BabyB wants to be mortgage free (or at least have more equity!)
babyb06
Forumite 369 Posts
Hi All
I have been lurking for a couple of months on the MFW forum and finally plucked up the courage (I know that sounds strange) to start my own post.:j
So......a few details about me and then I will try and do an SOA ready for a post later in the week (I know lots of ppl ask to see it).
I bought my flat at auction for £191,000 in July 2008 with just over a 10% deposit, so my mortgage was for £171,000. I fixed my interest only mortgage at 5.9% because at the time I knew I could not afford a penny more and if interest rates went up I would be in BIG trouble. I quickly regretted fixing as interest rates fell and then fell again and then fell again! :mad: But oh well I had my certainty and made each payment.
From the start I overpaid slightly, rounding up my payments (I like even numbers) by approximately £20 a month.
I am self employed and earning a very good income and it went up significantly in the first year of my mortgage, so in October 2009 I was able to make a lump sum payment of £7,500 :T(I stole a little from Peter to pay Paul etc, but was straight again after that payment by January 2010). Thereafter my overpayments returned to only £20 a month (and my mortgage payment was only interest only). But I started saving so I had an emergency fund (very important being self employed).
This summer my fixed term ended and that really made me think – my rate dropped to the SVR of 4% and so my mortgage payments dropped by almost £300 and I really turned my thoughts to my mortgage and started to read the threads on this site. At first I started a few of the little things (a virtual sealed pot type thing whereby every Friday I paid the change (anything less than £10) from my current account towards my mortgage).
I have now also decided to look into an offset mortgage (as I am self employed I have all my tax money in a savings account) and so decided this diary may really help me with my thoughts and goals (my LTV is too low for an offset at the moment).
This won’t be my last mortgage (it is a flat that I can see myself staying in until marriage/kids come along – more about my OH in a later post) but I want to decrease my mortgage as much as possible so that I am in a good position when buying my next home.
Sorry if that was a little too long and rambling but I have been thinking about this for a while, so a lot to get out!
I have been lurking for a couple of months on the MFW forum and finally plucked up the courage (I know that sounds strange) to start my own post.:j
So......a few details about me and then I will try and do an SOA ready for a post later in the week (I know lots of ppl ask to see it).
I bought my flat at auction for £191,000 in July 2008 with just over a 10% deposit, so my mortgage was for £171,000. I fixed my interest only mortgage at 5.9% because at the time I knew I could not afford a penny more and if interest rates went up I would be in BIG trouble. I quickly regretted fixing as interest rates fell and then fell again and then fell again! :mad: But oh well I had my certainty and made each payment.
From the start I overpaid slightly, rounding up my payments (I like even numbers) by approximately £20 a month.
I am self employed and earning a very good income and it went up significantly in the first year of my mortgage, so in October 2009 I was able to make a lump sum payment of £7,500 :T(I stole a little from Peter to pay Paul etc, but was straight again after that payment by January 2010). Thereafter my overpayments returned to only £20 a month (and my mortgage payment was only interest only). But I started saving so I had an emergency fund (very important being self employed).
This summer my fixed term ended and that really made me think – my rate dropped to the SVR of 4% and so my mortgage payments dropped by almost £300 and I really turned my thoughts to my mortgage and started to read the threads on this site. At first I started a few of the little things (a virtual sealed pot type thing whereby every Friday I paid the change (anything less than £10) from my current account towards my mortgage).
I have now also decided to look into an offset mortgage (as I am self employed I have all my tax money in a savings account) and so decided this diary may really help me with my thoughts and goals (my LTV is too low for an offset at the moment).
This won’t be my last mortgage (it is a flat that I can see myself staying in until marriage/kids come along – more about my OH in a later post) but I want to decrease my mortgage as much as possible so that I am in a good position when buying my next home.
Sorry if that was a little too long and rambling but I have been thinking about this for a while, so a lot to get out!
Mort at highest - June 2008 - £171,000 - Daily Int 5.9% = £27.64:eek:
Offset Mort - Nov 2010 £150,299- Daily Int 3.75% = Nov £15.44
Mortgage Jan 2012 - £136,000 - Daily Int 3.75% - £3.10
0
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Monthly income after tax................ £ 3310
OH bill contribution……………£145
Monthly Expense Details
Mortgage................................ 650 (includes a £104 overpayment)
Management charge (leasehold property).. 87.50
Council tax............................. 122
Electricity............................. 90
Water rates............................. 60
Telephone (land line)................... 15
Mobile phone............................ 65
TV Licence.............................. 12
Satellite/Internet...................... 85
Groceries etc. ......................... 300 – Shocking for two people I know!
Clothing................................ 100
Toiletries/Make-Up………….50
Petrol/diesel........................... 40
Road tax................................ 15
Car Insurance........................... 57
Car maintenance (including MOT)......... 35
Travel…………………..75
Medical (prescriptions, dentist etc).... 10
Contents insurance...................... 30
Life assurance ......................... 15
Income Protection Insurance …………45
Presents (birthday, christmas etc)...... 50
Haircuts................................ 5
Entertainment........................... 200
Holiday................................. 0 - SEE BELOW
Dad’s 65th Fund……………...100
Neice/Nephew Savings Account……40
Sofa (0% for 3 years)……………45
Emergency fund/Savings (ISA).......................... 300
Pension………………..160
Total monthly expenses.................. £2943.50
Debts – I only have my student loan, which I pay yearly because I am self-employed.
My OH moved in with me a few months ago and he pays a proportion of the bills (he gives me £145 a month which is about 40% as I earn more than him. He also gets £500 a month for renting his flat, we put that in a savings account and that pays for all holidays, weekends away and odd things we need for the flat.
the shocking thing is that I should have a few hundred pounds surplus income every month according to this and I don't! So, I must be spending more in some areas - I think I should have a miscellaneous category (magazines, cups of tea etc I buy when out and about)!
I earn a very good salary and I am appreciative of that, but I think as it is a new thing for me to have money (only last 3 years) I have made the most of enjoying it and I think I now need to think about my long term future a little more.
All comments appreciated!
I am hoping to convert him by dropping hints about how much £1 overpaid now will save in the long run - it is those calculations on other ppl's threads that really made me think!
It's very difficult to comment on other's SOA's, especially when they are not on the debt board. Didn't stop me having a go though :rotfl:. I think the important thing is what YOU think. Do YOU think £85 is too much for Sky etc? If you are happy with what you are spending on various areas, and are getting each part as cheaply as possible, then that is what matters.
PS - have you got a moat though
It is hard to comment on peoples SOA as house sizes / locations etc come into it but at first glance.
Agree Sat tv, Why is this so high? Mine with Sky is £60 a month with internet and phone line and calls.
food - too high. mines £400 pm for 7 of us and we eat like kings
Water - ouch :eek:
Electricity - I presume that this is gas as well ? Mines £83 pm for both
Make up - too high. try mingling brands
Entertainment budget ? Wow every month ? Can you do it cheaper?
Do you really only spend £5 pm on your hair? Cut, colour, tip ?
Try keeping a spending diary as like you said you should have a few hundred left over a month. It probably is the odd snack here, coffee there. But it all mounts up. I account for every penny which makes me a complete bore but at least then I know what I REALLY have to OP.:)
good luck
edit -> advanced
(thats ok because these are good starting targets)
A budget is the plan of how you want to allocate you income, this will be flexable as you reprioritise your allocations
Start a spending diary and track you spends and see how they match the plan.
(Think of your personal life as if it was a business)
Modify the plan to meet reality but keep the Income/expences ballanced over the longer term.
I use a rolling year, start with monthly updates and as the plane starts to match reality these updates will become less frequent.
On the SOA
TV,internet and phones are somewhere you can save loads.
(our Basic VM package is £25pm with unlimited landline calls)
Cash back mobiles are close to free.
Seperate out booze/fags(other discretionary) from groceries
I have eating out and take aways as seperate catagories, if you do these a lot the groceries should be lower than the "norm". Some of this expence is probably in the entertainment but by breaking it down you identify the annual costs at a finer level which makes it easier to priortise "fun"
Entertaining a home can include some food/drink from the going out part of the plan
A meal out can be about the same as a weeks groceries so there are easy trade offs. We traded a weekly takeaway habit for an extra holiday.
Are any of the SOA items business if they are then they must be seperated.
The car is costing a lot( £147)for the £40 fuel costs does the OH have one as well could you get rid. There is £75 other travel as well.
Is the income protection insurance suitable for self employment?
Yearly totals for each catagory can be enlightening, big numbers can be broken down to identify the bad value spends.