5 year plan

Financialfreedom · 6 September 2017 at 9:02PM

Having achieved all the usual aims of house, job, family etc. I am now in desperate need of a new 5year plan! So instead of upgrading my lifestyle, I'm keen to follow the motto of 'same house, same spouse, same car' to take us to a mythical place known as 'mortgage free living'. Having scrimped by for years living pay check to pay check whilst paying out vast sums for the kids nursery, we are now back in the land of financial comfort and able to enjoy all the little extras, like a new car, bigger house, more holidays etc. Sounds great, but it's comes at a price. The rat race! And I am asking myself the question of whether I want to work for the next 30 years in a 9-5 office job with 25 days holiday. Maybe not...

I have been reading these forums and the idea of being mortgage free is an exciting concept. My partner and I are in the position we can live off one wage (frugally) and save the other. Putting the spare cash into savings, house renovations, holidays AND have spare to pay off the mortgage. Mainly possibly because of low interest rates and no more school fees.

As much as I want all the material things in life, like a new sofa, huge house and bigger garden, the idea that I can still have all that in 5 years when I am debt free and have savings is a massive appeal. I also need to think about splitting between house payments, savings and investments.

Having done the maths, I believe I can make regular overpayments on my mortgage by next spring of up to £2k per month (still less than childcare fees! It really has been tough...) and have some cash saved up.

Over 5 years, that's £120k off the mortgage without any consideration to pay rises or bonuses. I haven't factored in overpayment charges, my mortgage allows up to 10% overpayment per annum. Anything over that will be saved and repaid at the end of each mortgage term.

I have never saved in my life, so this will be a novel and trying experience, so please do send lots of saving tips my way!

Step one - remove bank cards from wallet and accept cash allowance of £500 per month from OH...

Betterthanever · 6 September 2017 at 10:43PM

I'm on a 5 year mission too so will follow you with interest. Good luck!

wishingthemortgaheaway · 7 September 2017 at 6:07AM

You are going to smash the mortgage down at that rate.

Have you done something to celebrate the end of school fees though? I always have a treat with the first lot of 'extra' money after paying for something - nice handbag with first lot of money not going on the student loan etc.

All the very best.

Wish

pinkypig · 7 September 2017 at 6:38AM

Good luck - I'll be following your journey and cheering you on:)

bexster1975 · 7 September 2017 at 8:00AM

Hi

It's addictive. You will make huge inroads at £2k a month. If you need motivation, work out the daily interest on your mortgage.

The thing is, scaling your lifestyle is unlikely to make you happy long term. Being mortgage free will offer you the freedom to do whatever you want. That will give you a good deal of happiness I imagine. You can still do great things, just not wasteful ones. Why a new car? Is the old one knackered/ beyond economic repair/not fit for purpose? If that's true replace it. If it just now needs an MOT probably need to question why it needs an upgrade. Bigger house? If you need more space then certainly a bigger house is a good idea. Otherwise, why? It's worth remembering we are sold this desire to acquire more and equate it with success and happiness. Capitalism doesn't work if people are satisfied with what they have. As adults however, we all have a choice. I wish you the best of luck. Once you start, you won't want to stop.

Bexster

erin_transport · 7 September 2017 at 9:36AM

Sounds awesome!
I'll be following your progress- good luck

Madcatgirl · 7 September 2017 at 2:28PM

Sounds like a fantastic plan! And, I agree with Bexster re lifestyle inflation! My car is 15 years old and still does what I need it to do, so no upgrade until it falls apart.

beanielou · 7 September 2017 at 3:45PM

Happy shiny new diary

Financialfreedom · 7 September 2017 at 6:58PM

Thanks all! Nice to have some words of encouragement! 2 days in and total spend is £11. I have sadly cut out morning fancy coffee and instead taking my own, which is worth it since I will save a staggering £400 a year!

You are spot on Bexster, I just don't need a lifestyle upgrade. My car is 12 years old, but good for another 5. I only buy second hand (mainly since I always scratch my car, so a new one would be wasted on my bad driving...).

I think my main motivation at this stage is that I still don't know what I want to do with my life. Without being tied to a mortgage, I would have the option to change career, travel, study.

Next step is to set up an online payment direct to my mortgage account where all my underspend on my allowance can go each month...

Betterthanever · 7 September 2017 at 7:07PM

You're exactly right.....giving yourself options is what it's all about!

And I thoroughly appreciate the coffee conundrum. My Costa habit was so huge that the manager of my local branch asked me on a date and we ended up married!!! Needless to say, he is in charge of the super duper coffee machine we have at home and I get my fancy coffees for "free" here instead!!

bexster1975 · 7 September 2017 at 7:50PM

Financial freedom.

I'm a coffee fan. If it helps, I have a pod machine and Aldi do great pods for about 18p a cup. Depends what you like but I take a flask in to work most days which is a nice ( cheap) treat

Bexster

5 year plan

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