Budgeting for Mortgage

Gatica

Just wondering how everyone else did their mortgage affordability budget... I think it's difficult to think of everything for a full detailed budget as I often don't really know where the money goes!
The regular bills and food costs are easy, but it's everything else that seems to add up.
We know we'd be able to afford a mortgage around the cost of our rent plus some of what we save. However, since we haven't been exactly frugal, maybe we could do better.
Though I don't want to put ourselves in a position where we would only pay for a mortgage and not afford to save for anything else, e.g. a car, furniture, etc... even children. And that's something we know nothing about.

28064212

There's two parts to budgeting. The first part is predicting what you're going to spend over the next X amount of time. The second part (and the part most people forget) is actually tracking what you spent over X time, and comparing it to what you thought you spent. If you don't know where your money is going, you're doing it wrong.

There are loads of money-tracking apps available, or, of course, good old-fashioned pen and paper. Record every penny you spend, and it becomes a lot easier to see what's happening.

bee06

28064212 wrote: »

There's two parts to budgeting. The first part is predicting what you're going to spend over the next X amount of time. The second part (and the part most people forget) is actually tracking what you spent over X time, and comparing it to what you thought you spent. If you don't know where your money is going, you're doing it wrong.

There are loads of money-tracking apps available, or, of course, good old-fashioned pen and paper. Record every penny you spend, and it becomes a lot easier to see what's happening.

Agree 100%. I use excel and have a column for expected and one for actual for each month so it's easy to see where I've gone over or saved any month. I've found it has also made me more aware of my spending habits. When I see all those unnecessary small purchases added up it really makes me think about how I use my money.

Doodah7

To track where your money is going is very simple: download each month's transactions from your online banking, set up a spreadsheet with various categories such as ATM withdrawals, Visa Debit purchases by shop/supermarket etc, ESB, GAS etc.

Keep receipts for cash purchases and plug them into your spreadhseet.

Very quickly you will then have a clear idea of where your money is going enabling you to target certain spending activities with a view to saving.

It takes discipline but that's what saving money is about!!

Gatica

I guess will have to bite the bullet and actually do that again now. We did budget tracking to save for the wedding, but I don't think it was an accurate reflection of our life now as as we'll probably not want to live quite as carefully as we did then.

The other thing is predicting budget taking into account children. Anyone can give any idea of what it costs to have kids? :rolleyes: LOL!
I know it probably sounds a bit much, but other than hearing from people that kids are very expensive. We've actually no idea. I'm sure all the gadgetry of buggies and cots are a "splash out" expense for the first that hopefully is saved on the second child. However, they eat, need to be dressed and grow out of clothes quick, then it's creche, activities, school...
What we can afford to save now will probably change drastically with kids and that'll need to be taken into account as to what we'll be able to afford in terms of a mortgage.

RedRebel

I've started using an app called Spendee (€1.78 on iTunes, free on Android Play Store). Have to say I'm pretty impressed with it so far, worth the €1.78 for my iphone, even better when you consider it's free for Android. Just this weekend I used it to track my spending attending a wedding, forgot how expensive they can be!

Gatica

Thanks for the suggestion. Will download that one to try it out

ct5amr2ig1nfhp

My 2 cents. Can you afford your mortgage on one salary? Work a scenario where one is out of work for X reason and see if you can afford the mortgage.

Definitely try and factory kids into your affordability, although it can be very difficult but put something down.

Teagwee

I agree with all the budgeting advice already given - all very important and useful.
There's just one other thing worth remembering - an attitude of frugality doesn't have to be joyless. Think about it more as a challenge you can rise to - reducing the outgoings so that your other spending choices are maximised.
In terms of having children, there are ways and means to 'cut your cloth'. Babies don't need expensive new equipment and clothes, for example, as many people will pass on good quality items that will see you through. It's more about prioritising your spending and trusting yourself to cope when the time comes. Having a grown up family now makes me wish I could go back in time and offer myself this advice instead of stressing about money

Gatica

Thanks for the advice. I guess one can do with as little or as much as needed. Childcare though I suppose will be the biggest expense in the first years.

Walter Nervous Soup wrote: »

Work a scenario where one is out of work for X reason and see if you can afford the mortgage.

Hm... hadn't thought of that. Will try work that out.