XSpender - MFW in Training

XSpender

Hello Iris:wave: I am feeling much better thank you:)


I am having a bit of a wobble this morning. I have signed up to N/wide internet banking and it has got me thinking am I putting my overpayments to the right place?

#1 is my 2.5% interest only mortgage with N/w balance £121k allows any amount of overpayments fee free. The monthly payment without overpayment is £260
#2 is my 8.9% second mtg £25k which only allows 10% overpayments t a time with a fee of £60 for each one. The monthly payment is £460

#1 is getting a regular overpayment of £41
#2 has a savings account that I am aiming to pay £50 - £100 into each month while I am on mat leave but will increase this in the future

The savings rate is lower than the interest rate on #1 and it will take me a long time to save that first £2500 where as every £1 I pay to the mortgage has an instant impact and goes straight off the mortgage balance.

#2 has 70 months to run and we would like to move in 60 months. The balance at that time could be cleared out of the equity

I have other ISA and instant access savings at a good rate for emergencies and Christmas/hoidays.

My original plan was to have cleared #2 and reduced #1 to less than £100k in 60 months (optimistic figure). Although payments are low at the moment these will increase with DH bonuses and when I return to work and also would increase if we paid the secured loan off early.

I think I am leaning towards paying the overpayments to #1 because the decreasing balance will keep me motivated. #2 will get paid off if I just keep paying it while #1 will never go down if I don't make an effort to reducing the balance.

What do you think?:)

gallygirl

All you need to do is set up a spreadsheet to take into account:

Additional interest charged on No.1 by not overpaying, less
Additional interest earned on savings account (net of tax unless in an ISA), less
Additional interest saved from a particular point in time on No. 2 account, less
£60 fee each time.

Then you can play around with various options and see which works best.

Simples

Serously, for an excel expert it's probably not that difficult. Unfortunately I'm not an excel expert .

But, as a rule of thumb:

£1000 on no. 1 would cost you £25 in interest over the year. If you were overpaying monthly direct to that account then you would be saving around 1/2 that interest (as £1000 being paid gradually). But from every year onwards you would get the full benefit of that £25 savings, plus 1/2 the next years etc. So at the end of year 2 you would have saved £25/2 from year 1, plus £25 from full year's savings of year 1 OP, plus £25/2 from year 2. So, £50 saved.

Saving £1000 at say 2.5% net would again give you around £25/2 interest. (In reality you'll struggle to get 2.5% net, so will be getting less than you would save by OPing on no.1.). At the end of year 2 you would have the same, as you would not get compunded interest if lifted to make OP on no. 2. So, end of year 2, £25 interest gained.

Making a lump sum payment of £1000 at the end of year 1 would save you nothing year 1 but save you £89 year 2. Factor in the £60 fee and you've saved £29, plus you have the £25 interest, so overall gained/saved £54.

I think that's right(ish). So, in effect you're as well sticking with your plan to OP on no.1, unless you can save quite a bit more than £1000 a year. Which is what you wanted to hear . Unless you want to project over 3, 4 or 5 years in which case saving then OP'ing on 2 would look a better bet

XSpender

Thank you for working that out for me gallygirl. I think I will put my little overpayments/savings to the mortgage #1 account and let #2 take care of itself until I am in a position to make larger overpayments and then may try tackling them both at the same time:)

Received a one off TC payment of £19.10 today, thought I better ring up and check I could keep it. It is something to do with them going into my account to see if the spending review would impact my payments and it has automatcally done some kind of adjustment. They also said if I do an estimate of what I am going to earn this year (a big fat zero) they can look to adjust my payments too. I will do this today/tomorrow as if I can get a bit more coming in it will stretch the length of time I have before I need to look for a new job and I can overpay a bit more:D

DH is on a course today and will finish early (never normally happens) and wants to go for a happy hour pizza, might be persuaded to spend the £19 on it;)but it will come out of the grocery/housekeeping budget. I don't feel too bad about spending this as I have done without my personal spending money this month and it will be nice to spend some time with DH as a family:) Normally I would have sent this to the overpayment pot.;)

I am useless and can't count:mad: When I checked the change to pay in this afternoon it is £26 as I had originally thought not £36. Grrrrr:mad:

Finances Update

In

£99 current account after all bills and DDs and DH concert ticket
£16 purse
£26 change to be paid in today
£40 NP0wer to be paid in today
£181 TOTAL

Out

£245 left in grocery/housekeeping budget(aiming to save £100 here)
£45 left in diesel/misc budget(aiming to save £20 here)
£22 christening outfit(using £10 voucher)
£312 TOTAL

Still a bit short, must get my free ads done by Monday so I can get something sold this month.

Will get the ad paper I keep forgetting today and will need a stamp to send my Dad's christening invite to France so a couple of £ off the misc budget.

Right off to have some lunch then post office, newsagent and bank:)

SmlSave

Enjoy your pizza tonight (if you go of course)

XSpender

We didn't go for Pizza in the end as DH had a full roast dinner and bread and butter pudding with custard for lunch on his course! :eek: We ended up just having posh burgers for him and veggie hot dogs for me from the freezer. Not a very healthy tea and I had to get up at 11.30 with indigestion.:(

My veg box has arrived this morning and I think that the small one might be a better size for us as I can see all the contents been eaten this week. Cost £11.45.

I collected my refund money from the post office yesterday and paid this in to the bank with the ticket money from DHs brother and friend and my loose change.

Spent 60p on a stamp to post my DDad's christening invite to France, £25.91 on food and £2.51 on some 9-12 month sleepsuits for DS as used up some of my nectar points on a bottle of mint baileys for christmas and put the rest towards the suits:drool: DH thinks the sleepsuits look huge but to be honest DS is that long at 6 months I can't see the current ones lasting until he is 9 months.

I got really excited on the drive to the post office as I saw a billboard advertising the 5x£40 morries shops = £30 voucher which we missed out on last year as we only started going there half way through the qualifying period. How sad am I?

Remembered to go get an ad paper but they didn't sell them at Mr S so will have to try a couple of small newsagents today. I keep thinking of more stuff I can sell.

My Mum and Stepdad are coming up for a couple of days next week. My Mum is going to help me take up some gorgeous Laura Ashley curtains I used to have in my living room at my flat years ago to hang in the kitchen They are the biggest size of curtain LA do so I will only probably need half of one to cover my french windows, make a false roman blind for the small window and a tie back.

I really liked the crochet stuff Kirsty made on her home programme this week and the necklace the instructer was wearing so I might have a go at crochet. Does anyone else crochet and what do you make with it?

DH invited some friends over on Saturday night so I will need to get some more food and beer in as I do a different theme night on a Saturday and this week its Mexican.:beer: The couple who are coming are right drinkers though and DH is easily led and will probably get as drunk as a skunk but I will be falling asleep by 11.30pm as I am not a big drinker anymore and will have to be up with the little one in the early hours!

84p gone in the overpayment pot today:)

Update on financial shenanigins.....

IN

£120.14 balance in account after dds less veg box
£19.80 purse

OUT

£207.17 left in grocery budget
£41.37 left in misc/diesel budget
£22.00 christening outfit - will get this at the weekend

£130.60 short if I use up both budgets. This is unlikely but I need to get cracking selling some stuff or I will have to dip into the savings.

Ooo what a lot of old waffle. I am off to update my signature with the change in MFW targets and see if I can find Memory Girls thread I keep hearing so much about.....

XSpender

We have had a busy weekend and I am way behind on posting and reading other's diaries.

Went to the local council run firework show on Friday. It is free and very impressive, there must be 20,000 people there:T. Saturday we had some friends over for a mexican evening which was great fun and on Sunday had some neighbours over to watch the footie. We are worn out.

I have realised that we spend quite a bit of our food budget on entertaining. We have had friends over 2 out of the last 3 weekends, fed BIL twice and I have my parents coming up for a couple of days later in the week. We don't go out much so I suppose it all evens itself out in the long run.

The good news is I have realised that we are not £300 short due to DH wage been a bit lower this month but because I paid the £300 cash to the kitchen fitters out of this months income and forgot to transfer it from the savings:o No wonder I thought we were skint:o Eeejit!

Still, it has helped me focus on sticking to our budget which can't be bad. I am still going to sell some stuff this month to see if I can raise £300 as I was originally planning too. The ad paper comes out on a Wed and usually sells out, that's why I couldn't get one last week.

The £19 extra CTC they told me last week was an extra payment isn't as I got a letter on sat saying they are reducing my payment by a couple of pound a week. Why they didn't say this on the phone I don't know. Updated them with my reduced circs due to redundancy so I am hoping I may get a little bit more.

Still loving my new kitchen and made my first batch of Twinks in the new oven and they were the best batch I have made:D

DH didn't like the christening outfit I was planning to buy so bought DS a stocking and a hat and mittens as the one he had on Friday night made him look like an Ewok!:rotfl:

Balance in overpayment account is £130.25.

The postman has just been with my internet banking log ons for the mortgage so I am off to regiser:T:D

SmlSave

Glad to hear you had a good weekend

XSpender

:j:jFirst increased DD went out to mortgage today so I have officially made my first overpayment of £41.90:j:j

Total in overpayment account is £131.96 and I will send this over too when the balance reaches £150 which will probably be by the end of the year.:D

XSpender

I have had quite a productive MFW day today.:D

• Took out 30 day trial with l0ve film £18.54 cash back with TCB:j
• Took out a 30 day trial with cred1t expert £15.54 cash back :j
• Did a quote with g0compare so should earn another £1.75 cb:j
• Got a quote from Sains for house insurance £245 cheaper than current renewal with £40 vouchers and £30 cash back:D:j
• Existing provider requoted at about the same taking into consideration the £30 cashback they would send me 2 months later:)
• Not been near a shop even though I was craving liquorice torpedoes and even avoided the sweeties when I out diesel in the car:D
• Got a bag of goodies including tom tippee cups for letting the hv at the baby class use their new software on me;)
• Planned a menu for when DM & step dad come upthis week from stores so no need to buy extras except a bottle or 2 of wine and some lemonade for Mums martini:D
• Didn't use the tumble dryer today (only cos DH has piled a wheelbarrow full of stuff in front of it);)
• All meals from storecupboards and using up bits left from mexican night;)

I will get DH to do a trial with credit expert tonight too as the offer ends today. I never think to use top cash back to earn bits and pieces from quotes and things.

Iris_Blue

Well done on all your moneysaving today ! What a busy day.

Also :j on your first OP - How good does that feel!