1 year No Saving but I have responsibilities ?!

[Peachh]

I will be 30 in 2 years, I have a 7 year old and I am SP.
I want to buy a house but in London it’s very hard obviously and I only have £10k saved. Am I being irresponsible and delusional to want to have 1 year of no saving, just spending freely, buying whatever, going on holidays and treating DC. I have £5k in debt, tone of Student loans which I will be paying back for forever but now earn good money.

Convince me not to (I have some what already started as we went on holiday for the first time since the pandemic and I spent like there was no limit).

High earnings do not reduce the mortgage rate that you pay.

Your credit score is not seen by lenders, it’s a marketing gimmick by ratings agencies, close to worthless. It’s loan-to-value that makes the biggest difference to borrowing rates.

I think this is great and would give some flex, going to sit down and implement this approach this weekend as my saving goal is always a very ambitious number. Thanks.

If you earn good money, why only £5k saved?

So aiming for £40k would take another 3 years at your current savings rate, 4 if you have your year of spending.
It just comes down to what's important to you personally then. For me when I was buying, I wanted to put every spare penny towards that goal because I I knew I'd be kicking myself if I had say 10 pairs of lovely shoes but fell short of buying by a couple of thousand.

With my earnings, affordability, and credit score I have access to better interest rates.

That's not how mortgages work.

Good affordability will help the application process overall, but your rate is dependent on LTV and the market, not your earnings.

I'm 31. We had a few years of tightening our belts and being really boring and it's really paid off. Firstly, I'm not dead yet and I still enjoy my life even though I didn't go mad in my 20s. We found once we started investing it sort of snowballs. Our deposit on our first house 7 years ago when I was 24ish was £60k. We now have about £370k in equity and I'm not even really sure how it happened.

If you will earn so much more soon why not continue saving, then when you get a pay rise then put half to debt repayment and then once that's cleared, savings. For example if you get a pay rise than is £400 net per month then put half to savings, half to fun. Work on your career, grow your salary further. If you start spending everything now it's so so hard to rein it back in!

Also when you become really good with your money you start saving it everywhere. You can save 10% from insurance by paying the year up front (because you've saved and have cash available), ditto council tax in my area - we pay in full and save 10%. We never pay credit card interest as we pay them off monthly but instead collect points on BA amex to fly for free.

Yes I understand this, as first time buyer at the time I looked last year I was eligible with lenders if I had a 10% deposit and 5% if it was a house not flat. I spoke with an advisors and this was their professional advice also. I know the market will change this as you mentioned.

Just want to acknowledge here that I know we are really privileged and this same system also penalises the vulnerable as they get stuck. But the OP does have options and isn't leveraging them.

why only two extremes, save loads or spend everything? If you’re earning a decent salary I’m sure you could afford to save as well as still enjoy life?

@HoneyIShrunkThePizza Thanks for sharing your experience and that’s an amazing amount of equity! I pay for most things upfront such as contents insurance but not council tax, will look into this!

Well I think it's amazing to have 10 k saved at such a young age and living in London at the same time. Enjoy your life for a year, that's what it's for.

If you say you could save 20k in 1 year with extreme saving then you could not go so extreme and save 15k in a year which would give £100ish a week pocket money for things to do with your dc, days out etc.

I think you're just being a bit rebellious because you're finally in a good position and think you deserve it which is understandable. However, I'd at least try to save 12k over the course of the year!

wow. I'd be going down the route of securing my child's financial future. But I'm a boring 40 year old who spent my 20's getting into debt and partying. Now I listen to Dave Ramseys podcast and read MSE for fun.

have a nice holiday by all means. Allow your kid to so maybe one or two hobbies that you deem expensive. But don't set her/him up in a hobby they love that you can't afford to continue.

if I were you I'd be saving 3 months salary as an emergency fund. Paying chunky amounts into my pension. Then saving a decent chunk for a deposit. Only then would I think about fun stuff. Pay yourself first.

@ZiriForEver has a really good suggestion.

You could have 2 bank accounts, the first your salary goes into. Out of this you have a number of Standing orders that go out the beginning of the month:

• rent
• second bank account - out of this you pay all household bills including food and annual payments such as insurance etc. If you set the figure right you build up a small credit over the year.
• your LISA - I think there is a max amount each year
• Medium to Long term savings account e.g. house deposit for savings above the LISA limit,
• Short term fun savings for holidays etc.
• The remainder stays in your first account for day to day extras.

This way you know what is in your main bank acct is for extras etc. to last the month plus you have a fun money acct for holidays. A balanced approach means you get used to saving but also are able to have a holiday etc.

I used to have about 8k of debt and continued to live the highlife. I knuckled down to clear the debt- every time I would not have a coffee or bought a cheaper lunch I’d make a micropayment off my credit card- rather than paying my lump sum every month I must have been making 40 or 50 payments a month and cleared the debt in 15 months. When it was cleared I can honestly say I was so happy, the weight was lifted and it was the type of content feeling that no night out or theatre trip or holiday could’ve given me. It was so hard, but it couldn’t have been more worth it

I think you're just being a bit rebellious because you're finally in a good position and think you deserve it which is understandable. However, I'd at least try to save 12k over the course of the year!

Yes I think this is partly why I have this attitude. Started my professional career on 18k so it has been a massive jump. But it does not justify my need to go all out.

Well done on the career, you should be proud!

Now you can really make yourself proud by saving at least £12k in the next year then see if you can challenge yourself to save more than that! But like when you get really stubborn to prove a point like giving up alcohol for lent because your mates laughed when you said it.... or was that just me? 😀

Thanks @keeprunningupthathill

thanks so much @Princessglittery all great ideas, will look to use one of my spare accounts for DD.

Well done @SarahSissions i had a £750 overdraft when leaving university and the feeling when I cleared it was amazing also so must have been a great relief.

I would just get on the swiping apps. In London there will be plenty of men with decent careers who will want someone similar for a shared middle class lifestyle

Meant to add one more, when you get a pay rise use the first month’s net increase for fun, then from month 2 onwards increase existing standing orders by c70%+ of the net increase is split over the long term and short term savings. When you get a mortgage include an increase in monthly repayments in this split.

Why thought? What is the virtue in "challenging yourself" to ... not live your best life? Especially with a child, that is young here and now? It is much better to learn how to both save and use money than saving every pound for the sake of saving.
Of course if it is necessary, one does it.

The OP said she could save 20k with extreme measures. If she aims to save at least 12k and be comfortable but could possibly do 14k with just a bit of extra effort then what's the harm?

2k in 1 year is £5.50 a day so that's what some people spend in Starbucks each day, not exactly climb mount everest challenging is it?

Plus some people respond to challenges, I know I do, so it was merely a suggestion, not an order.

With that sort of potential, I’m assuming you are on something like £90k now. Yet only £10k in savings ? And £5k debt! You’ll be paying your cc in full each month with that sort of salary!

Things don’t add up, OP!

The yearly allowance for the lifetime isa is not 20k. That’s the yearly allowance for isas.