I am very impressed by the progress that you've made since March.
Hi hendrake, thanks! I'm always impressed when I read the numbers in your journal.
Is your Emergency Fund large enough? Everything about your life (working in England, leaving one job to become a contractor and then leaving that job for another job) seems exciting and at the same time pretty scary to someone boring and work-a-day like me.
It's "enough" for now. I really
want this stupid HELOC GONE, and then I plan to get my EF up to 9-12 months of expenses (eventually 24, but that will take a while). Also, the UK government gives a (small) stipend to people who are job-hunting, which (theoretically) has no expiration date (unlike US unemployment), so that would help a bit.
No doubt you're very talented and you don't have to worry overmuch about being unemployed for any length of time, but if the worse were to happen, can you live for 3-months on ¬£5,500? Maybe you can - I don't know. If you went back and added up everything you spent over the last three months, would it come in at less than ¬£5,500? If so, awesome, congrats! In which case, considering it's only August, I would see if I could set aside ¬£7,350 by the end of year, and call it my 4-month emergency fund - then at the very least, add another month next year.
When I moved, I set up a tentative budget of ¬£30k (pre-tax) to shoot for. Since I've gotten here, I've been managing just fine on that, and throwing extra money at savings/debt. ¬£5,500 is technically not *quite* 3 months of salary at ¬£30k (which works out to about ¬£1,900/mo post-tax, so I'm ¬£200 short), but that's also salary
. My "needs" expenses total about ¬£1,300 which includes ¬£300/mo to my HELOC, so once that's gone, ¬£5,500 would cover about 5 months of "needs" (with a couple wants in there as well, probably).
I like that you're attacking your HELOC. I hate debt. Is it an adjustable interest rate BTW? I assume it is but maybe no. Regardless, good for you for being willing to pound away at it once you realized that you didn't qualify for a Roth.
Thanks. It is adjustable rate, so I want to get it out of the way now when the rate is low, since I'm assuming rates will jump up eventually.
I know you have that US IRA, is there a British-equivalent that you can start contributing to? I'm not saying that you should do so to the detriment of your HELOC-attack, but if your new company does any sort of match you might take advantage of it.
As a contractor, I don't qualify for any benefits like company matching (and I've found a lot of companies don't match anyway, for whatever reason). That said, you're allowed to put away ¬£5,100 in cash that grows tax-free (similar to a Roth), and you can put away ¬£5,100 in shares as well.
My current goal/plan is to:
- get rid of the HELOC by Dec 31 (if not feasible, at least get it as low as possible)
- spend Jan-Mar putting money into my ISA (the UK Roth) before the tax year ends in April
- after that, start up a pension fund (15% contribution) and start auto-contributing the max for my 2011 ISA
- use any extra money to bump up my EF as much as possible
I'm hoping the 15% + the ¬£10k I can put into tax-free savings will help make up for the fact that I didn't contribute anything to retirement this year (in part to get rid of debt, in part because I wasn't sure if I'd settle here long-term)
You seem to really have a grip on things though. I'm impressed by your choices. Would you mind sharing your age? Only roughly, of course - no specifics necessary.
I've never been a spendthrift, but really focusing on my finances and planning for the future has been a recent addition to my lifestyle (over the past 2 years). I'm really liking the idea of possibly being able to work for myself on projects I'm interested in once I have the financial foundation/flexibility to do that.