2009 New Years Resolution-MFW Diary

Tesco_points_addict wrote: »

Live of the freezer for next month or two, just need to buy the basics Yes, I was going to do this too but Stuart put me off my garlic bread pudding so I may have to rethink

Buy NO magazines in 2009 Don't be so hasty - there are deals on quidco where you actually end up in profit - as long as you remember to cancel DD!

Hello and welcome, I look forward to reading your progress. Can I suggest if you haven't already, that you set yourself up a spreadsheet (or 4 or 5 ) to monitor your progress, they are a great inspiration. Good luck!

TPA
If you don't have any spreadsheet then I suggest you get one set up for household budgeting (I can send you one if you PM your e-mail address) and download one for the mortgage calculations.

In essence the mathematical argument vis a vi OP or saving is simply to consider:
(1) Interest charged on capital owing, vs,
(2) Interest gained (less tax if outside ISA etc) from savings.

However, then we enter the subjective/preference area in this respect.
A) Some (like me) prefer to be rid of the debt as soon as possible and fore go small gain in interest earned on savings. This is also relevant when considering the means tested limits for any benefits if redundancy strikes, as you are not allowed to have savings in excess of £16k to gain anything so you have to draw down on savings first, and (in most cases) the savings are savings even though you have "allocated" them to the debt of the mortgage. You must not make a deliberate reduction in assets i.e. suddenly take some of the savings and throw into the mortgage once redundancy is possible..

If you can resist drawing on savings which are there for the mortgage, then this may be appropriate where interest generated is better than that charged on the outstanding capital, especially if you cannot access monies overpaid into the mortgage. However, some mortgages inc offsets will allow you to draw upon your mortgage facility or to withdraw the overpaid funds, to have a payment holiday. Check the details.

You state the £15k is "allocated" to the future extension, so it seems to me you need to build your emergency fund of 3-6months income in savings in addition to this. Similarly, have you considered the amount to save each year for things like holidays, contribution to replacement car, major work on the home, replacement of items like white goods etc over time.

HTH and gives you some ideas to chat over with OH.
Best wishes in your plans.