Spending Review

Less than a week in, and I've already impressed on you, dear reader, how little self-control I have in terms of spending. My focus has been (and likely always will be) on increasing top-line earnigs rather than trying to save my way to financial independence, but understanding what we need to cover in terms of costs is pretty important in order to know when were done. So, let's take a little time to break down the current costs and where we need to make sure we have things covered before we're in a position to the do the “let's quit the day job” dance.

Let's start with the big stuff

Mortgage£1,900

Currently sitting at a respectable £230k outstanding, with a monthly payment of £1,150, the mortgage is for us (and likely most people reading this and trying to achieve some form of financial freedom) the largest single expense on the books. Never one to make things simple, we're also about to remortgage to free up some additional equity to cover a large (very large, really) two-floor extension to house the family ness and the seemingly endless amount of toys and junk two under-5s require to remain pacified. Taking this into consideration, we'll be increasing the monthly spend to £1,900, with a total balance of £330,000. Either the 330k needs clearing out, or we need to cover the ~2k monthly outgoing as part of our alternaitve income plans.

Transport£1,500

This is probably our most extravagent expense (well, maybe let's keep reading, shall we). I'm an 80s kid, who grew up in a family where pretty much everyone was in the automotive industry in some form or another - cars are a huge thing for me. I love driving anything; expensive supercar; rental van; you name it. I'm also pretty certain that it's some kind of subliminal status symbol for me, so we spend way (way) more than we should having two very nice; exceedingly expensive; German cars on the drive. One 7-seat SUV which acts as the family bus, and one 4-seat convertible, which we tend to alternate using to get to work, or when we don't have the kids in tow. Both are on personal leases (we like to change every 2-3 years); and with petrol/diesel cost us about £1500 per month.

Yes, for all of those of you that just fell off your chairs, that's £1,500 per month - £18,000 per year. It's more than most peoples mortgages, yes (I told you this wasn;t going to be any average FIRE blog, didn't I). We could make huge savings here, but I'm not in the market for that (yet), not least because we like having the expensive cars - it's an extravagence we take pleasure in. We may revisit at the next renewal (I quite fancy an electric car to replace the convertible next time), but for now, it's a big expense we need to factor into the mix.

Groceries£920

2x adults; 2x kids; 1x Ocado shop; 1x 'fruit and veg' shop; a few top ups (fresh bread; bits and bobs), and you get to an average of £230 per week, or £920 per month that we hand over for basic food and houshold items. Again, we aren't exactly frugal in this area - we buy named brands; we shop at the more 'upmarket' shops; we waste way more than we probably should;. Having said that, we eat well, with a varied diet made up of good quality, home-cooked food. The kids love to try new stuff (and eat stuff that I would never have even dreamed of as a kid), so all is good and right in the world. Needless to say, not an expense we plan on trimming anytime soon, so one more for the 'just have to get it covered' list. Where we do (probably inadvertently) help our spending position here is in my wife's cleaning obsession. We have a cupboard in the utility room that looks like it's essentially a store room for a cleaning product department at a large supermarket. What this means though, is that she often buys in bulk - we have enough fabric softener to fluff up the linen for a large hotel chain - and as a result we (overall) minimise our cost in this space. It may not look like it when you're stockpiling your 12th bottle of washing up liquid, but it's worth taking advantage of the offers on these kind of things when they come along, safe in the knowledge that it will keep for a good while, and you'll always need the stuff at some point.

That's about as close to frugal soending habits as you'll get out of me - back to the more extravagent items on our monthly statement.

Savings£750

Not as much as we'd like (clearly - I wouldn't be writing this if we'd saved well earlier in our professional careers. Every school-age kid should be taught about compounding as soon as they can understand it). We do however save a little. £250 into some share options, which have done well for us in the past (5 year options +160% on maturity). On the last vesting, we decided not to put back the full £500 as we saw better growth opportunities in external investments - we signed up for £250, and 'll be pushing the other £250 elsewhere in the coming months to see if we can get a decent return.

In addition to the share options, we have a few smaller investments in various funds and stock (more details to follow in a later post), which we top-up to the tune of £300 per month.

Finally, to my earlier point (compounding is king), we drop £100 per cherub into a child stocks and shares ISA to (hopefully) set them out on the right foot. Interestingly, we've spread their investments differently, and there's a definite two-tier growth pattern going on across the two ISAs. The boy is currently lagging a reasomable way behind the girl in terms of their portfolio performance, which can prove interesting when we discuss it with them (they like to count the money in their piggy-banks, and we discuss their 'bank accounts' at the same time - it gets quite competitive, which may or may not be a good thing in the longer term)

Insurance£402

This is an area which really surprised me when I reviewed the data. Not an area you'd want to skimp on, but it's a big chunk of our outgoings which I wasn't really accounting for when thinking things through.

General Bills£1100

I've recently started to use the great Yolt app to track all the transactions across our various accounts. Among other things, it gives you a great insight into what you're spending on through it's own catgeories, and user-created hashtags. Not the big stuff (this is always pretty obvious), but those little £20 subscription here and there that really start to add up. As you'll see below, in our case they start to add up to the tune of over £1k!.

I've tried to highlight where we think there may be opportunity to remove these costs; trim them somewhat; or where they're pretty much off limits. We'll revisit at a later date to see if there are a few savings we can make here - every little helps as the giant conglomerate would say when trying to convince you they're actually on your side and not all about shareholder return and maximising profit.