Am I insane? Or just overstretching my budget?

MsPennyMinder

Hi
Looking for some honest, experienced, and friendly feedback, hope this is the right forum.
 I'm in my mid 20's and hoping to buy my first home soon, but I've never lived completely independently before aka rented or such. I tried to move out while finishing university a few years ago but I had a major health crisis and then just wasn't physically/mentally capable of moving out on my own yet. So I am still live at home but paying rent/bills and helping raise my younger siblings. I should state I live completely off my own income, which I have always had, regardless of my health, but I've never run a home solo before. I will have some savings left - an Emergency Fund in case of, well, emergency. 

I've attached an SOA below with an educated estimate of a budget - my guaranteed basic (part-time) wage is paid weekly but I budget monthly, so it's 1156 with extra on a five-week month. Realistically, I haven't earned this in well over a year and a half, I do lots of overtime so I'm easily 200-300 more each month. As that's not guaranteed, I worry if something happened and I only have basic wages, it would be way too tight to live on.  Such as - I fall sick and couldn't work or simply there is no overtime though that's unlikely since we technically have 5+ full-time roles vacant that my work is dragging their feet to offer to us, part-timers. Why would they, when we're doing it already. 

Am I insane to think this will work? Should I wait for the full-time hours to be offered to me (eventually it will, but I'm reluctant to hold my breath for it)? I wouldn't mind a better-paying job but I feel a pandemic isn't the best time to chop and change when my job is classed as essential and terrible in demand. 
Thanks you in advance for all feedback

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1156

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 1156[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 310

Management charge (leasehold property).. 0

Council tax............................. 91

Electricity............................. 30

Gas..................................... 30

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 21

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 30

Groceries etc. ......................... 150

Clothing................................ 20

Petrol/diesel........................... 75

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 100

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 0

Buildings insurance..................... 10

Contents insurance...................... 10

Life assurance ......................... 10

Other insurance......................... 0

Presents (birthday, christmas etc)...... 20

Haircuts................................ 0

Entertainment........................... 10

Holiday................................. 0

Emergency fund.......................... 0

(Unnamed monthly expense)............... 0

saving.................................. 75

Amazon ................................. 6.7

House................................... 20

Gym Club................................ 50

Nowtv................................... 5.99

Audible ................................ 7.99[b]

Total monthly expenses.................. 1152.68[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 2000

Other assets............................ 0[b]

Total Assets............................ 2000[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR[b]

Total unsecured debts..........0.........0.........-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,156

Expenses (including HP & secured debts). 1,152.68

Available for debt repayments........... 3.32

Monthly UNsecured debt repayments....... 0[b]

Amount left after debt repayments....... 3.32[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 2,000

Total HP & Secured debt................. -0

Total Unsecured debt.................... -0[b]

Net Assets.............................. 2,000[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

tacpot12

I think you will be able to afford to rent somewhere, but your SOA includes costs for fuel and car maintenance, but not road tax and car insurance. I'm guessing this means that you are borrowing your parent's car and contributing to its running costs. It would be sensible to either to budget to run you own car, in which case you need to add tax and insurance, or plan to rent somewhere close to work so you don't need a car. You might need to budget for the rent being a bit higher. You can use Rightmove to check how much rent will be in a location where you wouldn't need a car. If you decide you need your own car, you will need to save to buy it, and you will be paying all the maintenance, and your should also be saving for its eventual replacement. 

Your SOA includes life insurance, but if you are renting you don't need this yet. (If you buy a house or flat you will need it, so keep it going it you already have it, and remove it from the SOA if you don't) 

If you want to buy your own property, you need to be sure that you can pay the mortgage. One of the best ways to do this is to start saving the amount that your mortgage will be, to get your deposit. If your mortgage is going to be £500 per month, start saving that (or if you want to rent first, save £500 per month minus your rent). You should really save a bit more as you will have some extra costs as a home owner.

The quickest way into you own home will be to remain at home - renting is just putting money into the pocket of a landlord. I know this is tough when you are ready to move out, but taking the best financial decisions often is tough, so the sooner you get used to it, the sooner you will be able to reap the benefits of taking those tough decisions. 

MsPennyMinder

Hi Tacopot12
Thank you for the advice.
I do currently own a car, for simplicity I added the road tax/mot/serving/insurance monthly amount together in one space as I save it together and take what I need for each bill as they come, it's normal plenty.  But I'm also saving a 100 a month as I will need a replacement car in a few years. I know staying at home is the best, if a most frustrating, option to save, but I almost have what I consider a basic mortgage deposit for a small house/flat in my area. My estimated mortgage amount is similar to my current rent, so I'm just unsure if I can run my own home on the rest of my monthly wages aka bills and stuff. 

[Deleted User]

Don't pay road tax, it doesn't exist! Can defo save money there if you are currently paying a non-existent tax. I know it's not your fault as it's a template but man whoever created that needs to move on from 1937

tacpot12

Deleted_User said:

Don't pay road tax, it doesn't exist! Can defo save money there if you are currently paying a non-existent tax. I know it's not your fault as it's a template but man whoever created that needs to move on from 1937

VED is such an ugly acronym though. 

tacpot12

You are right to be concerned about what happens if you lose you job. In the worst case situation, which would be losing your job, you only receive about £380 per month in benefits, and you couldn't live on that amount if you have bought somewhere. You might receive more if you become disabled, i.e. too sick to work, but this won't be clear for at least 9 months.  

I would say that need some income protection insurance, something that will pay you at least £750 per month if you are too ill to work. (You will save money on running a car if you are too ill to work). The cost of this insurance might be c£25 per month if it pays out until you retire, but you might be able to reduce this substantially by agreeing to defer the payment for 12 months. (i.e. they won't pay you anything for the first 12 months, so you will have to cover your bills until then, but you should have some SSP or JSA for the first six months.) You can get this insurance to cover situations where you lose your job and can't find work, but realistically, you would expect to be able to find work within 12 months if lose your job, and if you defer the payments for 12 months as I suggest, you are so unlikely to receive a payment if you lose your job, it's probably not worth paying for the insurance. 

You also need to have some savings you carry you through to the 12 month point. Ideally, this would be £10,000 but £6,000 would be the minimum. If you are taken on full-time, or in months that you work overtime, you can save a bit towards topping this up to £10,000. Premium bonds are a good home for these savings as there is a chance you might win a big prize and been able to repay some or all of your mortgage, they are dead safe, and they take time to get the money out so that you are not tempted to spend it without good reason. This would be the price of being certain that you would not lose your home if you were too ill to work. 

MsPennyMinder

I haven't considered Premium Bonds before, I will look into Tacpot12 and building up a good backup fund, thanks.

pbartlett

I'm more worried about haircuts - I mean one must uphold certain standards !

MsPennyMinder

That's what sisters are for Pbartlett, and who can see an actual hairdresser right now anyway?!

jimjames

The SOA has rent at £310. Is that realistic as it sounds very low at least for the properties I see? I'd expect it to be double that for a 1 bed place which has a significant impact on the numbers

MsPennyMinder

Hi @jimjames I've price checked and while low, it is perfectly possible to get a mortgage at that price in my area. My cousin has a similar flat ( to what I am aiming for ) at that price.