#41 October Summary

So, did we stick to the budget?

No. Overspent by £314.55.

If not, why not?

Holiday. Actually I expected to spent a lot more.

The aim was to maintain the downward trajectory on the monthly overspend. The graph above shows we succeeded with this.

Any positives?

Kept spending lower than I expected.

Grocery shopping was £120 less than budgeted. Our third on-budget or better month in a row. Previously this had been a big killer.

Lessons / thoughts?

Nowt this month.

Expectations for next month?

Really struggling to think of things which we'll be spending money on next month. Something almost always comes up but really hoping can stick to our budget.

Effect on overall finances?

S    Student loan – Does not exist anymore :)

·         House loan – £298 was paid off direct debit. Total remaining now is £6,249

·         Credit Card -  £47.58 was paid off. Total remaining now is £2,067.34

   

Total Debt = £8,316

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Wealth Accumulation

Summary:

Finally opened up a global index tracker fund. Starting with £50 per month direct debit into this. As mentioned in previous post depending upon the outcome of our house move this may increase or not.

It feels like a big thing beginning.

PPBF shares continued negative trend.

Next month will get the first entry for my workplace sharesave scheme = £100 per month into that.

Noticed that we've now doubled our positive saved wealth in the 9 months since February. 

Asset	Value	Month Increase
Pension Value	£12,761.50	£260.95
PPBF Share	£340.78	-£9.10
Cash Savings	£0	n/a
Fidelity Global Index Tracker	£50	£50
Total	£13,152.28	£301.85

#40 Anticipating Financial Circumstance Changes

One of the things I'm concerned about is that as we get more money, either by paying off debt or salary increases, the additional available money is just absorbed.

For example 2 months ago I paid off my student loan. This was £330 per month. However, in the following 2 months we've not saved a penny.

Further example is that 2 years ago I was earning £51500. That is nearly £18k less than what I earn now. However, we have no savings to show for it. Granted the priority in this time has been paying down debt and we have achieved that.

So my plan is to plan and as soon as additional income comes available have a decision already made to automatically move that money each month so it's not missed.

Upcoming changes in circumstances.

1. Potential pay rise eta March / April 2017
1. Roughly £50 per month
2. Bonus eta March/April 2017
1. Roughly £3000
3. Tax code change eta May 2017
1. Roughly £100 per month
4. Paid off Credit Card eta Sept 2017
1. £50 per month
5. Paid off House Loan eta Sept 2018
1. £281 per month

Options for what to do?

1. Cash savings.
2. Stocks and Shares ISA.
3. Pay off mortgage.
4. Treat.

If I commit 

1. Any additional pay rise income to go into Stocks and Shares ISA. We've proved that we dont store cash very well so will use monthly surplus to top up cash savings.
2. Commit to split the bonus in 3. One third to cash savings, one third to S&S ISA and one third towards treat for the wife and family.
3. Commit to adding tax code changes to S&S ISA.
4. Credit card re-payments can be used for cash savings.
5. House loan is too far in the future to consider now.

What I'm interested in is increasing the monthly amount I save into the S&S Isa.

Currently this is £50, starting 2nd Nov.

With pay rise and tax code change additional income this should increase to £200 per month by the summer of 2017, as well as a one-off bonus amount.

I have started considering what my 2017 goals are likely to be. It's early but I'm excited as it'll be the first year where the focus is turning to wealth accumulation rather than debt repayment. With £400 already invested in PPBF shares the aim should be completing 2017 with around £2.5k held in stocks and shares, with a further £1.2k invested in my company share save scheme.

#39 Where Does My Money Go?

I'm interested in seeing a breakdown of where my money goes and crucially how much % of my gross pay am I actually saving.

Gross Pay	$5,750.83
Tax	$1,495.47	26%
National Ins	$384.44	7%
Season Ticket For Commuting	$274.67	5%
Childcare Vouchers	$124.00	2%
Fixed Spending	$1,302.81	23%
Variable Spending	$1,020.00	18%
Debt repayment	$331.65	6%
Pension Payments	$287.54	5%
Fidelity World Tracker Fund	$50.00	1%
Expected Savings Per Month	480.25	8%
	Overall Total	100%

This is based on my monthly budget, which as we know I've only stuck too once so far in over a year. Therefore the 8% expected savings per month can be ignored.

Using gross is interesting as I can see the amount of tax paid etc however as this cannot be changed it doesn't provide a fair reflection upon how much of money which could be saved in theory is being saved.

Therefore, here are the net figures...

I have added the net pension cost to me to the net pay to enable a 100% view of the book;

Net Pay + Pension Net Contribution	3,351.48
Fixed Spending	$1,302.81	39%
Variable Spending	$1,020.00	30%
Debt repayment	$331.65	10%
Pension Payments	$166.77	5%
Fidelity World Tracker Fund	$50.00	1%
Expected Savings Per Month	480.25	14%
	Total	100%

Disappointingly the amount of my available pay being saved is exactly the same = 6%.

If we stuck to the budget this could be increased by 14% to 20%.

Once debts are re-paid this can be increased by a further 10% to 30%.

What concerns me most is that over the last 18 months~ we have only stuck to budget once.

What that means is that excluding my pension which can only be accessed at age 55 we're only actually saving 1% of my take home pay.

That is ridiculously absurdly low.

 According to this chart referenced by Mr Money Mustache  this means I'll retire in 98.9 years. Great.

Therefore, priority has to be increasing the savings rate by sticking to the monthly budget, paying down the debt and increasing the automated savings each month rather than rely on cash savings.

When it comes to 2017 aims for the year I think this will need to one of the key drivers. Replacing the debt repayments with direct debits into savings to increase our savings % to 16%.

#38 Wealth Accumulation

I have realised now that we are nearing a period of wealth accumulation. Our debts are a third of what they used to be, and we're working to paying them off in the short term.

Now I need to focus on how to build wealth.

A couple of pieces of advice I've read over and over again;

1. Don't delay just start now. 
2. Compounding works miracles.
3. Shares beat cash usually over the medium / long term.

A couple of lessons from my own experience;

1. We are great at adapting to spend the amount of money we have.
2. If savings are easily accessible they will be accessed.

So with that in mind I'm going to begin the journey of accumulating wealth :).

I'm 30 years old and target setting is for another day.

Today is about starting the journey.

Here's a view of my current standing.

£12.5k in a pension I can accecss @ 55 years old.

£350 in individual shares.

Obviously I plan on maintaining my full payments into my pension.

I do not plan to buy further individual shares.

As mentioned in previous post I plan on paying £100 into my companies sharesave scheme. I will track this as 'cash' as I am only buying into options. Once these mature in 3 years time - if still within the company - these can be turned into shares or a profit from shares.

I will continue with the plan to create an emergency fund which is at least one months out-goings. This will be built up in a regular savings account - as I am able to get 5% interest rate that way.

My final way of creating wealth will be through a Global fund. Initially I believe I'll start with a small amount - £50 per month and see what's remaining. I will find the cheapest fund platform and cheapest fund - targeting no more than 2% charges per annum.

#37 First Dividend!

I received my first ever dividend last month!

1.60 for my 4 shares.

Reading into this, it appears this is the interim (half year) dividend payout, with a final dividend also paid. So in effect two payments per financial year, which now runs Jan>Dec.

In each of the previous 5 years the final dividend payment has been twice that of the interim payment.

Assuming the final dividend is 80p, I'd get a payment of £3.20 for my 4 shares. Giving a total dividend for the FY of £4.80.

Given I invested £429 to purchase the shares it's the equivalent of a 1.1% interest rate, based only on dividends ignoring any movement in the initial capital.

#36 Sharesave scheme and new house

2 exciting things have happened lately.

#1 We found a house we like within our village and had an offer accepted. Our is up for sale but with no offers in the 3 weeks it's been available.

#2 My company opened up the latest sharesave scheme.

New House?

The house we're looking to purchase is on the market for £500k.

We had an offer of £490k accepted.

We expect our house to sell for £350k. 

We have £188k equity in our house, and as you know 0 savings.

Mortgage broker has provided us with these options...

Ok, so on the basis of purchasing at £490,000 you could borrow £360,000 with one lender over a 40 year mortgage term, the rates are as follows;

-          2 year fixed @ 1.64% = £1026.04 a month

-          3 year fixed @ 1.94% = £1081.83 a month

-          5 year fixed @ 2.29% = £1149.07 a month

-           

Or if you are happy to pay a little more each month and stick with a 35 year term, there is a better 2 year fixed rate available as follows;

-          2 year fixed @ 1.49% = £1103.54 a month

Alternatively, if you wanted to raise a little extra funds and still stay under 75% LTV, you could borrow an extra £7,500 over a maximum of 35 years

-          2 year fixed @ 1.49% = £1126.47 a month

-          3 year fixed @ 2.09% = £1237.78 a month

-          5 year fixed @ 2.29% = £1276.24 a month

I don't want to increase to a 40 year term, so ruling those out.

The house we're buying is going to need to attention, so the additional £7.5k of provider 3 looks interesting. Couple with the fact that for a 2 year fix it's only £23 more expensive and would provide us with a £7.5k windfall I think we're leaning towards that one.

Now, that would increase our monthly mortgage payments from the current £797 to £1,126, an increase of £329. Funnily enough almost exactly the same amount as I was paying back my student loan!

Sharesave Scheme

The priority is the new house, fingers crossed.

However, we also do not want to miss out on the opportunity that the Sharesave scheme provides.

It's 3 years.

The price offered is fixed now and is fixed at 20% below todays market rate. The fix option price is £69.

The limits for entering the scheme are min £10 and max £500.

Cash can be withdrawn and the scheme exited at any point. Payment holidays can be also be taken.

I have missed out on previous scheme which saw a lot of people earn very well in my company, and was determined not to miss out next time the opportunity arose.

However, we do not have much money left each month.

So working on assumption we take the above mortgage and our monthly repayments are increased to £1,126 we would be left with £229 per month. Some of this could go towards the sharesave scheme.

However, council tax, electricity and water are all likely to increase.

Increasing all of these by 10% leaves us with £200 per month.

The elephant in the room is obviously that we've not actually managed to stick to our budget yet and will be buying a house which needs attention. 

So on the assumption that the £7.5k can both act as our emergency savings and cover improvements to the house I think we could afford £100 leaving £100 as cover for any overspend.

The guiding principle being that we have shown over the years that when we need to save we can make it work - hence we are in a position to buy a house worth half a million pound - but that when we have a bit of safety then we overspend. 

Hopefully we'll get the new house and will learn to live with less money and stick to budget!

Either way it will be exciting.

 

#35 Variable Spend Budget

For 16 of the 17 months I have been tracking budget spending we have over-spent on our variable spending.

The last 3 months have seen a combined variable spend of £3,831. This is £800 over budget.

I'm now going to attempt to break down the budget further to allow for better visibility of where the budget is wrong and allow me to focus on resolving.

Firstly, breaking down the spending into sub-categories.

We have Need, eg petrol, misc, debt interest. Kids.

Could. House, Mr Work.

Nice. Mr/Mrs/Family treats.

Then the one-off big items. The general idea of these being all must haves.

How much we spend on big-one off items?

Over the last 12 months we've spend £3,245.89 on one-off big items. This equates to £270 per month.

Our budget for variable spending per month is £450.

If we aim to reduce big spending to £250 per month. That leaves £200.

Things that can be removed, or not budgeted for as we want to remove them...

• Debt interest
• Top up Mrs account
• Mr work - buying lunches etc

Things which remain...

• Mr/Mrs/Family treats
• Stuff of kids
• Petrol

How this could break down...

• £250 on one-off big items. 
• £50 on petrol
• £100 on Mr/Mrs/Family treats
• £25 on kids stuff
• £25 on misc little items

I will update the budget and track this going forward.

Hopefully it will focus our decisions and allow me to identify where the over spend is coming from,

#34 Sept 2016 Summary

So, did we stick to the budget?

No. Overspent by £537.55.

If not, why not?

Fixed spend small amount over, inconsequential.
Grocery shopping - on budget.

We fell down on variable spending:
£330 on one-off big items.
£182 on family day outs/treats.
£143 on petrol.
£124 on the house.

Plus other spending meant that our variable spending was £935, which is over double the budget.

Some of this was needed, new freesat box to replace SKY TV (£184), car parking fine (£60).

Any positives?

The overspending of the last three months has been very bad. However, at least each month has got better.

Debt has dropped below £9k, now stands at £8,661.92.

Grocery shopping was again on budget thanks to using pre-pay card.

Lessons / thoughts?

Need to break down the variable spending budget to allow for better planning and understanding.

Expectations for next month?

My expectations for each following month have been well off recently.

However, we have our family holiday in October and still have the car-hire to pay for which will be roughly £150 plus other holiday spending. So expecting October to still be expensive and over budget, aim will be to spend less than this month to keep it going in the right direction.

Effect on overall finances?

S    Student loan – Does not exist anymore :)

·         House loan – £298 was paid off direct debit. Total remaining now is £6,547

·         Credit Card -  £48.68 was paid off. Total remaining now is £2,114.92

   

Total Debt = £8,661

~~~~~~~~~~~~~~~~~~~~~~~~

Savings

Paid for our foreign holiday to the Canary Islands so savings taken a beating.

Emergency savings / Savings for France 2017 family holiday

• £168

Shares

• Current value is £349.88 (decrease of £17.20)

Total savings =  £517.88

Pension

• Current value is £12,500.55

#33 Freesat

12 months ago we were able to sign up to a great Sky tv/phone/internet deal. £35 all inclusive per month, including line rental.

This month that deal ended and to stick with the same deal would have increased our monthly bill to over £100.

Obviously this wasn't an option.

Having looked around what we've plucked for is a Freesat box with HD and pause/record functionality + the cheapest internet we could find, which this month was PlusNet.

We have exchanged £184 up front for the Freesat box for no on-going monthly contract for TV.

Our internet and line rental is now £16.99 per month. TV = free.

Each month this means we'll be spending £18 less than with previously Sky.

After 10.2 months we'll have covered the cost of the Freesat box initial outlay and will be spending less money that if we hadn't made this decision.

It is a nice feeling to 1) reduce monthly expenditure and 2) remove ourselves from the dependency of a TV contract.

#32 August 2016 Summary

So, did we stick to the budget?

No. Overspent by £760.

If not, why not?

£600~ spent on our holiday in Gloucester.

However, even when excluding this we'd have been £700 over budget.

Key items break down into;

• £312 on one-off big things
• £150 new laptop
• £120 son football 12 week payment
• £130 on Mrs shopping
• £116 on home improvements
• £90 on kids shoes

Any positives?

Using a new pay card for grocery shopping via work. Provides a discount an incentive to not spent more than budget. Set at £570 a month currently.

Lessons / thoughts?

Family holiday was a one-off and well deserved, in future would prefer for this to come out of savings rather than be added to the monthly budget.

Did have alot of one-off expensive items, the laptop, football sessions, shoes. These wont be repeated for quite some time. BUT, we do seem to have regularly had quite alot of one-off big items lately.

Expectations for next month?

September, we don't have any big plans for and currently no plans to spend on any big one-offs.

Potentially there is some work needed on the car but that's unknown at present.

Only four weekends and with new grocery cash card expecting to remain on target for the budget in Sept.

Effect on overall finances?

S    Student loan – Does not exist anymore.

·         House loan – £298 was paid off direct debit. Total remaining now is £6,845

·         Credit Card -  £49 was paid off. Total remaining now is £2,163

   

Total Debt = £9,008

~~~~~~~~~~~~~~~~~~~~~~~~

Savings

Paid for our foreign holiday to the Canary Islands so savings taken a beating.

Emergency savings / Savings for France 2017 family holiday

Currently this is just one account and needs to be split into two soon.

• £112

Shares

• Current value is £367.08 (increase of £14.50)

Total savings =  £429.08

Pension

• Current value is £11,234.31

#31 Feeling Positive

Feeling very good today. I received my first paycheque since paying of the student loan and receiving the 3% rise. I didn’t allow myself to get too excited until the money was actually received but now it feels very good. Take home pay now after pension, childcare vouchers and season ticket loan is £3,218.31. This is up almost £500. But there are still multiple expenses which over the coming 24 months or less can and will be removed to increase this.

Currently my monthly budget if stuck to, and I’ve only done that once in the last year, has me having a surplus £532.15 per month.

We’ve booked a foreign holiday (it was one of our 2016 aims) which will need to be paid for over the next few months, plus using up our savings but after that should quickly be able to stockpile some money.

Because we’re close to actually having money to save I’ve also been looking at how and where to save. I have minimal invested in shares and considered buying an index tracking ISA, but have decided upon one of the 6% regular savings accounts instead. These are ideal as we do not, yet, have a large sum of money and wil instead be adding monthly and the interest rate is great. To get this will involve another bank transfer, this time to M&S but I’m very used to that – been moving around all over the place to get hold of free cash incentives over the last 18 months.

What really excites me now though is that this is the start. For the past 2/3/4 years I’ve been thinking and planning and noting when we’ll actually start to have money. We have multiple avenues where we’re spending money currently which will be removed in the coming 2 years.

• Student loan = £330 a month 
• Complete
• Childcare vouchers = £80 net a month = only until son is old enough for the free lessons, 6 months left. 
• Total surplus should rise to £600~
• Credit card = £120 a month = only £2k left, expect complete no later than 12 months’ time. 
• Total surplus should rise to £720~
• Tax. Currently paying about £130 per month in repayments = 8 months left. 
• Total surplus should rise to £850~
• House loan = nearly £300 a month = 24 months left max. 
• Total surplus should rise to £1150

Now we just need to start sticking to the budget more regularly, do all we can not to increase spending in line with saving and also save up for things ahead of spending, such as the holiday.

#30 Tidying up accounts

I want savings accounts for the below...

1. Emergency funds - aim is to have £2629.29
2. France 2017 holiday - £56 per month for 12 months
3. Account for bills - £60~ paid in each month to cover bills over 12 month period
4. Another account for savings which aren't emergency - which are for fun and/or long term... TBD 

Currently I have:

1. Halifax Web Saver - Interest rate 0.25% - Nil - not used
2. Halifax ISA Saver - Variable Interest rate 0.6% - £1,648.56 - used for Emergency and France funds
3. Lloyds Classic Account - Interest rate 0% - Nil - used for bills
4. Lloyds Standard Saver - Interest rate 0.25% - Nil - not used

Possible upgrades: 

The Lloyds Standard Saver can be updated to a Monthly Regular Savings account with an interest rate of 2%. This still allows for withdrawals to pay for the bills, it'll be pennies earnt but better than nothing.

Actions:

- Upgrade Lloyds to higher rate savings account. 

- Update standing order to direct the bills money to the new Lloyds account.

- Separate the emergency funds and France 2017 holiday savings. Do this by moving the France savings to the Halifax Web Saver and changing the standing order to go to here automatically.

Soon I will be switching my current account provider to Coop. When this is set up I will set up a standard savings account to add any excess money into. When we do with that money is a discussion for another day.

#29 July 2016 Summary

So, did we stick to the budget?

No. Sadly - following June's great result of sticking to budget - July has been our worse month. We were £954 over budget.

If not, why not?

The stag do cost over £400 which is far more than expected. We also had a range of one off purchases not planned for. Wife and kids passports - £160, work cycle annual hire pass - £90 were the main ones.

We also spent £180 over budget on groceries this month. 

Any positives?

A giant positive this month was receiving my bonus and paying off my student loan. We've also got enough left over to save £1000, have a weekend away and put £3000 towards my credit card debt.

This is great news but is somewhat overshadowed by our poor performance in the monthly budget.

Actually it shouldn't be overshadowed. I have paid off my student loan!!!! That's £330 per month which I will now be able to keep.

Total debt has now dropped below £10,000.

Lessons / thoughts?

Don't go on another stag do for a long time.

Make sure we rein in grocery shopping again.

The extra spend required reminds me of the need to have an emergency fund so need to ensure this is racked up fairly quickly with the new additional income.

Expectations for next month?

August we have a weekend away as a family. Not abroad but we're still super excited. I suspect it will be fairly expensive.

Car insurance is due but that will be looked after by the bills account which is topped up on a monthly basis.

We're also looking to purchase a laptop, a cheap one.

Effect on overall finances?

S    Student loan – £0

·         House loan – £298 was paid off direct debit. Total remaining now is £7,143

·         Credit Card -  £3000 was paid off. Total remaining now is £2,213.40

   

Total Debt = £9,356.40

~~~~~~~~~~~~~~~~~~~~~~~~

Savings

Removing the bills account as those aren't savings they are known bills broken down into monthly payments.

Emergency savings / Savings for France 2017 family holiday

Currently this is just one account and needs to be split into two soon.

• £1,648.56

Shares

• Current value is £329.60 (increase of £22.98)

Total savings =  £2,001.14

Pension

• Current value is £10,995.56

#28 No More Student Loan!

Quick update to share the good news.

Bonus was paid and immediately got on the phone to pay-off my student loan.

Had an unexpectedly large amount left over - £5000! - after paying it off.

Sat down with the Mrs and we decided to put £3000 towards paying off our Credit Card - leaving only £2200 left in balance - keep a further £1000 as savings for now and put the other £1000 towards a well-deserved break of some sort as a family.

We're still looking into when and where that break will be but ideally it'll be abroad so we coughed up the £92 for the kids passports and an additional £78 to renew the wifes. Expensive business this holidaying.

Debt now looks a lot better and we'll be benefiting from the addition £330 each month that I was paying towards the student loan.

•       Student loan – paid off. £0 outstanding.
•       House loan – Total remaining now is £7,441. This will be updated on 1st Aug.
•       Credit Card -  £3000 paid off. Total remaining now is £2,212.99. This will be updated on 1st Aug.

   

Total Debt = £9,653.99

This time 10 months the total debt I owed excluding mortgages was £25,800. To get down to below £10,000 in less than 12 months is great. 

Now we have to not just absorb the additional £330 per month which was previously going on the student loan and instead save it and/or use to pay down the remaining debt asap.

#27 Salary and Bonus

An ad-hoc update.

Received confirmation from my manager that I'll be receiving the full bonus I am entited too, which is 20% of my current annual salary - £67k.

Even more good news was that I will be receiving a 3% pay rise - taking me up to £69,010 per year.



The plan is to use my bonus in July to pay off my student loan which will leave us with £330 per month extra - to be put directly into a savings account.

The pay rise should add £120~ extra per month too, which will also be put directly into a savings account.