Quarter of a million reasons to be Mortgage Free!

I've sold some shares today in a non performing bank and made another overpayment to the mortgage of £750. It means February really has been a fantastic month for overpaying.

Feb 2016 Target

Monthly overpayment target . . . £1,750.00
Actual monthly overpayments . . . £3,011.19
(Shortfall) / Surplus . . . . . . . . . . . . £1,261.19

Cumulative Targets to date

Cumulative overpayment target . . . £7,000.00
Cumulative actual overpayments . . . £8,673.19
(Shortfall) / Surplus . . . . . . . . . . . . . £1,673.19

Other stats

Cumulative interest saved. . . . . . £7,200.00
New estimated daily interest . . . . . £15.04
New mortgage balance . . . . . . . . . . £234,585

Financial Planning

I've been doing a lot of reading lately and I am getting more and more excited by the idea of financial independence. I'd realised quite a while ago that I want to retire early to spend more quality time with my wife as we would love to go travelling together and see the world. However to do this it is becoming apparent that I need to give more thought to long term financial planning.

I've been reading Edinburgher's diary and apart from enjoying his writing style I am also impressed by his attitude to financial independence and long term planning.

So........... things for me to consider are as follows:-

- As a result of this diary I have increased my pension contributions from £200 per month to £500 but I still don't think this is enough. I would like to get this closer to £1,000 per month by looking at adding employer contributions (I own 33% of my business). My pension pot is currently around £26k which is way off where I need it to be.

- I still haven't sorted my wife's pension out yet so this will be tackled in the next few weeks. We have sat down with 2 financial advisors so it is just a case of looking through the figures and picking one.

- I would like to do some research on ISA's for the start of the new tax year and start diverting some funds to these. Ideally I would like some kind of equity ISA to offer a greater cumulative growth.

- I also need to give some thought to how aggressive I am being with my mortgage overpayments. I am fully committed to overpaying the mortgage but I don't want it to be at the expense of losing out on building an asset portfolio.

- Lastly but not leastly I would also consider a BTL porfolio. I just need to understand the new tax rules for private landlords and also accept that this isn't one to set up overnight but if I don't plan for it, it will never happen.

- Continue with my "fun" investing of a small amount per month into equities but research what I am doing with a little more care.

- I also need to balance all of this with the wants and needs of daily life! New kitchens and drives to be paid for and holidays and fun days out with the kids.

Apologies for the long post but my head is spinning at the moment and I needed to get some thoughts down on "paper"

I've received my Feb dividends today which would usually be used for my March overpayments but I figured the sooner it found it's way to the mortgage the better! Therefore £1,250 paid off the mortgage today

Feb 2016 Target

Monthly overpayment target . . . £1,750.00
Actual monthly overpayments . . . £4,286.19
(Shortfall) / Surplus . . . . . . . . . . . . £2,536.19

Cumulative Targets to date

Cumulative overpayment target . . . £7,000.00
Cumulative actual overpayments . . . £9,948.19
(Shortfall) / Surplus . . . . . . . . . . . . . £2,948.19

Other stats

Cumulative interest saved. . . . . . £8,259.00
New estimated daily interest . . . . . £14.96
New mortgage balance . . . . . . . . . . £233,400

My daily interest has dipped below £15 for the first time ever! A small milestone to celebrate :beer:

The bay of E has earned me £123 from selling a few things that were just lying about so I've transferred this to the current account and overpaid it against the mortgage. I have a few other items that I can list as well so should generate a small amount of additional funds over the remainder of the month.

I have also set up 4 new current accounts to try and maximize the interest rates I earn on any floating balances through the month. With reward fees, cashback and additional interest I anticipate I should earn an extra £30 per month from April onwards, which will obviously find it's way to the mortgage

Mar 2016 Target

Monthly overpayment target . . . £1,750.00
Actual monthly overpayments . . . £669.00
(Shortfall) / Surplus . . . . . . . . . . . . (£1,081.00)

Cumulative Targets to date

Cumulative overpayment target . . . £8,750.00
Cumulative actual overpayments . . . £10,617.19
(Shortfall) / Surplus . . . . . . . . . . . . . £1,867.19

Other stats

Cumulative interest saved. . . . . . £8,808.00
New estimated daily interest . . . . . £14.87
New mortgage balance . . . . . . . . . . £231,893

coxj2901 wrote: »

My new years resolutions usually revolve around losing weight so it will be good to have some solid financial goals to work towards! That's not saying that I couldn't do with losing a stone

2016 Financial Goals

1. Overpay £23,000 on my mortgage. This works out to £2,000 more over the year than the monthly amount of £1,750 that I set myself but I want a bit of an extra challenge to see if I can find another £2,000 from other means. I won't include this amount in my monthly targets but it will be reviewed and measured throughout the year at various intervals.

2. Increase emergency fund to £6,000. Before the start of this year I had no emergency fund in place so to have a buffer would give us some comfort in the event of any unexpected changes.

3. Increase my pension pot to £33,000.

4. Increase my wife's pension pot to £5,000.

5. Increase my personal share holding to £1,500.

6. Pay for a new drive. I am expecting this to come in around £3,000 and is something we have wanted to do since we moved into the house as we are constantly driving across our neighbours grass when we reverse off the drive!

7. Pay off my 0% credit card in full. There is currently around £3,900 remaining on this credit card so I would like this to be gone by the end of the year.

I thought I would do my Q1 review of my financial goals for 2016 to ensure I am still on track, so here goes!

1. Overpay £23,000 on my mortgage. I have overpaid £6,985.19 in 2016 which is 34.93% of my target. I have £13,014 left to overpay in 2016 which equates to £1,446 over the next 9 months, which means I am on track

2. Increase emergency fund to £6,000. This one isn't going so well in the traditional sense of keeping a cash buffer. All spare money that has not gone towards the mortgage has been diverted towards medium to long term investments that deserves it's own post. I will expand more on this at another time

3. Increase my pension pot to £33,000. My pension pot is sitting at £26k due to a subdued market and I will have employer contributions of £625 per month going into the pension from this month onwards which will take me to ~ £31,625 so will need some recovery on my equity holdings to achieve this figure

4. Increase my wife's pension pot to £5,000. My wife's pension is currently in the process of being set up and she will also have £625 per month going in as an employer contribution. This will take her to ~ £5,625 by the year end if I ignore any potential growth so we are on track with this one

5. Increase my personal share holding to £1,500. I have £2,000 currently sitting in my personal share save scheme but this resulted in a rash decision to top up some shares that were deemed undervalued.

6. Pay for a new drive. I am expecting this to come in around £3,000 This is my big bug bear as my estimate was way off. We have had a number of quotes and the cheapest has come in at £8,000 for what we want doing. We are either going to have to tone down what we want doing or simply wait longer to save the extra money :mad:

7. Pay off my 0% credit card in full. There is currently around £3,900 remaining on this credit card so I would like this to be gone by the end of the year. This has been re-paid in full

I have also had a refund from some car insurance for £18 which has been paid against the mortgage today.

Things have been a bit quiet on the overpayment front this month as my efforts have been slightly diverted towards putting some money away for our new drive and starting to build a small investment portfolio.

However, I've made an overpayment of £125.00 today just to keep things ticking over and ensure I don't lose the momentum I have built up with regards to paying off my mortage

Mar 2016 Target

Monthly overpayment target . . . £1,750.00
Actual monthly overpayments . . . £812.00
(Shortfall) / Surplus . . . . . . . . . . . . (£938.00)

Cumulative Targets to date

Cumulative overpayment target . . . £8,750.00
Cumulative actual overpayments . . . £10,760.19
(Shortfall) / Surplus . . . . . . . . . . . . . £2,010.19

Other stats

Cumulative interest saved. . . . . . £8,927.00
New estimated daily interest . . . . . £14.87
New mortgage balance . . . . . . . . . . £231,943

Investment dilemma

I have been reading lots lately on the benefits of investing my money rather than overpaying my mortgage and effectively achieving a better rate, that is compounded over time, which makes more financial sense from a purely mathematical point of view.

However, I feel this poses dangers for me as it could mean a large pot of liquid funds lying about that I could get my hands on at any point and could be spent on a whim. For example, let's have a new kitchen now or have a loft extension etc......

I am trying really hard to change my behaviour towards financial decisions after spending a large part of my adult life thinking "I'll have that now and pay for it later". It's taking me a long time to start changing my thinking and although I am on the track I still don't fully trust myself 100%

Therefore although it flies in the face of conventional mathematics I will be splitting funds between mortgage overpayments and investing. I recognize that it will probably cost me in financial terms but it also gives me an element of protection that I don't wake up one day and blow the lot on some magic beans :rotfl: