Onwards to freedom!

turtlemoose

Don't stop updating here! Please I'm only at the beginning of my MFW journey (and an avid reader of many many many threads on here!), and unfortunately am not even overpaying my mortgages yet but through the clever people on here have realised that OPing my debt instead was actually the quickest route to being MF and am indeed (roughly) on target for my MF goals. So I witter on on my diary, nobody replies but it keeps my thoughts (and plans) in order

So, please don't go. You give me something to aspire to!

SuperSecretSquirrel

Thanks for posting gallygirl and turtlemoose! I've read some epic diaries this week (including a mammoth 50+ page one) and realise there's already some FI diaries on here so I guess I can stay on beyond my mortgage neutral and mortgage free dates

Another £499.99 OP yesterday and the balance is now £45,697.75 - that's another spreadsheet house brick coloured in this month

£3,344.53 short of neutral, not long now!

It's a little sad (as in saddo) that I'm sad (as in boohoo) that there's only £1,555 OP allowance remaining for the year This year's OP adventure will be over by this time next month! Oh well, I guess saving resumes from that point. Saving isn't as "fun" as OPing though

I've done some serious spreadsheeting and daydreaming this week! An up to date SOA has revealed nothing but good news, and has set the cogs in my brain spinning at top speed. We currently have a healthy spread between income and outgoings, and that's based on a realistic SOA that allows for treats and holidays etc. That in itself allows for some very interesting possibilities in the short term

In addition, there's the medium term to consider... Having wargamed all the possibilities regards mortgage payoff I think the optimal route will be to continue OPing the maximum ERC free allowance annually in sub £500 chunks (to avoid repayment amount being reduced thanks to an automatic recalculation), then in January 2018 (by which time the balance should down to £14,150) overpay the full 10% allowance in one lump forcing a recalculation, which would leave us with a sub £250pm monthly repayment. We could then do the same again January 2019, which would reduce the monthly payment to £225, and again in January 2020, reducing monthly repayment to £200. At the end of the fixed period in July 2020 we'd have a balance of approximately £4.5k, which we could pay off penalty free. We would pay a little less in mortgage costs if we just paid it all off (and paid a high erc) as soon as we hit mortgage neutral, but factoring in the lost savings interest it is not optimal. Also, it's not really an immediate option as OH has set a minimum 10k cash emergency fund baseline that she never wants us to drop below, and I'm perfectly happy to agree to that. If all goes well then, we'll be slashing our monthly repayment amount by about £500 in January 2018. It would be inexcusable not to put that extra money to good use! Good use could mean investing, travelling, relaxing, or most likely a mix of all three along with other things that haven't crossed my mind yet

I've done some thinking regards retirement too, now that's long term thinking! I think gradual retirement would suit me more than early retirement. Actually, I think it would be more a gradual transition to semi-retired self-employed rather than properly semi-retired. We could afford for me to reduce my hours now if I really wanted to, but I don't feel the need yet so might as well keep earning what I can for now. Later on I could renegotiate my contract, perhaps reduce employed work to four days a week. That would free up an extra day for family time, but realistically LO will be in school by then (though who knows, there might be a LO2 by then!) so better term time use of the extra day might be focusing on my business, with flexible days to do what we like during school holidays I could in theory then keep drifting slowly towards semi-retired self-employed in this way over time I think reducing work time to focus on life outside work is what it's all about, and I think I'd rather work say three days a week from now til the day I die than five days a week til I'm 55 and then nothing from that point on!

This post is already too long, so I'll hold off on my planned ramble about "wealth spirals" and "recognising when you already have enough", but that stuff is ticking around in my head too. Maybe I should write this stuff down just in case I decide to give the PF blog a shot in addition to posting here

gallygirl

Not too long at all, all good stuff :T, I love how you're thinking long term :j. I do get a bit concerned (in a 'what do I care, they're all strangers, don't be a stalking saddo' kind of way ) that people throw themselves at the mortgage and then think 'what next' - you need to be thinking of the end game all the time. Even if you don't know what you want it to look like or when you want it!

SuperSecretSquirrel

5k milestone! Our balance is now under 45k! :j

Current balance is £44,790.03 and we are just £1,695.84 short of neutral

Total OP's so far this year - £4,499.91 :eek: That leaves just over £500 available to overpay this year, then we're back to saving til 2016.

In anticipation of getting back to paying into savings accounts, as opposed to making withdrawals to OP, I've been getting myself organised.

123 account is less than half full thanks to a big tax bill in January, a used car purchase, and lots of OP withdrawals, plenty of breathing room to pay in there then. Any SE earnings will go there for now. We don't bank on this money so accounts are set up to assume zero SE income, anything over zero is a bonus.

I have a FD regular saver up and running for £300pm dripfeed from monthly salary. That will continue. When it matures I'll pay the balance into 123 and hopefully open a new issue if available at the time.

I'm going to continue drip feeding £250pm from salary into S&S ISA for now. This is for the proper long term and earmarked for some vague distant future. Barring some huge unforseen disaster there will be no withdrawals made for years and years. All my investments are in accumulation funds, I don't even have the temptation to spend dividends this way

I have recently opened another current account, so expecting a £125 voucher from them along with access to a £250pm regular saver. Sadly there is no slack left over from salary after the above two transfers are made, but all is not lost - I'll just drip feed the £250pm from the lower rate 123 account Again when the account matures I'll pay the balance back into 123, and ideally open a new issue to rinse and repeat.

Later in the year, once I'm happy there's a healthy cash reserve in 123 account I'll likely start moving more into S&S. The tentative plan is to invest £400pm from September onward.

I'm really glad I looked into my pension and increased contributions now. Thanks again to ed for the kickstart I needed at the time! There's a steady £640pm being paid in, and I can honestly say I don't miss the money. The pension is deducted via PAYE, bills direct debits and savings standing orders do their magic very soon after payday, then what little is left in my account is what I have left to work with until the next payday. This kind of very loose budgeting is perfect for me We save (and I include investing and mortgage overpayments when I think of saving rate) a very good percentage of income but don't have to micromanage day to day stuff. Anyway, back to pension, we're now settled with me at this level of contributions which is an excellent position to be in as not only are the retirement savings growing decently, but there's breathing room should I ever wish to reduce my working hours and pay accordingly, or if disaster struck and I had to accept a lower paying job sometime in the future. Next job will be to convince OH that she should increase her pension contributions as she's currently paying in the very bare minimum, but this is very much a slowly slowly catchy monkey kind of thing

Luckyinlife

wow 5k overpayments this year thats great work :]

And i bet hitting under 45k is amazing so cool keep it up

How come your going over to saving and not paying more of the mortgage ?

SuperSecretSquirrel

Hi Luckyinlife, thanks for posting

We have a 10% annual fee free overpayment allowance, and in a couple of weeks time we'll have maxed out our OP's for the year. Anything we overpay beyond that will incur a fine of 6%. Our mortgage rate is 5.29%, so paying more than the allowed overpayment allowance would actually cost us slightly more in charges than it would save us in interest.

It's not entirely clean cut on those factors alone as mortgage interest compounds over the years whereas the ERC is a one-time cost. Still, when you consider that there are regular savers out there paying 6% and current accounts paying between 3% and 5%, and the fact I'll only pay basic rate tax on interest this year, saving will definitely be the way to go for from next month til January 2016

If I had a mortgage without any overpayment restrictions I'd keep on paying it down and just keep a 10k emergency fund in cash. In hindsight an offset mortgage would be the perfect fit for us, but our mortgage advisor was totally dismissive of them at the time we were buying as "offset mortgages are only for rich people". They're not. They are also ideal for perfectly average people with a good savings rate! I guess we were still a bit wet behind the ears at the time and you live and learn. An offset would be seriously considered should we decide to buy another house sometime in the future!

Luckyinlife

I see makes sense now and 6% is quite high isnt it as a fee unless you was to pay it all of in one hit.
Defiantly doing the right thing :]

Ya i know what you mean

Iv recently got a mortgage myself now and the overpayment charge on the KFI i have is 3% in first year and 2% in second year then i guess its no charge when i go on the svr

I wonder if i could overpay 10% a year was this stated on your mortgage offer or did you have to ring them to find out ?

SuperSecretSquirrel

Yeah it's pretty high We went for a long term 10 year fixed rate deal. The ERC is fixed at 6% for the first 6 years and then it tapers off. At the time we figured overpaying 10% a year would be impossible, never mind exceeding that - how wrong we were Still, there are ways around it. Summer 2013 we reduced the term from the standard 25 years to 12 years, a sneaky way of paying it off at a good pace (and massively reducing the interest paid) while avoiding the ERCs

The ERC information was on our lender's website back when our deal was offered. It was almost certainly in the original mortgage paperwork, and I'm pretty sure they have a note about it on the annual statements too. I'd advise checking the small print on your existing paperwork, but if no joy there either check your lender's website or call them to ask

SuperSecretSquirrel

It's the last large £499.99 OP of the year today - our balance is now £44,335.48 and we're just £1,516.31 short of mortgage neutral! The standard monthly payment in a couple of days time will drop us into a new 1k bracket (under 44k) and a new 5% estimated ltv bracket (under 35%) :j

I've created a chart that shows our mortgage and savings balances over time, along with what the mortgage balance would have been had we stuck to the 25 year term with no OPs. It's a great visualisation of the figures - I'll be posting it here as soon as we're mortgage neutral That could possibly be as soon as next month :eek:

I can't get over the fact that had we stuck to the standard repayments we would now have a balance of £78,101.59. That's just £8,747.41 less than where it first started nearly 5 years ago. I'm very glad we're overpaying! :cool:

SuperSecretSquirrel

I've just made the last planned OP of 2015. Our annual 10% ERC-free allowance is all used up now, so we're back in saving mode again!

Total owed today is £43,511.31, and we're £1,634.85 short of neutral.

We're off on holiday tomorrow A week in soggy south west England isn't usually my idea of the perfect holiday, but it makes sense to stay in the country for our first trip with LO. I'm looking forward to a break regardless of the weather, and it's a nice bonus that this is a very cheap option that shouldn't stop us becoming mortgage neutral within the next month or so