Learning to live within my means

astrocytic_kitten

Love the the list idea!! I tend to either leave browser tabs open or stick as a line in my to do list app, both of which tend to keep it a bit more in my face than I’d like. I’m only up to book 5 in Rivers of London, but either Moon over Soho or Broken Homes is probably my favourite so far. Moon over Soho is definitely the one that got me hooked on the series, I liked the first one but wasn’t sure about reading an entire series  (I’d bought books 1-5 in one go when on kindle offer years ago, before I’d actually read any - definitely pre-LBM! So reading the series was kind of needed after that).....but after MoS I was hooked.

After listing out everything I want to spend the money on, I’ve decided half can go to a work charity drive I normally budget for but forgot to this year, and the other half on some fairy lights and a couple of practical household bits and bobs.

The people I buy birthday presents for all have their birthdays over winter so I’ve been doing some online Christmas/ birthday shopping and even though I’ve been saving for this all year and it’s all budgeted for, I’m getting a bit anxious spending the money - partly because I keep seeing things I want for myself and I’m worried it’s reawakening the shopping monster and I’ll slip back into old ways once debt free. I’ve also increased a couple of charity direct debits basically on impulse without thinking about it, on the basis I can afford it....I’m amazed I’ve paid off so much so far and stuck with it, and the end being in sight is exciting, but I’m also worrying I haven’t learned any lessons and I’ll slip back into old ways. I guess I’m worried about both self sabotaging success, and also that I’m getting ahead of myself and jinxing it by assuming I’ll continue to make good progress 😂

astrocytic_kitten

Having a very money-focused day today, thinking about long term goals. Was then distracted all through yoga, so putting it down here to get it out of my head.

Immediate priorities:

1. Get out of debt - hopefully in April 2022, if not then May
2. 6 months emergency fund (currently at 3 and a bit months)

Goals for after that but I have no idea what order etc to tackle them in:

1. 12 month emergency fund - feel like this is really important given economy and precarious state of my health. Ideally in a notice account? I currently keep one month plus a £400 things breaking emergency fund in easy access savings and will continue with that.
2. Overpay mortgage - can overpay 10% per year without hitting ERC. Increasing equity basically increases deposit for next place and also saves on interest so this feels important (though makes me nervous about having less cash handy).
3. Increase pension contributions - I’ve had a really good pension for the past couple of years. Before that I always contributed but generally a pretty minimal amount, at one point it was down to 1 or 2% as I was so highly leveraged. This is also the first time I’ve had a generous employer contribution, before it was mostly matching mine. According to the calculator if I work at my current salary till I’m 67 I’ll be fine but that seems rather unlikely so I’m thinking some catching up needs done. But I can’t decide if it would also make sense to not increase until I’ve moved house, for mortgage income purposes, or if that’s stupid because I should get started ASAP.
4. Continue with sinking fund for house. Exists but is in its infancy and I want to increase what I’m paying from £50 to £100 once debt free. I currently have about £300 for this in an easy access account, and today set up a regular saver for it to get a better interest rate. Max regular saver contribution is £50/m and I’m saving that so I can’t move over the current £300 (also no plan for how I’d increase the monthly amount for it, it certainly can’t be done what that account!).
5. Continue with vet sinking fund - have regular saver for this.
6. Maybe start putting money aside for a holiday?!
7. Moving fees for house move. Planning to have solicitor fees etc come out of equity but will need some up front costs. 
8. Stocks & Shares ISA - I do know this is likely to be final priority, once rest sorted.

All the above complicated by (a) not knowing what my income is going to level out at - it’s currently being supplemented with sick pay but that won’t last forever and (b) needing to move house in the next year or so (plan to start looking 6 months after my hours increasing to a level I’d get the sort of mortgage I’m looking at) to somewhere more accessible for long term health / mobility reasons, which will almost certainly end up increasing my mortgage which all complicates (c) wanting to get my living costs as low as possible due to health etc reasons, so I’m not tied to earning a certain amount. Though I do plan to increase the money I give myself for spending a little bit once debt free.

The other thing confusing me is where to save the money....ideally I’d continue with one account for emergency fund, one for house fund, one for vet....and then have short term emergency fund and my pots all easy access. That would be nice and simple but I know it’s not going to work unless I’m happy with rock bottom interest rates on some of it. At the moment I have the emergency fund in Marcus account but the rate on that has dropped, have £500ish in credit union which I can’t access while the loan is being paid down, and have a couple of regular savers. Plus short term emergency fund and some of house sinking fund in easy access savings attached to my bank account. Interest rates on most are minimal. According to Martin regular savers need swapped around yearly for best rates. And then I think it probably makes sense to keep some in an Isa even though currently there’s no real extra benefit. It’s basically just all really confusing.....good problems to have I guess, but my head does feel like it might explode. Maybe I need to leave the safety of DFW and venture into other parts of MSE to find out how people manage their money 🙈

Anyway, watch has just buzzed at me to tell me I’m unusually stressed so off for a hot chocolate 😂

GeorgianaCavendish

I haven't even thought about the best type of account for my savings! To be honest, I think I'm still in shock that I actually have some savings to be honest It does make sense to put my emergency fund in an account with a higher interest rate that is slightly more tricky to access (compared to a pot in my Monzo account). I just had a look at Marcus but their online savings account is currently closed to new applicants, I'll have a look at the MSE savings guide and see what they recommend for instant access. 

I keep replaying the same saving vs debt repayment arguments in my head, I'm going to save towards each goal in named Monzo pots for now and think about it again a bit closer to the end of the soonest-expiring 0% rates - I've still got 6 months on those cards and it seems a bit ridiculous to be devoting so much headspace to it but after years of poor financial decisions, I'm really stressed about making the right choices now. 

MidsHollie

Hi @GeorgianaCavendish and @astrocytic_kitten. Have you guys ever listened to Dave Ramsey? I know he isn’t the most popular bloke round here, but I think what he says about emergency funds really make sense. He says that an EF isn’t there to make your money or work hard for you. It is essentially insurance. So if your interest rate on it is pitiful, it really doesn’t matter. As long as it is there for you to access easily in an emergency that is all that matters. I don’t worry too much about where my EF or my sinking funds are, but if they remain instant access then I will try and maximise the interest. But I don’t lock them away just to get a little more return. 

GeorgianaCavendish

Thanks @MidsHollie that is great advice! I definitely wouldn't lock it away in an account with any notice period for withdrawals, but maybe getting it out of my Monzo account will stop me getting stressed about doing the 'right' thing with it (and if there is a any extra interest that is a bonus!) 

astrocytic_kitten

Have been feeling much better about everything money related since got it all out on the page here. That’s a good way to think about it @MidsHollie, I might be so excited to actually have savings I’m getting a bit ahead of myself on the best thing to do with them! 

@GeorgianaCavendish, I have one month’s emergency fund in an easy access account attached to my bank account so I can transfer the money instantly via the app, but everything beyond that is with Marcus. It really helps it feel like untouchable separate money to me, and I like not being able to see the balance on my banking app. Helps soothe worries I’ll spend it all.

I’ve spent today wavering on buying a dress I’ve been wavering about buying for a good 2 or 3 months now. It’s on a good deal, I have nothing left in my clothes pots but could scrounge money from other pots. Have decided to sleep on it and see what I feel like tomorrow - minor progress at least, instead of just hitting buy.

astrocytic_kitten

Well, I didn’t buy the dress. But I’ve just discovered that some really beautiful Discworld hardcovers have been published and now I want them all 🤦‍♀️ There is obviously no need for me to be buying books that I already own in kindle, audiobook and paperback form, and I also have no space for them. But I’m still seriously coveting them.

I’ve reached a compromise with myself that I can buy as many as I want to AFTER the debt is paid off. I was going to give myself a quarter of the monthly debt payment to spend on something - had been thinking a painting, but maybe I can do a painting plus books. Need to leave it at that though, and be mindful of the prospect of promising myself this for lots of stuff and having a big blow out.

astrocytic_kitten

Well, I still haven’t bought anything! Finishing October just under the 6k barrier and at 74% paid off. In a couple of weeks when the loan payment comes off I’ll have paid off 3/4 of the original debt - can’t really believe it. Was wondering if I could get to 3167 by the end of the year, so I’ll have paid off 20k in 2 years, but I don’t think I can make it happen. Getting into the 3k bracket is hopefully doable though.

astrocytic_kitten

I don’t know what the matter is with me at the moment, but as soon as I talk myself out of one purchase I’m all set on another one - this morning it was convincing myself I needed a big snuggly jumper. Unfortunately the clothes pot is empty (have used it to cover some higher medicine spends than normal) so I’m just going to have to manage with the other 10 or so jumpers I have.

rugbymadfamily

Hi @astrocytic_kitten just stopping by to say congratulations, you're doing so well! Can't believe how much you've managed to pay down since your LBM - seriously impressive. Sp close to your DFD now, keep it up and look forward to hearing what you plan on doing with the money once it no longer has to be paid to debt each month!