10k in x2 ISA's, what shall we do with it?

annon24

Hi,

I am new to the forum, but have always known about this place, and it has helped me a lot for years now. It has always been a great go to place for help and information mixed with a variety of peoples views and opinions.
I'm not one to message in forums but I always like to have a look in now and then.

Sorry if I have placed this in the wrong section.

Anyway I was after some advice, and peoples opinions on what is our next step to really help ourselves out.

I'd like to start with my wife and I are both young. (25)
We have been living together for about 6 years, we were married a year and a half ago. And are just starting to really enjoy like again after a horrid 3 years of heartache, pain and suffering. I wont develop too much into that, but basically, I went into bankruptcy, (through no fault of my own I must add, but this isn't what the help is for so I wont go into it) I was discharged 6 months ago.

My wife stayed out of bankruptcy, but it wasn't easy to say the least!

We are now out the other end of it all, and although I didn't go into bankruptcy due to any over spending, or credit card debts, (it was business and family related) we have a very firm grip on our savings, spending, and general money.

So this leaves us in this position,

We are renting, therefore have bills to pay.
We are both working and earning (not a lot though, probably about £35 - £40K between us before deductibles. We have both started to pay into our pension.
We have 1 car, both of us insured.
We have 1 motorbike for myself to get about and to save car petrol costs.

Our monthly outgoing cost is give or take £1K
Split down it is;
£575 Rent
£30 broadband
£35 x2 mobile phones
£30 water
£55 Electricity
£100 Council Tax
£150 - £200 food and petrol

We both earn after tax give or take £2K.

That leaves us £1k, and we usually end up saving between £500 - £700 of that £1K each month after we have bought extras like clothes, or paid for other costs such as dentist, or nights out, dvds, that sort of thing. The things that make you try to enjoy life after spending everything on else bills.

So to make it easier I'll say we save £500 each month. Which is probably about right really, as we somehow always end up spending or going over more than I plan or would like. I set ourselves mini goals to try and reach in 6 months time, and we have done pretty well at hitting them.
The problem though this month is that we had an unexpected costs of our car breaking. Which has set us back £400.

How do people manage unexpected costs?

This happened just after we managed to celebrate hitting our £10K in savings and it's like another step in the wrong direction after doing so well.

So we feel we have done pretty well with getting to the 10K saved, and I was hoping to really push in some overtime and be able to have £15k in savings by September, but this seems very unlikely now

What would you fine people suggest we could do with our 10K in savings to make it work harder and earn us more? At the moment we have it spread across 2 ISA's in each of our names. Earning roughly £15 interest per month in each one.

Where do we go from here? It is going to be years before a bank will take us seriously in helping us buy a house because of my bankruptcy, do we carry on saving anyway?

What are we saving for if we can't buy a house?

Any suggestions would be much appreciated.

Just to add in here, because of it all, and because it feels like we're struggling still even though we are able to save and put money by each month. We have put off having any children, it feels impossible to be able to get a bigger house with bigger costs, and obviously costs of raising a child on our income. But we are both un-skilled in pretty standard jobs. So we have nowhere to go.
We have thought about training, but that costs money which we need to pay the bills with. Not only that but the jobs market in any industry isn't really booming at the moment.

Do we just carry on plodding along and that is it?

Sorry for the long message, I hope people kind of get a gist of what I'm asking,

Just a quick re-cap;
£10K in savings, we have no debt (no loans, no outstanding credit cards, nothing!)
We rent, have basic paid jobs. What is next for us in life?

Kindest regards

annon24

I'd also like to just add, that we have no parents to fall back on. A lot of people who I usually speak to, have always had some extra special care from their parents to be able to buy a house and get a good start in life. That isn't an option for either of us.

A nice windfall of money would be nice, but just isn't going to happen.

We will only be able to have what we earn, and over the past year or so saving £10K has and does seem like a big achievement. Would just be nice to have double that right now!

xylophone

I think it would be an idea to continue saving in your cash isas until you have around £15000 set aside in your emergency fund.

You should both see an improvement in your take home pay with this
month's increase in tax free allowance.

With regard to jobs, have either of you a particular career in mind? Have you explored the possibility of part time study? You could explore the possibility of grants or bursaries?

annon24

Thank you for the reply, over 100 views but no replies I was wondering if anybody understood me.
I really do hope we see a difference in our take home pay, we haven't had a decent pay rise this last year so a little extra will go a long way.

Neither of us really have a clear career idea in mind or how to reach any idea. My wife enjoys helping people and looked into teaching, but courses are expensive, and because we're working and have savings I don't think we'll qualify for any bursaries or grants? The prices put her off and the idea fizzled out.
Not only that but teaching assistant don't pay very well, and pre/primary school teachers don't seem to be in demand.

So when people talk about savings do they include their 'emergency fund' as part of that? Or do they just talk about anything over their emergency fund? That means we are minus £5k still then, no 'real' savings.

Sorry if I sound bitter about people who have had a windfall or parents help in their early life, but, well, I am haha!
Its hard staying positive when people you know, and read about get 'x' amount of bonus money for working half as hard as yourself haha.

xylophone

Do you mean that your wife wants to train to be a teacher?
http://www.education.gov.uk/get-into-teaching

annon24

Oh this site looks good, not sure if she's seen this, I'll have to show this to her in the morning! She got a lot of open uni packs and those costs were off putting. Thanks for the link!

atush

Yes, emergency cash counts as part of your savings.

The point of having it is just what you have described. If you didn't have it, you would have had to borrow it somehow. Which isn't easy in your situation.

So, going forwards, keep saving. After you have a good whack in cash, then start saving into equities. In S&S Isas. I like Investment trust savings plans for this (can be ISA'd) or you can go with funds. As it will be a long time before you can buy, you will find that equities will outperform cash over longer periods of time. This will continue to build wealth for you alongside your cash, and better yet will help you keep pace or even beat inflation.

Credit repair. As soon as you are able, start to repair your credit record. Thru doing whatever you can (such as paying bills on time/early even, getting a credit repair low value CC etc).

Do think about your life and what you would like to do. Sometimes, your local college will have evening classes at low cost that you can fit in around work at can either enrich your life ( I have taken everything from french polishing to picture framing to upholstery to webpage design and programming) or to improve your work prospects. In my case I was learning things that I would have to pay others to do, but could not afford to. Enabled me to do things like turn junk into nice furniture, etc.

I have known others to take courses in building work, plastering, plumbing etc so as to save costs on property. You save long enough (and live in the right part of the country) would could save enough to buy a house and then do it up to make even more money.

Porcupine

Annon, have a read of:
http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes
and
http://www.moneysavingexpert.com/students/mature-guide

The second guide covers the position for a married mature student compared with someone who is 18 (they'd take your income as a couple into account rather that parental income), but seems to me you'd count as fairly low income (especially if your wife's income drops by studying) so might be eligible for grants and loans. The loans might seem scary but they're geared so that high-earners pay off a lot more than low-earners. So if she gets something like a teacher's salary, she pays off tens of pounds per month. If she becomes a barrister she'd pay off hundreds. If she stayed as a teacher, most likely the loan would eventually timeout (ie you'd never have to repay it, so it's not a debt hanging over you). I wouldn't rule yourself out of student finance just yet, see if you can find out specifically the costs for your situation.


How to manage unexpected costs? Well, you have a reasonable savings pot so one way is to 'self insure'. For example, some people have mobile phone insurance costing £10/month. I know that my phone was £80, and I can reduce the risk of dropping it down the toilet by not taking it with me when I go for a pee. So if it lasts for 8 months, I'm quids in. If it does go phut, then that's the risk I take and I have to dip into the savings, but the likelihood is it'll last for longer than that. Similarly, some people buy a new car because they don't want to worry about repairs. The alternative strategy is to buy a tidy old banger, and the money saved will pay handsomely for garage bills if there's a problem. But if there isn't a problem, you've saved lots of cash. So don't be hard on yourself if bad stuff happens, think of it as the money you saved by not buying a fancy insurance policy.

Also, lots of things get cheaper if you buy in bulk. For example, pay upfront for the car insurance and you won't pay the extortionate interest that's added when paying in installments.

Just a thought... if you wouldn't get a mortgage due to the bankruptcy, would your wife alone? Obviously it would be tied to her income alone which might mean you could only afford somewhere small, but you could pay off the mortgage twice as quick (rather depends where you are - not going to happen at London prices, but might work out somewhere up north).

If you want to grow the savings you could invest it, but you'd need to be sure you could cope without it for 5 years minimum, and you'd want to keep a good cash buffer too. Which is probably not what you want when you might buy a house and/or have kids in that timescale. So probably a better way would be to gain some skills and increase your salaries.

The other thing is to look at this longer term. Savings rates are dire at the moment, and the job market is weak. It won't be ever thus. So get some skills while things are slack, invest in yourself, and then you can hit the market when it's picked up a bit. Just do your research carefully when picking fields.

Good luck