Mortgage Free In 12 Months

Carafan

Hi,
After lurking on this thread for some time now it has finally given me the kick up the you-know-what to sort out our finances!

Our household consists of me - 38, self employed, DH - 39, works for NHS and DS - 10, player of computer games.

I suppose we have been aiming rather haphazardly towards being mortgage free for some time now. In 2005 we sold our house for a profit which enabled us to buy an older wreck of a house. The money that we made would have paid for the house outright however we needed some cash to enable us to do some work on it (and boy did it need some work doing!)
So we held back a lump sum of £28,000 and got a mortgage for that amount.

So fast forward five years on and the house is almost finished and we can now look to pay off the mortgage. At present there is around £23,000 outstanding and it would be brilliant if we could pay it off before my 40th birthday in December 2011. We have £13,000 in a savings account which i would be happy to use however DH is a senior manager with the NHS and I think it would be prudent to try to hold on to that for now what with the proposed cut backs etc.

Anyway thats the plan, I just need to delve into the details now but I feel that by posting on here I have kind of committed myself to doing something that I should have done a while ago.
So I'm off now to read up on everyone's plans for inspiration and hopefully I'll post again soon with more details.:)

Jock_Tight

All the best on your mortgage free journey Carafan
I too am looking to be mortgage free before I turn 40 (Jan 2013).

Queen-Bee_2

Hi Carafan :wave:

Good luck on your journey! £23k between the two of you seems like a very 'do-able' amount - it's amazing what can be achieved when you set your mind to it... Topcashback, cutting back on buying lunches out and taking your own, and ebaying instead of buying new can make a tremendous difference to ones finances!!

QB

lovethymini

Hi Carafan

Sounds achievable, go for it!
What a way to celebrate your 40th. (And If you pay it off early you can treat yourself to a big present)

I think there's no way I'll be MF by 40 (3years and £215k? nah.) so am a wee bit envious

Carafan

Hi and thanks for all of your comments :wave:

Well this afternoon I made my first step - We had been putting £300 a month away for a big holiday. Well we came back from that holiday 2 weeks ago so I have arranged for the £300 to be used as monthly overpayments on the mortgage. This is great as we have had a direct debit taking this money out for 18 months so we won't even miss it!

At the moment I am surrounded be piles of paperwork as I am going through all of our household spending and compiling a SOA - I'll post more on that once its done.

I really should have done this ages ago, however to be mortgage free by the end of next year means that I might even look forward to my 40th birthday!:eek:

Carafan

Hi,
Well this weekend I've been able to look into our finances in a little more detail. This is basically how it breaks down -

Total Monthly Income (after tax/pension) £2758.59

Mortgage (inc £300 overpayments) £447.60
Council Tax £119.00
Electric £56.00
Gas £50.00
Water £36.00
Telephone £31.00
Mobile £5.00
TV Licence £12.12
Internet £7.50
Groceries £260.00
Clothing £100
Petrol £150.00
Road Tax £30.00
Car Insurance £66.00
Car Repairs/MOT £50.00
School Dinners £26.00
Dentists/Opticians £15.00
House Insurance £38.00
Life Insurance £6.05
Other Insurance £23.45
Birthdays/Christmas £83.00
Haircuts £15.00
Entertainment £50.00
Holidays £40.00
Caravan Club/NT £10.00

Total Monthly Expenses £1701.72

Monthly Budget Summary

Amount(£)

Total monthly income

2,758.59

Monthly expenses

1,726.72

Available for repayments

1,031.87

OK so thats the finances in order - next step a plan of attack!!!!:D

Carafan

Hi there!,

Well I have been in touch with the building society this morning and have got the amount outstanding on the mortgage - £23,264 which is around what I expected.

After having a good chat about this over the weekend with DH this is what we have decided to do.

We have an ISA with approx £3,200 in - this will be kept as an emergency fund.

£10,000 in savings account will be added to over the next 12 months and will be used to pay off mortgage.

We are currently paying £147.61 in mortgage payments.

In January we will start to over pay by £300 per month.

so......

Savings = £10,000
Mortgage Payments x 13 = £1918.93
Over Payments x 12 = £3600
Total amount paid off = 15,518.93

Which leaves us with £7,745.07 to find. Now looking at our SOA it looks do-able however at the moment the money that we are supposed to have left each month just isn't there!!!!
I know that it gets frittered away on stuff so our challenge is going to be cutting back on all of the things that we really don't need and being a bit more frugal!
If anyone has any advice on how to go about this it would be really welcome!

Thanks for reading:)

Carafan

They say that talking to yourself is the first sign of madness!...lol:rotfl:

Well after looking at bank statements its easy to see where all of our spare cash has gone - on the house. Its amazing how all of those trips to B & Q add up.

While we have been doing up our house all of the big spends - new windows, loft conversion, kitchen etc have been funded from our savings account, however all the other stuff has been paid for out of our current account. What bothers me is that the house is about 90% finished but we still have work to do and I'm unsure how much we can put into paying off the mortgage while we are still spending.
Looks like another bout of budgeting is required!

Another note I trying to get all of my Christmas shopping done by the end of this month so that I can start saving in earnest in December.

Thanks for reading:)

Carafan

Well I've not made much headway this week with saving as I've been trying to get all of my Christmas shopping done:eek:

I want to get it done by the end of this week so that I can start saving in earnest in December - I know, its probably the worst time of year to save!
Hubbie is in the process of converting part of our garage into an office for me so there has been more expense, thankfully theres not much more money to spend on it other than it plastering. I'll be glad once all this spending is out of the way!

Carafan

Well it was pay day for DH yesterday and he has been paid for some overtime so I have transferred it straight into our savings account - thats £400 closer to paying our mortgage off!!!

Carafan

Well I've been having a look at figures this weekend.

If I can get the outstanding balance to £12,000 by the end of this year then its a straight £1,000 each month that I have to save for the next year :eek:
£300 will be in the over payments that I have already arranged to start in Jan so that means that I have to put £700/month into the savings account. Thats some serious saving so I'm starting to swat up on things that I can do to cut back.
I've started a jar for loose change this weekend which I will pay in as soon as it's full and I've been looking out for bargins while doing the supermarket shop.
This week I will be looking at my home insurance, at the moment the premium is quite high as it combines my business insurance as its home based. I'm going to see if there is a cheeper way of doing it - hopefully there is!