Onwards to freedom!

SuperSecretSquirrel

Time will tell I guess MFD, and thanks

Credit club update has come through - score increased by 47 points in the space of a month, I'm now sat at 611.

What did I do to achieve this?

Nothing.

Minimum repayment DDs have gone out, and that's all. No accounts closed. No credit limits reduced. No active attempts to improve my credit rating at all.

It's a funny old world, the world of finance, insurance, and credit scoring...

SuperSecretSquirrel

[SIZE=2][FONT=Courier New]               CURRENTVALUE       +/-MTH       +/-QTR       +/-YOY
House Value:    [COLOR=Blue]£125,000.00[/COLOR]        £0.00        £0.00        £0.00
Cash:            [COLOR=Blue]£40,918.17[/COLOR]     -£434.37   -£1,086.99   -£6,971.75
Pensions:        [COLOR=Blue]£75,837.86[/COLOR]    £3,387.29    £4,481.27   £16,483.31
Car Value:       [COLOR=Blue]£15,140.00[/COLOR]       -£5.00       £75.00    £5,940.00
S&S:             [COLOR=Blue]£24,173.04[/COLOR]    £1,633.52    £3,586.53   £12,335.32
Mortgage:       [COLOR=DarkRed]-£15,667.31[/COLOR]      £759.05    £2,265.90   £11,421.25
Due to HMRC:       [COLOR=DarkRed]-£450.15[/COLOR]      -£17.75      -£61.55       £72.30
Student Loan:      [COLOR=DarkRed]-£447.54[/COLOR]       £66.25      £198.55    £1,825.13
[B]Total:          £264,504.07    £5,388.99    £9,458.71   £41,105.56[/B][/FONT][/SIZE]

88.2% of the way to 300k net worth (2020 challenge), 12.5% mortgage ltv, £48,973.75 beyond mortgage neutral in liquid assets, 17.3% financially independent.

Crikey! What a difference a month makes...

My last net worth update (1st October) saw us making pretty much zero progress - pensions and S&S took a hit, modest increases in other areas, net effect being very little changed overall. This past month has seen equities race ahead again at quite an alarming rate with over 5k added to net worth in a single month! :eek:

It's hard not to enjoy seeing this kind of monthly net worth increase, but it really does feel like a bit of a rollercoaster ride at times!

SuperSecretSquirrel

[SIZE=2][FONT=Courier New]             CURRENTVALUE     +/-MTH     +/-QTR      +/-YOY
House Value:  [COLOR=Blue]£125,000.00[/COLOR]      £0.00      £0.00       £0.00
Cash:          [COLOR=Blue]£40,452.92[/COLOR]   -£465.25 -£1,196.44  -£7,095.19
Pensions:      [COLOR=Blue]£76,463.77[/COLOR]    £625.91  £2,904.19  £18,248.99
Car Value:     [COLOR=Blue]£14,825.00[/COLOR]   -£315.00   -£225.00   £5,775.00
S&S:           [COLOR=Blue]£25,174.54[/COLOR]  £1,001.50  £3,445.40  £12,887.27
Mortgage:     [COLOR=DarkRed]-£14,904.43[/COLOR]    £762.88  £2,278.23  £11,470.90
Due to HMRC:     [COLOR=DarkRed]-£483.33[/COLOR]    -£33.18    -£71.36     £122.61
Student Loan:    [COLOR=DarkRed]-£381.21[/COLOR]     £66.33    £198.78   £1,814.85
[B]Total:        £266,147.26  £1,643.19  £7,333.80  £43,224.43[/B][/FONT][/SIZE]

88.7% of the way to 300k net worth (2020 challenge), 11.9% mortgage ltv, £50,239.70 beyond mortgage neutral in liquid assets, 17.5% financially independent.
__________________

Another month flown past!

Nothing out the ordinary in this months figures, about as steady as they come really. Credit score didn't even budge by a single point!

We're looking forward to Christmas, and beyond that a juicy OP in January :rotfl: We'll certainly OP the full 10% fee free allowance. Most likely a lot more on top

If I'm not back here before then - Merry Christmas and a Happy New Year to you all! :beer:

Escapar2020

Hi SS
I've been tracking back over some of your old posts, and found some from 2015 when you became mortgage neutral and started talking about your net worth target. It's been both an enlightening and thought provoking read.

They say knowledge is power, I often feel like I don't know enough and wonder if I'm doing the right thing!? I'd be interested you your thoughts and those of others…

I'm not looking to achieve complete financial independence, at 44 I think I may have left it too late for that! Equally, another 20+ years working fulltime in a job I don't enjoy feels like a prison sentence!

I've been overpaying on my mortgage for some years, but in earnest for the last 12 months, since I gained a promotion (and became a high rate tax payer ). My plan is to finish the mortgage early, in around 2 ½ years, but I don't have a plan for after that. My current balance is in my signature, the house is worth about £140k and I don't have any plans to ever move, but an extension might be on the horizon! I have about £12k in an easy access savings account (for the extension) and an LGPS pension, but no other investments.

Despite the recent rate rise, my standard mortgage payment has dropped to £288pm and I'm op by £712 plus any spare cash each month. Should I be doing something else instead of overpaying?

I've read a few FIRE blogs, but most seem to have huge net worth targets and be written by people working in the finance or IT sector that plan to start their own consultancies (good for them, but not for me!). Your NW target seems more achievable, how did you set it and why did you choose to include the house value?

There's too much to read on the internet, it makes my head spin sometimes! Is there anything you'd recommend though? Naturally, I've subscribed to your thread :T

Escapar2020

SuperSecretSquirrel

Hi Escapar, thanks for posting!

A good long while ago my finger in the air estimate of household spending (excluding mortgage and childcare) was 1k per month. Assuming a 4% withdrawal rate, that would see us needing 300k squirreled away in order to retire early. I looked into when we could conceivably hit 300k net worth, then brought the date a little closer to make it more of a challenge, and set that as my medium term aim. Ended up aiming for 300k net worth by the end of 2020.

While I'm confident living on 1k per month would be possible for us, that's not a lifestyle we'd be entirely happy with. Over the past 8 months we've been monitoring every penny spent, and found that on average about £1,300 per month is what it takes to live comfortably as we do now (again, excluding mortgage and childcare). This would not include contingency for large lumpy expenses like car or boiler replacement, or eventually helping our children with university costs or starting a business or buying a home. Also, the house we live in won't be "earning" us any money (but it will save us from having to pay rent for the rest of our days), and its value can't really be drawn down (ignoring equity release as we wouldn't be interested), so it shouldn't really be included in our FI calculation. As a result of all this, it became clear that a net worth of 300k would be nowhere near enough for us call ourselves financially independent! A more realistic figure might be a 400k pot for drawdown (16k pa at 4%), plus a 50k lumpy spends pot, plus a mortgage free home. Then again, that would likely be too high - once we hit state pension age we'd have less need for any personal provision, and we won't need the drawdown pot to last forever so a 4% withdrawal rate may be too low (though others may argue it's too high!). I suppose the real amount needed is somewhere in between the too low 300k net worth figure and the too high 450k plus a house figure. Luckily, what the actual amount needs to be doesn't really matter right now, as whatever the amount is, the point at which we'll realistically hit it is quite far away in the future. Reaching that point isn't something I can plan effectively, just something I can generally steer us towards, so that's good enough for now. I kept the 300k by the end of 2020 target, as even though the 300k figure doesn't have any real significance, it's still a good figure to aim for in the short to medium term

Last spring I started thinking more about FI, and wanted a more useful measure of our progress towards that eventual goal. I posted about it here, and added some concrete figures for the first time here. The FI% has quickly become my favourite metric to track. I guess it instinctively means that much more than having X amount in the bank, or a mortgage balance of Y, or investments totalling Z... As our outgoings reduce, and our productive savings and investments grow, we earn ourselves a little bit more virtual freedom It's not to be taken too seriously, for the reasons given in the paragraph above, but it does help me put things in perspective.

I need to work a further 17 years to get the full state pension, and I have two young children. I'd hate to lose out on time with them while they are young, just so I can work and save hard, so that I can retire when I am older, by which time they may have potentially flown the nest. Having that simplistic FI% figure under my nose helps me play around with ideas like reducing my work hours, and as a direct result my salary, in order to spend more time with my children now. For example dropping down from five days a week to four would see me bring in a little over 80% of my current net salary (which still leaves a healthy gap between income and expenditure), I'd still accrue a full year's credit towards my state pension, and the weekends (where I get to spend the best quality time with my family) would be 50% longer - seems like a good idea. Later on, when the children are a bit older and have little interest in spending time with boring old Dad, maybe I'd choose to leave my current job and do something a bit more fulfilling, even if it paid less. If we had already achieved an FI% figure of say 85%, and the opportunity came along to do something I would absolutely love, but it would mean halving my income, then why not go for it? Same options would be available to OH. It's not like the extra money would add anything meaningful to our lives, so why not swap the "suck it up at work monday to friday and live for the weekend" life for something where every day is a joy? I don't suppose it's about retiring early for us, it's more about having balance and options.

Err, I think I've gone off on a bit of a tangent, sorry...

How did I set my net worth target? Badly, initially at least, and with a fair sprinkling of fuzzy/loose/flexible/ballpark kind of estimates involved.

Why did I choose to include house value? Initially because it resulted in numbers that weren't disheartingly low. Now I don't, not really. It's in the net worth figure, but not factored into the FI% figure (and again, that figure has a lot of guesstmating going on so not to be taken too seriously).

As for the "should you be doing something other than overpaying your mortgage with your spare cash" question... The first thing that springs to mind is that you are a higher rate tax payer, so stuffing a bit more into a pension might be a nice idea, you'd get tax relief at the higher rate so it would almost certainly be the most bang you could get for your buck.

Finally, are there any blogs I'd recommend? I enjoyed reading the finance zombie's blog, I read the whole archive a month or two ago. Other than that, I've not really read many FIRE blogs recently. Every now and then I check out the list of net worth sharers on rockstar finance (you can filter by country if only interested in UK blogs), so I'll dip in and out of the occasional blog through that list, but there aren't any that I keep up to date with as such. In fact, I find the pure finance stuff can get a little dull at times, and I tend to end up on more lifestyle oriented blogs like the frugal cottage, skint dad, thrifty lesley, frugal queen, the minimalists, etc.

Thanks for subscribing - I'm already subscribed to your diary and look forward to following your progress :beer:

SuperSecretSquirrel

I won't become a millionaire this year, but at least I won £25 on the PB's this month!

Stooze stats as they stand - I've paid a total of £151.34 in money transfer fees, and £6.35 in interest, received £25.27 cashback, and won 3 x £25 prizes. 5 months into a 24 month experiment I'm £57.42 down.

Karmacat

Wonderful posts, thank you!

takingonedayatatime

Hi SSS

I have been reading your thread for a while now and love your musings and way of thinking.

I also have a spreadsheet which monitors our (husband and I's) net worth and in terms of overall net worth it looks great as I have an old DB pension worth circa £200000 and my husband a DB pension currently worth £300000 and fully intends to continue working for the same company. We have a low mortgage of £60000 with a value of £220000. and some £20000 in cash stashed in S&S's. No other debt.

What this has meant. is that we can live of my husbands salary and I can stay at home with my children. I sometimes get frustrated that our cash reserves do not increase by much each year and that one of us will still have to work for another 15 years before we can retire but your recent post has highlighted the enviable position we are in.

1) My husband's salary is enough to cover outgoings, food, helping my 18 year old at Uni, clothes, a small UK holiday and some for monthly savings. Salary is in lower tax threshold.
2) My husband is fortunate enough to work locally, finishes at 4 every day and is home by 4.20 (cycles to and from work so no need for a 2nd car)
3) I get to stay at home and be with my 8 and 3 year old and my husband and I spend a huge amount of time with them but don't feel the need to spend lots of cash on them.
4) We can definitely retire at 62 (DH) and 60 (me) without having any drop in monthly income but with no mortgage, but our 3 year old will be starting Uni so will still be able to help her.

So thank you for reminding me that while FI is something to aim for it is also important to make time for children while they are still young.

All I need to do now is ignore those people who brag about new kitchens, bathrooms, holidays, and cars while we make do, fix and mend our way through the next 15 years. :rotfl:

Thank you again and keep posting!

Escapar2020

Thanks for your reply SSS. I'll have a mooch around your links and recommended blogs. The idea of an FI% indicator sounds good, I'll have to see if I can calculate mine.

In the meantime, I've started another thread to help me explore my options before I set my targets for 2018, feel free to stop by : http://forums.moneysavingexpert.com/showthread.php?t=5755807

SuperSecretSquirrel

Thank you all for posting

You seem to be in a fantastic position takingonedayatatime! Half a million in pensions, a smallish mortgage with plenty of equity, enough income to cover living your life as you like it - with plenty left over to save and help children out, and lots of time with your family - even your husband as sole breadwinner thanks to short commute and early finishes. Sounds like you've got it cracked!

Those that brag about shiny things could well be envious of your lifestyle. I find there's no point comparing with others, we all have different values and aims, and live accordingly :cool: