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  • FIRST POST
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Sep 12, 12:07 PM
    • 435Posts
    • 1,954Thanks
    SuperSecretSquirrel
    Onwards to freedom!
    • #1
    • 8th Sep 12, 12:07 PM
    Onwards to freedom! 8th Sep 12 at 12:07 PM
    Hello and welcome to my MFW diary. Not sure how often I'll update as I'm going down the boring 'increase monthly mortgage direct debit' route, not the more interesting to read 'random repayment as and when a bit of extra money is made' route. Still, no harm in starting a diary here, even if it's just for me to look back on in a few years time!

    It seems like a good idea to start with a bit of background, so here goes...

    We bought our house in July 2010 with an 87k repayment mortgage, fixed for 10 years at 5.29%. Nearly two years of £525pm standard repayments allowed us to rebuild our savings, but after 20 monthly payments (over 10k paid out) the mortgage balance had only dropped around 2.5k thanks to all the interest being paid...

    We decided to make a small start on overpaying - small overpayments early on have quite an impact over the long term so why not start small and ramp up later? March 2012 we made our first regular overpayment, £50pm. Amazingly, if we were to keep up with this £50pm over the life of the mortgage we'd be mortgage free nearly four years early (Nov 2031) and save ourselves a tidy bit of interest. Not bad rewards for just £50 a month!

    A few days ago I decided to step things up a notch. From next month the regular overpayments will increase to £250pm, £200 less will find its way into my long term savings (paying 2.8%, minus basic rate tax), £200 more will find its way to the mortgage provider. Makes a lot of sense looking at the interest rates! I'll keep on saving in a normal savings account though and won't be putting every penny into the mortgage - I'm used to seeing my savings grow monthly, and like to try to be prepared for any eventuality, so I'll keep on squirelling away a chunk of my income in savings each month. I know this isn't the most efficient option in terms of reducing interest payments, but it's a balance that keeps me sane, if there's any major disasters the savings are there to fall back on, that kind of peace of mind is well worth a few pounds! Anyway, here's where the numbers get really interesting - by overpaying £250pm for the life of the mortgage we'd be mortgage free nearly eleven years early (Oct 2024). Wow!

    Seeing the massive savings I started looking into this stuff in more detail. We're allowed to overpay up to 10% of the mortgage balance each year without penalty. I don't want to increase overpayments over £250pm right now, but maybe after another year or so of growing my savings I'll step up the overpayments to £500pm. Two years later the overpayment would need to drop to £450pm (to avoid penalty), year after that drop to £400, and the following year drop to £350, and the years after that drop to £250 at which level the op's would have to remain until the end of the fixed period (August 2020). If we were to follow this plan, at the end of the fixed period our mortgage balance would be around about 20k which we could pay off with a lump sum from savings. Mortgage free fifteen years early, at age 36, sounds awesome, and what's incredible is that it also sounds very realistic.

    At the moment overpaying is my project. OH and I have our own accounts that our wages are paid into, and a joint account that we feed monthly to pay the bills. As I earn a little more I also do the grocery shopping, pay a few extra bills, and overpay the mortgage. Beyond feeding the joint account OH's income is none of my business, it can be spent on whatever OH likes, same goes for my income. This works well for us - if I want to splash out on a new computer game or a night out or whatever I can do so without needing to consult OH, and if OH wants to splash out on a night out or clothes or whatever no need to consult me. We're both debt averse and savers by nature, so as long as we spend less than what's coming in and all the bills get paid all is well. I'm hoping that seeing the mortgage balance reduce might convince OH to get involved in overpaying the mortgage (or at least split savings into two pots, one 'spendable' short term pot for holidays and home improvements etc, and a long term one earmarked for paying down a lump sum on the mortagage), but there'll be no pressure, if OH joins in that would be excellent, but if not that's ok.

    Finally, I know life doesn't always go smoothly - anything could happen in the next 8 years, babies, redundancy, armageddon, "the best made plans of mice and men, often go awry"... But if things don't go to plan, nevermind, we'll have made a great start on the mortgage regardless, any overpayments we make early on will benefit us later on, so we may as well give it a shot while circumstances allow It's nice to remember that circumstances can go up as well as down too - maybe there will be payrises and good fortune along the way that make achieveing the target easier, who knows!

    ----------

    January 2014 Update:

    Things have changed quite a lot since I first started this diary... The new aim is to hit the MFiT3 target of a 40k mortgage balance by end 2015, and to have 40k in savings by that time too, making us mortgage neutral 20 years early! Anything can happen, but I think it's time to aim high!

    ----------

    March 2015 Update:

    We did it! We are mortgage neutral (savings balance higher than outstanding mortgage) and are locked in to achieve the MFiT3 stretch goal of mortgage below 40k by the end of the year I'm going to keep this diary going, the aim is total financial independence now!
    Last edited by SuperSecretSquirrel; 20-05-2015 at 8:14 AM. Reason: We did it! :D
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

Page 17
    • ajmoney
    • By ajmoney 1st Sep 16, 5:37 PM
    • 4,732 Posts
    • 54,907 Thanks
    ajmoney
    Thought I might do a short and sweet post for a change!

    Our mortgage balance is down to £28,501.88. Since we now have more than twice that in liquid savings, we are mortgage neutral twice over, which is pretty cool
    Originally posted by SuperSecretSquirrel
    SSS that is great, well done. I am just over halfway to mortgage neutral and we are bringing it down each month by a month. Do you intend to keep saving above mortgage neutral until the mortgage has gone or will you clear it?
    2016 MFW No. 70 £3582.88/£3000
    MFiT-T4 No. 70 £7739.41/£329736
    Mortgage £132484.28 Savings £78272(ish)
    Total left to pay/save £54576.28

    • SuperSecretSquirrel
    • By SuperSecretSquirrel 2nd Sep 16, 8:07 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    Hi ajmoney, well done on reaching halfway - it should just keep getting easier from now on

    We don't really need to spend more than we do right now, so we'll keep on saving. I've always been against paying it all off and stumping up the ERC, but if savings rates keep dropping I guess I might be tempted (though I know I should investigate p2p before doing anything too hasty).

    We have a fresh new 10% OP allowance available in January. The current plan is to hold tight til then, and OP the 10% fee free. We'll then keep the high £830ish monthly repayments for 2017, make a lump sum repayment Jan 2018 to trigger a recalculation of monthly repayments, then enjoy approx £200pm repayments for the remainder of the fixed term, and pay a £5k lump to wipe it out once and for all in July 2020.

    That's the plan I set out a while back, but to be honest the only bit I'm committing to now is doing nothing until Jan 2017, once those four months are up, who knows what we might do
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • SuperSecretSquirrel
    • By SuperSecretSquirrel 2nd Sep 16, 4:09 PM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    I've decided to do a monthly net worth review from now on. It'll help me keep my eye on the ball, and give me something to post about here!

    Code:
                   CURRENTVALUE   +/-FROMJUL
    House Value:   +£125,000.00        £0.00
    Cash:           +£46,859.37   +£1,180.99
    Pensions:       +£54,309.13   +£5,932.63
    Car Value:       +£9,500.00     -£300.00
    S&S:            +£10,751.18   +£1,547.53
    Mortgage:       -£28,501.88   +£1,396.71
    Due to HMRC:       -£408.82      +£35.63
    Student Loan:    -£2,418.38     +£136.53
    Total:         +£215,090.60   +£9,858.76
    I nearly choked when I checked my pension - the value is now around £6k higher than it was two months ago. A little under £1,400 in new money has been invested during that time. That's crazy! On the 1st July, my investment units were priced at £1.71, yesterday they were at £1.91. That's an increase in unit price of nearly 12% in 2 months. Continue that trend for a whole year and you're looking at 70% year on year! Of course, it is not in the least bit realistic to expect the trend to continue.

    A similar if less extreme story with stock and shares isa - portfolio value is now around £1.5k higher than it was two months ago, £700 paid in during that time. The value of my stocks and shares barely moved at all in my first few years investing, but I've seen quite large increases in recent months. Of course it can't last forever, and I'm expecting inflation to rocket in the near future too, so that will take the shine off things.

    Thanks to these ridiculous increases, net worth is up a total £9,858.76 in two months. Most of the credit goes to the market, not us It's amazing to see our net worth increase far faster than we can actually earn money, feels like it's not really real... I'm sure it'll hurt seeing those numbers drop at some point in the future. My net worth chart does nothing but make me smile at the moment, a dirty great drop in those pension and S&S lines sometime in the future will smart a bit, but I know full well that's the game we're playing.

    Of course an unfortunate side effect of having previously braced myself for lower share prices, reassuring myself that it just means I can buy more cheaply in that case, also means I now feel that I'm maybe paying too much... I guess the glass is always going to be either half empty or half full! I always try my best to see it as half full I'll also do my best to keep my emotions disengaged and be a good robotic monthly-drip-feed come-what-may investor. I've managed it so far, but it's easy when prices are flat or rising

    Finally, I am over the moon to have crossed the 10% FI barrier. Right now it seems we are 11.2% independent (our interest earning assets would cover 11.2% of our annual spending using a 4% withdrawal rate). We have also crossed the 70% mark on the "achieve a 300k net worth in 2020 challenge", now sat at 71.7%
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • SuperSecretSquirrel
    • By SuperSecretSquirrel 23rd Sep 16, 8:32 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    My FD 6% regular saver matures today Things will be changing for us over the coming months (), but having reviewed finances it's safe to commit £300pm to a new issue over the next 12 months. Might be the last time we see 6% for a while, it would be a shame to miss out!
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • SuperSecretSquirrel
    • By SuperSecretSquirrel 1st Oct 16, 12:36 PM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    First of the month, net worth update time
    Code:
                   CURRENTVALUE       +/-MTH       +/-QTR       +/-YOY
    House Value:   +£125,000.00        £0.00        £0.00        £0.00
    Cash:           +£47,369.27     +£509.90   +£1,690.89     -£307.12
    Pensions:       +£56,429.75   +£2,120.62   +£8,053.25  +£19,335.14
    Car Value:       +£9,350.00     -£150.00     -£450.00   -£1,800.00
    S&S:            +£11,160.59     +£409.41   +£1,956.94   +£6,045.33
    Mortgage:       -£27,794.80     +£707.08   +£2,103.79  +£11,893.93
    Due to HMRC:       -£478.61      -£69.79     -£105.42   +£1,703.89
    Student Loan:    -£2,343.75      +£74.63     +£211.16   +£1,009.93
    Total:         +£218,692.45   +£3,601.85  +£13,460.61  +£37,881.10
    Another great month for pensions! Other than that, we're pretty much just plodding along in the right direction

    72.9% of the way to 300k (2020 challenge), 22.2% mortgage ltv, £30,256.45 beyond mortgage neutral in liquid assets, 11.7% financially independent

    The S123 rate drop comes into effect at the end of this month. I'm considering emptying the account and downgrading to lite. I currently near enough break even each month on fee vs cashback, downgrading would see me in around £4 profit each month. I've opened a couple of current accounts that will pay 3% on a total of 6k combined, and I think I might pay off my student loan with some of what's left over.
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • SuperSecretSquirrel
    • By SuperSecretSquirrel 11th Oct 16, 8:38 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    I mentioned recently that the amount of bank accounts I have is verging on the ridiculous, and in light of the s123 interest rate reduction it might be time to simplify things, reduce the number of accounts, stop stoozing, and pay chunks off my student loan and maybe even the mortgage...

    It seems I was ready to give up a little too easily! Fast forward a few days and I now have a further 5 current accounts added to the collection, paying 3% on up to 21k with no fees

    Student loan interest rate of 1.25%, high ERCs on the mortgage, and 0% spending cards - it makes sense to keep on saving while 3% is still available on instant access cash! Of course my accounts spreadsheet has grown even larger, but that's a small price to pay

    The rate on these new accounts could drop at any time. If and when that happens it'll be another opportunity to take stock of the situation and again decide what to do for the best

    In mortgage news, we have now dropped below £4 daily interest. Mixed feelings really, that is a fantastic reduction from nearly £13 six years ago, but it's still high considering how low our balance is. Still, knowing I can pay the whole thing off whenever I please and drop the daily interest down to 0p snaps me out of it nice and quick
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 11th Oct 16, 10:26 AM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    I am surprised that you are intersted in paying off your student loan at all. I am more than happy to carry a balance at 1.25% when I consider all the alternative homes for our money! Was actually quite pleased to discover that increased pension payments through salary sacrifice = reduced student loan payments
    • mrsp1987
    • By mrsp1987 11th Oct 16, 7:05 PM
    • 781 Posts
    • 3,760 Thanks
    mrsp1987
    Even if I paid off my mortgage etc I would not choose to pay off my student loan (unless I won the lottery and got a stupid amount). I don't even consider it a real debt, it's not as if it's secured on anything or it's going to be requested to be repaid in full (I hope).
    Mortgage April 2011: £108,499 30 yr term Current Mortgage £96,211.87 20 yrs 10 months left
    O/P Fund: £2,336.81/£1,000
    Tilly Tidy #11: I've completely lost count!!
    MFiT T4 #67 - Reduce mortgage from £99,310.76 to £80,000. Currently £95,166.53
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 13th Oct 16, 8:13 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    Thank you both for posting

    I agree that repaying the student loan would be slightly backwards, but back in post 319 I worked out that for me it would be a total cost of £5 to repay it in full, if 1.5% was the best rate available on cash. Part of me felt desperate to do something with our finances, and I guess striking a debt off the balance sheet qualified as "doing something", even if in the grand scheme of things it has little/negative effect. Of course I then found various accounts paying 3%, so no contest, the student loan can remain for now

    I'm genuinely interested to know about the other nice homes you have in mind for your money ed. 25℅ of my salary is paid into pension monthly, I don't want to increase this, or start a SIPP, I want access to the money when I choose, maybe 10-20 years from now, in my 40s/50s. I already have plans to increase the S&S monthly contributions, I could increase further I guess. I have a circa 20k fixed cash ISA maturing soon, at the moment I see my choices for that cash being a 1.5% 3 year fixed cash isa, or moving to S&S ISA, though paying a large lump sum when things may well be overvalued seems a bad idea. Happy not to second guess the market and keep drip feeding no matter what, but timing is more of an issue with a lump sum. I could drip it in over time, but to do that means finding somewhere instant access to hold it in the meantime. I think I have near enough all the high interest paying current accounts by now, and have a sneaking suspicion they'll all be dropping their rates sooner or later...

    Things like premium bonds and BTL have crossed my mind recently, so better ideas for the early retirement fund really would be appreciated I note from your diary that your love affair with p2p may be coming to an end?
    Last edited by SuperSecretSquirrel; 13-10-2016 at 8:17 AM.
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 13th Oct 16, 8:34 AM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    My money is largely going to the same places as yours SSS, you have a bit more disposable income as you have a cheaper mortgage

    We have paid into work pension, S&S ISA and 2 SIPPs this year. From the new tax year we will be putting our work pension contribution up to 27% (an arbitrary figure that will ensure we hit ££££ contributions every month), so largely pensions for us, we won't be able to afford much more until Mrs E goes back f-t.

    The plan (such as it is), would be to get pensions to £175k or so, then drop to the minimum required and stash everything else in ISAs or cash. Still, that's more of a 10 year plan

    The rest will go into building home equity. We paid £215k for our house, but it was only valued at £200k. As every subsequent home within a mile has sold for more than what we paid, we're confident that HPI will allow us to break even within a year or two. After that, we're assuming that every £1 spent on the house in improvements will add about 50p. That might be a little optimistic, but we're working towards a very nice finish that's neutral without having no character (no furry spiral wallpaper).

    As for P2P, it is fading into the background a bit, but it definitely hasn't been abandoned. I am less convinced, however, that it will play a pivotal role in our retirement monies (which is basically all we want a nest egg for, DD being invested for already).
    Last edited by edinburgher; 13-10-2016 at 8:38 AM.
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 18th Oct 16, 9:05 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    We're not really miles apart on strategy then

    I think I might start shovelling more into the S&S ISA than I can afford from monthly cash flow soon. As a result, I'd slowly reduce my cash savings to the benefit of equities. Gets around the "lump sum" dilemma. Not sure now is the best time to start increasing what I put into S&S, but if I gave into these doubts nothing would ever get done!

    I doubt the 3% from the scottish bank and the every little helps supermarket bank will last forever, so best to plan with 1.5% or lower cash interest rates in mind. Of course, I've been spectacularly wrong in the past (see >5% long term fixed mortgage), maybe the much anticipated inflationageddon will see base rate and savings rate rises. Won't hold my breath though, with QE funny money in the mix it seems the whole system is broken. Base rate may go up, but until banks need customer deposits to raise funds, I can't see savings (or lending) rates being boosted to match. In that case, why bother raising base rate in the first place, it won't necessarily reduce consumer spending, so won't slow inflation. Maybe stopping the funny money would have more impact, but I guess it could be fatal

    Enough of that... 175k pension and then shifting to more accessible holdings, how did you decide on that figure?

    I am torn between the more lucrative pension and more accessible ISAs. Since my employer contribution match is maxed out at 5% I could reduce my pension contributions quite a lot without leaving free money from my employer on the table. I benefit from basic rate tax relief on the way in, and don't anticipate having a massive income in retirement so taking the tax free personal allowance into account shouldn't pay much tax on the way out. Whereas the ISA is paid into from after tax income, but shouldn't be taxed at all on the way out. There's a clear (though not massive in my BR taxpayer case) advantage to pension over isa in terms of numbers, but then there's a clear advantage to isa over pension in terms of flexibility. I can't decide where to draw the line to best suit my plans for the future.
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 18th Oct 16, 3:42 PM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    I am going to ignore the whole crystal ball bit there because (as you've pointed out often enough), nobody has one

    £175k is quite lacking in any statistical import, it's just the figure I spitballed that we'll have in 10 years assuming 27% contributions + existing monies. Call it a guess.

    At that point, we'll be faced with the rather more challenging challenge of bridging the gap between 50 and 5x, which is where ISAs come in. I haven't really been able to come up with an affordable model where we aren't skint for these 8 years, but end up far better off come 58/65/68

    I thought you were paid HR tax? Also, don't you get sal sac benefits for extra contributions? 99.9% sure I already asked this, but can't find where.
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 19th Oct 16, 10:49 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    Thanks for the explanation ed

    I've paid HR Tax in one single year of my working life, back when my side hustles were going great guns. Sadly no longer the case, but it's not so bad really. I could earn more at the cost of family time, but that's not a sacrifice I'm willing to make

    You are correct on the pension contribution salary sacrifice. That's another entry in the pro pension column, reduced NI and SL payments.
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 19th Oct 16, 12:10 PM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    Indeed, those savings are what make it so blimmin' good when trying to invest for the future. Like yourself, I struggle to get motivated about other options because I can't down what is in effect something like 33% free money (if you can get it tax free at the other end).

    I suppose the risks are a) political risk (i.e. moved goalposts), b) not having enough elsewhere to bridge the gap and c) the eventual benefits of the xx% 'free' money being reduced because we're unable to structure withdrawals in such a way that tax can be avoided (but hey, that's a nice problem to have)
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 23rd Oct 16, 9:55 AM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    Problem "a" is absolutely my biggest issue with pensions. I hate that it is totally out of my hands. So is "c", but that is a far lesser concern. Provided " a" and "c" remained constant, calculating an accessible target to mitigate "b" would be fairly trivial.

    Of course this is all built on myriad assumptions based on historical performance. If the flexible variables in "a" and "c" bother me, what hope have I of dealing with unprecedented ZIP, and unknown future levels of inflation? The models are based on history, but new records are created all the time!

    I have early retirement as a goal, but rather perversely am reassured that it is so far in the future that the minutiae are irrelevant right now i.e. a problem for another day/year/decade. Right now that target of 25x annual spends to achieve a 4% SWR is reassuringly simple. Of course I'm not advocating zero planning, more heading in the right direction for now and fine tuning the detail later on.

    I suppose the only real concern when paying too much into pensions and not enough into flexible accounts is you overshoot the point at which you could retire - net worth is sufficient, but not enough cash to get you to pension age. That just means a little more time working, which sucks, but also more money in retirement, which does not suck. I guess its very similar in effect to "one more year syndrome", just the cause is very different...
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 23rd Oct 16, 10:52 AM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    I suppose the only real concern when paying too much into pensions and not enough into flexible accounts is you overshoot the point at which you could retire - net worth is sufficient, but not enough cash to get you to pension age. That just means a little more time working, which sucks, but also more money in retirement, which does not suck. I guess its very similar in effect to "one more year syndrome", just the cause is very different...
    Just came up with a possible solution for people with a mortgage - take the biggest possible mortgage you can for the longest period. This would allow you to a) possibly free up equity and b) reduce your monthly payment substantially. Like equity release but without the 7.5% interest rate
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 24th Oct 16, 6:45 PM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    MFiT4 Update #3:

    Mortgage: -£27,057.25 (Quarterly progress £2,102.36)
    Tax: -£490.83 (Quarterly regression £183.75)
    Cash: £46,087.30 (Quarterly progress £1,645.62)
    S&S: £11,831.80 (Quarterly progress £1,763.00)
    MN+: £30,371.02 (Quarterly progress £5,327.23)

    Another good quarter

    We need to average £3,772.25 per quarter to meet our final target. So far we're doing great, but we always expected it to be quite easy at the start, and that it would get more challenging over time...

    Happily, we were right Our second child is due in February We have another year(ish) of statutory maternity leave on the horizon, and beyond that more childcare expense or a drop to single income. Never have I been happier with the prospect of being short of cash
    Last edited by SuperSecretSquirrel; 24-10-2016 at 7:05 PM.
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • edinburgher
    • By edinburgher 24th Oct 16, 7:29 PM
    • 10,091 Posts
    • 52,646 Thanks
    edinburgher
    Congratulations - you're a braver man than me!
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 24th Oct 16, 9:06 PM
    • 435 Posts
    • 1,954 Thanks
    SuperSecretSquirrel
    Thanks ed
    Mortgage: £27,057.25 [MFiT4 MN+60k: MN+£30,371.02] (24/10/16)
    Independence: 11.7% [300k in 2020: 72.9%] (1/10/16)

    • NorthernMonkey1
    • By NorthernMonkey1 24th Oct 16, 9:07 PM
    • 139 Posts
    • 574 Thanks
    NorthernMonkey1
    Cost of not repaying?

    I've just read through some bits of this thread. I know that no one wants to pay ERCs, but have you compared the cost of paying ERCs vs keeping the mortgage.

    If youre paying 5.29%, and you're only getting 2% interest on cash, then the cost of avoiding the ERC is 3.29%. If the ERC is half the interest rate, at 2.65%, then the cost of avoiding the ERC is greater than the ERC.

    It might be worth shovelling a few more options into a spreadsheet to work out the least bad approach to paying stuff off
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