The Six Year Plan - my Savings diary

pennyforthepot

In six years (and one month) I am hoping that the last of my children will be flying the nest and off to university - forward planing a little I know :rotfl: DH and I have a plan for when this happens - to buy a two bed flat in London and enjoy our kid free lives before we get too old. (We will be 51 when this happens).

Don't get me wrong, we love our children very much (we have four between us: DSS1 23, DSS2 16, DS1 14, DD1 12 - the eldest has fled the nest already) but as we got together when both of us already had kids, our time together once they have left home is really important to us and something we are really looking forward to planning for.

To achieve our goal I have set myself a target (DH having no concept of what it means to save money I am doing this myself). To have saved £250,000:eek: by the time DD is off to university.

I am quite a good saver and to be fair I am already over a third of the way there (although this has taken a good 8 years to reach). So as of tomorrow, which is my payday, I will have saved £96,502 of my £250,000 goal.

Our circumstances have changed recently as DH was so down at work that we made the joint decision for him to leave and so in November last year we set up our own ltd co. and now DH works from home on a much more relaxed basis (seems to involve a lot of tweeting ) He doesn't bring in a lot of money and so the salary that he draws is for his personal use and not put towards any of the household bills or general living costs. He is so much happier and I'm glad we made the decision to do it even though it has reduced our monthly income by almost £3,000 it is definitely worth the sacrifice.

We made the decision to sell our house last year and put the capital we made into an investment fund. The gains that we drawdown from that pay for the monthly cost of the property we rent (well 90%) of it. By doing this we will be in a position to hopefully buy somewhere outright and not have the hassle of trying to sell our house when we are ready to move. So the aim of saving the £250,000 is to provide us with a regular income (based on living off the interest) once we have moved without having to up the pressure of working more. (I'm not sure if that makes sense but it is very clear in my head).

The reason for me deciding to keep a diary here is that because we only have my income now (which is basically my maintenance, that will be halved in four years and stop in 6) and we are currently dependent on that to pay all the bills, saving any money on a monthly basis has become a lot more difficult and if I am to achieve my goal and save £153,000 over the next 6 years then I need to absorb all the money saving ideas I can - particularly as DH is MSphobic and give me 'that' look when I use my t£sco coupons and put the 15p savings into my savings account!

Well that's enough for an introduction - I shall provide a breakdown of income and out goings tomorrow so I can work out exactly what I should be able to save and how much I need to save to reach my goal.

PennyForThePot x

atush

I have a few thoughts. If your OH is happy being kept, and you are happy to keep him- fine. But he really should work enough to contribute to finances now. After all, the children are his too?

Second, the kids. One is grown and gone, but where will the others live when you are in a 2 bed home in london when the youngest is just off the uni? Won't you be helping them with expenses? Where will she/they sleep during the school holidays? After all, many children move home for a year after uni to build a small pot to be able to pay a deposit on a rental flat? Will your fund (given you are not reinvesting the income) be enough to buy a flat in london in 6 years as prices are rising again?

What income do you think you can get off 250K, and will that be enough to live on or will you both still work?

All in all a fairly ambitious plan that you are well on your way to achieving, but I do wonder if you are taking on too much (say he decided to leave you- would it kill you to give him half your savings?) on your own shoulders- I feel you should have some help?

Hominu

pennyforthepot wrote: »

Don't get me wrong, we love our children very much (we have four between us: DSS1 23, DSS2 16, DS1 14, DD1 12 - the eldest has fled the nest already)

I must say, very inventive names you have given your children there!

"Good Morning DSS1 & DSS2, would you like some toast?"

However, I also must agree with atush.

Sure, rushing off to uni is fine and all that to get rid of him for a while, but what happens when he comes back? Does he sleep on the sofa?

liamcov

What does DSS1 etc stand for?

pennyforthepot

Thank you atush for you thoughtful comments. All the points that you have raised are very relevant and I have also raised them myself. Although OH gets to keep his monthly income with that he does contribute on an ad-hoc basis to petrol, food going out and any additional outgoings that occur for his son who lives with us. Also the company will payout dividends to both him and myself at the end of the financial year, so I am happy with the financial arrangements that we have come to with respect to this.

With respect to the children coming home during holidays at uni we will be able to have all of them back for the next 6 years, by which time the eldest will have completed his course. (Obviously this is only theoretical at the moment). The youngest will still be able to come back home or live at home as we aim to have two bedrooms. If I'm honest I would rather support the children by helping them pay for rental accommodation once they finish their education as I think it's an important part of encouraging their independence. We are also in the situation where they have their other parents homes to go to and I have discussed it with my ex who supports my ideas and is willing to help them financially once they go to university as he is very financially stable.

With respect to my investment fund I am lucky to be in a sound financial position. I have made good returns on the purchase and sale of property at a time when the market was rising so I have around £500,000 currently invested. I am also paying a large portion of my rent out of my cash savings which means I'm not actually having to draw down much of my investment which has grown by about 7% in the last year. Obviously markets go down as well as up so I keep a close eye on this.

We do aim to carry on working as I'm very aware that, having done the sums, £250,000 does not provide a particularly high monthly income but it will give us a financial grounding.

There is no being able to predict the future and anything could happen and I will learn much on my journey but am happy to know that at least I'm on the right road to financially stable future.

Many thanks
PennyForThePot

atush

Ok, your ex will help your kids- as it should be. You have other savings plus 500K growing.

But my concern remains re: the OH. He should be (or his ex should help) FULLY supporting his son. And now it seems he does help a wee bit with costs, good. Before you soad he got to keep all he earned. Is he paying Nics? Does his company pay into a pension for him? Very tax efficient in an LLC.

All in all, you seem to be OK, but the OH should be working a bit harder, now he is doing what he wants. He can twitter in his down time off work. you are happy now, but should you split, he'd be getting half of what you alone seem to have saved.

Given I have seen this happen, that would be my main concern.

pennyforthepot

Thank you Atush I will think about what you said.

Up at 4.45am this morning to take OH to the airport, good job we live so close. Today is the first day of the month for me as my income comes into my account and I would usually reconcile my spreadsheets to confirm what my savings have been for the month. Unfortunately excel has crashed on me and OH isn't around to sort it out. I do know that my savings now sit at £96,502 as I did the calculations yesterday but I'm not sure what my monthly saving total was - I think it was around £1100 for the month. £115 of this was made up of additional income which comes from credit card cash backs, interest earned on my bank accounts, D/D cash back and shopping vouchers. To date this year I have earned approximately £6,000 in this manner although the majority of this has come from the interest earned on a number of accounts that recently matured of which there are no more to come in 2013.

We've have incurred a lot of expenses over the last 6 weeks due to holidays, weddings, a big BBQ where we catered for about 70 people (we do like to party in this house) school uniform to buy and lots of petrol consumption. As I hold budget accounts for a number of outgoings including holidays, kids stuff and entertainment a proportion of this has been covered and won't affect my savings for next month but I am a couple of hundred pounds down due to the wedding/hen night and stag do attended. As I pay for as much as I can on my credit cards (to benefit from their cash back) this will have a knock on effect on next months savings.

On the upside we got our offer accepted on a new rental property that we found the other day - saved £150 per month on the asking price and will be £400 a month cheaper than we are currently paying so this should have a positive impact on my savings. Renting around here is so expensive - we are currently paying £3000 a month to rent our house! The new house is right next to the children's schools so it will mean we will no longer need to drive them, again a positive for our savings (although just down the road to the pub - which could be a negative). There will be an initial outlay for the cost of removal services and rental agreements but that should be recouped within two months of the move.

Off to declutter DS1's room whilst he is away on holiday with his dad. (DSS stands for Dear step son Liamcov - these phrases are used a lot on Debt Free Diaries )

PennyForThePot x

Brassedoff

pennyforthepot wrote: »

In six years (and one month) I am hoping that the last of my children will be flying the nest and off to university - forward planing a little I know

You are hoping? Mine came back and are still here in their mid 20's!

pennyforthepot

Brassedoff wrote: »

You are hoping? Mine came back and are still here in their mid 20's!

Ahhh - with our plan they won't have the opportunity :rotfl: - we did wonder about moving and downsizing each time one leaves to go to uni, then accidentally forgetting to tell them where we'd moved to but decided that was a bit harsh :rotfl:

atush

I am quite happy for mine to live at home after Uni- for a year or two. To save up (eldest graduated last year, and has saved over 10K in his first year. I do charge them a weekly fee to live here though lol. He is moving out next summer on his 2 year anniversary.

I would not want them to be living there much longer than that, but I am their mother so would consider it.

We are downsizing for 5 beds to 3, just in case lol. Plus while I am off to america/the world, they can feed the dog and mow the lawn.

mgdavid

children are for life, not just until uni.
think about it.
maybe when you are old / infirm / ill they won't want to know, and who could blame them?