Learning to walk before I run

edinburgher

@teapot2 - it was the Velux website on certain styles. Turned out that they were more expensive than 3rd party suppliers even with the discount, so we left it.

Mhhh... it has come to my attention that now is probably the time to start being worried about the state of the economy. While we have a fixed energy tariff until next May, a fixed mortgage rate until December 2024 and income protection insurance, we do not really have an emergency fund. It has completely gone by the wayside because of the attic conversion.

If mortgages go from our current rate of c. 2.05% to 4% (which seems highly probable, we're basically already there), that would add £206/month onto our bills. As I understand it, energy costs have gone up by a factor of 3-4, so that would add in the region of £245-£366. So as of next May, we could be say, £3,700/year worse off. That's grim reading. If energy bills don't go back down, I'd be assuming we'd be at least £6,138/year worse off by the end of 2024. That would require us to essentially give up personal pocket money, so no fun money.

My original inclination had essentially been to ignore what is coming and in essence, hope for the best. I think that is being a tad irresponsible. As a starter for 10, I've reduced our mortgage OP DD down to £1 from £99 and will do the same with our ISA. That will save £196/month in the short term. I will continue to make small payments to the SIPP from additional earnings, as that's my money, or extra earnings that I've gained through digital sweat equity. I have also managed to divert £118 from other pots to start a new EF, but it will be very slow going.

Modern life is rubbish and I'm one of the fortunate ones.

*Edit: £1.68 paid into my SIPP (£2.10 after tax relief). That will probably be my last payment in a wee while, I'm going to focus any earnings from Prolific etc. on rebuilding my personal spends pot, it's looking a bit sparse.

elantan

I reckon it's a good time to make these changes now, if we leave it too late we wont have a cushion and may make more desperate decisions. 

Atleast we know what's happening so we can prepare, so many people dont have that wiggle room, that really worries me. Mr El and myself are like you and your wife, changes will need to happen but we will get there, I cant get the worry of others out of my head, so many people are really gonna struggle, the mental health of the population isnt great to begin with post covid, I think this will tip many over the edge. It's a worry Ed

South_coast

I guess the thing to think about is how much of an EF you really need. For me (private sector job in a fairly volatile-to-economic-shocks industry, my EF is all about paying the bills if I lose my job) - as I did in 2020. I have a feeling my sick pay wouldn't amount to much as well (probably should check that 🤔) But if the two of you are in more stable jobs and you have income protection, what is the biggest emergency you could see yourselves using the EF for? No need to answer here, I'm just wondering whether paying down the mortgage to reduce your LTV, or even overpaying to your energy supplier so you build up a credit which you can then run down whilst making smaller monthly payments might be a better use of your cash. Only you know what makes you sleep better at night though, so focus on that!

edinburgher

@South_coast - I hear what you're saying and I don't think we need a year's money in the bank or anything We do, however, need more than £118

There are significant additional risks at the moment and we're currently loading up on 0% debt as we look to finish the attic. It's less than £6k at present, but even that creates a drag of c. £150/month on our finances. It's an academic risk (as we do have the budgeted cash to pay it all off), but things change. We also have to allow for the fact that Mrs E's earnings are going to go down over the next 8 months as mat leave tails off, increased food costs (over £500/month already) and the possibility of even higher fuel bills (any reason why another +50% past the estimated January figures won't happen)?

We are lucky in that the attic will hopefully take us to 75% LTV, although it won't make any difference until we remortgage. I won't be overpaying with my energy supplier as they were one of the most expensive (green) suppliers in the country when we moved to them and I get the distinct impression that will still be the case. Then again, they're all largely using the cap as their standard offering these days, aren't they?

Ps. The Lord works in mysterious ways - I took DD1 out for a walk around the neighbourhood and got an odd looking notification on my phone - £20 after some lovely random used my referral offer for an e-money account on R3ddit about 6 months ago and finally completed the sign-up!

Baileys_Babe

You make some very good points @South_coast I am gearing up to asses our outgoing, budgets, plans etc I will include them in my deliberation 😊

killerpeaty

Going back a little, I changed careers by focusing on the part I liked the most from my then current job and then taking a course on Coursera. Deciding that it wasn't the worst thing ever. Applying to jobs for two years, taking a more professional technician course and eventually getting it. 

Good luck with the building up the ef, I would also want to build it up. I know that you can have the calculations for an effective ef, but sometimes you have an emotional ef figure. 

South_coast

edinburgher said:

We do, however, need more than £118

Well yes, I would agree with that 🤣!

savingholmes

Could you use regular savers to build EF?

Suffolk_lass

Oh my 22 posts behind! RL a bit crazy here. Thanks for sharing your flooring choice. Here the discussion goes on. At least we collected the replacement flooring (vinyl tiles for DS's kitchen (for which we are responsible) and intend doing our bathroom with the same. It is on the wet-Wednesday list. I have quite a bit of painting to do too, and some filing. I have mis-filed a cash ISA and have not recorded the account details in the finance spreadsheet (nightmare). These tasks are just there. Lurking. In the meantime I have some catering equipment to sort out and hopefully will sell some use some.

I think a regular saver for your EF is a really good option. Having used over £9k of our EF this year my maturing one (£250 a month at 3.5% [1.75% really] is a welcome boost to the EF). It is the discipline of saving a fixed amount that I sometimes struggle with but don't deviate from.

Have you considered a battery storage wall for some of your solar (or for overnight cheap rate leccy) you can store and use ?

Suffolk_lass

Ooh I forgot. If CPI is 10% in September your DB would increase to £7392 if it was frozen. You'd have to have a pretty big salary increase for it to outstrip that. It's something some former shift worker colleagues considered once they were over 55 (within 5 years of their occupational scheme's normal pension age). Several opted out of the DB pension, went semi retired and took their current rate early, working 2 days a week to earn the same overall