Getting shot of the mortgage sooner than 2049!

joedenise

I agree with @QueenJess that 0% CC would be the way to go if you can apply and get one.  Otherwise use one of your CCs and then try for a 0% balance transfer.

You know how much you can afford to pay so it would seem the most sensible way to go.

greenbee

It's a tough decision, and it's hard to spend savings once you have them! My suggestion would be to research loans so you know what the best deals are. Then spend the conservatory money to get a car as thats the immediate need, and have an extra-frugal challenge month to try to top things up a bit with savings/extra earnings - it won't cover everything but will make you feel you're redressing the balance.

Then when the conservatory payments are needed, review the loan info, use the credit card to buy yourself a little more time, see whether you can get a 0% balance transfer to buy yourself a bit longer, and use the loan as a last resort. That way if the conservatory takes a while, you might end up borrowing less than if you do the borrowing now. 

savingholmes

I would buy a car you are comfortable with. You can get 0% spending cards or 0% money transfer cards sometimes. That could be an option. If it was 0% spend and the garage let you use a card you won't even have a balance transfer fee.

Bluegreen143

Thanks for the advice all. 

We had a really good chat yesterday and decided to change tack a little bit. 

We realised that completely emptying our savings to buy a £4k banger means we are extremely vulnerable if said banger is also a lemon as we will have nothing on hand to repair it. And if we use a credit card we will be struggling for months stressing about paying it back.

Five years ago when we bought our last car, you could get a reasonable older but reliable family car for less - our last car cost £2k and lasted 5 years with minimal work. But costs have shot up so much for cars that £3/4K gets you a banger with a huge amount of miles on the clock, unless you’re maybe buying a very small car. Obviously we have two growing children and Red is 6 ft 4 so we are limited in how small we can go - when we used to have a Micra years ago, Monkey simply couldn’t fit behind Red in his car seat as Red’s seat would press back on it - it worked ok as we had one child and we would move his seat depending whether Red was driving or the passenger! With two kids that is no longer an option. 

My mum is keen for us to buy a reliable car too, so she has suggested that we look at something newer with a reasonably low amount of miles on the clock and she will lend us the money interest free (from her own savings) over three years. Which I’m so grateful to her ❤️ This means paying back a set payment each month that she’s happy with rather than using a credit card or commercial loan where I’d feel we could do nothing else til it was gone. 

She is happy to lend us £6,000 and without totally stripping all our accounts, we can put £2,000 to it (as we should get £1k for our car) giving us an £8k budget. This feels like sooooo much to us as our current lemon at £3k is by far the most expensive car we’ve ever had. We’ve always bought total cheap bangers with cash and driven them til they are scrapped and have never had a car loan before. But while I hate debt, I do think that buying a more reliable car (which I need for getting to work) is probably “good” rather than “bad” debt. Hopefully this car will last us many years if we run it into the ground, or will actually be worth something to sell when we want to trade it in! 

Red is going to see a car on Monday - it’s a decent sized estate car, 30k miles on the clock and 15 plate. Bit different from the 130k on our current car… I don’t know if I mentioned too, but older diesel cars are out for us too due to the low emission zone in central Glasgow coming into effect next year - so another reason why our current car was a stupid buy, I hadn’t realised it wasn’t compliant 🤦‍♀️ 

Got some stuff to put about budgeting but will start a new post! 

QueenJess

I’m glad you’ve found a solution and it sounds like a good investment to get something a bit newer. I tend to buy newer and then drive them until they become totally useless (so I’m only on my second car ever). Your mum is a hero 🦸‍♀️ 

Bluegreen143

So onto budgeting. I’ve been reading All Your Worth by Elizabeth Warren and it’s a really nice, simple framework for budgeting and manage your money. Here’s a quick summary of the method:

⭐️ Calculate your monthly income including the bit that comes off your pay cheque into your pension. 

Ours is £4,120 not including Child Benefit. The CB I allocate straight to a pot for kids clothes, pocket money and activities so I haven’t budgeted for them below.

⭐️ Your NEEDS should be under 50% of your budget (bills, legal obligations, fuel, a sum for basic groceries only, not buying treats). 

I’ve already added in what I’ll pay my mum for the car loan. 

The book has advice on how to get this down (reduce obligations or increase income) and what to do if you’re in a temporary “high needs” budget eg you’ve just lost your job or had a baby. 

💰 OUR NEEDS - £1,860 - 45% 💰

⭐️ Calculate at least 20% for SAVINGS including what comes off into your pension. 

If your needs are under 50% you can send that to wants, but atm I added the excess to savings.

Her savings plan suggestion is:

1. £1k baby emergency fund (to be kept in your current account as a buffer)

2. Aggressively pay off any consumer debt

3. Save 6x your NEEDS as an emergency fund, pausing future goals to top it back up whenever it gets used. For us this is a huge £11,000.

4. Split your money into three:
a) 1/2 your savings for retirement (unless you’re starting late, then make it more)
b) 1/4 savings to overpay mortgage 
c) Save or invest the rest for your dreams (eg paying for your kids weddings or travelling the world)

💰 OUR SAVINGS - £1,030 - 25% 💰

£350 comes direct out for pensions 

£100 for our Help to Save accounts 

The rest will be used to build up our emergency fund again.

⭐️ What’s left - around 30% ideally - is for WANTS. 

She suggests withdrawing this in cash, except what you need in your account to pay for direct debits like your gym membership. Then adding to it your basic grocery money from the first step, so you have one cash sum for groceries and wants. 

If you’re partnered work out in advance how much is for personal fun money and how much is for the family and obviously you can split some into pots for Christmas, your annual holiday(s) and any big things you’re saving for.

💰 OUR WANTS - £1,236 - 30% 💰

Family pots £510

- holidays

- gifts & celebrations

- home/garden 

- plus paying TV & music subs

Remainder split based on earnings:

Red £420 

Me £303

Obviously this isn’t a revolutionary system. But I really like the simplicity and thought the book was very readable. Plus I found it reassuring. Calculating our budget based on the percentages reassured me we can afford the car loan to my mum as we are still under 50% needs and able to save 25% of our budget each month. The problem with spending too much time looking at FIRE blogs is you start to beat yourself up if you’re not saving 75% of your income each month. Also, while I love the old style forums, a lot of the posts are about scraping everything right back to the bone which just isn’t that relevant to us right now. I want to build our emergency fund and I am focused, but it’s ridiculous how I still feel mega guilt over buying anything when in reality we do have a good income and (well, for a short while) no debt, except our mortgage. I feel myself getting defensive and apologetic over the fact that our grocery budget isn’t rock bottom. But it doesn’t need to be, it’s ok to prioritise health if we are saving each month.

Not going to withdraw all groceries & personal spending in cash as we buy most things online so will need to have a think about how we separate it, but I think this plan will work well for us. 

LittleGem

Really interesting to see your workings and ideas @Bluegreen143. I might see if they have that book at the library! 

Skint_yet_Again

Hope your plans work out @Bluegreen143 My parents lent me the money for my last car a good few years ago now and we arranged a realistic monthly payment over 5 years & interest free. It’s been paid off and I am still running the same car. There have been a few repairs along the way but nothing major and I still save monthly into my car repairs fund. 

Don’t feel you need to apologise about your spending. Old style is really helpful but it’s up to you & Red what you spend and everyone is different. 

savingholmes

That sounds like it will work as a budgeting system for you. We all have different priorities and set our budgets / spend accordingly. It's only if it is out of control that it's an issue - or if you have debt you're trying to shift.

The car sounds a good solution. Fab low mileage for the price.

MissRikkiC

So glad you found a solution. Your mum is a good egg