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starting to budget like a tightwad

August 20th, 2006 at 04:48 pm

Okay My husband and I have officially gone through a budget.. and agreed how we would like to save.. We've been looking for houses lately and my husband was worried about having an islamic mortgage and if we could keep up with the payments. I don't blame him because it is extremely expensive to live here in england. After totally all of our expenditures the least amount we could get away with is 850 a month without buying any clothes for the children and ourselves. Unfortunately my husband needs proper clothes to go to work in.. after all his job is the place where we get our money from. And its important he's not wearing holes or the same thing twice in a week... People will definately notice.
Most people seem to be living off credit, credit and more credit.. How does one live who doesn't take interest, and still survive. what happens if the roof falls in.. ectr ectr.
Its a scary thought taking on a mortgage for a house and wiping our our savings in the downpayment.. But can it be done? Should it be done?
so we wrote down a list of our short term goals, intermediate goals, and long term goals. How does our short term lead us to our long term??

1.) we definately need a house
2.) definately need 2 cars
3.) schooling for the kids

We have the house we live in! That if we keep will give us a rental return of 340 a month. It needs a new kitchen and I need to change the boiler = 2,500. So the first year we will prob. not see any return on renting the house. However, with a new boiler and kitchen we will be able to sell the house faster.. if we feel the payments on our mortgage are too high..

I figured my husband should get rid of his gas guzzler and buy a diesel car that will give him at least 65mpg. That would save us a whopping 50-80 a month on gas. If he could sell his car for at least 2000 then maybe we can put in an extra 3k. And he can buy me a lil junker to get around it.. for about 1,000. Its sad because we only just paid off my hubbies car and it was bought brand new 7 years ago. Cars really are a waste of money.
My mother in law keeps giving things to charity because she thinks her son is a doctor so he's rich. We almost got in a fight when I told her that we are poor.. cuz my husband doesn't like to work overtime and is one of the lowest paid gps working for the pct. He takes home 3,100 a month after medical fees. And just to live without buying clothes is 850 at the moment. I've started busting my ass and have so far only spent 400 on gas, food, electrictiy and ectr.. Was really pissed when I found out we owed 140 more on gas and electricity this month because they miscalculated what we owe. Such is life.

We found a house which costs 190,000. the mortgage will be about 990.
I've been as tight as I can and tried to get my expenses, utilities and petrol, food, taxes, nappies, formula and things down to 700. We have decided not to have a telephone for the first year. My husband also needs to buy a more gas efficient car.. which will cost 5k but his car is breaking down anyway. I am going to deliver the newspaper... and babysit for xtra money for clothes and expenses. So far our expenses look like 1,700 a month. Which means a saving of 1,500 a month and 18,000 for a year.. - 4,000 for yrly expenses, medical fees, and the car (which we plan to put on a 0% apr for 12mo. car.)

So thats about 14k saved in the bank..-2,000 for my car. (always need to do something like change the tires.)

So in the first year we are praying we can save 12k. It is going to be very hard.. we will not have any furniture, pots and pans, or silverware for the the first year -year and half. But I am really praying and hoping that once we get passed this year everything will be fine.

Once we have 12k in the bank then we plan on saving another 15k and putting 1ok on the mortgage.. every year. Meaning we would have the house paid off in 13 years from buying. If that is no other expenses come up in the meantime..

Plus our mortgage will slowly decrease as we pay off the house.. which will be very nice.

I feel so stressed and worried that we will not be able to do this.. In fact I am crying as I write this blog hoping that God performs some miracle on our finances and doesn't give us any added expenses.

This week I have spent 12.50 on laundry
3.17 for groc.
9.97 for meat
4.50 for groc.
Hoping to only spend 5 next week on groc. Until my hubbies has his next paycheck. And nothing else..

All I need now is some sugar, salad leaves, milk(6) and .88 cents, bananas and oranges, frozen peas and cauliflower and we'll be fine until the 5th of next month.. 15 days from now.

3 Responses to “starting to budget like a tightwad”

  1. baselle Says:

    So how does an Islamic mortgage work?

  2. ummabdullah Says:

    Well their are no ideal islamic mortgages out there at the moment. The only thing available is change in the way contracts are written. So in conventional mortgage they use interest.. and in an islamic mortgage they call that interest "rent." Unfortunately, living in the west and even muslim countries these days mean that one can rarely get away without having some sort of interest mortgage to buy their home. There are many muslims who still prefer to rent due to this fact and their disgust with islamic mortgages.

    There are two main types of islamic home finance methods.
    Murabaha
    Ijara

    Murabaha is where you put an offer on the property. The bank buys the property for that price and then sells it to you for a higher price. Fixing the mortgage payments month by month. The house is put in your name on the first payment. The mortgage term is usually for 7 - 15 years only. This mortgage type is completely islamic.

    Then their is Ijara (the most controversial of schemes) Is where you put an offer on a house. The bank buys that home. You give the bank your down payment and whatever % of the house it covers is placed in your name. The rest of the house is in the banks names and the bank makes you pay rent on the part of the house they own. Which is based on the interest rates available at the time and can go up and down like any other interest based mortgage. This form of finance usually lasts 7- 30 years.
    190,000.
    19,000 downpayment means 10% of house is legally in your name.
    171,000 of the house is in the banks name.
    the bank makes you pay rent on that part of the house.
    Since the bank is not a muslim organization they are allowed to calculate those payments in any way they see fit.
    So most use the benchmark of current interest rates.. at the moment HSBC is 5.25%. They then calculate the rent payments based on this benchmark. Meaning that a person would pay from 982-991 a month in rent charges.

  3. Joan.of.the.Arch Says:

    Perhaps the your husband will get pay raises over the years which would make your budget easier. Something to look forward to?



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