Challenge of a lifetime!

cotswoldaccountant

OK I have reviewed my other two insurance policies to see if we can save money on them, or indeed if we still need them.

The first, which is costing us £40 per month, is a Family and Personal Income Plan. This gives us an income of £2,832 per month if one of us dies or is diagnosed with a terminal illness.

The other is an Income Protection policy for OH, and this costs £61.19 per month. This will pay us £2,666 per month after the first 26 weeks of OH being unable to work due to illness or accident. There are a lot of restrictions covering when the policy will pay out, and I do feel that because of the nature of OH's business, working through his own company, the insurer will be sure to find a good reason why they cannot pay out!

I am inclined to cancel both of these policies. Of course we would keep the decreasing term assurance policy which pays off the mortgage if either of us dies.

When we took out the policies, I hadn't started my business and we did not have our rental property. We would have found it difficult to make ends meet if the worst happened to OH. But now, between them, these other income streams generate sufficient cash to pay day to day bills not counting the mortgage (which would have been paid off under the decreasing term assurance policy if OH died). If I was unfortunate enough to die, OH earns enough to pay for a nanny to help look after the children so that he could continue to earn enough money to support the family. So the Family and Personal Income plan seems a bit surplus to requirements.

I don't like the Income Protection policy - it is very expensive, and because our new mortgage will be an Offset, we will quickly build up a large buffer which we can resort to using if the need arose and OH could not work for 26 weeks. We would still have my income, lodgers' rent and the rental income to pay day to day bills too.

I'm sure that if the worst happened, we'd be really grateful to have the extra money from these policies coming in - but insurance for insurance's sake is not something I am keen on. I haven't quite decided whether I am being sensible in thinking of cancelling these policies, or whether we should we err on the side of caution and keep them both. OH is away on business at the moment, but I think this is something to discuss when he returns!

Of course I am also considering the potential overpayment of >£100 per month from cancelling the policies...

Tilly_MFW_in_6_YRS

Hi, Mr T and I cancelled ours after a lot of discussion. We both had cover and it was about £170 a month between us. It's not an easy decision though and took us a while. What swung it in the end was the number of get out clauses, which reduced or prevented payout. Ridiculous.

Good luck with your decision

Tilly x

Heffi1

Hi Cotswoldaccountant,

That is a huge mortgage, I wish you good luck in getting rid of it as fast as you can, I have subscribed so I can follow your journey along the way.

cotswoldaccountant

Just checked bank account to see if there is anything there to overpay - I'm getting impatient now I have started my diary! Sadly not - the middle of the month always seems like a bit of a slow time for getting money in. All that has arrived is £3.07 from paypal for an ebay item, but I have just donated to a friend on JustGiving so that will cancel that out!

Still, only a couple of days till new lodger moves in and then I'll be able to OP lodger rent.

I decided recently that I needed a strategy to keep up with the overpayments - until now, I'd been OPing anything left in the bank account at the end of the month. Not a good idea, as there was always less left than I had hoped! New strategy is to keep an amount in the current account at the beginning of the month as that month's spending budget (after allowing for direct debits etc), and OP anything else that comes in. It is working well, and forcing me to be more frugal to keep on budget with my monthly "allowance". I am an impatient OP-er, and like to make lots of OPs where possible, not just one a month. Fortunately, our incomes are quite "bitty", with different payments coming in at different times of the month - lodger rent, income from our rental property, payments for invoices for my accountancy work etc. Topped up with the occasional ebay item etc!

Next challenge will be to reduce my monthly allowance, which I think is WAY too high at the moment, so that I have more to OP each month! Any tips on how to do that would be much appreciated - outgoings for a family of 6, with one car, seem ludicrously expensive at the moment!

bodmil

I always get impatient that things only really happen once a month! And I'm also trying to make my OPs an up front payment and live off a fixed allowance but it is hard, practice and lots of spreadsheets make perfect.
I can't help with ideas to cut down spending for a big household, it's just me here but good luck with your journey!

shala_moo

What an amazing acheivement you've already made with reducing your mortgage! I'll be following you on the rest of your journey..

Having a spending diary for a while may help you identify some areas that you could cut back on.

Grocery spends are my worst habit.. do you spend much for a family of 6?

cotswoldaccountant

Thanks for the support shala_moo! I have kept a spending diary for a month at a time on occasion, and food is by far the biggest outgoing, so I must bring it down as it could make a big difference to how much I can OP.

I have just had a look at my spending diary and the average we spent on food/groceries each month for the months I kept one was £571. I know a family of 6 must consume some food, but my children are small so I think this is a big area of overspending. Having said that, I never buy processed food and always make meals from scratch - there is no point buying ready meals as they are not big enough to feed us! I am good at baking and can make lovely puddings and cakes for little money. I come away from the supermarket with a trolley full of food, none of which I consider to be an extravagance or excessive. I buy own brand/value/economy brands where I think there is little difference to branded items, e.g. cereal, tinned tomatoes, pasta etc. OH is even worse - I always bemoan him when he spends £150 in the supermarket and then returns without even the smallest treat of a bar of chocolate!

At the moment my strategy is: do a supermarket shop, then make it last as long as possible before going shopping again, with extra milk/fruit/veg bought in the week as needed.

I think I need to change to meal planning though. I have wanted to for ages but, while I like cooking, I don't have much time to sit down and think about the meals for the week, and often a meal is planned half an hour before we eat it! Ideally, I'd like to halve the amount of money we spend on food - others on this forum seem to make lovely meals while spending a fraction of the money that we do. I don't really know where to start, though!

Spiggle

Hi cotswoldaccountant,

Amazing target you have there! Your journey will be fascinating to watch after the brilliant achievement you've already had.

I just wanted to suggest that you may want to check out the monthly grocery challenges on the Old Style Boards on here. We were spending a fortune a few years back and joining that was the best thing I ever did. And just like this board, the pepole on there are super friendly and helpful. Also you'll find long lists of recipes at the start of each month's challenge to help with menu planning. The current month will be a sticky on the OS board.

Good luck, I look forward to following your journey.

All the best,
Spigs

Tilly_MFW_in_6_YRS

Ooohh CA, I love menu planning. Mindset change required. I look on it as a time out with my cookery books, cup of tea and lap top :). The biggest switch is changing from "it's a chore".

We all have to do what works for each of us, but for me a Sunday afternoon towards the end of the month, will find me surrounded by books, normally different ones as we LOVE cooking, and this encourages loads of variation.

I can then work around nights when I know kids are out really early and little time to cook, or Mr T or I will be travelling, and plan appropriately. I have a spreadsheet with a delightful variety of columns, so that I can note down anything I know I need to buy, or when to take something out of the freezer.

We do vary it though as social plans change and I switch around, but this has saved me loads of £ and very, very rarely do I have any waste.

Sorry, menus, food, cooking get me very :j:j:j

Tilly x

cotswoldaccountant

Thanks Spiggle! That is quite a set of acronyms you have in your signature! I like the sound of the recipe ideas and grocery challenge - will have to have a look at that.

Tilly, I love the sound of an afternoon surrounded by cookery books! I have quite a lot, but actually what I get most ideas from is a big folder of recipes cut out of old food magazines - when my pile of magazines got too big, I cut out all the recipes I liked! We have an Aga so I am always looking for new ways to get the best out of it - I love it, but cooking methods are different to conventional ovens and some recipes take a little planning to work well in an Aga.

CA