Lumina's leap towards a brighter future

Like many others, I've read countless mortgage free wannabe posts over the past year, but never managed to start my own diary. But here we go, I'm determined to make a start.

A bit about us, we're a family of two (soon to be 3 :j) and have gone through so many changes over the past year, that I've kind of lost track of our finances. I think as a first step I should try and work out how much money is coming in (fairly easy) and how much we're spending (:(). With more changes ahead I thought it'd be a good time to get started - and it's also a good way to ignore the pile of washing that's waiting for me in the kitchen... :)

While I'm not sure how to get there yet, our big goals are:
  • buy a nicer house
  • sort out pension etc
  • build up savings/ensure financial stability
  • be more aware of what we can afford

We bought our current house about a year ago and knew at the time that it would only be a temporary solution. Our bank offered us a 250k mortgage at the time :eek:, but we settled for a much more manageable 85k... it turned out that it was one of the best decisions we could have made.

In the short term, I plan to tackle the following:
  • sort out water bill
  • pay home insurance in full
  • cancel travel insurance if possible
  • post SOA
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Replies

  • newgirlynewgirly Forumite
    8.1K Posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
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    Welcome lumina and best of luck with the new diary and mortgage free journey :)
    MFW 67

    2021 £16,534.27 / £16,400
  • EatingTheElephantEatingTheElephant Forumite
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    Hello and welcome :)
  • edited 23 April 2018 at 8:06PM
    LuminaLumina Forumite
    35 Posts
    edited 23 April 2018 at 8:06PM
    Thanks newgirly and EatingTheElephant. I just realised that I didn't once mention the word overpayment in my first post and only talked about spending more money and buying a nicer house :rotfl:

    Ok, I had a fairly productive morning:
    • paid home insurance in full for the next year -28%APR if paid monthly :eek:
    • paid water bill until March next year - we're currently not on a meter. I talked to them about getting a meter fitted and it would save 3£ a year for an average user. I think we use quite a lot of water, but I might look into getting a meter fitted at some point..
    • had a look at our finances - SOA is below, any comments are welcome :)
    • did a little bit of housework

    Statement of Affairs and Personal Balance Sheet

    Edit:now out of date


    Reproduced on Moneysavingexpert with permission, using other browser.[/i]

    This isn't as bad as I thought to be honest :)
    • We only have one income atm. OH is newly self employed and hasn't been able to draw a wage yet. The plan is to live on my income and OH wage is going to buy us a bigger house, my dream car, nice holidays - and pay off our mortgage :D. I think a regular net income of 1k from January '17, and 1.5k from January 2018 is achievable.
    • Food :eek: We spend nearly 400 pounds a month on food!! That's groceries, eating out and lunches. I actually thought we were quite frugal :rotfl:
    • Emergency fund: we have a 10k emergency fund, as opposed to overpaying our mortgage last year, we focused on our savings. It should keep us going for 6 months.
    • £787 Surplus: I would like to increase this to £960 - this is how much the nursery for LO is going to cost :eek: So actually a deficit of £173 here - but we have until spring next year to adjust our spending habits...

    Next steps:
    • open savings account for annual bills
    • define overpayment and savings goals
    • Excel spreadsheet that tells me how to allocate income
    • start meal planning again
    • track spending
    • budget for home improvements -work out when we can afford them.
  • newgirlynewgirly Forumite
    8.1K Posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
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    Ouch hefty nursery bill- does that include any help from the government if you are eligible?
    MFW 67

    2021 £16,534.27 / £16,400
  • LuminaLumina Forumite
    35 Posts
    Not yet, I'm eligible for child care vouchers, but I haven't quite worked out how much it would help. I was hoping for the new tax free child care system to be in place by next spring as it would save us 2k a year...
  • edited 23 April 2018 at 8:08PM
    LuminaLumina Forumite
    35 Posts
    edited 23 April 2018 at 8:08PM
    I feel like i made quite a lot of progress over the past few days :beer:

    I set up an excel spreadsheet that tells me how much of our income needs to be allocated to various pots. Some money will go into the joint account for groceries and bills, some will stay in my account for the mortgage, and some into savings/annual bills.
    The spreadsheet also told me that we will be able to save 3.5k until Dec '16 :j
    As opposed to putting this into our OP savings pot, we will do some work on our house. It should get us a new bathroom and heating system. This also means that we won't be able to save much towards the mortgage until Jan '16 but I doubt we'll have the patience to get it done once LO is here. .

    Next steps:
    • track expenses
    • open savings account for small amounts saved that can go towards mortgage (maybe slightly optimistic, but I saved £17 at hairdressers the other day, and £3 by returning an item that I had just bought, because it was cheaper in the store next door.)
    • confirm that we can get the work done for 3.5k before we start (we have got a bit of a habit of starting projects before pricing them up and they always end up costing a lot more than we thought...:rotfl: )
  • LuminaLumina Forumite
    35 Posts
    Opened 3 additional savings accounts yesterday and was told they would be ready to use on Monday :j
    One account is for mortgage OP, one for annual bills, one for nursery fees.
    So excited that we seem to be making progress (even though we haven't saved anything yet), that we went straight to the pub last night to celebrate :( that's £25 for a very average meal. But OH wasn't very impressed either and has decided it's not worth the money and he doesn't want to go there any longer. So I guess that counts as progress? ;)

    Also managed to get a bunch of baby clothes from a second hand sale for £20. It should be enough to dress LO for the first 6 months - and a good quality cot bed for £20, which should last 6 years :)
  • EatingTheElephantEatingTheElephant Forumite
    1.4K Posts
    ✭✭✭
    Lots of great progress since I last popped in Lumina, well done :)

    Ouch to the nursery fees, I'd forgotten how expensive childcare is.
  • edited 23 April 2018 at 8:07PM
    LuminaLumina Forumite
    35 Posts
    edited 23 April 2018 at 8:07PM
    A few things have happened over past few days:
    Good:
    • Meal plan is working really well. OH didn't even complain about veggie mince in chilli con carne
    • both of us had a packed lunch each day so far (it's only been 3 days:rotfl:)
    • booked our holiday
    • In-law has said he's getting us a top of the range car seat and click-base-thingy for LO! :j It doesn't really count as a saving as I hadn't budgeted for it, but it's made my week :)

    Not so good:
    • accidently went into overdraft on JA. Food shopping was delivered after 9pm on Saturday, and they debited the account on Sat, but my online transfer didn't go through until Monday... :mad:
    • we've been to our local shop already..only wanted to get milk, but somehow ended up spending £10.

    I'll try and get a price for our heating next week, best to do this while it's still warm :)
  • LuminaLumina Forumite
    35 Posts
    It's been a mad week at work and I'm grateful that the weekend is finally here...

    Heating work will cost us £1650, and we've decided to go ahead with it while it's still warm. While we're unlikely to recover the whole expense in energy bill savings (only planning to stay here for another 3 years, but more on that later), it will make this house easier to sell and warm in winter...
    We will pay for the work from our emergency fund now as opposed to saving up for it. But August's and September's savings should bring this back to 10k.

    I tried to work out how big our OP pot needs to be to enable us to upsize in a few years time. In a perfect world we would sell our current house now and move to a better one right away (there is a lovely one for sale atm for 250k), but I'm very reluctant to take on such a massive mortgage as we would need to borrow 215k.... I think I would be happy to borrow 170k, which would cost us 1k/month with 5% interest. If house prices rise by 3% each year, this house would cost us 275k in three years time, which in turn means that we'd need to find 105k by then :eek: Provided our house rises in value to the same extent we would have 45k in equity (also assuming we reduce mortgage balance by 5k during this time with our regular payments). We would be able to find another 10k from various sources, leaving us with with a savings target of 50k by Aug 2019 or 16.7k a year or 1390 per month :( right now this seems pretty impossible :(
    My income won't rise in the next 3 years and will just about cover nursery fees and living costs, which in turn puts a bit of pressure on OH who has just started his own business.

    I think I might need to review our spending habits and see if I can identify areas for further savings... Apologies for this not being the most positive post, but at least I now have some figures to work towards :)
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