Hello from the UK

[minmax]

I've lurked here for longer than I can remember. I've been a closet mustachian for years and struggle to discuss in any depth our favourite topics with friends and family, so I'm reaching out to you guys!

First a little intro to set the scene, audit my current situation if you please! Perhaps you will also find the cost of living in the UK of interest.

Age: 30
Status: Co-habiting
Kids: Now, 0, hopefully 2 within the next 5-7 years
Location, UK (Not London, that's quite important, it may as well be another country due to its completely different financial climate)

Overall: I save about 65% of my NET income. I work for a FTSE100 and try to play the game to my advantage.

Home: We rent, we pay £680 a month (So, £340 each, we split all living expenses down the middle). We are looking to buy but the UK market is currently viscous. The Gov has announced help-to-buy schemes and pries are staying artificially high. A typical 3-bed family semi in an OK area near me goes for around £175k. We are biding our time to find a fixer-upper which offers better value for money.
Gas: £25 a month
Elec: £25 a month
Council Tax: £105 a month. I'm not sure if the US has something equivalent? It's basically a tax that covers the upkeep of roads, services etc in your local area. Includes rubbish collection.
Water: £25 a month
Internet. £22 a month.

Car: I run a 1999 saloon. Work covers all fuel, personal and business. By running my own car I am eligible to receive £600pm car allowance, this is obviously taxable (@40%).
Work: I work from home 80% of the time, 5% in the office, and 15% at client site. Most journeys to the office or client site are 100-200 mile but fully expensed.
Phone: Contracts are cheap as chips in the UK. I pay £5 a month for all you can eat data and 300 text/minutes. I never go over £5.

Savings: £20k in a taxfree savings account paying 2%. £25k in a taxable savings account paying 1.5%. I've been keeping it liquid for a house deposit, but this is proving a long process. £45000 is about 6 years worth of living expenses for me. I think this is an area I should improve and move these funds elsewhere.
Pension: I pay £50pm, work pays £250pm. I have about £20,000 in the pension pot, this is my first pension.

Debt: I have £13000 student loan debt. The scheme I am on is linked to base rates. Therefore I pay 1.5% interest. This money is taking out of your income automatically at source. I pay about £330 a month and should be debt free in 5 years. We hold no other debts or credit cards.

S/O: Mostly on-board, nowhere near as aggressive at saving as me. Compared to her peer group however, she would be classed frugal. Compared to us, probably frivolous ;-)

Vices: Food. We spend £200 a month on food for 2 people. And a further £50 a month on eating out. We could halve this but I'm inclined to say its worth it. We love good food.

Exercise: We both run daily - past the Gym full of people paying £70 a month!

Health/Medical: We have free NHS in the UK but I take additional private cover via my employer. It costs me about £30 a month for dental and full extensive health with zero excess. I was originally undecided, but after going through some recent health problems, I've been very impressed with the speed and service.

Our current plan - Keep savings 60-70% NET income, buy a basic family home at £175k - have children and bring them up in a responsible and frugal manner. Perhaps pick up an investment rental or 2 within 5-10 years. We are also both fully committed to supporting our parents when they are no longer able to, that could be in 15 years, it could be 25. I'm not sure how this will work out, but its something we are passionate about.

[daverobev]

Council tax is property tax in the US and Canada, except the person living in the house pays it in the UK, but the owner pays it in North America. Obviously the tenant pays the landlord more here to cover the property tax - it covers the same stuff, local municipal services. Schools, fire, rubbish collection, etc.

Not London, lol. Where abouts? This hand-up by the govt is a completely stupid bloody thing. All it will do is raise prices.. but anyway.

2% on your ISA is horrid, 1.5% taxable is even worse!! Yuck. I forget - you can only put half of the ISA allowance into cash savings, right? So you should have some investment room? VUKE.L and HMCX.L are good!! You should look into buying some every month...

Also, you know you get a dividend tax credit for shares held in taxable accounts, right? That 40% rate, yuck. Still, lucky you!

Alternatively - I guess the 50/250 doesn't scale? But - if you put in more, obviously you get the tax on that put in too, remembering (I think?) you can take out some as a lump sum at 55, tax free.. or maybe that's changed?

Anyway, seems like your saving side is doing well. Just need to make that money work for you. I reckon (as do many people) the UK housing market is due a 20% (ish) correction. So you may want to keep renting and invest elsewhere... Retirement cottage in Spain you could rent out? Or something!

[minmax]

@daverobev, Thanks for the information.

Investing in vanguard via an ISA wrapper seems like a good way to go for future excess funds. I will look in to that, the popular broker for that here in the UK seems to be hargreaves lansdown.

I'm in the Midlands, middle of the road for house prices, but still inflated as you say.

Pension is maxed out tax-savvy wise at the mo, and you are right, if I end up working until I'm 55 I should get something like £150,000 taxfree. However I'd like to be retired well before then! The idea of working for another 25 years is a scary thought.

[daverobev]

Yup but you don't have to work to 55 - you can work to 35 or 40 and just factor it in, knowing it'll be there in x years.

Check out what the recurring costs are - I use iWeb Sharedealing and for a regular purchase, it's only 2 quid. So, say, 200 quid of HMCX or whatever. Plus it's only 5 quid a (non regular) purchase or sale - I think HL is 7. There are plenty of providers - check on MoneySavingExperts or the iii.co.uk forums for more ideas.

[rosered9]

Hi minmax. The forum ate my first reply but a few thoughts/questions:

1) Stuff I noticed wasn't mentioned (but maybe you don't have them): TV, contents insurance, home phone?

2) Can you cut rent down at all to boost your deposit funds? I am in the Midlands too and it seems high for me when you don't need a property accommodating children for the moment, but obviously that's area-dependent.

3) Check out the Santander 123 Current account - cashback on household bills (which should make up for the £2 monthly fee - may also get Quidco or similar money on it) and 3% interest on credit balances up to IIRC 20k - stash most of your taxable savings here and double the gross rate if you're keeping them in cash.

4) 2% on your current ISA doesn't sound too bad. I just transferred one and couldn't beat 2.3% for one with strings attached and a fixed rate. However I would open a new one at a better rate with this year's subscription if possible.

5) Are you using a cashback/rewards credit card?

6) See if you can trim the fat on your groceries budget. We spend less than half of that for 2 people and we eat very well - we certainly don't feel deprived and I don't think increasing what we spend would make us more satisfied. Maybe try to just challenge yourself a little there and exercise your frugality muscles. E.g. have a week where you try to spend under X and still cook well; try to have more meatless meals.

7) Energy doesn't sound bad but again have you shopped around, tracked meter readings, made energy efficiency improvements? You might be able to get this down a little too.

8) Which companies are you with for internet and mobile if you don't mind the question?

These are mainly small potential gains but they may add up to boost your savings a little more without much pain. You are obviously doing well with that savings rate but every little helps.

[minmax]

Hi Rosered - thanks for your feedback!

I've answered your points inline:

1) We don't have a TV or home phone. Contents insurance runs us £35 a year after cashback from Quidco.
2) We could cut down on rent if we moved area. It's something I would consider if we were not so close to buying a house.
3) I've been tempted by Santander numerous times but the tales of terrible customer service put me off, any feedback here appreciated.
4) 2% on the ISA is with Natwest for larger balances
5) Yup we both use reward cards and pay off in full every month!
6) Food is our area of weakness for sure, it's my GF's passion and I'd have to tread carefully here... :-)
7) Yup just switched to a better tarrif with EDF based on meter readings, fixed until 2016
8) Sure I am with Virgin for internet, hence no requirement for a landline. I am with T-mobile for mobile phone, I've been with them 3 years and they reduce my sim only tarrif every year with loyalty bonuses.

So in summary you are right, we could trim off probably another £250 a month if we ate smarter and moved to a worse area. It's just getting that balancing act right between frugality and quality of life.

[rosered9]

Hi

I haven't had any problems with Santander customer service, if that helps.

With groceries, maybe you are falling into the trap of thinking more £ = better and spending less = worse when this isn't always the case. You could spend less without depriving yourselves. Maybe instead of focusing on the money, focus on the challenge of learning to cook some new things and stretch your repertoire. A lot of cuisines from other countries can be very cheap to cook (once you have a basic repertoire of seasonings) especially if you focus on the veggie ones. E.g. Indian, Caribbean.

Examples of what we have eaten in the last couple of weeks (we spend £10/week/person but this doesn't include 1 takeaway a week for partner and his breakfasts at work; however often feed friends). You would need more calories than us because of the running and I would guess you would want meat/fish for some meals so would cost you more but just examples. Cheap, delicious, nutritious, and satisfying to cook.
- Jamaican stewed peas with mashed potatoes and salad
- Hyderabad-style stuffed peppers (spicy potato filling)
- Green pea soup with homemade potato scones
- Jamaican brown-stew vegetables with rice & peas (seasoned coconut rice & kidney beans)
- Satay stir fry and noodles
- Moroccan-spiced chickpeas and spinach with homemade naan
- Indian rajma (kidney bean) curry with pilau and homemade naan
- Homemade veggie burgers of various kinds with homemade spicy potato wedges and salad
- Homemade falafel wraps
- All sorts of veggie curries
- Homemade pasta sauce and pasta bakes

Also make sure you are shopping around to the max possible (without being foolish in terms of time/fuel etc). I mainly shop at Asda to take advantage of the price guarantee (which is great as long as you know how to play the game) plus mainly reduced items from Tesco/Sains, special offers and the odd thing from Aldi (Aldi Super 6 is great). I keep track of prices on my phone so I always know if something is genuinely a good deal. MySuperList app for iPhone is really good or the website MySupermarket.co.uk. I use cashback apps like Clicksnap and the TopCashback app plus MySuperList; we get free stuff (Try Me Free promotions) & use coupons from the internet combined with promotions.

Do you prepay for your Virgin line rental for broadband? (This saves £60/yr)

[macky]

looks like you are doing pretty well, couple of things, the help to buy scheme is being extended to second hand houses soon and the deposit loan is low interest, so it could help you. be wary of do-a-uppers as there is often not much of a discount on them nowsdays (there is a lot of demand for them from people who want to make their own mark on a place).
I am a Santander 123 customer have had no problems with them, I have 20k with them and earn about £50 a month, £40 interest, £10 cash back on mortgage and council tax (have thought about their credit card as well but do not drive enough). They also have a tracker mortgage at 2.25%. great for paying off quickly. I also have a Halifax account which pays me £5 per month for being in credit and I juggle money between accounts.
finally are you paying car insurance yearly or monthly, the interest rate on monthly is about 15%, I save about £50 a year by paying yearly.
ps 175k is very good for a 3 bed, if you don't mind, where are you?

[kt]

- Jamaican stewed peas with mashed potatoes and salad
- Hyderabad-style stuffed peppers (spicy potato filling)
- Green pea soup with homemade potato scones
- Jamaican brown-stew vegetables with rice & peas (seasoned coconut rice & kidney beans)
- Satay stir fry and noodles
- Moroccan-spiced chickpeas and spinach with homemade naan
- Indian rajma (kidney bean) curry with pilau and homemade naan
- Homemade veggie burgers of various kinds with homemade spicy potato wedges and salad
- Homemade falafel wraps
- All sorts of veggie curries
- Homemade pasta sauce and pasta bakes

making a note of these, cheers! always looking for recipes which are cheap in the UK (different ingredients/cheap foods from US can be a problem!)

[caligulala]

Moving to the East Midlands in September from the US and want to be able to follow this thread! Keep the suggestions coming!

[martynthewolf]

- Jamaican stewed peas with mashed potatoes and salad
- Hyderabad-style stuffed peppers (spicy potato filling)
- Green pea soup with homemade potato scones
- Jamaican brown-stew vegetables with rice & peas (seasoned coconut rice & kidney beans)
- Satay stir fry and noodles
- Moroccan-spiced chickpeas and spinach with homemade naan
- Indian rajma (kidney bean) curry with pilau and homemade naan
- Homemade veggie burgers of various kinds with homemade spicy potato wedges and salad
- Homemade falafel wraps
- All sorts of veggie curries
- Homemade pasta sauce and pasta bakes

making a note of these, cheers! always looking for recipes which are cheap in the UK (different ingredients/cheap foods from US can be a problem!)

Snap. they sound delicious. I've been thinking of cutting down on meat a bit.These recipes will help I'm sure :)

[ozzage]

You're clearly a higher rate taxpayer so I would still be looking at increasing pension payments by a LOT. If you genuinely can't through your employer (even if they don't add anything) it's still a VERY tax efficient way of using your money if you're otherwise paying 40% and you can always open a SIPP and do it yourself.

This is particularly true if you live a relatively frugal life, as you'll save 40% on the way in, and only pay max 20% tax on the way out (assuming you won't need to draw enough to go higher rate) PLUS you'll get your 25% tax free lump sum on money you have never ever paid any tax on!

[rosered9]

If I can help with recipes, let me know (might not be able to supply for all, and some are from books, but let me know if there are any particular ones you would like).

[ducknalddon]

I haven't had any problems with Santander customer service, if that helps.

I've had terrible problems with them including two lost cheque payments.

[minmax]

Thanks all.

@rosered, thanks for the recipe ideas! We've started to address our food budget and will make small changes each month.

@macky, sounds like you have a good deal on the mortgage, good luck paying it off quickly! I am in the midlands.

@ozzage, I can pay more on my pension via my employer but I've never considered paying more than they will match. Perhaps I should rethink this!

@ducknalddon, my account just got approved so I'll keep an eye out, I'm aware of the trade off in customer service for these higher rates

In other news, just put an offer on a cheap house (Mortgage = 1.1x our joint income), fingers crossed I'll come back with positive news!

[ozzage]

re the pension it's worth checking if they will do salary sacrifice on extra contributions. That way you'll save not only the 40% higher rate tax but also the employee's NI contribution. If you're REALLY lucky the employer might even give you some of the money the save on the _employers_ NI contributions. Definitely worth checking as that makes it about the most tax efficient thing possible.

Of course you need to balance how much you stick in a pension against the likelihood of early retirement and how much you'll need BEFORE 55. I try to balance ISA and SIPP contributions for this reason, even though pension contributes are far more "efficient" (I get 40% relief plus both sets of NI)

I have the Santander 123 account as well, plus some Lloyds Vantage accounts. My other half has the same. They all pay 3% so we can hold quite a bit of cash at that rate. I've also had zero problems with Santander.

[minmax]

Thanks, they do indeed to salary sacrifice so as you say, very tax/ni efficient.

It's the 55 yr lower limit and possibility of future gov/policy changes that make me hesitant about ploughing more than the match % in.

[daverobev]

Thanks, they do indeed to salary sacrifice so as you say, very tax/ni efficient.

It's the 55 yr lower limit and possibility of future gov/policy changes that make me hesitant about ploughing more than the match % in.

Thing is, it's a private pension. I'm not saying "they can't touch it ever" but it's unlikely. If tax rates go up in the future they'll go up whether you sheltered that money or not! It's better to have a few years of compounding going on... and there is always the personal allowance.

Honestly, I doubt they'd take away the basic foundations. They might change the state pension etc, but they *want* people to invest in their own pensions! It takes the burden OFF them!

[minmax]

This for example:

http://www.telegraph.co.uk/finance/personalfinance/pensions/10180555/Cap-tax-free-pension-lump-sum-at-36000.html

[daverobev]

This for example:

http://www.telegraph.co.uk/finance/personalfinance/pensions/10180555/Cap-tax-free-pension-lump-sum-at-36000.html

"Shrug"? You're better off putting money in now, rather than waiting 5+ years for what might be beneficial, IMHO, especially if you are a higher rate taxpayer.

It's still your money, you still get the PA. And £36k tax free is a big chunk!! Especially if you "really" only put in 60% of that!

[ados]

Hi,

Noob on the site here, based in the UK, assessing options for an early retirement.

Just wondering.. is £200/month on food for 2 people really considered "bad"? This is one area that my wife and I are really looking at right now, but £200/mth for 2 people seems pretty good to me! That's £3.33/person/day, right?

Interestingly, there was a program on last night about the housing issues in the UK, and they featured one guy who after all his housing costs was left with "just £6/day for food".. which they made out to be "not enough".


Ados

PS - how did you get on with the house offer back in August?!

[daverobev]

Ados, depends on what you eat - of course!

You can eat more frugally, but if you want steak... it'd be tricky.

Last I lived in Blighty I was a vegetarian, and I'd generally go for organic stuff, and at a guess I'd be at sub-£20 a week just for me. But not too much less. So for £200 going to £160 I don't reckon there is much to cut - probably worth looking elsewhere to save, and coming back to this one later once other easy wins are done (mobile phone, internet, gas+electric maybe - turning down the temperature, making sure the hot water is only coming on when you need it, etc, etc).