Attempting to pay off our mortgage for a bigger house! :)

glitterjunkie

Hi all! I am a total newbie to this part of the forum, but I wanted to start my own diary to keep me motivated so hope you don't mind me joining in?

My hubby and I live with our gorgeous little boy who is one. We bought our house for £85k in 2009 and took out a mortgage of £55k (now £54k outstanding). I realise we are already in a very lucky position as we had a big deposit to put down in the first place (inheritance from my granddad), our mortgage is already pretty small, and house prices are cheap where we live. We have no debt apart from my student loan and £3k we owe to my mum for a car, which is already budgeted to pay back over the next few months. HOWEVER our house is a modest 2-bedroom terraced house, and in a couple of years we would like another child meaning we want to move to a bigger 3-bedroom house. We have therefore decided to pay as much off our current mortgage as possible over the next 2 years, to reduce what we have to borrow for our next house. Hopefully we will be able to continue overpaying once we move (I've heard it gets addictive?!) but I'm not really thinking about that at the moment, it's more of a short term goal to afford a bigger place

I have been really encouraged by the Overpayment Calculator which shows if we keep paying at our current level, our mortgage will be around £51k in 2 years... however if we can find an extra £400 a month to overpay, it will only be £41k in 2 years! My hubby isn't a massive Moneysaver and is more of the opinion that 'you can't take it with you', but when I showed him that he said we should definitely go for it

I used to post on these forums a few years ago around 2009/2010, when I was a student and we were saving for our wedding and first house. My hubby and I both earned minimum wage and I only worked part time, but I used to think I was a pretty good Moneysaver and so we always got by on a very low income. I used to do mystery shopping, loads of ebaying, the £10 a day challenge, online surveys etc etc.

Nowadays we both work full time in better jobs and jointly earn about £1,000 a month more than we did back then. BUT I don't feel like we're any better off because have somehow lost our Moneysaving lifestyle along the way over the last couple of years I haven't posted on these forums since 2011 because I've just been a terrible Moneysaver! I don't have as much free time to do ebaying etc nowadays, and although we earn more than we used to, we have nothing extra to show for it becuase all the extra money we earn is being frittered away on rubbish! I don't think we're extravagant on big things (we haven't had a holiday for 4 years) but we just seem to waste SUCH a lot on the little things like buying lunch out, takeaways, constant new clothes and toys for our little boy (who to be honest could open his own toy shop and has more clothes than he has time to wear them!) We are awful for buying convenience food and our Asda bill is astranomical because we rely such a lot on pre-prepared stuff with being at work all day. I budget £400 a month for groceries and nappies which should easily be enough for two adults and a toddler, but we end up spending about £600 a month in Asda?!! I just feel like we need to change our whole lifestyle at the moment because we're working incredibly hard but have nothing really to show for it. We should be able to save around £700 a month on our income after all outgoings are paid, but for the past few months all that extra money has just disappeared and I'm not sure where it's gone?! I did go completely overboard on Christmas, and spent a fortune on a professional cake and party for 20 kids for my little boy's 1st birthday which was lovely but he didn't know or care that it was his birthday so it was a bit daft of me really... It's just getting silly and I want to change my mindset, stop wasting money and instead direct that money to the mortgage, so that we have something to show for it all in a few years!

SO... I have the following plan of action -
1. There's a few direct debits I'm going to cancel such as home phone and broadband (we never use it as always use our mobiles!) and weekly Graze boxes... I love them, but they do add up and mine aren't even healthy, as I have all the naughty options 'favourited' so they're always full of flapjacks and chocolate!
3. Cancel credit cards...I have two Cashback credit cards and while the cashback is a nice perk, I've come to realise that they just encourage me to spend much more because I don't have to stick to a budget! The cost of which way outweighs the cashback value. I just spend without thinking, as they both have quite big limits. I do pay them off in full religously each month but I always have a massive shock at the total each month (hence I suppose why the £700 we should be saving disappears on paying the cards off every month!)
4. Instead of credit cards, open a new joint account just for spending. Each payday transfer all the grocery, petrol and 'spending' money into there, and we are only allowed to spend out of that account. When it's gone it's gone. If we have nothing left by halfway through the month we'll just have to walk instead of use the car, and eat storecupboard meals! (little boy excepted of course, I will try to fill up the freezer with a month's worth of homecooked meals for him at the start of each month)
5. Try to do more grocery shopping at Aldi... I buy bits in there on my way home from work and I've been SO impressed, it's like half the price of Asda/Tesco and really good quality! I do the grocery shopping online as don't really have time to go to the store, and Aldi don't do online... however I'm wondering if it's worth making time to do a full shop at Aldi instead?
6. Set up direct debit of £400 a month to overpay mortgage, to go out just after payday so we can't be tempted to spend it! I've already phoned out lender (Woolwich) and that is the most we are allowed to overpay until our fixed rate ends next September
7. Any extra we have, put in an ISA, to hopefully do one big overpayment once the fixed rate ends ... we should have an extra £300 really, although whether I can stick to a budget and not end up spending this remains to be seen!

I have completely rambled on, as usual... sorry! It's just something I've been thinking about for a while and I think it will help me loads to have a diary to track progress and keep motivated so I'm really excited to get started now! I will try and keep this updated. Hope to follow some other people's journeys along the way too!

Xx

chirpchirp

Welcome to the board. You sound like you're really committed to doing this and you know what to do so I will read your progress with interest.

Beckyy

Welcome! Looking forward to reading about your MF journey

glitterjunkie

Thanks guys I've been reading a few other peoples diaries over the last few days and it's really motivating! Will defo stick around

I plan to start OP'ing once OH and I both get paid in January, so December will be more about trying to get in the MSE mindset again (have bought all Christmas pressies, although we do have 2 meals out and a wedding night do this month which I forgot to budget for oops!) I'm going to try and keep a spending diary in here, as our biggest problem is that we overspend every month on stupid little things like magazines takeaways and convenience foods. If we can cut that out we'll have loads more for overpayments. So here goes...

Monday I made £12 by selling a couple of my son's old outfits on a local selling site... unfortunately my hubby was off work, met me for lunch and suggested we go to Subway which spent £8 of that, so NOT a good start, but still the day overall was a profit! The house I delivered them to was a lovely big house and it did make me think 'maybe they got that lovely house by being careful with money', it definitely motivated me! Tuesday was a NSD, then yesterday spent £21 in Asda on milk etc... most things were on offer so not too bad. Today hubby has spent a further £20 in Asda unfortunately on rubbish - he's on night shift fthis week and bought some pre-made sandwiches, junk food etc to take with him. He's only just started doing nights so we aren't really in the routine of it yet... I think I'm going to have to start batch cooking meals for him to take to work, as that £20 could have made 10 or more meals, much cheaper and healthier. I always batch cook for our little boy so need to start doing it for us too I think

I have made a start by applying for a new bank account online for me and OH to use as a 'spending account' - it won't have an overdraft so no chance of overspending, once it's gone it's gone! Also cancelled Graze box and claimed travel expenses for work - mine are only a couple of quid a week and I usually forget to claim them, but I've just found out accounts offer an option to save it all up and claim it once a year, so it will be a nice £100 or so to put towards an overpayment this time next year.

Off to bed now as my little boy had us up at 5am this morning zzzz. Hoping tomorrow will be a NSD!

glitterjunkie

Oooh... just checked our EDF Energy account online as we had an email from them and they are reducing our monthly direct debit by £30! They put it up to £119 last year which I thought was ridiculous but just put it down to having a new baby and using loads more energy, but we're now in credit. So that can go straight to OP each month month. Yay!

racing_blue

Love your style, hope you don't mind me not mincing words as I assume you would like to hear from different people with different perspectives. These are two questions I have.

1. Your aim is to move to a bigger house... which is going to cost you more money... so why exactly are you spending time, effort and money overpaying your current mortgage?

2. House transactions have a big impact on your wealth. If you are planning to move soon... why not focus on building these skills, rather than the other stuff you mention?

- how to sell a house for the highest price
- how to buy a house for the lowest price
- how to secure a mortgage for the lowest cost

Anyway, good luck with it all.

chirpchirp

Lowering your mortgage and increasing your LTV should allow you to access better mortgage deals so I think you are working on this the right way and disagree with racing blue.

Be careful with the EDF bill! What tends to happen with energy bills is that you build up a debt, then they increase your bill to cover the amount you are in debt and the amount you are forecast to pay, then when you are in credit they drop the bill again but not to the inbetween amount that you need it to be on so the cycle continues. I refuse to accept my decrease and allow it to mount up.

For example I pay £137 but they now want me to decrease to £98. We are going into the winter months when I know I will use more and that my bill increased substantially this year as I was in debt from last winter. £120 is probably the amount I need to be paying but as I know that I'm feeling the cold more and more and I haven't sorted thermostats yet, I feel it is best to pay too much rather than too little and would rather have a refund after the winter months.

Gillybean

I'm OPing for the same reason, glitter. This house is fine for us and we can be here for as long as we want really, but it's not our forever home. In a few years we'll own this house outright and when we're ready to move we'll have the value of the house plus a cash lump sum to buy our dream home.

Good luck, sounds like you're really motivated.

glitterjunkie

Thankyou for your replies! racingblue I think the reason is just like the other 2 have said. .. im hoping that by overpaying now we will build up more equity in our current house, which we then means we wont have to borrow as much for the next one. If we OP £400 a month for the next 2 years we can knock 10k off the mortgage, which is a huge motivation! I would be extremely interested to learn more about the other points you raise if you can point me in the right direction?

Chirpchirp - thanks for the reply, I think you might be right actually! Can you ask the energy company to keep your DD the same then? I just got excited by the prospect of more OP's haha but its no good if we end up with a huge energy bill next winter.

Gillybean- nice to speak to some one in the same boat! Do you have a diary? Your signature is very inspiring! I will feel so proud moving into our next home knowing we haven't over-stretched ourselves to buy it

Well ive had a good few days... got paid and work have given us all a £200 Christmas bonus! So that will pay for the Christmas meals out and wedding do that id forgotten to budget for, so dont have to dip into savings/overdraft. Paid my mum £2k back that we had borrowed for a car too, been saving bits in our ISA and my bonus meant I had enough to make it a nice round 2k so ive transferred that across to her before I could dip into it and also opened me and OH's new 'spending' bank account to start from next payday, which is when il be chopping the cashback credit cards up and attempting to stick to a food budget... eek! OH is working days this week so every time we cook an evening meal we are going to make double and freeze 2 individual portions, which will mean he doesn't have to buy a load of rubbish and expensive ready-meals to take to work next time hes on nights.

Spending wise ive been pretty good, im finding keeping this diary is really making me think about what im spending and not waste so much. I spent £25 on a meal out with the girls yesterday paid for from bonus, but drove there and back so saved taxi money and alcohol. .. would have been nearer £50 usually! DS needed nappies yesterday so I checked online for where had them on offer and made the effort to walk there, about 5 mins further than our usual supermarket but saved a fiver by doing that! Filled the car up with petrol but made the effort to check where was cheapest locally rather than just going for convenience. I also spent £2 on entry to a soft play area with DS today but resisted the urge to buy tea/coffee/lunch afterwards which id have usually done. I reckon I have saved £40 this weekend already just making little changes. I really think we can save so much by changing the way we think about money and trying to atop wastage!

Muser1

Welcome! Good luck you sound in a great position.

Muser x

Ps give Aldi nappies a go!

glitterjunkie

Thanks Muser... have heard good things about Aldi nappies, must remember to pick some up next time im there! We usually use pampers = expensive :-/

Have had another good couple of days... NSD yesterday and we cooked a big batch of chicken tomato pasta for tea and managed to freeze 5 extra portions! MIL looked after DS In the afternoon and he came home with a brand new pair of shoes, she'd had his feet measured in Clarks and he'd gone up a size so she got his next pair... What a star, and £30 saved for us! He has really wide feet so only Clarks will do really. Also made myself a packed lunch for work today = at least £3 saved on shop bought sandwiches.

Feel like we are definitely making progress! x