Mr and Mrs P are going mortgage free...

lulabelle1

Good plan re job, 6 day week would be really hardwork with the little one let alone how much you would all miss each other...

MrsP1983

Thanks Lulabelle-it's so hard to know what's right when the numbers say one thing and my heart says another! I sent the application with the request for a job share and I'm 99.99% sure I won't get interviewed, but oh well, I'll just chalk it up to experience and hope they advertise again in a few years when MiniP is a bit bigger!

MrsP1983

I convinced Mr P to get on with his end of things and he's recently applied for a First Direct account (for the bonus), phoned the bank about reclaiming his PPI (I KNOW-I can't believe it's taken him this long and me this long to nag him successfully-I have been going on about it for years!), cancelled his membership to our local cinema (it gets you 4 free tickets a year and a reduced rate on other tickets but we practically never go nowadays as Mini P isn't very cinema-friendly!) and cancelled his sim for the iPad, which we needed when lived in a flat without broadband but now that we have it, definitely is an unnecessary £15 a month. So I am a very happy wife, as I'm getting to the point where I can't see where else I can cut back, and it was driving me nuts that he could be doing these things and laziness was the only thing preventing him!

I've discovered Dave Ramsey this week-he has a podcast you can download for free, which is quite fun to listen to as it's full of quite over the top Americans getting excited (half my family's American so I say that with affection!) and shouting about being debt free and paying off their mortgages. He has a book too which is quite simplistic but encouraging and motivating. We don't have any debt except the mortgage and Mr P's student loan, which is about £9k, and we hadn't really been considering the student loan as debt as the rate is low and it just disappears from his salary before we think about it, but being sensible it's still a DEBT and we'd have an extra £100-odd a month if we didn't have it, so I'm really trying to convince Mr P that we should throw some money at it as soon as possible, and make it go away...

Good news-we've filled one cash ISA for 2012-13; we've no hope of filling the other before April but we'll give it a go! We're managing to save approx £1000 a month at the mo, which I'm delighted about as it means as soon as our fix has ended that £1000 can be diverted straight into monthly overpayments, and we should have a nice emergency fund built up by then. Come on May 2014!

MrsP1983

I don't know if anyone out there is reading this but if you are I'd really appreciate some quick advice! We have been thinking more about Mr P's student loan, at just under £9k. He's 30 next month, so he's been very, v-e-r-y slowly paying it off for 9 years!

We have the first £6000 of our emergency fund saved, which we're focusing on while we can only make minimal overpayments due to the terms of our mortgage.

We had really wanted to save a full emergency fund (the aim is £16k), plus a few thousand to get out to the states to see my family over there, before May 2014, when we can start making unlimited overpayments on the mortgage.

Should we stop saving for a while and plough the money into Mr P's student loan? We could probably have it paid off by this summer, which would free up another £150 p/m. One part of me would LOVE to just get rid of it and feel that we're totally debt free (apart from the blinking mortgage!) but another part of me is a bit terrified about going back to 0 on the emergency fund.

How much do other people have in their emergency funds? £16k is 6 months outgoings for us. Maybe we should aim for 3 months and paying off the student loan? Is 3 months enough for a young family with a mortgage to pay? If we both lost our jobs (unlikely, but you never know), would we seriously regret not having 6 months saved?

Any thoughts VERY gratefully received-we're rather going round in circles!

MrsP1983

Although, all that said, I have just realised that our figure for 6 months included the £600 we try to save before any extras each month, so assuming that in an emergency we would stop saving, we'd actually only need about £12,200 for a 6 month pot...

lulabelle1

I have hardly anything in savings... All of my spare money is overpaid on the mortgage. I'm fortunate though in that I can take back any of my overpayments whevever I want.. So if we lost our jobs we would just take it back from the mortgage overpayment reserve if that makes sense....

Money in savings is too tempting to me.

MrsP1983

Thanks, that's really interesting-I know exactly what you mean about the temptation! We can't get our overpayments back (at least, not at the moment, I don't know whether that will change once our fixed rate is up) so I do feel the need to have some squirrelled away...

muddywhitechicken

Hi MrsP
What's the interest rate on the student loan? My guess is that it's fairly low (although it's a long time since I had one though) and that it would be better to have your emergency fund in a savings account instead of using it to pay off the loan. I wouldn't want to be without my emergency fund.
MWC

MrsP1983

It's only 1.5%, so much lower than savings. Financially I think it makes sense to keep the loan as is at the mo, but psychologically I think it would be amazing to get rid of it. Hum.

argomatt

lulabelle1 wrote: »

I have hardly anything in savings... All of my spare money is overpaid on the mortgage. I'm fortunate though in that I can take back any of my overpayments whevever I want.. So if we lost our jobs we would just take it back from the mortgage overpayment reserve if that makes sense....

Money in savings is too tempting to me.

My mortgage is like that too, so I can "borrow back" all the overpayments I have made if need be.

But, this is subject to an affordability check. So if I was out of work and needed the money back I probably wouldnt pass the affordability check and won't be able to get my money. :eek: