Finding the right mix.......

FIREdoc

Such an inspiring diary, thank you for sharing! Looking forward to following your journey.

Zeddy

Today has been a good day, we've had fun as a family, enjoyed some experiences and not wasted money.

As we're staying in a hotel we brought cereal pots and a pint of milk for the girls to have first thing and we slowly got ready for the day. We had brunch (due to how the day was going to work out food wise), went to frankie and bennies and used a voucher for kids eat free so that came to £19.

We walked into town and popped in to two charity shops and bought MM four Jacquline Wilson books for £3 and MC a Paw Patrol reversible sequin t shirt (which she didn't particularly need but she's a massive fan and normally used to hand me downs! We went to visit the castle, which had a great trail on, entry came to £18 but it was really enjoyable and I don't mind fees for this kind of thing, I view it almost as a charity donation for the preservation of buildings, so am happy with that.

We took a couple of snacks to replace lunch, went to a play area and then had a walk by the river. We then headed to the indoor snow centre. For MrZ's Christmas present I bought him a private ski lesson, plus family snow play and toboganing (or boggling as MC keeps calling it), we had so much fun together with this. While MrZ had his lesson I did buy the girls and me a drink and cake so we could warm up and as I knew dinner would be late.

We then headed to Pizza Express for dinner and used clubcard points, so spent £17 on drinks and the leftover food balance. Plus there's now some pizza for MrZ to have for breakie tomorrow!

So a reasonable speedy day, but decisions were planned, it was very enjoyable, we haven't had a proper family day in ages.

getmore4less

I do find we waste money though, by being disorganised, by not thinking, by not appreciating the things we do. We got in a habit of eating out and it didn't feel like a treat, the kids wouldn't always behave as it became the norm to eat out rather than a treat to be enjoyed. We've cut back on this and enjoy meals out much more when we go out and are saving money. For me it's finding the value in what we do, not wasting our money and saving on the interest on our mortgage and saving for our next house move

Just dropping in for my 2d worth and the above caught my attention

You have a very healthy income and it is very easy to drift into habits that don't get good value, but you kind of don't notice because there is plenty to go round.

I think you would benefit from a detailed budget, this requires thinking about where you want to allocate the money and planning for the big ticket items.

Our mortgage was initially £297,500 and we have repaid approx £38k and it's sitting at £259,000. We currently overpay each mortgage payment by just under £450 a month.

If the £450 has been for the full 3 years that suggests a mortgage payment of around £1,100k(2%) on a 70% LTV with full term of 30years


This is your first big ticket item the hard(ish) deadline coming up in just under two years so that would be a good one to plan for in more detail.

Remember that your HTB payback is not the amount you borrowed but 20% of the house value.

Your £25k loft conversion will have cost you another 20% of the value added to the property.

With the house now at around £475k that going to need £95k to pay it off.

if you reset your mortgage back to 70% £332,500 that would cover £73,500,

75%(to still get good rates) would get you £97k covering it now.

If prices are still rising in your area it may be worth sorting this out sooner than waiting the full 5 years

Definitely worth the number crunch as that 0% on the HTB may not be saving you anything.

Your HTB has gone up from £85k to £95k in 3 years that an equivalent rate of 3.75%

To pay that off in 27 years 2% would require around £1450pm less than you are paying now with the overpayment.

It's the £2k everything else that I need to ensure we're getting value for money on/worth it. There are some decisions that I'm lucky enough that I can say my time is worth more than the cash savings, but its this I need to balance.

it can be an easy justification to say I earn £X per hour so I am better of doing another hour and not worrying about the cost of stuff.

The reality is that when you get into the habit of looking for the deals and value for money the savings become long term and far outway the initial investment of time.

If either of you are going into the 40% bracket consider upping the pension contribution.

Zeddy

Thanks GM4L some interesting points.

The mortgage initially had 25 years, we didn't over pay all the time as we had a 24m interest free purchase of furniture when we first moved in, when this finished I moved the repayment all into mortgage over payment.

Our LTV is better than I made out as the mortgage company accepted a better valuation, however, I am dubious of it, so my valuation is cautious, especially as we're pushing on the higher valuation in our area.

I know what you mean about the help to buy and it is something I need to look into. When we purchased the house my earnings were over £10k less p.a and I wasn't in the profit share bonus that I now am in, with hindsight we didn't need to use it as my income this year will be about £30k more than it was then. The idea was it was to be repaid when our childcare costs reduced or if we saw a dip/stagnation in the market we would jump on that.

MrZ has a final salary pension and we haven't set him up with a private pension so it's just me that at the moment can make extra pension contributions, which I'm doing a one off payment in March for £4k which will help. In a few years my bonus share will double, once ive paid in equity for my stake of the business, then I will make more significant over payments and pension payments.

Zeddy

Yesterday we had breakfast of croissants from the supermarket and MrZ had MM's left over pizza. We went for a walk around Birmingham doing a children's trail, it was glorious weather and we had lunch sitting outside by the canal.

We took snacks and drinks so didn't buy anything else on the walk and even managed to not cave to MC's constant whining for an ice cream!

Dinner on the long drive back was McD's as it's quick and cheap. Journey was fine and both girls slept for the last half so MrZ and I managed to have a chat about holiday budget for the rest of this year and next which is a far more exciting budget to talk about!

Busy_Mee1

Hi Zeddy.

Just read through your diary and it makes an interesting read. We are in a different place to you now, but we were where you are now a few years ago. Busy jobs, two children, childcare and all the related costs, big mortgage........juggling and more juggling. But you are doing really well and I do like your balanced approach. You never get those years with the children back and believe me they fly by.

What I would say is try to keep a spending diary of where your £2k a month goes ....I did this recently using a spending app and it was very illuminating :eek: But once you know how you are spending your money it is easier to make conscious choices about what you want to pay for.

The other thing I would suggest you do is more of a long term plan....where do you want to be in 5, 10 years time, do you want to pay for driving lessons for the children, buy them a car, fund them through university or help them with a house deposit? And finally when do you want to retire ? All of this will help you plan how you want to spend or save your money.

I hope this helps and I look forward to watching your journey

BM

Zeddy

Busy_Mee1 wrote: »

Hi Zeddy.

Just read through your diary and it makes an interesting read. We are in a different place to you now, but we were where you are now a few years ago. Busy jobs, two children, childcare and all the related costs, big mortgage........juggling and more juggling. But you are doing really well and I do like your balanced approach. You never get those years with the children back and believe me they fly by.

What I would say is try to keep a spending diary of where your £2k a month goes ....I did this recently using a spending app and it was very illuminating :eek: But once you know how you are spending your money it is easier to make conscious choices about what you want to pay for.

The other thing I would suggest you do is more of a long term plan....where do you want to be in 5, 10 years time, do you want to pay for driving lessons for the children, buy them a car, fund them through university or help them with a house deposit? And finally when do you want to retire ? All of this will help you plan how you want to spend or save your money.

I hope this helps and I look forward to watching your journey

BM

Thanks BM, I know I do need to understand where the £2k goes, my guess would be 25% food, 5% fuel (after work reimbursement), 25% entertainment, 15% clothes and beauty, 15% birthday/Christmas/celebrations, 5% insurances I pay annually, 10% holidays/spending money. It would be good to see now, how close I am, maybe a task for evenings this week.

As for long term, I really don't know and that's half my problem. I have mixed feelings about paying for things for my children as adults, but that could be because we're a way off, but it would be good to have the option if they needed it. I need to figure out what we want, I've no desire to stop working or cut down, in fact I can't do my role on cut down hours, I've tried! I think my goal needs to be for moving and then figuring out how to pay back a large mortgage before we retire, so I need to look at this seriously.

Thanks for your comment, it's gives me some good homework :rotfl:

getmore4less

Although I did not say it in the post while you are focusing on the £2kpm and squeezing better value you could be letting another £10k slip away from you.

If you think you will do more on the house you need to factor in the HTB impact of adding value.

You have to be thinking the mortgage is £95k bigger than the current balance.

Even if you move to go up market that's money you need to service and pay back at some point.

On the job front any scope to scale the job, where you effectively pay people to do the easy stuff and focus on the bits that earn the real money.

That's how most successful business grow.
Works for individuals as well even if part of a bigger business.

Zeddy

Right, so have had a look at what I've saved extra to my monthly over payment to my mortgage savings account and it's £886.16 and looking at my Feb budget I'll have another £95 to add which I've not spent or saved in Feb.

Looking at my March budget I've planned to move £364.02 on 1st March which would be £1,345.18 to go into extra mortgage savings for the first quarter (plus 3x £430 reg over payments), therefore for 2019 Im going to try to save £10,000 (plus reg overpayment) into extra mortgage savings. This will be doable if I can repeat this first quarter, plus an extra £206 each quarter, plus add £4K of my bonus that's paid at the end of a March.

Zeddy

getmore4less wrote: »

Although I did not say it in the post while you are focusing on the £2kpm and squeezing better value you could be letting another £10k slip away from you.

If you think you will do more on the house you need to factor in the HTB impact of adding value.

You have to be thinking the mortgage is £95k bigger than the current balance.

Even if you move to go up market that's money you need to service and pay back at some point.

On the job front any scope to scale the job, where you effectively pay people to do the easy stuff and focus on the bits that earn the real money.

That's how most successful business grow.
Works for individuals as well even if part of a bigger business.

We won't be doing any work on the house over and above maintenance, it doesn't need at and I'm conscious of the extra it costs with the HTB.

Because of how the deal on buying our house and selling our old one was structured there were a number of factors/savings which negated the almost instant increase in value of the loft conversion (we sold our old house to developers and bought the largest house they put on our plot, so there were all sorts of tax and fee savings which I felt at the time roughly compensated for paying extra increase in value to HTB). The other part of this was when we sold we were looking for a larger house in the same area but there weren't really any for sale, we couldn't face doing work/living through extension type work, my eldest was halfway through reception so I didn't want to upset her settling into school and really importantly as we have no family local to us we wanted to stay close/at the same school as two families we know well who also have no local families as we're a great logistical support to each other, so I guess there lay the compromise.