Mortgage Free ASAP

Queen-Bee_2

Hello LP - I see from the time of your posting that you're a night-owl - a bit like me! Yes, we did meet on the OS Board! I think I'm going to be doing a lot of browsing and asking for advice there, as I need to drastically reduce my household expenses and start budgeting. Something which - believe it or not - I've never done before...I dropped by your thread and it seems you're working increadibly hard - but also reaping the rewards. Well done! QB

financialbliss

Queen-Bee wrote: »

Today, I was finally able to access my Nationwide mortgage statement on-line.

Queen-Bee,
My mortgage information, such as that posted here:
http://forums.moneysavingexpert.com/showpost.html?p=23800309&postcount=1107

can be tracked via the Nationwide site and your own spreadsheet. The Nationwide single interest value is not very good at all - taking a note at the end of each month allows monthly and daily interest to be determined very easily. uzubairu does pretty much the same.

If you know and understand your mortgage product and how it will change month on month, I feel this is half the battle. Even a few days into August, I can calculate that the August daily interest will be £6.85 or less. The other half is simply finding the funds to pay the damn thing off. :eek:

Keep overpaying - it will do wonders in the long term.

Financial Bliss.

Queen-Bee_2

Now that I know my mortgage account updates at midnight, I couldn't resist sneaking back for a 12.35am update. And I have just found out that between yesterday and today, I have clocked up £9.62 in interest. Interesting. Very much looking forward to seeing that going down!
QB

LilacPixie

My interest is roughly the same. I know i pay roughly £281 interest in a 31 day month so I just did a bit of division and concluded I was paying £9 something a day.

Queen-Bee_2

Step 2 - Model different mortgage repayment scenarios on a spreadsheet to work out savings

This evening I logged back into Nationwide to see if they'd credited my account with the extra £3k. They hadn't.

However, I felt that by now, I should have enough information to model a few repayment scenarios and work out what financial position I might be in - vis-a-vis my mortgage - by next Summer and whether I'll be able to afford to take up that university place. Financing my studies by selling up is not on the agenda!

Next step was to create a spreadsheet flexible enough to capture a range of mortgage payment profiles for the remainder of my fixed term (ie until March 2011) and thereafter.

If I am to be a student from September 2010-June 2013, I will need to make lower payments during this period. When I get my first post-qualification job, they can rise, but as I'll be starting a new career, my salary's likely to be less than half what what it used to be!! Hence these payments will still need to be lower than they were in the first half of this year. Balanced against this, I’ve been saving hard over the last 2 years and intend to use these savings, and part of my severance payment pay off as much as possible over the next few months - whilst leaving enough to live off during my studies.

Now this is the point at which I should admit that unlike some other MSEs, spreadsheets are not my forte. Fortunately, Locoblade has written a very flexible spreadsheet and generous shared it as a downloadable file. It allows for individual payments, variable interest rates etc on a month by month basis AND tells you how much your mortgage will cost you in terms of interest. As far as I'm concerned, it's a slice of magic…

I’ve used it to create three scenarios, reflecting:
1. My original mortgage path, with an end date of September 2025, which will cost nearly £51k interest on my £100k loan over its term
2. The repayments/overpayments I’ve made to date, but assuming that I’ll draw down on some of my savings during the next year, and bring the mortgage end date forward to March 2017. This would leave me with a modest reserve to finance myself through my studies. Assuming a 4.5% interest rate in March 2011, this would cost nearly £22k in interest over the term – a saving of £27.8k on Scenario 1
3. As per 2, but drawing down on a much greater % of my savings and bringing the mortgage end date forward to March 2017. This is attractive in that it would drastically reduce the mortgage’s outstanding balance before next September. It would however, leave me very little to live on whilst studying and without a safety net. Again assuming an interest rate of 4.5%, this would *only* cost £19.4k in interest, a saving of £31.3k on Scenario 1.

It’s a tough choice. Not least because my assumed interest rate come March 2011, is just that.. an assumption. A couple of % point increases and I’ll be in deep trouble. Then again, if it drops, I could find myself in clover.

For the next few months however, Scenarios 2 and 3 follow the same path. Consequently, the immediate plan is to try and head for no 3, but review the situation very carefully at the end of next March.

Oh dear. What was it I said about making my postings shorter?

uzubairu

Queen-Bee wrote: »

Locoblade has written a very flexible spreadsheet and generous shared it as a downloadable file. It allows for individual payments, variable interest rates etc on a month by month basis AND tells you how much your mortgage will cost you in terms of interest. As far as I'm concerned, it's a slice of magic…

It certainly is. :T
Every time I want to reduce the term of my mortgage, that's my reference point.

Queen-Bee_2

Budget Review

Today I decided to review my outgoings with the assistance of a Statement of Affairs Calculator. Hopefully this will help identify where savings can be made - which can then be used to reduce my mortgage!

It took me quite a long time to fill out, mainly because it prompts you to think about and enter an estimate for just about every expense under the sun. In fact, I discovered a surprising number of things I'd otherwise have missed off!

I've got the bit between my teeth at present, so I decided to fill out the SOA as accurately as possible. This meant retrieving my old bills for the last year to see how much I paid and then working out a monthly average for each. As much my administration up until now has involved a series of carrier bags, this then turned into a long-overdue filing exercise...

However, I have now established that my primary monthly expenses – excluding my mortgage - are as follows:
- £148 council tax. This sounds a lot, but there’s not much that can be done about this until I am a student, at which point, I can apply for an exemption
- £119 BUPA – again, this is a bit of an :eek: at the moment. I'm currently mid treatment for something, but as soon as that’s finished, this will have to be discontinued
- £230 pension – a biggie this, but I think I need to cancel it. In fact, now that I am no long working, I probably need to get in touch with my pension provider *action point
- £32 electricity. I am on a British Gas Price Guarantee Dec 2009 tariff, so not much can be done with the base cost, but hopefully I can make savings by educating myself on potential energy savings
- £50 gas. Tariff as per electricity above. I have had problems with British Gas in the past, not least because of some wildly inaccurate estimates after I moved into my house (resulting in a truly frightening bill when an actual reading was finally taken). Consequently, I now phone in actual readings when the bill arrives and only turn the heating on when I have to – it’s been off altogether for the last couple of months
- £15 emergency boiler/electrics cover from British Gar – surely this could be cheaper
- £22 gym membership – needs to be cancelled… I will be using my bike (and feet) a lot more! *action point
- £86 groceries – optimistic one this, and based on my being able to keep to a £20/week budget!
- £86 entertainment/other expenses – again optimistic, as a single glass of wine and a pint of Stella cost £8.10 in my local last night, but I’ll have to see how I go
- £20.75 car insurance – renewed in May, and I shopped around a lot to get a good deal so not much more can be done with this I think
- £55 combined building/contents insurance from Nationwide
- £22.75 land line/broadband – just changed from BT & Virgin as per my previous post
- £15 mobile phone
- £20 clothes – I have a lot in my wardrobe I can make do with, and if I need more, I can buy on ebay
- £14 water (metered)
- £12 TV licence

In addition to being a useful summary of where-I-am-right-now, I intend to use this SOA as the basis for a budget moving forward, as well as a benchmark for my electricity and gas bills.

QB

LilacPixie

afternoon QB.

I think you could get boiler cover cheaper. are you tied into a contract?? Gas also seems high do you have your hot water on alot?? I find it more cost effective to boil the kettle for dishes and only switch on the hot water to run the bath for my kids.

B&C insurance is also large. I am less than half that, obviously i have a smaller home but maybe get a few quotes, I have for getting B&C insurance from your mortgage provider is seldom cost effective.

earthgirl

Hi Great thread and information!
If you are looking to save more, I would look at B&c and boiler cover too.
I had to claim on my B&C last year, and mine is still less than half the price of yours (mines only for a 3 bed terrace though).

Also, have you had any thoughts about cutting down your clothing allowance? I have saved loads by stocking up on £1 days in george, using charity shops, and friends giving me loads of clothes as a kind of swap. I think I spend about £25 on clothes a year, but hopefully don't look like I do (eek). edit oops just realised I had a blow out in June so add quite a bit to that

I don't suppose you've had time to look at upping your income yet?!! Can you get a part time position to add a bit extra to the pot? maybe do mystery shopping or tutoring?

Best of luck EG

Queen-Bee_2

I’m still waiting for the Nationwide to take the requisite funds from my current account for the increased mortgage payment, which should have commenced in July. Fortunately, they’ve agreed to backdate the payment when they eventually get round to taking it, so I shouldn’t loose out financially.

In the meantime, I’ve started to turn my attention to household expenses and pick off a few obvious areas where I can budget more wisely. Today was laundry day and I have implemented two major changes to cut costs.

Washing the sofa covers myself – the last time I took my sofa covers to the dry cleaners, the bill was something in the region of £45... and this was [ahem] several years ago. Having discovered ingrained chocolate on the seat cushions last week however, and encouraged by what I’d read elsewhere on the MSE Forums, I thought I’d have a crack at cleaning them myself. So off they came, and into the machine on the delicates cycle – 6x seat, side and back cushions and 2x arm covers. I left the base cover on the sofa’s carcass, as this doesn’t get any wear, simply using the vacuum cleaner’s upholstery brush to get rid of the dust. When the covers came out the machine, I smoothed them, hung ‘em up to dry outside and then ironed them on the reverse of the fabric. I held my breath when putting them back on the cushions… Could they have shrunk? Fortunately, not! The result? Fantastic looking covers, and much cleaner looking than after that previous – and infinitely more expensive – trip to the cleaners.

Other Laundry – which brings me to the issue of washing generally. The last time I stocked up on detergent (for whites and colours) and fabric softener (I live in a hard water area and the towels are like sandpaper without it), there wasn’t much change from £15. Yoikes! So, once again buoyed up by my newly acquired MSE knowledge, I invested in some Soap Nuts. For those of you who don’t know, these are simply nutshells, which contain a natural detergent. You put 6-8 shells in the machine (in a little bag) and can re-use them up to 6 loads. A 200g bag cost me four quid, but contains enough shells for an awful lot of washing. I’ve not worked out the savings myself, but the accompanying Soap Nut blurb says using them works out at 3p/wash instead of the more normal 25p/wash. As it will obviously deliver a non-bio wash, I think I’ll keep a Mr S’s Basic’s bottle of bio-liquid to squooge onto any particularly grubby patches.

I can’t believe I’ve gotten so excited about cleaning I’m actually blogging about it. But then again, it’s not really the cleaning I’m excited about, is it? It’s the savings I’m making. And if I’m going to bankroll my dreams, these have a crucial role to play.