Countdown to Freedom

Tilly_MFW_in_6_YRS

Hiya SD, I wonder then, once we have paid say a year of OP, could I stop the mortgage protection insurance? That costs circa £180 a month, which could then be OPd as well. The insurance is to cover the mortgage if we lose our jobs, but if we effectively have insured ourselves for a year by Oping, then I don't see the point. I need to think on about that as its a lot of money paid over many years. As we have not had to use it, I begrudge paying it, however, would not be prepared to stop it until we had built an equivalent 'insurance' bucket.

My brain...........aaaggggghhh.

Night all, Tilly

SJ1

Hi Tilly

Thank you for the message! I need to reassess what I am doing. Did really well at the start of last year and managed to save loads and then in the summer it all went wrong and we have had huge credit card bills since! So trying to get back in the MSE way again, it's a real state of mind thing I think.

I think I am just allowing too much money for things. I have three accounts. So one for the mortgage and other direct debits, so that is where the big mortgage payment, electric, council tax, life insurance and all those other wonderful things come from. Then we have a direct debit account which I divide into five areas, food (£500), petrol (£500 - I drive about an hour to work each way and this in a diesel car), eating out (£120), other bits (£500) and then cash. We also have childcare coming out of this account too. The 'other bits' is supposed to cover all the things that we need so shoes for the kids, things for school, dentist, books. I always think that this sounds like a lot of money and it just goes so fast its unbelievable. Out of the left over money I try to keep around £650 to cover all the one off things like looking after the cars, house insurance, christmas, birthdays and holiday. After that we should have quite a lot left over but the credit cards recently have been a bit of a nightmare so that is where I am going to put all my efforts at the moment.

I think I need to just examine every spend that we are doing. Quite a lot of the week now I am having no spend days, making my own lunch which. Think that I just need to find that magic state of mind where I don't want to spend anything. But that can be tricky! That said Christmas is almost sorted apart from a few things... hmm you have made me think.:)

SJ

Tilly_MFW_in_6_YRS

Hiya SJ1, although a complete pain, I think it would help you to keep a spending diary as it really is the incidental spending which I found tends to get out of control. That's why I transfer money to the credit card pot, whenever we spend on them. That was one of the biggest lessons I learnt. Good luck with your thinking.

Night, Tilly

sweetdaisy

Tilly_MFW_in_6_YRS wrote: »

Hiya SD, I wonder then, once we have paid say a year of OP, could I stop the mortgage protection insurance? That costs circa £180 a month, which could then be OPd as well. The insurance is to cover the mortgage if we lose our jobs, but if we effectively have insured ourselves for a year by Oping, then I don't see the point. I need to think on about that as its a lot of money paid over many years. As we have not had to use it, I begrudge paying it, however, would not be prepared to stop it until we had built an equivalent 'insurance' bucket.

My brain...........aaaggggghhh.

Night all, Tilly

Not really sure about stopping mortgage payment protection, however I suppose that if you feel you have secure jobs and have 'rainy day' savings behind you then this money could be used to offset against the mortgage/overpay etc.

Also, as you are overpaying a lot on your mortgage and reducing the Capital I am sure that your protection insurance could be reviewed to reflect your remaining mortgage balance, so that your payments can be reduced.

Imelda

We have stopped our mortgage protection insurance. The basis of our decision was similar to yours. We have enough in the savings portion of our offset to pay our mortgage and other life expenses for at least 5 years, in which time we would have found some work at least and mortgage protection would have stopped paying anyway.

lulabelle1

SJ1 wrote: »

Hi Tilly

Thank you for the message! I need to reassess what I am doing. Did really well at the start of last year and managed to save loads and then in the summer it all went wrong and we have had huge credit card bills since! So trying to get back in the MSE way again, it's a real state of mind thing I think.

I think I am just allowing too much money for things. I have three accounts. So one for the mortgage and other direct debits, so that is where the big mortgage payment, electric, council tax, life insurance and all those other wonderful things come from. Then we have a direct debit account which I divide into five areas, food (£500), petrol (£500 - I drive about an hour to work each way and this in a diesel car), eating out (£120), other bits (£500) and then cash. We also have childcare coming out of this account too. The 'other bits' is supposed to cover all the things that we need so shoes for the kids, things for school, dentist, books. I always think that this sounds like a lot of money and it just goes so fast its unbelievable. Out of the left over money I try to keep around £650 to cover all the one off things like looking after the cars, house insurance, christmas, birthdays and holiday. After that we should have quite a lot left over but the credit cards recently have been a bit of a nightmare so that is where I am going to put all my efforts at the moment.

I think I need to just examine every spend that we are doing. Quite a lot of the week now I am having no spend days, making my own lunch which. Think that I just need to find that magic state of mind where I don't want to spend anything. But that can be tricky! That said Christmas is almost sorted apart from a few things... hmm you have made me think.:)

SJ

Hi SJ! - I was very similar to yourself and noticed this when I started my diary a few weeks ago. I took some advice from Tilly and did a bit of thinking and in the end opened lots of savings accounts for all of the different things that I wanted to allot money to each month or same over the course of a year.

Result is that I have loads of savings jars set up and I plan to transfer the allotted amount to each of them on pay day. I will be really sensible, let it run for 3 months and see how it works out. Worse case is that it helps me stick to a monthly budget, best case, with my new MFW hat on, there is money left in each of them at the end of the qtr and I can throw this at my mortgage.

Good Luck!

lulabelle1

Imelda wrote: »

We have stopped our mortgage protection insurance. The basis of our decision was similar to yours. We have enough in the savings portion of our offset to pay our mortgage and other life expenses for at least 5 years, in which time we would have found some work at least and mortgage protection would have stopped paying anyway.

I stopped mine when I read the fine print and realised it wouldn't actually do much for me.........

You and Tilly both strike me as resourceful, focused individuals and even if you lost your current jobs, you would soon have either or another job or find away to make some money, just the sort of people that you strike me as being...... When I started thinking like this I realised that I hopefully would never need the income protection.....

Also, I'm employed by a company that I own a part of so receive part of my salary as dividends, sadly this wouldn't be covered, so even if I had protection, it would barely pay my food bill let alone anything else.... :rotfl:

Tilly_MFW_in_6_YRS

Hi LB, I definitely begrudge the money I spend on the insurance but will look to get a years worth of overpayments made first. However, during that time, I will be checking whether the premiums can come down as the capital reduces.

I am definitely having a day when I wish we had take up this baton years ago, however, we are where and we are all fortunate to be able to OP whatever the amount.

Have a good day
Tilly

lulabelle1

Agreed Tilly, when I look back at how we treated/viewed the mortgage over the last 13 years it scares me. If I knew then what I knew now I would probably have next to no mortgage o/s.
Still, at least we have found the focus now, sadly some people never will and will still be paying their mortgages for many more years after ours are (hopefully) a distant memory.

Sepa74

I'm like lulabelle, I cancelled mine when I started my own business as it wouldn't really cover me. But I'm also not convinced it's good value if you manage your money well and have a good sized emergency savings fund.

I claimed on mine when I was made redundant, but only received one month of payments because by then I had a contract and was starting my business.

£180 pcm is a lot.

Lulabelle, I have taken out "executive" income replacement insurance. It's very expensive (but not as expensive as Tilly's mortgage insurance!!) but the premiums come out of the company pre-tax, so there is a saving there.

It would pay out until I retire, AND covers dividend income AND would pay me enough to cover my pension payments between now and retirement.

My FA has said I should match it to my ability to retire - so if I have enough savings / pension pot to retire at 55, then I would change the payout date to age 55, which would bring down the premiums.

I don't think my FA feels it's good value, but the peace of mind is enormous. I know of someone who had it, and when she had a nervous breakdown and couldn't work it made all the difference to her. She still can't work, (can't leave the house, even, or have visitors or touch anything without wearing rubber gloves - very sad!) but has no money worries because of the insurance.