5 ways to get out of a rut

I’ve been meaning to write a blog post for some weeks now but the ideas weren’t flowing nor did there ever seem to be the time to actually sit down and draft something out.  I’m off for a week over Easter and I finally had some time to consider what was wrong.  I would like to share a few tips that I’ve used over the past few days.

Consider external factors

You’ve probably heard of Maslow’s Hierarchy of Needs or seen it displayed as a pyramid with the most basic physiological need such as food, sleep and shelter are at the bottom, progressing through to self-actualisation, or the need people have to achieve their full potential.  You cannot begin working on the more psychological growth needs until the more basic needs are satisfied.

Over the past few days, our son has been having trouble sleeping at night, constantly waking almost every hour. This has led to an unhealthy lack of sleep for both of us.  The off shoot of this is as well as being chronically tired, we’re not taking time to eat well or exercise which perpetuates the cycle.  If you’re not feeling particularly inspired, have you stepped back to ensure all of your basic needs are being met?

Try the 5 Whys Technique to establish the root of the problem

The 5 Whys technique was created by Sakichi Toyoda, founder of Toyota Industries in the 1930’s and the company still use it today.  I first read about this in a blog post and have found this an excellent way to pinpoint the exact cause of my worries.

You begin by defining the problem and then ask ‘Why?’.  When you have answered this question, ask yourself why in response to your answer.  This process continues until your answers to why produce no more useful responses.  The five in the 5 Whys is subjective, you may be able to reach the root of the problem in only 2 or 3 whys or you may need to keep questioning further.

In my situation, I felt the cause of my lack of productivity was caused by uncertainty about our housing situation. I’ve previously written about where we want to eventually live but we are still currently saving our deposit so feel a bit in limbo at the moment.

Look at your long term goals and check the short term goals that you need to achieve them

It’s important to set goals however it can sometimes be overwhelming considering the steps required to take action. Unfortunately simply dreaming about what you want will not get you where you need to be.  Similarly, dwelling on potential problems can be as equally paralysing.

Instead, break the goal down into smaller, easier-to-tackle parts. Completing these smaller steps can generate positive momentum, a bit like the debt snowball you frequently read about on personal finance blogs. If you need help with setting goals, the SMART method (Specific, Measurable, Achievable, Relevant, Time-bound) is a useful tool for drafting them.

Our end goal is to own our own home.  To do that we need a mortgage so one of my smaller attainable goals has been reading everything I can about the process to maximise our chance of a successful application.

Take action

“A journey of a thousand miles begins with a single step”

– Lao Tzu, Chinese philosopher

Of course, writing your goals down is the easy part.  Enacting them is the challenge which is why it is important to have a time scale in mind. Regularly review your goals and check your progress, are you on track to achieve them in the time you’ve set?

Taking action can also mean admitting to yourself something is not going to plan and rethinking and potentially abandoning that goal. Some of the bloggers I have read that have been steadily working towards FIRE (Financial Independence, Retiring Early) have achieved the goal, successfully retired early and then have found that it’s not the right path for them. Have they failed? Certainly not! They had to reach that point in order to know it wasn’t right for them and now they are setting new goals for the future, with far more financial resources to help them.

One of our mini goals was filling one of our Lifetime ISAs for the current tax year. And it does give you a boost to know that you’re on the right track.  We now need to check our goals for our next achievement towards that ultimate goal.

Take a break

Sometimes, you just need to take a step back to recharge. Scientific studies have shown that the brain is able to perform better when given the opportunity to divert from a task. A chance to rest and the time away can give you a fresh perspective when you return to the task and help avoid getting into a rut in the first place.

I’m only a couple of days into a week off work and already spending time with my family and using my free time to pursue my hobbies and even just sit back and watch Netflix has enabled me to approach my projects with fresh eyes.  I was able to look at some of our house buying goals and not feel hopeless anymore. Incidentally, I do believe this is going to be my longest blog post to date so I’m going to accept that as evidence that taking a break works!

 

 

 

 

 

 

Leasehold and Freehold, what’s the difference?

The upstairs flat next to us has just been put on the market.  I opened our door the other morning and there it was, the real estate agent’s sign standing tall on the fence.  I let myself get a little excited as I googled the agent’s name and our street but the glimmer of hope was quickly extinguished once I saw the price.  In a previous post I reflected on where we might like to live ultimately but London house prices are starting to make that decision for us.

(update: the flat sold less than two weeks later from when I posted this!)

I brushed off my disappointment at the local cafe where I take our son for my regular dose of caffeine and started checking the houses for sale on Rightmove.

Two of the terms I had to learn the meaning of in the UK when I started looking at houses and flats for sale were freehold and leasehold and I’d like to talk a little more about the difference between the two today.

Freehold means you own the property and the land it stands on and are responsible for all associated costs. Leasehold means you only own the property but not the land, which you ‘lease’ from the freeholder. The lease is usually for quite a long time, about 99 years although 125, 500 and even 999 year leases are common).  If the lease runs out, the property goes back to the freeholder although you can pay to extend the lease.

You have to pay a ground rent to the freeholder and banks tend to not lend to borrowers on properties with less than 75 years of lease left.  Older leases usually refer to a ‘peppercorn ground rent’.

peppercorns

In order to enforce the terms of a lease a ground rent must be set, but in the past many leases had tiny ground rents so in some cases freeholders stipulated that the rent should, instead of money, be a peppercorn (as used in pepper grinders) to save them the trouble of collecting the money.

This is Money

More recently it has become possible for groups of owners of leasehold flats to work together to purchase a share of the freehold.

Most London flats are leasehold however there has been controversy lately with new build homes being sold as leasehold.  The owners have been charged huge amounts of money to renovate or improve their homes or have been set service charges that double every ten years which reduces the resale value of the property.

Taking all things into consideration, we are trying to avoid purchasing a leasehold property as we want to own our home fully, even if it means paying for the upkeep of the place wholly.

There is an excellent article exploring the differences between leasehold and freehold properties on the Moneysaving Expert website.

Is your home leasehold or freehold? Has it affected you in any way?

We filled a LISA, mini-goal achieved!

I didn’t really know what to post about, afraid that I didn’t have anything interesting to share, but then considering this blog is about our journey to home ownership, this seemed particularly relevant. Sometimes you just have to celebrate the small wins.

When saving up a seriously large amount of money, like a house deposit, you may need to set yourself a few smaller goals along the way.  We achieved one of these today by filling one of our Lifetime ISAs for the year.  For a reminder of what that is, check my previous post on the topic.

This means that in May some time, the government will top whatever is in the account by 25% which is pretty exciting.  There may be a spot of constant balance-checking over that time period!

What next? We’re going to try and fill my husband’s LISA as much as possible before the deadline of the 5th April.  And then we begin saving towards the 2018/19 allowance.

Are we disappointed that we haven’t filled both this year? No! There are loads of people who haven’t even opened a regular savings account. so in that respect we’re ahead of the game.

Have you reached a savings milestone this week?

The emotion behind owning a home

We visited my husband’s friends over weekend.  I had heard a lot about the guy as my husband plays in a band with him so it was one of those situations where you feel like you already know the person despite having never met. He and his wife have a son who’s a little older than our boy. We had a lovely time watching the babies play, eating delicious food and playing board games.

They bought their home approximately two years ago in an area neither of them had heard of approximately one hour’s drive from London. The area seems to have had an influx of new build properties in various states of construction as we drove through. They each commute half an hour to their jobs.  When I asked why they had chosen that particular area, the deciding factor had been the size and quality of the house they could afford.  Indeed, as we sat in their open plan kitchen-dining room and looked out into their large backyard, I could hardly argue.

We are still deciding where we want to live but sometimes I wonder whether we would be better off continuing to rent.  My favourite blogs are asking the same questions and I wanted to share some of the more thought-provoking posts I have read on the topic.

On Monevator, which is one of my favourite UK personal finance blogs, they wrote two articles on either side of the coin:

Reasons to buy a house instead of renting

Reasons to rent a house instead of buying

Some of the reasons to continue renting were:

  • The ongoing cost of repairs, insurance and furnishing your own property
  • The cost of a mortgage and the associated interest
  • Buying a house ties you down to an area which may improve or deteriorate as time passes
  • House prices could crash in the future.

On the other hand, reasons for buying included

  • There will be an eventual end to the mortgage payments
  • Having complete freedom to do what you like with a property and not worrying about landlords
  • Mortgage interest rates are historically low at the moment
  • The house price will potentially increase in the future

Across the pond in Canada, another one of my favourite blogs, Money After Graduation, set Twitter alight with a tweet about home ownership which inspired her own blog post on the Rent vs. Buy debate.  After running the numbers, the final conclusion was that the numbers work out roughly the same however buying one’s own property has it’s own significant emotional benefits.  I particularly liked this quote from the article.

Homes are emotional investments even more than they are financial ones. For most people, buying a home symbolizes adulthood as much as it does a retirement plan.

Ultimately, I think it is a personal decision.  Although we still consider renting a larger home or perhaps trying out a new area, we very much have our heart set on owning our own home.

Did you have your heart set on buying and then change your mind?

 

Where to live? Our predicament

*ugh, this post took far longer to write than I ever intended. Sometimes life just gets in the way!*

Earlier this afternoon we signed a contract with our new childminder who will be looking after our son three days a week starting in May when we both return to work full time.  I will be applying for childcare vouchers and my husband has drafted his application for flexible working to send to his manager tomorrow.

One of our dilemmas with our house hunt has been where we want to eventually settle.  We currently live in Zone 3 London however my husband’s family live about 90 minutes out of the city.

Stay in London

benjamin-davies-484913-unsplash
Oh to live this close to the centre of London!

We love London. It’s where we met.  It’s the only part of the U.K. that I’ve ever lived in.  I love that you can go out any night of the week and you’ll find something to do.  We’ve lived at our current home for nearly four years and have built our lives and our interests around the area so in that respect it would be rather difficult to start again.

However, we couldn’t afford to stay where we are.  Living 25 minutes from the city centre is a great perk but when we sat down and thought about it, we rarely go into the city, we much prefer to stay around our local area so is it really worth paying the premium?

London outskirts

By this I mean staying within the M25 or Zone 6.  Places are a bit cheaper out here and we’ll still be able to commute into London for work and play.  We also have our car so we can get around fairly easily and we’ll both be able to keep the same jobs.

We would have to get used to living in a new area and building up new community links and it is still expensive but this could definitely be an option.

Move closer to family

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Not their actual town, imagine a town just like it

We have a great relationship with my husband’s parents.  They are amazing with our son and have not kept it secret that they would like us to move closer to them.  Having just paid the deposit for our childminder, not having that huge expense over our heads would be tempting.  Properties around here are a lot cheaper and we would be more likely to get a 3 bedroom property under the stamp duty limit for first time buyers.

My husband grew up in the area and many of his childhood friends who he grew up with are still in the area.  They have welcomed me into the group with open arms and they are great people but I haven’t got a network of my own in the area.  Also more likely than not I would need to find a new job as the distance isn’t easily commutable.  This would be the option most like starting again.

It feels like a really tricky decision to make, especially since buying will tie us in for several years.  What would you do in our situation?

Thanks for reading!

Shared Parental Leave: How we choose to afford childcare

As I’ve mentioned in previous posts, my husband and I opted for shared parental leave rather than the traditional 12 months maternity leave on offer in the UK.  I went on maternity leave in May last year until December and then my husband took over from the start of this year until May.

In this post I want to go a little bit more into why we chose this for our family, how we set it up and some of the perks and challenges along the way.

Why did we opt for shared parental leave?

  1. Ultimately, the main reason was because I earn more than my husband.  We did some calculations in the early stages of my pregnancy and in order to comfortably pay our bills and continue to save towards our dream of owning our own home I would need to go back to work sooner.
  2. My husband wanted to be a hands-on father to our son.  This arrangement wouldn’t work unless both parents are 100% on board.

How it works

Both parents need to have been at their job for at least 26 weeks before applying.  Along with the usual paperwork you need to complete for maternity leave, I had to complete a form confirming that I would be ending my maternity leave early in order to begin Shared Parental Leave. Once you opt to end  maternity leave, your decision is final, so you need to be absolutely sure you want to do this!

Once you have indicated you will be ending your maternity leave, you need to decide how you are going to take your Shared Parental Leave.  You basically have 50 weeks less any maternity leave taken and you can either take your leave in turns or at the same time. You don’t need to decide this right away but you do need to give your employer at least 8 weeks notice.

How has it been going so far?

Just over one month in, I’d say it’s going pretty well.  I have quite a supportive employer and they have allowed me to work from home occasionally.   My husband is doing a great job and is loving watching our son learn and grow right before his eyes.  I miss baby during the day but I make the most of our evenings and weekends together.

One of the things I was worried about was perhaps being questioned why I picked my career over my child (not true!) or my husband having trouble fitting in at our local playgroups and activities but the reality could not be further from the truth.  Everyone has been very supportive and there are even a few fathers at the playgroup.  The only downside has been a lot of the mum friends I made on maternity leave are still off work and prefer to meet on weekdays so I don’t catch up with them but I have enough friends with children that I don’t feel like my son or I am missing out.

What about when SPL ends?

We are still discussing options once my husband goes back to work in May.  Childcare in London is expensive and childcare for babies under 18 months is even more expensive. There’s no other way to describe it so it is going to take a hit on our finances.  My husband is looking into applying for flexible working at his company so we won’t need to pay for 5 days a week childcare.  We have been viewing childminders and nurseries in the area trying to find that golden balance of quality and affordability and we think we’ve found a few good options.

Ultimately, you know your family best and what will work best with childcare however after experiencing it, although a bit complicated to set up at the beginning, we would highly recommend considering Shared Parental Leave.

For more information about Shared Parental Leave in the UK, take a look at the ACAS website

Emergency funds: A True Story

Hello again.  I am now back at work full time while my husband stays home to look after our son temporarily (here is some more information about Shared Parental Leave).  Receiving my first full pay cheque after several months of maternity pay was a welcome relief and I made sure that we went back into full savings mode.  This included a £300 lump sum into the Lifetime ISA and slowly increasing the other regular payments I make into our other savings accounts (for more information about how we’re saving for our house, see my previous post on the topic). One of those accounts is our emergency fund.

Now, any personal finance blogger worth their salt will say something about saving an emergency fund (usually 3-6 months of your fixed expenses).  There are literally thousands of posts on the topic which I think is part of the problem.  It all becomes white noise and you don’t really think about doing it. “Yeah, yeah, yeah, save an emergency fund, but tell me this! How do I become the next Warren Buffett?!”

Anyway, I hadn’t really started our emergency fund until I was about 6 months pregnant and was a bit worried that we wouldn’t be able to afford our rent once my maternity pay kicked in so I began putting money into our regular saver for a rainy day.  Thankfully we never needed to use the money towards our rent but we did need to dip into it.

For the past year we had been driving a 1998 Ford Focus.  It was old but we had bought it for £600 and it had low mileage and had been running well.

Ford-Focus-Mk1
It looked a little bit like this

It had breezed through it’s MOT when all of a sudden we started having engine problems.  One mechanic suggested it was the clutch so although it was an expensive repair, we got it done as we figured that the car should keep going for a long time afterwards.  Unfortunately two weeks later as I was driving home with my son, it broke down again at a set of traffic lights.  Thankfully a bystander helped me push it off the road and I had breakdown cover.  A friend who lived locally picked up baby and drove him home and I waited with the car until the tow truck arrived.  After this breakdown, we decided it was time for a new car.  Not the most frugal decision however the repair costs were becoming more than what the car was worth and I never wanted to be stranded with my baby like that again.

Our emergency fund gave us the freedom to put a deposit on a good used vehicle from a local car dealer.  The new car is also a Focus but it has a much more efficient engine so we have been making big savings on petrol and also has a lot more safety features which as a new parent does put my mind at ease.

Ford_Focus_2014_(6)
What can I say? We like the Focus!

Hope for the best, prepare for the worst and take what comes

We’re thankful that we had the money put aside for a rainy day and have worked hard to replenish our emergency fund.  When we one day own our own home, we will hopefully have enough put aside to take care of any unexpected expenses.  All I can say is that I no longer ignore those articles about emergency funds, you never know what you may learn!