It's kind of fun to do the impossible

Sholly

I've had 2 spend days this weekend:
50p yesterday

£25.60 today

The 50p yesterday was the cost after expenses of a mystery visit to Five Guys. My son and I had a burger each and shared fries and a drink. After a month of carefully planning meals and using what we have at home, Five Guys felt like a real treat! And I couldn't make that meal at home for 50p so it's easily justified.
The costs today were for birthday cards and presents for my son's two best friends - £10 each in a card and a bag of sweets - that's what all of his friends do so really easy to sort out. It was my first trip in a supermarket this year but I didn't buy anything apart from the cards and their sweets.

So including my grocery shop last week (£38.72), my spends for January are £64.82, although with the grocery shop being paid for with Amazon vouchers, my cash spend is only £26.10. My car is running on fumes though! So if we need to go anywhere before the end of the month, I'll need petrol, but we don't really have anywhere to go so we might get through without that outlay. I'm going to keep this challenge going through February, although I'm sure we'll need a food shop at some point!

cannyscot_2

You have done so well ! I am up to £98.33 for food spend as have to accommodate 5 people and one who insists she needs specific stuff for lunch - that set me back £17! - but as the job makes her financially independent I figure is actually a good investment for me . I have loads of food in and we will have a burns supper tomorrow as a bit of a celebration with haggis and steak pie .  I have only bought one hot chocolate for £2.50 and one coffee from Lidl for 55p both times whilst out walking with another person so didn’t want to be too mean . 

The five guys mystery visit sounds perfect ! Brill idea . 

I am currently planning on spending my feb food budget ahead as I have a load of £5 of £25 on lidl so makes food super cheap . I am going continue Jan- April as I think I can make significant savings and we will be lockdown so will make a great start towards the cost of the postgrad fees for next year . 

Definitely make a a difference when there is nowhere to go ! It gives you time and space to make better decisions . 

Sholly

Thank you! So have you - there are only 2 of us so you're equivalent, even with the special items! Enjoy your burns supper! Do you set a specific grocery budget? The mystery visits are lovely treats at the moment - Five Guys have put their prices up recently so the allowance doesn't quite cover the cost (£11.00 allowance, but cost of £11.55 to buy the required items) but the additional payment was £5 so with my son's burger costing £4.95, a 50p shortfall is worth it!
Yeah I think these lockdown times are a good opportunity to save money - I didn't in the lockdown last time, I spent more on groceries than normal to make up for not being able to go anywhere, and built the chicken coop and got chickens and everything that came with them so I'm hoping to take advantage this time around.

Sholly

January NSD challenge update:
I had 27 no spend days in January. January was a really hard month emotionally with my son really struggling with home schooling so he spent a couple of days with a family member (our single family bubble) and I used those days to get outside for late night walks after work and went via the shops for a treat for tea a couple of times, otherwise my NSDs would've been 29/31. I'm happy with 27. In these circumstances, going to get a frozen pizza is absolutely acceptable! I did have to get petrol in the end too - I forgot that I had an appointment to give blood when I posted last time, and didn't fancy breaking down! That will see us through February too though. I also got a refund from Adidas for a Christmas present that I returned - I'd ordered a couple of different sizes for my son - so that's gone back onto my card. I'm waiting for a refund from Footlocker too, but they're definitely not as quick as Adidas.

Spends breakdown:
Takeaway: £0.50
Son's friend's birthday gifts: £25.60
Groceries: £56.52 (£38.72 vouchers & £17.80 cash)
Petrol: £40.39
Total cash: £84.29, total spends: £123.01

I did a big grocery shop yesterday so I've already spent more in February than I did in the whole of January!

Feb so far...
Groceries: £134.66
Takeaway: £2.55 (I went to Greggs on the way to the supermarket...I can justify this though 😏 I was hungry and if I hadn't eaten, I'd have hungry-shopped and bought more! I have no regrets!)

Feb NSDs so far: 3/4

Sholly

After a really long few weeks, it was lovely to log off from work last night with a week of annual leave and a week of study leave ahead of me (my first exam in 16 years at the end of Feb!!). I'm also hoping it'll give me the headspace to make a decision about my finances.

I've had a niggling feeling for a while now that the Spain holiday home decision wasn't one that I was totally comfortable with, so I decided to do some more research and see if I could work out where that feeling was coming from, and if it was justified. I realised that I'd been too focussed on how much I'd need to buy the property, and so I'd only worked out the potential profit with loose costs for running it as a holiday let. As it turns out, there was going to be very little, if any, profit in it (I'm talking a maximum of £120 per month on average over the year, and that's if it's rented out 48 weeks of the year, which I don't think is at all achievable). The tax in Spain is high for non-resident holiday homes and is charged on gross profit, not net. And if I bought it and didn't rent it out, it would cost me more than £6k a year. Considering I'd have to put in more than £27k to buy it, it doesn't seem like a smart financial decision. With that £6k a year, we could have some amazing holidays and see more of the world. And the £27k could be used more wisely elsewhere. Head had to win over heart.

So what next? With the measley 0.85% that I'm earning in my savings account now, it seems pointless keeping my money in there so I decided to look into what overpaying on my mortgage would look like. If I don't overpay, my current mortgage deal will cost me £232,826 - that's £62,440 in interest. I'm fixed in for another 2 years with a 32 year term. I think I have an allergy to paying interest, so these figures almost brought me out in hives! I decided that I'd make a £2k one-off overpayment and also set up a recurring overpayment for £1k on top of my normal £611 payment, with the knowledge that I could stop if I wanted to or if needed to. I was absolutely comfortable with this decision, but when I went on my provider's website, there was a message to say that any overpayments wouldn't reduce the term, which means it won't be as beneficial. I called them hoping that I could just ask them to reduce the term instead but apparently they don't offer that like some other lenders do, and any overpayments would mean that my monthly payment is recalculated (I'm unhappy with you, NatWest!). I can request that they reduce my term, but that's possibly a permanent decision for the remainder of my fixed term. There's also a £35 fee for doing so. I used the MSE overpayment calculator and looked at 13 different options, ranging from "do nothing" to various different one-off overpayments and different terms. I think that the option I want to go for, is to make a £7.5k overpayment and then reduce the term down to 9 years - this feels pretty extreme, but it's the one that keeps my savings at a level that I'm pretty comfortable(ish!) with whilst still making the overpayments that I wanted to...and it's a bit of a middle finger to the mortgage provider!! I would still have £913 left over per month to put into my savings account to top those savings back up, especially in lockdown when we're not allowed to go anywhere anyway (this is after all bills, savings for annual payments, food and fuel). It would also mean that the interest paid is £46,700 less than if I did nothing - which helps those hives 😏

My concerns around this option:
- It's a fixed change for 2 years - I could ask to pay the £35 again and increase my term, but they could say no.
- It's affordable as long as both tenants don't leave my rentals at the same time! Both sets tenants have been in the properties long-term (4 years for one and 18 months for the other) and have always paid their rent on time. They're also both on 6 monthly contracts which renew 4 months apart. If they both leave at the same time, I'd have -£61 between incomings and outgoings. If this happened, I'd have my savings to fall back on, and I could reduce my grocery allowance (I don't use it all anyway).

I think this nervousness around what's leftover at the end of the month might just be an irrational reaction to having less leftover - it's still plenty and there are definitely solutions. If I think back to even a few years ago, having £913 left over at the end of the month would've been a dream! - I've definitely been far worse off than I am now, but maybe the memory of not having enough is ingrained.

So, to anyone reading, any pearls of wisdom/words of warning?

bubblycrazy

Sholly said:

 I decided that I'd make a £2k one-off overpayment and also set up a recurring overpayment for £1k on top of my normal £611 payment, with the knowledge that I could stop if I wanted to or if needed to. I was absolutely comfortable with this decision, but when I went on my provider's website, there was a message to say that any overpayments wouldn't reduce the term, which means it won't be as beneficial. I called them hoping that I could just ask them to reduce the term instead but apparently they don't offer that like some other lenders do, and any overpayments would mean that my monthly payment is recalculated (I'm unhappy with you, NatWest!). I can request that they reduce my term, but that's possibly a permanent decision for the remainder of my fixed term. There's also a £35 fee for doing so.

Hi, my mortgage was with Natwest for almost 5 years and I made OP without it recalculating the monthly payment?

They might not officially reduce the term, however the OP by default will reduce the term, as there will be nothing left to pay back at some point before your official mortgage end date. Does that make sense? 

Sholly

bubblycrazy said:

Sholly said:

 I decided that I'd make a £2k one-off overpayment and also set up a recurring overpayment for £1k on top of my normal £611 payment, with the knowledge that I could stop if I wanted to or if needed to. I was absolutely comfortable with this decision, but when I went on my provider's website, there was a message to say that any overpayments wouldn't reduce the term, which means it won't be as beneficial. I called them hoping that I could just ask them to reduce the term instead but apparently they don't offer that like some other lenders do, and any overpayments would mean that my monthly payment is recalculated (I'm unhappy with you, NatWest!). I can request that they reduce my term, but that's possibly a permanent decision for the remainder of my fixed term. There's also a £35 fee for doing so.

Hi, my mortgage was with Natwest for almost 5 years and I made OP without it recalculating the monthly payment?

They might not officially reduce the term, however the OP by default will reduce the term, as there will be nothing left to pay back at some point before your official mortgage end date. Does that make sense? 

Thanks for the reply. That's what I was hoping to do but two advisors told me that it would reduce the monthly payment 🤔 and I'd then have to manually increase my OP online to add the difference between the old payment and the new payment. I found someone else on here that had the same issue, the advisor on that one said "Your contractual monthly will change following any recalculation for example: A rate change, a product switch or a lumpsum overpayment of £1000 or more" https://forums.moneysavingexpert.com/discussion/6124687/natwest-overpayments-confusion - I've overpaid previously with NW and they kept my payments the same but maybe it's different because it's over £1k, in which case I could make it £999. So confusing!

bubblycrazy

Ah yes mine was always below £1000. I think if you pay it in £999 chunks you'll be ok! Just make sure to leave enough time between the two payments so the first one has gone through and they don't get added together as one.
Good luck! 

Sholly

bubblycrazy said:

Ah yes mine was always below £1000. I think if you pay it in £999 chunks you'll be ok! Just make sure to leave enough time between the two payments so the first one has gone through and they don't get added together as one.
Good luck! 

That's a good point - I'll make sure it's set up for the 1st of every month if I can. Thank you! I think I'll do the overpayment first too so that might recalculate the monthly payment first anyway, but I'll do some more calculations and work out the best way. Appreciate your help 🙂

Sholly

So, with a £170,386 starting point -

Option A (the original option)
* pay off £7.5k, then officially reduce term to 9 years:
  * new mortgage total: £162,886
  * no overpayments
  * £1,654 per month standard payment
  * £178,595 total repaid by end of mortgage

  + less interest
  - no flexibility
  - £35 fee

Option B (discussed with bubblycrazy above)
* pay off £7.5k, keep term at 32yrs, overpay by £999.99pcm:
  * new mortgage total: £162,886
  * £999.99 overpayment

  * £580 new standard payment after £7.5k overpayment

  * £179,426 total repaid by the end of the mortgage
  + total flexibility with the overpayment

  + lower standard monthly payment

  - £796 more over the lifetime of the mortgage (£831 extra interest minus £35 fee)

I like option B - it gives me the saving that I want with the flexibility that I was worried about losing