Any single mortgage free wannabes?

SandC

molit wrote: »

i was wondering, assuming that one day some of us might be taken off the shelf :-) (tongue very firmlg in the cheek) how would you feel if your prospective partner had never been a MFW, and instead of saving, had spent their money on the things that we have given up on to buy a place, and then got all the benefit from all the overpayments???

It's a seriously good question because I've never lived with anyone (except my parents!). It would be a longish relationship before I considered cohabiting anyway. During that time I'd have to be satisifed that we at least had the same attitude towards risk if you like.

I don't expect or need someone to be overpaying on mortgage but as another poster said, I would want them to bring something to the party. Their own place and a bit of equity would be okay. It's all about attitude and I do understand that it can take a long time to get financially straight after a divorce, say, but I honestly couldn't see myself getting seriously involved with anyone who had zilch to their name.

heavenfire

ultrarunner wrote: »

What do you like doing, there must be some free things which you enjoy in London!

I don't want to sacrifice holidays, but equally I prefer a camping holiday in the UK to an expensive foreign holiday

Southend1 wrote: »

It's amazing what you can do for free. As for entertainment - museums, walks, evenings in with friends are all free or at least bus fare/petrol cost only. Where I live there's always something going on - cultural exhibitions, street entertainment, bands playing in the park etc, so there's plenty to do on a very limited budget. I'm sure there must be plenty similar in London.

Apologies if my post made it sound as if I didn't like to do anything in London! I do like visiting the museums, taking long walks, check out sites like this one for freebie tickets or vouchers and having evenings in but with eating out, drinks, entry to some places and the pathetically early time that public transport (I don't drive) ends it makes going out expensive.

I know, I know I could eat before I go out, not drink or drink during happy hours and get the night bus but I can't always have my own way when my friends want to organise nights out (unfortunately ).

Take for example the free entry into Hyde Park to watch the Olympics and hear live music. You couldn't take any food or drinks in with you (they did a thorough bag search). The food and drinks was extremely expensive with say a chicken and chips (small looking portion) costing £7. My friends and I felt so sorry for those bringing their families with them as it must have cost them a fortune! :eek::eek:

I'm really not the camping type. I need a proper bed and essentials like that I hate flying so when I go on holiday I like to try and make it worthwhile and it does take a lot of saving for me to get away.

:eek: Can I make anymore excuses?? :rotfl:I need to play the lottery!!

Southend1

Spent most of yesterday evening re-doing my monthly budget and have been able to increase my overpayments by another £50 to about £73 per month from September 1st! :money:

Chilliplant

Hi all. I'm very new here and only just starting to feel my way towards sorting out finances properly. I've had a mortgage since 2004, there's about £75k left on it and unless I try and pay it down I won't be MF until 2039!

What has prompted me to think about things more is the realisation that I can't see myself ever being able to afford to upgrade, so will be still in the same one-bedroom flat when I retire. It's all a bit daunting though, and I see the first thing I need to do is find out whether my mortgage provider will accept overpayments.

The trouble is, this is probably not the best time to start. In the last couple of months I have set up a business with a friend and whilst we haven't had to take out loans or anything for start up costs, we're still in the uncertain period when we don't know if we will be able to get the clients we need to make it viable.

I'm going to lurk around the place to pick up tips and I know I need to be more disciplined about my spending. I don't have debts other than the mortgage and in theory I have a monthly budget spreadsheet, but it's far too easy to overspend money that I would be better off saving.

One question though - in my last job I had a pension plan which I paid into for two years. I would like to start contributing towards that again, once we know where we are with the business. Would I be right in thinking that should be a priority over paying down the mortgage? There won't be an employer's contribution any more for example.

LibbyR26

Hi, many thanks to Heavenfire for starting this thread. So nice to see the great progress that people are making on their own.

I'm nearing the end of my mf journey, with my final payment due next month. I bought my house in 2005. My "lightbulb" moment came in 2008 which started a lengthy period of uncertainty with my job due to reorganisation. I had many sleepless nights worrying what would happen if I lost my job and could not pay my mortgage. I was very aware of not having the safety net of another income coming into the house.

I became determind that if I got through it I would never be in that position again and risk losing my home due to factors beyond my control. For the next 3 years I lived pretty frugally and overpaid as much as I could. The experience helped my appreciate the difference between the essentials in life (which are fewer than I previously thought), the things which may not be essential but make life enjoyable and luxuries, which I can either do without or pay less for.

One of the other posters mentioned one of the hardest things of trying to do MF on your own is not having someone to bounce ideas and decisions off. I think it would be lovely if this thread grew into a regular following where single mfw could meet on a regular basis to support each other.

Good luck and best wishes to all single mfw

Sepa74

Hi Chilli,

I can't take credit for putting it this way, but being financially secure in retirement is like a three legged stool - you need to have a solid foundation of investments (including property), savings and pension. If any one of these is wobbly, your whole retirement will be wobbly!!

So you need to do both - pay off your mortgage AND contribute to a pension.

I would continue to contribute to your pension fund, and would also think about shifting it to a stakeholder pension fund which has very low fees. A huge chunk of the return on pensions is eaten up by fees, so it is worth minimising these.

Although you have lost your employer contribution, your personal pension contributions will be a deductible expense from the business. I would pay into the pension a small amount each month from your pre-tax income, just to maintain continuity and reduce what you will need to catch up later, and pay a little off the mortgage from your post tax income to reduce the interest you are paying.

As the business grows, you can increase the pension payments dramatically as a way of minimising the business tax and make up for the low payments you were making into your pension when the business was young.

As your personal drawings increase from the business, you should also think about saving into ISAs which produce a handy tax-free incomes stream after retirement.

At some point you should also think about income replacement insurance if you become long term ill, and / or health insurance to get you better again as soon as possible!

I also make sure that I spend some time with an IFA every 5 years or so to make sure my pensions and savings are on track.

Having a business definitely complicates your finances!

MuffinTops

Hi,

I'm another singleton with a mortgage who has just managed to get to debt free, and will be concentrating on paying off the mortgage very soon.

I like the fact that I'm single and doing it alone as I don't have anyone else earmarking that money for other things. It would be nice to have the support and the encouragement, but I've found that I'm ok at boosting myself in that respect and staying focussed (perhaps a little too focussed at times ). If I decide to have a tight month and pay more than I can "comfortably" afford for a month to hit a target, then it's only me who pays for that temporary discomfort.

Personally, as I lurk in many diaries, I find that having a partner can be as much of a help as it can be a hindrance, obviously depending on the partner. While it would be nice to have a second income, it's also nice to be solely responsible for your destiny and timeframes.

Also, think of the achievement when you know you did it all by yourself and your friends needed help!

So, although we can't help with the second income, we can all relate to each other and bring support to help you pick yourself up and brush yourself down when you need it.

Lois_E

Chilliplant wrote: »

Hi all. I'm very new here and only just starting to feel my way towards sorting out finances properly. I've had a mortgage since 2004, there's about £75k left on it and unless I try and pay it down I won't be MF until 2039!

Take heart, Chilliplant. You're not the only one with a projected MF date of 2039 - look at my sig. I'll get there in the end, and so will you.

I agree with downsizer - it's definitely easier to do this on one income than on two incomes but with a partner who spends everything. Any time I tried to treat our finances as something we should discuss and compromise and agree about, X felt I was being unreasonably controlling. But I also agree with those who've said it can be overwhelming making all the decisions with nobody to discuss them with. I feel that too.

Chilliplant

Sepa74 wrote: »

I would continue to contribute to your pension fund, and would also think about shifting it to a stakeholder pension fund which has very low fees. A huge chunk of the return on pensions is eaten up by fees, so it is worth minimising these.

Although you have lost your employer contribution, your personal pension contributions will be a deductible expense from the business. I would pay into the pension a small amount each month from your pre-tax income, just to maintain continuity and reduce what you will need to catch up later, and pay a little off the mortgage from your post tax income to reduce the interest you are paying.

Thank Sepa, that certainly makes sense. I was wondering whether alternating payments monthly would work, so one month pay some into the pension and the next over pay on the mortgage. In the immediate future, say for the next couple of months, I'm focussing on ensuring I have a savings cushion in case things go pear-shaped with the business, but once I'm comfortable that the business is going to be secure then I would like to try and do the three things.

At some point you should also think about income replacement insurance if you become long term ill, and / or health insurance to get you better again as soon as possible!

I've actually got mortgage protection insurance already since it was a condition of taking out the mortgage in the first place. So far I've had two occasions when I've needed to try and claim on it but the first time they didn't want to pay out and this time round I cancelled the claim because we were setting up the business.

I also make sure that I spend some time with an IFA every 5 years or so to make sure my pensions and savings are on track.

Having a business definitely complicates your finances!

Very good idea, I must arrange to do that!

It is reassuring to know, though, that it is possible to do as a single person. On the face of it, I thought it wasn't something I could do but reading the stories of other people is really encouraging.

Sepa74

Hi Chilliplant, you should check the mortgage protection insurance to see that it would pay out if you can't pay yourself because the business has no money (because you have been ill and can't work). Sometimes they don't, in which case you should try and cancel it as you're just wasting your money. They will also only pay the mortgage payments, which means you still have to find money to live on from somewhere.

Income protection insurance is different to mortgage insurance in that it will pay to replace any lost income due to sickness, so it's more comprehensive than mortgage insurance, and Directors insurance will pay out dividends you would have been paid had you been working (ie if there is no money in the business because you can't work). If you have directors insurance, this is paid as an expense from the business (ie pre-tax).

Income protection insurance will also pay out sufficient to cover your pension payments... I have it in case I become long term ill - I would fund myself for the first 3 months of any illness, but after that I could start claiming.

The other insurance to consider is health insurance which would allow you to access elective treatment more quickly than the NHS, so it would get you back working more quickly if you do become ill. I am not sure whether I want to take out health insurance... I'm still thinking about this one as I am still under 40 and figure the NHS is good enough for me at the moment. This is considered a benefit to you as an employee, so is taxable.

If you have a family you should also think about life insurance... also taxable!

These are all the insurances that a lot of workers get as part of their employment package, but those of us who are self-employed need to cover it ourselves!

One other thing, the pension payments come out of the business (so are paid pre-tax) and the mortgage payments come out of your own money (post-tax)... so there is no point in doing alternative months unless you want to for a particular reason. Given that you have a partner, you should discuss how much they are happy for you to take out of the business to pay the pension payments. It probably won't be much at first, but can gradually build up as the business grows - and of course your partner also needs to think about these things!!

There is no rush to get this stuff sorted, but they are things to be thinking about as the business grows and you become more secure. Sorry if I've overloaded you!