THE trick to squirrelling away cash is to find a savings method that suits you – and Vikki Barnett used an unusual one involving envelopes to save for her first home.
Teaching assistant Vikki, 41, saved up the cash needed for the £198,950 family home her and her husband had their eyes on by stuffing cash into five separate envelopes.
Each envelope helped her save for different costs including the £10,000 deposit needed, savings for furniture, solicitors fees, an emergency fund for any extra housing costs and upgrades for the house.
She said she “nearly had a heart attack” when she thought she lost one of the envelopes though – and there are other things to consider when deciding whether to use this savings method.
Your cash will not be earning any interest if you put it in an envelope as opposed to putting it in a savings account or ISA, for example.
As the family were saving before the time that the Help to Buy ISA scheme – which gives you 25% extra interest in what you put in – was scrapped in 2019, they also missed out on free cash they could have bagged.
But the most important thing about saving is finding a method that works for you – and as Vikki and her husband have proved, the more unusual methods can go far.
She exchanged on her house with her husband, who works in an oil refinery, in March last year, and they are now the proud homeowners of a four-bed home big enough for their two kids.
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They didn’t receive any help for the deposit, and managed to save the cash needed while forking out £520 a month on renting costs.
We took a snoop around their house for The Sun’s My First Home series.
Tell me about your house
It’s a three-storey, four bed new-build house in Grimsby.
The master bedroom has an ensuite, and there’s a family bathroom too.
There’s a separate kitchen, dining room and lounge.
We have a downstairs toilet too, and quite a big south facing garden which our chocolate labrador Lola loves bounding around.
We have a garage too.
How did you decide on the location?
We’ve lived in the area for 20 years – we used to live down the road in a rented house.
We love the area, and it's close to my daughter’s school nearby – so we searched for new build developments around here.
That’s when this house popped up when I was doing a Google search.
I hopped in my car and checked it out – after falling in love with it, we reserved one of the plots.
That meant we had no idea what the house would end up looking like by the end, because the development was still being built.
How much did you pay for it?
We paid £189,950 for the house, and put down a £10,000 deposit for it.
Our mortgage is £137,950 over 26 years, with a fixed term interest rate of five years at 1.5%.
The monthly mortgage repayments stand at £577.
We took out a Help to Buy loan of £42,000 as well.
Under the Help to Buy scheme, the government will lend you up to 20% of the value of your property – or 40% if you live in London.
The loan is interest-free for the first five years.
Our mortgage is nearly the same as what we were paying in rent for the home we lived in for 20 years, which cost us £520 a month.
We didn’t get any financial help for the deposit.
How did you save for it?
We saved all our money using the envelope savings method.
I made five envelopes and split all the savings into each one, depending on what the cash was going to be used for.
I had one for savings for bits like furniture, one for solicitors fees for the house, another for the deposit, and an emergency fund for any extra housing costs.
On average, we were putting £150 a week into all the envelopes.
We would take the cash out of the bank and transfer it into the envelopes.
There was one time I had a nearly heart attack, though, when I thought I lost an envelope – and that’s obviously a downfall of using this savings method.
You don’t have as much security putting it in an envelope – you might misplace it and when it’s lost, it’s lost.
But it works for us – it meant we were less likely to spend it on online shopping and we found we were impulse buying less.
We saved over two thirds of the deposit needed to bag the home by shelving our holiday plans.
We planned to go on a trip of a lifetime to Florida, and started saving in 2018.
The plans were all booked and we were due to fly out in August 2020, but Covid hit and it was cancelled.
Instead of choosing the option to rebook the holiday, we chose to bank the money and put it towards the deposit for the house instead.
We also slashed our spending on meals out, takeaways and drinks with friends.
Before, we were spending £120 a week on this, but cut this down to one takeaway a month to save cash.
An unexpected way we saved money was only going to the supermarket once a week, instead of making lots of small trips.
We were probably wasting £100 a week on buying non-essential items and falling for the offers on products we didn’t need.
Going for a big shop once a week meant we saved £400 – which all went towards buying the house.
I also flogged our unwanted household items to make £1,500.
We sold old washing machines, beds, and our old fridge, as well as toys the kids have outgrown and random trinkets.
I sold most of it on Facebook Marketplace and through going to car boot stores.
There were a few complications along the way when we were buying our house – especially when it came to getting the keys to the house.
In June 2020 we reserved the plot, and the developer said our house would be ready to move into in December that year.
But it was in March 2021 when we finally got the keys – and the house we reserved didn’t look like the one we bought.
We thought the house was going to be made out of brick when we reserved it – but then the builders changed this and we have a wooden frame home now.
We got £3,900 worth of compensation for it, including free upgrades for the house, like getting our back garden turfed.
Advice for first time buyers?
Even small changes to your spending habits can make a difference.
For example, giving up takeaway coffees soon adds up – if you get three a week, that could be costing you nearly £10.
Don’t throw away your old junk – sell it instead, and it could pay for some new furniture for your home.
If you're fed up of renting, then keep motivated by remembering that the house will be all yours.
You'll feel a real sense of achievement when you bag your dream home – and don't have to answer to a landlord.
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