Author Topic: New baby, and now retirement feels ike itís out of reach (UK)  (Read 791 times)

LFH86

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New baby, and now retirement feels ike itís out of reach (UK)
« on: February 04, 2018, 01:36:35 PM »
My husband and I had a baby 15 months ago and Iíve just gone back to work. Both of us have gone down to part time hours (I work 4 days/week, he works 3, and our little boy goes to nursery the other 2 days). Now that weíre working part time and have childcare costs, retirement feels like it is so far out of reach. We had so much disposable income in our 20s that we more or less just disposed of it and didnít really think much about saving (well, we did, but if something came up that we wanted, we bought it).

We have been exceptionally lucky to have both inherited money, much of which went towards our flat deposit.

Life situation: both 31, one baby, no plans to have more (I had a few months of PND so genuinely not considering another for many years, if at all). Just before I went on maternity leave, we combined our finances but my husband is categorically not interested so I look after all our money. I have a complication in that I am technically a US citizen (was born there but never lived there). I have just become aware of my tax filing obligations so am in the process of getting up to date with that, but it means it is much more complicated to invest and my accountant has advised against it until I expatriate (which is a few years away). I have some ongoing accountancy costs but unsure of how much this will be just yet.

Living situation: own a 2 bed flat in South London which we bought just over 4 years ago. High cost of living area! We are planning to move back to near Manchester where weíre both from in the near future to be nearer our parents and hoping to cut down the housing costs greatly (current costs listed below). Other than mortgage and student loans, we have no debts.

Salary: I earn £34k/yr on my part time hours and husband earns £25k, so gross is £59k.

Monthly:
me: £2800 gross
Pension: £72 (3%, 5% employer match. This is the max I can contribute with a match)
Childcare vouchers: £243
Tax and NI: £550
Student loan: £96
Total net: £1900
Husband net: £1400 (I donít have all his details to hand)
Child benefit: £82
Total monthly net: £3382

Assets:
Cash emergency fund £25k (5% interest on the first 20k)
Cash ISA (mine) £36k (1.2% interest) note: we have a lot in cash ISA as we may need it if we plan to move soon. Plus, I canít invest in stocks and shares yet, and I want to have money in my name just in case. Open to advice on this!
S&S ISA (husband) £40k
Pension (mine) £5500
Regular savings £3500 + £1200 (both earning 5% for a year. Weíre saving the maximum allowed each month so in July when they mature, weíll have £6000+£2400)
Car (is this an asset??) 2007 Ford Fiesta, inherited from husbandís aunt

Liabilities
Mortgage: owe £160k @ 2.99%, 18 years to go. We pay £950/month (ouch). This was a fixed 5 year deal when we bought but we are due to remortgage at the end of the year. If interest rates stay similar to now, our monthly payment will go down to £800/month. Flat is worth around £320k tops (we bought at £290k. Similar properties have sold for around £320k in the last year or so). If we moved, we would plan to buy a house for probably £250k max.
Student loans: I have about £5k to pay off, my husband more but in the uk these loans are not worth paying off, as theyíre income dependent, so if you donít work, you donít pay.

Expenses (monthly):
Mortgage £950
Residents association £100
Council tax £116
Utilities £60
Life insurance and income protection £63
Home insurance £19
Tv license £13
Internet £27
Mobile phones £27
Spotify and Netflix £16
Petrol £45
Car insurance £56
Groceries and household - depends on the month, usually between £250-£400
Cleaner (I know!!) £60
Window Cleaner £15
Public transport £80 (although I just last week got the nerve to go back to cycling to work so this will go waaay down)
Personal spending £200 (£100 each)
Savings £500
Saving for car insurance and incidentals £140
With regards to other spending... I donít really track it. I sort of do, in that I think we usually spend around £60/week on lunches and coffee etc at work, and activities on the days when we have our little boy. And then I ďallowĒ £50 for weekend activities - going out for lunch, doing things with friends etc. We donít normally spend that much though. We try to plan our meals so we have leftovers to take for lunch at work but sometimes we donít manage, in which case, we spend a lot, other weeks we spend less.

Every few months we spend about £120 on swimming lessons for little one. We also go on holiday and Iíd guess we spend around £1000 each year on holidays. This year we are going to a farm stay for a week with our families and going to a wedding in Italy in June and July. We almost never go out in the evenings any more, so pretty much no socialising costs.

We each have a bug weakness though. Husband is obsessed with bikes. Our flat is littered with wheels, tyres, handlebars and thereís always more coming. I have no idea how much he spends, most of it is second hand but I often see PayPal payments on our statement which I assume are for bike parts. My weakness is treating myself. I feel like Iíve had a rough year with depression and losing a lot of my identity, and I shop emotionally... it varies massively month to month. When I was on maternity leave, I had a LOT of time with a sleeping baby on me and Iíd just browse websites and buy stuff. Not great. The plan is that each having £100 to spend each month will get us used to having that as our fun money and if we want to spend more, tough shit, you have to wait until next month and save up.

In short, I feel like while weíre doing well for our ages and thanks to a LOT of luck with inheritance, we could be doing better. Where would you start with trimming things? Do you need any more info?

cerat0n1a

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Re: New baby, and now retirement feels ike itís out of reach (UK)
« Reply #1 on: February 05, 2018, 06:02:41 AM »
I'd say your salaries aren't really high enough to justify living in London - highest impact change you could make would be to move to a cheaper area. After that, I think you've already identified the next biggest area - set a budget for "fun money" and stick to it, maybe also have a think about whether you really need the cleaner? Also £60 for lunches and coffees seems like an area where savings could be made?

OTOH, you have a pretty decent amount saved and you're continuing to save, and working part time lets both of you have the opportunity to spend time with your baby. Seems to me it's better to prioritise this precious time when your son is young than to work flat out so that you can retire a year or two earlier after he's left home? I think you are in a far better position than a large majority of people your age.

LFH86

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Re: New baby, and now retirement feels ike itís out of reach (UK)
« Reply #2 on: February 06, 2018, 01:56:52 AM »
Yeah, the reason we are in London in the first place is for my job. I work in fashion retail and while there are opportunities elsewhere, theyíre much fewer. My husband is a writer in a marketing agency, so weíve agreed when I get a job nearer Manchester, he will look for something too and then we can move. But it is dependent on me getting a job. Salaries are lower too, so for a similar role, Iíd be on lucky to get any sort of increase.

Iím not sure what a new job would let me do in terms of part time or flexible working... hopefully we could both continue to do 4 days each and then when our son goes to school we can look at going back up to full time. My parents would definitely be keen to look after him one or two days a week, so hopefully that would reduce our childcare costs too (this isnít me being cheeky, my dad has said as much in the past).

The cleaner... do we really need her? I mean, trying to get the flat clean and tidy with a 15 month old running around is not even really worth trying. When heís a bit older and can be distracted for a while with tv or colouring or something, then maybe it would be easier but at the moment he wants to be held all the time and is a bit of a destruction machine, so anything you tidy up is immediately untidied  again. I feel like itís worth it for my sanity.

I feel cross with myself for not realising that early retirement was a thing sooner... before I had my baby (and before our finances were combined) I was easily saving £1000 every month but I could have done SO much more. You live and learn, I guess, but a lot of opportunity wasted.