Mfi in 100!! - My Oct 2017 challenge

Floxxie

Hi ThriftyGirl,

Without sounding negative I gave up my first job to concentrate on 'completing the family'; after many downs baby number 2 appeared nearly 5 years later.
I have not been able to go back to work as childcare costs more than my wages and I have to admit I find it very difficult being at home especially as I 'earn' money at home to overpay the mortgage and have the nice things in life. It is damn hard work. I can't wait to get back to full time work but that won't be for a few years yet...

Perhaps you could have a look around to see what jobs are out there? Based on what there is, that might make the decision for you.

Floxxie

THRIFTY_GIRL

Hi

Thanks for all the advice. I think I will have a look around to see what is available and then decide.

Today has been a little more positive. The road ta refund arrived and I jumped at Martins email about the 5% 5 years (but really 3 months) bond and have applied to transfer my ISA.

We are definitely having another baby and I think the question is when and not if....let the story unfold.

Always up for a challenge:j

cake21

Hi Thrifty Girl,

I've been overpaying for a year, and today I was wondering how I was going to keep motivating myself, and then I saw your diary :T

Inspired by you I had a look at my spreadsheets and discovered that if I keep up with my current level of overpayments I'll be mortgage free in 100 months too! :j

(Like StuTheDon I'll also be 40 in 2017, what a birthday celebration :beer: )

Looking forward to reading about your progress, best of luck :money:

THRIFTY_GIRL

2017 will be good year!!!

twinklie

Me too! Providing I OP £200 per month....and don't move (which we probably will).

StuartGMC

Thrifty
Best wishes with the review and options for job/another child. Is this the time for OH to move jobs (if this is likely in the near term anyway) and then you "follow" if you would have to relocate, as this will take time anyway allowing things to take their course for second child?

Whatever you choose, stay positive.

THRIFTY_GIRL

1 month into the challenge and my balances are as follows:

Main residence: £91,029.33

BTL: £112,667.75

Total: £203,697.08 a reduction of £2,049.43 or 0.996% in 1 month.

I think I need to reduce by 1% per month to reach my target lol! was about £8 short I think....never mind.

This month we are opening the 5% ISA for DH but this will count as overpayments on the mortgage. Will get redundancy money by end of month so hopefully we can pay in the full £3,600 equalling about 4 months of overpayments.

setmefree2

Yay well done on that reduction:T

mel19632

Hi Thrifygirl, well done on starting your MFW! I realise that your BTL interest rate is higher and so the obvious choice is to pay this off first but have you considered the fact that interest paid on it is tax deductible? It would be more tax efficient for you to pay off your mortgage on your main residence first, then to tackle the BTL. Capital repayments on a BTL are not tax deductible.

When you do your tax return at the end of the year they will calculate your tax as rental income minus expenses (this includes interest payments made on a mortgage but not capital payments) and then you pay tax on the difference.

So should you get £1,000p/month rent and your mortgage interest payments are £600p/month then you will be taxed on the 'profits' of £400p/month. If you manage to halve your interest payments by paying off half of the capital on your mortgage then you will still be getting £1,000p/month rental income but the interest on the outstanding mortgage is now £300p/month meaning that you now have £700p/month that is now liable for income tax.

If you overpay on your residential mortgage it just means that the money you are saving is going directly into your own pocket and there is not a bite being taken out by making yourself liable for extra income tax.

THRIFTY_GIRL

Thanks Mel. The reason I'm paying off the BTL is that the rate is 2.09% compared to 0.77% for the MR. So the after tax saving on interest for the BTL is 1.67%. This means it is still better to pay off the BTL.

I agree this may be a little simplistic and may not account for the cost in the long run. But until I have the patience to really get some wacky spreadsheets going this will do....

I'm going to put the next 4 months overpayments in an ISA for DH. After that we shall have to see what happens with interest rates. We will probably put what we save between now and April somewhere like a LTSB current account ready for the new tax year and set of ISA allowances.

Unfortunately double taxation is a phenomenon we have to live with.....I should know this being a tax advisor:rotfl: