Only freedom will do

Luckyinlife

edinburgher wrote: »

We have already passed our Emergency Fund target of £5,000. This is slightly over our complete expenses for 3 months, slightly over 5 months for our 'bare bones' expenses. We keep it in a mix of current accounts, something like 3% after tax. I didn't see the point of using an ISA unless it paid more.

Mrs E and I have both worked for over a decade without redundancy or unemployment, pretty stolid but reliable income. We'll probably up it a little once we move to a house.

What is your interest rate? When I started to become more interested in investments, our mortgage rate was/is 3.15% and all the commentators were talking about a 'new normal' of low growth. At the time, investing felt like a bit of a punt. Unless the BoE goes crazy, I would be disappointed to be paying more than 2% come next spring, at which point the prospect of OPs just seems barmy.

My interest on my savings is poor less than 2% but its tax free i was a 40% tax payer last year so if it was in a normal account id have to pay 40% tax on the interest i earn so i just stuck it in the isa to save the hassle really

With my emergency fund as im self employed i need to at least cover a full years expenses really which i think it does currently maby even over a year at bare bones

Im single so need that bit extra really as i aint got anyone to bail me out if i get stuck from time to time

AlexLK

edinburgher wrote: »

:dance: :dance: :dance: I'm shuffling! :dance: :dance: :dance:

We have reached the end of another working month and it's time to make the spreadsheets dance.

Today is Mrs E's last day for over a year

I have discovered another budget hack as our commuting line no longer needs to be as high as it is with only one of us working. I have cut it in half and have deducted £145 to pay into our S&S ISA. The 'free' half will be getting added to our investments for the time that Mrs E is off and should amount to another £500 or so over the course of the year.

£640 paid into the Emergency Fund as well, meaning at least £1,065 to savings and investments this month.

***Stop reading at this point unless you are interested in dull investing chat and behavioural investing***

The S&S ISA money will be going into our bond fund. I am a little bit torn at the minute to be honest. The monkey part of my brain is telling me 'Stocks are going through the roof, buy stocks!', but the robot part of my brain is telling me 'Warning! Warning! Stocks are going up too quickly and your bond allocation is too low!'

I am also torn because the bonds that we hold in our ISA represent part of general retirement planning and are tied to our need to reduce volatility in our pension funds. While my robot brain tells me that paying more money to pension-like investments shouldn't be a negative thing as we're planning for potentially the next 55 years, my monkey brain is yelling mean comments about 'the man' and how I don't want to work until I'm 100

Long story short, it's boring decisions like this that remind me that I'm here for the long haul, no ERE for me

And I thought it was just gallygirl who did the spreadsheet shuffle.

Is your wife not going back to work for a year? And are your emergency fund and savings not the same thing?

As for the investment talk; I'll pretend to know what all this means with my new found investment knowledge from the "Dummies". In reality, I haven't a clue and cannot give any advice other than to say it all sounds terribly complicated. :rotfl:

edinburgher

Ed you have made me think. Quite thoughtful Watty here now.

I'm sorry, it wasn't intentional

And I was wondering this morning about going for a fix on the mortgage and starting to invest instead.

Well, your mortgage would seem to be manageable compared to most on here, although I fully appreciate that everybody has different circumstances.

I suspect that you would be able to get a pretty decent fix, so now might be a good time to consider other assets beyond your home?

With my emergency fund as im self employed i need to at least cover a full years expenses really which i think it does currently maby even over a year at bare bones

That sounds entirely sensible, I'd be looking for at least that much if I was SE.

Is your wife not going back to work for a year? And are your emergency fund and savings not the same thing?

Indeed, Mrs E gets to be a lady of leisure for 54 weeks or so. I don't disagree with your point, but I would caveat it. Our EF is essentially our cash savings, but were these to drop below a pre-determined point (£5k in this case), I would start to get a little worried :eek:

edinburgher

I applied for a new T5B current account at 5% thinking they'd reject it (apparently only one per person + 1 joint account now), but it went through! I think I might be one of the lucky earlier adopters who can open up to 4 accs!

That would mean £8k at 5%, enough for even an expanded Emergency Fund :dance:

AlexLK

edinburgher wrote: »

I applied for a new T5B current account at 5% thinking they'd reject it (apparently only one per person + 1 joint account now), but it went through! I think I might be one of the lucky earlier adopters who can open up to 4 accs!

That would mean £8k at 5%, enough for even an expanded Emergency Fund :dance:

I will have to look into this as it would be nice to receive 5% interest on money that usually just sits in my account. Will probably have to get my wife to apply as my credit file is still terrible.

Is the one account per person and one joint for all accounts or with the TSB? Also, is there a limit to the amount which is paid at 5%?

Thanks.

AlexLK

I've just been on the TSB website to have a look at this account. Sorry if this sounds really stupid but does "5% AER/4.89% gross variable" mean if I keep £2,000 in this account for a year I will get an interest payment of £100 at the end of the year? It says they won't pay interest on balances over £2,000 but will I need to pay tax on the £100 interest?

edinburgher

Is the one account per person and one joint for all accounts or with the TSB?

I believe you could still have an account in your name and a joint account with your wife, you answered the other question yourself

As regards interest, you are largely right, but interest is paid monthly and you will pay tax each month at your current rate. I'll oversimplify slightly. From memory, your wages are structured so that you withdraw a salary in basic wage territory. This means you'd get 5% * 80% (you lose 20%) = 4%.

*But*, you'd only get 4% if you paid the money in and left it for exactly a year. In reality, you'll get 1/2 of 4% each month (or thereabouts). More like £81.

edinburgher

Today has been a tale of two cities - gambling and nesting - now nackered from doing both!

Gambling wasn't as successful as I would have like, perhaps £30-40 profit.

Nesting ramped up a notch today, Mrs E is now on maternity leave.

• Mrs E added some decorative touches to the nursery
• Shopping at Asd@, B&M, £stretcher, HB and L1dl
• Replaced bulb in study (thankful, thought the fitting was gubbed!)
• Hoovered thoroughly (no cowboying today)
• Washed the insides of all our windows
• Took out the rubbish and recycling
• Currently making HM stock, will make bread as well

Tomorrow I'll need to make a bulk SC braised lamb stew and clean the fish tank.

My plan for the rest of the evening is to read Monevator and drink a couple of beers :beer:

Hope everyone is having a happy and productive weekend.

Alchemilla

You 18 years to FIRE? radical!


Wish i had your early wisdom.

edinburgher

So says the spreadsheet