SOS - Save or Sink

gnobak

Summary

I have a good income but am not saving money and get stressed when big bills come up or when I think about the future.

Background
Me: 47, I have an income of 90k in IT with a pension.
Wife: 48, has an income of 2.5k cash for tutoring.

We had kids starting at 23. We made a conscious decision that we would be a 1 income family, stay at home parent. So we have been 1 income for about 23 years.
2 adult kids. 1 finishing a Masters. 1 working part time instead of college, and will be studying part time soon.

We have a small mortgage on a big house.

About 10 years ago we spent 50k on a piece of land. We sold a car and used some savings, and got a 20k loan which was then paid off a bit early. We are big into trees/small holding etc.

I am very good at tracking money and estimating cash flow and shopping around. I have a spreadsheet where I input daily spend/bank transactions. It also projects cashflow out for 6-12 months ahead. I'm trying to be clever..... but our disposable income flits.

Recently I have sold one of our cars and paid off a loan. We have a reliable 15 year old car, and another 15 year old as a 'spare' which will go to a child when learning. It's handy to have around TBH.

I have given up all hobbies except DIY/smallholding.

I have a 4k CC and in 25 years have never paid interest. Cleared every month.

Debts
- Overdraft 3k. I have been purposefully saving money away each month to force my balance to -3000 out of -4000... to put pressure on myself to not run out of money. I usually end up around -3500.
- Loan 3.5k. A personal loan I used to change cars 2 years ago.
- Education loan 25k. My daughter looked like she would be going to a private college at 6k/year x3 and my son was doing a masters at 7k. So I needed 13k in one year. I took the 25k out and spread the payments at 360/month to ease the burden. She deferred on college so I have it sitting there for use from next year, or this year if she does part time courses.
- Mortgage 99k. House is worth about 650-700k. This is a tracker mortgage and I pay 650/month

Problems
- Mortgage rates are rising. I am now paying 120/month more.
- Energy costs are rising. They have more than doubled for me. The house is big and not well insulated
- We flit money. My wife small and frequent, me seldom but large.
- My wife doesn’t like detail but will track spending to a certain degree but I have to nag a bit and it's tiring.
- We have expensive DIY jobs that need doing to the house. I've been qouted 8k and 10-14k for 2 jobs. There's plenty more.
- I want to be able to help children with property ladder etc

- My biggest problem is actually stress. I have been feeling stressed for an extended period of time in lots of areas: work, family life, money. One feeds the other.
I did a Master degree to make my mind off work. It led to a new role and things are much better, but overall I’m not happy.
Teenage and young adult life has been draining and still is.
Because of fund issues I gave up all my hobbies that would have distracted me from the above to some degree.
I have been trying to not spend, but sometimes when all you have left is 1 hobby, the land, and even that is stressing you because you can’t do a multitude of jobs without a piece of equipment and things are getting on top of you, then you break and just buy something for your own sanity. Last year I purchased a strong meadow cutter for 4k. If I hadn’t, then we wouldn’t have been able to cope with the jobs as we would have been cutting grass non stop. I just couldn’t face it.

Goals
- Pay off overdraft 3k
- Pay off 3.5k loan from Education loan balance.
- Save for 25th anniversary hols this year.
- Build up 2k emergency fund, supplemented by 3k overdraft
- Start putting savings into pots.
- Build up emergency savings to 5k and close overdraft
- Pay back education loan balance I took over 2-3 years (I took 4k for my meadow cutter, so about 7.5k!)
- Build up emergency fund to 12k
- Focus on pot saving for major DIY jobs

I will post an SOA below.

CAVEAT: I am actually in Ireland. But I don't want to post on and Irish board as I'm sure I'll be recognised.... we all know each other TBH things are much of a muchness. I know some advice will not be applicable.

gnobak

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

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 4500
Partners monthly income after tax....... 300
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 4800[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 650
Secured/HP loan repayments.............. 470
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 200
Gas..................................... 180
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 40
Mobile phone............................ 40
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 500
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 75
Car Insurance........................... 60
Car maintenance (including MOT)......... 400
Car parking............................. 0
Other travel............................ 70
Childcare/nursery....................... 0
Other child related expenses............ 80
Medical (prescriptions, dentist etc).... 50
Pet insurance/vet bills................. 0
Buildings insurance..................... 30
Contents insurance...................... 0
Life assurance ......................... 60
Other insurance......................... 45
Presents (birthday, christmas etc)...... 100
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 3240[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 700000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0[b]
Total Assets............................ 703000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 99000....(650)......2
Secured Debt.................. 3500.....(105)......9<
Education......................25000....(365)......7[b]
Total secured & HP debts...... 127500....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR[b]
Total unsecured debts..........0.........0.........-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,800
Expenses (including HP & secured debts). 3,240
Available for debt repayments........... 1,560
Monthly UNsecured debt repayments....... 0[b]
Amount left after debt repayments....... 1,560[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 703,000
Total HP & Secured debt................. -127,500
Total Unsecured debt.................... -0[b]
Net Assets.............................. 575,500[/b]

[i]Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.[/i][/font]

gnobak

To start with.... I was able to take all my 1500 in savings and move to the overdraft.

I just had a boiler problem and the quote to fix is either 700, or 'new boiler' I have put 700 aside. I will be able to use the 1500 too obviously if need be. But it's not a great start.

For Goal 1.... if the fix is 700 then I estimate my overdraft at the end Feb should be -800, minus and spend we do.

gnobak

Ooops, my car (3500) and education (25000) loans are unsecured, not secured.

Sarahwithlove

Could your wife pick up more hours now your kids are adults? Could she be given a spending allowance each month maybe to help with the regular spending? 

gnobak

Sarahwithlove said:

Could your wife pick up more hours now your kids are adults? Could she be given a spending allowance each month maybe to help with the regular spending? 

Hi, thanks for responding.

She could but I don't think that's the issue. We have plenty of disposable income, we just dispose of it too often! Anyway, she gave up her career and long term earning prospects to raise the family, and the payback is not going to be to send her to work in a low paid job! She is very active running the household and looking after parents, and charity work.

Yes, a few years ago I set up a system where I would print out a set of 'pots' with totals and she would keep track of what she was spending. It worked, but fizzled out, and I think I will return to it, but I think I will just put one big total in for the month that covers all the shopping/petrol/stuff she would normally have to spend on, and when it's gone, it's gone.

The problem really is beyond that. At the moment she is keeping all her tutoring earnings as her own pocket money. I just think we need to be clear that she doesn't spend beyond that on 'frivolous'. I don't think there will be a problem. Last year 50% of it went towards a summer holiday for us so it's not like she is hoarding it. I think we just need to be disciplined.

On that note, I do not have a spending fund for myself. What happens is that I can see that in the next month we will have e.g. 1300 left over. That has to cover EVERYTHING we spend beyond repeating known bills. So it's clothes/entertainment etc. We are actually quite frugal... it's just that life is expensive and when things crop up they are expensive... but the frugality might be a bit of penny pinching and then splashing out. When you see you have 1300 left then you just think it'll be 'safe' to buy that new power saw, and then the shopping etc overspends a bit here and there, and then suddenly it's 500 left and you get an unexpected bill.... and if that happens often enough then you always have spent it all!

Diary note:

I have just spent 2500 on a college bill, budgeted for.

I have done the annual car test and booked car for a service, budgeted for.

I have to get the rear brakes done, not budgeted.

enthusiasticsaver

I think you are right to  address this now as you are vulnerable should your job be at risk or your health suffer so that you are unable to work.  

The overdraft if it is like UK ones are the most expensive way of borrowing so get rid asap.  Over here the interest is 40%.  It is a debt like credit cards or loans.  

Although you have a good income you  have high secured/unsecured loans.  What is the  £400 in car maintenance?  Are you saving that somewhere? Does that not cover the brakes for the car?

I think you need to address the savings after the overdraft is gone.  Pots for car, house and holidays, christmas etc all work for me.  The goals are all good but from the sound of it you struggle to stay disciplined with spending.  A spending diary will help so great you  have started one here.  I look forward to your updates. 

gnobak

@enthusiasticsaver Thanks.

Exactly... in the last year I had a health 'incident' which was related to stress. I am actively trying to avoid stress and this diary is one prong of attack.

Also, the company I worked for for over 20 years sold our division and we are in a new company. It's I.T. so all pretty stable etc but it's concerning. If I lost my job I would get a pretty big payout as I carried my years of service, but still....

I think the overdraft interest rate is 11.85%.

The 400 in car maintenance basically covers the annual test and basic service for both cars.

Yes I am writing here to keep myself focused. I don't mind if there are no responses, but appreciate them!

vampirotoothus

Hi I would look into fixing your mortgage. See what your existing lender has to offer and you may be able to move to a better deal with no fees and no income checks. That way you know what you will be paying each month. Good luck on your journey V x

gnobak

vampirotoothus said:

Hi I would look into fixing your mortgage. See what your existing lender has to offer and you may be able to move to a better deal with no fees and no income checks. That way you know what you will be paying each month. Good luck on your journey V x

Thanks @vampirotoothus

I am on the lowest tracker rate ever offered in the country! I think it tracks the Central Bank + 0.45% and it has been super low for many many years.

The thought did cross my mind to fix, but there was an article in the papers here recently about this topic and the expert opinion was that for the likes of me it is probably best to leave it as-is.

gnobak

Just checked my mortgage rate has gone from <1% to 3.1% and is probably going to go to 3.6% next month.

My provider has a fixed rates of 5years 3.35%, 7years 3.95%, 10years 4.1%

They are likely to rise too, and the chances are that mine will drop again, so I think I will stick.

Thanks for forcing me to look it up!