Author Topic: Game Changer Coming (Kid) - Critique / Advice / Suggestions Needed Please (UK)  (Read 833 times)

Zola.

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My wife and I are (all being well) are going to be new parents, any time from now - one months time. This will be out first kid, and its going to be a game changer for our lives, naturally.

I am a late discoverer of the MMM ways and I am seeking to implement the teachings as much as possible. I am a 33 year old dude who didn't start saving well until I was about 26, young and single...meeting my wife changed everything!

Things are going ok, but I need to see what I can do to improve. I need to drastically up my savings and Vanguard fund.

We bought a new car and financed half of it over a 3 year loan (pre MMM). I have just finished paying it off in 7 months (which I am very happy about). So the car debt is gone, freeing up an extra 220 a month just in time for the baby.

Current state of affairs:

Vanguard S&S Fund: 9700
Bank Acc: 8000
My Pension Fund: 23,000

Mortgage Debt: 115,000
Student Loan Debt: 4000 (1.5% APR)


Here are my monthly budget plans:

Monthly Costs   
Investments - - - - - - - - 320
Mortgage Payment - - - - 627
Mortgage Overpayment - 350
Life Assurance - - - - - - -112
House Insurance - - - - - 14
Electricity - - - - - - - - - -32
Sofas - - - - - - - - - - - - 60 (4 months to run on this 0% APR)
123 Bank Fee - - - - - - - 5
Internet - - - - - - - - - - -35
Gym - - - - - - - - - - - - -20
Council Rates - - - - - - - 80
Eating out / Takeaways -100
Groceries - - - - - - - - - 280
Fire Logs - - - - - - - - - 15
Car Fuel - - - - - - - - - -160
Oil - - - - - - - - - - - - - 30
Cars Bills Averaged - - -150
Child Minding - - - - - - -??   
   
Total   2,390.00


My monthly income 1820 (after 17% put into my pension fund - 453). I have worked out that my savings rate is about 25%.

My wife's income circa 1900 (after pension and personal S&S ISA contributions)

She will get full pay until September, after that she will be down to statutory government maternity payments, which is a paltry 550 a month.

So that pooled with my income is 2370, which on paper is basically enough to cover our typical expenses.. However come October we have expensive insurance and servicing costs for our cars (circa 1200 I am guessing), which will put a dent in the savings. 

This is unavoidable really as we need two cars,  our parents live in opposite directions and we have different hobbies which mean two cars are needed for flexibility.

The eating out should decrease when the baby comes, as we will be more house bound, and my plan is to batch cook a lot more. I was given a large chest freezer, so that will be able to hold lots of home cooked meals. This will be a huge shock to the system as we will be at least 1000 worse off from my wife not working.

Hoping I can get some advice and tips on what I can tweak to make improvements etc.

Cheers! :)
« Last Edit: June 21, 2018, 03:41:23 AM by Zola. »

schmerna

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It looks like you are missing the student loan payment from your monthly costs.  Is that in repayment at this time?  If not, when does that start?  Do you have mobile phones?

Your life insurance looks very high.  It that typical for the UK?

What is you mortgage rate?  When do you refinance?  Why are you making extra payments?

Will your parents be able to help with child minding so you can eliminate that cost?

Zola.

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Hi Schmerna,

My student loan deduction (about 75 a month), is taken directly from my monthly pay, so it comes out before the bottom line net pay figure is produced.Will be around 4 years before that is finished. The more I put into the pension, the smaller the student loan payments are, just the way it works here.

Yes have mobile phones, these are paid from our personal accounts each month, about 30 each.

I agree the life insurance is high, I do some intense sports and have a wide cover for me and family, I will try to bring that down though, will need to look out all the paperwork.

Our mortgage rate is 3.09%, fixed for another two years.

Our parents are both 45 minutes away each side, so it will probably have to be child minders :( . Which in this country is about 850 a month for full day time care.
« Last Edit: June 22, 2018, 04:02:56 AM by Zola. »

Hirondelle

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Seems like your income/expense ratio is gonna be pretty tight with the reduced income. But there's some fat to trim:

- Sofas jump out for me. Why did you get sofas that you couldn't just buy in cash or did you do it because of the 0% APR?
- Do you have an EF at all? If yes, how much is in it?
- Takeout/eating out is quite high. This can easily be halved.

Touching a sensitive topic: the cars. You say you still have car debt. What cars are you driving? First of all, reevaluate if you REALLY need two cars. You mention it mostly for travel to parents and hobbies, making me assume you don't need it for your commute to work. What hobbies do you have that require a car? Is there no way to do your hobbies within bikeable/walkable/public transit distances? Is it possible to take public transit to your parents?

Then if you still are convinced you need both cars, is it possible to sell one or both of them and replace by a cheaper and/or more gas-efficient alternative?

Zola.

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We got the sofas when we moved into the house 3 years ago, they are all but paid off. It was a choice of paying 3000 upfront, or let them take it slowly via 0%, so I opted for that. Once thats cleared (October), no more debts except the mortgage and student loan :)

Emergency fund is whats in the bank - approx 8000

Its been an expensive few years, bought a house 3 years ago, a wedding 7 months ago and a new car. Now everything is more or less sorted I want to focus on building wealth.

Yeah I agree on the takeouts. My wife and I used to go out every friday lunchtime on a little date as we worked close by. Now that she is off this will stop, freeing up some cash for sure. I plan to start making ham and cheese toasted sandwiches or something one or two days a week to be extra frugal.

Yes I need a car for work, should have said so, its 10 miles away and sadly not doable by bike.  Access to parents isnt easy by public transport, involves 2 buses and a train, which would work out more expensive than driving.  :/  I do car share with a buddy to go to sporting hobbies.


reeshau

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I agree the life insurance is high, I do some intense sports and have a wide cover for me and family, I will try to bring that down though, will need to look out all the paperwork.

I hate to break it to you, but your days of doing that are about to end.  Or, if your wife supports it, make sure you treat her as the angel she is.

On the plus side, the intrusive changes that the baby brings will bring positives (in the financial sense) as well as negatives.  You have pointed this out in terms of eating out.  But beware the takeaway monster--much too easy, and you will be making decisions while sleep deprived!

Zola.

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I will for sure be cutting the sports down a little bit for the first while when baby arrives. Its mainly two nights a week, so not too bad.

I have started batch cooking, and using some other things up from the freezer, I plan to start making double everything in our meals to have extras.

Calvawt

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consider keeping some of the cash going to mortgage overpayments in your bank account instead.

I don't usually push to drop down from 2 cars to 1, but you might want to consider it.

Also, agree with reducing your insurance coverage a little bit.

Kids only cost a lot if you let them.  They don't need new everything and most of the gadgets are luxuries you may not even use.  DO NOT buy new baby clothes.  Accept them as gifts and buy them at yard sales.  Most are worn once or twice before the baby grows out of them, so they are like new anyway.  With our 3 kids we have sold clothes that were never even worn once (some with tags even).

Zola.

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Thanks Vawt

Yeah we have a load of kids stuff already, most of which has been given to us for free from family members! That will save a small fortune...

My wife is 37 weeks now and is all but finished up with work, the baby could be arriving any time from now really! :O

I am hoping that I am in pretty good shape for this, but if anyone has any other thoughts I would be glad to hear them.
« Last Edit: June 26, 2018, 03:30:50 AM by Zola. »