3-6 months salary untouched

his_missus

I've only just got myself into a financial position where I can actually consider saving for a rainy day. I've just started saving into an ISA with the intention of using for house deposit or to improve my current house and also now save into an "emergency fund".

I would like the security of knowing that should one of us lose our job or were unable to work we had enough put aside to live on for 6 months but that's going to take me a while, I think.

DevilsAdvocate1

At present we could fall back on our offset mortgage if necessary, though I'd prefer not to. We don't have any savings at all right now.

Three years ago we decided to build a large 2 story extension to our house. This wiped out are savings and we ended up having to use a large portion of our offset mortgage. We also bought the kitchen, bathroom, sofa and a car all on credit. So for the last 3 years we have been up to our eyes in debt.

Each month I managed to reduce the total debt by around £1000. As of last month, we have cleared all the items on credit. We have also made great inroads into paying back the money we took out of the offset mortgage. We are now around 1 year behind on our mortgage payments.

My plan is to catch on on the mortgage payments by Christmas so that we are back on track. I will then be saving each month to build a buffer. This will be stored in the offset account rather than in a savings product.

It was a bit of a risk having all that debt. It feels great now that it has all gone apart from the mortgage.

atush

I am glad you are working your way out, but blimey- why did you extend and buy all that on credit if you couldn't really afford it? Scary.

Good luck being back in the black by xmas

katejo

atush wrote: »

I am glad you are working your way out, but blimey- why did you extend and buy all that on credit if you couldn't really afford it? Scary.

Good luck being back in the black by xmas

That's what I thought! Last summer I took advantage of a low base rate tracker to channel some mortgage money towards a new kitchen but I didn't buy the kitchen until I had saved all the required money plus an additional cushion for emergencies.

atush

When it works out, you've dodged a bullet,

but if it doesn't?:eek:

Sailing too close to the wind IMHO.

gadgetmind

DevilsAdvocate1 wrote: »

Three years ago we decided to build a large 2 story extension to our house. This wiped out are savings and we ended up having to use a large portion of our offset mortgage. We also bought the kitchen, bathroom, sofa and a car all on credit. So for the last 3 years we have been up to our eyes in debt.

Was this all part of a plan? Or did something external go wrong that derailed a plan? Or was the credit-fuelled splurge all a bit ad hoc?

We are now around 1 year behind on our mortgage payments.

Well, I guess you're not going to have debt problems in future!

YoungBusinessman

That sounds like a massive credit splurge and out do the Joneses to me, look at our new car and out lovely extension etc etc. all come good though so well done. Should start saving 6 months expenses by September and have it all saved within a few months.

CPS91

At present I have over 5 months of nett salary but if needs be that can last me in the region of 1 year as regards expenses conservatively.

Although technically speaking this money is reserved at some stage for a house deposit but obviously I need to take a view that I need to save such an amount above that of the house deposit in order cover any unforeseen costs in the move whilst still having a buffer beyond this period. Does anyone have a rule of thumb regards this out of curiosity?

marathonic

CPS91 wrote: »

At present I have over 5 months of nett salary but if needs be that can last me in the region of 1 year as regards expenses conservatively.

Although technically speaking this money is reserved at some stage for a house deposit but obviously I need to take a view that I need to save such an amount above that of the house deposit in order cover any unforeseen costs in the move whilst still having a buffer beyond this period. Does anyone have a rule of thumb regards this out of curiosity?

This is a difficult one. It really depends on the amount of deposit you have and how exposed you'd feel without a cash buffer.

Buying a house is always going to be difficult and if, by using your emergency buffer, you get a better mortgage rate and have to rely on a credit card for emergencies until you 'get back on your feet', then I'd probably go that route.

Actually, I would go that route - and did last December. I had no emergency fund whatsoever on completion of my house purchase but am now using a regular savings ISA to build it back up.

nearlyrich

srcandas wrote: »

All sensible stuff and good advice but just to amuse:

I went for a job interview in the 80s for an IT sales job. I felt somewhat underqualified but gave it my best shot.

I got the job and I eventually asked why I had been chosen. I was told of the final two I was more hungry. I liked expensive holidays, a fast car, etc. The other guy was careful and had declared that he was money savvy. As Cliff said "I want hungry salesman, not careful ones "

So stash away but if you want to be a salesman don't mention it :cool:

This made me smile I am in IT sales:D