New House Savings

Hi everyone! Starting a thread that will hopefully keep me on track for buying a house next year with my boyfriend.I'm very lucky that my parents have let me stay at home this late but it's time to get things sorted.

At the moment I only earn £1226 a month after tax so one of my priorities is to try and find a higher paying job. Already tried to get an increase as I was so close to minimum wage but instead they just reduced my hours. It's still five days a week so I'm not so keen on getting a second job at the moment but it might have to come to that.

I'm also paying £202 a month on a car for the next three years - wasn't sure if it would be better to try and get it paid off early? Any opinions?

I have a total of £5200 saved already. At the moment I'm only moving £100 across to my savings as I have a holiday booked at the end of July. Not ideal when you're trying to save but I thought it would be a final treat.

Replies

  • Skint_yet_AgainSkint_yet_Again Forumite
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    Hi there :wave: welcome to the forum. It's been a quiet week here but good to see you. Good luck on the job hunting and well done on your savings so far on your low wage that's marvellous :T
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  • savingwannabesavingwannabe Forumite
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    Hello frivolouswhim, Sorry about late reply it has been a crazy week for me. lol.

    Your salary sounds pretty healthy already I think. It's not how much you earn it's what you do with it I have learned over the years.

    I don't know anything about car loans but if you are paying a higher rate of interest than you are earning on your good savings it makes sense to pay it off early. I don't know what other's think. Then using Dave Ramsay's method I would try to get a £1000 of emergency fund and then just save as much as possible but still do have some fun along the way.

    I take sandwiches to work and have saved so much. I don't drink a lot of alcohol and that saves money too. I would also look at switching your bank accounts as you can get money for doing that with almost no hassle. I am going to carboot lots of things later in the summer. You can ebay or facebook sell things to make money also. All of these should make you money. Take your time and enjoy it. It is v satisfying.
    Aiming for a minimal spend 2022
  • SesleaSeslea Forumite
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    Hi! I'm also saving to buy my own place :)

    I'm sure you already do, but definitly make sure you have a Help to Buy ISA or LISA. You could use the money you have saved now to put the full £1200 first month's allowance in when you open the account to get the most from it!
  • Hi frivolouswhim (AWESOME username by the way!)

    I'll second what Selsea said - if you count as a first time buyer then definitely open a HTB ISA or LISA to get the bonus (and get your boyfriend to open one too if he's a first time buyer). But keep in mind that whichever one you use has to have been open for at least 12 months before you buy.

    Are there any charges for paying off you car loan early? If not, then ordinarily I'd say to pay off your car loan if you can - I think the interest rates on them are reasonably high, and DEFINITELY higher than any interest you'll be earning on your savings (although you will be getting a 25% boost on your HTB or LISA savings!). However, as you're hoping to buy a property, you also need to be sure that you've got enough money saved up for that and if paying off the car loan means you won't have enough to buy a property then you need to decide which to focus on. What price property are you hoping to buy? Is your deposit large enough? Do/will you also have enough saved to pay for solicitor fees, searches, moving fees, stamp duty (if you'll pay it), furniture on top of what you need for your deposit?

    Are you desperate to buy/move out of your parents as soon as possible? If not, then I would work on paying off your car loan first as it will save you the most money. If buying a property is your priority then I would work out what how much you need in total for deposit + stamp duty + solicitor fees + searches/surveys + moving costs + furniture costs + £1000 emergency fund (as suggested by SW). Then figure out how much short you are (if you're short) and decide on a monthly savings amount that will ensure you have enough money at the point you want to buy (plus a bit more to be on the safe side). Everything else left over that you don't need to save, use to pay down the car loan. Paying down the car loan will benefit you in three ways: 1. you'll save money on the interest by paying it off early, 2. you'll have more money left per month to pay the mortgage/save/enjoy, 3. the mortgage lender will be likely to lend you more money as you've basically got £200 "more" money in your pocket than you currently do.

    And enjoy the holiday!! Saving is all well and good (and I definitely don't recommend debt to anyone), but you can't take money with you at the end of this life and I firmly believe that life should be enjoyed all the way through, not struggled through in frugal misery. It's just about working out what your priorities are. For us holidays are very important, and something we're willing to spend money on but we don't care much for alcohol, eating out at posh restaurants, fancy clothing or buying lunch out every day at work - so we cut down on those to afford what we want!
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