hello... a plan in progress.

stewby

hi there.

very new newbie here so forgive me if i am a bit dense. basically, i was quite "fortunate" and due to my grandad passing away, my parents were able to give me 10k towards my first house. (my dad acted as guarantor as i was only 17 at the time).
i have since moved into a new home and found myself a partner. we have no children.

i had no idea that i could pay my mortgage off early, i assumed it was with me for life so have done nothing with it.
i have currently have 14 years and 6 months left on it.
the balance at present it 57,057 (as of 2012, my next yearly statement is in october so i presume i will be down to about 54k as it seems to drop by 3k each year).

anyways... my reason for coming on and announcing my presence (after a wee while lurking) is that i want to pay off my mortgage early. it isn't really possible at the moment but in the next couple of months, i plan to get it sorted out.

in my next post i will put in our current financial situation, my end goal and a couple of questions i have.

hope you can help me achieve my goals.

want_to_save

good luck on your journey

stewby

background
righto... i am going to be honest cause there's no point in not being truthful. i hope no-one gets offended by me. sorry in advance. i feel like a bit of a fraud after reading other people's posts as my situation seems a bit "mild" and self-inflicted compared to others. oh... and my use of the english language is atrocious so i apologise in advance if i don't make any sense.

basically... i have a mortgage that is currently at £57,057. (i get a new statement in october and it should be about £54,000 i think).
i have a £10,000 loan which i used to clear my debts and visit my partner in new zealand. (he went out for eight months as part of his training course). i also have a credit card of about £3,000. my partner has just completed his training course which involves a bond of £90,000 which we need to pay off.

i cannot change my mortgage as my dad is on the agreement. (he owns 25% of my house). and if i change it in any way, they want him off the agreement due to his age. (something to do with having 15 years and 6 months left and my dad being 58).

plan
* after reading on here about overpayments, i have decided that this is the way to go. i am with the woolwich and have no early repayment charge.
question 1: how do i find out if there is a cap on how much i can overpay?? (i currently pay £341.10 a month).
* i really need to budget better. just now, i get £400 a month and i have spent it by the 10th of the month. (poor budgetting and lots of petrol).
this is about to change as i am away to move jobs and will be closer to home so petrol will be dramatically reduced. my plan is to give my dad £100 of this "pocket money" so that i can use it to pay off my debts.
* my partner has a bond of £90,000 and i have no idea how this works. (neither does my partner).
question 2: does anyone have any experience of bonds?? the repayment period seems to be 9 years. is it just like a mortgage??


if possible i plan to increase my payments from £341.10 ----> £500 a month which means i will pay off my mortgage 5 years earlier.

i hope to put £100 a month into a house fund (for refurbishment in the future).
i also hope to put £100 a month into a holiday fund. (for example, next year, we are going to a wedding in kos which we have no savings for so are putting it on the credit card too).


i want to try and plow loads of money into repaying our debts... but this is all in the future as currently my partner is unemployed so there is just me earning.
my pay is lower just now but will be going up when i move jobs. (long story which i won't bore you with). so... the plan is to start in october (when my new job starts).

i hope to join your "honor roll" and i am hoping that posting on here will give me the incentive i need to actually focus on making my finances work. (i tend to be quite competitive with myself if that makes sense).


hope this all makes sense. please let me know if there is any more information or anything you would like to know. thank you for reading.

stewby

well... i contacted the woolwich today who are my mortgage people.

the guy was really helpful and said i could overpay as much as i want. i can do a lump sum or monthly overpayments and it would reduce the term of the mortgage and not just decrease the payments amounts. (something i learned by reading the diaries on here).


i have spoken to my partner (who is looking for work at present and he is happy with the plan) and i have spoken to my dad and asked him to keep in charge of my main bank account.
this means that out of my wages, we get £400 to live on each month.


at present the plan is simple:
* from 15th november (my mortgage day) we will be paying £400 instead of £341.10 every month.
* we plan to budget our meals better and write out shopping lists to try and prevent impulse buys.
* we would like to keep part of our £400 budget to pay back my parents.


once my partner has a new job then we plan to:
* increase our savings (for contingencies and any home improvements).
* try to make more overpayments. (either increase the monthly amount more or make some lump sum deposits).


it feels good to have a plan. kinda glad i have read so many different diaries as they have given me ideas on what i want to achieve and how to do it.
:j

originalmiscellany

Excellent work. Sounds like you're going to make huge strides. Just being aware that you can overpay is a huge step of progression
Anything you can overpay (As you saw) makes a massive difference to the final date of your mortgage.

Obvious things: What is this bond? Is it interest bearing? Is it for his work?

Of your debts, which has a higher interest rate? Mortgage or other debts? You would be wise to clear the highest rate first as that will cost you more in the long run.

But congrats on being so level headed and willing to make inroads

stewby

thanks for the reponse orginalmiscellany. i will have to find your diary as well as you seemed to have various debts like me. (mortgage, credit card, etc. well, before you paid it off of course).

the bond was through a training school so neil (partner) could train to be a pilot. he has completed his training and passed everything but jobs seem to be a bit scarce just now. (i imagine cause it is just passed the busy summer period so everything is winding down).
the bond was sorted out between neil and his mum and i haven't had a chance to see any of the associated paperwork so it is kinda vague (i'm afraid to say).

the plan is to try and pay off a little of the mortgage each month just so i feel like i am achieving something. cause i can't really do anything with the bond until neil gets a job. (it sounds a bit like a student loan where you pay it back once you reach a certain salary or get a job).

i want to try and pay the credit card back first but my dad can do that using the main account. (he is paying it back each month, about £200 a time. i have no access to this account for obvious reasons).
:P

we are a bit restricted in what we can do with our £400 but i want to try and take control a bit.
for example: this month we went to the leuchars airshow (which was brilliant), however it cost £200 on my credit card as i bought tickets and stayed in a campsite. then i spent the £400 whilst in st andrews for the weekend. so we had no budget by the 10th september.
this is why i need to change. it's not fair on my parents or on neil so i need to control my spending more.

wow... i seem to love long posts. sorry again folks.

Beckyy

What are the interest rates on your loan and credit card? If they are higher than your mortgage you should pay those off first to save yourself a lot of money in interest.

Weird_Nev

Stewby, I've read this and your other post about your partners.

You appear a bit scattergun on your approach. There is no point overpaying your mortgage by £60 if you then have to put £200 on your credit card as you have no money.
Likewise, you mention your dad managing a "main" account, paying off £200 a month of your £3k credit card debt, and owning 25% of your home.

This is not how adults manage their finances!

You're on the cusp of greatness, you've got all the right ideas and motivators, and if your partner can get work you'll be laughing. HOWEVER, this is the time to lay foundations.

I'd recommend that you write out a full statement of affairs like you see on the Debt Free Wannabee boards. That way you know where you stand and where you need to focus your efforts.

IS your income £400?
Does your partner earn?
Even ignoring the credit card debt, and with an income of £400 and a Mortgage of £341, how do you live? And How do you expect to overpay the mortgage to £500 a month?


You've got all the right ideas, you just need more clarity and control over your finances.

We overpaid our mortgage for 4 years for no real reason other than we could, and it seemed sensible. Those overpayments allowed us to take 3 months off of work and travel around the world, without having to pay the mortgage. They also let us take one month out of the mortgage when we emigrated, and rented out home out, allowing us peace of mind and a leeway. And of course, becuase we reduced the outstanding amount of the mortgage early, we took a chunk out of the total interest accrued.

SO, time to get real with yourself, add up exactly how much you earn spend, and take off your dad (Which I suspect is what's happening to make up the numbers) and then build a plan.
But remember, Income MUST exceed outgoings, then pay down debt, then you can attack the mortgage.

Happier_Me

Hi Stewby and a very warm welcome to you. I am a newbie to this board also but I am not a newbie to mortgage wannabe freedom, this is a road I have been on for several years and I have a few more years to go before I reach the end of this road.

So congratulations on committing to being mortgage free and I wish you luck on your journey.

I work to a monthly budget that's designed to allow me to overpay my mortgage and for the best part of this year I have done exactly what you have done. I have overspent well before the end of the month on non essentials, stuff I could have done without - I have absolutely nothing to show for my overspends. But I have savings in the bank, equity in my property and no debt other than the mortgage, so I can afford to overspend - I just don't want to because it delays mortgage freedom by a few months, hence a MFW diary. I know I need to be kept on the straight and narrow if I am going to finish this journey on the date planned and a diary is definitely one way of doing it.:D

You will find lots of tips and help with budgeting on here. From your posts your circumstances sound quite complicated so I think it would be a really good idea to post a statement of affairs (a monthly list of all income and all outgoings from you income). This will help focus the advice you get, identify where you can save and we will also be better placed to help you figure out if your plans are actually sustainable or maybe a little too ambitious. Also listing your debts, any terms and interest payable would also be useful as well as any savings you have.

Looking forward to reading your diary in the future.

stewby

my wages are about to change so i am going to use an estimate of what they will be. (based on my old wages and my current ones).

incomings
* at the end of october, i will start earning about £1800 a month. this will fluctuate depending on whether i am on days or nights, working weekends, etc.
* currently, my partner is not working at all. he contributes when he can but it's not much. (roughly £40 a month).

outgoings - monthly (sorry, it's going to be messy).
* mortgage: £341.10
* loan: £240.86
* credit card: (i pay off about £200 each month. the problem is that i am constantly using the card so it never really reduces).
* utilities: £68.00 (just started direct debits).
* council tax: £163.00 (just increased this month).
* "luxuries": £85.34 (tv licence, mobile phone, sky, broadband).
* insurances: £54.92 (home, life and critical illness).

i, embarrassingly, am unsure of any other outgoings as my dad deals with this account in case i mess it up. so that brings my outgoings to £1,153.22 a month.

additionals
next: due to being a shopaholic, i have a nice juicy account with next. it currently stands at £360 (although i did buy a dyson so it's not all clothes). i pay off the minimum £30 a month.
my living allowance: we get £400 from the main account to live on for the month. this includes fuel (i drive 40 miles a day when working although this changes to 3 once i change jobs), and food for two adults. we also enjoy buying the occassional treat like a dvd or a game. the £400 is normally gone by the middle of the month. i tend to blame the fuel but it obviously isn't.


so incomings should be £1800 a month. (varies).
outgoings are about £1583.22 a month.

i would like to increase my mortgage (just to give me that feel good feeling really, as otherwise it is all about digging myself out of a hole rather than achieving something). i feel the extra £58.90 is not a massive expense.

i am not sure the % of my loan. i will have to rake for the paperwork upstairs.
i also know nothing about my credit card but have sent a text to my dad to find out. (he took it out for me initially to do some home improvements). *just got a reply back. i am not the primary card holder, my dad is. (but i am the only one who uses it) i am a named credit card holder and it is about 14 - 19%. (i am guessing that is ridiculously high and you are going to tell me to focus on that).

would you recommend paying off the next bill instead?? currently i get charged £6.70 each month but this will be going up due to my latest spend of £100.


hope this is detailled enough. i really am completely new to all this budgeting and saving and i didn't even know you could pay more off your mortgage each month (i assumed you either had it for the 25 years or you got a lump sum when someone died and paid it the whole thing off then). if this is not detailled enough, then give me a shout and i will split it all up further.
thanks in advance.

stewby

i feel that i was bit intense in that post... so i am writing one to say thank you for your replies and interest and for trying to help me.


the reason the £400 crops up so much is because i have full control over it (that poor money, it never stood a chance) and i want to try and show my dad that i am comitted to sorting out my finances. (due to my erratic spending, my dad took over the main account so i didn't miss any payments or anything due to lack of funds).

the plan on the 1st october is to give my dad £100 of our living allowance to keep safe (in case it's a disaster). then by the end of the month if it is still intact, i am giving it back to them.


i know it's not going to be a quick fix but hopefully we're on the right track now. it's a bit worse than i thought but at least i am now aware of it.