Am I right in thinking that we don’t have too much to worry about?

[Baconfryz]

Hi,

we managed to get on the property ladder in 2021 after years of renting. We’ve done some work on the house and we do have some unsecured debts that we are also clearing.

dh is worried about money and thinks that money is ‘tight’ but I disagree. We’ve drawn up a budget and after all bills, debt payments and food/fuel, we are left with just under £950. This month we have used £300 to overpay a debt, £300 saved and £350 as ‘fun’ money. I think that this this is actually quite a lucky position for us to be in at this stage in our lives. Mortgage is fixed until 2028 at which point the other debts will be gone. No childcare fees anymore 😀

am I deluding myself, or is dh over- worrying?

I think you’re doing pretty well. I might lower the fun money budget and increase the savings budget a smidge, but you’re definitely not in panic territory.

It's all relative. What do you count as fun money?

Where does kids clothes, birthday and Christmas costs, holiday money etc come from?

Which pot does MOTs and any unexpected car costs come from?

We have a healthy household income and on paper have lots of money remaining each month, yet in reality, most gets spent that I can't always account for. You know, £30 here, £20 there and poof, it's gone. We're trying to get a better hold on what we're spending but in order to feel comfortable, I think we'd want a set amount remaining for savings each month that isn't tapped into for the above things I mentioned.

I'd say you're doing bloomin well! Most people in the UK don't have that spare each month, can't afford a house, let alone find one to buy or rent. Your partner is off his trolley IMO. Having said that, it's always good to be cautious about money and potential rainy days ahead - but honestly you are in a very good position compared with most.

It depends on the wider context. How old you are, if you’ve got emergency savings, pensions, how old your children are. £300 in debt a month is a lot, it means you only have £650 for saving and fun money. I’d up the debt repayments and lower the fun money and savings amount (unless you have no savings in which case build that up first), until the debt is paid off.

I wouldn’t say most people don’t have £650 spare (£300 of OPs is going on debt), or can’t afford/can’t find a house to rent or buy. Obviously lots don’t but you’d be surprised how many do l, even in the younger generations, and how many own their own homes.

I'm lucky to be able to save £30 a month. But then I think you know you're in a really great position and your husband is being unreasonable.

Hi,

I save £50 into a regular savers account each month for Christmas. Birthdays do you have to come out of the £950 we also have to use that money to buy clothes. I am quite savvy with clothes though and use a lot of sites like Vinted . We also don’t believe in buying expensive clothes for the children. We tend to swap and share a lot of things amongst and nieces and nephews etc.

we only have one car. This is something that we decided on last year as previously we had a car each. My DH works literally a five minute walk from home. Our car that we do have is a salary sacrifice car through my job. The payment covers the insurance and all servicing and MOT etc. In hindsight we probably wouldn’t do it again, however we are tied in for two more years. It’s likely that we will buy a secondhand car next time.

I understand what you mean about money disappearing. I am trying to keep a spending diary at the moment so we can really see where the little spends add up to large amounts over a month

Hi, at the moment we only have about £3500 in emergency savings. This is something that we are both keen to build up. The £300 that I mentioned in my first post is an overpayment towards the debts. The minimum contractual payments are included in our regular bills. We intend to continue to make overpayments but I suppose that there is always the option of not doing that one month if we need the money for something else in an emergency

How much debt do you have? I would decrease the amounts for savings and fun money to make the debt repayment your priority after other bills have been paid.

Hi, we are both in our mid 30s. We also both paying to our work pension scheme. We have about £3500 in savings although we both agree that the sea is nowhere near what we should have. Our children are both in primary school so we no longer have the dreaded childcare costs. We are very fortunate that my mum works in the school that they go to and helps us with drop-offs and bringing them home etc

Our total debt is high at 25k. It’s all at low rates etc. it will be fully paid just before our mortgage is due for renewal.

I agree. My niece has just managed to buy a house aged 22

Not a terrible situation then, no. High debt but plans to pay it off, and able to save and have some disposable money in mid 30s isn’t bad.

I think so. I feel really fortunate to be honest

If you've got 25k of unsecured debt then you don't have 950 quid spare. What's the interest rate? Does it really make sense to put money into savings?

Hi,

I understand your point but I disagree. We make the agreed contractual payment. I don’t think that we should be paying all of our spare money towards this debts as this would impact negatively on other areas of our lives. The interest is around 7% but I’ll need to double check.

its a bit like saying that people with a large mortgage need to throw every penny at it

You’re only paying off a tiny amount of your debt every month, so the interest on your debt will be compounding every month. The more you pay off, the better off you’ll be in the long run. Up to you of course, but I don’t see the point in paying off £28K when you could ‘only’ pay off £26K (approximate figures).

Are you getting more than 7% interest on your savings?

If not, I would want to pay off the debt.

In general - to me, that sounds like a really large unsecured debt to have at your ages. I wouldn't consider myself to be doing well until I had paid it off

It is widely reported all over the many news channels and newspapers that the majority of people don't have £650 to spare, with most haven't got anything spare at all. I can also confirm this from my work role working across the UK and from experience of friends and family. If it wasn't such an issue why would foodbanks be overrun? people not being able to afford Gas & Electricity and the GOV having to give people subsidies - perhaps you are lucky enough to not have this impact you, but that is not the case for the majority of UK citizens. The south of England is almost destitute for rental properties with 20+ people competing for the one extortionately priced property and there are very few, if any at all, 'affordable' properties to buy.

7% is a high interest rate. I'd definately be looking to refinance that somewhere cheaper, even if only in part. If you can't, definately look to pay it off a bit faster (although you will likely still need some savings, depending on the state of your car / boiler / job security)

No we definitely aren’t getting 7%. It’s more a case of wanting to build up an emergency fund so that we don’t have to rely on credit if an emergency happens. We’d like to have at least 5k saved.

we do want to pay off the debt as quickly as we can but I also think that we have to strike a balance as I also feel that we need to have a life.

I agree with your DH - £25k unsecured debt is high, I'd be looking to pay that off as fast as possible.

Hi,

the interest on the loan was front loaded so that won’t increase. We always make the contractual payment. We have 40 payments left

if we continue to overpay by £300 then it will knock a considerable amount of time off the loan.

Given the information you've drip fed, I think your DH is right to worry. I don't consider someone with 25k of unsecured debt and an interest rate of 7% with only £3500 in savings to be in a fortunate position.