The Mortgage Free in Three - Take 3 challenge (MFiT-T3)

ShelleyC_2

Glad to see you're back FB and sorry to hear life's been so crackers.

Have posted my update. Never quite sure with the form as a saver whether my balance is what I've saved so far or whats left to save :rotfl:

Fab to see how well people are doing & excited to see the update :T

financialbliss

ShelleyC wrote: »

Have posted my update. Never quite sure with the form as a saver whether my balance is what I've saved so far or whats left to save :rotfl:

Looking at numbers now. I saw pretty much that comment from you in your update.

I think what probably works best for savers is their actual balance. Eg if you're saving from £0 to £100 and you have managed to save £25, then in terms of decreasing balance, ie how the charts work, the effective balance would be £75, ie the amount left to hit the target. But it's probably less confusing to a saver to report the increasing savings balance, ie £25.

Managed to confuse myself and I've re-hashed the calculations for it to calculate the remaining target from the savings value - if you follow that.

I've remind myself to add an appropriate comment to the update form in the next few days...

FB.

financialbliss

OK. Being thorough this time around.

I've just:

• Updated the handful of updates for Chart 01
• Completed updates for Chart 02
• Reviewed list of change in challenge objectives

Think that is everything up to date for Charts 01 and 02.

Can everyone check their entry please, especially so if you were waiting for a change to be applied and PM me if anything is incorrect.


For change of challenge objectives, I've pulled these of of the update form data:

6. icklehelen. Reduce my mortgage from £72,500 to £54,500.
47. SuperSecretSquirrel. Reduce my mortgage from £81,055 to £40,000.
68. FreedomGirl. Build up my savings from £39,649 to £99,999.
133. sammy70. Build up my savings from £0 to £25,000.
144. eeker. Reduce my mortgage from £132,000 to £100,000.
149. Gizmo247. Completely clear my £46,447 mortgage.

I've updated post #1 and the registration tab in the charts - which gets applied across all charts.

Can everyone check their objective please if you have recently put in a change and PM me if anything is incorrect.


EDIT: Got disturbed earlier - Mrs Bliss and oldest blissling coming in. Going to complete this now...

If you have a savings challenge - the charts work on a decreasing balance as this is the direction you hope your mortgage is going. With having another look at the savings increase to mortgage decrease balance calculation switch over this evening, so that I can present the savings as a decreasing balance, I'm not 100% sure I was doing the calculations correctly.

I've just put two updates in for sammy70 (133) and it's working out the sums correctly now.

So, if you have a savings challenge, can everyone check their balance across Charts 01 and 02 and PM me if anything is incorrect.

Thanks,
FB.

Gizmo247

Sterling job FB.:T

My Charts 1 and 2 now reflect the mortgage value rather than the offset value which makes the challenge much more relevant so now the challenge won't be over for me until the fat lady sings (or pays off my mortgage).

NB: Any similarity to operatic over-weight female members is purely coincidental :-)

financialbliss

Just a quick heads up.

The bad news...
Left the house before 07.00 this morning and the way today is going at work, I'd going to be impressed if I get back home before 19.00.

Aim to get Chart 03 out before 9pm this evening, as I want some chill time (and perhaps a beer :beer: before I turn in this evening) - suspect it won't be much earlier than that if I do manage to get away from work early.

The good news...
Chart 04 is pretty much ready and I just need to publish the link. Should also have that done this evening.

FB.

Alion

Thanks FB as always for all your hard work

Looks like I'm in the red for the first time ever. I'm not surprised to be honest as we haven't overpaid in almost a year. However, the renovations are very nearly complete (we're onto furniture and carpets in the next few weeks) and we're planning to divert the money that's been going into that into the mortgage. So hopefully we can start catching up on where we should have been in 2014.

Good work everyone!

black_taxi_2

Alion---I was in the red 4 years,only the last quarter I'm green

the only thing you need to look at is your balance is going down

FreedomGirl

Hi,

Here’s a check on the numbers FB !

Start value of £39,648.94 (rounded to £39,649)
End value of £99,999

Chart entries
12/12/12 99,999
12/6/13 current savings balance (£58,426) (currently not entered correctly in the chart by me - am going to fix it now):o
“Reduce by” (i.e. increase by) 99,999 (end value) -39649 (start value) = 60350 (target) – that’s correct in the chart

Repaid so far = current balance – start value = 58426 – 39649 = 18777

Percentage of total goal ? 18777 (repaid) /60350 (target) * 100 = 31 %

It’s a bit confusing (to me J) FB – did I get it right ?

The following is some long ramblings - FB, no need to read

Hmmmm – the biggest shock I have had just now is realising that my psychological make up with respect to an achievable target for pension is out of whack with how I thought about paying down my mortgage.

We haven’t had a mortgage since 2009, but at our peak we were paying off nearly 2 grand a month (and earning less than we are now). But when I calculated earlier on this week that I would need to pay in 1099/month for my pension to hit my target, I thought – ooh that’s a lot, not sure if I can do that! But if that was my mortgage, I would think, yeah – that’s achievable.

*It’s the same amount of money* (sounds of penny dropping)

It’s been a real eye opener ! I have had two years of high salary and have managed to save quite a bit but it’s clear I have been wasting cash because I didn’t take my MFiT3 attitude over to my pension savings once I paid off my mortgage!

Learn from my mistakes MFiT3-ers – switching to a savings target immediately after you have paid off your mortgage (even if just setting it at half or a third of your mortgage, or giving yourself a six month holiday) is really important (at least) because you need to carry on the mindset and if you fall out of practice...

Or maybe it’s just me that has no discipline J

Anyway, I have been thinking...

Given that the NS&I ISA rates are so awful right now, and that I am a 40% tax payer, is it worthwhile taking some out of my NS&I ISA and putting it into my SIPP? I have 13 years left before I can access this pension fund. I am cash only in my SIPP with no interest (planning to start buying shares in the next year or two – I think we have a bit of slump-ish time coming), and when you trade off the 40% boost versus the flexibility of direct cash access...hmmm...

Clearly rates will raise at some point in the future and I expect the NS&I ISA will track those rises (even if not “exactly” inflation) but it could take an awful long time to compensate for the 40% boost. However, I have to assume that I will be a 20% tax payer so it’s a question of what inflation will need to be at over that period to match.

So, I did some sums. Assuming that there is no interest paid on my SIPP (worst case) inflation will need to be only 1.45% year on year over 13 years to match the 20% uplift from basic tax relief (i.e. 1.0145)^13 = 1.2. The power of compound interest...there is therefore an argument then for keeping some in the NS&I ISA because you protect future tax free earnings and get some protection against inflation. And for considering how much it is going to “cost” me to stay in cash...

This is a hard one to call, because I may not be a 40% tax payer in the future and once it is lost, it is lost. Hmmm...all thoughts welcomed !

In addition, in terms of emergency funds, how do people estimate what you would need to run a 2 person house (no children, no mortgage) assuming two people out of work for 12 months? We pay in a total of £1600/month to cover our current running expenses (car, bills, food...).

I just checked our end of July joint statement and it is £583/month to cover utilities, petrol, car and. There are spikes (e.g. MOT maintenance, annual house insurance) so I would work on an average of £700/month.

I have also just added up how much we spent at Tesco and other supermarkets. It is £562.25, and 23 separate visits were made (of which 15 were to Tesco – we have a large supermarket around the corner). An average spend per visit of £24.45. I am ashamed L I remember back in 2006 doing a similar exercise with spends...and back in 2008-2009 when we were both unemployed we lived on a lot less L Aie, wasted cashflow L

In total the money out that month was £1210.76. And looking at other months the values were higher when a holiday was involved. Hmmm – looks like £1600/month is a good starting point. What are other people’s emergency fund sizes and rough monthly running costs (if they want to share)?

Anyway, over a 12 month period that is a touch under 20K for an emergency fund. I don’t want to touch my index linked certificates so in conclusion, I think I am going to not shift my ISA over to the SIPP for this tax year because I have £18166.97 available.

Also, I have just noticed – through reading some MSE posts – that there are much higher ISA rates available if you have minimum deposits (24K, and 40K are the two that I have seen). Blimey – I hadn’t thought about that! Makes sense to accumulate up to 24K at the beginning of next year...

(The hubby does not have any appreciable savings – he earns less, and doesn’t have a savings habit in any case, so I am the one “responsible” for the cash buffers. Need to change that J)

Actions
1) Read MSE more thoroughly and think about this sort of stuff and listen to MFiT3-ers J
2) Reduce shopping spend significantly (will set target in discussion with the hubby) and accumulate more of a cash reserve in joint account for next year’s holiday and for Christmas. Don’t pay in extra (had set up an extra £500/month into the account) to compensate for those things – work smarter with the existing cash flow.
3) Get hubby to save something each month into his ISA. And say I will match it.
4) Set the target of leaving job once have hit the MFiT3 savings threshold (I don’t want to be in my job for the long term) – that should encourage me to maximise things over the next year or so.
5) Accumulate towards next year’s SIPP payment in this year and keep an eye on those large initial min payment cash ISA transfer accounts

Sorry for the long ramble – but guess it shows again the benefit of MFiT3 – it gets you thinking about your finances!

FG

ShelleyC_2

Sorry FB my chart 1 entry is wrong but two looks right?! Chart one has same totals as 2 but in the opposite columns but my figures were as below. I think the savings thing is making it more complicated for the spreadsheet - sorry

12/12/12 starting at £0 target £50,000

12/3/13 amount left to save £36,958

saved (repaid so far) £13,042

Percentage 35.29%

Thanks for again all the hard work :T

financialbliss

ShelleyC wrote: »

Sorry FB my chart 1 entry is wrong but two looks right?! Chart one has same totals as 2 but in the opposite columns but my figures were as below. I think the savings thing is making it more complicated for the spreadsheet - sorry

12/12/12 starting at £0 target £50,000

12/3/13 amount left to save £36,958

saved (repaid so far) £13,042

Percentage 35.29%

Thanks for again all the hard work :T

Hi ShelleyC,

Good news - I added into £13,042 into the sheet and it reported your balance as £36,958. Now fixed 01 and 02. Assume you started chat 01 with a balance of zero.

About to sit down for some tea - I'll be back later.

FB.