Looking to save deposit for house

A

AmIok

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Age: 32
Spouse’s/Partner's age: 31

Annual gross income from employment or profession: 47K
Annual gross income spouse: 70K

Type of employment: e.g. Civil Servant, self-employed. Fulltime employment, spouse in a recognised profession.

Expenditure pattern: In general are you spending more than you earn or are you saving? Not anymore, although we were living beyond our means for a long time.

Rough estimate of value of home: Nil
Mortgage on home: Nil
Mortgage provider:
Type of mortgage: Tracker, interest only, fixed rate
Interest rate

Other borrowings – car loans/personal loans etc
Loan: 7000, min payment is 300 p/m. Aiming to pay a lot more off this
Car: 4200 owed, paying 267 p/m (value 4K)
Credit card: 900 (@ 9.9%)

Do you pay off your full credit card balance each month?
If not, what is the balance on your credit card?

Savings and investments:
No investments, c.1K in savings that is there for emergencies (car / emergency flights somewhere etc.)

Do you have a pension scheme? Yes, both in employers schemes at c.6%

Do you own any investment or other property? No

Ages of children: None

Life insurance: None

Other outgoings:
Broadband: 20 p/m
Phones: 40 & 50 p/m (bill pay)
Shopping (food): 250 p/m
Petrol: 40 p/m
Lunch / morning coffee: Me 200 p/m, Spouse 100 p/m
Dry cleaning: 40 p/m
Rent: 1250 p/m
Socialising: 200 p/m for meeting friends, cinema, comedy club etc.
Socialising: 100 p/m in unplanned events (friends home from abroad etc. at short notice)
Clothes: 100 p/m
Other expenses: 100 p/m (birthdays etc.)
Employers pay health insurance
Medical bills: 50 p/m

Net income:
Me: 2,990 p/m
Spouse: 3,900 p/m

We would like to buy a house towards the end of this year or early next year. Fully aware of the current market so will be aiming for a house we could stay in for at least 20 years / life. This will be in Dublin and be at least a 3 bed.

The current plan is to live off my salary, 2 people renting in Dublin should be able to live of 3K a month with little problems. Use Spouses salary to pay down debt in the order of credit card, loan and car loan.

Will open a savings account with one of the new deals (probably Postbank) and gain interest on the money as it is saved. We have no holidays planned this year, although I think we would like to get away if possible to somewhere in Europe, with a couple of weekends away likely too. Decisions on this are likely to be dictated by how close we are to our target and the destinations involved.

The figures above do not include annual bonuses of c. 5% paid in April & May.

Really I am looking for confirmation that we have the right plan in place to save a deposit for a house. I know we could tighten our belts a little more (especially my morning coffee habit and more expensive lunches). Our food bill is probably high, but it is always fresh food and rarely fast / pre-prepared and usually includes a bottle of wine for the week.
 
Do you have an idea how large a mortgage you are aiming for? Is 250 a month on food correct? Sounds very low.
 
I'd like to get a 92% mortgage but realistically it will probably be 95%. I'd prefer to avoid the 100%ers. I suppose the budget is probably 450K or so. Could probably stretch that for a real keeper of a house. Talked to a lender a few months ago and they were offering 500K on a 100% mortgage, I'm guessing that will have dropped after the credit squeeze.

€250 p/m on food buys breakfast (OJ & cereal) and dinner for 5/6 nights for 2 adults. It doesn't include work lunches, that's separate above. Do you think that's really high? I don't buy own brand stuff, always buy good quality meat and veg.
 
I think you underestimate your monthly grocery spend, I don't believe any couple could feed themselves for a month with that small a spend (our monthly spend for 2 adults and 2 young children is about €700- 800). You spend a lot of your income on "casual" eating out, coffee, socialising etc. There's certainly room for savings there.
 
€800 a month for groceries? Seriously? That's way too high.

Below is a sample shop, granted this is just on the spot and not based on receipts per se.

Mon
Whole free range chicken: €15
Potatoes: €4
Peas: €2

Tues & Wed
Curry paste: €3
Rice: €2
Naan: €3
Tomatoes (pack of 6): €2

The chicken can also be used to make a freeze a stock for a soup base later in the month.

Thurs & Fri (cottage pie)
Mince: €5
Puree €0.50
Potatoes: (from pack above) €Nil
Tomatoes (from pack above): €Nil
Other veg: €5

Sat
Breakfast
Rashers: €5
Bread: €2

Lunch:
Soup & bread or similar: €8

Dinner:
from socialising budget

Sun
Breakfast
Fruit: €5
Bagels: €4
Cream cheese: €3

Lunch:
Soup & bread or similar: €8

Dinner:
Pizza base: €3
Puree €0.50
Mozzarella: €3
Tomatoes (from pack above): €Nil
Some other topping: €4

All days
Breakfast cereal: (€4 lasts 3 weeks) €1.25
OJ: €6
Milk: €3
Wine: €12
Coffee: €4
Tea: €4


Once monthly buys:
Olive oil: €5
Washing powder: €5
Toilet roll: €10 (Guessing!)
Dishwasher tablets: €5
Sugar, herbs and others €20


Over a month the above comes in closer to €400. That's interesting, I'll pay much closer attention to that. The dinners above are just a sample, we often have other dinners, but regularly cook something that lasts 2 nights - pasta bolognese, beef stew, lasagne , cous cous to name a couple,
 
Just glancing at some of the item prices above (you don't specify weight or size for some so it's difficult to judge accurately) but I wonder if you could economise even further by buying from the likes of Lidl/Aldi or even own brand ranges from Dunnes, Tesco, Supervalu etc.?
 
Agreed it might be difficult for someone to visualise. Don't tend to buy own brand stuff other than toilet roll.

The chicken above is free range, but it is fully used. All meats tend to be higher quality too, same with Veg.

The food listed above is enough for 2 people to live on for a week with little left over. I think some economies could be made here, listing it out has pointed out that it's a higher cost than I thought.
 
AmIok said:
listing it out has pointed out that it's a higher cost than I thought.
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Interesting - that probably goes for other stuff for most people too. Listing things out concentrates the mind and serves as a reality check versus what we might like to believe! I guess this is why a standard budgeting/debt management mantra is to keep a spending diary and then review it to see what the facts rather than assumptions are.
 
Hi AmIok,

I recently traded up from an apartment to a house, the mortgage on our apartment was the same as the rent you are paying at the moment so we were also saving while paying out the same amount as you. I will try to offer some good advice with regard to your monthly outgoings and where you can save.

Phones: 40 & 50 p/m (bill pay) - could you change over to pay as you go. My boyfriend and I both changed to meteor and got free texts for life once we top up 20 euro a month, alot of my friends are on meteor too which I didn't realise, so saved even more money. My phone never costs me more than the 20 euro. Do you need the bill pay phone for work?

Shopping (food): 250 p/m - this sounds about right to me but I would try to knock the lunch money on the head and make your own luch and bring it to work, the money for lunches should be incorporated into the 250 per month you are spending on food. Make out lists of what you will have for dinner each day of the week so that you only buy what you need and have no waste. When my boyfriend and I started doing this we noticed a massive saving at the end of each week.

Petrol: 40 p/m - probably nothing you can do to reduce this

Lunch / morning coffee: Me 200 p/m, Spouse 100 p/m - try and reduce both of these while you are saving. Make your own lunch. A slice pan and a packet of ham and cheese is a lot cheaper than spending say 5 euro a day or thereabouts on lunch. Shop bought coffee is a big unnecessary expense - bring a jar of a brand that you like to work and make your own.

Dry cleaning: 40 p/m

Rent: 1250 p/m

Socialising: 200 p/m for meeting friends, cinema, comedy club etc.- while it is important to still maintain a social life, you will really need to reduce this amount while saving. If friends are going for drinks drive in to meet them and have a few soft drinks (this is what I did) - saves on the money you would spend on alcohol and taxis, and if you have the car you can't be swayed into a long night out on the town drinking. Don't feel the need to attend every outing, people will understand that you are saving. Rent dvd's instead of trips to the cinema.

Socialising: 100 p/m in unplanned events (friends home from abroad etc. at short notice) as above

Clothes: 100 p/m - do you really need new clothes every month? you'd probably be amazed by the amount of clothes you have in your wardrobe that you forgot about.
Other expenses: 100 p/m (birthdays etc.) - is this for presents? or attending outings? If presents then just give a token, like I said people will always understand if you are saving for your house. 1200 a year on other expenses like birthdays is a lot of money.
Employers pay health insurance
Medical bills: 50 p/m

Also, when you find yourself with money left over at the end of the month put it straight into your savings account, it can be easy to say oh I'll just have one treat but every little helps when you are saving for your house deposit.

You are both earning good money and have a nice lifestyle, you should be able to make the cutbacks to save without too much of a struggle, just keep thinking of the final goal and having your own house and it will all be worth it! Best of luck!
 
It's interesting that your actual grocery spend is nearly double your original estimate! I know our own grocery spend is high (and believe me, I'd love to be able to reduce it!) but we both bring lunches to work (with rare exceptions) and we have other expenses that you wouldn't have (nappies, babycare essentials etc). Have you factored in the occasional "top up" shop during the week for fresh bread, milk etc. I think a lot of people fail to factor in those little extras and mistakenly believe their once a week trip to the supermarket is the cost of their weekly grocery spend, discounting the €5 or so spent here and there on incidentals.
 
Socialising: 200 p/m for meeting friends, cinema, comedy club etc.- while it is important to still maintain a social life, you will really need to reduce this amount while saving. If friends are going for drinks drive in to meet them and have a few soft drinks (this is what I did) - saves on the money you would spend on alcohol and taxis, and if you have the car you can't be swayed into a long night out on the town drinking. Don't feel the need to attend every outing, people will understand that you are saving. Rent dvd's instead of trips to the cinema.
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To be honest €200p/m for socialising is quite low I would have thought. Even if you are saving you do need a little bit of a release so I wouldn't go cutting this, but like your grocery spend I would make a list and see how much is actually spent on socialising. Most of your list points to little relative outgoings to your combined income so I think you may have under estimated your spending habits across the board.

When you start looking for a house don't just look at prices, because if people have a budget of say €450,000, they tend to spend €450,000 and then some. Identify areas and styles and then go look and you might pick up something inside your budget that allows a little more to spend on yourselves.
 
When it comes to the house I think we’ll probably still aim for the max of our budget. If that means we have the option of a 4 bed instead of a 3 bed in one area or the opportunity to buy a 3 bed house in an area we’d prefer over one where we were thinking then I’ll opt for the bigger house or other area. The house we end up with I’d like to be a keeper, it will not be an ‘investment’ it will be a home.

The €200 p/m socialising covers Friday or Saturday night drinks in the pub once a week and a nightlink home for 2 people, will be avoiding rounds*. I’ve also got an extra €100 for other social events or the occasional taxi home (€20).

TBH, I’d prefer not to switch to pay as you go phones. I’ve never had one and I don’t want the hassle of monitoring my credit.

€1200 a year on presents sounds a lot when it’s put on paper like that, but it covers birthdays, weddings (3 this coming year) and tokens for births. So €1200 is probably reasonable, although I agree for this year it could be reduced.

€100 on clothes I think is fair, it’s not €100 every month but there are some things that have to be bought every couple of months. Work shirts (tend to renew every 6 months or so). Warm coats for the winter, new shoes all have to be bought through the year.

The original target is to pay off loans and then save €4,000 a month, although I think this might be optimistic having started this thread. That said the extra costs for food can be compensated from the high costs of coffee & lunch.

*I was saving for something a few years ago and the biggest saving I made was by getting out of rounds, subsidising those spirit and mixer drinks that others were having halved the cost of a night out.
 
Carpenter said:
(our monthly spend for 2 adults and 2 young children is about €700- 800).
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Few comments were made about the grocery expenditure above.

We are also 2 adults + 2 young children, and our monthly grocery expenditure is also €750..and we are also careful enough about what we buy, trying to avail of specials. But we do not cut corners on quality and buy loads of fresh products (no frozen ready to go stuff which actually would may be turn out to be more pricey).
 
Hi AmIOk. Just to clarify, are the figures in your original post what you're actually doing each month, or what you plan to start doing?
It seems to me you have a relatively high joint income, relatively low debts & monthly expenses and yet have zero savings. Where's the money going?
 
As ever in situations such as this the original poster needs to do up an accurate and details income and expenditure diary/budget to see where the money is going and where savings might be made.
 
tiger said:
Hi AmIOk. Just to clarify, are the figures in your original post what you're actually doing each month, or what you plan to start doing?
It seems to me you have a relatively high joint income, relatively low debts & monthly expenses and yet have zero savings. Where's the money going?
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The figures above are what we are actually doing, although when I put on paper a sample weekly diet it worked out much higher.

The money is going to pay off old lifestyle loans, about 12K in 8 months has been knocked off them. But we also took one 2 week holiday last year and between us 11 weekends away. The lifestyle has been knocked on the head, starting last month and I think there is more fat to be trimmed.
 
Update on the above, 4 months later.

Age: 32
Spouse’s/Partner's age: 31

Annual gross income from employment or profession: €50,000
Annual gross income of spouse: €70,000

Type of employment: e.g. Civil Servant, self-employed: As above fulltime employment in both jobs, partner in a recognised profession

In general are you spending more than you earn or are you saving? No

Rough estimate of value of home: Nil
Amount outstanding on your mortgage:
What interest rate are you paying?

Other borrowings – car loans/personal loans etc: €3,500 car, nil other loans. We have managed to payoff 20K in lifestyle loans in 1 year without making too many sacrifices.

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? Curent balance, c.€750

Savings and investments: €1,500 in emergency cash. Nothing else, all other income has been directed at paying down old lifestyle loans

Do you have a pension scheme? Yes, as above c. 6%

Do you own any investment or other property? No

Ages of children: No

Life insurance: No

Have paid close attention to spending over the past 4 months and it breaks down as follows p/m;

 Broadband: €20 p/m
Amnesty: €20 p/m
 Phones: €40 & 5€0 p/m (bill pay)
 Shopping (food): €450 p/m
 Petrol: 40 p/m
 Weekly expenses (Lunch, morning coffee, bus fare, dry cleaning etc): Me 320 p/m (80 p/w), Spouse €100 p/m (highly subsidised workplace)
 Rent: €1250 p/m
Socialising: €400 p/m for meeting friends, cinema, comedy club etc.

 Clothes: €100 p/m
 Other expenses: €100 p/m (birthdays etc.)
 Employers pay health insurance
 Medical bills: €125 p/m (Recent ongoing work that will go on for another year, would be considered cosmetic so no threat to job / income)
Other bill (ESB or NTL): €150 p/m
Misc. €200 p/m (pretty much always use this)
Net income:
Me: 3,000 p/m
 Spouse: 3,900 p/m

I should point out that a 2.5K bonus was also received during this period that paid a lot off the 7K loan, that is not likely to happen again in the next 12 months.
What's the best way for us to save for a house deposit and associated costs?
 
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My tuppence worth

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? Curent balance, c.€750
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Does this mean you have 750 on your card but you will pay it off in full? Or is it 750 you haven't paid off?

Phones: €40 & 5€0 p/m (bill pay)
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I think this seems very high (to me) - are you also paying Eircom landline or just use your mobiles? Is there some way you can get a better deal?

Socialising: €400 p/m for meeting friends, cinema, comedy club etc.
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This has gone up from E300 in your original post. If you are serious about saving can you not cut down on this?

A
 
Thanks for the reply, to get to your questions;

1) There is €750 owed on the credit card at the moment, this will be paid off at the end of this month. It is a combination of some online purchases, minor shopping and concert tickets (which €250 will be repaid by others going to the concert)

2) Phones are mobiles and I don't think there is much more to be gained by reviewing these further, other than going pay as you go - and I don't really see that as an option.

3) The socialising figure has gone up, but it's actually more realistic now. It also includes hobby activities.
 
annR said:
This has gone up from E300 in your original post. If you are serious about saving can you not cut down on this?
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Also €400 represents under 6% of our monthly income. I don't think that is an excessive figure to spend on socialising. People need to socialise, both with your partner mid week dinners etc. and with friends at the weekends.
 
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