Onwards to freedom!

edinburgher

Have your S&S slammed into reverse as well SSS? Think this is my first pension statement in about 4-5 years where I have lost gains :rotfl:

SuperSecretSquirrel

turtlemoose wrote: »

Yay on the daily interest! Great work!

Thanks turtlemoose :beer:

edinburgher wrote: »

Have your S&S slammed into reverse as well SSS? Think this is my first pension statement in about 4-5 years where I have lost gains :rotfl:

Oh yeah

S&S ISA is now worth £15.27 less than the total amount I've paid in over the past 3 years.

It dropped 5.3% in the 18 days between 1st and 19th January ("lost" £344.86 from a high of £6524.20). Since then it has increased by £55.39... Great start to the year:rotfl:

As for pensions, I only look once a quarter for my own sanity's sake

In the three months from 1st July 2015 my personal pension value increased by £127.98... Not great when you consider £2078.13 was paid in during that time :eek:

The subsequent three months saw it bounce right back.

I guess these three months to April might see it right back down again.

It's a wild ride that's for sure :rotfl:

mrsp1987

Hi SSS, really interesting reading some of your posts. Can I ask how do you calculate your daily interest charges? Is there a formula or a spreadsheet that you use?
I've just started my journey and love reading the threads on here and seeing what other people get up to

SuperSecretSquirrel

Hi mrsp1987, thanks for stopping by

The daily interest calculation is pretty straightforward:
Daily interest = balance * (rate/365) / 100

In my case:
Daily interest = £34164.98 * (5.29/365) / 100 = £4.95

Do you have a diary thread on here?

mrsp1987

SuperSecretSquirrel wrote: »

Hi mrsp1987, thanks for stopping by

The daily interest calculation is pretty straightforward:
Daily interest = balance * (rate/365) / 100

In my case:
Daily interest = £34164.98 * (5.29/365) / 100 = £4.95

Do you have a diary thread on here?

Huh when you put it that way it seems pretty obvious that's how you would work it out. So, after a quick calculation my daily interest is £8.68 (rounded up).

Yes I do have a diary on here. Only started it a few days ago. It's called Mortgage Free Mini Goals (I think).

SuperSecretSquirrel

mrsp1987 wrote: »

Yes I do have a diary on here. Only started it a few days ago. It's called Mortgage Free Mini Goals (I think).

Found you

mrsp1987

I did see your reply this morning but I'm currently on a training course in Manchester and had my head buried in questions about calculating energy bills and learning how to read electric dial meters :rotfl:
When I get home and have some time to myself I'll add another entry, but thank you for following me!

Teacher2

Hi SSS,

I have just stumbled across your thread and have read it up to date. My goodness, what an achievement to have come so far financially in such a short period of time!

You seem extremely bright (from your accurate, interesting writing style) and intensely focussed and I have no doubt that these reasons are why you are doing so well. In many ways your 'journey' is similar to that of my DH's and my own.

We have always, right from first being together in our early twenties, kept a precise written account of all of our incomings and outgoings and know exactly where we stand financially. This has allowed us to plan ahead as you have and to make projections for our future as you do.

We have had some comic miscalculations along the way. When we started out we were paying 14% interest on our mortgage. We could never have imagined that mortgage rates would come down to 5% - or even the 1.8% that our DD is paying on a fixed rate.

Another surprise was when I was factoring in what we might be able to make on our savings once the mortgage was paid off. I was working on a 'modest' 5% never imagining that achieving 1% was going to be a struggle. We could be living the life of Riley on 5%!

Another unexpected element was how the headline, published rate of inflation fell while the actual rate of inflation rose exponentially. Or to be more accurate how the price of goods has fallen (a washing machine is half the cost it was 15 years ago) while that of services and salaries has gone through the roof (the cost of painting the outside of our house has doubled).

Furthermore, the overtaking of decent private section pension pots with good annuity rates by index linked final salary public sector pensions has been a bit of a horrible shock as we were rather relying on the OH's pension to see us through and the current annuity rates wouldn't feed a rabbit on his 'pot'.

Despite events banjaxing some of our plans what has turned out right is that having a prudent mindset, never spending up to your income, paying off debts and not keeping all your eggs in one basket pay off as much now as they ever did. These seem to be the habits you have imbued too to judge by your forensic attention to your financial affairs.

I say all this to show you that while you might encounter some setbacks and miscalculations on the way your basic principles and habits should see you through as you will be able to cope with glitches. Your basic mindset is autonomous rather than fatalistic and that will see you in good stead.

One point. I notice that you are much exercised by the financial penalty incurred by paying off your mortgage early but are also eager to see the end of the debt. You rightly note that you would gain more in interest on the savings you have invested by not paying off and you would lose more than that interest by paying off and incurring the penalty. In mere money terms you are right.

However, does it occur to you that you are so far ahead in your investment programme that you can afford to indulge your wish to be mortgage free?

If you pay the mortgage off with your savings you take a hit of a couple of grand. However, the mortgage is costing you a fiver a day so that's £1825 per annum you'd not be paying. And you would be able to switch the mortgage repayment sum straight into savings so in a very short time you would be back to square one and then saving at an even higher rate.

These are the sort of counter intuitive benefits that being prudent is able to confer. Money gives you autonomy and choice.

I first noticed this when I was watching 'Location, Location, Location' and couples were losing houses they really wanted because they wanted to negotiate the price down and get one over the vendor. In actual fact they'd have been far better off taking a little hit and getting the house of their dreams. They were cutting off their noses to spite their faces.

I am by NO means suggesting that this is what you are doing as you are really on top of things. I am just saying that sometimes you can ease up and 'lose to win'. Not everyone can afford this luxury but you can. It took me years to realise this as I didn't trust myself. I thought that if I ever loosened up I'd become imprudent and !!!!less in a moment! As if.

Good luck with the future.

SuperSecretSquirrel

Hi Teacher2

Thank you so much for reading along and posting such a considered post, it really is appreciated!

Those comic miscalculations sound about right, no matter how carefully we plan for the future we can't ever really know much with any real certainty! Luckily we are quite adaptable and fully aware that reality won't match the forecast so are happy to roll with it I would agree that taking this journey has armed us with the right tools to manage ok come what may.

I've calculated the optimal mortgage pay off route from today to cost a total of £36,855.52 (£3,499.45 of which would be interest). If I were to repay in full today, the cost would be £35,311.83 (£1,955.76 of which would be early repayment charge), but losing that amount of savings would likely cost us over £5k of lost interest over the mortgage repayment period (assuming I manage a minimum of 3% over the next four and a half years). Overall we would be at least £3k worse off, which is no small amount over a relatively short period of time.

I agree that in some instances following a suboptimal path can be worthwhile. A common example would be that of a heavily indebted person choosing to pay off their smallest balance first, rather than the more efficient path of targeting the highest rate first. It will end up costing them more in pure cash terms, but sometimes the psychological boost from a quick win like that can be priceless. For us, however, there is no real psychological win to be had. I am sure it will feel great when we officially have no mortgage, but knowing I can settle in full any time I like has me feeling as though I'm essentially already there.

I already kick myself at times for locking-in to such a long term fix.. I am entirely convinced that if I were to pay the mortgage off too hastily and it ended up costing us an additional £3k I would kick myself even harder! I totally agree with what you are saying in that sometimes doing the "wrong" thing confers such additional benefit that it ends up being the "right" thing to do, but I don't think that applies to me right now Of course, anything can happen, and if for some reason the best savings rates were to plummet to say 1%, I would certainly reconsider my approach.

I am honestly more interested in the bigger picture of tracking savings beyond mortgage neutral than I am in the mortgage itself these days. Mortgage balance and savings balance are just columns on a spreadsheet, the column I really care about is the one that sums the two values

SuperSecretSquirrel

Moved another £499.99 from savings to mortgage this morning and coloured in another block on the spreadsheet house as a result - balance is now £32,870.58

There's just £266 left of this year's OP allowance, so a smaller OP planned for next week, and then no more until next year. From that point on we'll be looking to grow our savings and investments, and the focus will be more clearly on increasing the MN+ balance.

We are £16,376.46 ahead of neutral today