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  • FIRST POST
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Sep 12, 12:07 PM
    • 572Posts
    • 2,542Thanks
    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 [2013 £64k|2014 £51k|2015 £38k|2016 £26k] £17,182.66
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k] +£45,783.87 (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k] £258,813.46 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%] 16.5%
Page 24
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 4th Sep 17, 7:33 PM
    • 572 Posts
    • 2,542 Thanks
    SuperSecretSquirrel
    Thanks KC, yes we've had a really nice time Might not be everyone's idea of a good time, but doing the simpler things with our two small children is what we enjoy the most!
    Mortgage [2013 £64k|2014 £51k|2015 £38k|2016 £26k] £17,182.66
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k] +£45,783.87 (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k] £258,813.46 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%] 16.5%
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 6th Sep 17, 8:23 AM
    • 572 Posts
    • 2,542 Thanks
    SuperSecretSquirrel
    Another small PB win this month

    I've paid a total of £151.34 in money transfer fees, and £6.35 in interest. Received £25.27 cashback, and 2 x £25 premium bond prizes.

    2 months into a 24 month experiment I'm £82.42 down. Plenty of time to break even and then start making a profit. Nothing is guaranteed with PB's, so I could end up being down by £82.42 at the 24 month mark. There's also a vanishingly small chance of ending up around £1m better off. I guess reality will lie somewhere in between.

    Interestingly, a holding of 50k is more likely to hit the £1m jackpot (1 in 28,537) than it is to win nothing (negligible). At least £500 is a virtual certainty, 96.9% chance of at least £750, 63.3% chance of at least £1,000, 7.02% chance of at least £1,500.

    Average luck would see me win £1,000 over the two years (if I don't shift any money out into better options in the meantime). That's a stooze profit of £867.58. Will be fun finding out if my luck is average, below average, or above average

    Interestingly (for me anyway), the chances of hitting a million being 1 in 28,537 doesn't seem all that bad. As a percentage, 0.0035% - never gonna happen. Funny how the same number, written in two different ways, give totally different gut reactions
    Last edited by SuperSecretSquirrel; 06-09-2017 at 1:38 PM.
    Mortgage [2013 £64k|2014 £51k|2015 £38k|2016 £26k] £17,182.66
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k] +£45,783.87 (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k] £258,813.46 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%] 16.5%
    • Betterthanever
    • By Betterthanever 6th Sep 17, 9:40 AM
    • 190 Posts
    • 673 Thanks
    Betterthanever
    Well done on the win....I'm sure it will be an experiment worth doing! And of course, essentially "risk free" so you know you can get your money back if you need it. I'll be watching with interest!!
    Former DFW Need 230. Determined to be MF.
    Current balance £116,878.11. Offset £1034.
    end date - 03/29 aiming for 10/22

    Bring it on!
    • Lexi-lu
    • By Lexi-lu 10th Sep 17, 10:52 AM
    • 148 Posts
    • 715 Thanks
    Lexi-lu
    Hello SSS,

    Congratulations on the win and wishing you lots of luck

    LL
    Mortgage Balance £50,305
    Savings for O/P Sept £19,050
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 21st Sep 17, 7:58 AM
    • 572 Posts
    • 2,542 Thanks
    SuperSecretSquirrel
    Thank you both, fingers crossed for the October draw

    Nearly six months worth of detailed spending records under our belts now... Yesterday I realised a couple of cashback payments had been missed off the spending diary. Rather than lump them all into September, I've gone back and added them in the right place. I'll do a mini six month review with the corrected values soon.

    Reviewed my credit club credit score history too: 891 June, 786 July, 650 August, 564 September... Down down deeper and down

    In theory it shouldn't drop any further. No more borrowing or applications planned short term, and repayments slowly reducing the stooze pot... But next on the agenda is closing the mule card and some dormant current accounts, and potentially reducing the credit limit on the slow stooze card. This will reduce my available credit, but it will also result in my used credit percentage shooting up, will be interesting (to me at least) to see how this affects my score

    Not much else to say, other than if we stick to the January lump sum plan we have just 3 mortgage repayments to go!
    Mortgage [2013 £64k|2014 £51k|2015 £38k|2016 £26k] £17,182.66
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k] +£45,783.87 (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k] £258,813.46 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%] 16.5%
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