MF before I'm 30

YoungBaker

Hi there

Have been a long time member of the forum and have decided to join in on the Mortgage Free Wannabe board as there is so many great stories and diaries and hopefully this will help give me a bit of structure and keep me on track for paying off the mortgage and saving on all the interest!

A bit of background... I am 22 years old and have just bought my first home in April of this year. I have worked really hard since high school and managed to get a first class degree from uni and walked straight into a well paying graduate job, so am in quite a fortunate position for my age.

Alongside this, as much as I like going out and having fun like anyone else my age, I have been pretty sensible with my cash over the years and so was able to save and have enough for a house deposit... (not to mention help from the parentals).

To top all this off, this Summer I got married to my wife after being together for 8 years. To be honest, it has been a bit of a whirl wind year with marriage and a house buying - all whilst I am still pretty young. We are both very happy though and, as above, have been together for a long time so are really proud of how things have turned out for us.

Don't get me wrong, we are still young and enjoy going out and having a great time - but the fact is not many friends our age are in the same position as us yet and so we can have a lot more parties in our own home.

Now my wife has graduated from uni she has started her one years guaranteed graduate work. As such, we are now quite fortunate in our joint income and are using this to get going.

Our aim for this is to get our savings pot topped up - what should we be aiming for here?

Once we hit this, we are going to start over paying the mortgage. We have a £68k mortgage which has 25 years left to run. To be honest I never really thought of over paying until I fired in some numbers in the calculators... if we overpay a few hundred quid a month it knocks over 10 years off and saves us about £17k in interest alone!!

So having a look, if we pay off about an extra £300 a month we would have the whole thing paid off before the both of us were 30 which is just amazing.

To be honest, the liklihood is in 4 or 5 years when we start thinking about kids etc. and will be further on in our careers we will probably sell up and buy something a bit bigger / a forever home so will probably never become totally mortgage free by this age. But the plan is to get as much paid off as a we can and then see where we are by then.

Realise I have written quite a lot ha, but will try and keep this thread posted and need to tally up what savings we have got just now and what we need to aim for.

Thanks

SeriouslySeekingtoSave

What a fantastic thing to realise so young! However by the sounds of it, with all of your saving, you are already a very switched on couple and baring life throwing you some curve balls will hopefully never experience the financial hardship that some other people go through. It also sounds like you are both in this together which is another good omen.

I think you are right about not being mortgage free by the time you are 30 if you are planning on have kids, but with more equity in the house you'll have much better choices when/if you do decide to move. And the fact that you are already thinking about it and wanting to make your next move your 'forever home' means you'll likely not to wasting a great deal of money by switching houses every few years. A very expensive thing to do.

Regarding how much you should save; it varies. With your partner in a secure job for a year that does give you a bit of security but I would use that to build a good pot of savings. I personally would suggest enough to live on for 6 months (with belt tightning) in case you both lost your job at the same time. It sounds like you have parents which could come to your aid if things got really bad (although no one wants to do that ) so you've got a bit of security there as well.

Best of luck. It doesn't sound like you'll need much of it though.

Calfuray

Hello you!

You sound very similar to me, I'm 22, getting married in May, and about to go into my 3rd of 4 years of uni., and we got our house when I was 19.

Can I be nosy and ask what you studied? Well done on the first!

I agree with SStS, 6 months of essential expenditure plus a buffer is a good amount to save before OPs start. You'll find it addictive once you do start! I would definitely say to try and keep up with the diary, as you've already said, the stories on here are amazing, from Tilly's TillyTidies (TT for short)and enviable meal planning skills, nattypants' hilarity and plodding on through disasters, FroggyG on his slightly different MFW path, FortuneSmiles on turning a hobby into what looks like a good money maker, etc, etc. Couldn't list them all.

Best of luck, and please keep up updated!

Cal

YoungBaker

Thank you both for the warm welcome, appreciate the advice already and good to get a confidence boost for the start.

To be honest it is likely it will be a bit yet until we make our first overpayment as, as said, we will be focussing on the savings for now - but the whole point of doing that is to let us overpay afterwards.

Will sit down tonight with OH and figure out how much we spend as a necessity per month with a buffer added in and use this x6 months as a rough guide for what our savings pot should be really. All have a bit saved away but a lot has been used lately in getting our house kitted out. We have done pretty much all we need to do until next year now (Garden is next and waiting til next Summer).

Calfuray, thanks - good to know there is someone else pretty similair out there! I studied Business at uni, was a great course and really enjoyed it. Couldn't believe I managed to get a first nevermind a job after it ha! Most of my mates can't believe I'm married and have our own house at this age haha, I almost can't believe it myself some times But to be honest I would much rather be in the position we are in than sitting with no idea what I wanna do and just going out and wasting my money every month on pay day. Don't get me wrong me and OH have a nice "going out" pot that we enjoy each month and have a nice style of life at the moment but we have both worked so hard over the past years and scrimped through uni so are enjoying that now.

Thanks both

YoungBaker

So on my way home from work in the train I have sat and had a calculation of what We would need to really cover the bare essentials each month (all household bills, tightened food and petrol, and very little for going out) and its coming back that if we had both lost our jobs and had absolutely 0 income we would be needing about £1200 a month... So for 6 months just over £7k.

Does this sound about right? It seems like quite a big emergency buffer to have sitting, but I guess its best preparing for the worst case scenario ie. we both lost our jobs.

I had originally thought about £5k pot for this but maybe need to discuss with oh tonight and have a re think!

Looking forward to really getting going once we have a more definitive target though!

Calfuray

Hey YoungBaker.

Tbh, that sounds about right.

My very quick breakdown (and assuming I would be locked into contracts with companies):

• Mortgage - £300
• Life assurance - £10
• Buildings/Content Insurance - £10
• Phone - £10
• Fibre BB - £26
• Sky - £30
• Netflix - £6
• Mobile - £22
• OH mobile - £26
• Council tax - £90
• Electric - £30
• Gas - £30
• TV License - £12
• Car tax (2 cars) - £20
• Car insurance (2 cars) - £40
• Car maintenance (2 cars) - £20
• Petrol - £150
• Groceries - £150

So that totals £952 for the two of us, times 6 months = £5712

I feel like I'm missing something out, and obviously these are not essential and I'm assuming worst case we were locked into a contract, but yeah, I would have my EF at about £7-8000.

And bear in mind I'm a student right now with no job, so I don't have normal outgoings like petrol to job etc.

sweetdaisy

Just wanted to wish you well on your MFW journey . I started my MFW journey 2 years ago at 32 years old (wish I had started earlier, but better late than never) and I hope to have paid the mortgage by my 40th Birthday.

Your plan to get your savings topped up first is very sensible, as you never know what's around the corner. It's also peace of mind to have some savings behind you. A 'safe' amount to have in savings is usually 6 months of income/monthly expenditure.

Pennysmakepounds

Congratulations…..firstly for marrying your childhood sweetheart and secondly for being a home owner…..both these things are very difficult to achieve…J
Being mortgage free by 30 is an extremely hard thing to achieve in this day and age, with the state of the economy and the ‘wage to house price’ ratio..
It wasn’t always so…….J….In my day….(When the Dino’s roamed the earth J) the gap was FAR FAR lower….i remember buying my first house at 25 years of age for 23K (2 bed mid terrace in the north) when I was earning 16K…..like you I was very savvy with money and had 10K in savings as a deposit and with my wife’s joint income managed to pay the entire sum off in a few years….
Unfortunately, today….. even though I earn WAY more money than I did then….I don’t think I could achieve that….
I do worry about my kids and youngster today…..because they will find it very VERY hard to get on the property ladder let alone be mortgage free by 30…
So on that note….I say…. WELL DONE….

Cinny91

Just wanted to wish you luck too! We're about a month off starting to save our deposit (mfww?!) so I keep snooping over here, it's motivating to see someone my age gearing up to clear their mortgage

I agree with the 6 months living expenses, I follow the Dave Ramsey principles and that suggests 3 - 6 months living expenses in an easy access saver. Our's would be around 7-8k too so that must be a good average?

YoungBaker

Thank you all so much, appreciate your kind words and advice.

I understand it is so difficult to become mortgage free by 30 now a days, and to be honest I doubt very much this will be the case for me... It's more of an aim to get as much paid off and be in the best position by then.

The next 6 months or so is going to be spent really building up our savings and getting into a position to be able to actually overpay. On paper, with mine and OH income we could make the max 10% overpayment per year and be fine - but obviously have money going into our savings and etc. first of all.

I have a question - what is the usual approach you guys take for making your OP? Do you make them directly to the account as you go, or do you put the money in an ISA / savings account then make one lump sum payment when you are ready? I appreciate there will be a mix of ways but just wondering the best way really...


Think we will be aiming for at least about 6k in savings before we start an over payment pot, and have checked last night and currently are sitting at about £1k at the moment... so just 5k to go! :eek:

Hoping to treat ourselves to a nice holiday next Summer also as we have worked hard, so needing to get some sort of savings pot up and running for that also!

Also starting to think about ways to maximise income, and get through the last of our stuff to unpack etc. in the house and maybe figure out what we can sell etc.

Thanks again for your help so far

Calfuray

It depends on the exact terms of your mortgage which is better.

My mortgage interest is charged daily, and my interest rate on the mortgage is higher than any savings accounts, so the best thing to do is to pay off any amount, no matter how small, asap, for maximum effect.

Other people have mortgages which charge the interest monthly/yearly, or their mortgage interest rate is so low that ISAs can earn more, etc etc. Some mortgages have a stipend that you can only pay OPs of £500 at a time, etc.

So, depends on your mortgage T&Cs.

As for the emergency fund, I found it too depressing to put all my money in the EF and have no OPs, so I split it half and half. There are many different approaches.

Good luck!