Onwards to freedom!

SuperSecretSquirrel

I love my spreadsheet house, and I don't care how sad that sounds It gives a much clearer picture of the current situation at a glance than a table full of numbers ever could!



The brightly coloured blocks covering the bottom half of the house, equity (based on purchase price not current value). The crosshatched blocks covering the roof and half a row of the top floor, cash savings. The grey blocks between, what we owe on the mortgage that is not yet offset by cash savings.

The cash savings amount includes what is held in OHs and my own accounts. I'm then deducting a very generous tax/ni/slc/etc estimate (50% of all freelance earnings). If anything, our offset cash should in reality be higher than what I reckon, so there's no dodgy accounting going on there...

Looking at this picture, mortgage neutral by end 2015 looks like a realistic prospect The shortfall is currently under 18k, and even with the uncertainty of maternity and freelance stuff on the horizon, and the increased pension contributions that should be kicking in soon, barring any major disasters I think we are in with a good shot at colouring in all those grey blocks by the end of next year Even if we make no more OP's (we intend to), and don't add a penny to savings (we intend to), the standard monthly payments would see us under 5k short of neutral. Looking at it that way, neutral by end of next year should almost be a walk in the park!

And finally... Our balance is now officially below 60k, woohoo! :j

SuperSecretSquirrel

I've decided to try simplifying things a little ahead of the impending baby related chaos.

By my reckoning we're allowed to OP a further £2556.57 between now and the 31st December. OP's so far this year have been made as and when extra earnings come in. This is not particularly efficient, we have a good sum in cash savings earning far less in interest than the mortgage rate. I've decided to withdraw some money from savings to max out the annual OP allowance as soon as possible. I'll be doing this in chunks of £499.99 weekly, so this years OP's should be done and dusted by the end of April. I won't be going over the 10% allowance as there is a 6% ERC beyond that.

End of April pay packet will be the first of the reduced take home pay variety thanks to increased salary sacrifice to pension. It's also when OH goes down to maternity pay. I want us to adjust to this reduced income as quickly as possible, and removing the complication of OP's means that we'll have a steady baseline to work with.

Provided I haven't vastly underestimated baby costs I've balanced the budget to break even on my reduced wage and OH's maternity pay. Only time will tell if I've got this right... I don't take anything for granted regards freelance earnings, but provided budget is about right anything extra earned can go straight into savings, that should mean plenty set aside for the tax bill in January and the remainder can go some way towards replenishing/boosting offset cash savings.

Sounds like a plan

edinburgher

Adjusting to maternity pay will make a difference, won't it? You're quite lucky in that you have the capacity to earn a good bit extra through freelance work. I'm aware that you work hard for it, I mean 'lucky' in the sense of 'fortunate'

We have started to cut back our outgoings in light of our good news and it will be tough to begin with. We're pretending that mat leave has already started (it will be August before it does) and our cutting our cloth accordingly.

No real difference last month (i.e. pretend '4 weeks at 90% of Mrs E's wage), but this month (2 weeks at 90%, then statutory), will chop about £400 off.

Still, not nearly as bad as the last 13 weeks, when she'll earn naff all

SuperSecretSquirrel

Hi Ed

Yes adjusting to maternity will be a bit of a shock, but like you say we're fortunate to have a buffer so we won't be badly off just a little less comfortable. I fully intend to spend a lot less time working soon, so the freelance earnings will drop a bit, but that's a conscious decision and one I am more than happy to make With a bit of luck it'll just mean that we tread water for a while and don't start moving backwards.

Your dry run on maternity wages is a great idea, 13 weeks at naff all though :eek: Our plan is for OH to go back to work after nine months so no weeks at absolutely zero, only time will tell though, she may decide that she never ever wants to go back :eek:

Hurdler

I just took a long look at your house and I find it absolutely marvellous. It makes my house look like a five year old finger painting by comparison.

On Tuesday I am transferring all my cashed in share income to a proper wrapped fund for a min of five year's investment but I still have real money squirrelled away so my next house will have that reflected in the bricks somehow ... Maybe green for cash reserves and blue for the investment - love getting new ideas from diaries!

Hurdler

So if I understand "mortgage neutral" rightly... it is the point at which savings/investements etc could be offset against the remaining value of the house?

I hope you don't mind me hoofing off with your idea... I thought it was a brilliant way of showing the total picture!

SuperSecretSquirrel

Exactly right Hurdler I'm a believer in lots of little targets to break up the journey to mortgage freedom and beyond. Lots of short term ones, a few medium term ones, and one big long term vision.

We've always liked the security of having cash to fall back on, and we have quite a restrictive mortgage, so aiming for mortgage neutral is a good medium term target for us. We'll pay the mortgage down up to the ERC threshold, and beyond that increase our savings. It's all part of the eventual long term vision of financial independence, and it's more motivating than focusing on a mortgage free date as due to ERC's it's not really sensible for us to completely clear this mortgage too far ahead of the fixed period ending. The ERC's do taper off in the last few years, so we might end up paying some ERC's to become MF sooner, but realistically I think we'll probably be quite happy with a low £100pm mortgage and will find other ways of investing/growing our money by then.

Of course you are more than welcome to take inspiration from my spreadsheet house :rotfl: I like that we're being proactive and attacking this debt from two sides, a pincer movement, having the paid off mortgage coloured in from the bottom and savings coloured in from the top is quite motivating, that grey bit in the middle shrinks quicker than you might expect!

Hurdler

SuperSecretSquirrel wrote: »

Exactly right Hurdler I'm a believer in lots of little targets to break up the journey to mortgage freedom and beyond. Lots of short term ones, a few medium term ones, and one big long term vision.

We've always liked the security of having cash to fall back on, and we have quite a restrictive mortgage, so aiming for mortgage neutral is a good medium term target for us. We'll pay the mortgage down up to the ERC threshold, and beyond that increase our savings. It's all part of the eventual long term vision of financial independence, and it's more motivating than focusing on a mortgage free date as due to ERC's it's not really sensible for us to completely clear this mortgage too far ahead of the fixed period ending. The ERC's do taper off in the last few years, so we might end up paying some ERC's to become MF sooner, but realistically I think we'll probably be quite happy with a low £100pm mortgage and will find other ways of investing/growing our money by then.

Of course you are more than welcome to take inspiration from my spreadsheet house :rotfl: I like that we're being proactive and attacking this debt from two sides, a pincer movement, having the paid off mortgage coloured in from the bottom and savings coloured in from the top is quite motivating, that grey bit in the middle shrinks quicker than you might expect!

I haven't taken into account the equity of the place, and a BTL mortgage I have is totally off the scope at the moment as it just takes care of itself and that's good enough for me. Also excluded is the Business accounts - until it arrives in my account in the form of salary, expenses and whatever monthly dividend I can pay, it is not part of my funds!

I could be neutral then by the end of this year which is not a bad position to be, I think.

Lois_E

SuperSecretSquirrel wrote: »

I love my spreadsheet house, and I don't care how sad that sounds It gives a much clearer picture of the current situation at a glance than a table full of numbers ever could!





And finally... Our balance is now officially below 60k, woohoo! :j

Yay! Well done on getting sub-£60k. :j:beer::T

I like your spreadsheet house too. There was a poster a while back called Pammy who had one too, and I think some other people have had them as well. I think they're great, but I don't have one myself because I'd need so many bricks and it would take me such a very long time to colour in each one. I do have a pie chart on my spreadsheet though, together with the version of the pie chart when my borrowing was at its highest, so I can see the slight difference in the angles.

Why are some of the roof tiles a different colour from the others?

Hurdler wrote: »

I just took a long look at your house and I find it absolutely marvellous. It makes my house look like a five year old finger painting by comparison.

But you have a great graphic of Vernon the virtual mortgage pig.

SuperSecretSquirrel wrote: »

Exactly right Hurdler I'm a believer in lots of little targets to break up the journey to mortgage freedom and beyond. Lots of short term ones, a few medium term ones, and one big long term vision.

Exactly. I would never be able to keep up any enthusiasm for this MFW thing if I didn't keep celebrating the tiny milestones.

SuperSecretSquirrel

Lois_E wrote: »

Why are some of the roof tiles a different colour from the others?

Good question The bolder colours represent cash in accounts that are in my name, the lighter colours represent cash in OH's name.

I used to disregard OH's savings as I couldn't login and check the account balances online. From now on I'll just be asking OH for an updated balance every couple of months or so to update the spreadsheet. OH's savings will be pretty static over the next year or so anyway thanks to maternity and no planned big spends. I know I'm not to the penny real time accurate, but it's close enough. OH's savings figures are more accurate than mine to be honest, her side of the finances is simpler, I overestimate tax return stuff to make sure I always have enough easy access cash on hand to settle up quickly, she simply pays tax etc on PAYE basis and has no further complications.

I'm considering treating myself to a newer car if there's a decent surplus left over after paying my tax bill in January. With a bit of luck it won't have too much impact on the mortgage neutral date Wait and see I guess!