Downsizing - had enough of travelling

Downsizing__for_sanity

Hello all,

Despite lurking around the forums for a few months, I have decided that I need to take my moneysaving research a step further and actually start to post. I'm looking for some advice on a big life change...

My situation:

My husband (of 6 months!) and I are both in the Armed Forces and so for obvious reasons (security and career) I don't want to give out too much personal information. My husband and I have been serving separately almost since we met, and since before we married, I was posted to now be just over 550 miles apart. We have our own house, which my husband lives in, and I do on the weekends and holidays I can get, but I recently worked out that we've only spent 12 days together since we married, excluding the honeymoon!

We've been thinking for a while now about one of us leaving what is a very well-paid career, and I've decided that I'm going to leave to study medicine at University, something I’ve been thinking about for a long time. Our problem is finance - currently, the travelling up and down 2x per month (too far to drive - have to fly) combined with airport parking, petrol, running costs of 2 cars etc means that I reckon I'm more or less working for my own satisfaction! If I give you some figures, would the more financially adept of you help me balance the books?

We’re doing all we can to reduce our outgoings already, in the 6 months or so before I leave. We could get rid of my car, currently worth about £3,500 according to Exchange & Mart, but this wouldn’t pay off the loan completely - we’d still be making payments of £233/month (I don’t know when the loan is paid off but 2 years time I think). If we could comfortably manage the cost, I think we’d keep the car for flexibility. The loan (AA) offers no advantage to paying it off early.

I pay a RBOS loan of £250/month, (credit cards) finishing Jan 07.
I have an ISA and other savings, combined at about £2500. We also have a life of balance deal at 7.9% with a RBOS credit card, £3290.

Mortgage is £737, council tax £80, insurance £30, life cover £50 (LTA, CI)
We could sell the house at a little more than we paid for it a year ago, and move into married quarters, but at about £500 rent, I feel we’d lose out long term for what is only £50 a week difference.

My husband’s income will go up on promotion in Nov to £2700, so this, with the reduction in flights etc (£370 min per month) will make up for about half of my “lost” income.

We’re doing the obvious like switching utility suppliers and I’ll have more time to grow veg in our garden. We’re also getting a couple of chickens!

My questions – if I’ve only worked 6 months of this financial year, can I claim back any tax/NI? Also, I don’t want to commit to more debt, but if we need to move debts around or change the structure, we need to do it while I can prove an income. What would be the best options for this?

As a fully qualified GP (in 9 years time) I would be earning around £90,000 in today’s money so the prospect of some debt doesn’t worry me too much. I have a first degree and have paid off all my student loans. I know I might be eligible for a Career Development Loan but have no idea about the rates and terms of these.

Any ideas how can I manage to live as a student again? I’ll have more time, but less money!


Income now – me £2200, husband £2100

Major Outgoings
- Mortgage £737
- House ins £30
- Life Assurance £50 (CI & LTA)
- Groceries (home) £160
- Flights/car parking/petrol to/from airport - £370 min – seasonal variation
- Food while I am at work (Mess, so no choice about this) £75
- Mess bill £80 ish (This will disappear)
- My car - £233 loan, £35 insurance + MOT, tax etc
- Gas/elec £50 direct debit
- And lots of other things that I can’t remember!

I put £150 in savings each month from my salary as well (pension payments currently covered by MOD).

Debt_Free_Chick

And lots of other things that I can’t remember!

tut, tut

Seriously ... you need to know exactly where your money goes. I also think you need two budgets - one based on "carrying on as we are" and a separate one based on "what if I study".

With the second one, you just strip out the things on the first one that wouldn't apply such as flights, parking and all the expenses associated with your current way of life. Of course, you'd need to strip out your income too.

Do this first and account for all the existing debt repayments. This will show you whether you could manage just on your husband's income. If not, then you'll need to economise somewhere - especially if you can't manage to live and repay the current debts just on his income.

I think you need to do this before you can make a decision about giving up work, before you look at switching existing debts around and before you decide whether you can afford a CDL.

Can I suggest you post the second one here if it doesn't balance?

Cheers

robindunne1

You should be able to claim some tax back, but it may not be too much as it is close to the end of the financial year. It would have been much more if you stopped working in a couple of months time when you would of been able to use your entire tax allowance and effectively work for a couple of months tax free.

downandout!

robindunne1,

I think you need to set out a detailed budget with everything. Use the one provided on this site.

£2700 is an extremely good wage and with some trimming here and there I am sure you will not need to contemplate the "prospect of some debt".

I am pretty positive you can claim back Tax but I'm not sure about NI.

I think you should maybe consider using the savings to pay a large chunk of either your loan or the credit card from RBOS.

Downsizing__for_sanity

To clarify, if I put in my papers in May, I should be out by Nov. I'll also try to save some leave so we can have an extra month of wages once I've moved home.

Budget will be on way asap...

Debt_Free_Chick

if I’ve only worked 6 months of this financial year, can I claim back any tax/NI?

I missed this when I first replied. The answer is that there is no automatic refund of tax & NI if you only work part of the year. You only get a refund if you overpay. Overpaying NI is unlikely, unless in that 6 months you earned more than the NI upper earnings limit which is about £30,000 (from memory).

Tax ... there may well be small refund, but I wouldn't expect much, if at all. Essentially, your tax code gives you 1/12th of your personal allowance each month. After 6 months, you've had half your personal allowance, set against half your pay. If you don't work for the rest of the tax year, you should end up with your 100% of that year's personal allowance set against half a year's pay. In other words, you still get the whole of your personal allowance to set against whatever you earned in that tax year.

So you will be owed tax on half your personal allowance. Call it 22% of £2,000 so roughly £400.

HTH

downandout!

When would you begin studying? If it is around Aug 06 then you could possibly look a getting a job between Nov and Aug which shouldn't be too hard for someone with your qualifications.

I think your main aim is obviously to have the smallest amount of debt possible for when you leave the Armed Forces. I would therefore throw the £150 savings each month with everything else you can muster up at RBOS debts. Also could you maybe think about cutting down on your home visits in the knowledge that you are going to be home for good soon, thus freeing the extra cash for debt repayment?

fairenoughclough

Downsizing__for_sanity wrote:

To clarify, if I put in my papers in May, I should be out by Nov. I'll also try to save some leave so we can have an extra month of wages once I've moved home.

Budget will be on way asap...

When you say "if I put in my papers in May," do you mean buy yourself out ?
How many more years are you signed up to do ?
If it's a short time maybe delay leaving and take advantage of resettlement training allowances in terms of time, living allowances and still getting paid.

When I left the RAF 20 years ago, my resettlement living allowances paid for my rent for a year and even though we both left on the same day my official leaving date was 12 weeks later than a colleague who bought himself out!

I assume you've both asked your bosses if there's any chance of a posting nearer each other.
Do you know anybody that's done the GP training ? I've heard it's incredibly time-intensive and so you'll still hardly see each other.
Can you not do the medical training whilst still in the forces ?

We hear about the forces downsizing, any chance of redundancy ?

Downsizing__for_sanity

"I assume you've both asked your bosses if there's any chance of a posting nearer each other."

What do you think?!

"Do you know anybody that's done the GP training ?"

Yes lots! I've done some unofficial work experience in various jobs.

"I've heard it's incredibly time-intensive and so you'll still hardly see each other."

Yes but we'll at least be living together - so we'll see each other more often than 4 days per month!

"Can you not do the medical training whilst still in the forces ?"
Tried to persuade them!

"We hear about the forces downsizing, any chance of redundancy ?"
Unfortunately not in either of our trades - we're both in undermanned trades.

By the way, you don't have to buy yourself out these days. The Human Rights Act changed all that. However, you do lose some or all entitlement to pensions, resettlement etc depending on the time you've been in.

Basically, I could walk away in a few months, with nothing, but I want to do it on my terms, with as much as I'm entitled to.

Thanks for all your help so far everybody though!

Spendless

Hi Downsizing

This is a very personal question and don't feel obliged to answer it, but you say you've only been married 6 months.

Have you given any thought to if and when you want children, and if you do would you be able to afford them and study?

Best wishes

Galtizz

Downsizing__for_sanity wrote:

I pay a RBOS loan of £250/month, (credit cards) finishing Jan 07.
I have an ISA and other savings, combined at about £2500. We also have a life of balance deal at 7.9% with a RBOS credit card, £3290.

Have a good read of THIS link and particulary take note of this bit:

MSE_Martin wrote:

<LI class=MsoNormal style="MARGIN: 0cm 0cm 0pt; tab-stops: list 36.0pt; mso-list: l0 level1 lfo1">Use savings: The interest paid on savings is usually far less than interest charged on borrowing, so paying off debts with savings makes sense. Traditional logic does say always have an ‘emergency cash fund’. I disagree.

I know it sounds scary, but it makes sense really, if you think about it. I used a savings accounts to pay of a loan and just started again, putting the amount I usually paid off for the loan in the savings account and it soon built up again to a nice healthy figure, I was actually saving more in the end.

There are also links to how to be a credit card tart (this is moving around and getting the best deal everytime) I'm sure you'll find a much better deal than 7.9% if you have the energy to move cards every 6 months or so.

Lots of couples manage to live on £2100 (we do), it might not be a lavish lifestyle (but I guess you're so busy you're not use to going out to posh resturaunts and going on expensive holidays anyway) but I'm sure you'll find it a better quality of life.

If you are worried about it come over to the Old style board, lots of people on there have downsized either through choice or circumstances, there are people on there who could advise you on feeding a family of 4 on £20 a week! You'll get lots of advise on home budgeting (groceries etc rather than credit cards) and how to save lots of money in those areas.

Lastly, good luck in your downsizing challenge