Hi guys,
The background:
I'm a pretty recent 'convert' and have been reading and lurking around for a few months. Before MMM my life was naturally quite frugal (others may say stingy) and I've always been good at saving. When I was a teenager my first job started at £2.50 an hour (one day per week), 3 years later I was still only on £3.50ph but by the time I finished school I'd saved enough to take a gap year, to put myself through driving lessons and test and to go travelling round the world for 5 months.
I went to university in Scotland, with nice free tuition, but did take out the maximum possible loan for my situation. During university (5 year undergrad degree) I did some seasonal work, but only enough to supplement loans and stop me from having to move back in with my parents over summer. Realised in year 4 out of 5 that I really did not want to go into the area my degree was in (veterinary medicine), so spent a year after finishing just kind of subsisting, working just enough to meet basic outgoings, but no more. Got my act together and found a Masters degree I was really interested in that came with a tuition fee grant. Didn't take out any loans in this time and simply worked to survive. This was genuinely paycheck to paycheck stuff and serious budgeting, self restraint and some creativity were needed. Loved the course and lined myself up a decent if not hugely lucrative gaduate job in biostatistics, giving me my first 'real job' at the age of 26.
Since I stopped having to worry about where money for rent and food were going to come from I've only really budgeted in the loosest term of the word. I'm living well within my means (in fact current savings rate is about 50%), but really need to start putting a strategy in place to put those little pounds to work for me and would love some input.
My situation:
28yo female, living with boyfriend, but we keep all our finances separate, no dependents. Only 'complicating' factor in the current climate is that we're both EU citizens. I've been in Scotland for so long that all my finances are completely done through the UK system (including my student loans, ISAs, pensions etc.) but it definitely creates additional uncertainty in the long tem plan.
Living situation:
We rent a 3 bedroom flat in a big city in Scotland, moderate cost of living (split all costs equally). Had a flatmate until 2 months ago and after the last one I'm enjoying having my own space so much I'd rather not entertain the thought of having to share again.
Salary: has just increased to £34, 000 pa (gross)
March 2017-September 2017 £30, 000 pa
July 2016 - February 2017 £22, 500 pa
= essentially my total gross for 2017 will be just under £30, 000
Monthly: £2833 gross
pre-tax deductions: - £170 (6% pension contribution, employer match worth 8% is added too)
taxable income: £2663
tax and NI: - £579
student loan : - £106
take home pay: £1978
Current expenses:
Here is where I don't have the detail (well I suppose I do, maybe next rainy day I'll sit down with all 5 accounts I've spent money from and work out the exact details) so I'll give a high level overview of overall spending and 'fixed' cost within this.
Calendar year to date I have spent £10,697 (a smidge under £1000 per month)
I'm fairly happy at this level of spending and know that there's a fair amount of fat to be trimmed if needed. Happy to elaborate here (some of it is truly ridiculous).
'Fixed' costs per month
rent £312.50 (my half)
council tax £75 (my half, paid over 12 months)
electricity £30 (bit of a guess, boyfriend's department)
TV licence and internet : £12
mobile phone: £7.50
car £40 - belongs to my boyfriend 2005 renault clio 110K miles , this number represents my half of insurance, tax, MOT and other maintenance to date this year)
petrol £80 (the commute and travel to the horse. Working on the former, little stuck with the latter)
horse £150 (he's old, I'm a sucker, won't be forever...)
food £60
and then the rest is pretty much variable non-essential but involves holidays, christmas, socialising etc. This year I've been the Greece, Denmark, Switzerland and Italy as well as visiting family in Holland, Belgium, France and popping over to visit the Boyfriend's parents in Ireland.
So assets:
cash: £17 000 (earning an average of just over 2%)
S&S ISA: £917 (well it's a start?)
pension: £6200 (again better late than never)
liabilities:
No debts.
just the good old student loan, £13 923 left, currently at 1.25%, paying £106 a month back. It's coming directly out of my pay and the only reason I'm mentioning it at all is that my new employer's pension scheme is a salary sacrifice scheme...
Currently my 'saving' set up is as follows per month:
6% into pension (8% employer contribution)
£200 into HTB ISA
£250 into 5% regular saver (cash)
£500 (just upped) into S&S ISA - within this holding Vanguard VLS just now with a pretty high equity % as lets face it, I currently have a pretty low risk 'portfolio' overall.
any extra leftover (most months) excess floats around for a while earning very little interest before I periodically put it somewhere with marginally higher interest.
My long term goals are definitely FI and probably RE.
Medium term I'm facing quite a lot of uncertainty and with the whole Brexit thing we are not sure we want to tie our money up in a house just now. Job is pretty secure and boyfriend has a project with funding for 2 years at the university, so short term we're ok.
However not ruling out buying property in the next few years so the cash cushion is probably here to stay (and possibly get a bit fatter although we definitely have more than enough for a decent deposit in the area we currently live in and for what we'd want - a 2/3 bedroom flat in the city to keep the option of renting it out open).
So in short I'm looking how to optimise the pension and S&S contributions going forward, hoping to be FI well before I can access the pension pot (can always dream right).