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    • armchairexpert
    • By armchairexpert 9th Feb 17, 4:00 AM
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    armchairexpert
    The ups, downs, and occasional sideways bits of trying to be mortgage free
    • #1
    • 9th Feb 17, 4:00 AM
    The ups, downs, and occasional sideways bits of trying to be mortgage free 9th Feb 17 at 4:00 AM
    Hello! I used to loiter around here a few years ago and you were all terribly friendly. Then I was made redundant, started my own business, and it's all been a bit uppy and downy since then.

    We've been meandering along for the past three years, since taking on a new mortgage in 2014, paying things as they come up and failing to notice that we're not making a dent in the mortgage at all. It's set up as a line of credit, so the minimum payment on it is only interest - we'd expected to be paying down the principal as well just as a matter of course, but it hasn't quite worked out that way.

    I'm not going to do a SOA because I'm in Australia, and even the most dedicated MFW'er probably can't tell me if I'm paying the right amount for my electricity! But I have buckled down and done a very comprehensive YNAB budget, and it tells me that I should have about $700/month extra without cancelling the children's extra-curricular and the occasional treat. We shall see if this holds true.


    As an aside, I also have a second mortgage on a buy-to-let, but the tenant is my mother, who can't afford to pay us market rent much less cover the running costs, so that costs us about $5,000 a year or so. As a way of clawing back savings, I don't budget any of the tax reductions that brings us, I just treat it as a normal expense, and then anything we get back at the end of the tax year is like an annual bonus.

    What else? Two DDs, the youngest one started school this year which is a GAME CHANGER I tell you what, some lovely silly chickens who very generously make eggs for us, the beginnings of a fairly pathetic vegetable garden which I'm not convinced even pays its own running costs - and long suffering DH, of course, who keeps the lights on.

    Also I am not the most succinct person in the world.
    Last edited by armchairexpert; 09-02-2017 at 4:10 AM.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
Page 8
    • Tahlullah
    • By Tahlullah 7th Jun 17, 8:20 AM
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    Tahlullah
    Practical people are wonderful aren't they? So worth a pair of new suede gloves, because you will reap the rewards for years to come. Large wood planter this year, next year, your own ocean going yacht! Although you may have to work on that one; but plant those seeds in his head now...

    And one exercise session is better than no exercise session! Small steps and all that. After all, if you go in full blast, you could do yourself an injury. Best work up to all that high energy expenditure. Get the body used to the idea of exercise. Con it into thinking that exercise is normal and when you do intensify, it won't notice!!
    Striving to be mortgage free.
    • armchairexpert
    • By armchairexpert 8th Jun 17, 1:44 AM
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    armchairexpert
    Practical people are the best people. I've been teaching myself very rudimentary DIY skills - now, why is it that school tech studies taught me how to use metal sheets to construct a pencil case, but not how to use a power drill or basic joinery? Far more useful! - because it would be far too easy to rely on Mr E for all of those jobs. Also using a power drill is fun. I am neither neat nor particularly competent, but I try and do things myself where it doesn't matter (like the chicken coop: I don't think the chickens care very much if there are visible nail joins in their roost!).

    Mr E has the job of teaching our girls, though, because he benefited from a lot of childhood tutelage in practical skills and I want them to learn the same things. I'm a great believer in teaching small children practical things: my eight year old can make a decent bolognaise and excellent pancakes now, and my five year old is allowed proper sharp chopping knives for vegetable cutting. I don't know why the schools wait until secondary. Well, lawsuits, probably, now I think about it.

    Oh, right, this is a money diary! Let's see.

    1. Mr E didn't even get an interview for the job in the end. Since they asked him specifically to apply and implied they might give it to him internally without even advertising, this is v galling. It wasn't a big payrise, and we weren't relying on the money, but it would have been an excellent opportunity to widen his skill set and put himself in line for more senior positions later. Mostly his ego's hurt, honestly.
    2. Had a chat with the bank who think yes, they can definitely offer us a better deal than we have now, so we have a meeting on Tuesday armed with various documents to see if remortgaging is a better idea. I'm going to try and see if we can switch the home loan to a P&I with an offset, and keep the investment unit as IO. I'd really like to see these interest payments go down, so cross your fingers for us!
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • Cherryfudge
    • By Cherryfudge 8th Jun 17, 8:34 AM
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    Cherryfudge
    What a shame for you and Mr E about the job. Is it worth his following up with a phone call to see 'what he could improve on'? A colleague of mine has just missed a post because HR made a mistake... it does happen. He was urged to reapply but already has an interview lined up elsewhere.

    Yay to the meeting with the bank! Let us know how it goes.
    • Tahlullah
    • By Tahlullah 8th Jun 17, 7:45 PM
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    Tahlullah
    To digress from the purpose of the diary for a moment more - yes, schools do fail young people in many instances. I was taught how to whittle a bit of wood to look like a wall plaque but how to change a fuse, I had to learn as an adult. And don't even get me on how often I have needed to use my SMP book since leaving school!

    Shame about the job, but galling that they didn't even offer him an interview! As you say, probably bruised egos at work, but I am not surprised and think that would be very normal given the circumstances. Why allow Mr ACE to put himself out there if they aren't even going to allow him to show them what he can do in an interview? Oh well, onwards and upwards. The shame of it is that if another internal position becomes vacant, he may not apply because of the way he has been treated this time, even if the job appears to be made for him. Or maybe I am just overlaying my own feelings on him...

    Good luck with the bank. Hope it goes well. After all, they are the ones saying they can improve your situation without seeing your paperwork. The worst is that they don't give you the best rate there is, but an improvement is still a win, and you will still be saving money!

    Tx
    Striving to be mortgage free.
    • armchairexpert
    • By armchairexpert 9th Jun 17, 12:02 AM
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    armchairexpert
    Yes, I was planning to talk to other banks and then go back to ours armed with that knowledge, but truthfully that's likely to take me a few weeks to get around to, so this at least means there's some improvement.

    There's not much competition over here compared to the UK, with the 'Big Four' owning most of the smaller branded institutions, so it's hard to feel like there's much power to be had.

    We saw Matilda, and it was fantastic. Really glad I splurged on that. And it felt very MSE, because the tickets were bought and paid for late last year, and we took sandwiches and juice so the only cost to us on the day was the bus fare. My face hurt from smiling by the end of it.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • emmie26
    • By emmie26 10th Jun 17, 12:38 AM
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    emmie26
    Ooh my DD would love to see Matilda, she has watched the dvd a million times and loves it

    Total Debt: £24,359.79 £22,182
    debt reduced by 9%
    Debt free date: May 2019
    • armchairexpert
    • By armchairexpert 12th Jun 17, 12:59 AM
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    armchairexpert
    Another week after a fairly frugal weekend. We did take Little Girl into town for sushi on Sunday, but no shopping after that, just a nice walk around the Botanic Gardens and then an art exhibition. Bank meeting tomorrow.

    I have to start doing my tax, too: I have three interlinked 'arms' of my business and they each need a separate set of expenses doing for them which then go to the accountant. The earlier I get it done the earlier my tax return will hit, and that'll take a considerable lump off the mortgage so well worth doing.

    Public holiday here today - for the Queen's birthday, in fact! Crazy that it's a day off here and not there. Anyway, the Queen will just have to enjoy her cake and candles without me, because I'm working all day. Partly to make up for Friday, when I was glued to your election results and got hardly anything done. Lordy goodness what a nail biter. I have some pretty strong opinions about this proposed DUP deal, but maybe here is not the place. Just consider me tutting and shaking my head over the garden fence.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • emmie26
    • By emmie26 12th Jun 17, 7:20 AM
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    emmie26
    Ooh sushi, Botanic Gardens and an art exhibition sounds more cultured than my weekend, I'm jealous. I'm also jealous that you get a day off for the Queens birthday!!

    Good luck with the tax returns, that's one thing I don't envy you for

    Total Debt: £24,359.79 £22,182
    debt reduced by 9%
    Debt free date: May 2019
    • Tahlullah
    • By Tahlullah 12th Jun 17, 7:49 PM
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    Tahlullah
    As I am a complete ignoramus, the only thing I am remotely jealous of is the extra holiday.

    You get a holiday and we get an election. Would you like to swap?

    Tx
    Striving to be mortgage free.
    • Cherryfudge
    • By Cherryfudge 13th Jun 17, 1:01 AM
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    • 1,802 Thanks
    Cherryfudge
    Partly to make up for Friday, when I was glued to your election results and got hardly anything done. Lordy goodness what a nail biter. I have some pretty strong opinions about this proposed DUP deal, but maybe here is not the place. Just consider me tutting and shaking my head over the garden fence.
    Originally posted by armchairexpert
    There's a fair amount of that going on over here too.

    That and photographing dogs outside polling stations.
    • armchairexpert
    • By armchairexpert 13th Jun 17, 11:33 AM
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    armchairexpert
    As I am a complete ignoramus, the only thing I am remotely jealous of is the extra holiday.

    You get a holiday and we get an election. Would you like to swap?

    Tx
    Originally posted by Tahlullah
    Haha! We are pretty famous for calling elections early (and also deposing our Prime Ministers in between, just to keep things lively) we had one last June and it looks like we'll have another one by this time next year, so thank you but I shall keep my holiday.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • armchairexpert
    • By armchairexpert 13th Jun 17, 11:54 AM
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    armchairexpert
    Bank visit very good, although now I have to dig out some documentation I'm not 100% sure OI have, like the formal lease agreement with my mother. Anyway.

    1. Home loan goes to a P&I loan rather than IO, but with an offset and ability to redraw any overpayments, so that's fine. Interest rate goes from 5.15 to 3.98%. I'm running calculators now and it seems like that will take $200 off the interest every month - from $930 to $730, more or less. Which seems like a lot? More than I'd have expected? I guess it's a 20% reduction in the interest rate, and $200 is about that, so...wow.

    2. Investment property showed up as having gained so much equity that we are re-doing it as a stand-alone loan instead of cross-collateralising, meaning that I can sell or shift that mortgage to another bank without hassle. It showed up on their valuing tool as being worth $330K, which is nuts because I bought it for $250K four years ago and I haven't done anything improvement-ey to it at all.

    3.I negotiated to keep that one as an IO on the same rate - the advertised rate for an IO is now 5.98 which is CRAY but I gather the banks are trying to dissuade IO loans because it looks bad on their risk sheets if they've got too many?

    So the investment will stay the same and I will go back to ignoring it, but having run some numbers on the main mortgage, if I can keep repayments at $2400, my new mortgage free date is August 2026 which is almost two years earlier than before (May 2028).
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • Tahlullah
    • By Tahlullah 13th Jun 17, 6:18 PM
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    Tahlullah
    This is absolutely fantastic news. Congratulations on this and I bet you are over the moon with the new figures.

    Fabulous that the other property has gone up in value and you have managed to separate it, so if and when you are ready, you can re-mortgage to a lower rate. But great that it remains IO so you can ignore it for as long as you can afford to ignore it. Brilliant investment!

    And what a great saving on the main mortgage. Who cares if it's P&I when it comes with an offset and allows you to draw down any over-payments. I would class that as a fantastic mortgage, because you are eating into the principal with every payment and you don't have to worry about finding a lump sum if you haven't been making those regular payments in an IO, , especially when life gets in the way.

    Can't tell you what great news this is! Oh, yes I can, it's your mortgage! Sorry, getting excited there!!
    Striving to be mortgage free.
    • armchairexpert
    • By armchairexpert 14th Jun 17, 2:45 AM
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    armchairexpert
    I am very very dubious that the new value for the investment property is at all correct, to be honest. The unit next to ours sold for $295 last year, and they did substantial renovations including taking out an internal wall, putting in a new kitchen and landscaping the garden. But it doesn't matter to me, since I don't intend to sell it, I'm just pleased about the extra flexibility it gives us now they're separate.

    P&I on the main mortgage will stop us getting slack again and spending more than we earn on the busy months, which is what we did last year: we put a series of lump sums in between August and October, and then ate them away again until I took control in March.

    Thanks for sharing in my excitement Tallulah! Although the bank themselves intiaited this review, not us, I can't help feeling like it was connected to my finally taking a close look at the finances. I was starting to think about shopping around for a better rate, and lo and behold they gave us one!

    Gorgeous day today. We've had a bunch of frosty mornings, but it's a lovely mild sunny 12 degrees out there now, so I skived off work for an hour or so and went for a run around the lake. Bliss.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • armchairexpert
    • By armchairexpert 16th Jun 17, 1:46 AM
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    armchairexpert
    Got dressed in my running clothes this morning but then it started raining and I just can't face it. Might do a few star jumps and things later instead.

    I was right, we have lost the lease, so I have to redraft it and of course my mum's away on the first holiday she's had in three years so can't get her to sign until next week. Hopefully that's the last thing we need to do to get the refi through.

    Mr Expert was booked in to have heart surgery today, just a minor op, but we found out yesterday that our private health insurance doesn't cover it although we assumed it did so now we're back on the public system and we don't know how long the waiting list will be. Not sure if it's the same situation in the UK: we have Medicare, like the NHS, but our government also really pushes hard for higher income earners to have private health cover so it subsidises it and there are tax penalties if you don't have it. By higher income I just mean top 50% of earners, so basically most of the middle class/anyone in a white collar job, not the super rich. Anyway I'm grateful that we sitll have the public option of course but it's galling to discover that we've been paying all this money for all this time and it doesn't cover something as integral as heart conditions! We wouldn't have been looking at that when we took out the policy, and nobody can remember all the inclusions and exclusions in a policy. It costs us $250/month and I am seriously considering just putting that money into a savings account instead. But then again, Mr E needed an ambulance the other week and that would have cost us $1100 if it hadn't been for the insurance. And a couple of years ago my Mum needed a knee op, and the waiting list for that on the public system is three years plus, and she literally couldn't walk without one of those three-pronged metal hospital walkers. She paid out of pocket because she doesn't have private health and that was $5k on her credit card. And also, also, I need some dental surgery and both my girls will need orthodontics and our public system doesn't cover any dental treatment at all, not even checkups, which is crazy.

    It's tricky. I just wish we had a decently funded public system still. I'd happily pay more tax and be glad that everyone had the same amount of cover instead of all this poring over fine print and trying to out smart the insurance companies.

    Okay, that digression is over! On the money front we FINALLY got around to changing mobile phone providers so that should drop the monthly bill from $150 (+ excesses when Mr E goes over his data limit which he does regularly) to $80 with double the data. I think that's the last of the low hanging fruit now: everything else is as cheap as it can be (except the darn health insurance!) and it's just a matter of plodding along and pushing any income rises towards the mortgage.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • Tahlullah
    • By Tahlullah 16th Jun 17, 6:37 AM
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    Tahlullah
    Wow. You don't realise how good the NHS is until you have to make comparisons. I couldn't imagine the Ambulance costing over £1k, and thats before any actual medical treatment.

    Is it possible to increase premiums to get better care, or change insurance provider, or are you stuck with it for good? I guess it's not an organic insurance that you can add to as necessary.

    So, the only way you could have got it right was when you took it out, many moons ago when you were younger, healthier and not earning as much, you would have had to purchase the most expensive insurance there was, based on the fact you might need it in the years to come.

    Think I'll stick to the NHS and pay to go private when I can, which has not been wildly expensive when I have needed to. You said wish you had it still. Did you have it once? What happened?

    Congrats on the phone tariffs. Great saving. and I would award the brownie points for just thinking about wanting to go our for a jog.
    Striving to be mortgage free.
    • armchairexpert
    • By armchairexpert 19th Jun 17, 2:01 AM
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    armchairexpert
    What happened? I moved to Australia! We have a public system after the NHS model, but over the past several years successive right wing governments have gutted it, and added various levies and subsidies to incentivise people to pay for private health cover. And then when the left get into power they don't roll back those reforms. There are also some gaps in the public system - dental has never been covered here in Australia, nor ambulances for some reason. You can get just ambulance cover, which is a fraction of the price of a comprehensive policy.

    I can change policies, but unless we pay for the absolute top cover, there'll always be something that isn't covered. To get heart covered, we'd need to pay an extra $100 month, meaning $350/month, which is a LOT of money. Not to mention, even the top private cover doesn't cover everything: a friend of mine was telling me that she took out the top cover possible when she was planning to get pregnant with her first kid, and then had both children in private hospitals and ended up with a $6K bill because the cover has a cap, and her obstetrician and anaesthetic charged more than that cap. Private health insurance is a ridiculous concept, and I am furious that we're blindly following the US down a path that is proven to not work. US health care isn't just immoral, it's inefficient: their government pays more in health costs per person than anywhere else because there's a whole layer of bureaucrats, coders, debt recovery agencies and the like, all of whom also get paid.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • armchairexpert
    • By armchairexpert 19th Jun 17, 2:04 AM
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    armchairexpert
    I'd like to follow that rant with a nice cheery post about my lovely weekend of gardening and cycling with the girls. And it was lovely, but I feel really flat and angry this morning for no good reason. As if there's just nothing to look forward to. I don't mean that in an all-caps Depressed way, I'm fine, but just - you know. You get up, you plod through your days of work which are fine but aren't changing the world, on Fridays you buy yourself a beer or a block of chocolate and maybe once a month you see a friend for dinner and that's it, that's life. Blah. It's probably just a case of the Mondays.

    In this mood, I wonder whether the Pay Off The Mortgage project isn't just me avoiding the real issues in my life. As if paying off the mortgage is a magic door to an amazing new life of wonder and joy, but also allows me to put the visualisation of that life off for ten years rather than confront it now.

    Blah blah blah. I am sure I will feel better tomorrow.
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
    • Tahlullah
    • By Tahlullah 19th Jun 17, 10:20 AM
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    Tahlullah
    I think the rant would have helped. Venting is good for you. But it also allows you to think about the bad things, which add to the general feeling of dis-satisfaction. And yeah, I know exactly what you mean, which is why I bought a bar of chocolate last week!

    I think if you stand back and look at life for what it is, you will get depressed. It is a perpetual cycle of get up, go to work, earn money, work at home, sleep and start again.

    The lucky ones, whereby I mean rich, can break the cycle of work. But you still have the issue of getting up and going to bed. And not necessarily making a difference.

    What difference do we want to make? Well, I'm not about to find the cure for cancer or anything interesting like that. And when I die, no-one will remember me after a couple of generations. So you then have the 'what is the meaning of life' conundrum.

    There is no answer to this, so the next time you are having a 'what on earth am I doing here on this beautiful day? This is the only life I've got' type of moment (and I have them all the time), next time try a drink of water and a few deep breaths!!

    Paying down the mortgage gives you focus. It allows you to think about how you want to live your life, as opposed to how you have to live your life. Once the mortgage is gone, you wil have more freedom. You don't have to work as hard. You can get up in the morning and think about what pleasure you can get from the whole day without having to consider what you have to do because someone else instructs you to do it.

    Deep breaths, you are doing fine.
    Striving to be mortgage free.
    • armchairexpert
    • By armchairexpert 19th Jun 17, 11:31 AM
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    armchairexpert
    You're 100% right and I needed to read that, thank you. Even if I were rich it wouldn't solve anything, because my malaise comes from a feeling that I'm not doing anything significant, not that I have too little leisure time. More leisure time wouldn't solve that, and more 'stuff' certainly wouldn't! As far as the stuff I really value goes, I already have it: lovely children, a beautiful relationship with a great man, a house which is safe in an area which is clean and healthy, friends and family.

    None of which are stopping me from having a right old sulk!
    MFW diary here. 1 Feb 2017 $229,371 - MFD Feb 2043 aiming for May 2028
    14 August 2017 - Refinanced: $220,000
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