Hello and welcome! What an exciting time for you.
Generally, I would agree with the other posters that conventionally you are doing very well, and if all you want is a comfortable old age then just keep on trucking. However, if you are interested in early FI (let alone RE) then you need to make some hard choices.
First, 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.
Finances still largely separate, but getting steadily closer and will be combined at some point relatively soon after wedding.
You personally sound mildly enthusiastic about FIRE, and a good candidate to be a SWAMI (as described above). You don’t sound desperate to quit ASAP or to make any huge changes. But what about your wife-to-be? It’s crucial that you’re both on roughly the same page about your financial future. The fact that she might want to be a SAHP is a good ‘in’ to propose changes and savings.
There are many different ways to pool finances when you’re married. The way we do it (which is obviously the best :P) is that everything goes into one pot, we spend jointly on most things, but then we each have a monthly allowance of personal no-questions-asked-yes-darling-you-can-spend-it-all-on-books-if-you-so-desire-and-I-will-spend-mine-on-cake money. I don’t need to worry about what Mr SLTD is spending his on as long as he doesn’t spend over the allocated amount, and it means he can do things like spend silly money on professional haircuts while I DIY at home.
As I complete my professional qualification and get other promotions salary should increase, expected salary in 2-3 years should be around £45-50k
Even if you did nothing else, if your salary increases as you expect and you don’t increase your expenses to match, you will do a good job. Preventing lifestyle inflation should be your number one concern.
Utilities (house is very inefficient, we're working on this in the house costs section): 220: This is insane and you know this. How much of the improvements are you DIYing? And how many ‘quick fix’ things can you throw at this utility bill? For example, laying loft insulation is basically buying it and rolling it out. Hanging thick curtains or adding thermal linings to existing ones. Putting foam strips round doors and windows is easy peasy. You could spend a single day on stuff like this and make a real difference. Google can teach you.
Internet: 33. Superfast broadband we both need in order to work from home, partially expensed through self employed business We are with Plusnet and get broadband and a landline for £18.99 a month…and yes, we work from home! Check out USwitch – one switch and you save money automatically every month.
Phones (1 each, plus separate work phone for partner, expensed through self employed business): 41 This also seems kinda high, even for three phones. Again, check out USwitch, and look for Smarty and iD.
Food: 500 (I realise this is high, we're both foodies, love our food and cook every day, this is something I'm aiming to reduce) WOW. We like food and cook every day and average around £250 for all food, toiletries and cleaning/laundry. Usual question: what do you eat? If you’re interested in food, I suggest making this your hobby. You’ve got to eat anyway, so you might as well enjoy yourself while you’re doing it. I decided cooking/food would be one of my hobbies so reducing the costs has been fun because it’s involved trying lots of new things. We got into Mexican food and Japanese food and it’s brought our costs way down because we focus on the vegetable-heavy stuff but it’s still an exciting taste exploration. I’m learning to make sourdough bread (50p/loaf!) and sourdough everything else (sourdough pizza… mmm…) Look at Budget Bytes for recipe inspiration, and commit to more vegetarian meals.
Clothing (including professional wear for partner, again expensed through business): 51 This seems like loads! What are you buying, armour plated socks?! Apart from this year when I need to buy a new pair of shoes, I reckon we average about £10/month between us. (Hard to say because it comes out of personal money except socks, underwear and shoe repair.) I buy almost all of my clothes on eBay, and mend stuff a lot. You can search on eBay for specific brands and can filter for a Buy It Now price if you don’t want to go through the hassle of bidding. It’s just like any other online shop, really.
I'm now starting to venture into the world of reading on investing as this will be more efficient than paying a 1.99% mortgage off, so once I'm feeling more confident about that (have binge-read MMM and am working on reading through relevant info on Monevator) I'll look into investing rather than mortgage.
Read this:
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. The JL Collins stock series is also good.
Around £20k each in ISAs.
Cash or S&S? If cash, please immediately invest it all in Vanguard LS100. You can optimise later.
~£60k equity in house.
2013 Nissan Juke, paid for in cash and going to be run into the ground over the next 10 or more years at which point we'll look electric
Interesting, but not assets. You can’t spend them.
One big point is that we're likely to want my partner to be able to not work for a year or more when we have kids, but also want to keep working towards our capacity to be FI, so don't want our saving capability to plummet when she's not working.
It just will. Sorry. You’re removing £1620/month from your household accounts. It’s impossible for that not to affect your savings rate. HOWEVER, you’re in a great position with your projected salary increases to make sure you’re just putting your savings on ice for a year rather than dipping into them…IF you avoid increasing your expenses.
Thoughts?
What do you really WANT? You’re already nearly in a position for your wife-to-be to take a year off for children, you say neither of you wants to retire, you’re projecting big salary increases in the next year without big increases in expenses… There isn’t really anything else to say, unless you have a different dream in mind that isn’t living comfortably and freely continuing to work until pension age.
