The long road to being mortgage free!

Sepa74

You really only need at the most 6 months of outgoings as an emergency savings pot... If keep any more (unless you're earning a lot of interest on it of course) and you're not maximising your finances.

But you definitely should build your savings up to that level, even though it might feel frustrating that you're not meeting this year's target.

But as everyone says, this is for the long haul, which is why this community is so helpful. We'll get there in the end, and it will be quicker than most people with a mortgage, and it will also make us richer in the long run!

Tilly_MFW_in_6_YRS

Hi Ammonite, Sepa and ShalaMoo are right about savings. You do need to have some security behind you. I think the mindset change which comes from MFW is important. It's all about using your money wisely. I can't recall whether you have an OS mortgage, will need to read through your diary again but if you do, I would focus on building your nest egg. If not, then look to build a savings pot which will keep your bills going for 6 months.

Whilst it would be great to knock a year off, knocking 6 months off, but knowing you have cash IF you need it, is worth a lot. You will still know that you have ended the year better than you started it, even if it's not OPd. Why don't you think of 2012 as preparing yourselves for the year ahead. This frugal stuff is life changing and I find it's a little competition with myself. Any money I avoid spending somewhere, I do something deliberate with - all helps to keep the money where it needs to be which is securing our futures.

Best wishes Till x

ammonite

Thanks Tilly, Sepa and ShalaMoo, all excellent advice. I actually think that you might be right given our potentially changing financial situation.

I think it will be the right thing to build up 6-12 months worth of savings (given the aforementioned financial situation) and then if things all end up rosy jobwise and we don't need to use the savings, we'll have a nice lump sum to pay off before we renew our mortgage term. Sound good?

In other news, got the most depressing letter of the year through today - the Mortgage statement for the year.

Only 260 months to go guys!

So with the above mentioned, still might try and commit things like my Quidco cashback, vouchers money etc. to the overpayment - -even if it is only £30 per month, it is better than nothing. I might try for £50 a month minimum, we wouldn't actually notice that if we spent it on a night out (which we rarely go on) so I think we could manage without that PLUS build up the nest egg.

Thanks for the excellent advice as always

ammonite

OK had a finance check and reckon we are around 20% of the way to saving towards our 'nest egg'. Long way to go!

Definitely using cashback etc. for mortgage overpayment even though it will be a tiny amount each month, it will make me feel as though we've made a start!

Have quite a few expenses coming up - we need a new fence and shed which isn't ideal but needs must sometimes hey!

Thanks for reading, it keeps me going

ammonite

Someone needs to talk sense into young ammonite!

I had such hopes of overpaying. I know the 'nest egg' makes sense. But I still really wish I could overpay.

Having a "money makes the world go round" day today

ammonite

Right I'm rambling here again.

Paying £2100 this year will save me £7000 of payments in the long run according to my magic spreadsheet.

I'll compromise and overpay £1000 this year saving me around £3500 in the long run and save up the nest egg at the same time.

That sounds like a plan?

Tilly_MFW_in_6_YRS

Hi Ammonite, don't forget this is a long journey so I wouldn't get too hung up on your first 'year'. Look on this perhaps as an investment for the future, getting yourself set up for next year.

Good luck, Tilly x x

ammonite

That's true Tilly. It's a marathon not a sprint. It's the fact that the mortgage calculator is telling me I'll be paid off in 2033. What a thought!

gallygirl

ammonite wrote: »

Someone needs to talk sense into young ammonite!

I had such hopes of overpaying. I know the 'nest egg' makes sense. But I still really wish I could overpay.

Having a "money makes the world go round" day today

How's this for a compromise? Go for a 'zero net debt' position which means you count your mortgage minus savings as your debt figure . Seriously, come the end of the year that's what I will be doing as our rates are lower than we can get elsewhere with savings. What matters is being ABLE to pay the mortgage off - it's all about giving yourself options :T.

I agree with you though about making little and often payments - that is what keeps your interest up - you're in it for the long haul .

ammonite

True Gally - think I was just having a "argh we never have any spare money" moment (when in reality we probably do - we hardly suffer for it!).

I think I will do the 'zero net debt' as you say.

Just calculated it........


We have 4.508% of the current mortgage in savings.

Also being realistic, our LTV is probably now around 50% which isn't bad seeing as we've only had the mortgage less than 4 years. Good deposit and a bargain house that we ploughed money into to do up.


Hmm, that makes me feel better. This percentage will increase each month as we make normal payments AND increase because of overpayments (minimal) and additions to savings.

OK Gally Girl, you're a genius. You've made me find a way of counting that makes me happy

Addicted to saving!