How to manage our new financial situation

[griffinz]

Evening all,

Firstly, this is NOT a stealth boast. I lived for year just above the poverty line, however due to our jobs etc, dh and I have managed to get into a decent situation.

We both work in senior roles in education. I have just got a new job from September which is a decent promotion for me. dh has also got a new job as a Head Teacher, also from September. This coincides with the end of us having to pay nursery fees - currently just over £1000 per month.

For years we struggled to get by, expecially when we were in Greater London. We moved to the midlands 6 years ago and that made things a bit easier.

I am determined for us to use our new income sensibly and to not go crazy and get used to it. We have worked out that from September our joint take home pay will be around £7800. We do have a biggish mortgage at £1350 per month.

All of our bills, mortgage and regular monthly outgoings come to just under £2500. We usually spend about £120 per week on food. We spend quite a bit on kids activities etc - swimming, music lessons etc etc at around £300 per month.

I lease a car which costs just over £300 per month and dh has a car loan that costs £188 per month

Fuel for the cars and doscretionary spending comes to about £250 per month

So based on how we live now, we should have about £3800 per month that we can save/invest/spend on non-essentials

How would you divide this money? I want to get the balance right so that we are making the money work for us, whilst also having some fun/holidays etc

Nets*, not meets.

Ignore the jealousy, some people expect it handed on a plate and begrudge anyone who has worked had for it.
Life could be more stressful and busy with your new roles so I agree with others about cleaner, gardener etc.
Yes reduce debt but also treat yourselves, you work hard you enjoy the benefits

There’s a great feeing when you are able to buy things like cars outright without finance. I was a saver in our family, what I do regret savings back was that I should have paid more off my mortgage, rather than sitting on savings not earning as much as interest rates. I also had savings accounts for my children, which paid for driving lessons, first cars and insurance for first year.

We are in a similarish position.

We currently have £2000 spare which we mainly overpay the mortgage with. When our daughter starts school in September we will be putting that money towards the mortgage too so we can pay it off early.

Whenever my husband gets a promotion, we put that towards the mortgage as we don't "need" it so would rather not get used to it and waste it. If anything happens in the future, and he has to take a lower paid job etc then at least we put it to good use.

Oh and I do also agree with others on cleaners etc.

We have a house full of animals so as much as I would love a cleaner it wouldn't work. So we chose to spend the money on Gousto instead which has made a big difference to us.

All of our bills, mortgage and regular monthly outgoings come to just under £2500. We usually spend about £120 per week on food. We spend quite a bit on kids activities etc - swimming, music lessons etc etc at around £300 per month.
^^
I lease a car which costs just over £300 per month and dh has a car loan that costs £188 per month
^^
Fuel for the cars and doscretionary spending comes to about £250 per month
^^
So based on how we live now, we should have about £3800 per month that we can save/invest/spend on non-essentials

£2,500 monthly bills
£550 food (£120 x 4.33, allow a bit extra)
£300 kids
£500 car leases/loans (rounding up)
£250 (bet this is actually more!)
= £4,100

So I think you’re down to £3,700 and you should track the ‘discretionary’ spending as I would almost bet that’s higher. At the least if you’re 2 teachers you’ll spend way more some months - summer holidays etc - than others. Look back over a year’s statements to get a true average. Don’t discount things as ‘expensive one-offs’ - assume there will always be one-offs!

Whilst you’re doing the look-back, make a note of things you spend on regularly but that aren’t ‘monthly bills’ - car services, insurances, tax, Christmas & birthdays, boiler maintenance or house repairs, passport renewal fees, white goods repair, all those irregular things that crop up. Estimate an average over a year and divide by 12 to get your ‘true expenses’ cost you need to put away in accessible savings to pay for these things.

Do you and your DH not get any disposable cash each just to spend as you please no questions asked? What do you do about stuff like clothes, hair cuts, toiletries & cosmetics - joint expense still?

Once you really break down your outgoings over a longer period than a month, you see that lots of the ‘spare’ cash isn’t disposable at all, it’s going to be needed in lumpier sums in the future, so you need to save.

For the first few months, I'd transfer 3000 straight into an instant savings account just after psy day.
That gives you 800 of instant extra spends, and should get your aessible davings to a reasonable point. If you need more money, transfer it back and spend it.

After that point, look at how much you actually spend.
Split the rest between overpaying debt, short term savings, and longer term savings.

That flowchart is a good starting point. I will also add ‘pay yourself first’ - so move money into savings, mortgage overpayment etc on pay day, before you start eating away at it in your current account and wonder where the excess went.

I don’t think you need to look at pensions, as you will have good ones from work.

Pay down debt, overpay the mortgage, build up a good instant savings pot (for future cars, house jobs etc, as well as holidays and such) and then invest - pay into your own ISAs, consider paying into ISAs or LISAs for the kids, or even into a personal pension!

We probably had a little less than you, in different roles, but DH was a Contractor so less job stability. We are late 50s, haven’t had a mortgage for many years, and it has enabled us to build up a substantial pot of savings/investments for retirement.

We have also helped DC with driving lessons, cars, uni etc. They can be more expensive as they get older.

Congratulations on your new job OP and sorry to see so much negativity on this thread.

You may want to consider additional payments into your pensions (not sure if/how that works for teachers though).

Otherwise perhaps save into a few different ‘pots’ (home improvements/travel/rainy day/investments for example). You could always save into premium bonds and then invest a lump sum in stocks and shares once a year or whatever. The Money Saving Expert website will provide good advice.

Lots of options. Increase pension contributions, overpay on mortgage, place money in a cash ISA for emergencies, and stocks and shares ISA for investment.
Money placed in S&S ISA should be left there for long term to reap the benefits, so try not to put money in there that you want to use.
Look at what your goals are; early retirement, helping your kids through Uni or getting on the housing ladder.

Congratulations on your promotions. Those aren’t jobs that many people choose to stay in right up to retirement age, so starting a savings fund for the years before your teachers’ pensions kick in would be a good starting point. A SIPP (self-invested personal pension) which is completely separate to your teachers’ pensions would give you flexibility to stop working up to ten years earlier, without you having to touch your (hopefully generous) occupational pensions. They’re really easy to set up and manage, and you could set up monthly payments so the money grows quickly without you having to do anything.

I’m speaking as someone who always expected to work until retirement age, but life got in the way. Having a second pension gave me choices I wouldn’t have had otherwise.

We are in a similar situation but monthly income £6800 after some fairly chunky pension contributions - 25% of my salary and 20% of DHs salary. Obvs we'd have a lot more otherwise so I'd prioritise pension contributions. Our mortgage repayments are similar so this is what I prioritise next as far as overpaying. Then after that we have a bit in savings but I really do try to funnel everything into mortgage and pension.

Put it in a vanguard so the money starts earning money for you so if you want to retire early that is possible. You are in a fortunate position but fortunes can change so I would get that money working for you and earning money for possible early retirement.Teaching is such a stressful profession you may want to get out sooner than you think.

Congratulations OP, £7800 is a fantastic take home pay! It's gives you loads of freedom and options.

In your position I would probably....

1. Clear the car loans asap.
2. Use the money you were spending on car repayments to overpay the mortgage.
3. Start investment funds for your children's futures if that's something you're interested in.
4. Consider when you would like to retire and look at options for early retirement.
5. Build up a good emergency fund.
6. Once emergency fund is built up start investing everything you save monthly.
7. Allocate some of that money towards having fun!! Being sensible and saving for the future is important but you no doubt work very hard and you need to enjoy the fruits of your labour today too. Take holidays and go for nice meals out.

I'd second ynab but for its planning. You can get a 34 day free trial and it's a game-changer! I'm an accountant/personal finance fan and can't rate it highly enough.

I would read up on FIRE. Try Reddit or mr money mustache for this. In the UK extreme FIRE is more difficult, however having savings gives freedom and piece of mind.

Assume you both have very good pensions so would focus on building Isa’s and overpaying mortgage.

Love Mr Money Mustache! Worth reading from the beginning.

@giggly wow you're bitter aren't you?

@justanotherdrama they're asking a valid question. Not everyone is struggling with money. And actually, making good decisions about a large sum of money is important.

You had no need to comment.

OP we are in a similar position however we've received a big lump sum instead (sale of company) so it's been a bit overwhelming knowing how to invest it.
Things we've done/doing:

• Paying off mortgage. Our fixed rate ends soon so might as well before we get fleeced.
• paid off all loans, especially those with poor interest rates.
• premium bonds
• ISAs to build up some interest

I think what's key is you balance being sensible with pleasure.
Nothing wrong with building a pot of money to go on an awesome holiday, or get cleaner/gardener in.

You're both working as SLT, you're going to want to cherish your spare time so pay good money for your house to be taken care of.

Good luck, and enjoy!

It IS a stealth boast. If you're both in senior roles in the education system yet can't sort out your finances, God help schoolchildren growing up.

Try living on £1080 a month (yes, a month), on SSP (one of us) and PIP.

PLease don't forget the teachers are striking for their payrise to be FUNDED, not just taken from existing school budgets. I wish the MSM would stress this!!

Congratulations!

In the short term I’d prioritise paying the car loan off, next I’d hire outside help e.g a cleaner, then I’d focus on a six month emergency fund and private pension/LISA