The trick to saving cash is to find a savings method that works for you – and Vikki Barnett used an unusual method involving envelopes to save for her first home.
Teaching assistant Vikki, 41, saved the cash needed for the £198,950 family home she and her husband had an eye on by stuffing the cash in five separate pieces lucky money envelope.
Each envelope has saved her various expenses including a £10,000 deposit, savings on furniture, attorney fees, an emergency fund for any additional housing costs and house upgrades. home.
She says she “almost had a heart attack” thinking she’d lost one of the envelopes – and there are other things to consider when deciding whether to use this savings method .
Your cash will earn no interest if you put it in an envelope as opposed to putting it in savings account or ISA, Eg.
Because the family is already saving ahead of time, the Help to Buy ISA program – which gives you an extra 25% interest on what you put in – is removed in 2019, they also miss out on the free cash they could have had.
But the most important part of saving is finding a method that works for you – and as Vikki and her husband have demonstrated, more unusual methods can go further.
She discussed her home with her husband, who works in an oil refinery, last March, and they are now the proud owners of a four-bed home big enough for their two children. .
They don’t get any help with the deposit and are trying to save the necessary cash while setting aside £520 a month for rent.
We snooped around their house for The Sun’s My first house series.
Tell me about your house
It was a new three-story, four-bed house in Grimsby.
The master bedroom has its own bathroom and includes a family bathroom.
There is a separate kitchen, dining room and lounge.
We also have a toilet downstairs, and a sizable south-facing garden that our chocolate labrador Lola loves to surround.
We also have a garage.
How did you decide on the location?
We have lived in the area for 20 years – we used to live in a rented house before.
We love the area, and it’s close to my daughter’s school – so we were looking for new construction projects around here.
That’s when this house came up when I did a Google search.
I jumped in my car and checked it out – after falling in love with it, we booked one of the lots.
That means we don’t know what the house will look like in the end, because the development is still under construction.
How much did you pay for it?
We paid £189,950 for the house and a deposit of £10,000 on it.
Our mortgage is £137,950 over 26 years, with a 5-year interest rate of 1.5%.
Monthly mortgage repayment at £577.
We also took out a Help to Buy loan worth £42,000.
Below the Help to buy schemae, the government will lend you up to 20% of your property value – or 40% if you live in London.
Interest-free loan for the first five years.
Our mortgage is roughly what we pay the rent on the house we’ve lived in for 20 years, at £520 a month.
We do not receive any financial assistance for the deposit.
How did you save for it?
We saved all our money using the envelope saving method.
I made five envelopes and divided all the savings into pieces, depending on what the cash would be used for.
I have one to save for things like furniture, one to pay for the house’s attorney fees, another for a security deposit, and an emergency fund for any extra housing costs.
On average, we put £150 a week into all the envelopes.
We’ll take cash from the bank and put it in an envelope.
However, there was a time when I almost had a heart attack thinking I’d lost an envelope – and that’s clearly a failure of this frugal approach.
You don’t have much security when you put it in an envelope – you can misplace it and when it’s lost, it’s lost.
But it worked for us – it meant we were less likely to spend on online shopping, and we found we were tempted to buy less.
We saved more than two-thirds of the deposit we needed to get into the house by shedding our vacation plans.
We were planning on taking the trip of a lifetime to Florida and started saving in 2018.
All plans were booked and we were supposed to fly in August 2020, but Covid hit it and it was cancelled.
Instead of choosing the rebooking option, we opted to deposit the money in the bank and put it on the deposit for the house.
We also cut spending on dining out, takeout and drinks with friends.
We used to spend £120 a week on this, but let’s cut this down to one per month to save cash.
An unexpected way for us to save money is to go to the supermarket only once a week, instead of making many small trips.
We’re probably wasting £100 a week buying non-essentials and giving discounts on products we don’t need.
Going to a big store once a week means we’ve saved £400 – all on buying a home.
I also scooped up our unwanted household items for £1,500.
We sold used washing machines, old beds and refrigerators, as well as toys the kids had grown up with and random knick-knacks.
I sold most of it on Facebook Marketplace and through auto shoe stores.
There are some complications in our home buying process – especially when it comes to getting the keys to the house.
In June 2020 we booked the lot and the developer said our house will be ready to move in by December of that year.
But it was March 2021 when we finally received the keys – and the house we booked looked nothing like the one we bought.
We thought the house would be made of brick when we placed it – but then the builders changed this and we have a wooden frame house now.
We received £3,900 worth of compensation for it, which includes free upgrades to the house, such as renovating our back garden.
Advice for first time buyers?
Even small changes to your spending habits can make a difference.
For example, giving up takeaway coffee will soon add up – if you drink three cups a week, that could cost you almost £10.
Don’t throw away your old furniture – sell it instead, and it might pay for some new furniture for your home.
If you’re tired of renting, stay motivated by remembering that the house will be yours.
You’ll feel a real sense of accomplishment when you bring in your dream home – and there’s no need to respond to the landlord.
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https://www.thesun.co.uk/money/17290244/saved-deposit-home-envelope-savings-trick/ We saved £10,000 deposit on a £199,000 house using the envelope saving trick