Jan

23

7 essential pieces of furniture for your first home

Filed Under house | 17 Comments

Grace’s furniture signFollowing on from thinking about how to plan moving out of home and my admission the other day of a house magazine buying problem, I thought it might be interesting to share my list of essentials for furnishing a home. Sadly, most of these are borne from bitter experience.

I’ve also included some basic prices for brand new cheap versions of these, you might have luck with free/second-hand, but then, you might not.

  1. A bed - and now that I’m old, I’ve got to say that I’d never go back to a single bed (£100)
  2. A sofa with arms - and I know that this is essential because I’ve lived without a sofa, and currently have one without arms. Both situations suck. (£90)
  3. A table that you can eat from - it saves on laundry. I’ve lost count of the times that I have spilled all my dinner down me whilst sitting on the sofa in my old flat (no table) (£20)
  4. A chair that you can sit on to eat dinner - see above. This set up is also handy for blogging (£10)
  5. A wardrobe/closet - I don’t iron, so if my clothes aren’t hanging up they get creased and then I look a mess. These do not necessarily come as standard in British homes (£30)
  6. A bedside table - countless reasons why you use them, they’re also cheap. I think it’s better to get one with a drawer, you don’t necessarily want everything in view (£10)
  7. Window coverings in at least one room - you need somewhere to get changed where you won’t be frightening the neighbours children (£15)

The total price tag for people that can’t do mental arithmetic that quickly is £275 (approx $550).

What do you think? What are your essential pieces of furniture? Have I missed anything off? Let me know in the comments.

Image by pixeljones

Jan

17

setting up your own home

Filed Under house | 7 Comments

moving your prized possessionsSo, for whatever reason, you’ve decided to move out of your current living situation and set up on your own. What’s a good plan of action?

It would help if you had a reasonable budget - understand your current income and expenditures, which might include debt repayment, a car, various hobbies, eating out, mobile phones and so on. You should initially budget for an emergency fund if you don’t have one (and more savings or investments if you do), 10% of your income would be a nice round figure to start off with.

ongoing costs

What will it cost you each month to live out on your own? I’ll try and outline all the regular costs that you really need to consider, and give you a rough outline of some of the typical amounts that I’ve spent on them.

utilities - gas, water, electricity

It can be pretty hard to work out in advance what reasonable utilities would be. The best solution is to ask someone in your area who lives in similar circumstances what they pay. For what it’s worth, living in a small flat or house, my gas/electricity bills combined have been in the region of £30-£40 a month, and my water bill something like £15-£25 a month.

insurance

You’ll need contents insurance. The cost of this depends on where you live and how expensive your stuff is. I’ve typically paid £100-£200 annually. You should be able to go to an insurance quotes website to get a reasonable idea of likely costs, whilst you’re just looking for a frame of reference, in the UK, Endsleigh Insurance, and the Post Office usually offer reasonably competitive quotes.

communications - phone, internet, tv

In the UK, check out the best deals at money saving expert. If you don’t use a landline much, you can probably get phone and broadband for around £25 per month. If you like to talk on the landline a lot, you can get an idea of your likely bills by looking at the current bills wherever you’re living. This is an area where it’s easy to cut down. A tv licence is £135 annually.

groceries

A very subjective choice. I think in the UK, a bare bones budget for a single person would probably be about £20 a week (£85-£90 a month) to include lunches and so on.

council tax

This will depend entirely on the area that you live in. Most small flats and houses outside London are likely to be in the A or B bands, but closer to London they will range higher to C or D and above. Estate Agencies often put council tax bands on the details of the properties they are letting or selling.

Once you have this information, you can look up the current council tax on the local authority website. This is usually paid either annually, or in up to 10 monthly installments per year, and it’s of the order of magniture of £50-£120 a month. Don’t forget that if you are living on your own you get a 25% discount.

rent

Although finding a place to live is the most important part, it’s actually easier to do the sums in reverse, and find out all the other information first. Totting up all the figures above my experience in the UK has been that general costs of living on your own (excluding rent) will be in the region of £230 to £330 per month.

Suppose, for example, you have an income of £1200 per month, and already committed expenditure of £470 per month through mobile phone, going out, car, and savings. That will leave you with a maximum of £400 to £500 to spend on rent - not forgetting that the more expensive the rent, the higher the additional costs are likely to be.

The other detail to bear in mind regarding rent is that you typically need an annual income of 30 times the monthly rent in order to convince a letting agency that you have sufficient income to cover the rent. If you can’t show that will have this amount then you’ll probably need a guarantor.

Once you’ve got a rent budget, you’re in a better position to look at the current market and see where you can afford to live.

If you do the calculations for your own circumstances, you might find that you can afford more or less than you anticipated. Being able to afford more doesn’t mean that you should go out and spend more. Look again at the amount of money that you’ve allocated to savings and investments - increasing the amount you can put there and having say 10% going to savings and 10% to investments/retirement plans will pay off in the long run. You also might want to spend more on some of the variable parts of the budget, such as groceries or tv.

Being able to afford less than you anticipated, means that you’ll either have to lower your expectations of the sort of living arrangement you can have (consider a smaller place, a shared house, a less nice area) or cut down on some of your already committed expenditure (use the mobile less, cut car or going out costs). You could increase your income by getting a second job, but you’ll need to keep this up for the long term, and you might find yourself getting burned out.

upfront costs

If you’ve determined what everything will cost on a monthly basis, it’s easier to work out the upfront costs. You may need some or all of the following:

  • 1 months rent in advance
  • a deposit of 1 to 1.5 months rent
  • letting agency fees (often £100-£200 depending where you live)
  • furnishings (bought new from cheap places like Ikea this might run from £400 upwards)
  • moving costs (my last move from my 1 bed flat cost me something like £350 including furniture)
  • utility deposits (I’ve never had to pay these, my best guess is something like £50-£100 per service)

Suppose as with the example above that you decided you could afford to rent a £400 pcm flat (assuming such a place exists where you live), and you don’t have any furniture or fittings. Your upfront costs are likely to be in the range of £1300 to £2000.

If you don’t have any savings, by living on the budget that you plan to once you’ve moved and depending on your current living costs, you could save this up within 3 to 12 months.

There are more tips on renting your first flat or house at m-network member, my two dollars.

Have you moved out on your own recently? What do you think of my costings - have I missed anything out, or under- or over-estimated anything? Let me know about your experiences in the comments.

Based on the comments received, it looks like I probably under-estimated the food budget. You could probably allow twice as much, easily.

Image by sholt.

Oct

31

an investment property should ‘wash its face’

Filed Under house | 10 Comments

There are two recurring contradictory pieces of news in the UK about the housing market. The first is that prices are about to crash, and the second is that there isn’t enough supply to meet projected demand. It wouldn’t surprise me if both were true, but over different timescales.

One thing that is agreed upon about the current housing market is the importance of buy to let investors, people who have bought properties as investments.  Although I think that your own house is a poor investment, renting out properties can be.

However, renting out a property you own becomes very risky if the property doesn’t ‘wash its face’, which is to say that the rental income should cover the costs. And for a lot of people who’ve bought recently, it doesn’t. People are paying out every month for the privilege of having someone else live in a house they own.

It’s true that in the UK, the increase in the cost of houses has been running at 2% above inflation since the 1970s. While that’s nothing to be sneezed at, if it would be cheaper to rent then buy, and there’s a glut of rental properties, you can be sure there will be a  correction and it is unlikely to be in your favour.

In short, if you are losing money month on month by renting a property you are likely to be better off putting your excess cash somewhere else, like say, in stocks and shares.

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