFA being a good idea. Hadn't really thought about it before. I didn't think we had enough complication in our finances, maybe i was wrong.
Also agree about the medical section comment, a very interesting post!
Unfortunately a sabbatical would not be possible.
Its amazing the power of writing a situation down. Up until i typed this yesterday i didn't realise half the issues / opportunities we have. I've just been bumbling along not putting enough thought into any of it.
We don't have any children and are not planing to so don't need to worry about what we leave behind selfishly. I want to try and enjoy my next 12 years before 50 rather than getting there as a burnt out wreck. Yes we are active and healthy but we certainly drink our stress away and im on 4 different medications for stress related blood pressure issues. Not that im that bothered by that as I know i could easily fix that with lifestyle change.
Your last paragraph sounds much more important than you re giving it credit for.
I think you can easily sort all of this situation and probably need a little guidance on where and how to invest the proceeds. Not sure I would be going from one extreme to the other (big house to caravan on lake) when there are many in betweens.
I think you can easily sort all of this situation and probably need a little guidance on where and how to invest the proceeds. Not sure I would be going from one extreme to the other (big house to caravan on lake) when there are many in betweens.
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