Disagreement re. DP with finances/budget - what do you think?

[Raceacrossworld]

DP and I are looking to move house, however we have had a disagreement over budget and what would be affordable.

If we were to get the Mortgage I think would be manageable, our outgoings would look similar to the below. I think it would be fine but DP doesn’t believe we have sufficient left over funds.

We have an emergency fund saved already.

Can I ask for your thoughts?

Monthly:

Combined income post tax/NI/pension contributions is £4000 + £100 child benefit = £4100 total

-Mortgage/house bills - £1900
-Nursery (we have one DC) - £100
-Petrol - £150
-Other (eyecare, phone contract etc) - £50
£2200 total

Food at an estimate c.£450 a month

Bills + Food = £2650
£4100 - £2650 leaves £1450 for social, savings etc.

I think £1450 left over is plenty, we aren’t particularly extravagant people. We enjoy the odd meal out, DP goes to watch football maybe twice a month.

This would be a move to a house which in theory would last us for the foreseeable, so the need to save heavily would be removed somewhat. We would still want an abroad holiday a year and luckily have 2/3 years until DC starts school so can go away out of school holidays etc.

Any thoughts welcome!

I personally think you have lots of space in your budget for that size mortgage, especially if you are able to stay in that house for the foreseeable. What size mortgage does your husband want? Where is his comfort point?

He thinks what we pay currently (which is around £1400) for mortgage/house bills is about right (maybe an extra £1-200 on top) and thinks we should try to increase income before moving (we have been for a while, but both in a ceiling at current companies).

I wouldn't be at all happy to have a mortgage that's half my income. If one of you loses your job, suddenly it's 100% of your income.

Do you intend to have more DC? I think your food budget is very low and as the child gets older would be tricky to stick to.

Dave Ramsey says to have no more than 25% of your income on housing - I’m with your DH. If one of you lost your jobs things could get very tight.

Your outgoings seem to be quite low - does that really include everything? Download bank statements from the last 12 months and categorise everything. We bring in about £7k and spend about 2250 on mortgage and bills. About 6-700 on food. £250 on my car finance and a chunk from dh on child maintenance. Some into savings. The rest just goes, somehow!
Consider how affordable it will be for you if/when interest rates rise. I don’t know if you plan more children but with hobbies etc as they grow it all adds up.

I wouldn’t be comfortable with just house & house bills being 50% of total income, if one of you found yourselves unemployed you’d be up shit creek really quickly.

What about all your other costs?

Clothes and shoes
Haircuts
Children's activities
Car insurance and general running costs etc.

Where is that coming in? What happens if one of you loses your job?

Holidays, insurance, car tax, tv licence, kids scout camps etc all add up.

Your outcomes seem low. What about house insurance, car insurance, life insurance, car tax etc. is that included?

Other (eyecare, phone contract etc) - £50

What is actually in this category? £50 seems very low.
Any holidays?
Car tax, insurance, MOT, service
Clothes esp children’s clothes, as they will grow out of them.

Mortgage/house bills - £1900

How much is your mortgage?
Council tax?
Gas?
Electricty?
Water?
Broadband?
Any TV subscriptions?

Sorry OP, I think it sounds tight. It's not so much what's left over, but how much of your income is committed to mortgage and bills.

We have always kept ours to 20/25%, and when my husband lost his job last year I was very pleased about it! It does mean our mortgage and bills are over half my income now and I do notice it

I think your outgoings seem low. If you now pay £1400 for mortgage and bills and you think £1900 is fine are you saving £500/month easily now? If so then I think your plan makes sense. If not then what spending are you cutting to make this work?

This would be too tight for comfort for me, I'd aim for a mortgage payment that is about 25% of your joint income.

Thanks all:

-Things such as car insurance etc we pay annually out of savings. We only have one car which we own outright.

-Clothes and haircuts etc we just buy as we go

-We save over £1000 a month currently

How much is the mortgage have you included all bills house insurance car tax etc. do you plan on having more dc

I agree with your partner. I think you have a lot of things unaccounted for to use the £50 other for.
You haven't included;
Landline or internet
TV licence/subscriptions e.g. netflix
Car maintenance ( car insurance, mot, servicing)
Presents
Holidays
Days out/meals out
Contingency fund e.g. repairs

I think you need to properly plan it out. Saying you pay upfront for things like insurance is fine, but what if you use all that money up and then have other costs.

Have a look at 3 to 6 months worth of your past statements and work out what you actually spend a month. Don't forget to include once yearly spends divided by 12

You worked out you'd have £1450 for social, savings etc with the new mortgage/bills (£1900)
Your current mortgage/bills is 1400.

So do you currently have £1950 sloshing around your bank account at the end of the month? If you don't, you need to go back to the numbers

You need to sit down and list absolutely all of your outgoings. There are so many things missing from your list that it's quite worrying, really.

Subscriptions I’ve included in fixed costs. We don’t usually have sinking funds for holidays etc, we’d just use the savings pot or DP usually receives an annual bonus each summer which we allocate for a holiday.

You buy as you go for haircuts etc yes, but they still need to be budgeted for for the purposes of an exercise such as this as they are still a coat across the year.

What proportion of the 1900 is mortgage? Your outgoings seem very low, and your above comment about haircuts etc suggests to me you don't have a total handle on actual costs across the year. Same with insurance, you may pay annually out of savings but that cost still needs to be accounted for.

It would be c. £1400

Only £100 a month on nursery? seems low even with free hours.
What’s the income split? Maybe your partner is worried about pressure if you were to have another child?
Advice used to be that mortgage should be no more than a third of your joint income….I think it’s too tight and you have possibly missed some outgoings…..

Clothes and haircuts etc we just buy as we go

Your £50 budget for other stuff be wiped out with one purchase

We have no mortgage but pay £1250 in bills (includes a bed on interest free, child's savings and all insurances paid annually out of it).

Your estimate feels low.

Do a proper breakdown and your DP may feel differently.

Again re holidays...if they come out of savings then that isn't a true savings pot...it is you budgeting across the year for annual costs. So you should be considering them as such...so if you say you save £1000 per month... consider that you actually don't, you save £700 once haircuts, clothes, holidays, insurance etc are deducted.