Prosperous soul, mortgage neutrality & creativity Year 2

savingholmes

Thanks Leigh, Beanie and Edinburger

Yes the be AVC is intended to be my route to mortgage freedom as it can all be taken as a tax free lump sum. 

I feel very fortunate to have had significant lump sums the last couple of months so feel my financial situation has majorly improved.

I need to consider how much £ to allow for fun and holidays moving forward as well as savings 

mark55man

Don't begrudge a little spending - you earned all the lump sums.  Plus if you screw the frugal valve too tight you are at increased risk of a blow-out - but a fair balance of now and future will ensure a controlled release. .

Moneyfordreams

Peace is healing - glad you are feeling it.

broke out of my gym membership 2 years ago now - I have hand weights and fbook and yutube videos. I also step in front of the TV. Obviously that can be isolating - but it suits for now and free.

your saving figures are great

savingholmes

Thanks Mark and MFD 

MFD - On the gym - I need to make myself cut the link as barely gone since August... 

£800 sent to savings. This time of year I have less 'annual bills' so that helps. Also Feb and March I should be able to have higher savings as no CT.

Mark - I had a little look last night at things I wanted to buy - but realised they would be just 'because I could' type purchases. I would rather have experiences - so will save for now until the weather is nicer or something pops up that I particularly want to do. I would consider a cottage stay away for peace but would need good wifi as would still have to work as have hardly any holiday left. I don't as you say want to become too frugal and feel I am not living - so definitely balance to be had.

I want to buy some windowsill propagators but HB had some before Xmas at £6 each so not breaking the bank stuff. I also want to buy more bark and compost but no rush. I may buy another pallet collar type raised bed £20 but need the rest of the bamboo digging out first. I bought some art tapes and special paper to try... 

I will text my friend about the art group - and someone I know is setting up a writing group soon which I may try.

I need to set up going and seeing a family member but not sure when that will be. May then go to the theatre or something which would be nice. Sadly at my local theatre the seats are too narrow for me and they hurt!

Need to make myself shower and finish getting ready for work.

beanielou

Enjoy your weekend 

edinburgher

Are your AVCs tax free as you're taking then with a DB pension?

savingholmes

Thanks Beanie

Well this morning I was feeling 'rich' and in danger of returning to fritter spending so I tried to estimate other things I might want to save for and it came out at scary numbers - reminding me why most people go in debt for them!! I've never saved in advance for big stuff before.

Obviously I'd like an EF. For a 3 month EF I'd need around £8K. I'm just over half way there. For anything bigger - say up to a year - I'd need closer to £32K. While I might not need that much as my job is pretty secure - it would facilitate time off if needed to help with parents etc if needed... or let me go part time at some point

1. I think I should aim for at least 6 months EF longer term so say £16K.
2. Home Decor £2K if got someone else to do it - that could be a project for this year - but would potentially wait for DD to move out.
3. New carpets / flooring - could be a few thousand.
4. Medical self insurance - might want £10-20K - some scope to combine this with point 1 though.
5. If I want to replace my car in 4 years - I'd need to save around £20Kish - some room for manoeuvre on that one. My current plan is to keep this car (6 years old) as long as practical but I need something reliable and safe.
6. If I wanted a new kitchen - I may need £10K - This has been a want for a number of years but a few years ago DD and I repainted all the units and I got a new pretty worktop put in so not urgent. 
7. New bathrooms - perhaps £6K each so up to £12K - more if I want to create a further ensuite.
8. New doors and windows at some point £6-12K. 
9. Savings towards kids weddings/special events - say £4K each so £8K.

That could take 10-12 years to save/pay for (if needed) and would wipe out some of the savings I was hoping to use towards financial independence. At the same time I don't want to erode my home's value by not doing some work along the way. I'm torn between wanting to not waste money - and therefore delay replacement kitchen, bathrooms etc until it is critical and not wanting to erode my house value. Logically - I should pick a project every year or two and tackle it that way once I have my EF in place.

It could take me up to 5 years to just save a 6 month EF and for a new(er) car.

How do other MFWs/MFs balance investing in their home versus mortgage / financial freedom?

edinburgher

By fits and starts. Largely ignore OPs and investing while doing home improvements. Get into debt. Pay it off. Get obsessive about investments for a while. Repeat 

badmemory

I've always thought that EFs should be 3 months if there are 2 of you earning & 6 months if it is all down to you.  That is since I even knew what an EF was.  This place is fantastic for knowledge like that.  Now I am retired I use it for the accessible amount I need.  Same thing really just from the opposite side in a way.  So in other words you still need it when you retire.  Because the whatsit can still hit the fan & if you aren't prepared you can be sure it will.

DancingInTheRain

My approach is similar to Ed's although I am slacking on the paying down the CC's at the moment while trying to build savings after my year off work as well as trying to complete some necessary work on the house. Depends on what your personal priorities/motivators are too, definitely easier to make decisions with the security of having some EF in the bank though.