Author Topic: No dramas but little sense of direction!  (Read 1825 times)

mr muppet

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No dramas but little sense of direction!
« on: June 15, 2013, 03:24:22 PM »
Hi,
I love the website and have been rather inspired by what I’ve seen here and wondered what advice you could offer in planning for the future.

My wife and I are UK based and both working. I am a school 33 year old teacher and my wife is a scientist. My net pay is approx. £2200 each month which is after tax, pension contributions of 8% (employers adds 14%) and £180 of student loan repayment. I also have a second job which brings in around £3000 after tax.
My wife earns slightly less at around £1600 each month (but with far better promotion prospects!).  We also have a lodger who pays approx. £365/month which is tax free. So total income is approx. £4400. That looks like a massive amount but is balanced by some rather heavy debts.

Our mortgage has approx. £150k outstanding and is on a 5 year fix at 4.99%. This costs £915/month. We also typically overpay this by £300/month, we are allowed to overpay £500 BUT my wife wants to have a good buffer and be debt free before we start doing that.

When we bought the house we borrowed a whopping £20,000 to contribute towards the deposit this was £10k from the bank and £10k from my father. These are being repaid at the rate of £350 each/month and we will be clear of these by the end of Dec  ’14.

Student loans are taken before our pay is receieved and at an interest rate of 1.5% we aren’t in a rush to pay these off but mine should be done in 3 years and my wifes in about 10. After this I will have an extra £200/month

Other outgoings: two small cars cost approx £90/month to insure, I drive a 2004 Renault Clio and my wife a 2006 Citroen. Both are fully owned and relatively efficient 40+mpg. I cycle or walk to work most days and a tank of fuel at £50 lasts me the best part of a month. My wife spends approx £200/month commuting. This is non changeable as her work is highly specialised.

Other monthly regular costs are
£15 union fees
£33 month phone and broadband
£33 month mobiles
£110 electric, gas and water
£10 TV license fee
£30 wine spends
£350 savings to tax free savings
£250 Horse livery, vets, feed &lessons
£15 dog food and vets

We currently have about £1000 in current accounts and £3000 in tax free ISA savings.

Both my wife and I are quite good with spending but have a penchant for buying expensive gear for our hobbies. She is training for a riding instructor qualification and I am working towards being a mountain leader. These whilst expensive form part of the goal of early retirement as we turn our hobbies into our main line of work. We have however cut down on spending hugely and monthly CC bills have dropped from a typical £1200/mth to about £600/mth :)

We seem to be doing very well at the moment and have around £500 left at the end of the month which goes into our ISA savings.

We live in the house we plan to spend the rest of our lives in and have no children. I would like to pay off the house within 10 years and live mortgage free. My wife is more conservative and wants to be debt free but enjoy her money, particularly with spending it on her horse. Next on the agenda is a 4*4 (SUV?) and horse trailer which will set us back approx £10k in a couple of years. She doesn’t like the idea of investing in the stock market. I On the other hand want to make the most of our money and be able to retire aged 50 (nb. I probably am too willing to take risks and have made some stupid decisions with investing historically!)

So three questions, one, what are doing wrong that is obvious (nb – the horse is a sacred cow – he stays!)? What could we do better and finally what is the best thing to do with money from a relatively cautious perspective?

Thanks in advance,
MM
 
PS - wife has just enrolled into her company pension with matched savings of about 6%. My pension is a final salary pension and I accumulate 1/40 of a year each year. I have been saving into it for 8 years so working to 65 would give me a full pension - which funnily enough is when I am due to retire officially.
« Last Edit: June 15, 2013, 03:26:25 PM by mr muppet »

lizzigee

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Re: No dramas but little sense of direction!
« Reply #1 on: June 15, 2013, 06:34:15 PM »
I'd be uncomfortable making extra payments on my mortgage and putting 'surplus' money into a savings account if I owed a parent money. Have you thought about prioritizing that repayment, provided you have access to some form of emergency fund if necessary?

mr muppet

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Re: No dramas but little sense of direction!
« Reply #2 on: June 16, 2013, 12:06:31 AM »
It's a fair point to make, we've discussed it and they are happy to receive payments over 30 months. When our savings equal the remaining debt to father then we'll pay him off in one lump sum. We're paying interest but have front loaded the loan so as to ensure he gets a decent return on the loand even if we pay it off early.

Thanks,
MM