FlashBarry's £97k in 3 years MFW mission!

FlashBarry

About time I gave an update.

Thanks for all your suggestions about our Anniversary. I have discussed thiswith my lovely Wife and we have decided that I will cook dinner and we willhave a cosy, candle-lit night in watching our wedding video and reflecting onall the wonderful things we have done since then. My other half is as up forthis MFiT challenge as I am, which is fantastic!

Overall, I am feeling very positive about this. It feels great to takecontrol of our finances and to prevent us from giving about £100,000 ofinterest cash away! I can't wait for payday!

I had a bit of a shock today which I thought could jeopardise our efforts. Ifound an old mortgage illustration from ~2007 which stated that the most wecould overpay is 5% of the balance in any given year. It also stated that itwould cost us an extra £5k to repay the mortgage early! Luckily, I phoned upand they explained that this was only true during our 2-year fixed rate period.PHEW! Unlimited overpayments for the win!

Other updates:

I discovered my ISA account is about 10 years old and was only offering~0.5% interest! This has now been replaced with a new E-ISA offering 2% taxfree.

I found out that both the Mortgage interest and the Offset interest is at 1.4%. Therefore, investing in the ISA will offer better returns that using the Offset. I therefore only plan to fill my new ISA and then stick with overpayments.

My car is now in the dealership and their online adverts go live tomorrow(05/09/12). I have loved owning this car but I have decided that I definitelywant to move on, so I just want it sold now. It's more of a summer car(soft-top) so I hope someone buys it soon!

All our banking is set up now so the money goes into the right account and Ican manually control the overpayments.

We did our first big supermarket shop while on the challenge. We took astrict list and have decided to try "value" brand stuff to see if itis any good.

I am also trying to stop drinking as it usually comes with an expensivetake-away and a hangover. I don't drink much anyway, but I have found that I am enjoying it less and less. I haven’t hada drop since I started my challenge! I’mnot going T-Total, but I want to cut down 90%.

We will only know where we stand with our finances after the first couple ofmonths on the new regime.

Tilly_MFW_in_6_YRS

Hi, somewhere in my diary is a list of all the things I did quite quickly to improve our financials, may be a help to read it perhaps.

Things like paying my council tax be CC in order to cashback or points - my bill is £200 per month so easy points or cashback. Get a good cash back paying credit card, or points type credit card. I pay BT the line rental annually as this is a good saving. That's just a few.

Good luck and you seem in a really good place.

Best wishes Tilly

VoucherMan

FlashBarry wrote: »

I discovered my ISA account is about 10 years old and was only offering~0.5% interest! This has now been replaced with a new E-ISA offering 2% taxfree.

If you want to maximize your savings there's quite a few ISA's offering much better rates. There's a list on this thread.

And it's worth making a note in your diary to switch when this one matures or you'll end up back on 0.5% again.

RosieTiger

Just remember life is also for living so try to keep a balance.

Your goal is achievable, but if you did it in 3 years by making yourself miserable, whats the point!

Mrs RT and I have always tried to balance this out, we have recently slowed down on the rate of payback as some big family spends/hols/tax and fun came our way.

They will continue to do so and be both planned and unplanned but the ket thing for us is that some of that spending is nice too!!

FlashBarry

Hi all!

Still keen on this challenge! It's strange that I look forward to payday so that I can dump it all into the Mortgage!

I am already a lot more careful with my money. I now HATE having to spend more money than I need to. I had to spend £2.20 on parking today as the rain was really bad whereas I usually park out of town - I really didn't like putting the coins into the machine!

I value the items I already own even more though.

Roll on next pay day!

FlashBarry

My sports car still hasn’t sold L

However, we have adjusted nicely to the large overpayments and it feels like we are somehow living the same quality of life now as we were before! It makes me wonder- How on Earth did we spend so much money? (I think running 2 thirsty, flashy cars is the answer)

As we have started “paying more for the house”, we have started to appreciate it more. We recently decorated the bathroom by stripping off the old wallpaper and painting it antique white. This has transformed the room at the total project only cost of £14! (Tub of vinyl B&Q brand bathroom paint)

We have decided that any money spent on the house will be to make it more saleable.

I still look forward to Mortgage pay day (25th),so that I can update my signature on here!

uzubairu

I jumped on the MFW bandwaggon in secret well before my OH became remotely interested.

I used to make small overpayments (when I did a little bit of overtime etc). He was the main earner but spent money quite easily and didn't have any savings.

In 2006 we bought a new house and our mortgage went from £30K (originally £40K in 1997) to £113K.

I told the OH that we had to be a bit more disciplined and ensure that the mortgage could be serviced on one income.
We also went for a 10 year fix (@ 4.79%) for certainty of payments.

I then took over all the finances and set up a joint account for all bills (which OH deposits money into via standing order), looked at what savings could be made on our outgoings and factored in saving for holidays and treats in our monthly budget.

It was quite surprising how much money we had left each month once we started to get value for money (i.e. utility bills etc, using cashback sites, selling unwanted items on eBay instead of just giving them away or letting them gather dust, eating out with money off vouchers).
We tried the eating at Aldi and Lidl thing, but it didn't work out for us, so we shop at Tesco, Sainsbury's, Morrisons, M&S, sometimes Waitrose and Ocado. We use the multi-saves and discounts to get the best deals from each of them.

We also direct most of our overtime payments and payrises to the overpayments, as our basic budget set up in 2008 is still working for us 4 years on.
When I look back, it is a little concerning as to how much money had been misspent up until that point. My OH being the main culprit.
We went from £200 per month OPs to currently a minimum of £1,300.
Even with a more MSE lifestyle, we still get to go on nice holidays abroad ( 4 in 2010) and have treats.
OH now cycles to work to save himself the £80+ in city centre monthly parking fees. He enjoys it and some of the money saved goes to OPs, yet a couple of years ago he would have grumbled about having to pay the fees, but wouldn't have considered cycling to save the money.

From 2006 to 2010 we made OPs direct to the mortgage because we couldn't get a better rate elsewhere.
In August 2010 we paid £2K in redemption fees and took a fee-free base rate tracker with First Direct (BR + 1.79%).
Since then, our OPs have been used to fill our Cash ISAs, and we both have First Direct Regular Savers (8% - this year's contribution matures at the start of next month and then we'll start new ones immediately), HSBC Regular Savers (6%), Cheshire Building Society Regular Savers (5%), and an instant access account paying 3% which is used to feed some of the Regular Savers and contains our emergency funds.
When you see how much interest you stand to lose by ending them early, it is quite easy to exercise the discipline to leave them untouched until maturity.

This year we stand to earn £400 more in interest from the savings accounts than we will pay in mortgage interest.

I would definitely recommend separate savings accounts if the rates are better.
We have over £40K in other accounts and they remain untouched so far.

It's true that once you get hooked on being MFW you question everything you have to spend money on.

When I joined the MFiT-T2 challenge, I initially pledged to reduce the mortgage by £30K, which I changed to £50K and recently upped to £60K.

You are doing well and I am hopeful that you will achieve your target because as you start to see the mortgage go down, you get more motivated to do better.

FlashBarry

Another Mortgage payment just went in! :j

It is now fully automated, so the £2k overpayment goes in at the same time as the regular payment and the Mortgage company know to take it off the balance. I found that the manual overpayment system was a right pain! For example, I contacted them with a secure message (as instructed by them) to explain that I am sending a payment and it is to come off the Mortgage balance. They then sent me a letter about 2 weeks later to say they have recieved a payment from me but they don't know what to do with it :mad:.

Thanks for the great tips uzubairu. I have read a few times that it would be better for me to put this money into a savings account rather than direct overpayments. Deep down, I know that would make sense, but i'm still resisting it at this stage! I like to see the balance come down - especially in these early days!

I have a question for you guys - Could my Building Society decide to change the terms of my Mortgage in the future?

If I saved, say, £60k in a savings account ready for a large overpayment, could my Mortgage company then suddenly impose a 5% limit on overpayments? I feel so lucky with my current Mortgage terms that I dont want it to go wrong in the future!

Tilly_MFW_in_6_YRS

Hi FB, somewhere on this site there is a calculator which you can use to see whether it makes sense to invest your OPs elsewhere or OP directly.

Tilly

FlashBarry

Evening all!

I have been quiet on here but I am still committed to my MFW challenge.

We have paid £2100+ in overpayments every month since September (feels longer!) and it is great seeing the balance tumble down. We started the year on £101k and after this month’s payment, the balance will be around £85k! :beer:

So, looking ahead to next year…..

I’m looking to maintain my £2k+ payments BUT I am considering putting this into the offset rather than as a straight overpayment.

My reasons are:

1) This is a great mortgage! We are only paying about 1.4% (Don’t want to be too specific on a public forum) and it would be useful to use this mortgage if we decided to move into a bigger house in the future. If we paid this mortgage off and closed the account, no doubt we would have to open a new mortgage at 4+% for our next house.

2) We have been told that the “cash” in an offset account is better for our next mortgage negotiation. (Not sure if this is ture)

3) The offset pays the same interest as the mortgage, so it has the same net effect as paying it off. It also means we are less exposed if the interest rate suddenly shoots up.

What are your thoughts on this? Is it better for us to use the offset rather than paying it straight off?