Things I learnt when my brother-in-law moved to Denmark

Two weeks ago we said farewell to my brother in law who has finally made the move to be with his long-term girlfriend in Denmark.  They have been long distance for almost the entirety of their relationship so it’s great to finally see them living together.  Now that he has somewhat settled into his new home, I had a chance to reflect on what his life changing move has had on us.

Keep your eye on the prize

Not that his girlfriend is a prize to be coveted, but once they had gotten through the initial ‘honeymoon period’ of their relationship, they both started to think about their future together and where it would be.  Both the UK and Denmark were considered but ultimately, my BIL’s job was more transferable and his girlfriend had just started her university degree (which might I add is fully funded by the state… not envious at all…) so Denmark seemed like the logical place for them to begin their lives together.  Once this was established, they set a date for him to move and steadfastly worked towards their goal.

The importance of regular saving and an emergency fund

As you can imagine, it can be a bit expensive moving to another country.  I know firsthand after moving to London from Auckland, New Zealand but my brother-in-law had never saved substantial amounts of money before but soon realised that he would need to in order to make his dream a reality.

He moved back home in order to save money paying rent, gave up expensive habits such as smoking and cut down on going out with mates to the pub.  Once he started saving a bit more, this motivated him to increase his monthly savings so he had a good cushion once he arrived in Denmark.

Time spent in planning and preparation is rarely wasted

To be fair, his girlfriend takes most of the credit for this next point.  My BIL is laidback almost to a fault so she found affordable accommodation near her university for them to live, researched the documents you need to live and work in Denmark (think the equivalent of a National Insurance Number in the UK) and started finding potential jobs he could apply to.  My BIL started learning Danish and has enrolled in a Danish school. He updated his CV and had an interview booked the same day he arrived, which he got. As a stroke of luck, one of his new coworkers is from the same town in the UK!

Read the T’s & C’s before you sign!

Unfortunately there was one pot hole in the road in the lead up to the move.  After deciding he would sell his car before moving to add some more money to his savings, he was a bit shocked to discover that he had purchased with PCP (Personal Contract Purchase) finance. With this kind of finance, rather than paying off the entire value of the car, you instead pay how much the finance company predicts the car will lose in value over the term of the deal (usually 24 or 36 months) minus the deposit you’ve put down. This means that the monthly payments are usually lower.  At the end of the deal, you can either give the car back or trade it in for a new one (less penalties for going over stated mileage or damage) or pay a balloon payment to own the car outright.

My brother-in-law had been hoping to add to his savings pot but instead found himself having to pay to give the car back.  Thankfully he had an emergency fund to cover himself but it does highlight the importance of carefully reading contracts so you know exactly what you are signing for.

Support networks are crucial

As I mentioned before, his girlfriend has worked very hard to ensure his adjustment to Danish life has been as smooth as possible.  Both her family in Denmark and his friends family in the UK have tried to do everything they can to support the couple as they enter this next chapter of their relationship. They have offered practical advice, reassurance when fear creeps in and moral support over Skype.  Although many people have moved long distances alone, knowing that there are people out there willing you to succeed can certainly help you when having a down day.

 

Have you or one of your family members moved a long distance away? Did you find yourself reflecting on the experience? What did you learn?

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!

 

 

How we’re saving our house deposit

Hello!

So last week, I dipped my toe into the blogging world and wrote my first post explaining how I wanted to document our journey into home ownership.  For this post I’m going to go into how we’re saving and the reasoning behind it.

The seed is planted (2013-2015)

So I’m not originally from the UK.  I moved to London from New Zealand at the age of 24 intending only to stay for a short amount of time to travel and see more of the world…

Nearly six years later, I’m still here. Married with a child.

The reason I start with that is because while I was travelling and deciding what I wanted to do with my life, I wasn’t terribly good at saving.  Or, I did save, but it was all going towards short-term goals, like affording the next holiday.  I did discover a few Personal Finance (PF) blogs I enjoyed reading such as Mr Money Mustache, Money After Graduation and Making Sense of Cents.

The seed begins to grow (2015-2017)

It wasn’t until early 2015 when we were saving for our wedding later that year that I started saving in earnest.  I also started investing in index funds.  This was after reading a tonne of articles and books about the topic until I felt confident to part with my money (and even then not too sure!).  I found the Monevator blog incredibly helpful, especially since it was UK specific.  I also subscribed to Rockstar Finance to gain the perspective of many other people in similar or better situations.

Our accounts

Stocks and Shares ISA

I first put £150 into a Stocks & Shares ISA (Individual Savings Account) in April 2015 and have been investing monthly ever since.  The monthly amounts have ranged from £50 when times have been tough to £300 when we’ve had enough to do so. We’ve never had a lump sum to put away, the most important thing has been depositing the money and letting it grow. Buy and hold.  It seems to be working so far.

Help to Buy ISA

I first read about these on the Money Saving Expert website.  Basically you can deposit up to £1200 in the first month you open the account and then a maximum of £200 in subsequent months.  The UK government then tops up your contributions by 25% when you buy your first property (as long as you have a minimum of £1600 saved up).  This seems like a great deal however there are terms and conditions to look out for.  Particularly the value of the property you’re buying and whether it is in or out of London.  You also won’t get the bonus to help with the deposit which has thrown a few people.  Still, since opening this account in December 2015 and contributing to it every month, I’m surprised at how quickly our contributions added up.

For more information about H2B ISAs, check out the Moneysaving Expert website

Lifetime ISA

This is a relatively new product launched in the last year.  Anyone aged 18-39 can open a LISA account and contribute up to £4000 in the tax year.  The government will then top this amount up by 25%.  Although it sounds very similar to the H2B ISA above, there are a few key differences.  The money saved in a LISA can only be used to buy your first property or for your retirement otherwise you will be hit by a 25% penalty when you withdraw funds.  You can invest in stocks or cash with the LISA but there aren’t many providers out there and only one who has the cash ISA with a not so great interest rate.  A strategy that many people are employing (ourselves included) is transferring their H2B ISA into a Lifetime ISA as for the first year only, the government will pay the 25% bonus on all of it.

For more information about Lifetime ISAs, check out the Moneysaving Expert website

Our strategy

Currently we have a Stocks & Shares ISA, a cash Lifetime ISA (with our transferred H2B ISA amount) which we just received the very first bonus payment for, and a regular savings account that pays slightly higher interest rate.  We’re hoping to put more money towards our deposit fund in the coming months as I am back at work and that October deadline is rapidly approaching!

I think no matter how you’re saving for a deposit/downpayment for a home, the most important thing is to be consistent with your savings and put something away regularly (we found monthly was best for us as that’s how we’re paid).

How did you end up saving for a deposit or another large purchase?