How do you allocate your money?

SmlSave

Say you have £200 a month 'free'.

£100,000 mortgage at 3%
£6000 Savings at 2.5%
A house that needs a new bathroom. (going to be living here 10+years)
A holiday would be nice too

How would you/do you create balance in where you send your money?

I've been trying to figure out the best way to do a bit of everything and thought some peoples opinions would really help

coldcazzie

Do you have any savings currently?

martinsurrey

It all depends on you and your preferences and plans.

If I was going to be in the house for 5-10+ years I would do the bathroom first properly, I’m in it multiple times a day and it’s a long term investment of happiness.

If I was moving soon and the bathroom was saleable, I would spend as little as possible to freshen it up.

If I was moving and wanted to step up the ladder but was unsure on the LTV I would get I would pump every penny into the mortgage.

If I had enough savings for 6 months of unemployment, I wouldn’t use savings(worse rate after tax).

I love holidays, so I would use some for a cheap affordable holiday.

No right answer, just try and maximise your happiness (including long term, which is where mortgage repayments come into it).

SmlSave

Good points coldcazzie and martinsurrey

I've updated the first post to show £6000 in savings aka emergency fund and that we're planning to stay in the house a fair while

elsien

I tend to sling a bit of money at everything, the proportions depending on my priorities at the time. I have more surplus cash, at the moment, so it's £70 off the mortgage, £100 towards long term savings/ISA, then the rest gets split between new kitchen/ holiday/ new computer etc, depending on what's annoying me most. It's not very focused, but it works for me.

getmore4less

Have a good review and try and find more spare money

It is about priorities after essentials.

There are probably discresionary things you allready spend on that should be in your priority list along with the bathroom and holiday.

Sky/Virgin,car,mobiles, nice meals, booze fags etc.

coldcazzie

SmlSave wrote: »

Good points coldcazzie and martinsurrey

I've updated the first post to show £6000 in savings aka emergency fund and that we're planning to stay in the house a fair while

Then with that in mind, I would not bother with putting extra in savings at this point.

I'd either skip the holiday entirely, or go stay with friends for a couple of days somewhere you don't visit often and go to a couple of places around them. If you arrange it far enough in advance you can put aside a little each month to cover your spending money/train fare/whatever.

Assuming the bathroom was currently functional and just ugly to look at I'd put a set amount into savings each month with the aim of having enough to do it in the January sales next year. Look at whether you want to just redecorate/tile/floor, or redo the suite entirely, or move things around in the room. If it's the latter, then I'd give yourselves longer to save up for it. But I'd be looking at doing it next Jan, saving up as much as you can before then and then if you don't have enough putting the remainder on a 0% credit card and paying it off before the 0% rate runs out.

Whatever you don't save I'd OP on the mortgage.

You could split the bathroom/mortgage down the middle. Or you could OP a little bit/nothing on the mortgage until after the bathroom is complete. I think it would depend for me on how bad the bathroom is. If it's functional but just a bit unslightly then I'd treat it differently, compared to if the toilet leaks and the shower doesn't work, iyswim?

JimLad

How much savings are you comfortable with?

Many people say they want 6 months of basic living expenses covered by savings, but we knocked it down to 3 since the likelyhood of us both losing our jobs at the same time is slim and one of our wages will cover it.

After that we put everything into the mortgage. Foreign holidays can wait until we have paid it off.

All depends on priorities

LadyGnome

I'm a newbie but I've been lurking, reading and learning for a few months now.

I split my money between savings, mortgage OP and holidays / fun stuff. Paying off the mortgage is a long haul and so I knew I had to allow for frivolous stuff too.

I wouldn't bother saving any more. I would split the bulk of the money between mortgage and bathroom but allocate some to the holidays/ days out fund especially as you have children. I find it much easier to take my children for a day out when I have a pot of money specifically allocated for that purpose. I don't feel guilty that it hasn't gone on the mortgage.

SavingRaven

Hi SmlSave, I'm v impatient and find it hard to chip away at lots of different pots at a time so tend to go hell for leather on one goal and then move on to the next. I like to-do lists and ticking things off!

But agree with everyone above that it's totally about your own preference. The savings pot looks v healthy so well done on that, maybe focus the money elsewhere for now? SR

SmlSave

Thank you for everyone's replies I guess I was really wondering whether I should concentrate on one thing at a time or do a little bit of everything. Looks like the advice is mainly to do what feels right/most important.