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Confused where to start

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
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ForestBluebellsForestBluebells Forumite
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edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Sorry if this is the wrong thread I wasn’t sure where to put this.

I’ve recently been given a £15k gift and although I may spend some on home renovations I’m starting to think about how best to save it and also turning around my spending to save a much bigger chunk of my salary than I do currently. I’m not entirely sure where to start, I’ve spent hours browsing the forum but is there somewhere to look for a financial overhaul ideas list or something? I opened a savings account and a regular saver account, I might open a second regular saver and drip feed one with the money from my gift and use the other to build up savings from my salary. I intend to try and save up £10k as an emergency fund, I’ve already got £7k towards this so will have this saved up for certain within the next year. I also need to replace my car at some point, I’ve had it many years and done 160k miles so I’m wary it might not last forever but can’t justify the huge monthly expense of car finance so not sure what I would do to replace this when the time comes 🙈. I will have paid off my credit card (interest free) in 3 months so I’ll have an extra £150 a month to go straight into savings/overpaying mortgage. I’ll also have paid off my student loan in around 20 months so that will give me an extra £140 ish monthly to save.

Once I have my £10k emergency fund (not including my £15k gift) I’ll need to sort a car. THEN I guess it’s best to start overpaying my mortgage? Or is it best to save and pay a chunk off in a lump sum at the end of the term? My mortgage is due for renewal in March so I’m hoping to drop to 60% LTV but it depends on house prices as they have dropped recently meaning it might be hard to get to that next bracket 🤦!♀️ It is difficult trying to save hard when you are on your own paying the mortgage and all bills yourself. I currently have £129,000 ish left on my mortgage on 31 year term, when I renew I’m going to renew on a 30 year term and I believe it’s best to start overpaying? It just seems so far away being able to chip away at that figure I can’t see a way I would ever make much of a dent or ever be able to upgrade to a bigger home 😩

Basically I’m looking for ideas on how to budget and if there is a good tool to use and where best to start with a complete financial overhaul to make sure I’m not wasting money anywhere so I’m able to maximise my spare income to over pay my mortgage. All I can see on here is people saying how much they are overpaying but not what changes they are making to help achieve that goal?

Sorry if this isn’t the right thread, I’m just confused where to start. .
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  • MovingForwardsMovingForwards Forumite
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    How much you paying into a pension?

    You don't need finance / HP / PCP etc, just buy a newer version of what you are replacing eg if your car is now 15 years old, replace it with one that is 10 years old, no depreciation to worry about and should be a good price too.
  • bexster1975bexster1975 Forumite
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    Hello and welcome

    I think your regular savers are a good place to start. I don't know if they are still available to new customers, but the Santander 1-2-3 account did pay 3% on up to £20k as long as you have a couple of direct debits coming out a month. Take a look and see as it would be a good place potentially to put the 15k whilst you drop feed regular savers.

    As for saving money, do you know what you spend a month? And what it's spent on? If not, a spending diary would be a place to start for a month. Writing down everything you spend. If you do know, what do you " waste" money on? This is a really personal question. What you spend money on is completely your choice. But if you are unhappy with how much you spend then it is being " wasted". If there are catagories this applies to, look at how you can reduce this. Groceries are often a common area where cash could be saved.

    As for the car, how new of a car will you want? I agree, a car payment plan is a poor idea for most people. Could you save the cash to buy one? Or even consider a personal loan when you need to replace it. The £150 a month from your credit card payments would add up if saved into a " car" pot.

    As for overpaying, you should consider playing with the overpayment calculator. I'd consider getting your emergency fund where you want it, start saving for the car, and once your student loan is gone mud 2021, think about putting this into overpaying. You will be surprised the difference £140 a month extra will make to the mortgage term.

    Hope that helps to start.

    Good luck

    Bexster :)
  • ForestBluebellsForestBluebells Forumite
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    How much you paying into a pension?

    You don't need finance / HP / PCP etc, just buy a newer version of what you are replacing eg if your car is now 15 years old, replace it with one that is 10 years old, no depreciation to worry about and should be a good price too.

    I’m paying 5% into my pension I believe, whatever the auto enrolment payments are at currently. I only started it when auto enrolment came out as I was never offered a workplace pension before then and didn’t really know anything about them. I’m kinda relying on inheritance for my retirement 🙈
  • bexster1975bexster1975 Forumite
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    Just to add, it's very hard doing it on your own. But it can be done, and it is worth it.

    I also did a quick overpayment calculation. If you pay £140 per month extra, although I'm guessing your interest rate, you'll save about 9 years on 31 years and £129,000.

    Bexster :)
  • ForestBluebellsForestBluebells Forumite
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    Hello and welcome

    I think your regular savers are a good place to start. I don't know if they are still available to new customers, but the Santander 1-2-3 account did pay 3% on up to £20k as long as you have a couple of direct debits coming out a month. Take a look and see as it would be a good place potentially to put the 15k whilst you drop feed regular savers.

    As for saving money, do you know what you spend a month? And what it's spent on? If not, a spending diary would be a place to start for a month. Writing down everything you spend. If you do know, what do you " waste" money on? This is a really personal question. What you spend money on is completely your choice. But if you are unhappy with how much you spend then it is being " wasted". If there are catagories this applies to, look at how you can reduce this. Groceries are often a common area where cash could be saved.

    As for the car, how new of a car will you want? I agree, a car payment plan is a poor idea for most people. Could you save the cash to buy one? Or even consider a personal loan when you need to replace it. The £150 a month from your credit card payments would add up if saved into a " car" pot.

    As for overpaying, you should consider playing with the overpayment calculator. I'd consider getting your emergency fund where you want it, start saving for the car, and once your student loan is gone mud 2021, think about putting this into overpaying. You will be surprised the difference £140 a month extra will make to the mortgage term.

    Hope that helps to start.

    Good luck

    Bexster :)

    I’m definitely over spending on groceries, I’m going to try and have a low spend January and just use the food I already have in. I tend to just buy what I want when I want it, I’m trying hard to change that to think if I actually NEED it and if not, can I wait. I can’t wait until my student loan is paid off as it does restrict my disposable income a lot.

    Can you open a bank account if you don’t use it as your main account? I’m currently with NatWest and the idea of changing banks scares me. Plus I use their regular saver account too.

    When people have different saving “pots” do you physically have these in different accounts or just mentally know how much is in each pot?
  • ForestBluebellsForestBluebells Forumite
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    Just to add, it's very hard doing it on your own. But it can be done, and it is worth it.

    I also did a quick overpayment calculation. If you pay £140 per month extra, although I'm guessing your interest rate, you'll save about 9 years on 31 years and £129,000.

    Bexster :)

    That would be a manageable amount. Maybe once I’ve built my £10k emergency fund I can then switch that extra cash to mortgage overpayments so I’m building my car pot and savings slower but also chipping away at the mortgage. I wish I lived in a cheaper area, it’s hard down south knowing you get so much more for your money further north.
  • bexster1975bexster1975 Forumite
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    Hello

    I don't use my Santander account as my main account, just have a couple of DD coming out of it and so transfer some cash in every month.

    I personally have a savings " pot" for things like a car. I use the chip app to do thus currently ( I'm not paid by them, they are just someone I use) and I think the rate is 3% on that ( not sure if that's available to new customers. It takes a small amount out of your account each week ( you can cancel this) and you can add manual saves. But it also lets you set goals so I save for car tax, car insurance, holidays etc using this app.

    If you've no other debt after the credit card in three months ( and student loan) I'd say you are doing quite well.

    A meal plan, and batch cooking can help with grocery bills. It's a very common problem. I'd suggest a list of what you have already if you are having a cheap January.

    In terms of saving money, I like counting no spend days (NSDs) in the month where I don't spend any money ( not including bilks out of the account which happen every month).

    The Old astyle board might interest you in terms of money saving. They are a very friendly bunch.

    Bexster :)
  • getmore4lessgetmore4less Forumite
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    sambo84 wrote: »
    .....I’m starting to think about how best to save it and also turning around my spending to save a much bigger chunk of my salary than I do currently. I’m not entirely sure where to start, I’ve spent hours browsing the forum but is there somewhere to look for a financial overhaul ideas list or something?
    ...
    Basically I’m looking for ideas on how to budget and if there is a good tool to use and where best to start with a complete financial overhaul to make sure I’m not wasting money anywhere so I’m able to maximise my spare income to over pay my mortgage.
    ...
    Sorry if this isn’t the right thread, I’m just confused where to start. .

    The place to look is Debt-free wanabbe board.

    More examples of how to organize finances and trim spending than you could ever want.
    These are mainly driven by people that have got it wrong and are trying to sort out some debts but all the principles apply to everyone as we are all in a kind of debt as we need to fund the future self.

    if you have never done any planning before then the SOA format is a good starting point.
    If you post on the DFW board people can help spot the things you may have missed.

    IF you feel up to more budget/planning tracking then MSMoney(free) is a great tool to do the planning it is PC based and not supported but has all the features.

    The key starting point is knowing where your money goes then you can prioritize how you would prefer to spend/save it.

    For detailed day to day there can be great ideas on Old Style Moneysaving
  • ForestBluebellsForestBluebells Forumite
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    Someone mentioned pension contributions yesterday and it made me think, I hadn’t really put any thought into retirement planning other than I’m currently paying my 5%. Given I’m unlikely to pay off my mortgage significantly early as a single person with a large mortgage should I be splitting my efforts and chip away at the mortgage knowing I won’t make a huge dent in it and also either add more to my workplace pension/setup a private pension/invest in stocks and shares for a potential better return (I understand the risks but as it’s retirement planning it’s long term investment).

    Oh so confused and still feeling overwhelmed
  • getmore4lessgetmore4less Forumite
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    Any matched pension contributions will be sensible.

    Debt gets inflated away so it can be better to invest as the returns more than cover the interest and you then pay back the debt from future earnings that are also inflated.

    There may be a case to get the LTV good to get lower mortgage rate.

    At a very high level you can use the split in 3 model
    Spend a 1/3
    Buy a house with a 1/3
    Save a 1/3

    Retire in 25years.

    That gives time to settle in a career by 30 retire at 55.
    Adjust as needed
    A 30year plan the savings can reduce a bit often 20% is used.
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