Our SOA...

JamesEmma

Unfortunately I can't be that picky with when I choose to do the overtime. There's plenty of it but it's a case of me saying what days I'm prepared to do and for them to say which of those I get. It could be all of them or none at all. It's a case of me putting in for all of them and getting what I'm given. I generally expect a minimum of 5 a month which brings in an around an extra £1k a month after tax.

'Re childcare we use a child minder for three days a week. Outside of term time we have to pay a 50% retainer fee which is annoying as he'll to me but apparantly par for the course. We figured putting £299 A month in on top of both our combined childcare vouchers covers a full month and if we continue to chuck it in every month we should hopefully see a surplus grow on the bills account over the course of the year.(which could serve as an emergency fund for unexpected expenses).

JamesEmma

getmore4less wrote: »

Where I was going with this

£1,100 is quite a lot even if you have a decent deal on your place.

£1100pm will cover a £300k repayment mortgage @ 2% over 30 years(upto 70).

Of that £1,100 the split is £500 interest and £600 capital
Renting the money is a lot cheaper than renting the place you have.

If you looked at 5% deposit and 20% help to buy that gives around £400k to play with a £300k 75% LTV HTB deal

£20k savings would be a decent target for a savings pot.

I think that once you have the spending sorted, probably going to take 6 months to settle down, and you have a good idea of what is available to hit the debt and save I would be reviewing that goal of buying a place.


With £80k joint income £300k is under 4 times and I think with a good budget in place and the debt down you will hit affordability.

IT may be worth a chat with a broker in a few months to see what is feasible

when you crunch some numbers it may be worth delaying debt repayment to get a deposit together and buy.

With mortgage costs very close to renting the extra interest on delaying debt will be more than covered by the effective reduction in interest renting

That is encouraging. We've always held the thought that to apply for a mortgage we have to have 0 debt unless we have a massive deposit. If I understand you correctly you're confirming what if hoped that even with debt, with our spending controlled and a decent income, by using a help to.buy equity loan, we could still buy a house in the not to distant future :T

enthusiasticsaver

I think the figures quoted for potential mortgage assume no debt and many lenders make this a condition so I would not get too excited just yet re buying a house. Even if you are allowed the debt it will reduce the amount you are able to borrow. Ideally especially if you plan a second child and will need a large mortgage due to living in an expensive area having no debt would be best and a 10% deposit.

As others have said a realistic soa is the key and having a few years of keeping in budget is a good start and seeing how much you can get the debt down. You live in an expensive area so having a huge mortgage plus high debt seems a recipe for disaster especially if rates go up.

Chandelier.

Morning,

The calculator I used when snowballing debts was here: https://www.whatsthecost.com/snowball.aspx . Have a play around with the figures.. just make sure you insert the right debt totals, repayments and interest rates.

I still think there is room for tweaking into your budget. As someone said, plan for your yearly expenses ahead.

Personally for me, I worked out the costs of my expenses over the year and divided them by twelve. Each month, I then transfer the money across to seperate bank accounts/pots and let them build up and so the money is there when needed. This way does not always work for everyone and it may seem quite complicated to others.

I have recently started to use Monzo which allows you to have seperate pots for different things and organises your spends into categories so you can see where your money is going. It also updates you instantly when a transaction is made which I find helpful. You can then see what money you have left in each pot.

I use several different bank accounts, each which has a purpose and the system/method works for me.

I have a main bank account, where all my income goes into- I then transfer this out into another account ready for the month ahead. I use this as my main bills account which my monthly direct debits come out of and I leave a small buffer for other things.

My second bank account is with another bank. Once all my income is in, I leave it there as I earn 5% on balances up to £2.5k for 12 months. At the end of the month I earn the interest and then I take ten minutes or so to split my funds up to budgeted areas.

I then have saving pots with another bank account which are each have a name and purpose. I transfer set amounts to each of them which build up over the year and I have the funds there and then. I chose to save up to pay my expenses annually rather then another monthly direct debit. It takes a while to get into this mind frame though and my circumstances are different to yours.

I have another account which I use solely for entertainment purposes which is linked to a HTB Isa that I pay the maximum amount into each month.

And last but not least, a monzo account that I use for surplus income and which goes towards other spends I have not accounted for.

As I say, my system is quite complicated but it works for me. I pay myself savings at the begininng of each month and what is left is spread across everything else. I currently have a small debt of £270 on a 0% CC but I do not spend on this anymore and pay above the minimum each month. It will be repaid by the end of the promotion period but is there if needed for other expenses.

To give you an idea of what I save/budget for:

1) Entertainment Fund: £X per month. (This covers any meals out, day trips and other entertainment things)

2) Car Fund: £X per month. (This covers car insurance, car tax, servicing/MOT and any other car related expenses)

3) Petrol: £X per month. (I set aside a budget for this each month, I don't always use the full amount so let it build up incase of further trips that require more fuel. I try to drive as economically as possible. Have a look at the MSE Guide re this).

4) Food Shopping: £X per month. (Set a realistic budget, transfer the money into and work backwards from there. Once its gone, its gone. Make do with what you have in stock already, meal plan and buy accordingly).

5) Childcare Fund: £X per month. (I set aside just above the payments required and allow a buffer to build up. The money is there ready to pay upfront at the beginning of each month).


6) Birthday Fund: £X per month. (I add up the number of people I buy for over the year, set a savings target and put a set amount into a bank account which also leaves me a buffer).


7) Christmas Fund: £X per month. (Again, at the beginning of the year I look at who I shall be buying for, set a quick budget and add up all the figures, divide by 12 and pay a set amount monthly into a bank account. That way all costs are covered and I usually have wiggle room in the budget. I oversave in this category, what is left goes towards other savings),


8) Emergency Fund: £X per month. (It is always good to have one of these which is easily accessible for any just in case emergencies, start small and work from there).

Those are just a few of the things I save for. As stated earlier my circumstances are totally different.

I pay myself savings as if they are a debt repayment at the beginning of each month so I don't "miss" that money.

I know you are looking at repaying your debts off as quickly as possible but you also mention about saving for a deposit, Can you do both?

Utilise the LISA and what you already have contributed into it, set up a standing order for a set amount each month and let that tick over. It is amazing how quickly it builds up. Once your debts start to decrease, you could then possible split your surplus across remaining debt and savings. There are some savings accounts which offer up to 5% interest across the year. I recently did this and earnt just under £100 interest on the full balance at the end of term.

I may be blabbing on here but I am just giving you ideas on what worked for me.

Ultimately do what works for you, just be realistic. It's a journey, not a race and it needs to be completely manageable whilst still enjoying what you have.

JamesEmma

That all sounds really good..

We each have our own bank accounts with First direct into which our respective salaries are paid and from these we now feed two other accounts - the first pays our unsecured debts the second we will send everything else from our SOA monthly expenses to. I'm thinking that second account has a hell of a lot going into it and wonder if it might be worth separating out into another account certain categories such as holidays / Christmas / car Maintanace etc...?

MallyGirl

would be even better if that new account - where you are trying to build up a balance for larger expenditure - gave interest.

clairebeth

I'd suggest getting a Monzo then. You can have both a personal account and a joint account so you could booth keep an eye on the money and keep each other in check. It's app based and very easy. Starling pays interest but don't find the app as easy to use and doesn't always update the balance immediately.

getmore4less

JamesEmma wrote: »

That is encouraging. We've always held the thought that to apply for a mortgage we have to have 0 debt unless we have a massive deposit. If I understand you correctly you're confirming what if hoped that even with debt, with our spending controlled and a decent income, by using a help to.buy equity loan, we could still buy a house in the not to distant future :T

Debt will need to go down as it will reduce the lending available but you have total lending headroom on the salaries if you get costs under control.

It won't be tomorrow but I do think it is close enough to look into during the next 6 month it a bit more detail with broker guidance on the lending possibilities to drive the planning.

There are 5 year fixes at 2% so if you could do it today your mortgage would be about the same as rent, within that period the debt would be gone freeing up £1,500pm.

It's not today with the £1,500 currently allocated to debt
5 years should be £40k+ deposit
4 years £20k
3 years debt free

There is room to improve on that.

By the time you would have a deposit you would know if the finances are working to take on the mortgage commitment.

The SOA is not there yet but in 2 years if you keep throwing £1,500pm at the debt will be down to around £17k which won't impact the lending to much with a bit of work.

I would be reviewing this time next year to see where you are and if you can redirect from debt to house deposit.

getmore4less

JamesEmma wrote: »

That all sounds really good..

We each have our own bank accounts with First direct into which our respective salaries are paid and from these we now feed two other accounts - the first pays our unsecured debts the second we will send everything else from our SOA monthly expenses to. I'm thinking that second account has a hell of a lot going into it and wonder if it might be worth separating out into another account certain categories such as holidays / Christmas / car Maintanace etc...?

Unless you can manage with virtual accounting I would definitely spin off things like holidays and Xmas these are discretionary spends.

There is temptation when you see big balances to spend some of it best to keep the regular bills account running at no more than a month ahead so money goes in and out but you have a buffer.


One thing some can't get their heads round is it does not matter where the money is if you have a plan and sticking to it.

You can manage the what it's for separately from where it is.

You can them get the best rates for you money with the cash flow analysis some will be able to be put away longer term.

once your high rate debts are gone your others are lower than some saving rates.

BoGoF

theoretica wrote: »

I strongly urge you to look more closely at that £1000. If it is left as 'disposable income' it will find itself spent without thought. Decide how much you are happy to get spent without thought - on coffee and clothes and entry to the zoo and give the rest a place. I suggest putting some to debt repayment, some into a savings account for emergencies/things you will need to change your SOA to include (is your car maintenance high enough?) and a bit into a savings account for bigger purchases to be made after thought and discussion (like holidays or a new computer).

JamesEmma wrote: »

It's an aspiration and is the first time we've written down what we spend...everything in that list will be covered by what we send to the two respective accounts I've mentioned. It'll probably leave a disposable income of around £1000 A month for everything else day to day / to throw at the debt..

Re child benefit... We do claim and put it directly into a savings account for her. Last year I earned £55k pre tax and this year will likely hit 60k. I'm still not sure it was ever worth claiming as am pretty sure we will have to pay some/all of it back. My salary is actually £45k a year but I earn garuanteed over time. My monthly take home varies month to month... from anything between £2500 on a bad month to £4000 on a very very good month...(after pensions deductions, credit union repayment and maxing out the available child care vouchers (£246ish I think it is))...

The child benefit issue really needs to be addressed. There is no point setting a budger if HMRC are going to come along and seek repayment. There is likely to be interest and penalties. So I would urge you to look into this before HMRC catches up with you.