Young, dumb and saving for a house

joese

Hello everyone, my name is Joe and I live in the South East of England. I'm 19 years old and I'm saving up to eventually buy a house. I currently earn <£20,000 a year but I manage to save ~£1,000 a month - having no bills to pay definitely helps. 

Here's a breakdown of what I have so saved far:

• Vangaurd Global All Cap S&S ISA: £6,852.22
• MoneyBox LISA: £424

Outgoings
Rent: £200/mo
Phones: £6/mo
Credit card: £? I spend a lot on my credit card but I keep it below the 50% credit utilisation rate and always pay it off in full each month. Current limit is just under £2,000. I applied for loads of accounts at once and it absolutely tanked my credit score - hopefully it will recover eventually.

I must admit I'm not very good with money. I buy a lot of daft things and end up regretting it later. 

House prices in my area are astronomical and I don't think I could ever afford to buy one without a partner or via a shared ownership arrangement. My best bet would be to buy an apartment. 2 bed apartments in my area cost ~£200,000; assuming that I can borrow £100,000, I would need to save ~£100,000 to be able to buy one (am I right in saying this?) and at my current savings rate it will take me about 10 years (factoring in some inflation).

Update:
I havent updated this in a long while and a lot has changed since I wrote this post. I quit the job I had at the time because it was mundane, repetitive and made me absolutely miserable. I have changed jobs several times and now earn £29,000 at the age of 21. I am looking to change jobs again and move into a different industry (want to get into IT). I also am in the process of buying a 1 bed flat and hope to move in within the next 6 weeks price is 165,000 with 35,000 deposit.  

joese

I plan to start cycling to work to save a bit of money; it's a 15 miles each way but I think I should be able to manage, plus it's good for me and the planet which is a bonus.

MovingForwards

Welcome to the first chapter in your diary.

Credit scores are not seen or used by financial institutions, they have their own way of internally credit scoring you. Your credit card is sufficient to build up a credit history, you do not need loads of credit accounts. Make sure you're on the electoral roll every year.

Have you had a play with any of the mortgage calculators eg nationwide, Halifax etc. That will give you a current indication as to how much you could borrow on your salary.
(My salary is just a bit more than yours, but I could borrow about £93k. I needed about the same as you to buy, but opted for a commutable area. Much lower deposit to save and I purchased what I was looking for).

Your pension won't count towards your savings as that's for the future you. 

I had different savings pots for each aspect of the purchase eg deposit, broker, mortgage fees, solicitors fees, spare cash on completion.

I also saved everything 99p and under sitting in my current account and manually moved that into savings.

Good luck with your journey!

Skint_yet_Again

Hi Joe Good luck on your saving. Maybe you could check your bank statements and work out what you are actually spending it on. It’s surprising how much can be frittered away.  You have only mentioned rent £200, phone £6 and savings £1000. How much do you spend on commuting, coffee, socialising (I’m sure at 19 you are out with your mates) birthdays & christmas, clothes, haircuts etc. Once you know what you are spending on it might help to set a budget & maybe you will be able to save more. 

10 years is a long time to save but I know property is very expensive here in the south. My son and his girlfriend are living with me while saving for a deposit. At least at the moment with lockdown we are all saving a bit more!

savingwannabe

Hello Young and Saving for a Housey, Er you don't sound dumb to me at all. Your salary is great. At a young age it is fine to spend loads you  have learned early that avoiding conspicuous consumption is the best way. I didn't learn until I was ill and had to reduce my hours and salary and that was when I was 40. It's a good idea to keep a spending diary of everything you spend. I found that spending cash rather than by card helps as you think before you purchase. However with the danger of coronadoodah I'd stick with a card for payments as you are safer. 

If you are male it is worth looking at some great you tube sites such as Mr Moneymoustache, Dave Ramsey and 2cents and Nate O'brien they are v inspiring and write about the FIRE movement which is a great idea. I wish I had learned about this year's ago. If you are female Budget Girl is brilliant. Apologies as this sounds so sexist. We are a happy family on here and try to inspire each other and we love it when people join us. Please do keep posting.Hurrah, hugs, swx

joese

Skint_yet_Again said:

Hi Joe Good luck on your saving. Maybe you could check your bank statements and work out what you are actually spending it on. It’s surprising how much can be frittered away.  You have only mentioned rent £200, phone £6 and savings £1000. How much do you spend on commuting, coffee, socialising (I’m sure at 19 you are out with your mates) birthdays & christmas, clothes, haircuts etc. Once you know what you are spending on it might help to set a budget & maybe you will be able to save more. 

10 years is a long time to save but I know property is very expensive here in the south. My son and his girlfriend are living with me while saving for a deposit. At least at the moment with lockdown we are all saving a bit more!

Until recently I didn't track my spending at all; I would put 1000 into savings and blow the rest. Unfortunately this spiralled into a shopping addiction where I was buying innumerous quantities of expensive junk I simply didn't need. I tried out plenty of hobbies and a few stuck (like road cycling, jogging etc) but the majority were a waste of money (luckily I bought most of the gear used so I was able to sell it all for roughly the same price that I bought it for). I have had to block access to amazon on my laptop, by editing some admx files in microsoft group policy editor, because I found it too easy and enjoyable to scroll through amazon and convince myself that I absolutely needed whatever it was that I saw. 

After plugging in some data into a spreadsheet, I can see that I have spent over £1,500 on amazon from March 2019 - March 2020, £335 on ebay during the same period, £440 on credit cards, £500 on a bike from decathlon and so much more on food and everything else that is actually essential. I earnt on average £1,500 per month (after tax) [I started working late August so only had to pay NIC]. I have also spent loads more in the last two months as well, like £500 on a laptop, but my bank doesn’t seem to let me view more recent statements. However, I did make about £1000 back from selling a load of this stuff. 

Despite saving a decent amount, I haven’t exactly been living like a pauper. I was actually quite shocked to see just how much I had spent last year and I will definitely cut down from now onwards.

joese

savingwannabe said:

Hello Young and Saving for a Housey, Er you don't sound dumb to me at all. Your salary is great. At a young age it is fine to spend loads you  have learned early that avoiding conspicuous consumption is the best way. I didn't learn until I was ill and had to reduce my hours and salary and that was when I was 40. It's a good idea to keep a spending diary of everything you spend. I found that spending cash rather than by card helps as you think before you purchase. However with the danger of coronadoodah I'd stick with a card for payments as you are safer. 

If you are male it is worth looking at some great you tube sites such as Mr Moneymoustache, Dave Ramsey and 2cents and Nate O'brien they are v inspiring and write about the FIRE movement which is a great idea. I wish I had learned about this year's ago. If you are female Budget Girl is brilliant. Apologies as this sounds so sexist. We are a happy family on here and try to inspire each other and we love it when people join us. Please do keep posting.Hurrah, hugs, swx

Thanks for the kind words and the good advice. I'm big fan of MMM but I haven't heard of the others - I'll have a look at them. MMM is where I got the idea to cycle to work from  I also quite like monevator and occam investing. 

joese

• Opened a current account with monzo to help with budgeting.

• Implementing measures to stop me from making impulse purchases (using camelcamelcamel to buy when the price is low; waiting ≥30 days after discovering something before buying it; sticking to a set budget; not buying things on credit card unless I have enough to pay it off).

• Tracking income/ expenses with google sheets monthly budget template.

Rocksolid

... and I'm able only to get a 65% LTV mortgage because I'm new in UK and it takes at least 3 years to get a better LTV, no matter how much I'm good with the money...

Good luck  

Anyway, why don't use see the mortgage affordability? Then, you will get an idea of the salary needed to even try to ask a mortgage.

After that, ask for an evaluation, I think is called decision in principle or something similar through a broker.

I'm very curious to know how much they will give you, but please share also since how long you live in UK, it will help be to get an understanding how much quickly I need to sneak away from here, I don't wanna pay rent forever.

savingwannabe

I don't know anything about Occam or investing. That sounds v good. 

joese

• Didn't manage to save as much as I would have liked to last month due to furlough and absence at work (was on furlough for about 2 months). 
• Took money out of moneybox LISA and transferred to vanguard ISA.
• Closed Monzo account because they have been known to lock accounts and I'd rather not have to deal with that. 
• Created an emergency fund with a new debit account from nationwide.
• Cycled to work for the first time. I was knackered coming back after work and had to walk after about 10 miles.
• Brushed up my CV and applied for apprenticeships in engineering. I'm not too interested in changing jobs at the moment because I love my current one but applying was helpful for keeping me up-to-date on the job market. In a couple of years  I will change careers if I haven't progressed at all at my current one. 
• Created a 5-year plan for my career. 
• Working to end my habitual tech use. Managed to cut out all gaming, and have slowly been cutting back on Reddit and youtube. Living in accordance to the NoSurf manifesto I found online (attached below for anyone interested - it basically outlines how you should view technology to have a healthy relationship with it). 
• Stopped spending as much money but simultaneously stopped caring so much about [saving] money as well. "Don't think money does everything or you are going to end up doing everything for money" - Voltaire. 
• Started learning a few languages on Duolingo and learning to programme.
• Started Couch to 5k (C25K) and starting to exercise a lot more. 
• Started camping out in my garden because I have nothing else to do.
• Started growing peppers in pots on my windowsill 
• Planning to join a couple of sports teams and a gym once everything returns to normal.

I would say I'm on track to have 10k saved exactly 1 year after I started working.