Mortgage Reduction Beginner to Novice - The Show Begins

Mortgage_Reduction_Novice

edinburgher wrote: »

That's a very detailed answer and your reasoning works very well in your circumstances

For those of us who spent like drunken sailors as students and have £££££ loans, it wouldn't work so well. My £13.5k loan will be taking quite a long time to pay off regardless of how I tackle it! I suppose the one thing that your answer didn't address was the fact that (in theory) we get wage rises - so while the initial payment threshold creeps up, our salaries should as well. It would be interesting to track how my wage has risen vs. the threshold - time for a spreadsheet!

Absolutely you need to be near paying the loan off anyway for this to be beneficial.

Thank you... that's another point to add to swaying my decision. My union has calculated an earnings loss of 12% (taking inflation into account) over 3 years (their calculation not mine). Yes the reprieve by increasing the threshold will help ease the lack of pay rises... but I'm MSE... I can suck it up and go without luxuries!:money:

Mortgage_Reduction_Novice

edinburgher wrote: »

Never mind the difference between saving and SLs - have you compared the interest saved vs the interest you'd save OPing? As OPs are made at real rates (post-tax income), I can't bring myself to OP the SL.

This is what is making me dither a little over just withdrawing the full amount from savings and having done with it. SL interest is currently about £4 per month. Savings interest on one month's student loan payment is £0.19 per month. Interest on the loan balance while it's still in savings is about £6 per month.

So I'll stick with filling ISA and making 'as and when' voluntary repayments to the SL for now then when I'm offered the direct debit repayment (less than 2 years to go) I'll ask for a slightly higher direct debit than I have to or just clear it.

edinburgher

But surely if we allow for inflation, we break even, because the real value of the loan has fallen by the same % as the purchasing power of each £ earned?

Not picking an argument with you, it's just interesting to see different approaches to things and why people have opted for them

Mortgage_Reduction_Novice

edinburgher wrote: »

But surely if we allow for inflation, we break even, because the real value of the loan has fallen by the same % as the purchasing power of each £ earned?

Not picking an argument with you, it's just interesting to see different approaches to things and why people have opted for them

No argument at all - I'm not 100% certain my approach is the right one so discussing it is good.

If our wages (assuming continuous employment) and SL interest rate moved in unison with inflation then yes I agree we'd break even. But unfortunately is doesn't. Take for example in 2009 when we should have received a negative interest rate (based on RPI and inflation) for our student loans but the government set it at 0% (meanies). That year we didn't break even, we lost out.

Radish72

I am so glad I have repaid my student loan, it seems way to complicated now a days to work out the bet way to save money on it (but bonus would be I could have another spreadsheet)

BookWorm

Hi

Hope you don't mind me stopping by. I'm a newbie and I've been working my way round some of the diaries. Wanted to make myself known and say thanks for sharing your MFW journey.

It's very interesting but I think it's fair to say you definitely have more self control than I do!

BW

misscousinitt

I'm with Radish about having re-paid student loan. Theoretically I would have only just started repaying as my wages have never been particularly high. But I made a promise to myself that when I got a job I would just pay it off and I did - I only owed £2000 though - but I was at uni when SLs first came out!!!!!

MCI

Mortgage_Reduction_Novice

Thanks Edinburgher for the healthy student loans discussion. prompted by this I checked my spreadsheet over breakfast. SL has £3.56 interest per month and mortgage has £403 per month. So I plugged £3.56 per month into the mortgage overpayment calculator - a one off saves £4 interest and a monthly overpayment saves £412 interest. Then I plugged in the amount I pay per month towards my student loan and that makes a huge difference £94 and £8835. So now I'm even more motivated to clear the student loan quickly but without using savings!

Well done to Radish and MCI who have paid their student loans off... it doesn't matter when you got it!

Radish72 wrote: »

it seems way to complicated now a days

Yep, there's soon to be three different types of student loans being repaid. I bet SLC start to struggle with the complexity of that!

Like the marrow chat a few weeks ago... I'm putting this topic to bed now.:rotfl:

*******

Welcome BookWorm...

BookWorm wrote: »

you definitely have more self control than I do!

Regarding money or my SIL?! :rotfl:

MrMRN cooked a fabulous chicken korma last night... I am very much looking forward to eating the leftovers for lunch!

The Union ballot results are in - a narrow majority vote for strike and a huge majority vote for action short of a strike. Last year we got 0.4% pay rise, the year before was 0.5% and this year 0.5% is proposed again. Personally, I'm just grateful to have a job.

It's visiting relative's last night with us tonight... I prepared a cottage pie at the weekend. There's rather a lot of his beer in our fridge so either he's packing a heavy suitcase home or him and MrMRN are gonna be way past squiffy this evening!

I have a 13 hour turn-around of the guest bedroom before the next guests arrive and 12 hours of that I'll be commuting/working! That'll be fun tomorrow!

Final thoughts: £co have emailed to say they're paying me £3.33, three NSDs in a row and one day till I complete 6 weeks of packed lunches in a row!

LauraWxx

Mortgage_Reduction_Novice wrote: »

Final thoughts: £co have emailed to say they're paying me £3.33, three NSDs in a row and one day till I complete 6 weeks of packed lunches in a row!

Any idea how long these take to clear??
I have had an email saying £6.50 is being paid to me but no sign of it yet!

Good luck with the next lot of house guests! and well done for putting up with current visitor for so long...I could not do it!!

edinburgher

Any idea how long these take to clear??
I have had an email saying £6.50 is being paid to me but no sign of it yet!

3-4 days seems typical