How much r you saving, % wise? Your plans & goals for 2013?

[Phoenix]

So we're nearing the end of 2012 and about to embark on another year.

As per usual, I'd like to reflect upon what's transpired this year and make plan for the coming year(s). Financial planning is BIG on my list of priorities, particularly as DH practically leaves that responsibility (and pleasure along with it, lol) to moi ! This year, and last year for that matter, have been extraordinary for me in terms of bling. If you guys read some of my recent threads, you can see that I've been feeling somewhat (but not totally ) guilty about spending large amounts on bling for myself, hence the unloading now. But of course some (not all) of the sales proceeds is going to go back into new bling purchase(s). I am a PS'er after all, lol!

So no new/ or fresh funds are to be spent on selfish bling purchases for 2013 and following couple of years. I'd like to be more aggressive in our savings and put aside a larger % of our salaries towards our savings + retirement funds.

I think I shall take investment returns (capital gains that is) out of the equation b/c they can be hard to predict and can fluctuate wildy and in any case not everyone invests (aggressively or otherwise). Salary-wise, b/c of the bling and other large purchases, this year we've been saving only 20% of our gross income (ie. before tax), this is very poor IMO. We've done much better in the past and so for 2013, these are our goals (again we're talking salaries only, not investments):

- 40% of pre-tax or gross income;

which is the same as

- 30% of our after-tax income.

Afte- tax income would take into account bonuses, so anything in addition to monthly salaries is added to the calculation. Again, capital gains are not taken into consideration but if you have regular investment income, that should be added to the calculation.

So, what are you guys saving now and what are your goals and plans for 2013 and beyond?

 

[justginger]

Re: How much r you saving, % wise? Your plans & goals for 2

Our plans are very much up in the air, though I think of them constantly. I will be returning to uni full time for the next two years, which will inevitably impact my earning ability during that time. I am anticipating a 20% loss of base income, and absolutely no overtime available whatsoever. However, with this new degree in hand, my salary will be able to top out 30% higher - so obviously in the long run it is in our best interests.

We still have not decided if we will be purchasing the available block of land that we've been stalking. We're meeting with the agent tomorrow and submitting an offer. It will be our best offer, the only one we would be comfortable with. If it is accepted, our finances will be stretched and little to no additional savings will be built up over the next two years. If it is rejected, we will continue to hammer down our current mortgage and use the equity to purchase a different block in the same estate after I have graduated. Either way, little in terms of savings (though all of the extra we put onto the mortgage is of course available through redraw).

I think your plan is good, Phoenix - a solid amount of savings, I think. Our savings varies wildly as big expenses come up (land taxes, year payments for registration/insurance/home and contents, etc). Some pays I save more than 50%, some I save next to nothing. I'm happy with how we're going, though we could tighten up here and there. We're not ones to deny ourselves, which I think can lead to some bad spending habits. Being back at school and having money tight for a couple of years might actually end up being very good for us and our financial habits.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

So we're nearing the end of 2012 and about to embark on another year.

As per usual, I'd like to reflect upon what's transpired this year and make plan for the coming year(s). Financial planning is BIG on my list of priorities, particularly as DH practically leaves that responsibility (and pleasure along with it, lol) to moi ! This year, and last year for that matter, have been extraordinary for me in terms of bling. If you guys read some of my recent threads, you can see that I've been feeling somewhat (but not totally ) guilty about spending large amounts on bling for myself, hence the unloading now. But of course some (not all) of the sales proceeds is going to go back into new bling purchase(s). I am a PS'er after all, lol!

I meant offloading.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

Our plans are very much up in the air, though I think of them constantly. I will be returning to uni full time for the next two years, which will inevitably impact my earning ability during that time. I am anticipating a 20% loss of base income, and absolutely no overtime available whatsoever. However, with this new degree in hand, my salary will be able to top out 30% higher - so obviously in the long run it is in our best interests.

We still have not decided if we will be purchasing the available block of land that we've been stalking. We're meeting with the agent tomorrow and submitting an offer. It will be our best offer, the only one we would be comfortable with. If it is accepted, our finances will be stretched and little to no additional savings will be built up over the next two years. If it is rejected, we will continue to hammer down our current mortgage and use the equity to purchase a different block in the same estate after I have graduated. Either way, little in terms of savings (though all of the extra we put onto the mortgage is of course available through redraw).

I think your plan is good, Phoenix - a solid amount of savings, I think. Our savings varies wildly as big expenses come up (land taxes, year payments for registration/insurance/home and contents, etc). Some pays I save more than 50%, some I save next to nothing. I'm happy with how we're going, though we could tighten up here and there. We're not ones to deny ourselves, which I think can lead to some bad spending habits. Being back at school and having money tight for a couple of years might actually end up being very good for us and our financial habits.

I think your plan to go back to uni FT in order to up your earning potential later on is a good one. You have to think long term, esp if you're younger, which I think you and yr DH are, right?

I've been following your thread on the land with interest. Can't wait to see the outcome. I think it's good that you have a certain offer in mind and not be tempted to offer more. I'm very excited for you! Again, when you're younger, you can afford to take more risks. Do you have an emergency fund if you don't mind my asking? I know Suze Orman says 8 months but we put aside a couple of years - these days, it can take up to a couple of years to find another job. Of course, as you said, since you've been quite aggressive with your existing mortgage repayments, that could be source of funds if need be.

Our savings rate is a percentage of our savings for the whole year after deduction of all expenses, larger or smaller, monthly or one-offs. Most of our expenses are monthly ones, but like you we have expenses that are only incurred and paid once or twice a year.

Good financial habits take a lot of discipline. I know I can't talk since I've been rather "wild" with my bling purchases. I've measured them as a % of salaries, though sometimes I prefer to think in terms of investment gains; but it doesn't really matter either way b/c they're all our funds. In fact, thinking of your spending a % of your salary is a good way to discpline yourself, as it enables you to see more clearly your regular inflows and outflows, and as mentioned investments can be quite unpredictable and not something you can depend upon (investments can of course evaporate completely or go down in value significantly). I agree that being in a situation where you are forced to think more carefully before you actually spend provides a foundation for good LT financial habits.

Like you, we don't tighten our belts in all areas, though I do buy things like clothes, shoes etc...from the sale. We do go out to dinner once or twice a week, we eat well and enjoy a good bottle of wine here and there. We enjoy and are happy that we can afford to give financial gifts here and there, eps to family members. This will certainly continue. But we don't go on extensive extravagant holidays, since we already have at least two expensive trips a year, one to visit DH's family and the other mine. I sometimes wish we could travel more and go on longer trips but alas unless I cut out my bling completely, that'd be the unwise thing to do! Perhaps when I have all my "essentials" (yes, bling is essential, he he), we can then strive towards that goal. But for now, something has to give.

I'd really love it if we could buy an invesment ppty which we could pay off completely and enjoy when we retire (but perhaps sooner as a holiday home). Australia is certainly on our wish-list, Docklands in Melbourne is particularly attractive to us not least b/c DH sails and we enjoy the foods and wines there. Either that or the coast somewhere in the USA. So this is also on my/ our list of goals.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

Hah, I can't believe I got my numbers all mixed up!

Just focus on after-tax income only.

I'd love to hear what others are doing/ planning.

 

[ViolaDiamante]

Re: How much r you saving, % wise? Your plans & goals for 2

We are currently saving about 22% of our gross income, all of which goes into various retirement accounts. We are in our twenties, so I feel like this will give us a solid amount by the time we are ready to retire. I also do all of the financial planning for our family and just update DH on where we're at, or how things have changed.

My goals for 2013 are to increase our responsibility in our spending habits, and to do better about having an emergency fund. I typically waiver between wanting to pay down any long term debt sooner and having more savings. So I am thinking for 2013 I will start a good liquid savings fund, and then start aggressively paying down the mortgage in 2014.

My long term goals are to get our primary residence paid down, and then purchase a home in DH's home country, as a vacation home/income property. Like you, Phoenix, we spend all available vacation time visiting family and would like to travel more.

 

[rosetta]

Re: How much r you saving, % wise? Your plans & goals for 2

We are really bad at the ole finances. We should have a lot more money banked, but really it's only a year's worth of combined salary.

Plus I'm off this year on a career break, which means we have taken five holidays this year already, since I NEVER get more than a week off work at a time. We've even been on a no expense spared cruise.

We are lucky In that we have been living rent free for the last 4 months and will do so until February, so we are saving an extra £1200 or so a month. I wish this would continue!

To be honest, we will continue to save maybe 20% or so until my husband gets his big boy job next august and makes five figures pre-tax each month (unfortunately HMRC will take 40% of it so we are back to 4 figures) and we can then save 40% ish (I'll be going back to work then too wahhhh! )

Our saving goal is to save as much as possible. I would like to say it's for a house, but honestly, I'm not loving the idea of a huge mortgage. We have the financial cushion for one of us not to work at all right now, and I REALLY like it. I can't stress enough how wonderful it is to have all the TIME in the world.

That said, we live in a one bedroom flat (ok that's fairly typical for central London!) and thats not sustainable. I need to pull up my big girl pants and get a plan sorted. And I need to let go of the idea of getting a big house (just too expensive where we live and we would be paying millions in a mortgage which I just. Cannot. Bring. Myself. To. Do. )

I think the plan is 20% till august/sept 2013, then 40% once husband gets dream job. Then a small house first. No bling. No holidays till next spring.

I just have no clue about investments (only have a few bonds) and am not a risk taker. Got any tips Phoenix??

 

[Dancing Fire]

Re: How much r you saving, % wise? Your plans & goals for 2

So, what are you guys saving now and what are your goals and plans for 2013 and beyond?

i already know your plan for 2013..."you will buy a 10ct stone"...

 

[Dancing Fire]

Re: How much r you saving, % wise? Your plans & goals for 2

So we're nearing the end of 2012 and about to embark on another year.

As per usual, I'd like to reflect upon what's transpired this year and make plan for the coming year(s). Financial planning is BIG on my list of priorities, particularly as DH practically leaves that responsibility (and pleasure along with it, lol) to moi ! This year, and last year for that matter, have been extraordinary for me in terms of bling. If you guys read some of my recent threads, you can see that I've been feeling somewhat (but not totally ) guilty about spending large amounts on bling for myself, hence the unloading now. But of course some (not all) of the sales proceeds is going to go back into new bling purchase(s). I am a PS'er after all, lol!

I meant offloading.

i wanna see the menu...

 

[Dancing Fire]

Re: How much r you saving, % wise? Your plans & goals for 2

quote]
delete

 

[ruby59]

Re: How much r you saving, % wise? Your plans & goals for 2

Throughout the years, my husband and I always managed to put something aside from each paycheck. We always lived below our means. Our home is paid in full. Little credit card debt. At our stage in life, we would like to find a "safe" place to park our savings and see it grow so that we will be ready for retirement. At 1% interest, CDs are a joke.

 

[JuneRose]

Re: How much r you saving, % wise? Your plans & goals for 2

We are both in our mid twenties and just got married this spring. We both got our first "proper" jobs in the fields we studied in the past year and have been spending the last few months enjoying earning (and spending...). I see 2013 as the beginning of real financial stability. I'm glad we've had a few months of finally enjoying have cash after being students/saving for the wedding for so many years, but we want to buy a house at some point and we live in a very expensive area so we need to start saving and planning towards this.

My personal goal is to save 10% of my income next year. It doesn't sound like much but if we both do it I will be very happy. I like to put money away on a monthly basis whereas my husband isn't very good at saving the traditional way. If we need X amount he will sell one of his gadgets and make it happen but he doesn't ever split it into monthly deposits and think of saving a % of his income. I want to show him how great it is when you slowly build up savings without even realising it!

We currently have no savings but we both just paid off all our student loans and debts so we both have a clean slate and I'm looking forward to starting to save in 2013!

 

[dreamer_dachsie]

Re: How much r you saving, % wise? Your plans & goals for 2

We have young kids and are at the start of our careers (read high expenses and lower incomes) and we put away about 17% of our gross income. The majority goes into pensions through our work.

 

[Haven]

Re: How much r you saving, % wise? Your plans & goals for 2

Just under 10% of my pre-tax income goes into my state pension. This is automatic, as I'm a public educator and we have a defined benefit pension plan.
We put 10% of all of our post-tax income into our general savings account.
We put extra into our general savings every year on a monthly basis, it just depends on how much we have left over.
We put the max amount ($5,000) into a Roth IRA for DH every year.
Now that we're expecting a baby we're putting $500 per month into a savings account for the baby. We'll adjust this moving forward, but $500 is where we're going to start. I haven't looked into our state's college tuition plans, but I know we can lock in the current state tuition rate if we open an account and but semesters now, so that's something else we're going to do.

Now that I look at it this doesn't look like much, but I'm happy with what we've saved and how much we add every year.

 

[rosetta]

Re: How much r you saving, % wise? Your plans & goals for 2

Oops I forgot to count our excellent government pensions and ISAs (I think these compare to Roth IRAs but the max is only £5300 ish per year). I somehow don't count these as savings at all. Duh!

ETA: see, this is what I mean about being crap at the financial stuff

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

We are currently saving about 22% of our gross income, all of which goes into various retirement accounts. We are in our twenties, so I feel like this will give us a solid amount by the time we are ready to retire. I also do all of the financial planning for our family and just update DH on where we're at, or how things have changed.

My goals for 2013 are to increase our responsibility in our spending habits, and to do better about having an emergency fund. I typically waiver between wanting to pay down any long term debt sooner and having more savings. So I am thinking for 2013 I will start a good liquid savings fund, and then start aggressively paying down the mortgage in 2014.

My long term goals are to get our primary residence paid down, and then purchase a home in DH's home country, as a vacation home/income property. Like you, Phoenix, we spend all available vacation time visiting family and would like to travel more.

Wow, you are soooo goood. When I was in my twenties, I saved too but not so aggressively. And the sooner you start planning for your retirement, the more you'll have later on.

We'd love to own our home outright too, but the mortgage rate here is so low (around 1%) that it seems to make more sense to invest the money elsewhere to get better returns. Also, we're not sure that we'll stay where we are forever (either the house or the country), so paying down our mortgage aggressively may not be the best use of our money.

I hope you achieve your financial goals. They sound GREAT! Good luck.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

We are really bad at the ole finances. We should have a lot more money banked, but really it's only a year's worth of combined salary.

Plus I'm off this year on a career break, which means we have taken five holidays this year already, since I NEVER get more than a week off work at a time. We've even been on a no expense spared cruise.

We are lucky In that we have been living rent free for the last 4 months and will do so until February, so we are saving an extra £1200 or so a month. I wish this would continue!

To be honest, we will continue to save maybe 20% or so until my husband gets his big boy job next august and makes five figures pre-tax each month (unfortunately HMRC will take 40% of it so we are back to 4 figures) and we can then save 40% ish (I'll be going back to work then too wahhhh! )

Our saving goal is to save as much as possible. I would like to say it's for a house, but honestly, I'm not loving the idea of a huge mortgage. We have the financial cushion for one of us not to work at all right now, and I REALLY like it. I can't stress enough how wonderful it is to have all the TIME in the world.

That said, we live in a one bedroom flat (ok that's fairly typical for central London!) and thats not sustainable. I need to pull up my big girl pants and get a plan sorted. And I need to let go of the idea of getting a big house (just too expensive where we live and we would be paying millions in a mortgage which I just. Cannot. Bring. Myself. To. Do. )

I think the plan is 20% till august/sept 2013, then 40% once husband gets dream job. Then a small house first. No bling. No holidays till next spring.

I just have no clue about investments (only have a few bonds) and am not a risk taker. Got any tips Phoenix??

It's so great that you're able to take some time off and able to take so many luxury trips. I am so jealous! Am currently working on a project basis but we still can't take many (luxury) trips.

Wow, good luck to your DH. Sounds fabulous. Isn't 40% the second highest marginal rate and not a flat rate? (the top rate is 50%, right?). Whatever it is, that sounds like a huge amount going to Her Majesty!

40% savings rate is AMAZING! (I made a slight mistake in my first post - I wish! the 40% is if I don't take into a/c bonuses which is not correct ).

I've been asked this Q in the past and I am a bit reluctant to give any kind of detailed advice sine I don't know your circumstances. Nonetheless, I could give you some general tips:

- I'd continue to invest in the ISA's, that's a great investment vehicle.

- Pensions are great, esp if your employer(s) also contribute (that's basically free money). I know from watching Suze Orman that in the US, some employers match your contribution 1-to-1. That's a 100% risk-free return without you having to do anything. I know employers in the UK also contribute but the rates vary (I used to work for Prudential Plc when I lived in London and their contribution rate is quite generous).

- CD's and TD's are good, for someone who's risk-averse. Shop around though, soeme banks/ old building societies offer better rates than others. I think the Halifax and Abbey National tend to have better rates than say HSBC or Natwest, I particularly like their Guaranteed Reserve and Stepped Income Reserve. I'd go for the shorter-duration ones, since rates in the UK are sooo low now, they can only go up in a few years' time.

- As you and yr DH are younger (early thirties, right?), I'd look into equities. If you are risk-averse and do not have the time/ inclination to invest directly in the equity market, I'd go for unit trusts. Again, shop around (there are plenty of excellent money magazines in the UK you can read to find out who are the top pickers). Remember that you may need to move your UT's from time to time, don't stick your money into one fund/ one UT and leave it there. If I remember correctly, the best funds tend to attract the best guys (they're usually guys and not women - not sure why), and these guys move around. Putting a regular amount into your UT's provides you with the discipline of regular savings, so you're not tempted to withdraw it and spend it!

- I'd encourage you to save to buy a house. I've been watching the property markets in the UK for some 25 years and I have to say over time, this is a fantastic investment! Now is an excellent time to buy in the UK, I believe, prices are still rather low. Over the next 10-15 years (which is what you should be looking at for ppty generally), for sure prices will go up. Also, renting is just throwing money away (though it's great you've been living rent-free).

Just like to add that ppty is a poor investment if (I am just talking generally here and not specifically to you, Rosetta ):

i) you buy during a bubble (which the London market isn't at the moment) and/ or

i) you are very highly-geared (like 90-100% geared). It you have to gear up so high, it simply means that you can't afford it!

- I'd like to stress the importance of seting up a regular deduction (I forget whether that's called a SO or DD) every month from your salary so a fixed amount goes to a savings a/c without you being able to touch it.

- I'd also track your monthly expenses if you are inclined. I'd fact encourage everyone to do this. It doesn't actually take that much time and effort. There are all sorts of software to help you do this. But for me, I just use Excel. What I do is this:

. I list out our regular known expenses against our monthly income. I also include our one-off payments. This is a projection or your plan. Obviously, you need to have an idea of what you've spent in the past to do this. Don't worry if you're not sure, just start now and amend the items and amounts as you go.
. As we go through each month, I check our credit card statements and bank a/cs to see how much we actually spend vs. planned amounts.
. After a few months, a pattern begins to emerge. You'd be able to see where you have no option for changes (for eg. your mortgage payment but even there you could still make changes depending on your goals and financial sitatuation) and where you can cut back. So for example, I can be an impulse buyer (you don't say! ) and doing this has allowed me to see where and when the impulse purchases have taken place (usually when I am a bit down and indulge in some retail therapy) and have thus enabled me to cut back.
. I'd set up limits on your discretionary spendings and try to stick to them, for eg. our budget for going out to dinners can vary tremendously depending how often we go out, where we eat, whom we go out with etc...ATM, this is one area where we allow ourselves a bit more luxury, but we try to cap our spending to 2,000 a month and it seems to have worked. Don't worry too much if you go over a little bit (like by 5-10%) one month, you can always cut back next month.

- Last but not least (and I agree with Suze Orman on this), do not buy endowment or whole life insurance policies (precisely b/c I used to work for Prudential, I know how poor these are). Buy term insurance instead.

That's all I can think of for the time being. Pls feel free to ask more Q's if you'd like. I'll try to answer them as best as I can.

 

[justginger]

Re: How much r you saving, % wise? Your plans & goals for 2

Our plans are very much up in the air, though I think of them constantly. I will be returning to uni full time for the next two years, which will inevitably impact my earning ability during that time. I am anticipating a 20% loss of base income, and absolutely no overtime available whatsoever. However, with this new degree in hand, my salary will be able to top out 30% higher - so obviously in the long run it is in our best interests.

We still have not decided if we will be purchasing the available block of land that we've been stalking. We're meeting with the agent tomorrow and submitting an offer. It will be our best offer, the only one we would be comfortable with. If it is accepted, our finances will be stretched and little to no additional savings will be built up over the next two years. If it is rejected, we will continue to hammer down our current mortgage and use the equity to purchase a different block in the same estate after I have graduated. Either way, little in terms of savings (though all of the extra we put onto the mortgage is of course available through redraw).

I think your plan is good, Phoenix - a solid amount of savings, I think. Our savings varies wildly as big expenses come up (land taxes, year payments for registration/insurance/home and contents, etc). Some pays I save more than 50%, some I save next to nothing. I'm happy with how we're going, though we could tighten up here and there. We're not ones to deny ourselves, which I think can lead to some bad spending habits. Being back at school and having money tight for a couple of years might actually end up being very good for us and our financial habits.

I think your plan to go back to uni FT in order to up your earning potential later on is a good one. You have to think long term, esp if you're younger, which I think you and yr DH are, right?

I've been following your thread on the land with interest. Can't wait to see the outcome. I think it's good that you have a certain offer in mind and not be tempted to offer more. I'm very excited for you! Again, when you're younger, you can afford to take more risks. Do you have an emergency fund if you don't mind my asking? I know Suze Orman says 8 months but we put aside a couple of years - these days, it can take up to a couple of years to find another job. Of course, as you said, since you've been quite aggressive with your existing mortgage repayments, that could be source of funds if need be.

Our savings rate is a percentage of our savings for the whole year after deduction of all expenses, larger or smaller, monthly or one-offs. Most of our expenses are monthly ones, but like you we have expenses that are only incurred and paid once or twice a year.

Good financial habits take a lot of discipline. I know I can't talk since I've been rather "wild" with my bling purchases. I've measured them as a % of salaries, though sometimes I prefer to think in terms of investment gains; but it doesn't really matter either way b/c they're all our funds. In fact, thinking of your spending a % of your salary is a good way to discpline yourself, as it enables you to see more clearly your regular inflows and outflows, and as mentioned investments can be quite unpredictable and not something you can depend upon (investments can of course evaporate completely or go down in value significantly). I agree that being in a situation where you are forced to think more carefully before you actually spend provides a foundation for good LT financial habits.

Like you, we don't tighten our belts in all areas, though I do buy things like clothes, shoes etc...from the sale. We do go out to dinner once or twice a week, we eat well and enjoy a good bottle of wine here and there. We enjoy and are happy that we can afford to give financial gifts here and there, eps to family members. This will certainly continue. But we don't go on extensive extravagant holidays, since we already have at least two expensive trips a year, one to visit DH's family and the other mine. I sometimes wish we could travel more and go on longer trips but alas unless I cut out my bling completely, that'd be the unwise thing to do! Perhaps when I have all my "essentials" (yes, bling is essential, he he), we can then strive towards that goal. But for now, something has to give.

I'd really love it if we could buy an invesment ppty which we could pay off completely and enjoy when we retire (but perhaps sooner as a holiday home). Australia is certainly on our wish-list, Docklands in Melbourne is particularly attractive to us not least b/c DH sails and we enjoy the foods and wines there. Either that or the coast somewhere in the USA. So this is also on my/ our list of goals.

Well, the offer has been made on the block and we'll see if they accept or reject. I am in two minds - half of me hopes it is accepted, the other half hopes it is rejected. If the offer is accepted, we will be building a house on it with the intentions to move in within the next 4-5 years. In the meantime, the house will be rented out to assist with income and negative tax gearing. I think. I'm still trying to decide if it is worth the extra mortgage to be paying for two houses and the block, while getting rental income, having the interest paid on the loan tax deductible, and all associated costs tax deductible as well. It really is poor timing to be getting tax benefits though, while I am in uni and earning less than at any other point of my life. Perhaps it is wiser to sit on the block, having the interest being 'wasted' for a year or two, then turning it into a rental property, getting the tax benefits, and then moving in after another 3-4 years. You can't write off depreciation for most things in the house over more than 5 years, so there isn't as much of a benefit of having renters in past that amount of time.

I'd run all of this past a financial adviser, but I've always told myself that if *I* were a financial adviser, my first piece of advise would be to avoid wasting money on financial advisers! I'd rather do the research, inform myself on the costs/benefits of each route, and make my own informed decision. That's definitely the harder way to operate though!

And yes, we are young-ish (28/34), childless, and have about a year's salary in savings (in the form of mortgage offset). If we get really hard up...there's always diamonds to be sold.

 

[madelise]

Re: How much r you saving, % wise? Your plans & goals for 2

2012 has been a deficit year for me. 2013-2015, minimum, will also be deficit years. No work + paying for expenses + tuition = no savings. Just spending.

 

[rosetta]

Re: How much r you saving, % wise? Your plans & goals for 2

Wow, thanks for your detailed response!

We do get 1 to 1 employer contributions on our pensions (duh, I thought all pensions were like that)

Yeah, we need to get on the property ladder, even if we are rent free now. I'm thinking 80% mortgage is the highest we will take.

I max out the ISAs as soon as possible and they don't get touched.

I find it so difficult to work out how much we can spend each month, it tends to vary so much. I mean this month I spent £1500 on clothes, then I'll go months without buying anything. When our medical insurance and college subscriptions are due, it's easily £10,000 leaving at one go.

I'll look into the investment opportunities you've outlined too, thanks! But first is house: The Phoenix has spoken!

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

[quote="justginger|1355039147|3326670
Well, the offer has been made on the block and we'll see if they accept or reject. I am in two minds - half of me hopes it is accepted, the other half hopes it is rejected. If the offer is accepted, we will be building a house on it with the intentions to move in within the next 4-5 years. In the meantime, the house will be rented out to assist with income and negative tax gearing. I think. I'm still trying to decide if it is worth the extra mortgage to be paying for two houses and the block, while getting rental income, having the interest paid on the loan tax deductible, and all associated costs tax deductible as well. It really is poor timing to be getting tax benefits though, while I am in uni and earning less than at any other point of my life. Perhaps it is wiser to sit on the block, having the interest being 'wasted' for a year or two, then turning it into a rental property, getting the tax benefits, and then moving in after another 3-4 years. You can't write off depreciation for most things in the house over more than 5 years, so there isn't as much of a benefit of having renters in past that amount of time.

I'd run all of this past a financial adviser, but I've always told myself that if *I* were a financial adviser, my first piece of advise would be to avoid wasting money on financial advisers! I'd rather do the research, inform myself on the costs/benefits of each route, and make my own informed decision. That's definitely the harder way to operate though!

And yes, we are young-ish (28/34), childless, and have about a year's salary in savings (in the form of mortgage offset). If we get really hard up...there's always diamonds to be sold. [/quote]

Oh wow, I am so excited for you. Can't wait to see what happens next.

I re-read your house thread again and would like to ask you: this land would be negatively-geared (not your current house, which you've paid down most/ some of the mortage), right? I am rather intrigued as to how you could get $120 p.m. above your mortage repayment from the rental income and the tax benefits? I am just curious, is all - it's hard to conceptualise without seeing all the numbers involved and knowing your financial situation. Myself, I'd be too nervous to buy a negatively-geared ppty but I am sure you know what you're doing. Plus, like I said, you are younger and can afford to take more risks.

Would you consider, if the offer gets accepted, selling your current house and using the sales proceeds to pay down the new mortgae? I know you've had discussions with other PS'ers on yr own thread, but having two mortgage going concurrently, at such high proportions of your income, would make me very nervous. Also, what would happen when mortgage rates go up again? I know ATM, base and therefore mortgage rates have gone down quite a bit in Australia; but just a few years ago, weren't they hovering around 7-8%?

Yes, I know what you mean about FA's, we've talked to a few but I don't take their advice. I find that I know more than they do.

I hope you will never have to sell Poppy.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

So, what are you guys saving now and what are your goals and plans for 2013 and beyond?

i already know your plan for 2013..."you will buy a 10ct stone"...

Yeah, I wish, ha ha!

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

Throughout the years, my husband and I always managed to put something aside from each paycheck. We always lived below our means. Our home is paid in full. Little credit card debt. At our stage in life, we would like to find a "safe" place to park our savings and see it grow so that we will be ready for retirement. At 1% interest, CDs are a joke.

That's really great, Ruby. I wish our house was fully paid off. We always pay off our CC's in full - there's no such thing as zero % int. rate CC's here. Yes, 1% is a terrible return. Could you look into some bonds (perhaps T-bills)? Actually, I don't know much about the investing environment in the US but perhaps some other PSers can chime in (?).

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

We are both in our mid twenties and just got married this spring. We both got our first "proper" jobs in the fields we studied in the past year and have been spending the last few months enjoying earning (and spending...). I see 2013 as the beginning of real financial stability. I'm glad we've had a few months of finally enjoying have cash after being students/saving for the wedding for so many years, but we want to buy a house at some point and we live in a very expensive area so we need to start saving and planning towards this.

My personal goal is to save 10% of my income next year. It doesn't sound like much but if we both do it I will be very happy. I like to put money away on a monthly basis whereas my husband isn't very good at saving the traditional way. If we need X amount he will sell one of his gadgets and make it happen but he doesn't ever split it into monthly deposits and think of saving a % of his income. I want to show him how great it is when you slowly build up savings without even realising it!

We currently have no savings but we both just paid off all our student loans and debts so we both have a clean slate and I'm looking forward to starting to save in 2013!

That's really great, JuneRose and congrats on your first jobs. Isn't that wonderful? I remember how wonderful I felt when I got my first "proper" pay-check.

No, 10% when you're just starting out is really good! Men, I find in my personal experience, are not as good as we are at saving and financial planning; but maybe some male PS'ers will write in and show me how wrong I am! . You should definitely show your DH how great it is to have a good amount of money stashed away, for your future dream home, for a rainy day, for that long overdue holiday etc.... Congrats also on paying off all your student loans.

YAY, here's to a FANTASTIC 2013 to both of you!

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

We have young kids and are at the start of our careers (read high expenses and lower incomes) and we put away about 17% of our gross income. The majority goes into pensions through our work.

You're doing REALLY well then, considering all that. Congrats!

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

Wow, thanks for your detailed response!

We do get 1 to 1 employer contributions on our pensions (duh, I thought all pensions were like that)

Yeah, we need to get on the property ladder, even if we are rent free now. I'm thinking 80% mortgage is the highest we will take.

I max out the ISAs as soon as possible and they don't get touched.

I find it so difficult to work out how much we can spend each month, it tends to vary so much. I mean this month I spent £1500 on clothes, then I'll go months without buying anything. When our medical insurance and college subscriptions are due, it's easily £10,000 leaving at one go.

I'll look into the investment opportunities you've outlined too, thanks! But first is house: The Phoenix has spoken!

You're very welcome, Rosetta.

Well, I did have the benefit (or should I say misfortune ) of having worked for 3 employers whilst I lived in London, well 4 if you count another job that only lasted for 6 months. So I know not every employer is that generous!

You will find that nothing replaces the joy you get from owning your own home. I just really really LOVE living in our own place - always have and always will. I bought my first home in my late 20's in Stoke Newingtonm - for an AMAZING price - before anyone had even heard of it and just before/ around the time Islington started to become highly desirable (thanks to our former PM!). I was sooooo thrilled - a 6 bedroom semi-D Victorian house in MY very OWN name !! It felt like winning the lotto!

Having an 80% mortgage or less will lead to less stress associated with keeping up with the mortage. Don't forget to also budget for renovations, repairs, future rate rises etc.

Oh, I have those too. I tend to do my major clothes and shoes shopping twice a year, around June and Dec/ Jan. I just put aside a fixed amount every month in preparation for the onslaught when it comes! Same for other irregular major expenses. As long as you anticipate it, you can start putting aside a certain amount each month and build it up. And I also have a 10% cushion for unexpected expenses (and this is on top of our "regular" emergency fund). The way I look at it is this: if those unexpected expenses never materialise, then you can put all that money towards discretionary spending - bling anyone?

 

[justginger]

Re: How much r you saving, % wise? Your plans & goals for 2

[quote="justginger|1355039147|3326670
Well, the offer has been made on the block and we'll see if they accept or reject. I am in two minds - half of me hopes it is accepted, the other half hopes it is rejected. If the offer is accepted, we will be building a house on it with the intentions to move in within the next 4-5 years. In the meantime, the house will be rented out to assist with income and negative tax gearing. I think. I'm still trying to decide if it is worth the extra mortgage to be paying for two houses and the block, while getting rental income, having the interest paid on the loan tax deductible, and all associated costs tax deductible as well. It really is poor timing to be getting tax benefits though, while I am in uni and earning less than at any other point of my life. Perhaps it is wiser to sit on the block, having the interest being 'wasted' for a year or two, then turning it into a rental property, getting the tax benefits, and then moving in after another 3-4 years. You can't write off depreciation for most things in the house over more than 5 years, so there isn't as much of a benefit of having renters in past that amount of time.

I'd run all of this past a financial adviser, but I've always told myself that if *I* were a financial adviser, my first piece of advise would be to avoid wasting money on financial advisers! I'd rather do the research, inform myself on the costs/benefits of each route, and make my own informed decision. That's definitely the harder way to operate though!

And yes, we are young-ish (28/34), childless, and have about a year's salary in savings (in the form of mortgage offset). If we get really hard up...there's always diamonds to be sold.

Oh wow, I am so excited for you. Can't wait to see what happens next.

I re-read your house thread again and would like to ask you: this land would be negatively-geared (not your current house, which you've paid down most/ some of the mortage), right? I am rather intrigued as to how you could get $120 p.m. above your mortage repayment from the rental income and the tax benefits? I am just curious, is all - it's hard to conceptualise without seeing all the numbers involved and knowing your financial situation. Myself, I'd be too nervous to buy a negatively-geared ppty but I am sure you know what you're doing. Plus, like I said, you are younger and can afford to take more risks.

Would you consider, if the offer gets accepted, selling your current house and using the sales proceeds to pay down the new mortgae? I know you've had discussions with other PS'ers on yr own thread, but having two mortgage going concurrently, at such high proportions of your income, would make me very nervous. Also, what would happen when mortgage rates go up again? I know ATM, base and therefore mortgage rates have gone down quite a bit in Australia; but just a few years ago, weren't they hovering around 7-8%?

Yes, I know what you mean about FA's, we've talked to a few but I don't take their advice. I find that I know more than they do.

I hope you will never have to sell Poppy.[/quote]

I've already told my husband that I will not sell Poppy. Short of needing emergency, life saving medical treatment, that is non-negotiable. I've got my colored diamonds to sell off first, if it came to that. And my car, for that matter.

I need to do some serious number work to figure out exactly how these various scenarios would work. First, we are open to selling our current home if need be. I don't want to though, because I want to get into the rental property market for the sake of future financial stability (and there are benefits to staying where we are in the meantime, including proximity to my new university and the fact that our current solar arrangement means that we pay no power bills in this house whatsoever). Australia has an amazing track record with the capital growth of property and with the mining boom likely to continue for another 20-30 years, I don't see that changing any time soon. I think having both a family home and a spare house is a good move for a healthy retirement down here.

I can not negative gear an empty block, I must build a house on it and rent it out. If I do that, every cost associated with it becomes tax deductible. Piddly fees for getting the mortgage in the first place (settlement fees, transfer fees, and the like), the actual interest on the mortgage, all management and upkeep costs, plus improvements in the form of fencing, driveways, retaining walls. On top of that, we can claim depreciation costs for everything in the house, from the kitchen countertops to the washing machine. If it stays a block, it will bring me no benefits whatsoever. From my best guess, the fortnightly interest on the block and house (not including our current home) will be about $1600. The average rent I can expect in return is $1200-1300. But all of those tax benefits are taken off the TOP of our taxes, so that means that only paying attention to the mortgage interest alone, we'd be saving $520/fortnight on our taxes (32.5% tax rate on $1600). So $1600 repayments - $1200 rent = $400 in the hole. $400 - $520 tax benefits = $120 up overall. Add in the cost of actually managing the property, and adding the rental income to our actual yearly income, and I think we'd be about breaking even (perhaps getting a bit on top, but I'd rather assume the benefits would just meet the costs). We'd basically be having someone else paying our mortgage for us, with the further benefits of claiming depreciation on all of the inside stuff. When we can no longer get the benefits of depreciation, then it's time to move in ourselves.

But again, I need to work on the numbers more thoroughly. I haven't counted in the land or water rates (though this area isn't on scheme septic, so the water rates are absolutely minimal, about $150/year, I think). I haven't counted in the costs of all-inclusive property management versus single-purpose management versus self-management. Etc.

We could always live in the new place and rent out our place, but the tax benefits would be much less. We're paying far less interest on our own place, so the tax amount saved would be lower. Plus the house isn't new, so no benefits of depreciation.

Again, I've got to go over the numbers a bit more with the coworkers I have who manage their own rental properties. I am hopeful that it will be manageable, even if interest rates were to increase. When interest rates increase, so does the cost of rent! The highest the rates got here was exactly when we bought our home 4 years ago, and I think we were at 7.9%. Our current rate is 5.9%. Obviously I wouldn't like to see them go up, but so long as it doesn't spike in the next 2 years, I think we'd be ok. If things got AWFUL, we could always pick a property and drop to interest-only repayments on there to weather the storm.

 

[Phoenix]

Re: How much r you saving, % wise? Your plans & goals for 2

Ginger,

Thanks for your detailed reply.

Have you heard yet?

 

[justginger]

Re: How much r you saving, % wise? Your plans & goals for 2

Ginger,

Thanks for your detailed reply.

Have you heard yet?

No, we were told Tues would be the earliest we'd hear, Thurs the latest.

Really anxious about it - would prefer to get a wiggle on if it is accepted. I imagine getting paperwork through our mortgage broker, bank, and settlement agent will be a PITA around this time of year. Australia basically shuts down for the holidays, far more time taken off work than the area I grew up. Nice most of the time, but not when you're actually on a deadline!

 

[Dancing Fire]

Re: How much r you saving, % wise? Your plans & goals for 2

[quote="Phoenix|

I'd run all of this past a financial adviser, but I've always told myself that if *I* were a financial adviser, my first piece of advise would be to avoid wasting money on financial advisers! I'd rather do the research, inform myself on the costs/benefits of each route, and make my own informed decision. That's definitely the harder way to operate though!

[/quote]


so true!! they are a waste of money. Phoenix, better for you to hire a diamond adviser