Saving for our 1st house - help appreciated :)

HisDoris

Hi all

This is my first ever thread, I have been a lurker for quite some time but now after spending alot of time reading other peoples diarys I thought I would start my own in hope that it will help with the savings!

A little about my savings and me;
I'm 21 and have been with my OH who is 22 for almost 6years - We both work full time, I earn £15k a year and my OH earns £24k a year.

Last year we decided we'd start saving for a mortgage deposit - we managed to save over £4k between us but last month we decided we wanted to rent somewhere first just to see how we manage bills. We decided that we'd use our savings to pay our deposit and buy the furniture for the flat - we spent £3k and have put £1k back into savings.

My monthly Outgoings are;
£380 - Rent and bills (gas and elec, council tax, tv licence, virgin and water incl)
£25 Contract Mobile (ends June 2012)
£25 Gym membership (ends Dec 2011)
£45.60 Public transport for work
£60 Food Shopping (I get my breakfast and lunch at work so only have tea and weekends to pay for )
£120 'My Money' to spend on what I like when I like

My net pay monthly is roughly £1040 so therefore after everything is paid I should have £384.40 Left. At the moment I am paying £70 a week into savings working out at £303.33 a month.

My OH has more commitments with money than me;
£330 Rent and Bills
£225 Loan (0% interest - Ends April 2012)
£112 Loan (Ends August 2011)
£35 Phone Contract (Ends January 2012)
£180 Petrol Money
£150 His money to do as and what he pleases
£25 Contents & Life Insurance
£35 Broadband Dongle (Ends Dec 2011)
His net monthly pay is roughly £1350 so therefore after everything is paid he should have £258 left. At the moment he is putting £200 a month into savings although this will increase to £300 a month when one of his loans end in August.

So with the £1,000 we put back into savings we should have £5,375 at the end of December 2011.

We are aiming to have £15k in savings by December 2012. Do you think this is realistic?

Do you have any tips that you think may help us save some more?

Sorry this thread seems to go on forever! I will try to update as often as possible to let you know where we are up to with our savings and hopefully I'll have lots of help and advice to help us save even more! :j

Thanks for taking the time to read this ...

Doris (Not my real name before people judge - a 'pet name' as such! lol)

evenasus

It's many years ago, since myself & fiance were saving for a house depoist plus enough for basic furniture.

We did not have any money that we called 'My Money' to spend on what I like when I like.
Once we were engaged (aged 19 & 20) we saved every single penny we could for the next three years.

If you're really wanting to buy a house, then I would suggest you forego the 'my money' attitude.
You really will need to save every penny you can.

The time for saving for a house deposit, is when you're young and still living with your respective parents, before you marry and have children.

An alien concept today, I know.
More's the pity

HisDoris

I know that we probably shouldnt have a pot for 'my money' but I dont want to feel like I have no money to myself after working all month and that money will be used for things such as birthdays too - my workplace go out quite alot and I dont want to be having to say 'no' to their offers of going out for something to eat all the time - I want to still feel like I have a bit of a social life whilst saving.

We have bought quite alot of furniture for the flat that we are in at the moment with the view of moving the majority of it into our first bought property so that we dont have to find more money for the likes of settees and things.

How long do you think it 'should' take to save up £15k on our wages and looking at our outgoings that NEED to go out? Just out of curiosity - I feel like 18months is a long time but I think thats just me being someone that hates waiting for things.

Thanks for your input

Mr_Dudley

HisDoris wrote: »

Hi all

My monthly Outgoings are;
£370 - Rent and bills (gas and elec, council tax, tv licence, virgin and water incl)
£30 Contract Mobile (ends June 2012)
£25 Gym membership (ends Dec 2011)
£60 Public transport for work
£60 Cigarettes (I know this is bad but one day soon I will quit! )
£60 Food Shopping (I get my breakfast and lunch at work so only have tea and weekends to pay for )
£120 'My Money' to spend on what I like when I like

My net pay monthly is roughly £1040 so therefore after everything is paid I should have £315 Left. At the moment I am paying £65 a week into savings working out at £281 a month.

My partner has more commitments with money than me;
£330 Rent and Bills
£225 Loan (0% interest - Ends April 2012)
£112 Loan (Ends August 2011)
£35 Phone Contract (Ends January 2012)
£180 Petrol Money
£150 His money to do as and what he pleases
£35 Contents & Life Insurance
£35 Broadband Dongle (Need to look into when this ends!)


Doris

Hi Doris

Personally I would use the money you have saved to pay off the loans immediately, even the 0% one then you have a clean slate. I'm sure there are benefits for not paying off the 0% one but they are miniscule and if you paid it off asap then I figure you will be saving almost £620 a month between you - almost £7500 a year!

Once you start saving significant chunks like this then you will quickly see your savings rise. This way it becomes addictive and you save even more!

I quit smoking 9 years ago. I was on 30 a day. I just bit the bullet and stopped and then learned to translate the cravings into mental strength not to smoke again. After about 2 weeks the cravings fade. After a year you will NEVER smoke again!

You need to be mentally strong - DO NOT use any nicotine substitutes etc as you will never quit that way.

Regards Mr D

HisDoris

Hi Mr D

We have thought about paying of the loans with the savings but the smaller loan is almost finished and we're a little wary about the 'early payment charges' As we have had no loans previous we arent really totally clear on how it works if you pay them off early. As for the £225 a month loan, this is a loan from the OH's grandparents so we know that nothing is going to change within the terms or anything and we dont yet have enough savings to pay it all off immediately so we were thinking about just wating until Dec to pay this off - I kind of have the saving bug already and dont want to pay anything out that we dont have to due to the fact I always want to see a positive balance in the savings account - I think it makes me more determined to save if this makes sense?

I'm hoping to give up smoking very soon! (although I do find myself keep saying that!) ... Theres a few people in work starting a 'quit' group at the start of June so hoping to join that - I do not want any of the substitutes though because I'm the same as you and dont think they will help really but I do think the support of other people going through the same will help me :-).

Thanks for your advice

IanIan

Where are you saving the cash? This is important because you may wish to have an ISA for each of you, then when that is full, a regular savings account with, say, Teachers Building Society at 4%, will give a good return.

I use an ISA and regular savings accounts, and they work well for me. Although most of my cash is going on school fees!

Good luck!

HisDoris

We both have ISA's with halifax with the 3.5% rate, We are attempting to get the £5,500 allowance in one before using another so that we can get the full interest - Is this the way we should be doing it?

I know you CAN get higher interest rates than this but i also believe that to get higher interest rates you normally have to get an account that you cant touch for a certain amount of time? And I know thats normally atleast 2 years to get anything decent and unfortuantely we will be wanting the money out in less than 2 years time.

Thanks

edinburgher

Hi Doris

Re. loans - you say that OH is worried about early repayment charges - has he ever actually asked whether these exist? Only one way to find out!

Smoking - quit smoking and you'll save roughly £900 (almost 10% of your target) by next December - no time like the present (to stop)

My money - I'm also saving for a deposit and there's nothing wrong with spending a small amount of cash to make life enjoyable in the short term. In real terms, it's less than 10% of your wage and this seems perfectly reasonable. Unfortunately a lot of people think that it's one or the other (mortgage or fun), can't say I agree

Target - If you have £5k by the end of 2011 and are aiming for £15k by the end of 2012, you won't make it based on your current savings rate. Try playing with the MSE savings calculator to see how much you need to save

Are you looking to buy in 2012? Have you allowed for legal fees etc.? If you haven't already got it, the MSE mortgage guide is well worth a look

We both have ISA's with halifax with the 3.5% rate, We are attempting to get the £5,500 allowance in one before using another so that we can get the full interest - Is this the way we should be doing it?

It doesn't really matter where the money sits, as long as you have as much of it tucked away at the highest rate you can get for as long as you can.

Have you looked at the Santander First Home Saver? It currently pays 4% after tax (better than your ISA) and is designed for FTBs. You can only withdraw money when you close the account and you're expected to take a mortgage interview with Santander. Still, wouldn't hurt to speak to them and see if they can provide a mortgage that suits you? You can open the acc in branch (avoiding call centres) with up to £5k and pay in £100-300/mth from then on in.

SunnySusie

I don't have any comment on the specifics of your situation but just wanted to say best of luck and share my own experience which I hope will encourage.

I bought my first place with partner at the age of 28. From the moment I left uni I saved as much as I could, paid off my loans, and built up around 30k for a deposit. My partner was able to contribute a similar amount (although not as much :P!).

It took years but by starting straight away we were able to have the deposit ready when we needed and now have the home we wanted with our new baby.

Contrast with other friends of ours who decided not to save and are now wondering how the hell they are going to provide a house for their new families. Some of our friends spent as much on their wedding! I get the argument you only get married once (really?!) but you only get one family home too...

This approach isn't right for everyone but if building solid foundation for your future family is important then stick with it. I haven't been on expensive holidays, never had a mobile phone contract, don't drive, etc etc. That said we've enjoyed going to concerts, nights in with a bottle of bubbly (still cheaper than a night in the pub!), etc, good to have a balance!

And now we have the house, the family, affordable mortgage, etc. I figure having a more frugal first 10 years of adult life has been worth as I now have a more enjoyable 30 years ahead. I hope!!

Good luck.

HisDoris

The smoking is going to stop ASAP - Spoken to one of my office managers to find out when course is going to start and shes going to chase it up - hopefully by the end of the month it will have started!

I dont believe in saving every single penny I earn as I do believe you should have some money to yourself and I dont think I have given myself a huge amount out of my wages to spend on myself. If needs be I suppose I could stop giving myself 'me' money for a bit as I do have a lot of things booked up and paid for this year as in concerts and stuff so I have enough to make me feel like I have plenty to do without going out all the time.

I'm hoping the savings will go up next year, I am in the TA and hopefully will start making a little bit extra from that and my OH will be able to start paying in an extra £225 a month when the loan ends in April 2012 giving us an extra £1800. And I also hope to have had a payrise by then! (Fingers crossed of course!) So there is a few factors that will have changed by next year (the stopping smoking one too hopefully :-D) hopefully meaning we'll save more next year than this.

Thanks for the links Edinburger too - I'll have a look into these as all the working out at the top is just my 'estimates' if you like.

Sunnysusie - I dont go out a great deal - well atleast not as much as most 21 year olds! As I am wanting to be able to say the same kind of stuff as you have said in 5/6 years time . I'm trying my best at the saving and dont mind if it takes us until 2013 to get the deposit together for a mortgage - after all we'll still only be 23 and 24 so still relitavely young for a mortgage.

Thanks for sharing your experience - It really does help when you know it'll be worth it in the end!

Thanks for your help too Edinburger - I'm going to have a look at the links now

Simon11

Open a Santander First Home saver account, 5% or 4% after tax

Invest up to £5,000 up front then invest between 100-300 a month to get that rate.

I agree completly with the above posters, being young at home is the best way to save:)

I'm nearly reach the finishing flag! Have £38k saved up, hopefully have around £45k by september by which I should be 3 months into a full time job after university

A little bonus was winning $2,000 in winning 4 poker tournaments in a row which went straight into the saving pot! Not that i recomed poker for making money, breaking even atm with the $2k bonus. Also the tournments cost £1.30 so kinda MSE....*hides*

Regarding cutting back, its always important to spend money on what you enjoy(Only have one chance to enjoy yourself). I hardly buy any clothes, have silly contact mobile or spend £50+ on a night out. I enjoy going on at least 2 holidays a year, but MSE them. Mates going on a lad holiday expecting to spend £1k for a week holiday getting drunk, whereas I'll go on a 12 day holiday for £450 and still have a wicked time.