My savings journey - take 2

MaryMurphy

I used to post here quite regularly and had a lovely thread going, and then I just completely dropped off the habit of posting... I have no idea why!

Looking back, it really helped me keep motivated and positive about looking after my pennies, and I am now in need of some above-mentioned motivation!

So, I got married in Sept 2013 (wonderful day - there truly is nothing like your wedding day!), our honeymoon was amazing, and most recently we bought our dream home (in January in fact) and will be renting our previous house (it's dropped in value unfortunately so it doesn't make sense financially).

It took me about four and a half years, but next month I will have finally reached my original target of £3500 for my Isa fund (aka the emergency fund - do not touch unless absolutely necessary!)

If anyone is still about from my previous thread, you may remember I had a major issue with making packed lunches... well guess who fell off the bandwagon! LOL

So I do need to make some changes to our spend. Whilst we can afford the two mortgages (and rent will be coming our way soon), we still need savings for:
1) My usual short- to mid- term spends (e.g. MOT, car repairs, heating oil, etc etc)
2) New house refurbishments (the house is structurally sound, it just needs quite a bit of modernising);
3) Overpay loan (I hate debt!)
4) Maternity fund... we are due a little one in August!

Because of number 4, number 1 is a bit of a priority - I want to over-save where possible as whilst my maternity pay will actually be quite good and won't drop off to statutory for a few months, I want the freedom of choosing when to go back rather than having the decision made for me because we need the money.

Also because of number 4, I'd like to get any painting done before there's a baby in the house.

I do have more "targets", but this is probably plenty for me to kick-start things again. Welcome back to me

MMxx

Edit... this was my old sig... it's in dire need of some updating:

Emergencies (target # 1)..... 25/£100
Wedding (target # 2)............ 0/1200 .... Sept 2011

MaryMurphy

My car has been in the garage and I was really concerned the gearbox was banjaxed (it was having trouble going into 1st. 2nd and reverse), but thankfully it was the clutch, and since I had it replaced Aug last year it’s still within its 12 month warrantee the mechanic will replace it for free (plus, I assume, labour), so that’s a massive relief. It’ll have it back in a few days. :j:j

I worked two Sundays this month, which means extra pay, so I am putting £80.00 into my Directshare (we can buy shares before tax and NI – provided you keep them in the scheme for 5 years). The extra £80.00 (well, after tax etc it’ll be less) will probably go half and half towards savings and debt… haven’t decided yet.

The tenant is probably moving in this week (we’re signing the contracts tomorrow) so that’ll lighten our financial load.

I have opened a new account with the Nationwide, the rent and two mortgages will come out of that. The plan is for us to pay into it to cover the mortgages and then a bit extra (either into this same account or into a savings account), so there’s a little pot of extra cash for when my pay goes down to cover my share of the mortgage.

In other news, our new windows came in yesterday OH haggled like there was no tomorrow and shopped around loads so we’re getting them for a really good price, everyone is well impressed with how cheap they were – and the house looks great... It’s a load off our mind, even though the windows weren’t sealed yet (they’re doing that today) we could already feel the difference in terms of heat retention. We had old wooden framed single-glaze windows before.

We have one other big house-related spend coming up next week, and that’s our “home improvement” fund well and truly wiped so we’ll slowly be replenishing it after that.

The only other big thing that we’ll need to do within the next 9 to 12 months is a nursery/baby’s room of some sort, but that won’t be a big job. It’ll just be a matter of stripping the wall-paper, giving it a lick of paint and putting down a new carpet or laminate (sadly the d!cor is very old-fashioned and the carpet hasn’t probably been replaced, ever, by the look of it!) But if we were in financial difficulty, we can definitely live with the way it is – it’s all just superficial changes (so it’s a “would like” rather than a “need” so I’m not worried.

So my financial tasks for this week:
- Chase up the Nationwide if the new account hasn’t appeared on my Online Banking by the end of the week;
- Meet tenant tomorrow and finalise everything;
- Sort out our two joint savings accounts - figure out which one will be for house-related stuff and which one will be our baby/maternity/paternity fund (agree and stick to it! OH likes to change his mind about things);
- Work out finances once the 1st month’s rent comes in – figure out payment dates for the mortgages to make sure they are always fully covered (even if the tenant misses a payment – NEED to account for this if he’s ever late for any reason. You never know unfortunately )

And I think that’s it! End of essay!

MMx

atush

I didn't read your previous thread that I can recall.

I would say OPt 3 should be Opt 5, and Opt 3 should be pensions if you dont have them going already.

Once pensions and savings are addressed, in future extra cash could go to overpaying esp if your LTV is high. With todays rates, saving for a pension should trump overpaying in general.

MaryMurphy

Thanks for the reply atush

I currently pay 10% of my salary into a pension, and my employer matches it up to 9% (so 19% in total). I’m going to put this up to 20% in April when I am due a small pay rise.

As far as I’m aware, any payments I make of 7% (or maybe it’s 5%... I can’t remember!!) or above are an AVC, anything below that comes out of my pay before tax and NI.

I’ve been paying into my company pension since I was about 21 (at 4% back then) and gradually increased my contributions as my pay went up, and it’s something I intend to continue doing as and when I get more pay increases. I’m 28 now.

Thankfully we have a pretty good union, so it’s likely we’ll continue to receive some form of a pay increase every year (although I know these things are never guaranteed!)

I didn’t think of mentioning my pension as I feel my contributions are adequate, and I’ve been happy to see my pot grow each year (I get yearly statements, and can get interim statements online if I want) but I’m definitely open to any further comments about this!

My husband also contributes into an auto-enrolment pension at work but I’d like him to speak to a financial adviser about other options (his employer only contributes a max of 1%, so it’s pretty bad. That 1% is still “free” money so I still want him to take advantage of that, but I don’t know if he’d be better off paying any extra into a private pension or making extra contributions/AVCs).

I get your point about saving over OPing loans – it’s something I’ve been in two minds about. I have always prioritised saving over overpaying, and I feel this time I need to do things a little more “half and half” (obviously in a sensible way. By nature I am a saver not a spender - not that our recent transactions would suggest that mind you…) so I need have a think about this one a bit more.

Thanks for the input atush. Writing all of this down has already helped me to start thinking about our finances more and getting more organised (I feel I haven’t had as good a handle on things these last three months, maybe even more).

MMx

atush

your pension seems a good deal at the moment at 19%, and salary sacrifice means you are saving 32% tax if you a basic rate payer.

Your OH can open a PP and pay in more, if his contributions aren't that high, and he chooses a lifestyle fund like one of the Vanguard series then he could DIY instead of IFA until he has a pit of 20K or more.

MaryMurphy

Thanks atush,

I’ll have a look at myself at some options for my OH then (let’s call him MrM, even though I am technically MrsK now that we’re married!)

Another update…

I have semi-worked out my finances with maternity leave. Our lil one will be due at the end of August, and two of my Saveshare plans in work are due to be cashed in at the start of August. So, I’m going to earmark some of that money for baby things, and I will put away the rest to cover my share of the bills etc for when my pay goes down and OH’s two week paternity leave. If the shareprice tanks, I will get back what I paid in (so around 1.3K) but based on current prices I’m set to triple that, all being well.

I will still put away some cash so it’s readily available, and of course we are going to buy some things around June/July time. We will probably be given a few good quality things (especially clothes and toys) second hand from friends, and my father and father in law will more than likely give us money to buy a pram/car seat/etc. We’ll be OK, there’s no need to go mad and get loads of things straight away. I’ll nip over to the “Families” board closer to the time to get ideas on what we might need.

I also keep forgetting, my level of pay will be the same for the first four months, so I will still be able to top up my savings as usual, if not more as I don’t really expect to leave the house that much, at least at the start. It’s not like my pay will evaporate the moment maternity starts!

Now that I have that written down, I feel calmer about it, so that’s good for everyone concerned

Other financial stuff going on…

As of next week, our “Home improvement fund” will be decimated, so we’ll need to stop any big spends for a while whilst we get it topped up. Not that I mind having a bit of peace and quiet about the house for the next couple of months!

It’s MrM’s birthday this weekend. His father and brother usually always give him £100.00 each, and he’s sensibly decided it’s going towards home improvements rather than buying a PS4 (it’s not really a purchase he could justify at this particular point in our lives, I’m pleased he’s getting wiser in his old age )

He has also asked to go shopping on Monday so I can buy him some shoes that he needs (his other ones are pretty much done) as his present from me, how very MSE of him I’ll also get him a cake, and a box of beers, and if I see anything else small that he might like – a few of his friends are calling round for a low-key gathering at our house, so it’ll be cheap all round. We actually generally prefer to have drinks in the house with friends rather than going out (not that I’m drinking anything stronger than Shloer at the moment!)

It’s Friday, which used to be the day where I put any “change” from my bank account into my savings by rounding the balance down to a multiple of £10.00 e.g. if I had 132.30, I’d tuck £2.30 away. I’m going to start doing this again, both with my own account (to go towards savings) and our joint bills account (to go towards the loan). I think this has a name in the Debt-free boards, but it eludes me at the moment. I’m trying to stick to my “half and half” decision, with this kind of small thing anyway.

I know in this board people usually discuss large amounts of savings (and investments/investment strategies) and I am essentially talking about “wee buns” as far as everyone here is concerned, but who knows, in the future I too might be able to ask about “what shall I do with my 30k+ savings” we gotta all start somewhere!

If I get some time over the weekend on the laptop, I’ll see if I can get some more info on setting up a private pension for MrM – more on that later.

Other than that, here’s to hopefully a relatively cheap and cheerful weekend (and let’s hope the weather holds! It’s gorgeous out here at the moment).

MMx

RIP Terry Pratchett

Baby savings: £34.00
Loan OPs to date: £4.30

MaryMurphy

Yesterday was Friday, so another “change” day:

Baby (mortgage) savings: £35.89
Loan OPs to date: £5.95

I have £100 to keep me going until the end of the month, this is plenty so I should be able to squirrel away more before my next payday as long as I bring in packed lunches and snacks! I swear, this last month I have been insatiable, I really need to make sure I have a “stash” of fruit and snacks to keep me going in-between meals!!!!

Actions for this month (11 days until pay-day!):
1) Continue with Friday “change” day;
2) New Isa target: £4000 (target 1. Once I reach this, I’ll reassess). Start new standing order for next month. 3.5K was a fine target four years ago, but now that we have a second mortgage we need to increase our “cushion”. I’m comforted by the fact that I have never had to dip into my Isa over the years, thanks to keeping track of all upcoming expenses over a rolling 12 month period (this is in my regular savings account) so I’m quietly hopeful that I’ll be able to continue slowly increasing this fund.

Actions for April:
1) Keep on top of regular savings account (for upcoming bills). Priority upcoming event: my car’s MOT in May;
2) Continue Friday Change Days into savings (they keep me focused);
3) Find out about pay-rise… how much exactly am I going to get? I think it’s something like 2%... Then make sure it’s put away (1% into pension);
4) Bloomin’ loan! set up standing order to round monthly payments, so that balance showing on online banking for the loan is a decimal of £10. If I do this every month, I will apparently shorten the loan by 3 months (out of a current 57 months). Not massive numbers, but for a bare minimum it’s fine. It will get the ball rolling at least, with a view of increasing this when times allow it.

I also need to de-clutter. I have gone up a dress size over this last year and a half, and with the little one coming along I don’t expect to be able to fit into some of my smaller clothes for quite a while. I’m therefore going to get rid of them, my drawers are full of stuff I haven’t worn in about 9+ months and I probably won’t get any wear out of for a very long time (as, whilst I do want to be healthy, slimming down as such won’t be a priority). I best do this now whilst I have the energy!

I saw lots of cute little bundles of baby clothes and toys going for extremely cheap, so any profits could help with bits like that, once we know what we need. I am not a complete newbie to eBaying, I realistically know how much I should expect from most of my upcoming sells, so I could probably remain “money neutral” when it comes to getting a lot of the smaller baby items. We’ll see.

MMx

atush

when de cluttering, anything decent (or that people want) then ebay it.

MaryMurphy

Last “Change Day” of the month was Friday, so did that

Some considerable damp issues have been uncovered in our living room, which directly contradict the damp report we got done prior to buying our house. Thankfully we have the report in writing (which we needed to get the mortgage approved) so we’re going to have to get the guy back out and see how he misjudged the problem so badly.

Had we known in advance how bad the problem was we would’ve had to strongly reconsider either the price, or the purchase altogether. Thankfully it’s only in one of the living rooms, but hopefully we can sort something out with this “damp expert” and whoever else we need to get involved.

So that will be an upcoming issue that may have a considerable impact financially – we’ll see what the experts say and if we have any form of recourse with this guy.

Thanks atush, on Sunday I was going to put some of my better/more expensive dresses up for sale on eBay, but didn’t get round to it. I’ll need to get started with them sooner rather than later.

I started some research into a PP for my OH, I’m going to venture into the Pensions board for some specific advice soon as it’s all a bit over my head. OH decided to announce the other day that now all of a sudden he doesn’t “believe” in pensions. All because a friend of his recently changed jobs, and rather than keeping his pension with the other company as a pension, he cashed it in and made a significant loss on the amount he paid in.

I’m not sure of the finer details (this company is in the Republic of Ireland, so their rules might be different than the UK), but it’s now led Mr MM to believe that we should keep House 1 (the one that’s being currently rented out) until he hits 50, then sell it, pay off any outstanding debts (if any), and live off the remainder. Because that fool proof scheme has always worked out for everyone… needless to say, this is NOT the plan (never put your eggs in one basket etc etc) so he’ll follow my lead.

Looking forward to pay day tomorrow and a fresh new month, and sincerely hoping we can get the issue in the living room sorted once and for all without too much hassle…

MM

atush

OH decided to announce the other day that now all of a sudden he doesn’t “believe” in pensions. All because a friend of his recently changed jobs, and rather than keeping his pension with the other company as a pension, he cashed it in and made a significant loss on the amount he paid in.

Your OH is clearly misguided and does not understand pensions. Pensions solve those sort of problems, not start them.

What happened to his friend was, his friend CASHED in his pension ie took back his contributions instead of leaving them til retirement.

This meant any employers contribs were taken back (there goes up to 50% of the pot) then he had to pay tax and NI in his contribs (which may have been not charged to begin with- all pensions get TR, but some get NI back too if they a re salary sacrifice)

So in effect, if you take back your contribs, you lose all the ADVANTAGES of the pension wrapper. So the pension DID NOT fail here, the friend failed on what he did ie unwound the pension. It is better to transfer old pensions when you leave work and take all that tax, NI and employers bits with you!!

In any case your OH would have a PP no employers contribs so he just be putting in money himself and every 100 he puts in only costs him 80. As it gets boosted with TR. and that is already a boost.

The growth in pensions is tax free. You pay tax at your highest rate on BTL income.

Having BTL, if you know what you are doing is fine in and of itself. However it is costly and tax inefficient therefore should not be used instead of a pension but perhaps alongside one.

Temrael

Not "trusting" pensions is a common view that I've heard a lot from colleagues etc. It's a bit of a misconception though I think. A pension is just a pot, it can't really let you down per se. What can happen though of course is that individual investments within it can do poorly. This will be more likely with investments that are a bit more volatile that are then cashed in early.

Taking time (and advice if needed) to select investments that suit your attitude to risk, playing the long game and regularly reviewing shouldn't let you down.