Making a start...

lil.mouse

DH and I would love to be mortgage free before our 27 years are up and reading all the diaries on this forum has been a great insparation.
We have a large mortgage compared to some of the mortgages on here but it's not going to go down by itself! (183979.34, fixed rate, repayment).
DH and I both work full time and have a DS with expensive childcare so we don't have much spare money. Since July last year we have worked hard (not really going out or buying new things) to pay off our overdrafts, credit cards and have set up a standing order to pay £100 per month off our mortgage. It's been tough at times but now we're pleased and proud!
We have worked out budgets and have a standing order from things like birthdays, cars, holiday (Thanks Stuart!) and this gets paid into our offset account.
We do have a loan which is £300 per month, we may pay this off next week with savings. There is only four months left but it would nice psychologically for it to be gone.
I'm not sure how much we're are going to be able to pay off extra, and I will try to start e baying a few bits. We both get overtime now and again - so maybe so of that can be put in the pot. As well as anything that's left over at the end of the month.
I will also empty change pot - it's been hanging around for ages and it would be better in the mortgage!
Any tips and advice would be greatly appreciated, this is the beginning of a long journey - but hopefully not a 27 year journey!
I will be updating with progess to keep myself motivated!

Kaz2904

What do you have planned for the £300 monthly that will be freed up when the loan is gone? Maybe £100 extra to mortgage and £200 into an emergency fund until it's built up to a reasonable level? Then you can rejiggle. Also, it's worth looking at WHY you had overdrafts and have a loan? Is it likely to happen again and is there a way you can pre-empt it and save up first?
WRT clearing the loan, it may not be worth it if you have already paid the interest (or will have to anyway) and may just be worth using the time to formulate a plan and get used to living off that new budget.

Good luck, and be warned, it is ever so slightly addictive!

MrC-117

Well done! Always good to see more people trying to pay off the mortgage.

There's lots of useful advice here. Something I (and MrsC) like to do is write down all the payments in a book as well as posting on here. If ever we're feeling a bit fed up, we can have a look and see how things are going. It's quite motivating (works for me anyway).

lil.mouse

Thank you for the replies!!
The reason we had the overdrafts and loans was due to moving and the (wonderful) surprise of being pregnant. Not planing on moving and no more babies! Hopefully we wont need to get in that situation again. Re the laon - you're right - it's not really worth paying it off, money is better in offset account. It's just annoying us!!
Re starting a book, I did that yesterday (I love it) !!!
Thanks x

StuartGMC

Lil.mouse
Welcome to the board and best wishes on that journey. Budgeting correctly will be the key to your success I think, thereby ensuring you have put money aside for expected costs and planned funds for future needs plus the emergency funds (all offset of course and saving you interest in the meantime). You should then be able to OP with some confidence.

If however you don't yet have the emergency cash saved etc, then I would suggest you build this first before you OP. In essence both will do the same thing in the short-term i.e. reduce the interest you incur each month, but OP will of course reduce the capital outstanding.

I think you'll find a spreadsheet a better way to monitor progress. One recommendation I would make is to record regularly the details on interest rate charged and resulting final costs using one of the downloaded spreadsheets and then compare your end position with that. You should then get to see the benefit of even a few pounds OP plus offset are having, helping to maintain your commitment.

Looking forward to seeing your updates.

lil.mouse

Thanks Stuart, your advice is much appreciated.
We have some saved as an emergency fund. Might think about dividing any spare cash between OP and savings.
Counted up money box - £80! Not a bad start!

Happy Easter! x

dylansmum

Hi

Good luck! We're just about to start this journey too. Feeling good jsut thinking about it.

jackomdj

We have an offset mortgage & one of the things we do is spend through the month on our Sky credit card & have set it up so it pays off in full each time. This means we keep our money in our offset account for longer (so saving money via interest on mortgage) & also save % of spending on our sky bill! For us it is a win win situation. When we originally took the card it was a 9 month interest free period & we would tfr the payment due each month into our savings offset so it was not in the current account then we would not see it as something we could spend. This may or may not be for you though as your OP said you had spent a while paying off cards - only works if you are strict.

Also our child benefit goes into our savings account (so we don't touch it) as does any quidco income etc. Any birthday money the children get goes into the offset savings - but it is allocated to them on my spreadsheet.

I use discount vouchers & buy things on offer (eg end of line toothpaste in boots the other day I bought 6 packs!).

Good luck, I hope it all goes well.
HTH
Nicky

StuartGMC

Nicky
Fully agree on using the credit card for every purchase you make, as it can save interest on £1000-2000 per year (assuming monthly bills are of this order). I've missed two payments in 26 yrs both due to bill arriving just as we left on holiday - I looked at the direct debit option to pay in full, but for NatWest this would be something like 10 working days before due! With Faster Payments now working, my credit card bill is paid the day the money leaves the NatWest current a/c so I pay it 2-3 working days before due, just scheduled online and then it's done.

As your mortgage decreases so the current a/c increases as % of offset, making it even more beneficial in the latter stages of paying it off.

We often try to stage purchases of large items for 19 of the month if under our control, as the bill is generated on 18 each month, hence we maximise credit period. Using online purchase from Next etc can stretch this out massively because you make the purchase, they then bill you, pay by credit card and it's not left your account until later e.g. bought items 21 Dec in Next sale online, billed in January which we deferred to after 18 Jan and eventually paid on the credit card bill in March.

Offsets work when you make the money work for you. Having a budgeting spreadsheet showing net position and thus the "real" cash available helps.

I would recommend a balanced approach though; cover pension, emergency savings, day-to-day saving for holidays etc, savings plan for replacement big purchases (replacement cars) plus your investments and the OP on the mortgage.

jackomdj

StuartGMC wrote: »

I would recommend a balanced approach though; cover pension, emergency savings, day-to-day saving for holidays etc, savings plan for replacement big purchases (replacement cars) plus your investments and the OP on the mortgage.

I agree with Stuart on this. As well as pension I do a couple of share saves via work where we are guaranteed a minimum return if the shares are not performing well enough. Also we play a bit on the stock market with a bit of money that we have set aside saying that we are happy to lose it. Although minimising our mortgage is important to us we enjoy our holidays etc. Another thing we have to budget for is tax. OH is a contractor who operates via a ltd co & I run a small business as well as my day job.

lil.mouse

Thank you for you replies, lots of interesting things to think about.
When we were paying off debts we set up a basic spread sheet - which helped. I have asked Stuart for a copy of his famous one - think I maybe a bit scared of it!
We have thought about having a life as well. This is very important to us, as we enjoy 'family time' and love doing activities together. (Using annual passes, tesco points). We now also save a monthly amount for holidays, which is something we have never done before.
We both pay into good pensions and realise the importants of this.
We have come along way and reading all the tips on this sight has really helped.
Great idea re child benifit - thanks.

Will look at using the CC - thanks

Another day at work - but can't complain as it's double time!

x