Hello all! Two British would-be-Mustachians in our late 20s here: discovered the site about a month ago. We want to get our costs down and move towards financial independence, although we’re still working out the exact goal: we might want to go for very rapid independence, but it could be slowed down if we travel (we were planning a big year off in 2016, perhaps to travel around America) or depending on how we approach having kids (timing, whether one of us stops work full-time etc.).
In March we paid off the credit card with high interest, meaning our mortgage is our only debt with interest (though it’s a big mortgage: living in London!). We currently have a car that we only pay the insurance for, plus fuel: it’s used for specific weekends camping etc. We commute by bus.
We’re looking to save mostly by
- Finding more efficient energy providers etc.
- Being more careful with taking cheap public transport.
- Spending less on groceries.
- More socialising ‘in’ rather than ‘out’.
- Buying less shit.
Commuting is fairly cheap for us, and moving to walking distance of one of our workplaces would likely cost more (central London) plus would only save £60 or so a month on commuting. We’re looking at other ways to make our commute cheaper (walking/running back from work sometimes, for starters!)
Mortgage interest is cheaper than renting. We could move to somewhere smaller, but it’s hard to get stuff for under £250k in London and above that you pay £8k+ tax for the privilege of moving. I also don’t know how significant penalties would be for paying off the whole mortgage suddenly like that: one of the things on my list to check out.
We can pay an extra £500 a month into the mortgage without any penalties, and intend to do so. Otherwise, the plan is for savings to go in ISAs - up to £30k between us of tax free saving/investing, which is good as we’re both taxed at the 40% rate.
Really grateful for any suggestions/observations/punches to the face. Particularly anyone with a UK perspective to share on things: any tricks with cashback credit cards, energy suppliers, things you need to bear in mind before retirement, tips on swiftly paying off mortgage etc. Apologies for the formatting: I can't find a way to get things to line up neatly...
Current situation:
Assets
House: £300k (likely to rise quite quickly until any dramatic crash!)
Savings £6k
£306k
Liabilities
Mortgage: £245k (4% interest, fixed payment of £1300 a month)
Parental debt: £44k (no interest, pay £360 a month)
Credit card: £800 (no interest, pay £100 a month)
£290k
Net worth: £16k (nominally, but massively dependent on house prices)
Earning and saving
Current Target Change
Income £4850 £4850
Paying off debt/savings
Mortgage capital: £500 £1000
Parents £360 £360
Credit card £100 £100
Savings £1485 £1675
Increase net worth £2445 £3235 £790
Kissing goodbye to money forever
1. ‘Fixed’ costs (try to reduce in long term, but can’t choose to pay or not)
Interest £800 £800
Bills £120 £80
Tax £70 £70
Commuting £150 £120
Phones £65 £45
Union/donation £40 £40
Total fixed £1245 £1155 £90
Discretionary costs
Social/fun £575 £250
Buying stuff £125 £25
Misc £150 £25
General £850 £300 £550
Groceries £330 £180 £150
Total discretionary £1180 £480 £700
Total fixed+disc £2425 £1635 £790
Annual Increase net worth £38820
Less annual ‘large costs’ £1000
Total annual increase net cost £37820
Other stuff
Pensions: I have a small public sector pension: need to check out the details!
Student loans: in the UK, you pay these as a small slice of your income if you’re earning over certain levels. They’re therefore netted off the income above. They could mean we paid very marginal costs on our retirement income, or if we worked for a long time we could pay them off and get a bit more per month.
