Does spending 70% on household costs seem too much for a move?

[Stad86]

I’m going to move to a new house which is going to be a lot better for the family as it will be safer for the kids to play out as we currently live on a busy road as well as being a much nicer house which we can enjoy for many years to come. It would also mean the kids can walk to school and see there freinds which will be good as we are currently isolated.

iv always been a saver which is now causing me some issues getting away from that mindset

i read online a lot about the 50/30/20 way of allocating your income but this house would put me at 70% of income into the property bills , food, car insurance and bills and other fixed costs of home ownership including transport.

The remaining 30% is £1650 a month and where I’m struggling is that £1650 seems fine but 30% seems like a low number.

We holiday in a touring caravan which is fairly inexpensive and we don’t have any expensive habits so we are pretty frugal.

we don’t have any other debt or finance other than the mortgage which may help with any advice

any advice would be welcome, has anyone stressed over similar things?

We moved from a 1 bed flat to a 5 bed money pit fixer upper. I had the same angst.

Have you done a financial stress test? Model what would you have left over if inflation stays at 4% for bills/food/fuel (remember it compounds!), if mortgage rates went up a few % and so forth. I worked that out and worked out what I could slash if I had to i.e. gyms/subscriptions/services.

It made me realise that A) the top amount the bank would lend us was wayyy too much of a risk B) That we could do it, but we would needed a bigger emergency fund in case of job loss etc.

1650 left over seems a lot on the surface, but it is surprising how much will get eroded with inflation, childcare etc.

Well what does the 1650 have to cover? How much will you be saving?

You are right, the banks are willing to lend far to much which is quite worrying but we haven’t taken the max

We will be buying a house that doesnt need anything other than things we want to do as and when but I’ll defiantly do some calcs with higher costs and see where breaking point is

are you enjoying your new place? Was it worth the stress?

Hi, it will cover holidays, clothing and unexpected costs.

I’ll be aiming to save £500 a month if possible.

It’s about how much we’re spending on the same things. £1650 a month is plenty if it only has to cover miscellaneous spending and savings.

Percentages are meaningless, it’s the actual amounts that matter. You spending 70% on bills is less risky than someone on half your salary spending the “ideal” 50%.

That’s a very good point , I think Iv got drawn into all these percentages because of all the moving stress im under. I appreciate the reply

I would sit and analyse your spending over the last 3 months.

What has been your needs/wants/savings and how much?

Can you reduce your wants/savings and still live the lifestyle you'd like to live?

Eg your wants might have previously been trans-continental holidays each year, which might now be European holidays or a lesser number of holidays, or changing eating out once a week to eating out once a month.

It's not a hard and fast rule. What are you comfortable with and what lifestyle or savings compromises are you prepared to make?

Have you gone through your expenses and decided all your needs are definitely needs and not wants? I wouldn't include eg a Skye TV package in needs for example.

This is a really good point

In this needs section I have included the following

mortgage
council tax
car insurance /tax x 2
home insurance
life insurance
income protection insurance
all subscriptions including Netflix, Amazon , kids Xbox and PlayStations subscription
broadband
mobile phones

maybe I need to move some of those into wants but after all of the above that’s where I have the £1600 left

So, your overall income pcm is approx £5500 combined.

How many of your expenses will reduce in the next 2-5 years?

The amount you have left isn't huge, but that depends on you're life stage, so a £1000 nursery bill now will disappear in 2 years.

Are all of your essentials really essentials? Eg do you need iPhones or TV packages? Use uSwitch and watch what you can.

Only on this site is it said 1650pcm is not huge.

That is some peoples actual take home you know.

My wife is a stay at home mum so we don’t have any child care fees, I doubt bills will decrease by a lot but I do aim to increase my income over the next few years so that should free up some money. We do have the option to decrease the mortgage by paying money out of savings but Iv decided to take the lower rate for now and then if when I come to renew rates are higher I’ll then pay off a portion of the mortgage. I think for now the money is better off inside my S&S ISA

Ok from what you have listed.

Do you really need Netflix, Xbox, Playstation subscriptions?

Does uSwitch give you a better deal on your broadband and utilities than you are paying now? Do you own your phones outright? Can you get a better deal? I always buy my phones and then get SIM only, so often less than £5 per month. You don't need expensive iPhones.

Do you need to spend as much on food as you do? Could you make any savings?

Could you which suppliers for broadband/energy/internet?

Do you check for the cheapest petrol prices in your area?

So.many ways to cut needs into wants.

Not for a family it's not huge. For an individual it is, but for a family of 2 adults and 2.4 kids that's each adult having £825pm "pocket money" for non-essential savings or savings

I’m going to move some items out of needs and into wants such as the subscription and also one of the cars is a fun car and the other is the family car so that’s £130 a month straight away out of needs.

we own our phones as I hate effectively financing them

And you think thats not a lot. I really dont know what to say

I wish I had 800 quid at the end of the month for pocket money

You don't mention food shopping, clothes, dental @Stad86 .

Sorry that does include our entire food budget which is around £1000 a month , dental is NHS and not included

This, plus it depends how comprehensive your budget really is, some people think they have lots of spare money but in reality they've not accounted for significant essentials or the nice to haves that are paid for as and when, that would be a significant lifestyle downgrade if they were no longer affordable.

It also depends how 'spendy' you are. Some people spend loads on coffees, lunches, grooming, bits from shops etc, that can add up to a significant part of your budget .

You also don't seem to have included utilities so check that. You could look at a years worth of transactions from your bank/credit card accounts to see what you've really been spending to see if the new budget will work.

Also consider that fuel and utilities are likely to continue to rise in price in the short term.

We are not really spendy people as all, or at least I don’t think so

I take a packed lunch to work and that comes out of the food budget and we don’t go to coffee shops etc. Days out for us tend to be to museums or national trust sites and beaches which are low cost and we usually take our own food.

This list does include an allowance for £360 on utilities although I do expect that could increase in the short term.

How many dc?
you didn’t include elec/gas/water

I did try and edit it but I missed off gas , water , electric and food which is all accounted in the needs based on the spend over the last 12 months and an increase for the new house. Although the new house is much newer so may well be not as much more to run as I’m expecting as size bedroom wise they are the same

How many dc do you have? And after buying the new house etc how much savings will be left?

Analyse your spending over the next few months. I now do ours every month so I get an accurate picture for retirement. You always spend more than you think.

3 Children, 6,10,16

After the purchase we will be left with approximately £75,000 accessible cash across ISA’s and savings.

It was worth it for us, for all it's irks and quirks (and the 5 looong, dusty years of renovations) I am so glad we took the leap.