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The power of automating your savings

Automating your savings is all about paying your future self first. By automating your savings it enables you to achieve your goals more constantly and with less resistance. Making saving feel like part of your monthly expenses rather than a last-minute thought on the 30th of each month - scrambling to get to gather the last bits of your paycheque to move over to a savings account.

The first steps to setting up a savings plan, and starting out on automating yours savings is creating a budget. This will allow you to set a percentage of your income you want to save and how much buffer (miscellaneous spending) money you need each month. This may take some trial and error for you to find out how much you can comfortably put away in savings automatically every month without having to later withdraw it that month for regular spending. 



Easy ways to automate your savings 


Make use of employer savings plans 

Most employers will have some for of retirement savings plan. For those readers in the UK you will probably have been "auto-enrolled" onto an employer pension/ retirement plan. The perk of these sort of plans is that you never see the money. Eliminating the temptation to spend it and adjusting your mentality about it. 
Saving 10-15% of your salary into your pension (taking into account matches) is a great place to start and depending on where you live there may be tax benefits for paying into your pension straight out of your salary: pre-tax (known as relief at source).

Set up regular deposits for pay-day.

Making use of your banks standing order feature you can set up regular amounts into your savings accounts. If you don't already have an emergency fund of 6 months' expenses this is the place to start. But once this is funded make use of multiple savings accounts to ear marked for different goals. Setting up sinking funds for expenses which you know will come up (car service, a new room etc) will help you be prepared for whatever life throws at you. What feels to be quite small contributions can quickly add up to a health savings pot through the power of compound interest. 

Make us of account auto-saving services

Some banks such as Lloyds "Save the Change" service allows you to opt into having your account round up expenses and save the change into a savings account. What might feel like small change, merely pennies, is siphoned off into an account at a rate you are unlikely to even notice.  Many other banks offer similar services (or you could even do it manually at the end of each day adjust your account down to a round figure). There are also some great apps out there for automatic savings such as Plum which use tech to figure out the optimal savings for you. 

Save your tax return /rebate

Even in countries which automate taxation tax returns are quite common. Consider this - you have managed to live without this money up until now. Throw it direct into your savings account and you'll have been effectively autosaving the whole of the tax year (though you may also want to look into getting your tax returns sorted to reduce  the rebate  - don't give the government free money!)

Do an end of month account sweep 

Your budget should include some buffer money that does not form part of your start-of-the-month automated savings plan. This is to allow you to get through the month when some expenses are greater than usual without having to dip into your emergency fund (which is for emergencies only!) or other sinking funds. However, you may not need to use all your buffer money or may be under budget in other areas in a month. At the end of the month - just before your next pay cheque comes in now is the time to do an "end-of-month account sweep". Take that money and deposit it into a savings account and start the new month afresh. 


How are you achieving your savings goals through automating savings?



Our house buying journey



We've been pretty absent in 2018, but we have some exciting news we've bought a house!!  We've definitely learned a lot already through this process as first-time buyers but also have a lot to learn and plan to share our home renovations works on here too.

We had thought we might have to wait a couple more years to buy (mostly because C was still studying). However, in the summer we C got offered his dream 'grad' job without having finished school on the proviso he carry on studying online.  In November we got told that he would be passing his probation (yay) and that would come into effect in December. At that point we started looking at getting an agreement in principle from some hughstreet banks to see how much we could borrow. 

This was our first stumbling block ... so many of the high-street banks were not keen on lending to us because I had a fixed term contract or because Chris was a recent employee. We started to get quite disheartened that we might not be able to buy after all. However, speaking to a friend at work (who was also on the same contract) he recommended an amazing mortgage broker (email us for his details). The broker knew exactly which high-street bank would be okay with us having a fixed term contract. A couple of days later and we had an agreement in principle.

THE SEARCH 


At that point it was time to start properly looking at houses. We had been keeping an eye on property prices for the past 6 months and had a good idea of the area we wanted to buy in. Being Londoners I biggest priorities were being close to a good train station, reasonable house prices, an upstairs bathroom (which in this parts of is hard to find) and decent schools. 

We narrowed our search to houses within 0.5 miles of either East Croydon, West Croydon or Norwood Junction stations. For a two bed house in those areas the prices are between £350,000 and £425,000. 

The first house we went to view was near east croydon station, it was a lovely victorian terraced house with two beds, upstairs bathroom and a decent sized garden. However, it felt very dark and boxy and overpriced!! 

The second house we saw (which we ultimately put an offer in on) was also victorian terrace but it had considerable work done on it downstairs turning the lounge, kitchen, diner into a single open plan room with a stylish spiral staircase upstairs. We knew as soon as we stepped in it was the house for us. There is certainly work that needs doing and we plan on converting the loft to turn it into a 3 or 4 bed house. 

The third house we saw was a larger 3 bed house that was 1960s style. It was a good foundation but needed a LOT of work, far more than we have the capacity at the moment. We were particularly concerned about the presence of damp all over the property. It presently had tenants who had not taken good care of the property and overall we felt that it was not the right kind of purchase for us at the moment. In a way we were really appreciative to meet the tenants when viewing because that gave us a good indication of how they had kept the house and also what the existing owner had been like as a landlord. 

Having mulled our viewings over we decided to put an offer in on the house in late December. After some negotiation we managed to agree a price much lower than the original listing price of £410k. 

GETTING A MORTGAGE


Although we had an agreement in principle this does not bind the bank to offer you anything. We had been working surer hard to get our credit scores high in time for buying the house and at this point C had a 999 credit score !! Our amazing broker got the mortgage application off in a flash and we were able to do everything electronically (we've never stepped foot in the bank). 

Once the application is off the bank have to go to the property to view it and make sure it is of the value you are borrowing for (and that it isn't of non-standard construction). Some banks will charge a fee for this but not all so it is worth shopping around. We opted to have an extra homebuyers survey done at the same time which set us back by about £350. We heard back  a few days later that the property value was all fine and about a week later with the survey. We then went through the survey for all the things that had been flagged up so that we could mention them to the solicitor and have them resolved. 

Just before Christmas we got the news the our mortgage had been approved for the amount we needed !! It was around this time we discovered that the home-owners were part exchanging with the builders they were buying their new build off. What we hadn't appreciated it how pushy and aggressive these companies get. We received a letter stating that we had agreed to exchange in January and complete in February and that if we did not sign the contract within 4 weeks of receipt they would put the property back on the market!! 

In January we received a copy of the contract. We also realised that we hadn't had our Lifetime ISAs open a year (which they have to be at the point of exchange to use the money) both of our ISAs hit the year mark in February so we knew we were going to have to wait until then before we could exchange. We spent most of January and February getting the solicitor to ask questions about the property (our solicitor was VERY slow).

As soon as the 22nd Feb hit when C's ISA hit its year (mine hit its year earlier in the month) we started pushing hard for her to chase up the money with the bank. The vendors wanting to move on the 11th (and us happy to move on that date) the only hold up was our solicitor getting the money from the bank.

EXCHANGE AND COMPLETION 


Skipton (who our LISAs were with) were not fab and gave us lots of conflicting information about whether or not our requests for withdrawal had actually been put in. Our solicitor insisted on waiting until the LISA money was in before exchanging so this unfortunately held things up. Finally the funds came through on the 8th March and we exchanged.

After exchange was all rather a blur as we completed the following Thursday. It basically involved no work from our part beyond organising a removals van. We went for Aussie Removals who were okay (but not as great as the amazing removers we had moving up to London from Brighton). It didn't help that I accidentally said the lift was 10 meters from the flat rather than the 100 it was. But in the end it all worked out fine - having spent much of the previous day moving boxes and bits & bobs over ourselves. After all the stress of moving, using an online invite/announcement service is a great way to share your exciting news. Paperless Post  has tonnes of cute designs perfect for your moving announcement without the hassle of traipsing to the post office.



We definitely learnt a lot through this experience and will be sharing a few tips and tricks (and things we wished we had done) on the blogs. We are also looking forward to sharing our journey to becoming mortgage free as we enter this new stage of life. Along with fun DIY tips and our good ole personal finance posts.

Comment below what posts you would like to see on the blog soon.