What a great community you have here!! I only just found the site over the weekend, but have previously read posts over at Get Rich Slowly, and things from Ramit Sethi. I'm a self confessed luxury/status addict, who has got caught up in an endless cycle of keeping up with the Jones'. I'm an apple fan-boy, who just waits for the new i this, that or the other!
Having said that, I've landed fortunately, and have no debts other than my mortgage. This means as much as there is no student loan, credit debt etc - there is also no emergency fund, no savings - and the monthly budget needs a ton of work. At present, my wife and I spend everything we earn without savings - but we are both on board with planning for the future and creating a more meaningful life, beyond gadgets and short-term luxuries, to ensure that we raise a family in the way we want to.
I'm 27, and my wife is 30 - we have a two year old daughter. I have a 10mile commute to work, and hold a good job with a successful high-flying, driven crowd - where the culture of work hard, play hard is often taken to the extreme.
My current thoughts and queries are as follows:
1) Can someone point me in the right direction to learn the basics of saving / investing for those in the UK? I see a lot of talk about 401k's, and ROTH IRA which doesn't mean anything to me. Further, taking a search online it's difficult to separate the overly salesy - "how to beat the market in 3 easy steps" sort of material, from the credible, accurate information.
2) Secondly, can anyone point in the direction of, or share some comments on budgeting for two adults and a toddler in terms of figures which one should aspire to. I think the issue I have (income is approx £2700) is that I'm so used to spending what I earn, that I almost need exponential rather than incremental change to my budget - there are £000's which could be saved monthly, rather than £0's.
3) I currently have a 35 year mortgage (2 years into the term) for £128k against a £195k house. The current interest rate is 2.39% - although this expires in March, upon which time I can then re-mortgage and should be able to secure a similar rate for a further 3 years (fixed terms for mortgages are quite different in the UK, and tend to be for 2-5 years, and then are variable rate). What focus would you give to aggressively paying this down - obviously I'd rather not still be paying when I turn 60, but at the same time interest rate even with my understanding is lower than I would expect from my investment return.
4) I will shortly have a lump sum to invest/'use' - approximately £30-40k - now, my wife is keen to extend our house with a conservatory, to "future-proof" if our family were to grow, this would take about half the amount, but she is open to negotiation. What would people suggest I do, given I have no emergency fund, savings, investments - nothing at this stage, starting with a clean slate. I'm reluctant to mindlessly follow the "6 months of expenses emergency fund" school of thought, as my job is particularly stable and therefore there is no risk of redundancy. If I were to lose job for any reason, I could find another in weeks. As such, I wondered if maybe a lower multiple - maybe 3 months of expenses would be appropriate to cover appliances / household repairs etc should they arise.
5) Given that I'm at a blank slate, and with a small sum to invest, plus once the budget is scaled down somewhere in the region of £500 per month - what order should I tackle things in - should I start with an ISA, then index funds (read this term, don't necessarily understand though ;) ); rental property; paying down my mortgage? I understand the concepts of asset allocation as I work broadly in the finance space - but have no practical experience and therefore no points of reference.
Are there any other UK posters out there - I'd love to hear more about people trying to be frugal over this side of the pond!
Trying my best to keep this brief as a first post - but would be ever so grateful if people could share some wisdom, or give me a steer towards where I may find useful information. Anyway, off to work out how I can stop spending £600 a month on food, for two adults and a toddler!