New baby, and now retirement feels ike it’s out of reach (UK)

[LFH86]

My husband and I had a baby 15 months ago and I’ve 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 we’re 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 didn’t 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 we’re 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 don’t 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 can’t 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. We’re saving the maximum allowed each month so in July when they mature, we’ll have £6000+£2400)
Car (is this an asset??) 2007 Ford Fiesta, inherited from husband’s 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 they’re income dependent, so if you don’t work, you don’t 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 don’t 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 “allow” £50 for weekend activities - going out for lunch, doing things with friends etc. We don’t normally spend that much though. We try to plan our meals so we have leftovers to take for lunch at work but sometimes we don’t 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 I’d 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 there’s 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 I’ve 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 I’d 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 we’re 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]

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]

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, they’re much fewer. My husband is a writer in a marketing agency, so we’ve 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, I’d be on lucky to get any sort of increase.

I’m 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 isn’t 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 he’s 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 it’s 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.

[LFH86]

Things have changed quite a lot in the last month. I’ve been offered a job in Manchester, so we are relocating in May. Since we own our flat in London, we’re going to let it out (as a security blanket in case something goes horribly wrong and we want to come back to London) and rent in Manchester for a year or two - rents up there are half what they are in London for double the space. Not fussed about making any money with the rental, just want to cover costs until we in a position to want to sell and buy up north. I know what I’m expecting to get for rent, but I have no idea how to calculate if it will pay for itself - mostly when tax is added in.

We can juuuuust about get by on my income. My husband is going to make a go of freelancing so anything he earns is a bonus and will go to savings or holidays/other fun things. Depending on where we rent, I should be able to cycle to work and my parents want to help out with childcare. So feels like we’re going in the right direction...

[former player]

Congratulations on the new job and the move to Manchester.

On the rental, I would say a few things - I did the same as you when leaving London: kept my place there as a hedge against wanting/needing to go back and renting it out in the meantime.    From my experience 1) screen your tenants extremely carefully: I used a local agency that was pretty good so I would say to ask for recommendations.  2) If you can find a good tenant who wants to stay a long time you should (ie if you are choosing between equally good prospective tenants with different ideas about potential length of tenancy).  Even if you are not too worried about voids (not really been an issue in London) there is a big hit on income when accounting for all the costs of a change in tenant.  3) With jobs and a small baby in Manchester you should think seriously about having an agency manage the tenancy for you, and dealing with repairs etc.  This will be more expensive, but you will be looking for a good rent and that comes with a quick response to any problems.  I would make an exception for this if you have good contacts with local trades and someone local to act as keyholder (rental agency might do this even if just finding tenants and not managing the property - mine did).  4) You may find it cheaper to remortgage while you are still in residence, as letting properties can be subject to higher mortgage rates, but if you do there may be a clause in your mortgage against letting or putting a limit of 1 or 2 years on letting.  5) You may need to change your insurer, but if not you will certainly need to inform your current one.  6) If you settle out of London, after a few years having the London rental may well become too much of a hassle or worry and you will end up selling anyway.

[Playing with Fire UK]

Hi there LFH86.

You are doing better than many your age. If you want to prepare for FIRE then you should be thinking about stepping it up.

I'd strongly suggest tracking your actual variable spending. You have a clear grasp on your bills, but only a vague description of coffees, groceries, bikes and treats. When I had this level of detail about my spending I was spending way more than I thought - and tracking it lead me to find easy savings. Maybe set up cash envelopes or separate accounts for you, your husband and the baby's spending; all treats and bike parts would come out of the personal spending and when it is gone then you stop. How much are you saving each month (how much is your current account balance going up by?)? If it is less than you expect then you are spending more than you think.

If you can only just get by on your salary in Manchester it's really important that your husband does some paid work - otherwise you have no buffer for unexpected expenses (repairs on the London flat?). Especially if you have access to grandparent daycare. Maybe set a time period to try the freelancing before looking for paid employment? Or could he look for work a couple of days a week while seeing if the freelancing takes off?

Are there any tax efficiencies available in how you split the rental income between you and your husband? If he is working less or keeping profits in a company then he could be in a lower tax band than you?

I'm not an expert, but I've heard that US citizens don't get the same tax advantages from ISAs. If this is the case and you want to keep the money in cash, maybe look if you can get a higher rate of interest outside an ISA?

I'd hesitate before signing up for a window cleaning service and cleaner when you go to Manchester. If you find that you really can't live without it you can always add it in after a while.

[shelivesthedream]

Hey! Welcome to the forum! I spotted your post in the ‘UK threads elsewhere on the forum’ thread – good call, as UK stuff tends to get lost under the avalanche of dollar signs.

There are basically two aspects to Mustachianism: the money/numbers (which you ought to be able to get on top of pretty quickly) and the emotional/psychological aspect (which can take YEARS). This is why you can ask what you think is a simple question about numbers and get a hundred slightly different answers – because everyone feels differently about things like being in debt, how important travel is, what’s achievable for them…

First thing I would recommend is checking out a few journals. You can find some UK ones here: https://forum.mrmoneymustache.com/uk-tax-discussion/post-your-uk-journal-link-here/ Hopefully they’ll give you a sense of the journey before you or of camaraderie to have others walking alongside you.

Second, I would recommend reading this post about ‘converting’ your SO: https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/ You two don’t sound like you’re in major conflict, but it’s good to realise that you might be about to suggest some radical changes in your life which – to him – will come out of nowhere. Turn compassion and patience up to max.

Third, read this about investing: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ I would consider myself a beginner investor who is a bit of a scaredy cat, but it convinced me that ‘buy low-fee index funds and hold them’ actually is investing and not gambling. I buy Vanguard LifeStrategy 100 because I want a simple life and I know retirement is some time away. It may not be absolutely optimal, but I can always optimise in the future but I can’t save money in the future I didn’t save now.

Fourth, know that everything else I’m about to say is coloured by:
a)   My own emotional and psychological prejudices about money. (I work part-time in a artsy job and am just about to have our first child, my husband has committed to a steady but low-income career that he allegedly never wants to retire from. Debt freaks me out and I am desperate to own a house with a garden. YMMV.)
b)   An enthusiasm to help people with their money.
c)   The knowledge that if there’s anything you don’t like, you can just shrug, say ‘not for me, thanks’, and move on with your life.

We had so much disposable income in our 20s that we more or less just disposed of it and didn’t really think much about saving (well, we did, but if something came up that we wanted, we bought it).

This is OK! This is a very very common feeling around here. The ‘facepalm! Why didn’t I think of this earlier??’ feeling. But great news! You made it here before you got in trouble, and now there is a huge and enthusiastic community of people to cheerlead and support you. On the general forum there are some real jerks, but thus far the active UK subset has been incredibly nice, and we all hang out in each other’s journals. There’s a wide range of ages and life circumstances. Draw a line between your pre-MMM life and your post-MMM life. Don’t beat yourself up about all that, but do resolve to change things from now on.

(I work 4 days/week, he works 3, and our little boy goes to nursery the other 2 days).

Things may have changed given that you’ve recently moved, but SURELY you can find a way to eliminate those childcare costs if neither of you works full time! The great thing about a stash is that it gives you choices so you don’t have to desperately clutch at the first thing that comes along. Either you could re-ijg your schedules or find someone to swap childcare with.

my husband is categorically not interested so I look after all our money.

Me too, and it’s working out really well for us. He trusts me to look after everything and all he wants to know is ‘how much money do we have to spend on X right now?’ I generally have a philosophy of ‘(s)he who does the work gets to make the choices’. For example, I painted our house so I picked all the colours. Obviously I consulted with my husband so he wouldn’t hate it, but if he’s so bothered he can pick up a paintbrush! So given that I do all the personal finance work, I decide where our money is invested, who our utility suppliers are, how much we budget for food… Obviously he can always comment/submit an appeal against an unfair decision, but by and large Mr SLTD would rather not get involved. It’s meant I have sneaked so many little things in that he hasn’t noticed – changing energy suppliers, changing MY mobile phone, I do the online shop and meal plan… He works full-time and I work part-time so the work of the house falls more heavily on my shoulders so I get more control over everything, but it works for us. But LEAD BY EXAMPLE. Do the things that affect no one first (e.g. electricity supplier), then do the things that affect you and talk about them enthusiastically (cycling, declutter your personal stuff), then…wait. Just wait. Maybe he will come round, maybe he won’t, but it takes time to adjust to this new way of living.

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 can’t 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. We’re saving the maximum allowed each month so in July when they mature, we’ll have £6000+£2400)
Car (is this an asset??) 2007 Ford Fiesta, inherited from husband’s aunt

You have an INSANE amount of cash. Please read about Bob above and come back. Please also have a serious conversation with yourself about what size emergency fund (in terms of X months expenses) you need to feel comfortable. I decided we only needed a very small amount (basically 1 month) in cash and I was happy to keep everything else in the market. YMMV but do make sure this is a conscious decision.

Also, NO your car and the house you live in are not assets. How can you tell? Ask yourself ‘Can I spend this on food?” You should only ever calculate your stash based on liquid assets. You can convert your car or house into liquid assets by downsizing or selling altogether, but until you do then it is not an asset that matters for mustachians.

Student loans: I have about £5k to pay off, my husband more but in the uk these loans are not worth paying off, as they’re income dependent, so if you don’t work, you don’t pay.

If I were you I’d take some of your HUGE amount of cash and pay off that £5k. You’ll pay a substantial amount in interest if you’re only paying £96/month and you certainly have the assets lying around! It’ll also simplify your financial position.

Utilities £60: Good job on this one.
Internet £27: We pay £18.99/month with Plusnet. You should look at USwitch.com and find someone else. It’s a one-time thing that offers savings forever.
Mobile phones £27: Again, go to Uswitch. I pay £7.50/month for, um, some minutes and texts (I never get close to using them all so I don’t know what it is!) and 2GB data with a discount of £1 per unused gigabyte every month (pro rata) so usually pay about £6. Look for iD and Smarty as new providers and get a SIM only contract with your current handset.
Groceries and household - depends on the month, usually between £250-£400: This is a lot! I know you have a child and we don’t, but we’re two adults averaging £270/month for all food, household and toiletries. It doesn’t matter how much you spend in any given month – you want to know your longer term average. It doesn’t ruin my grocery budget if I buy £100 of toilet paper one month because then I’ll spend less on it for, er, many months more! A high grocery month is only a problem if it repeats indefinitely and if it’s on silly or highly perishable things. It’s a big difference between ‘usually £400 and sometimes £250’ and the other way around. So find out your average for the past six months-one year (or track in the future so you find out your future average). Broken record question when it comes to food is: what are you eating? How much of it are you cooking yourself? Meat and fish are expensive, tins of beans are cheap. I would recommend doing an online grocery shop really slowly at least one time so you can compare prices and see what’s driving up the cost and whether there are cheaper alternatives.
Cleaner (I know!!) £60: WHAAAAAAAAAAAT?!! You work part time! What are you DOING on your days off??? I mean, I hate cleaning. Really, I do. But go away and read this thread then cancel your cleaner (or at least IMMEDIATELY get them to come half as often): https://forum.mrmoneymustache.com/ask-a-mustachian/advice-for-making-your-home-interior-easier-to-clean-and-maintain/
Window Cleaner £15: Even bigger WTF! You get your windows cleaned every month?! Who does that??? Instant cancellation, please!
Personal spending £200 (£100 each): Excellent job! This is the foundation of a happy marriage. We all have our own vices and it’s good to be given some unscrutinsed but boundaried freedom with them.
Saving for car insurance and incidentals £140: This needs to be renamed. It is not savings, it is ‘bumpy spending’ (a term which I believe was coined by katekat in her journal)

With regards to other spending... I don’t really track it.

Be honest with yourself – do you REALLY even track everything above? Retrospectively, I mean? Or is this the amount you allocate in advance? Tracking spending WORKS. I didn’t do it for years, but am now a convert.

lunches and coffee etc at work

Unacceptable. YOU BOTH WORK PART TIME. You have plenty of time to pack four days worth of lunches. It doesn’t have to be leftovers! You are allowed to buy special groceries for lunch! This is something where I recommend starting off silently just doing it for yourself and waiting for your husband to bring it up. Mine is slooooooowly coming round to the idea of packed lunches, although his standards are much higher than mine.

Also, consider an alternative coffee solution. You could try fancy instant in a mug, or try bringing a pre-filled Thermos, or try an Aeropress or cafetiere, or lobby your work to install a machine for ‘teambuilding and employee morale’. You won’t know which of these solutions will have the best payback time until you’ve tracked your average coffee spend, though. (Another thing to do quietly by yourself at first.)

And then I “allow” £50 for weekend activities - going out for lunch, doing things with friends etc. We don’t normally spend that much though. Every few months we spend about £120 on swimming lessons for little one. We also go on holiday and I’d 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.
 

So how much do you spend? Track, please!

We each have a big weakness though….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.

Good job! You’re doing exactly the right thing to address this. Be prepared to adjust this number up and down a bit until you find your sweet spot.

Many words! Do take some time to digest and I’m very happy to answer questions if I can. Ut honestly, the first thing you should do is get out your last six months to a year of bank statements and sit down typing every single transaction into an expenses category on a spreadsheet. Yes, it will take a little while. But honestly, it REALLY REALLY REALLY is worth doing. I wish I had done it about three years earlier than I did. We only track joint expenses but I have tracked my personal expenses separately from time to time in the past and found it kind of embarrassing how much I was spending on snacks/treat food. And there are some expenses that don’t appear at all in your case study. Maybe you don’t have them but… clothes? Presents? Random stuff breaking around the house and needing to be replaced? Car maintenance? I can’t believe none of this stuff EVER happens to you, and you’ll be surprised how much money sneaks away on it.

You need to do your own calculations about savings rate and time to FIRE and decide what hard choices you’re willing to make. I am currently whining in my journal about how I can’t buy a house instantly because I’ve chosen to work part-time as a feckless artist…but I know in reality that I’d much happier pottering around the house baking bread and mending clothes than I would be killing it in some office somewhere. I know the choice I’ve made, and I also know it’s not a forever choice. The only real forever choice is spending all my money on stupid shit right now and never being able to get it back. Anything else can change in the future. But try stuff out! Try three months without a cleaner. You can always get one again if it's miserable, but you might be surprised how you adjust.

Also, read this and mentally apply it to personal finance: https://paulwheaton12.wordpress.com/2014/12/16/the-wheaton-eco-scale/ We do stuff right now that I would have thought was CRAY CRAY a decade ago. You might well think we’re a bit nuts right now! We don’t have a car, we don’t own a TV, I (try very hard to) grow vegetables, I just started baking sourdough bread, we kept bees for a while, we are thinking of building our own barbeque/smoker in the back garden… But there are people on this forum that *I* think are crazily DIY and austere. Just start on the ladder wherever you find yourself now, but know that one day you’ll be looking down wondering what all those people at the bottom are doing!

[Playing with Fire UK]

We had so much disposable income in our 20s that we more or less just disposed of it and didn’t really think much about saving (well, we did, but if something came up that we wanted, we bought it).

This is OK! This is a very very common feeling around here. The ‘facepalm! Why didn’t I think of this earlier??’ feeling. But great news! You made it here before you got in trouble, and now there is a huge and enthusiastic community of people to cheerlead and support you. On the general forum there are some real jerks, but thus far the active UK subset has been incredibly nice, and we all hang out in each other’s journals. There’s a wide range of ages and life circumstances. Draw a line between your pre-MMM life and your post-MMM life. Don’t beat yourself up about all that, but do resolve to change things from now on.

Echoing that this feeling is common and that no good comes from "if only...-ing". I offer you Internet forgiveness if that is of interest to you. If you want to feel better about yourself: I only figured money out after a dance with a vast, vast amount of debt. You are in a great place compared to so many of your peers.

You might find that the move gives you a chance to reset your idea of "normal spending". The habits of a daily coffee or two can be more easily changed when you don't know where the coffee shop is.

[LFH86]

Congratulations on the new job and the move to Manchester.

On the rental, I would say a few things - I did the same as you when leaving London: kept my place there as a hedge against wanting/needing to go back and renting it out in the meantime.    From my experience 1) screen your tenants extremely carefully: I used a local agency that was pretty good so I would say to ask for recommendations.  2) If you can find a good tenant who wants to stay a long time you should (ie if you are choosing between equally good prospective tenants with different ideas about potential length of tenancy).  Even if you are not too worried about voids (not really been an issue in London) there is a big hit on income when accounting for all the costs of a change in tenant.  3) With jobs and a small baby in Manchester you should think seriously about having an agency manage the tenancy for you, and dealing with repairs etc.  This will be more expensive, but you will be looking for a good rent and that comes with a quick response to any problems.  I would make an exception for this if you have good contacts with local trades and someone local to act as keyholder (rental agency might do this even if just finding tenants and not managing the property - mine did).  4) You may find it cheaper to remortgage while you are still in residence, as letting properties can be subject to higher mortgage rates, but if you do there may be a clause in your mortgage against letting or putting a limit of 1 or 2 years on letting.  5) You may need to change your insurer, but if not you will certainly need to inform your current one.  6) If you settle out of London, after a few years having the London rental may well become too much of a hassle or worry and you will end up selling anyway.

This is all stuff we’re looking at... a friend of mine works in a Lettings agency so she has offered us great rates on management and Lettings fees. I’ve spoken to a couple of other agents, and I think my friend’s company is a bit ambitious on the price we can get but I’d be happy to take less than their estimate especially when considering the fees and the fact that my friend will be involved too, as someone I trust.

Remortgaging... we have a 5 year fix which ends in December, and we would have an 8k early repayment charge so I don’t think it’s a viable option at this point unfortunately. I did speak to a mortgage advisor about it briefly who was of the same opinion as me.

I’m expecting we will sell this flat in a year or two. My husband has strong moral objections to landlording - he’s fine with it in the short term, but he doesn’t want to be doing it as a business. We’ll see where we are in a couple of years, but I’d expect we will sell.

[former player]

If you are planning to sell, you might need to keep an eye on capital gains, which can kick in if you have rented for long enough - the HMRC website will take you through the permutations.

If you end up owning two properties you can nominate one as your main home by writing a letter to HMRC and then won't have to pay capital gains when you sell.

[LFH86]

Hi there LFH86.

You are doing better than many your age. If you want to prepare for FIRE then you should be thinking about stepping it up.

I'd strongly suggest tracking your actual variable spending. You have a clear grasp on your bills, but only a vague description of coffees, groceries, bikes and treats. When I had this level of detail about my spending I was spending way more than I thought - and tracking it lead me to find easy savings. Maybe set up cash envelopes or separate accounts for you, your husband and the baby's spending; all treats and bike parts would come out of the personal spending and when it is gone then you stop. How much are you saving each month (how much is your current account balance going up by?)? If it is less than you expect then you are spending more than you think.

If you can only just get by on your salary in Manchester it's really important that your husband does some paid work - otherwise you have no buffer for unexpected expenses (repairs on the London flat?). Especially if you have access to grandparent daycare. Maybe set a time period to try the freelancing before looking for paid employment? Or could he look for work a couple of days a week while seeing if the freelancing takes off?

Are there any tax efficiencies available in how you split the rental income between you and your husband? If he is working less or keeping profits in a company then he could be in a lower tax band than you?

I'm not an expert, but I've heard that US citizens don't get the same tax advantages from ISAs. If this is the case and you want to keep the money in cash, maybe look if you can get a higher rate of interest outside an ISA?

I'd hesitate before signing up for a window cleaning service and cleaner when you go to Manchester. If you find that you really can't live without it you can always add it in after a while.

Thank you!

- Yes, we need to track spending much better. I am pretty on top of my own expenses, but my husbands spending is a grey area for me! He will tend to take out a load of cash at the beginning of the week and spend that, but then also buy lunch on his card a couple of days too so I don’t know what he’s doing with all his cash. I also don’t want to interrogate him because I think he alrea6 thinks I’m nitpicking and nagging him.

- Yep, we’re going to see what hubby can do work-wise. He has a couple of months and is planning on getting his website and LinkedIn sorted out and updated, and then try getting some business before we move, as his company does allow him to do freelance work as long it’s not direct competition. The gu he manages handed in his notice last week, so there may the possibility of continuing to work remotely for his company for a short time which would be great (although he doesn’t want to do it). Agree I don’t want to be ONLY living on my salary, but if hubby isn’t working, we have built-in childcare so that’s £200/month saved.

- Tax efficiencies... probably! I need to understand this better. My step-MIL is an accountant so imagine she will be able to help.

- I can get ISA tax advantages but only on cash, I’ve been advised to steer well clear of stocks and shares. The ISA I have is a 1.2% rate. I’ve struggled to find anything with a better rate to be honest,  it can have another look. I’ve always thought the “rule” is to not take money out of an ISA because once it’s out, you can’t put it back in. Do you think this is still correct? This was from MSE.

- we won’t be getting a Window Cleaner or Cleaner when we move. Only living on one guaranteed salary, it’s not going to make the cut!

[shelivesthedream]

I've always thought the "rule" is not to take money out of an ISA because you can't put it back in

This is true in that the £20k/yr/person ISA allowance counts all money going in and ignores any money going out. It is only a real problem if between you, you plan to save over £40k into ISAs next tax year. So while it's better to take money from elsewhere first, it's fine to do as long as you have seriously considered whether you're going to have enough room for all the money you plan to put in.

[never give up]

You can transfer ISA’s from one provider to another and/or from cash to stocks without losing your allowance. It counts as a previous year transfer.

Most of your cash seems to be at 5% which is good. I won’t ramble on as others on here have been so helpful but just to reiterate that you are in control of what you spend. Whatever you can sacrifice spending wise and invest instead will really help future you. You have to optimise your expenses and have a plan for your investments. Please read the Jl Collins stock series. I was also a nervous investor but reading about investing will help.

You can be mortgage free at a young age and retire early if you want to. Don’t feel it’s out of reach. Just track your expenses, minimise them, live within your means, invest the rest and good things will happen to future you.

[shelivesthedream]

Good point, never give up! VERY important to understand whether you are taking money out of an ISA or transferring it. If its transferring, your new provider should do all the legwork and you shouldn't need to touch your old account. I transferred from Hargreaves Lansdown to Vanguard last year and it was very simple - though mine was delayed because of maiden/married name discrepancies, but even that was simple to sort out. Taking it out means you actually want to do something with the money that isn't ISA-related, like spending it or paying off debt.

Query: if you can't get at S&S ISAs, would you "get" a better interest rate repaying a chunk of your mortgage in December/putting it all down as a deposit on your new place? I'm not too clear on the ins and outs of different mortgage options (or indeed where you are with your move), but if your interest rate is higher than the 1.2% you're getting, it would make sense to me.

[LFH86]

Thanks! Wow, so much information! I’ve tried to comment in bold where I can (hopefully the formatting will work...) I’m aware that some of it sounds excuse-y. I have found motherhood to be th3 hardest thing I’ve ever done in my life (I had PND following the birth of my baby which I’m pretty much recovered from now) but a lot of the treat spending was a way of making myself feel better or making things easier on myself, and I’ve just kind of kept it.

Hey! Welcome to the forum! I spotted your post in the ‘UK threads elsewhere on the forum’ thread – good call, as UK stuff tends to get lost under the avalanche of dollar signs.

There are basically two aspects to Mustachianism: the money/numbers (which you ought to be able to get on top of pretty quickly) and the emotional/psychological aspect (which can take YEARS). This is why you can ask what you think is a simple question about numbers and get a hundred slightly different answers – because everyone feels differently about things like being in debt, how important travel is, what’s achievable for them…

First thing I would recommend is checking out a few journals. You can find some UK ones here: https://forum.mrmoneymustache.com/uk-tax-discussion/post-your-uk-journal-link-here/ Hopefully they’ll give you a sense of the journey before you or of camaraderie to have others walking alongside you.

Second, I would recommend reading this post about ‘converting’ your SO: https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/ You two don’t sound like you’re in major conflict, but it’s good to realise that you might be about to suggest some radical changes in your life which – to him – will come out of nowhere. Turn compassion and patience up to max.

Third, read this about investing: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ I would consider myself a beginner investor who is a bit of a scaredy cat, but it convinced me that ‘buy low-fee index funds and hold them’ actually is investing and not gambling. I buy Vanguard LifeStrategy 100 because I want a simple life and I know retirement is some time away. It may not be absolutely optimal, but I can always optimise in the future but I can’t save money in the future I didn’t save now.

Fourth, know that everything else I’m about to say is coloured by:
a)   My own emotional and psychological prejudices about money. (I work part-time in a artsy job and am just about to have our first child, my husband has committed to a steady but low-income career that he allegedly never wants to retire from. Debt freaks me out and I am desperate to own a house with a garden. YMMV.)
b)   An enthusiasm to help people with their money.
c)   The knowledge that if there’s anything you don’t like, you can just shrug, say ‘not for me, thanks’, and move on with your life.

We had so much disposable income in our 20s that we more or less just disposed of it and didn’t really think much about saving (well, we did, but if something came up that we wanted, we bought it).

This is OK! This is a very very common feeling around here. The ‘facepalm! Why didn’t I think of this earlier??’ feeling. But great news! You made it here before you got in trouble, and now there is a huge and enthusiastic community of people to cheerlead and support you. On the general forum there are some real jerks, but thus far the active UK subset has been incredibly nice, and we all hang out in each other’s journals. There’s a wide range of ages and life circumstances. Draw a line between your pre-MMM life and your post-MMM life. Don’t beat yourself up about all that, but do resolve to change things from now on.

(I work 4 days/week, he works 3, and our little boy goes to nursery the other 2 days).

Things may have changed given that you’ve recently moved, but SURELY you can find a way to eliminate those childcare costs if neither of you works full time! The great thing about a stash is that it gives you choices so you don’t have to desperately clutch at the first thing that comes along. Either you could re-ijg your schedules or find someone to swap childcare with.

So, we tried to work it so that we both have time to spend with little one, but also maintain careers. This is the best way we could find. To be honest, I find it beyond exhausting to look after him all day, I honestly couldn’t imagine looking after someone else’s kid at the same time and giving them the same opportunities a nursery does. We haven’t moved yet, but when we do, I think we’ll be able to cut down the childcare costs due to lower cost of living and having grandparents nearby to help out. Saying that, I do still want him to go to nursery for a day or two a week because I think it’s amazing for his confidence and socialising and being able to do different activities that we don’t think of because we don’t know what we’re doing, haha.

my husband is categorically not interested so I look after all our money.

Me too, and it’s working out really well for us. He trusts me to look after everything and all he wants to know is ‘how much money do we have to spend on X right now?’ I generally have a philosophy of ‘(s)he who does the work gets to make the choices’. For example, I painted our house so I picked all the colours. Obviously I consulted with my husband so he wouldn’t hate it, but if he’s so bothered he can pick up a paintbrush! So given that I do all the personal finance work, I decide where our money is invested, who our utility suppliers are, how much we budget for food… Obviously he can always comment/submit an appeal against an unfair decision, but by and large Mr SLTD would rather not get involved. It’s meant I have sneaked so many little things in that he hasn’t noticed – changing energy suppliers, changing MY mobile phone, I do the online shop and meal plan… He works full-time and I work part-time so the work of the house falls more heavily on my shoulders so I get more control over everything, but it works for us. But LEAD BY EXAMPLE. Do the things that affect no one first (e.g. electricity supplier), then do the things that affect you and talk about them enthusiastically (cycling, declutter your personal stuff), then…wait. Just wait. Maybe he will come round, maybe he won’t, but it takes time to adjust to this new way of living.

Ha, this sounds so familiar. I decorated our flat singlehanded as he didn’t want to help, so I got to make all the decisions. Leading by example is slow going. We’ll see how it goes.

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 can’t 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. We’re saving the maximum allowed each month so in July when they mature, we’ll have £6000+£2400)
Car (is this an asset??) 2007 Ford Fiesta, inherited from husband’s aunt

You have an INSANE amount of cash. Please read about Bob above and come back. Please also have a serious conversation with yourself about what size emergency fund (in terms of X months expenses) you need to feel comfortable. I decided we only needed a very small amount (basically 1 month) in cash and I was happy to keep everything else in the market. YMMV but do make sure this is a conscious decision.

This is a good point especially with my ISA in cash too. Let me have a think about this. Probably I’d feel comfortable halving the emergency fund. But we get a really good interest rate on it... would it be better in the market though?

Also, NO your car and the house you live in are not assets. How can you tell? Ask yourself ‘Can I spend this on food?” You should only ever calculate your stash based on liquid assets. You can convert your car or house into liquid assets by downsizing or selling altogether, but until you do then it is not an asset that matters for

Good to know!

Student loans: I have about £5k to pay off, my husband more but in the uk these loans are not worth paying off, as they’re income dependent, so if you don’t work, you don’t pay.

If I were you I’d take some of your HUGE amount of cash and pay off that £5k. You’ll pay a substantial amount in interest if you’re only paying £96/month and you certainly have the assets lying around! It’ll also simplify your financial position.

Really? I pay almost nothing in interest. Hang on, let me dig out my statement from last year (financial year 16-17)... yep, so last year I paid £66 in interest. Paid off £1624 and balance was at £5.2k in April 2017. Interest rate was 0.9% at the start of the year then went up to 1.25%.

Utilities £60: Good job on this one. I’ve since checked an amended the direct debit and it’s now £43. BOOM.
Internet £27: We pay £18.99/month with Plusnet. You should look at USwitch.com and find someone else. It’s a one-time thing that offers savings forever. Good plan, I’ve not done this for a while. We are also with Plusnet but think prices have crept up over the years.
Mobile phones £27: Again, go to Uswitch. I pay £7.50/month for, um, some minutes and texts (I never get close to using them all so I don’t know what it is!) and 2GB data with a discount of £1 per unused gigabyte every month (pro rata) so usually pay about £6. Look for iD and Smarty as new providers and get a SIM only contract with your current handset. We both have sim only, I pay £10/month with Giffgaff and never go over. But dropping down to the next level doesn’t give me enough minutes. I’ll have a look at the companies you mentioned though, would be interested to see what else is on offer. Hubby refuses to change his (£18/month) as it’s unlimited data which is properly unlimited... he got it before it was possible to use that much data and they haven’t changed the contract.
Groceries and household - depends on the month, usually between £250-£400: This is a lot! I know you have a child and we don’t, but we’re two adults averaging £270/month for all food, household and toiletries. It doesn’t matter how much you spend in any given month – you want to know your longer term average. It doesn’t ruin my grocery budget if I buy £100 of toilet paper one month because then I’ll spend less on it for, er, many months more! A high grocery month is only a problem if it repeats indefinitely and if it’s on silly or highly perishable things. It’s a big difference between ‘usually £400 and sometimes £250’ and the other way around. So find out your average for the past six months-one year (or track in the future so you find out your future average). Broken record question when it comes to food is: what are you eating? How much of it are you cooking yourself? Meat and fish are expensive, tins of beans are cheap. I would recommend doing an online grocery shop really slowly at least one time so you can compare prices and see what’s driving up the cost and whether there are cheaper alternatives. Yeah, will start tracking. We cook almost everything from scratch but have probably drifted towards eating more meat and fish than is ideal.
Cleaner (I know!!) £60: WHAAAAAAAAAAAT?!! You work part time! What are you DOING on your days off??? I mean, I hate cleaning. Really, I do. But go away and read this thread then cancel your cleaner (or at least IMMEDIATELY get them to come half as often): https://forum.mrmoneymustache.com/ask-a-mustachian/advice-for-making-your-home-interior-easier-to-clean-and-maintain/ HAHAHAHA, come back when you’ve had your baby and tell me how clean your house is (congrats, by the way!!) On our days off we do childcare, and this kid requires so much entertaining it’s untrue. Just this morning for example, he emptied out the bottom two drawers of our dresser and threw the clothes everywhere then threw his breakfast all over the floor. I didn’t have time to clean it up before we had to get out of the house to playgroup (so he can create mess and destruction elsewhere!) so when I got back porridge was stuck to the floor, but then it was lunchtime and more food would get thrown so no point in clearing it up yet. Oh and then a 2 hour nap which he will only do with me laying beside him... and before I know it, it’s 3pm and I have to start getting tea ready. This is just one tiny aspect of the mess that a Cleaner saves me from.
Window Cleaner £15: Even bigger WTF! You get your windows cleaned every month?! Who does that??? Instant cancellation, please! This was where we are on the 2nd floor and we can’t clean the windows. In hindsight a one off to freshen it up would have done the job but I got suckered into their round. It’s cancelled now, and won’t be reinstated after the move (same with Cleaner)
Personal spending £200 (£100 each): Excellent job! This is the foundation of a happy marriage. We all have our own vices and it’s good to be given some unscrutinsed but boundaried freedom with them. It’s working well so far, and making me think about my impulsive and emotional spending
Saving for car insurance and incidentals £140: This needs to be renamed. It is not savings, it is ‘bumpy spending’ (a term which I believe was coined by katekat in her journal) True

With regards to other spending... I don’t really track it.

Be honest with yourself – do you REALLY even track everything above? Retrospectively, I mean? Or is this the amount you allocate in advance? Tracking spending WORKS. I didn’t do it for years, but am now a convert.

Honestly no, I don’t go back and look at what we actually spent vs what we actually budgeted. I have a spreadsheet which I could probably easily add an “actuals ” column to. It would be interesting to compare budget to actual. I will start this month.

lunches and coffee etc at work

Unacceptable. YOU BOTH WORK PART TIME. You have plenty of time to pack four days worth of lunches. It doesn’t have to be leftovers! You are allowed to buy special groceries for lunch! This is something where I recommend starting off silently just doing it for yourself and waiting for your husband to bring it up. Mine is slooooooowly coming round to the idea of packed lunches, although his standards are much higher than mine.

Ok, so we have been better at this. I love leftovers. The hard part is not eating it all at dinner so we actually have the leftovers, but seriously, having an amazing homemade curry for lunch at work is the BEST. I find it hard to get hubby to go along with it sometimes... he will “forget” his sandwich and spend £5 on his favourite Thai takeaway instead which I find really frustrating.

Also, consider an alternative coffee solution. You could try fancy instant in a mug, or try bringing a pre-filled Thermos, or try an Aeropress or cafetiere, or lobby your work to install a machine for ‘teambuilding and employee morale’. You won’t know which of these solutions will have the best payback time until you’ve tracked your average coffee spend, though. (Another thing to do quietly by yourself at first.)

Consider this done. A friend and I have a coffee club at work which is basically a bag of nice coffee, a cafetière and a morning gossip in the kitchen.

And then I “allow” £50 for weekend activities - going out for lunch, doing things with friends etc. We don’t normally spend that much though. Every few months we spend about £120 on swimming lessons for little one. We also go on holiday and I’d 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.
 

So how much do you spend? Track, please!

Right-o - will be tracked from now on via the aforementioned spreadsheet solution.

We each have a big weakness though….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.

Good job! You’re doing exactly the right thing to address this. Be prepared to adjust this number up and down a bit until you find your sweet spot.

Many words! Do take some time to digest and I’m very happy to answer questions if I can. Ut honestly, the first thing you should do is get out your last six months to a year of bank statements and sit down typing every single transaction into an expenses category on a spreadsheet. Yes, it will take a little while. But honestly, it REALLY REALLY REALLY is worth doing. I wish I had done it about three years earlier than I did. We only track joint expenses but I have tracked my personal expenses separately from time to time in the past and found it kind of embarrassing how much I was spending on snacks/treat food. And there are some expenses that don’t appear at all in your case study. Maybe you don’t have them but… clothes? Presents? Random stuff breaking around the house and needing to be replaced? Car maintenance? I can’t believe none of this stuff EVER happens to you, and you’ll be surprised how much money sneaks away on it.

You need to do your own calculations about savings rate and time to FIRE and decide what hard choices you’re willing to make. I am currently whining in my journal about how I can’t buy a house instantly because I’ve chosen to work part-time as a feckless artist…but I know in reality that I’d much happier pottering around the house baking bread and mending clothes than I would be killing it in some office somewhere. I know the choice I’ve made, and I also know it’s not a forever choice. The only real forever choice is spending all my money on stupid shit right now and never being able to get it back. Anything else can change in the future. But try stuff out! Try three months without a cleaner. You can always get one again if it's miserable, but you might be surprised how you adjust.

Also, read this and mentally apply it to personal finance: https://paulwheaton12.wordpress.com/2014/12/16/the-wheaton-eco-scale/ We do stuff right now that I would have thought was CRAY CRAY a decade ago. You might well think we’re a bit nuts right now! We don’t have a car, we don’t own a TV, I (try very hard to) grow vegetables, I just started baking sourdough bread, we kept bees for a while, we are thinking of building our own barbeque/smoker in the back garden… But there are people on this forum that *I* think are crazily DIY and austere. Just start on the ladder wherever you find yourself now, but know that one day you’ll be looking down wondering what all those people at the bottom are doing!

I would LOVE to have the life you describe. I used to be very crafty, making things with my sewing machine, baking, growing tomatoes on my balcony... since hubs came along I no longer have time, and am lucky if I get to shower every day.

[LFH86]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

To clarify our plans with the move: we will let out our London flat (with the idea that hopefully the rent will cover our London expenses. I need to clarify this) and rent in Manchester. Once we are settled and know the area a bit better, we will look at selling in London and then buying in Manchester (or wherever) knowing exactly what we want and being chain free.

I feel like our lifestyle will change hugely with the move and give us a good opportunity to have a proper discussion about living on one salary and what we need to cut. Whenever I’ve  tried this before, hubby’s position is “but we’ve got loads of money, we might as well spend it”. The good news is, as PWFUK says, that my job is on a business park with no coffee shops or exciting lunch options nearby so I’m almost guaranteed to save there (vs working on Oxford Street...)

[shelivesthedream]

Ha, please let me imagine you spent from 10am to 8.30 non-stop dealing with my post! :P

I don't have any brilliant answers about your husband, but you might find it useful to skim my journal for bits about Mr SLTD. He had a sudden flourishing lately but has now got all shy and "I don't want to know" about it again. The only other thing I might add to leading by example and having the patience of a saint is that if he's not interested, don't ever show him any money you don't have to. By which I mean, Mr SLTD knows how much we have available at any one time for his personal spending, our joint food spending, and our joint "odd household bits like postage stamps and new oven gloves". He doesn't see any of the other money - either other expenses like electricity bills or any of our savings. He's always welcome to ask, but just basically doesn't unless it's "How much can I spend on X?" I don't know how things are set up with you, but do consider 'hiding' every penny you can from him so the only money he can 'see' is money he can spend...and make that as small as possible. And be clear about what personal money has to cover. Mr SLTD's has to cover his haircuts because he wants to get them done professionally whereas I will happily DIY. Maybe your husband's has to cover "accidental" work lunches. Do make sure it is a reasonable amount, though, as you don't want to be seen to be stingy over the one bit of no-questions-asked money.

Also, I think I may have misunderstood some of your US loan/tax/investment stuff, so apply my "ignore anything you like" caveat doubly to that!

[Playing with Fire UK]

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

So after you've done this you won't be subject to US taxes? In that case I think you are doing exactly the right thing!

[LFH86]

Yep, exactly PWF.

I’ve just pulled together my expenses for 2018 so far (couldn’t face going further back than that!) I need to figure out how to make transfers between accounts to pay for stuff work out but I am interested to note:

- Groceries came out at average £250/month. We put all our food shopping on our credit card, but also any big purchases eg holidays so I think that made our food bill look bigger than it really is.
- Buying lunches and coffee etc out of the house came to average £91. This is ridiculous and we must do better (also, from this morning - reminded hubby to take a sandwich for his lunch, he tried to claim he didn’t have time to make it so I did it for him. That’s £5 saved, and using up the ham I bought specifically for taking sandwiches!). I split out eating out as a separate category - £53 in January due to treating my parents to a takeaway, as they had us to stay for 10 days over Christmas. Otherwise nothing.
- Public transport - average £124/month. This was skewed by having to buy a train ticket to Manchester in January though for my interview which was £60. Went from £183 in January to £65 in February, due to restarting cycling to work
- I spend a lot of money on my son. We started using cloth nappies at Christmas, so I spent quite a bit on a big stash in January which I won’t need to do again. Spending went from £144 to £17.

[shelivesthedream]

Congrats! Well done you for taking action so quickly. And for making that sandwich!

I work from home a lot, but when I have to be on site more than a day or two in a row, I often make a big, hearty salad and package it up in a few tupperwares. Zero "no time" excuses! But I am picky about what goes into it, as some stuff is only really good on the first day: tinned beans are good, couscous/wild rice/orzo/pasta are good, roasted vegetables are good, solid salad vegetables like cherry tomatoes are good, spinach is OK. I don't like lettuce, cucumber or the like as they tend to change texture. Also, pro tip: either dress the salad the morning you eat it or bring it in a separate container.

This is an area which has great scope for you just quietly getting on with it without impacting your husband's life in a way he's likely to complain about. It's like 1% extra work to make a big salad for two (i.e. him as well) and then it's always just there in the fridge for him to grab.

[beltim]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

Why is this an expensive headache?  At your income level, you should be paying no US income taxes unless you have more than ~$20k per year in capital gains and dividends. 

[LFH86]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

Why is this an expensive headache?  At your income level, you should be paying no US income taxes unless you have more than ~$20k per year in capital gains and dividends. 

Because I have to pay an accountant to do my taxes and then it costs something like £2500 to expatriate. Expensive!! I won’t  have to pay any tax.

[beltim]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

Why is this an expensive headache?  At your income level, you should be paying no US income taxes unless you have more than ~$20k per year in capital gains and dividends. 

Because I have to pay an accountant to do my taxes and then it costs something like £2500 to expatriate. Expensive!! I won’t  have to pay any tax.

Why not do your taxes yourself and not expatriate, and save all that money?

[LFH86]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

Why is this an expensive headache?  At your income level, you should be paying no US income taxes unless you have more than ~$20k per year in capital gains and dividends. 

Because I have to pay an accountant to do my taxes and then it costs something like £2500 to expatriate. Expensive!! I won’t  have to pay any tax.

Why not do your taxes yourself and not expatriate, and save all that money?

Two reasons: 1) I have literally no clue how to go about doing my own US taxes and the fear of getting it wrong is too great with the potential penalties associated. And 2) because I'm not a US citizen in anything other than technicality and I don't feel that the IRS has any business knowing about my financial situation. It's a principle thing. I lived there for 6 months and now that entitles them to know all the ins and outs of what I'm doing? No thanks.

[MrThatsDifferent]

Sorry, I started typing the reply to SLTD at 10 this morning and just finished now (8:30pm). So to address the posts the same up between those times...

I transferred my isa at the start of 2018 but I don’t know that I’ve ever taken money out of it. I’m  hesitant to do too much with it because in the near future, I will be bable to whack it into the stock market. When I gave 5 years of US taxes filed, I can expatriate and be a normal British citizen. I’m following the streamlined procedure for US citizens in my position which means I can file the last 3 years of taxes in one go without any penalties. I’ve  just been asked for my 2017 accounts so this time next year my final lot of taxes will be being filed and once that’s done, I’m outta there. Such a headache (and an expensive one!!) So I guess I’m dithering a bit because I don’t know what will be best.

Why is this an expensive headache?  At your income level, you should be paying no US income taxes unless you have more than ~$20k per year in capital gains and dividends. 

Because I have to pay an accountant to do my taxes and then it costs something like £2500 to expatriate. Expensive!! I won’t  have to pay any tax.

Why not do your taxes yourself and not expatriate, and save all that money?

Two reasons: 1) I have literally no clue how to go about doing my own US taxes and the fear of getting it wrong is too great with the potential penalties associated. And 2) because I'm not a US citizen in anything other than technicality and I don't feel that the IRS has any business knowing about my financial situation. It's a principle thing. I lived there for 6 months and now that entitles them to know all the ins and outs of what I'm doing? No thanks.

It is a huge pain in the ass, but pay an accountant who understands the US expat situation to help you get up to date. There’s a forgiveness program which goes back like 6 or 7 years of your taxes, amnesty I think it is. I paid a lot of money to have someone file for me (and I didn’t owe a thing). It’s very complicated to do yourself, not your typical return. After you get yourself sorted, you might be able to do yourself. Do this with your emergency money so you don’t have the sword of Damocles hanging over head and then you can start investing.

[LFH86]

If you can only just get by on your salary in Manchester it's really important that your husband does some paid work - otherwise you have no buffer for unexpected expenses (repairs on the London flat?). Especially if you have access to grandparent daycare. Maybe set a time period to try the freelancing before looking for paid employment? Or could he look for work a couple of days a week while seeing if the freelancing takes off?

We went for a baby-free date lunch today which turned into a business meeting about these questions. He has agreed to out together an action plan for his freelancing - setting up website and LinkedIn profile, contacting former clients, deciding what success looks like and how long he has to achieve that. We've agreed that we cannot be sending bubba to nursery for him to just bum around the house. He asked how much he needs to be earning and I kind of just shrugged and said "as much as possible".

I think we will need to have a serious conversation about what our financial goals are though. He's very much of the opinion that "we have money, let's spend it, it doesn't matter if I don't work because we have your salary and can rip into savings". However I obviously don't agree - and as the sole (guaranteed) earner, I feel like I have a right to put my foot down.

I'm making him sound a bit feckless, which he's not at all... He's generally good at achieving the things he puts his mind to, and I think he has the skills to make the freelancing work.

[shelivesthedream]

I feel like Mr SLTD gets a bad rap on this forum too. He's actually very thoughtful and conscientious and mathematically competent - it's just when you put a pound sign in front of any numbers, he panics.

The one thing I have always been very very clear on is that savings are not for spending. Spending money is negotiable, but savings are not to be touched. I think it would be worth having this conversation with your husband. It's one thing him saying "we have your salary, we have money, it's fine, lets spend it". Quite another to suggest spending down your savings, and he needs to know this is not an option.

It sounds like you're doing the right thing together about his freelance work, though, particularly defining what success looks like. It would be good for you to both have a chat now about your options if it doesn't work out - does he imagine he'll be a SAHP, or find a full-time job, or something else? Not to decide now, but just to lay the cards out.

[LFH86]

So, having tracked spending for a month, it has been quite enlightening. The total budget was £2490 (not including saving) and we came out at £2545. We were on track with most categories, but our food spending is out of control. I budgeted £100 for eating out which I thought was generous but we actually spent £170. Groceries was £30 over at £290 (forgot to add in our milk delivery) but lunches and coffeeetc at work came in at £20. Part of that came under cash withdrawals, but we still only took out £60 in cash for the whole month (my husband would have previously taken out £60 for a week). In total we spent nearly £500 on food. Yikes. When I told my husband how much we spent on food shopping he looked very perplexed and said "but we don't spend much on food. How is it so expensive?"

We have decided to do vegetarian April - not super strict so if we go to someone’s house and they’ve cooked meat, we won’t turn it down, but we are going to buy no meat. So that should help. And I guess plan our eating out a bit better. We went out for lunch 3 times - once with a friend to break the news of our impending move, once as a date lunch and once when we were doing house viewings. Plus, a friend’s leaving do when we ended up getting food as well as drinks.

Had a couple of unexpected expenses like baby boy’s first shoes - £42!! He can get second hand next time! £15 on birthdays I’d forgotten about. £25 on a stall at a nearly new sale to get rid of some of baby’s old stuff before we move. I’m going halves with a friend though, and should make back what I spent on the stall next month.

So overall, I was fairly accurate but room for improvement. Next months budget is £2626 - as we have to pay council tax again next month, but otherwise should be pretty similar. I must admit I am burying my head in the sand regarding our moving costs - removals, deposit, getting our flat cleaned pre-tenants... and we also have holidays coming up in June and July which I’m ignoring for now

[Kwill]

Hi LFH86. It sounds like you're doing well and getting good advice.

I'm a US citizen working in the UK--just over two years now. It was interesting to hear about your issues with the taxes and expatriation. I've been doing my taxes in both countries. Your accountant will know better, but as far as I can tell, the only way I can safely invest in stocks at this point without making my taxes complicated is to do so through my pension at work. Because the two countries have an agreement about retirement savings, the workplace pension is protected from taxes similarly in both. At the moment I'm in the process of buying a flat, so I'm waiting to let my costs settle down before committing much more than needed to get the match at work. But I think I'll be contributing a lot more to the workplace pension since both UK ISAs and US IRAs would make life complicated. The lump sum pension payment on retirement is the one big issue that may come up with the UK pension with regard to the US taxes, but it shouldn't be a problem for you if you won't be a US citizen at that point.

[Playing with Fire UK]

So, having tracked spending for a month, it has been quite enlightening. The total budget was £2490 (not including saving) and we came out at £2545. We were on track with most categories, but our food spending is out of control. I budgeted £100 for eating out which I thought was generous but we actually spent £170. Groceries was £30 over at £290 (forgot to add in our milk delivery) but lunches and coffeeetc at work came in at £20. Part of that came under cash withdrawals, but we still only took out £60 in cash for the whole month (my husband would have previously taken out £60 for a week). In total we spent nearly £500 on food. Yikes. When I told my husband how much we spent on food shopping he looked very perplexed and said "but we don't spend much on food. How is it so expensive?"

Right?!?! Tracking is the most amazingly brutal form of truth. Whenever I go over my numbers I find something.

A meat-free month is a really creative way to kick-start more awareness of food spending. Maybe think about limiting the eating out for a month as well.

Did you find out anything about your variable spending? It can take a few months for patterns to become clear with this (I'm great at finding reasons why one month's spending is a one-off, but can't justify it when the numbers show that every single month is a special one-off).

[LFH86]

Did you find out anything about your variable spending? It can take a few months for patterns to become clear with this (I'm great at finding reasons why one month's spending is a one-off, but can't justify it when the numbers show that every single month is a special one-off).

I have been REALLY strict with myself about not shopping. I work in fashion retail so this is truly a struggle for me. And also staying within my fun spending limit - I’m getting my hair done next week (cut and colour which I only do once a year) so I’ve had to save up for that and haven’t had anything leftover to spend on crap.

The other area I think we would normally do better is public transport - with the snow and being sick for a week, I got the tube more than 8 would have liked. This month is all about cycling.

And yeah, we will definitely be limiting the eating out. I feel like last month was an anomaly but I may be wrong about that...

[shelivesthedream]

Mega congrats on the tracking! It's always a bit of a surprise to me, and it's interesting to me to see which categories are actually very regular over time. For example, we're not always great at planning our food but it seems to come out at roughly the same number every month like magic. Often months feel like an exception (no meat Lent, crazy pregnancy food week...) but turns out they're actually not.

[kpetar]

Yoo should make more money because there's no much space for saving in your case. I know, I know. Much easier said than done. If you really feel you are struggling though, it's worth thinking about with an open mind. Do you have a profitable skill you could use on the side? Do you have free time on the weekends where you could take on a second job for just a few hours a week?

[cerat0n1a]

Do you have free time on the weekends where you could take on a second job for just a few hours a week?

With a new baby? LOL ;-)

[LFH86]

^ Right! No, my free time with my family is absolutely invaluable, especially as I’ll be going back to full time working in about 6 weeks time. Any spare time I get at the weekends or evenings will be spent catching up on sleep or doing something for myself. Maybe in a few years when the little one is a little less dependent on me. Hubby is totally open to doing what he needs to do to keep us afloat though, whether it’s taking on a full time permanent role (if the freelance thing totally crashes and burns) or working part time in a cafe (for example) to boost his freelance earnings.

The good news is that my husband’s company is really keen to keep him on as a freelancer. Both he and his #2 have handed in their notice/left the company recently and they’re struggling to recruit which works really well in hubbys favour. Each piece of work he does would take a couple of days and bring in £400-500 so even if, worst case, he only does 1 a month, that’s a huge help. He’d be more likely to be able to do more than that though (not forgetting about tax and NI too).

At the moment he’s working on his website and reaching out to his LinkedIn contacts with a view to getting some work before he leaves his job and we move so he’s not starting from zero. His experience is quite niche which on one hand is limiting, but on the other if he can get the right clients he’s in a good position. He also worked as a translator for a number of years, so that’s another string to his bow, and a possible pocket of additional clients.

[LFH86]

Halfway through April and we’ve spent only £3 on public transport so far - and that was my husband going to and from hospital to have his wisdom teeth out. Compared to £70 last month, this feels like a win! I also made £40 selling old baby clothes at a jumble sale today. Still struggling with food... groceries are already up to £200 and I only budgeted £260 for the whole month. I also did a few coffee shop trips last week - my son’s nursery was closed for Easter so I was doing the SAHM thing and it is HARD to entertain a toddler for cheap when all the free playgroups are closed!

Swings and roundabouts...

[LFH86]

So April... We stayed within budget more or less, £15 over which I'm pretty pleased with.

Spent £50 less on food in total than the previous month but the actual grocery bill went up by £50. What's that about? We didn't even buy any meat! We didn't miss eating meat particularly but I think going forward we're going to limit ourselves to one meat product per week and stretch it out. Kept a lid on the eating out and getting snacks and coffee so that's ok.

We are moving to Manchester in less than 2 weeks. I'm having trouble visualising what our spending is going to look like to be honest! I've budgeted as best I can but very prepared for unexpected expenses to pop up.