Six Years To Freedom

Alan_Brown · 17 March 2017 at 11:13PM

Thanks for the comments. I'm still contributing to a pension, just not making the additional voluntary contributions.

Happier_Me · 18 March 2017 at 8:29AM

I can relate to your situation at work Alan. I am in my fifth job for three different employers in six years now, the aim of moving being to find a job I enjoy with less stress. But I use a formula for job searching (I need a certain amount of pay, flexibility, holidays etc) and its the formula that needs to change, because I have no option but to take on the stress to achieve my formula. On paper I have a fantastic job that pays well and gives me lots flexibility, but in reality I feel like I am trying to deliver the completely impossible most days both at work and at home.

So our aim is to become MF and DF too and we are hoping to get there by November 2019, at which point I can change my formula.

I would say, don't lose sight of the bigger picture though. Our ultimate aim is to retire early. I am in a good pension scheme but my husbands could do with a boost and I am very conscious that we are choosing to throw money at our mortgage and debts in the short term over saving extra for retirement. This will no doubt cost us in the long run. I have decided that my health comes first, though, because you have to actually make it to retirement age to reap the benefits:D.

Alan_Brown · 18 March 2017 at 8:55AM

Happier_Me wrote: »

I can relate to your situation at work Alan. I am in my fifth job for three different employers in six years now, the aim of moving being to find a job I enjoy with less stress. But I use a formula for job searching (I need a certain amount of pay, flexibility, holidays etc) and its the formula that needs to change, because I have no option but to take on the stress to achieve my formula. On paper I have a fantastic job that pays wells and gives me lots flexibility, in reality I feel like I am trying to deliver the completely impossible most days both at work and at home.

So our aim is to become MF and DF too and we are hoping to get there by November 2019, at which point I can change my formula.

I would say, don't lose sight of the bigger picture though. Our ultimate aim is to retire early. I am in a good pension scheme but my husbands could do with a boost and I am very conscious that we are choosing to throw money at our mortgage and debts in the short term over saving extra for retirement. This will no doubt cost us in the long run. I have decided that my health comes first, though, because you have to actually make it to retirement age to reap the benefits:D.

Your comments really resonated with me. In order to afford to pay for our house, I have to work in a more supervisory/managerial role which really is not suited to my personality or capabilities. The strain of constantly working outside of my comfort zone is really impacting my physical and mental health and could end up shortening my life. Diverting AVC money to mortgage overpayments may not be tax efficient, but it will make me feel more secure and help alleviate my current feelings of being trapped with no avenues for escape.

P.s. I'm still contributing 10% of my income to a pension.

Alan_Brown · 19 March 2017 at 4:49PM

I had a ponder over the weekend about the points some people raised about increasing my pension contributions so that they pay off the mortgage when I turn 55. It's appealing because as a higher rate taxpayer, I get 40% tax relief on my pension contributions.

This means that if I went interest only on my mortgage and paid £750 a month into a pension plan, the tax relief would add £300 per month, taking it up to £1050. If I also added in extra money, say £300 per month the tax relief would be £120, taking that to £420. Over 6 years, that would be £1470 x 12 x 8 =£141,000. I could take out 25% tax free when I reach 55, which would be a £35k mortgage payment.

Alternatively, I could keep things as they are, with my £750 mortgage repayments and £300 per month overpayments = £1050 per month. Over 6 years, that would be £1050 x 12 x 6 =£75,600.

Unless my figures are wrong, I don't see how increasing my pension contributions will help me reduce my mortgage enough to enable me to change to a less stressful job? Unless I also start taking an income from the crystalised pension, though this would be taxed at 40%, eliminating much of the tax relief?

To pay off the same amount over the 6 years with a pension, I'd have to accumulate a £302k pension (i.e. 25% of 302 = £75.6k), which would require a monthly pension payment of £2513 per month. I can't imagine the pressure of work, coupled with trying to sustain that much investment over 6 years of hating my job?

Freddykrueger69 · 19 March 2017 at 5:24PM

Hi Alan

Most of the things you mention resonate with me. I was channelled down the management route and all it seems to do is cause me stress. I also have a good work pension scheme but can't comment on pensions as it's not my forte. Suffice to say I pay in 8% total and get 12% from the employer making a total of 20%. I have some money tied up in a SIPP which I believe was not the right product for me and intend to try and close this and move to the work pension.

My aim is to get me to mortgage neutral where my offset balance equals the mortgage outstanding. I will be cheering you along the way as I'm in a similar situation to you.

Alan_Brown · 19 March 2017 at 6:06PM

Thanks Freddy, it's nice to know that others are sharing the same journey

Alan_Brown · 29 March 2017 at 3:38PM

End of the month update. I got paid my annual bonus and, coupled with my usual monthly payment amount, I cleared my credit card debt and so, apart from putting together a £500 buffer into a savings account, all my efforts will be now focused on overpaying the mortgage.

Work is getting worse and worse, with weekends and evenings lost to a project that even the client has stated their reservations about the lack of resources to do all of the work. My management team has pointed to a cast of thousands of off-shore workers who are 'part of the team'. Hmnn.....

I've started looking for another job, but until I can make a significant dent in my outgoings, I would just end up with a similarly paid job with a similarly crappy work-life balance.

At least we are now coming into Summer, so our gas and electricity bills will reduce for a while.

chelseablue · 29 March 2017 at 3:54PM

Hi Alan,

I owe a similar amount to you, current mortgage balance £224,000

So I'll be cheering you on!

Moneyfordreams · 30 March 2017 at 10:36AM

I feel for you on the work front. I was able to change from a management role after 5 years, which by the end was deathly... thankfully one year in a dull as dishwater healed me. I believe it gave me the clinical experience to move to my current role which is sooo much better.

Good luck

Alan_Brown · 27 June 2017 at 8:46AM

I haven't been on here much, but I thought I'd log on and give an update. I have changed work projects and this one is much better suited to my personality and career aspirations, it's also much less stressful. The only down side is that I'm working away from home all week. I've tried to put a positive spin on that by claiming as many cashback points (credit cards and quidco) for the train tickets, hotels and I also get a meal and travel allowance that I can keep if I don't use it fully (which I don't because I have supermarket food instead of restaurants and take the bus instead of taxis).

In June, I have made the following:
Quidco - £85.70
Amex - £130.84 (this is an introductory 5% cashback, which falls to 1%)
Nectar - £16.82
Meal Allow - £214
Travel Allow - £110

I have decided to use the above to help make the house more comfortable, both in energy efficiency and appearance. This will free up some of my salary, which I can then use to make overpayments on the mortgage.

For the first time in a long time, I'm optimistic about the future. I'm enjoying my job again, the cashbacks offset the inconvenience of being away from home and the improvements we are making to the house are a real lift.

Six Years To Freedom

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