Author Topic: Where can I cut back?  (Read 7101 times)

webcat86

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Where can I cut back?
« on: September 28, 2015, 03:23:48 PM »
If anyone would like to give my budget some critique, I'd appreciate it! I've recently gone through the finances to try and minimise where possible, and I feel like our annual spend is too high but i can't see where else to cut back. There are some anti-mustachian things here, like our couch payment, which is legacy from not thinking too much about money. For some background info here:

Our utilities bill, currently 85, has just reduced from 105. We are not spending this much, it's a direct debit and we are over 200 in credit since opening the account in April. The company let us reduce from 105 to 85 but as this is our first winter with them, didn't want us to go lower yet. (I'm happy with this - it means we're in credit and our last supplier royally screwed us and we ended up 1,500 in debt, because of their mis-selling. So I'm happy with credit!)

My car payment was 178 through the dealer and I refinanced with a different company to reduce it to 145. The car is 4 years old not brand new, and is so much cheaper to run and operate than my previous 10-year-old car that it is actually almost identical even after the monthly payment - probably about 20 a month more expensive. It's a 7,800 loan outstanding over 5 years but I'm hoping to get a book project (I used to be a ghostwriter and am trying to get back into it as a side hustle) to clear it. We have also switched insurance provider and saved over 200 a year, each.

We both drive and although i'm now looking to walk and cycle to the shops etc, our work commutes are dangerous roads for bikes so it's not really feasible to be doing, so our petrol spend is pretty much stuck where it is.

We have both just turned 29 and bought our first house in April of this year. 33 year mortgage on a 5 year fix at 2.83% - 788 a month and we are now overpaying so the mortgage payment is 900 a month. Our combined earnings are 46,000 - my wife earns a couple thousand in bonuses each year, and I'm looking to get some side work again, starting with some freelance writing as that was my previous job. I'm also going to be starting guitar lessons (so if anyone's interested, they can take place on Skype!)

Joint outgoings: 1,268 - mortgage 900, utilities 85, water 23, couch 19, bank account fee 6.50 (we both get phone insurance on this which is the only reason we keep it, as it's come in useful before and at 3.25 each is really cheap insurance), tv/phone/broadband 41, property/council tax 144, home insurance 25, gas cover 13.

Personal outgoings for one of us: 1,233 (including 50% of the above joint bills) mobile phone 53 (this will be cleared next September and another contract won't be taken out), groceries 80, petrol 100-120, car 145, car insurance 47, pet insurance 14, Dropbox 7.99 (i keep work files and photos here), vacation savings 55, and 70 on guitar lessons and studio - this is my hobby, and the lessons are an investment in myself to start offering them myself.

Personal outgoings for the other one of us: 1,058 (including 50% of the joint bills) phone contract 47, groceries 80, petrol 50, car insurance 48, pet food 25, car tax 18, car payment 80 (only a couple months left on this), healthcare 28, vacation savings 55


The vacation savings are for an anniversary trip next year, something we've never done before. We are both left with around 370 a month after this, although i'm left with about 80 right now as i'm hammering my small credit card while it's on 0% - that'll be cleared in the new year.

I don't feel like we're extravagant, and although there will be a few other cutbacks (at least one phone contract will be reduced to PAYG next year and the 80 car payment will soon be gone), I'm not sure if we are now at the point of not being able to come down much more and instead need to focus on earning more (which i'm working on, not sure my wife will though)


zolotiyeruki

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Re: Where can I cut back?
« Reply #1 on: September 28, 2015, 03:51:20 PM »
Nothing jumps out as particularly facepunch-worthy.  And since I'm across the pond, I don't know enough about the cost of living (food, petrol, utilities) to make a judgment on whether there's some fat that can be pinched.  Is the 45k/year earnings your take-home or gross?

norabird

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Re: Where can I cut back?
« Reply #2 on: September 28, 2015, 03:57:22 PM »
There was a thread recently that pet insurance typically does not pay off; you could just out that amount into regular savings instead, earmarked for possible emergencies?

La Bibliotecaria Feroz

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Re: Where can I cut back?
« Reply #3 on: September 28, 2015, 05:44:48 PM »
Why do you need to pay for Dropbox? It seems awfully high. I don't know the availability is different overseas, but are you sure you can't use Google Drive?




webcat86

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Re: Where can I cut back?
« Reply #4 on: September 28, 2015, 11:53:13 PM »
Nothing jumps out as particularly facepunch-worthy.  And since I'm across the pond, I don't know enough about the cost of living (food, petrol, utilities) to make a judgment on whether there's some fat that can be pinched.  Is the 45k/year earnings your take-home or gross?

It's gross

webcat86

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Re: Where can I cut back?
« Reply #5 on: September 28, 2015, 11:55:08 PM »
There was a thread recently that pet insurance typically does not pay off; you could just out that amount into regular savings instead, earmarked for possible emergencies?

We don't have it for all the pets - the reptiles are uninsured, as is the cat currently. We only have it for the dog and it's been invaluable for family pets in the past. At 14 it's very cheap and covers any illness for life - i fully agree that there are types of insurance that just don't pay off, including the ones that only treat something for one year.

webcat86

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Re: Where can I cut back?
« Reply #6 on: September 28, 2015, 11:56:44 PM »
Why do you need to pay for Dropbox? It seems awfully high. I don't know the availability is different overseas, but are you sure you can't use Google Drive?

I try not to get tied into Google's products - I have gmail though. Dropbox is also a far more utilised system that other programs are developed to work with, for example I use 1Password on my computer and phone and it syncs to my Dropbox account. So does YNAB. For 1TB of storage I don't think it's very expensive, although i would prefer a lower storage option at a cheaper price!

Playing with Fire UK

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Re: Where can I cut back?
« Reply #7 on: September 29, 2015, 09:32:30 AM »
Hi Webcat,

Overall a solid looking budget, the car payments are not ideal, but you have a plan for that. Groceries looks really good - would be interested to see what you buy and cook.

Some points to consider:

Do you need the gas cover? Have you thought about self insuring? How old is the boiler etc? When I had this I think I used three different intro offers for 1 for six months etc before dropping it completely in favour of self insurance.

How much TV do you watch (and does that include a TV licence)? We have ~23 fast internet with Virgin and watch catchup (previously Freeview). I buy day passes on NowTV for can't-miss sports events. But I have no need for a landline.

Do you have the appropriate amount of house? Would you rent a room if you had too much? [appreciate this is not ideal if you have recently started living together/newlyweds?]

Water seems a touch high, do you have a meter? If you have more bedrooms than people and are normal/cautious with water use I've found it cheaper with a meter.

Have you looked on GoogleEarth/similar for a safer bike route to work (paths/byways)? Could you car share (either with each other or colleagues)?

Healthcare - (don't want to pry) have you looked into a Pre-payment certificate for NHS prescriptions or a SimplyHealth type plan if for physio/dental.

You don't mention anything about pension contributions. Depending on your work, if I were you, I'd get whatever the max employer contribution is, save anything else in an ISA, and wait for the higher rate tax bracket or the change in legislation, and then pile it in rather than adding more now but DYOR.

Of the 370/80, how much is being saved and how much is leaking away?

Designing your life so that you pay for less house and less car and (with luck and effort) earn more, seems a solid plan.

Best of luck and keep us posted.

Scandium

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Re: Where can I cut back?
« Reply #8 on: September 29, 2015, 09:42:09 AM »
Phone insurance sounds silly, even if only at 6 queen-dollars. Have insurance for things you can't afford to replace.. If that's your phone; get a cheaper phone.

Could you be better off breaking  your phone contract and going PAYG now? Savings per month vs ETF..

How much do you need on Dropbox? I've managed to get 7GB for free there, plenty for my work files (with a 32 GB USB stick for massive files.)

Beyond my nitpicks I don't see any massive waste though.

DagobertDuck

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Re: Where can I cut back?
« Reply #9 on: September 29, 2015, 09:45:58 AM »
couch payment
[...]
My car payment was 178 through the dealer and I refinanced with a different company to reduce it to 145. It's a 7,800 loan outstanding over 5 years
[...]
33 year mortgage on a 5 year fix at 2.83% - 788 a month and we are now overpaying so the mortgage payment is 900 a month.
[...]

What are the interest rates on the couch and car loan?
Probably higher than the mortgage, so better pay those other loans off first. (if possible without a fine)

webcat86

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Re: Where can I cut back?
« Reply #10 on: September 29, 2015, 10:19:02 AM »
Hi Webcat,

Overall a solid looking budget, the car payments are not ideal, but you have a plan for that. Groceries looks really good - would be interested to see what you buy and cook.

Some points to consider:

Do you need the gas cover? Have you thought about self insuring? How old is the boiler etc? When I had this I think I used three different intro offers for 1 for six months etc before dropping it completely in favour of self insurance.

How much TV do you watch (and does that include a TV licence)? We have ~23 fast internet with Virgin and watch catchup (previously Freeview). I buy day passes on NowTV for can't-miss sports events. But I have no need for a landline.

Do you have the appropriate amount of house? Would you rent a room if you had too much? [appreciate this is not ideal if you have recently started living together/newlyweds?]

Water seems a touch high, do you have a meter? If you have more bedrooms than people and are normal/cautious with water use I've found it cheaper with a meter.

Have you looked on GoogleEarth/similar for a safer bike route to work (paths/byways)? Could you car share (either with each other or colleagues)?

Healthcare - (don't want to pry) have you looked into a Pre-payment certificate for NHS prescriptions or a SimplyHealth type plan if for physio/dental.

You don't mention anything about pension contributions. Depending on your work, if I were you, I'd get whatever the max employer contribution is, save anything else in an ISA, and wait for the higher rate tax bracket or the change in legislation, and then pile it in rather than adding more now but DYOR.

Of the 370/80, how much is being saved and how much is leaking away?

Designing your life so that you pay for less house and less car and (with luck and effort) earn more, seems a solid plan.

Best of luck and keep us posted.

Thanks for the reply. I'll go through the points in order:

The gas cover is peace of mind and for boiler protection - after we moved in we had a couple of leaks and these will be taken care of if we need them to be. My family always had it and when a boiler broke at Christmas it was repaired very quickly, and it was a freezing winter. Things like that make me realise the importance of the cover and for the price I'm happy to pay it.

We watch a fair bit of TV, it's somewhat academic as we're locked in for about another year and i'll look for cheaper at the time. We don't need a landline but it's actually cheaper to have it than not have it. We are on Virgin's second largest package and although we got it at a deal, so not full price, we don't use anywhere close to all the channels so will probably drop down when we're off contract. The price doesn't include TV licence, that's paid quarterly at about 33.

We have a spare room at the house and if we had to we could rent it, but that'd probably be if we lost a job or something. We're not newlyweds (just had 4th anniversary) but it's our first time owning and we are enjoying that, so don't currently want to invite someone else in.

We're on a water meter yes, didn't think our bill was that high actually!

I've looked at Google maps for bike routes and the problem isn't so much the majority of the journey it's the last few miles are quite treacherous and they're the only way into my work. We work in opposite directions and at different times so car sharing is out of the equation and neither of us have colleagues in our area.

Healthcare I get Bupa's top package as a benefit at work and it's offered to spouses for 28. This is again something that i've used in the past and know how important it is to have it when it's needed, and it's almost half the price of the plan i used to have individually, but a lot better.

Pension contributions my wife has i think 9% including employer contributions. I currently don't have one but work for financial advisers and will have a pension within the next year through auto-enrolment. I'm intending to save about 14%.

We have about 12,000 in cash, i'm getting financial advice through work soon to get it invested.

Of the money left over currently nothing is being properly saved, but we had our first of our new monthly money meetings last month and worked out what we will save, so hopefully from next month the answer will be different. We want to be quite aggressive with it.

One of our big priorities is paying down the house - we put 26% down when we bought it and I know some people prefer to invest the money when on a low mortgage rate i would prefer to build up our equity and take advantage of the cheap rate, which will also give us better negotiating room when our fix is up.

webcat86

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Re: Where can I cut back?
« Reply #11 on: September 29, 2015, 10:24:55 AM »
Phone insurance sounds silly, even if only at 6 queen-dollars. Have insurance for things you can't afford to replace.. If that's your phone; get a cheaper phone.

Could you be better off breaking  your phone contract and going PAYG now? Savings per month vs ETF..

How much do you need on Dropbox? I've managed to get 7GB for free there, plenty for my work files (with a 32 GB USB stick for massive files.)

Beyond my nitpicks I don't see any massive waste though.

I'm using 28gb on Dropbox

I've thought about breaking my contract now and going PAYG, not sure if it's good but i need to talk to the provider for the cost.

Phone insurance is one i've had to use in the past and the service was very good and actually gave me a more expensive phone than the one that needed replacing. The cost of my phone is about 23x the annual cost of insurance, so i'm not worried about it and at 3.25 a month i wouldn't even consider it a win ditching it. The account has other purposes for us anyway (including being my wife's longest account in the UK, which is good for her credit rating)


webcat86

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Re: Where can I cut back?
« Reply #12 on: September 29, 2015, 10:26:53 AM »
couch payment
[...]
My car payment was 178 through the dealer and I refinanced with a different company to reduce it to 145. It's a 7,800 loan outstanding over 5 years
[...]
33 year mortgage on a 5 year fix at 2.83% - 788 a month and we are now overpaying so the mortgage payment is 900 a month.
[...]

What are the interest rates on the couch and car loan?
Probably higher than the mortgage, so better pay those other loans off first. (if possible without a fine)

Nope couch is 0% interest.
Car loan is under 4% as i took out a cheaper loan for it. There's no penalty for clearing it early and i'm using excess payments (e.g. from writing projects) to pay it down. If i get a larger project like a full book then i'll be throwing all of it at the car. It's definitely one i want to get out of the way as soon as possible, i don't want a 145 outgoing for 5 years that's for sure.

DagobertDuck

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Re: Where can I cut back?
« Reply #13 on: September 29, 2015, 10:52:09 AM »
Well I read you're overpaying on the mortgage, but the interest on your car loan is higher, so better clear that one first.

webcat86

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Re: Where can I cut back?
« Reply #14 on: September 29, 2015, 10:59:38 AM »

Well I read you're overpaying on the mortgage, but the interest on your car loan is higher, so better clear that one first.

I'm overpaying that too. I'm thinking longer term - clearing the mortgage before a rate rise will save me more money, give us more equity and more room to renegotiate a better rate. The car payment I am tackling with payments from freelance writing

DagobertDuck

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Re: Where can I cut back?
« Reply #15 on: September 29, 2015, 11:30:34 AM »
If you pay down the car loan first, you'll save more on interest.
Save that money up, and throw it at the mortgage when needed.

robartsd

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Re: Where can I cut back?
« Reply #16 on: September 29, 2015, 11:38:23 AM »
Why do you keep the photos in Dropbox? If you removed them from Dropbox would you fit into their free offering?

DagobertDuck

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Re: Where can I cut back?
« Reply #17 on: September 29, 2015, 11:55:54 AM »
+1
Might consider multipe cloud services. Flickr for photo's, dropbox / google drive / MS One drive for work things etc.

webcat86

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Re: Where can I cut back?
« Reply #18 on: September 29, 2015, 04:04:20 PM »

Why do you keep the photos in Dropbox? If you removed them from Dropbox would you fit into their free offering?

Originally because my phone came with 50gb free for 2 years and I used the auto backup feature of my photos and phone contents. Then when I changed to the iPhone I continued to use that backup feature. I have thought about moving them elsewhere but I have too much other stuff in there to not pay for it anyway

webcat86

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Where can I cut back?
« Reply #19 on: September 29, 2015, 04:06:00 PM »
+1
Might consider multipe cloud services. Flickr for photo's, dropbox / google drive / MS One drive for work things etc.

Well there's an element of convenience and also reliability - I've used Onedrive happily thinking everything was backing up only to discover that it actually wasn't. Dropbox is extremely reliable and I also use its shared folders for work, keep work on there along with it syncing my encrypted password database etc. It's not just for photos

ETA: I could switch to iCloud and 200GB is about 2.50 or 2.99 so I'll save about 5 a month. That should free enough in Dropbox to just use the free space
« Last Edit: September 29, 2015, 04:14:01 PM by webcat86 »

webcat86

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Re: Where can I cut back?
« Reply #20 on: September 29, 2015, 04:07:19 PM »

If you pay down the car loan first, you'll save more on interest.
Save that money up, and throw it at the mortgage when needed.

True I'll save more on interest but it's not money I'll physically have in my pocket. I'm overpaying it, just alongside the mortgage

Scandium

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Re: Where can I cut back?
« Reply #21 on: September 29, 2015, 05:09:37 PM »
Isn't there a Google photos app for iOS that'll do backup? I've never paid for it and have all my phone photos there. Which aren't many to be fair. Flickr will do 1 TB for free, but no idea how well it works. I think only apple apps can run as background processes on iOS?

webcat86

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Re: Where can I cut back?
« Reply #22 on: September 29, 2015, 11:33:18 PM »

Isn't there a Google photos app for iOS that'll do backup? I've never paid for it and have all my phone photos there. Which aren't many to be fair. Flickr will do 1 TB for free, but no idea how well it works. I think only apple apps can run as background processes on iOS?

Yeah Google has but I don't like it and have never used Flickr. I like the convenience of having a single drive but could use iCloud instead as that's cheaper. Dropbox sort of runs in the background on iOS but does have limitations on when the images upload

gaja

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Re: Where can I cut back?
« Reply #23 on: September 30, 2015, 02:13:06 AM »
Transport is a big expence; do you have access to public transport?

webcat86

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Re: Where can I cut back?
« Reply #24 on: September 30, 2015, 02:20:05 AM »

Transport is a big expence; do you have access to public transport?

No, not for work

Playing with Fire UK

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Re: Where can I cut back?
« Reply #25 on: October 02, 2015, 12:56:00 AM »
Re my questions/suggestions but too long to quote.

All good points, it seems like you are on your way.

I find it amusing that the financial advisers you work for are telling other people to invest in pensions but not providing them for staff.

kvaruni

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Re: Where can I cut back?
« Reply #26 on: October 02, 2015, 02:27:54 AM »
[...] to invest in pensions but not providing them for staff.

maybe they are being smart? I ran the numbers for my own pension plan, and it makes more sense to invest the money myself than to put it in a pension fund (caveat: depends on your age). This is even more cringe worthy if you consider that my 8% is topped up with 15% by the employer and they still mess up the pension investment. Ever since defined benefits went out of the window, I'm not overly confident in any pension scheme.

And the topic poster asked for it, so here are my comments:
Does the utility bill include gas/oil/electricity? If so, I don't think this is too high.

Car payment ... not much I can contribute there. I would agree it is best to pay this off first, before you pay off any more of your mortgage. As for cycling, I guess it does somewhat depend where you live in the UK. Truth be told, I was scared as well, but it is a lot safer than I expected it to be.

Your house is some steep payment each and every month, but it is not like you can easily get out of that. It also depends on the area. If you are paying this in London: well done :). But this might be facepunch worthy if you are living in a more isolated place. If so, then either you should bike and get rid of the car as you must be close enough to the city centre, or you should move to a more rural area since you both have cars anyway. Still, I understand, this is your house and it's not like it is easy to move.

Bank account fees are just stupid. You can buy phones for that price. And if you brick your phone that often that the price is worth it, maybe you should really consider a much cheaper phone. Move to a bank like Halifax where you even get 5, each!, every month. The difference alone means 200 extra each and every year.

Cut out your TV/phone, move to internet only and get you some Netflix or Amazon Prime. Call the internet company and negotiate a 20% discount on internet on top of that. I did, took only a few minutes. I know, you mention that having the phone line is cheaper, and it probably is. Nevertheless, do give them a call. Especially with the latest price hike for broadband only you will very likely end up with a lower price. Again, it took me minutes to negotiate a 7 discount each and every month for the next 18 months, so it is definitely worth it.

Gas cover? Geez, I dunno. These typically exclude sludge or damage caused by sludge, and guess what will ruin your boiler and radiators in the end ...

Mobile phone of 53?? And another phone contract for 47? I do hope you are paying part of your phones in those contracts. Anyway, I call a facepunch here. Do you really need a phone that expensive? Do you really need to call/text/browse that much? I have a friggin' iPhone (bought outright), which I use for about 3 years, and my monthly bill is about 3 on Three. That works out to about 18 a month if I would drop the phone in a bin at the end of its life. I won't, and I will easily recuperate another 100 by selling it to CEX. So, yes, seems excessively high to me.

Healthcare? Really? To me, this is wasted money in the UK if you are looking for other places to save. Yes, NHS can be horribly slow, but it is free.

Groceries are very good, Dropbox is fine (but moving to iCloud does make sense), home insurance is low (don't just renew, next time use a Quidco deal or similar), vacation savings are even rather low!

Pet insurance ... up to you, but seems steep to me.

Truth be told, you aren't doing too badly in terms of expenses. Your income is not too bad either. As you mention, you aren't particularly extravagant. Areas I would see you can cut back in are the phones, the cars, and insurance. The phones are just stupid if you consider you are paying 1200 yearly for them. I don't have a car altogether, so I find cars stupid as well :). That being said, do consider downgrading to one car. If you can cut the most expensive car, that would give you another 250 a month (assuming 50 extra petrol for the cheaper car). The insurances are mostly because you like the convenience, but not because you actually ran the numbers. If you did, you would see that insurance is usually a rip-off. Home insurance and car insurance should be there. Pet insurance depends on the current medical condition and the age of the dog. Healthcare insurance, gas cover, and phone insurance sound dumb to me.

One more thing: don't get advise on investments. Put it all in a simple Vanguard LifeStrategy 80. You only need to buy one fund, and your money is immediately invested worldwide in both stocks and bonds. If you do want investment advise, go have a look at monevator.com .
« Last Edit: October 02, 2015, 02:33:38 AM by kvaruni »

Playing with Fire UK

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Re: Where can I cut back?
« Reply #27 on: October 02, 2015, 05:20:08 AM »
kvaruni - I'm learning just how lucky I've been with pensions provided by work. Mine aren't ideal, but have a passive equities fund at ~0.5% total annual charge. It's not perfect, but for me but the 42% tax bump and 200% employers match on up to 4% makes it a bargin. Although I see every year how companies are reducing the offerings for pensions, so I'm making hay while it lasts. Is it normal to not have a choice how the pension is invested? How can anyone mess it up that badly? I should probably get back to work to show my gratitude.

I'm with you on not paying for investment advice. I saw a couple of IFA's (for free) when I was starting my journey. Although they were lovely people and I imagine would have been kindly and hand-holding during a scary downturn; the fact that they wanted 1% of my money every year in order to invest in funds with 2% charges on a platform that I wouldn't be able to action changes was never going to be a deal. Also, both were twenty years older than me, still working, and my mental maths caught a mistake in their calculator maths - I'm not paying for that. I reckon the OP can get advice for free/cheap with work?

3 /mo contract, is that a legacy tariff? I though I was doing so well with my 5/mo including data and smart phone.

Second the love for Halifax free money (2x 5 bank accounts + 5 from the credit card) and Quidco. Our utilities and internet get changed as soon as the contract is up, the cashback covers my time and the savings keep coming every month.

kvaruni

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Re: Where can I cut back?
« Reply #28 on: October 02, 2015, 06:43:32 AM »
Is it normal to not have a choice how the pension is invested? How can anyone mess it up that badly? I should probably get back to work to show my gratitude.
Our pensions all go into a pot, where they decide to invest. You can only choose your fund to invest in if you contribute too much ... and you can choose out of one of the three funds they created, with absurdly high costs. They call it "making pension investment easy". Oh, and the only reason employer contributions are at 15% at the moment is because the pension fund has a gap to fill of 11.5 billion. Yep, the pension fund is currently valued at -11.5 billion. But I seem to be the only employee who notices/cares ...

3 /mo contract, is that a legacy tariff? I though I was doing so well with my 5/mo including data and smart phone.
No, it is just the 321 PAYG plan from Three. Data is just 1p per MB, and you can buy bundles of 500MB per 5 which you can use for a month. The latter sounds stupid, until you realise that Three has the Feel at Home where you can use your bundle for data roaming in 20 or so countries, including the US, Ireland, Spain ... . I use the data as I see fit and the phone connects to Wi-Fi whenever I'm home or at work, so I average around 3 a month. Probably not for everyone, but 250MB, a text, and a few minutes of calling is plenty for me.