£1250 - 'spare' pcm

tommer82

Hi All,

Firstly thanks to the posters on here, its helped me greatly over the last couple years.

Currently I have a mortgage and a house that is has just been renovated.

I am a first time buyer and the house is now complete (everything has been done, from roof, garden to carpets) I will have about 8k debt on credit card. The credit card is currently interest free but the interest kicks in next January at 16%.

I will rent out a spare room so after everything including bills and mortgage I have worked out I will have around £1250 pcm 'spare'.

This is the 'plan' so far:

1) pay Credit Card off.
2) once #1 is complete save enough to max an ISA (i think about 4k) and leave this as 'rainy day' money
3)?

If someone could help me with #3

overpay mortgage, save for a flat/house to rent, savings account, spend it! , save to have enough to move and renovate again (btw, i' 30 and would like to become a property developer eventually)


Cheers.

jimjames

If you are looking to invest then the maximum you can put in a S&S ISA would be just under £1000 per month.

It does sound like you aren't really looking to invest (as opposed to savings) but to me that would be a logical thing to do as your item 3.

tommer82

Thanks jimjamess, i've updated the title of the thread to 'spare' from 'invest' as I think that is more fitting to my current situation.

BillJones

Many people would recommend having more than £4k as emergency money. 6 months - 1 year salary in an easy-access account is more in line with what many people would tend to suggest if you are being prudent.

WGPA

I think your plan is good, similar to mine actually. My initial thoughts are:

1) Agree - get rid of the card ASAP, remember you can transfer balances to another nil rated card in January should it not be paid off by then.

2) Is £4k enough of a rainy day fund? Depends on your circumstances and income largely so not much we can advise,

3) Invest in some passive portfolios. I use Hargreaves Lansdown to invest in Vanguard LifeStrategy.

Key with investing is timeframe - sooner you need the cash the less risk it should have associated generally. I went for a risky investment (80% Vanguard LifeStrategy fund) as, in my view, I offset this by holding my emergency cash as well.

tommer82

Thanks.

1 - I think #1 (paying off card) is taken care of, I hope to clear it before next Jan but transferring might be an idea, so will bear that in mind

2 - 4k enough? I kinda worked it out as 4 months mortgage + bills with no tenant, perhaps I should make this at least 6 months.

3 - I think I need to research a lot more but these ideas are great so keep them coming.

xylophone

I will rent out a spare room

You have consulted your mortgagee and insurer?
https://www.gov.uk/rent-room-in-your-home/becoming-a-resident-landlord

You have checked out your tax situation?

tommer82

xylophone wrote: »

You have consulted your mortgagee and insurer?
https://www.gov.uk/rent-room-in-your-home/becoming-a-resident-landlord

You have checked out your tax situation?

Not consulted my mortgagee, didn't know I had to.
EDIT - Phoned my mortgage provider and they said I don't have to let them know for a lodger, however if I was to move out then I would. (definitely worth checking in advance, I got lucky!)

Not consulted my insurer either, i'll check with them soon.


From my understanding £4,250 is the amount that can go tax free. The rent from the tenant will be around that.

N1AK

BillJones wrote: »

Many people would recommend having more than £4k as emergency money. 6 months - 1 year salary in an easy-access account is more in line with what many people would tend to suggest if you are being prudent.

It's common advice but personally I think 6-12 months money in easy access savings is excessive (unless easy access savings offer the best rate you can get).

Firstly it ignores the potential ratio of what you spend (or would spend if made redundant etc) to what you earn. So first off I'd recommend you base your emergency fund on what you spend, and secondly many if not most investment options have ways to get at it if you're really desperate, for a cost.

atush

Ok you plan to pay off your debt and save an emergency pot- great.

Next stop is pension. Do you have one? Does your employer offer one? Thy will have to soon if they don't. If you have one. split your extra cash between extra contribs and a S&S isa.

tommer82

atush wrote: »

Ok you plan to pay off your debt and save an emergency pot- great.

Next stop is pension. Do you have one? Does your employer offer one? Thy will have to soon if they don't. If you have one. split your extra cash between extra contribs and a S&S isa.

Company does have one, this is an area I should research, as I don't really want to be working after 50, so its whether to start a pension now or just put the extra money into other things