I've been a mug but now I'm a mfw! Mortgage free by 2023!

snappybadger

I've decided to keep an official diary on here as a record of my progress with my new obsession - to be mortgage free!

I owe £120,285 on an interest only mortgage with just over 16 years left on the term. Until this month I had never made a single capital repayment on my mortgage I dread to think how much I have given the Halifax in interest payment so far.

A bit of background: In 2006 I decided to leave my well paid, secure job and set up a business and be self employed as I was severely unhappy in my career and life. At that time I had a huge amount of debt and because I had no idea how much I was going to be able to pay myself in my new venture I started on a debt management plan with CCCS (now Stepchange). As a result of this my credit reports got trashed, lots of defaults and even a CCJ...but I learnt my lesson and since then I've become a lot more savvy with money/spending.

My business performed quite well in the first few years and I was able to repay all but two of my debtors. The ones i left were the biggest one (about £20k which is the one the CCJ came from) and another loan which had the interest frozen on it. I've been regularly paying these since 2007 and the smaller loan is due to clear in Oct 2016. Because of the frozen interest and fact that the defaults are now 6 years old and they have dropped off my credit report there really is no incentive to repay them any earlier. So any excess money I've been able to earn I've been chucking into ISAs and the highest rate easy access savings accounts I could find.

This is where the mug bit comes in....it never occurred to me to chuck any of these savings at my mortgage. I (like the majority of people it seems) treated the mortgage payment as a regular bill and didn't give it any further thought. Yes, I knew that at some point I'd have to tackle the capital but that was 25 years away wasn't it?!!!

When my fixed rate ended I went onto the bank's SVR which made my payments drop by nearly £250 a month. Instead of keeping to the original payments I stuck the rest into savings or frittered it away each month.

As it stands now my business is suffering because of the economy - I'm earning far less than I was a few years ago and having to work harder for it, but it still allows me the potential to increase my earnings by working harder still so that's a good thing. I haven't been able to put much into my savings lately, and I've had to take a fair bit out for work on my house (plus I decided to treat us to a holiday in Florida in November - eek!).

So how did I get to be a mfw? Well I have a good chunk of money in a 2 Year Fixed ISA which is 1 year in so far and about a week ago I was debating with myself whether to use this to try and get a settlement figure on my biggest outstanding debt - with a view to having them both gone within the next few years. And then it occurred to me that actually my biggest debt is my mortgage and it is the only one that is charging me interest, and the only one not being repaid!!! Doh!!! What a mug!!!!

I knew from previous visits to this wonderful site that there was a MFW section so I decided to have a nose around and wow!! I have been so inspired by everyones diaries and the roll of honour and I want to join!!!

I have just turned 36 and I am a single parent to my 2 year old son. I would like the security of owning my own place and knowing we will have a home forever. Also, with the impact the economy has had on my industry I don't know how long my earning potential will be. My job probably only has another 10-15 years potential in it for me personally so I need to make sure we are as financially well off/secure as possible by the end of this timeframe. I have a small pension from my previous career but I have no idea how I will fund the interim years before that kicks in....so it would be best all round if my outgoings were as low as possible!

So what it the plan? Well there is just over 16 years left on the original term of my mortgage but I have decided to cash in my big ISA and chuck that money immediately at the mortgage, along with some other bits of money I've been able to source. This should enable to me to clear the mortgage within the term if I start making an overpayment of £360 per month from now on.

But that's not good enough! I want to set myself a harder target....10 years. Mortgage free by 2023! This will require overpayments of about £700 per month. It's a big stretch but *could* just be achievable....so why not try?

My short term targets are:

By end of this year (2013) to have paid off £16,000.

To have a LTV of 75% or less by the end of 2015 (when my credit report should be fully clean and I should be able to remortgage - hopefully to an offset mortgage).

snappybadger

So my mfw plan started on 1st June and the first thing I did was trawl through my two current account and redirect any spare money in there that wasn't going to be needed this month into my first OP! So i sent £500 to the mortgage account My first proper payment off my mortgage ever!

The next steps I have taken today were to cancel my 2 year fixed ISA. I worked out that despite the early cancellation fee if I paid this off the mortgage this month rather than in a year's time when it matured I would save about £300 in interest payments. Not much, but it all helps! And it will be a great start to my mf journey to chuck such a huge amount at the mortgage - should be just over £11k

I have also sent off a request to sell some shares I had from my previous job which should make about £450. I have also spent today scouring the house for all the pots/bags of coins I could find to take to the bank tomorrow. I have about 40 Euros and 40 Canadian Dollars I could exchange too. I need to see where is the best to do this....

I have also applied for a cashback credit card. I couldn't get a great one with my credit rating, so it's only 0.5% cashback - but i figured I could use it to pay for petrol and groceries (and council tax - thanks to Tilly's diary for that one!), and could earn a little bit extra to pay off the mortgage with as a result.

The biggest thing I need to focus on is reducing my grocery spending. I don't smoke, rarely drink, never go out, don't buy magazines, but my biggest vices are:

1) Not cooking properly/meal planning/wasting a lot of food
2) Buying (and eating) a lot of snacks - chocolate and crisps
3) Being a sucker for a toy bargain - last winter I had to buy a second wardrobe for my bedroom to hide all my haul in! But on the plus side I probably won't need to spend any money on my son's Christmas or birthday presents for at least the next 3-4 years!!!

I have decided to keep a spending diary to monitor and control my grocery spending. I am also going to try and do a weekly meal plan and will start to explore batch cooking and longer meal plans. I will cut out spending on snacks - my diet will thank my for that one! And I know that the incentive of being mortgage free will be enough to stop my toy bargain obsession too (I hope!).

snappybadger

Spend diary so far this month:

1st June: £21.90 - food shop for the week (I have meal planned and intend to use up stuff from the freezer/fridge)
2nd June: NSD
3rd June: NSD (except for DDs/SOs - do these count as spends?)

sweetdaisy

Just wanted to pop in and wish you well on your MFW journey .

kitjos

First of all, welcome to mfw thread :T

Secondly, congratulations on making the decision to work hard to be mortgage free

Im quite new to this site myself and starting the mfw journey, its going to be one fell of a ride but im determined to do it in 10years.

Hope you get on well, keep with it, and keep reading the posts on here for inspiration x

snappybadger

Thanks sweetdaisy and kitjos! Good luck on your own journeys too!

I have just been online to check my mortgage account with the Halifax and the £500 payment I sent through over the weekend isn't being shown on the statement, although it has come off the total balance figure (but they've also taken it off all previous month's balances too?!!!). How strange. I rang them up but they couldn't tell me why it was doing it either. Going to wait and see what happens once my regular payment goes in on 7th.

But the pleasing thing was to see that the balance has now come down below the £120k mark, and is now £119,785

Angelina1

I have paid off one of my mortgage's which was an interest only mortgage of £180,000.

I was so sad that I worked out how much interest I was paying on a monthly, weekly and daily basis. Each month I made an overpayment, I would get sent a statement showing my payments and balance and I would work out how much less interest I was paying.

It was great seeing the balance going down and the satisfaction I got knowing that the Woolwich was getting less each month in interest.

It gets very addictive and keep at it, if you have a bad month, even a little extra overpayment to the mortgage helps.:D

Good luck on getting that mortgage reduced.

snappybadger

Hi Angelina! Thanks for reading my diary and well done on paying off such a big mortgage!

You are so right about it being addictive. Today I popped into the Halifax to deposit £2 in coppers, a cheque from closing an old bank account for 6p, and transferred £500 from my son's savings account into my own. I also returned a pair of shoes to M&S that I decided I didn't need and got a refund of £25. So I've just been online again to transfer £527.06 over to the mortgage account lol!

I decided to move all of the money from my son's savings account off the mortgage as I figured that the house is going to be his inheritance and he's not earning a lot in interest on his account anyway. Plus as he's only 2 he has no idea anyway ha ha!

Angelina1

A fantastic start, but it is one hard slog and at times, you wonder if you are getting anywhere. But when you reach a milestone and you look back at all your statements and see that balance coming down, it is a fantastic feeling.

I told hardly anyone what I was doing, as they don't seem to understand that you are throwing away money to the banks. I just lurked on here for years getting my inspiration from here, especially when I felt like giving it up. I will be following your diary.

snappybadger

Thank you Angelina! It's funny because I've read a lot on here about not telling people what you're doing because they don't tend to understand and think you're mad. My best friend and her husband paid their mortgage off a few years ago and when they told me I was really pleased for them (it still didn't occur to me to do something about my own though!) and could see why they'd done it. I definitely didn't think they were mad.

I am so excited about this challenge and really want to work as hard as I can to get that balance coming down - and I really hope I can maintain the momentum over the long haul. I guess as you said I'll need to get my inspiration/support on these boards to keep going.

To update my spend diary: today I went to Mr Ts with the intention of just getting a few essentials but then I noticed they had their £5 off a £40 voucher offer on, so I decided to stock up on cleaning stuff and bulk buy some of our meals that I could freeze, to take advantage of the voucher. Ended up spending £53.55

Only problem is I'll have to spend another £40 in a few weeks to use the voucher up! I'll make a plan of things that I can stockpile that will get used anyway like laundry tablets, etc. to make sure I don't buy for the sake of it.

LauraJo

Good luck on your journey. Sounds ambitious but you'll get the bug and it'll be really rewarding. Worse thing will be how quickly 10 yrs flies by!