#JanuaryJoy: Plan your savings

Sounds pretty boring hey? Money. I don’t think we talk about it enough, with typical British reserve but aside from all the obvious statements about money not buying happiness, if you have a good enough handle on your finances, you can really start to make things happen and stop feeling trapped by your circumstances. Maybe you are postponing having a baby because you are worried about poor maternity pay or financial stability. Maybe you are desperate to move but have no idea how to get the required deposit, or maybe you have debts – don’t we all! I’m no financial advisor (but I do have a great one if anybody is interested and wants a recommendation – just email me,) but I thought I’d share a bit of a personal financial story that might help some of you rethink your ideas and start working towards your financial goals this year.


Image via The Everygirl

As most of you will know, we moved at the end of last year and it’s some of the comments I received around that time via social media and on the blog that made me want to write this post. There were a few grumblings about how ‘lucky’ I was to live in the north, implying how ‘cheap’ my house must have been in comparison to the south. Whatever your income or location, it’s never easy to save a lot. It’s all relative, including your expectations of what you will need to move (I’m using my move as an example here but this can be applied to any financial situation.) Basically everyone is different.

So, how did we get moving? I’ll say first that for about 4 years I had wanted to move. We bought our terraced house which had 2 bedrooms and box room we used as a study in 2006, just before the peak and then crash of the property market. Our intention given the state of the market then was to move upwards in 3 years, but it soon became clear that with the cost of moving, (stamp duty, fees, etc) and the less buoyant market, that that would be foolish. One thing after another trapped us in that house, lack of funds, eventually our employment circumstances (we each in turn became self-employed limiting our mortgage options,) but as we realised we wouldn’t be buying an intermediate home, the deposit we needed became the big issue. How on earth do you save such a big deposit?

We managed to come up with just short of a 20% deposit in the end. About 30% of that was equity in our house – we had barely any equity as we had a huge LTV mortgage and were paying interest only – a set up that suited us at the time of purchase then we stuck with later as we couldn’t get competitive remortgage deals due to our low equity. Instead we decided to stick what would have been a mortgage overpayment in the bank and that became our savings. The rest was all savings cobbled together over a 18-24month period.

I’m sure some of you are thinking, well it’s all very well if you earn a lot… and that is true – if you have more you can save more, but as I said before it is all relative. We did not save more. And I did not see how we could cut a single outgoing, but bit by bit we managed it. We started with all the usual things like changing over our energy and internet providers to get better deals but clearly that wasn’t going to make much headway. We needed to make big drastic changes. We decided to try and live on one salary and bank the other. When we dd the maths it didn’t work at all. We tentatively transferred all my personal direct debits (I have significant professional outgoings too for insurance and professional memberships etc which I let in my own account for tax purposes) to Petes accounts. And every month we went into our overdraft, but little by little we started to live within our means. I bought (a lot) less clothes, we planned cheaper holidays, we ate out less. Note that I’m saying ‘less’, because if we had cut out all fun, I never would have stuck with it. Altogether it made me feel more accountable, to Pete and our future together. Finally we made a big change and sold Petes car – his baby, bought to celebrate his first proper job out of training. It was costing a lot to run and maintain and so in a big sacrifice he swapped it for a 14 year old £500 banger. (Side note: it breaks down nearly every day on his way to work, he pushes it to the side of the road, waits 5 minutes and goes again, but we’re sticking with it!)

We’ve got so good at sticking within the budget that now, with a bigger mortgage and outgoings, we’re still managing it. That’s not meant to sound smug, but as people who (I’m not proud to say) spent the vast majority of our expendable income rather than saving it, we have made massive changes and as a result changed our life in a way that thought was impossible in the near future. We even recommended it to our friends who were saving for their wedding and really stuck for how to save – they too couldn’t see how it was possible but are now doing it and converted.

I know this plan won’t be for everyone, but I’m really curious as to how you guys plans and save for the future. I’d love to hear how you planned and budgeted for a move or other big financial change, perhaps a career break or change, or adjusting to maternity leave. Please do leave a comment.

Love,
Rebecca
xo

#JanuaryJoy – Make a Budget or Savings plan.


Image via Who What Wear

When I was growing up one of my abiding memories is of my mum checking off receipts against a pile of bank statements. Aways a big list maker, every penny in her bank account was accounted for as it went out and double checked. I always thought it was funny but joking aside, my approach to money couldn’t have been more different to my Mum’s. A child of the credit years I sailed through uni living in overdrafts and student loans, which might as well have been monopoly money. When I finally graduated aged 24 and started work I was incredibly fortunate to have a well paid job and progress through the ranks that saw my salary rise. It wasn’t without hard work of course, but the old adage work hard, play hard could well have been written about junior doctors. Of course there were times that I made budgets, but it was always more of a retrospective activity and an eye opener as to how much I was spending.

However, there have been periods in my life where I have saved, and saved hard, when we bought our house and the most notable being prior to our wedding. At the time we decided we wanted to save a certain amount, worked out how much that was and divided it month by month between the two of us. We managed it but fell back into bad habits after the enforced saving pre-wedding and a few months of treating ourselves turned into years.

Back in July, I wrote the post Dutch no More, where I shared Pete and my financial plans to go fully ‘joint’ in the banking department to try and save money towards our next move. There were 65 comments from those of you reading sharing your own financial arrangements and a few of you asked for a future update on how it went for us. 6 months on I thought it was time to recap.

When we started out, I don’t mind admitting was worried. I was worried we wouldn’t have enough in one account to cover both of our outgoings and our new financially savvy life would be austere and devoid of fun. I got my joint account card and didn’t want to use it. I suddenly felt so much more responsible for my money and accountable for where it had gone. In reality Pete doesn’t tell me what I can or can’t spend and when I have come home with shopping bags thankfully he’s good humoured about it. Those shopping bags are definitely fewer and farther between however. Everything I spend I think twice about and fripperies I might have splashed some extra cash on often go unpurchased. I do think this is in part because of the mental investment I have made in what we’re trying to do, how much I want the next house we’re saving for. The biggest adjustment has been remebering that his account (which we now live off) is not ‘his’ money, but ‘ours’, no more than the money that earn and save is ‘mine’. I joke about shopping bags but Pete reminds me that where I may spend more on clothes, his car costs a lot more than mine to run and maintain, so it all balances out.

It has been surprisingly easy to get used to shake off that feeling of spending somebody else’s money and the most rewarding thing has been that talking about money, previously something we took care of individually, has become a part of our relationship. It’s another element to the best feeling that marriage brings. That feeling that you’re in it together and we’re working towards our future together. And I’m pleased to report our bank balance has never looked healthier so it’s working too. More than anything I’m glad we did this before we had a family. I now have the confidence to know we can manage without my salary and it will be one less adjustment to make if and when the time comes.

Now it’s your turn readers. Did my post 6 months ago inspire you to change anything about your finances or are you, like we are, saving for something inspiring?

Love,
Rebecca
xo

PS. I have concentrated on saving here as that is most relevant to me at the moment but if you’re thinking of making a budget definitely head over and read this brilliant article by Sarah on Any Other Woman.

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