Onwards to freedom!

SuperSecretSquirrel

Happy New Year!

Before I start rambling I'll dive straight into the figures for 1st Jan 2016:

House Value - £125,000.00
Cash - £49,581.61
Pensions - £41,170.41*
Car Value - £10,700.00
S&S - £6,488.53
Mortgage - £37,716.04
Due to HMRC - £2,483.20
Student Loan - £3,116.23
Total - £189,625.08

*OHs pension has been transferred but we're still waiting for an online access code - as a result the pension figure for this update is something of an estimate, though it should be a reasonably accurate one.

That sees us at 63.2% of the 300k by 2020 target, and £15,870.90 ahead of mortgage neutral in liquid assets

Compared against the last quarterly update: Cash +1905.22, Pensions +4075.80, Cars -450.00, S&S +1373.27, Mortgage +1972.69, HMRC -300.70, SLC +237.45, Total +8813.73. That's an incredible total improvement for the quarter, it's more than our total combined take home salary! Of course we can't really take all the credit for that, about 60% of the pension increase was from contributions, the remaining 40% was growth (or should that be recovery?), very welcome growth after having pumped money in the previous quarter to essentially tread water! The S&S ISA balance has benefited from the market upturn too, just over 1k invested this quarter the rest is growth. Cash savings up a respectable amount, cars depreciating as to be expected, standard reduced term repayments off the mortgage, HMRC owed a little more having earned a little more from self employed side hustles, student loan reduced a little thanks to PAYE earnings and a little self employed earnings. So pretty much situation normal, with a big boost to pensions and S&S on top

I can also compare against a year ago today: Cash -9900.82, Pensions +10056.95, Cars +1700, S&S +3436.03, Mortgage +12830.56, HMRC +11605.03, SLC +3789.52, Total +33517.27. Again, a mind boggling improvement and spookily close to our combined annual take home salary. The reduction in cash is not a concern, plenty was shoveled into savings, but more was taken out to pay a massive tax bill, overpay the mortgage, and buy a second car. Buying the car resulted in year on year household car values increasing, not something you see often Regards pensions, over the year I salary sacrificed 6650.00 and received employer contributions of 1662.50, OH salary sacrificed 720.00 and received employer contributions of 480.00, which means growth contributed 544.45. As for S&S, 3400.00 invested, 36.03 growth Mortgage 9941.76 standard reduced term repayments, 5038.90 overpayments (i.e. 10% op allowance), -2150.10 interest charged. Paid a large tax bill accrued as a result of stellar self employed earnings in what seems like a long distant past, and as a bonus this slashed my student loan balance by more than half

So, looking back it's all pretty positive stuff

norfolkdream

All sounds rather complicated to me haha, but looks like you are going in the right direction.

Happy New year to you and your family x

SuperSecretSquirrel

Now it's time to look forward! Sadly, predicting the future is a lot harder than reviewing history

As always, there's a myriad of possibilities that could scupper future plans. Realistic things like a growing family, employment uncertainty, career change, moving house, self employment success/failure etc. Then there's the less likely lottery win, zombie apocalypse, nuclear winter, etc. It's impossible to plan for the latter, and actually I find it really really difficult to plan for the former too. I've rather hastily signed myself up for MFiT4, so I'll have to come up with some solid figures to target at some point soon, but for now I can put it to one side, I can afford to be a bit more abstract and hand wavey for now.

Cash: Keep on milking regular savers and high interest current accounts. Keep going with the slow stooze, increase credit limit or open a second account when credit limit reached. Try to do a free/cheap balance transfer at the end of the 0% period to avoid having to raid savings. Open a IFISA and start getting in on the P2P action. Keep an eye out for cash ISA transfers and the possible re-emergence of decent savings accounts. Maintain a decently high monthly cash savings rate.

Pensions: For now, keep on salary sacrificing 20%. I'm a little uneasy about eventually having too much tied up in pensions, especially as I have one eye on early/semi retirement, but can't resist the employer contributions and tax relief, not to mention the prospect of long term growth in investments that are quite difficult to meddle with and impossible to spend too early. At some point I'm going to switch to holding more of my assets in easily accessible ISAs, but in the immediate short term it ain't broke so I won't fix it. When I do start tinkering, I think it'll be a case of dropping pension salary sacrifice to somewhere around the 10%ish range (still a pretty respectable level), and paying the difference into S&S ISA. I should also try convincing OH to increase pension contributions, but that might be easier once we enter the mortgage wind down phase and monthly repayments drop (Jan 2017 at the earliest) leaving more slack in the monthly cashflow - of course if we have another child and OH decides to be a SAHM for a while this goes out the window. It pretty much all goes out the window if anything happens to my job!

Cars: I hope we won't be replacing either car in the next year, but realistically one or possibly both are likely to be replaced within the next three years or so. For now they can keep on depreciating away on the drive...

S&S: Continue investing a regular £350pm, consider increasing the amount if we get too cash heavy (or if decent cash returns become impossible to find). If pension salary sacrifice is reduced, increase S&S investment accordingly.

Mortgage: Stick with the reduced term, and overpay the maximum 10% allowance. Overpay in weekly chunks of £499.99 or less to avoid recalculating monthly repayment amount. Start asap (Monday 4th Jan) to minimise interest charges. In future years consider paying the full 10% op allowance in a single lump sum to reduce monthly repayment amount - this will help improve monthly cashflow, and the interest cost will be minimal on a small balance.

HMRC/SLC: These go hand in hand. A 2k+ payment this month will drop outstanding tax debt to around £500. Self employment earnings are much lower than a year or two ago now, so tax liability is pretty minimal. Of course I'd rather earn more and pay more tax (and repay my student loan more quickly), but that's easier said than done. I do need to work smarter though, I know I'm not getting the most out of my time. Repaying the SL ahead of time would be madness as the interest rate is currently a tiny 0.9%, it would be nice to settle in full within the next three years though - that means having to earn a good chunk (average of approx 5k pa) more than I am currently!

Here's to a happy and prosperous new year for us all! :beer:

SuperSecretSquirrel

norfolkdream wrote: »

All sounds rather complicated to me haha, but looks like you are going in the right direction.

Happy New year to you and your family x

Thanks for posting norfolkdream I have a terrible habit of only posting rarely but when I do its usually a long post, so that probably doesn't help! Yes overall things are going well thanks. Happy new year to you and yours too

edinburgher

Everything seems to be going swimmingly, happy New Year SSS :beer:

Luckyinlife

Happy new year SSS
looks like your way head of the game in all aspects

May i ask why you dont pay the mortgage off currently with such a big cash flow ? is it because you get a bit more per year in interest than you do pay interest on the mortgage is it

SuperSecretSquirrel

Thank you both for posting, and a happy new year to you too

I wish my savings could beat the mortgage interest rate LIL, but at 5.29% that's not going to happen anytime soon! If I OP more than the 10% annual allowance I get stung by a 6% ERC, even before factoring in the interest I earn on that 38k cash savings I'd be losing out. Lesson learned - don't get a long term fix if you're likely to pay off your mortgage way ahead of schedule and can exceed the 10% a year OP allowance! Anyway, first world problems and all that, we're in a pretty good position overall and I'm well aware of how lucky we are in the grand scheme of things so won't whine about it

SuperSecretSquirrel

Today I got to make the first mortgage OP in what feels like oooh about a million years or so £499.99 overpaid, and as a result I now estimate us to be under 30% ltv

Luckyinlife

Sorry about the delay reply sss

I see what u mean now the ERC is a night mare which i guess its there for anything over 2% is rediculas aint it

must feel good tho knowing you can Pay it off with your saving and save from your income :]

Great OP as well :]

SuperSecretSquirrel

Thanks LIL

Second OP of 2016 made today, another £499.99 paid off That plus the standard monthly repayment has dropped the balance below 36k, so that's two blocks coloured in on the spreadsheet house today I've now started colouring in the roof - how exciting! :rotfl:

Calculated today's balance to be £35,941.58 which sees us at neutral plus £15,674.61.

Next big milestone to hit is daily interest below £5. We are currently being charged £5.21 a day, four more OPs will see us under £5, and that should happen on the 8th Feb, all being well