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.