Are we in a small minority?

alanobrien

People become financially savvy at different times.
Some out of dire need, some just take time to wise up.

Even then once you discover the wonders of overpaying there is the question of ability to overpay and these days thats becoming increasingly difficult for some.

I figured it out late..ish but glad i eventually did as i should be MF in April next year. :j

pawlala

well done!

Rob_192

pocketrocket1 wrote: »

What I am saying is my parents were very open with me about how finances worked we used to discuss this at meal times ie how mortgages and the stock market worked, how debt works, compound interest etc. and I will be always greatful to them. We should all try this with our kids (surprising how many seem to know nothing or how to budget)
pocketrocket1

I couldn't agree more. If my generation (mid 40's) were taught basic financial management at school, this country wouldn't be in the state it is now.

Fortunately my wife and I have always had a logical approach to money and made some shrewd decisions over the years. When we took out our first morgage, we really couldn't understand what all the fuss was about endowment mortgagaes and fought tooth and nail to get a repayment mortgage (very much the exception in the early 80s). We then over-paid almost from day one and this allowed us to trade up when all our friends had negative equity. In the end, three moves later, we were able to clear our mortgage at the age of 40 and now have money to throw at our retirement planning.

I remember arguing with my mum who said she couldn't understand why we were trying to pay off our mortgage, 'better to maximise your tax-relief' she said!! I said that in order to maximise tax relief you would have to maximise the interst paid and where was the logic in that, but she didn't get it.

We now spend time at the diner table exactly as Pocketrocker's parents did, explaining money management to our kids and to be honest they're now pretty shrewd themselves. They all have their own accounts and savings and the eldest two already have their own Isas and make thier own decisions (under our watchful eye!). Also, we've invested a liitle money in a SIPP for each of them and they each researched and choose their own funds, which should be intersting to watch over the years.

R

LibbyR26

My mortgage adviser told me about it when I applied for my mortgage. He recommended regular overpayments throughout the year rather than annual lump sums. He showed me graphs showing the amount of interest I'd save if I did that - the savings were astounding.

As it was my first house I couldn't make alot of overpayment initially when I was furnishing and renovating but after a couple of years I was overpaying every month. I had a redundancy scare a couple of years ago and it made me determind to own my house asap.

My original plan was to have it paid off by the time I was 40 (4 years time) but I've increased my basic payments and am hoping to use half my savings for the overpayments so that I'll be mortgage free in 2 years (I'm on a fixed rate mortagage and the interest rate on it is higher than my Isa.) I am living pretty frugally to do this and I don't know if I can keep it up, but I am just focussing on how much extra disposible income I will have once I am mortgage free.

My mates are all pretty financially savvy. They've all had to live on single incomes at some point with divorces etc and so know about saving for rainy days. A couple of them are overpaying.

Thanks to everyone who posts on this board. I wouldn't have got this far without your inspiration.

Rob_192

LibbyR26 wrote: »

My mortgage adviser told me about it when I applied for my mortgage. He recommended regular overpayments throughout the year rather than annual lump sums. He showed me graphs showing the amount of interest I'd save if I did that - the savings were astounding.

Libby

I understand this is certainly the case with many mortgages.

Unfortunately our last mortgage with with Abbey was one of those old types where interest was calculated anually - the annual statement used to show the previous year's balance, plus interest (calculated on whole balance) less the 12 montly payments, so Abbey only knocked off the payments at the end of the year - even though they had received the money regularly throughout the year. Fortunately, it was only a small mortgage and by the time we realised this, we were well on the way to clearing it and to change would have cost more in fees/charges than we would have saved.

This is something worth checking and if anyone does still have one of these old mortgages, you should consider making any over payments right at the end of the year as there is no benifit doing it monthly.

R

LibbyR26

Fair point Rob - sound advice

pawlala

hopefully some more new MFWs will see this

lovethymini

pawlala wrote: »

hopefully some more new MFWs will see this

Seen it - thanks for the wise words, sound indeed

A new MFW

limpy-jim

We never really knew either until discovering MSE. On talking to firends and family it seems we are the only ones doing it too. ( i think they think we are mad!)

We have only just started out MFW journey, but when DH and I were talking about the other night , both agreed we wish we had done something about it years ago, before the kids came along and part time work started. We changed from Endowment to repayment about 10 years ago and didnt even pay the money from that to our mortgage either!!

We changed to our latest fixed rate 18 months ago and this allows overpayment of up to £499 per month plus 10% of outstanding balance in January each year. The interest is calculated at the end of every month, so it is certainly more of an incentive to pay extra. Our last fixed rate deal the maximum we could pay was 10% per annum and only in January ( interest was calculated in December... ) so not such a good deal. Our aim is to try to pay the maximum allowed every month as long as we can - this would reduce our term by 14 years!! Not sure how long we can continue with this but will keep going with overpaying anything as long as we can!

pawlala

limpy-jim wrote: »

on talking to firends and family it seems we are the only ones doing it too. ( i think they think we are mad!)!

There seems to be a lot of that madness in our forum!

It raises and interesting point, as MSEers should we be making it our duty to at least raise awareness of OPing with loved ones in the hope that it saves them money? Or does everyone think it should be "our little secret" and avoid any potential financial acromony?