NE's goal setting

NorthernExpat

Hello MSE, newbie post so any advice welcomed.

I plan to post an SOA so that anyone who wants to give advice can be more informed - I have been holding off in the hope I would do it in the SOA format I've seen on the debt boards but can't seem to find the link to how to create it. If anyone has the link I'll use that, otherwise I'll go off-piste!

I'm NorthernExpat (NE unless that is already taken), household has 2 adults and 1 baby in nursery. We have a fairly high mortgage that we have been overpaying each month and with one-off overpayments.

I'm posting to get my thoughts together on a few things:

- How to set a goal for mortgage freedom while balancing other goals, eg
- To flesh out our thoughts for when we can afford to have a second baby - we both agree we would prefer sooner, but childcare fees are high.
- How to agree longer term life and financial goals between you and your other half. Has anyone used any frameworks for questions that they found useful? (Maybe strangely worded but I can't think of a better wording)

... I'll reply more later but wanted to post now to get things started 

NorthernExpat

Ok so.. last post was nonsensical but I'll get there. It takes guts to post!

SOA below and hoping for any thoughts on it. Some context:
- I'm about to go down to 4 days per week as I really want to spend more time with my little one. Me and my OH agreed to give it a go for a year but I think he is concerned about the impact on our finances. Until recently we have been overpaying £650/mo extra but need to consider how much is possible with my reduced income.
- We were considering a loft conversion but got more info today and reckon it would add about £50k to the value of the house but cost more like £80k.  We have a 3 bed plus upstairs office house and only want 2 kids, but we do have family stay over often so the guest room is used a lot.  The cost in this economic climate plus the effort and lack of payback if we did move (don't have plans to move soon) puts me off it, and I think if we have another kid they could happily share a room for a while (I did). But my OH is in favour of saving up to try and make the loft happen.  We aren't people who borrow other than the mortgage but today wondered if that is worth it too - "should we just do what everyone else does and borrow the money"



Assets / cash position:
£7.5k joint emergency fund in premium bonds (intended to cover roughly 3 months of bills - perhaps a bit light vs latest bills)
£6k OH has invested in S&S ISA
£13.4k "Loft" fund in high interest account - see comment above
£9.3k joint savings from recent bonus - no home currently, potential "loft"
£0.2k joint house renovation savings (just did the last big renovation job so will build this back up gradually)
£0.1k joint holiday savings (recently went on UK holiday)

Mortgage £440k outstanding @2.15% until Dec 2025.  Original term was 35 years for flexibility but we've treated it as minimum 25 years since the start, and overpaid on top of that.
£1,700 is the actual minimum payment
£2,178 is the 25 year minimum payment

1 car, no finance on it, mostly use it irregularly for visiting family and for weekend day activities

Monthly income/costs:
£7,742 joint net income
£2,178 mortgage
£650 if we can mortgage overpayment (having only £112 in balancing savings is making us uncomfortable but we've not revisited this overpayment)
£1,722 other joint account costs (breakdown below)
£1,040 childcare
£250 house maintenance (savings towards bigger things)
£400 holidays savings
£50 xmas savings
£112 balancing savings
£240 travelcards for both of us
£1,100 personal money (£550 each to cover work lunches / own spending incl clothes, shoes etc / own phones or save up for larger things for just us)

Joint account costs split:
£153 council tax
£180 Gas/electricity
£25 water bill
£13 TV licence
£30 house phone and internet
£50 ongoing house maintenance
£120 fortnightly cleaner and monthly window cleaner
£500 groceries (this is one we overspend on most)
£30 fish and chips takeaway
£51 life insurance
£30 petrol
£100 train tickets for family members to visit
£10 joint account account fee (Natwest) - for phone insurance, UK holiday cover etc
£10 which? membership - bought originally to help with house renovations but has been useful for baby related too. Should cancel
£10 spotify. OH mainly uses this rather than me
£3 britbox (paid annually)
£50 eating out, eg coffee shop trips or lunch in cafes
£50 days out, eg weekend trips and incl English Heritage membership
£15 pubs out, eg a weekend trip for a good real ale (slurp)
£154 baby related (baby clothes, activities, buying things that are needed, and incl £50 into a S&S JISA)
And the following bought annually but averaged over 12 months:
£19 home insurance
£34 car insurance
£10 breakdown cover
£13 road tax
£5 MOT
£33 car maintenance



Sorry for the long post - it's hard to know how to balance info so it's useful with succinctness!  But writing it out is useful for holding us to account

NorthernExpat

Morning, on reflection I think I've got too much going on here and would be better asking some clearer questions on the Families board.  I won't ask for the board to be moved as I'll reword the question instead.

South_coast

Your first post made sense to me! I think people were holding off on posting any replies until your promised second post, as we didn't want to interrupt your flow. And it does indeed take guts to post - well done for making a start 😀

So, it looks like you're in a great position so far, a good income, good amount in savings, and overpaying the mortgage by a great amount - and a baby to enjoy spending time with (congratulations, by the way 🥰). I'm not sure whether you posted the SOA to get some input from others, so I won't go digging into it, other than to say I'm assuming the nursery costs will go down a bit once you drop a day at work. Is there anything you could do to make a few pennies on those days, that won't impact the time you spend with your little one? I'm thinking along the lines of selling old stuff on ebay/bank switching/the odd survey while they are napping etc, nothing major in terms of time.  

And on the loft conundrum, is there any scope to build a garden office, so that you could free that room up to use as a bedroom (either for a second child, or as the new guest room)?

NorthernExpat

Thanks so much for the lovely reply South_coast !   Absolutely it's wonderful spending time with our bab, good to remember that through all this pondering.

Yes please to input on the SOA!  On another thread recently I saw £300 each for personal spends was potentially high if you're concentrating on a joint goal. So I think our personal spends are an area to propose a haircut.

Childcare costs (and all costs above) are already for 4 days per week (and actually might go up in future as that's for a childminder, and we might move baby to a pre-school at some stage).  Full time nursery round here is £1,700!

Thanks for the tips RE making a few pennies, that's a good shout.  And thanks for the idea on the office - agree that that's a possible. The office is a box room so couldn't fit a guest bed, but could potentially be a nursery.  My OH also suggested another option could be to move a partition to make the box room bigger and another room smaller, but we've only just done up the room next door!!  So more for the long term.  Hmm!

Thanks,
NE

NorthernExpat

Can't sleep so posting to get my thoughts out.

We've been talking a lot about finances this weekend. It's been painful and upsetting at times, I think because finances are so interlinked with goals and priorities and they'll never be exactly the same between the two of you. But I think it's been helpful.

In the backdrop of all this is our long term plans. We are on different pages about when we might return from being Expats (ie go back up north). Since having our baby I want to move sooner, to be nearer family. It's taken a while to understand, but I think OH wants to do that later, once we've maximised what we can earn down south.  In his words, he wants to stay down here long enough to build a nest egg and then move to a nice house in the countryside with it.

Alongside this is the 4 day plan. It blasts a hole in our finances, around £1k a month, and with the news about mortgage rates it looks increasingly unworkable. Added to the possibility of trying for another baby, which would likely mean the 4 day working pattern would have to be for 3/4 years plus (so after our fix ends) rather than the 1 year test we originally planned.

What are the long term forecasts of mortgage interest at the moment? OH thinks 5.5% so we've been trying to do some planning for when our fix ends based on that rate. Doesn't look for fun reading, which puts another nail in the 4 day coffin sadly.

I'll be gutted as I really wanted to spend more time with my baby.

It's making me think that I should do some thinking about what I want from life, my priorities. I want to spend good quality time with my son, get to know him and build a strong foundation of a relationship with him so he can build a stable sense of self, like my mum did with me. I wonder if that is part of the guilt about potentially stopping the 4 day plan - feeling I want to do as good a job as my mum did, who worked part time and so was around for a lot of our childhood and supported me when I'd come home with tales of friends or of being bullied, and encouraged me to do lots of maths (which ended up being my favourite thing). If only I lived nearer to her and my dad to spend more time with them, to thank them for all they've done for me.  OH's wish feels too far away - to move back after 15+ years would miss all the remaining time I have with them.

It's tough thinking through all this, I think perhaps this longer term thinking is triggered by having my baby. Before that I hated thinking long term, and perhaps I still do now. I'm kicking myself now for not having thought about it before, and so planning a career in the south. Damn.

Waffle over, time to try and sleep. Night 

Schoolworker

I only work 3 days and have 4 days with my kids for the last 16yrs. It was more restricted money wise when both were at nursery and childminder etc as childcare is high. 

My youngest is due to start high school but I still want to stay part-time for a bit. My hubbie gets a good wage so I am able to do this and as a bonus I work term time which certainly helps at the moment but that will change soon hopefully. 

Things are certainly changing the now with the cost of living etc. Good luck for the future. 

NorthernExpat

Thanks Schoolworker. We haven't even considered the school holidays once he starts school!

Yes things are changing now, including that it's not always the man earning more. I think I earn about 4 times my OH's gross wage (incl bonus). So really it probably is a silly idea to be dropping down to 4 days, even though I would love to. (Before anyone suggests it, OH wouldn't want to drop to 4 days and fair play to him). It's a bit like having my feminist cake and eating it - having the cake of having a high earning career but also to eat it by wanting to work less at it to spend more time with my baby...

NorthernExpat

So yesterday was quite a rollercoaster. I woke up convinced we couldn't make the 4 day week work financially and spent the day talking it through with OH and my mum, and (tearfully) trying to accept it! But in the evening we went through the finances and worked out a plan for how we tackle the various big things coming up, and we decided that we want to prioritise family time over the next few years and accept that it won't mean overpaying the mortgage as much. Which is completely fantastic and I can't wait!!!!

So I want to crack on with the money saving, my personal account first. Yippee

South_coast

Wow, congratulations on making the decision. It must feel great to have it settled in your mind now

NorthernExpat

Thanks south_coast! Yes it's brilliant for me, and we both feel much more settled.  We've got a plan now for the finances so we're both on the same page. 


So... a long post (again!)

I've done a round up of my personal finances (in my £550 a month allowance).  The average over Jan-June includes mat leave (so less on work lunches and more on coffee shops).  Based on latest chats, no appetite from OH to drop the personal spends amount so don't need to target a reduction.

Category / Previous budget / Average over Jan-June / Spending in June

Necessary
Travel... £20... £21... £15
Groceries... £30...£23...£2 (these should mostly come from the joint account, so end up being groceries relating to just me)
Mobile...£10...£9...£9
Dentist...£15...£0...£0 (for one-offs)
Part necessary part luxury
Charity... £90... £86... £88 (£20 women's shelter, £18 homelessness charity, £20 local foodbank, £10 Marie Curie, until recently also £10 to my old uni but have stopped, also includes ad-hoc for friends/colleagues fundraising)
Work lunches... £60... £21... £44 (have been trying to get this down from a peak of £100 a month early in 2022!)
Exercise...£40...£42...£0 (ad-hoc, mostly every other month)
Hobbies...£30...£0...£0 (some of this might be in retail as I can't remember what each purchase was - will keep track going forward or perhaps merge)
Presents...£35...£27...£60
Work drinks...£55...£29...£45 (often end up paying for rounds including juniors - want to cut back on this. Somehow this was £86 in May.. eek)
Work coffees...£0...£5...£31 (taking my team out for individual catch up coffees - prob need to budget for this - or wondering is it cheeky to ask if work will pay)
Friends socials...£25...£12...£49
Family socials...£45...£16...£0 (this is ad-hoc so is more if family are visiting)
Days out...£40...£0...£0 (perhaps this should be covered by joint budget now)
Haircut...£15...£0...£0 (that's right - got my haircut just before Christmas....... think I do need to go again. £15/month is for ad-hoc, think it's about £40 each time)
Eating out...£20...£35...£0
Coffee shops...£0...£40...£9 (mainly a maternity thing but lately probably are me paying for joint trips so should pay via the joint account)
Retail... £15... £158... £117 (eek!  Had to buy new work clothes and shoes after putting on weight post-baby - should hopefully fit back in old clothes soon.)
Baby...£0...£40...£0... (I need to make sure all baby costs come from the joint account)

Everything left at the end of the month goes into a personal savings account, which gets used for big ticket things in future months. It currently has £190 sat in there, mainly from June (as savings got decimated by needing to buy a new work wardrobe).

Looking back I think I need to reset my budget - I want to spend less on work drinks, try and bring in lunch to work as much as possible, not go mad on the shopping/retail (but expecting to need new trainers soon),
to allow me to spend money on time with friends/family and perhaps save to overpay the mortgage.

My categories are probably a bit detailed - I'll have a look at a few other diaries to see how other people categorise it.  But some eg work drinks are good for me to see to make sure I keep it down