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MFW by 50?

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Comments

  • gaffel
    gaffel Posts: 80 Forumite
    Ah thanks for popping in Squirrel, I feel as if I have been visited by MFW royalty :-)

    I would love to be able to shuffle stuff around, but as an expat ... choices are VERY limited!
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • gaffel
    gaffel Posts: 80 Forumite
    edited 18 June 2015 at 1:12AM
    Did this.. yep I know, groceries...... but....... mrgaffel thinks he is jamie oliver... and I ain't complaining :beer:
    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 3
    Number of children in household......... 3
    Number of cars owned.................... 1

    Monthly Income Details

    Monthly income after tax................ 2500
    Partners monthly income after tax....... 2500
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 5000


    Monthly Expense Details

    Mortgage................................ 894
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 0
    Electricity............................. 200
    Gas..................................... 0
    Oil..................................... 100
    Water rates............................. 100
    Telephone (land line)................... 40
    Mobile phone............................ 0
    TV Licence.............................. 10
    Satellite/Cable TV...................... 9
    Internet Services....................... 0
    Groceries etc. ......................... 700
    Clothing................................ 10
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 15
    Contents insurance...................... 15
    Life assurance ......................... 38
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 100
    Haircuts................................ 30
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 2261



    Assets

    Cash.................................... 78000
    House value (Gross)..................... 250000
    Business debt........................ 83000
    Car(s).................................. 20000
    Other............................ 26000
    Business net assets....................535000
    Total Assets............................ 992000



    Secured & HP Debts

    Description....................Debt......Monthly...APR
    Mortgage...................... 147154...(894)......2.75
    Total secured & HP debts...... 147154....-.........-


    Unsecured Debts
    Description....................Debt......Monthly...APR
    Total unsecured debts..........0.........0.........-



    Monthly Budget Summary

    Total monthly income.................... 5,000
    Expenses (including HP & secured debts). 2,261
    Available for debt repayments........... 2,739
    Monthly UNsecured debt repayments....... 0
    Amount left after debt repayments....... 2,739


    Personal Balance Sheet Summary
    Total assets (things you own)........... 992,000
    Total HP & Secured debt................. -147,154
    Total Unsecured debt.................... -0
    Net Assets.............................. 844,846
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • gaffel
    gaffel Posts: 80 Forumite
    In other news, sold one van and made (ahem) 3.6k. Will be op'ing it tomorrow. It had sat on drive unused for 3 years. :eek::eek::eek::eek::eek::eek: Yes, I know. Insane.
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • gaffel
    gaffel Posts: 80 Forumite
    edited 16 June 2015 at 11:39PM
    I am so sad, I am running out of MFW's diaries to read.. have read some huge ones from beginning to end. I feel as if I know so many people know, or maybe I am just a stalker :eek:

    Got some fabulous ideas and inspiration and realised this diary is so much more than clearing a mortgage. It's future building. With no pension and income solely reliant on our business, time to diversify and build for our retirement. I hope to clear the mortgage as soon as I can but that is just step one of the planning.
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    How much of the mortgage debt is really business debt?
    (probably the cheapest way to fund business dent)

    It should be identified on the personal SOA
  • gaffel
    gaffel Posts: 80 Forumite
    None of the mortgage debt is business debt. It was a mortgage taken out to buy our house. Albeit it could be reduced if business paid us back money it owes. I also keep high cash savings in case business needs but am weaning myself off this!

    The business does owe us money, but have included that as 'shares & bonds' as seemed best place for it.
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    If the business owes you money and your only debt is mortgage then part of that mortgage is really business debt.

    if the S&S is all business debt then along with the cash you are effectively mortgage free and just carrying the mortgage as business credit line.

    You probably need two lines for the business.
    One for the personal debt, could be negative debt in the debt section with a negative payment if the company is paying you back slowly.

    1 for the value of the business as an asset.

    If any of the £5k drawings is debt repayment

    The standard SOA template allows you to add to each section.

    Something like an offset mortgage would probably be useful to carry your line of credit cheaper that the mortgage.

    Are the cars etc. really your or company(often cheaper to keep them in the company.

    The real goal here seems to be get the business sorted its seems to be the only reason you need the mortgage.
  • gaffel
    gaffel Posts: 80 Forumite
    Thanks so much for stopping by and for your input getmore4less, some great points.

    Yep an offset mortgage would be perfect. But I'm an expat living in ROI... cannot find one on the market! I get really frustrated at the lack of financial options here. Cannot get a decent credit card which offers good rewards. As I would pay about £50k a month on credit cards (business expenses all paid off monthly), it would be ideal to get some rewards but nothing in ROI. Instead I get a commercial business card annual charge. Personal credit cards in ROI (even UK ones) have a 40eur a year tax on them, so little value to me. :(

    No the £5k is salary. Again, due to our location, it is actually better to take salary from UK company rather than dividends. Double tax on UK dividends in ROI whereas double tax agreement on salary. Annoying! As is much living here. :mad:

    Yep we could be mortgage free but in reality interest on personal mortgage not tax deductible & I fear the 2.75% rate won't last. Our mortgage was subprime when we got it (companies brand new), and set at rate + 2.7%. Meant to move it years ago to a better one but now looks like my laziness has been in our favour. ECB rates 0.05% hence 2.75%. Looking around now best rate I can get is 3.7% in ROI (0.94% in UK!). Irish banks are a laugh!!! :eek::eek::eek: However, our mortgage has been sold to a new company, and they inferred on a phone call rates were being reviewed. I suspect we will be hit with 4-5% soon enough. It was the letter from the mortgage company which prompted this flurry off right, lets get this sorted!

    One car is in company, one personal. Again complicated by living in ROI and one business being in NI. Mr customs man in ROI decided one director did not need a company car therefore we had to sell the car to ourselves personally and pay €6k to import it in order to be able to drive it in ROI. Same car (like for like and its only a hyundai!) was 10k dearer in ROI.... He allowed me to keep a UK car. *just*

    Yes potentially we could have business(es) as an asset. How to value? Now that's a question. Complicated by the fact I technically own 7 companies. Best one is ROI one with very decent net assets of 0.5m. However, it also has loaned other group companies money to start/launch them so no spare cash right not, but that is improving. The rest all have net assets of c.10k, nothing major, but again all improving. :j

    Yep goal is get the business(es) sorted. We had become lax and not very efficient. Now we are trimmed and lean and cash is flowing again and we are back expanding. I am more comfortable reducing personal savings and offsetting mortgage with it, whereas have kept it there for years as an 'emergency' for the business. That said, business has no debt (other than ours) and in very good standing with bank, so we could get a business loan. But, as you pointed out, 2.75% is a tough rate to beat. But when we took the mortgage out, the business owed us nothing. However we have taken wages, bonuses etc then loaned them back if needed by the business and it has gradually built up.

    My main aim is to pay off the mortgage, then focus on pensions. which neither of us have. I'm thinking a combination of pension and buy to lets.
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • gaffel
    gaffel Posts: 80 Forumite
    I added the main company net assets into SOA...
    Original MF date: Feb 33 Target : MF date: Dec 20 Cleared mortgage August 2015
    Investment mortgage, 164k July 2038 MF date.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 18 June 2015 at 6:41AM
    The chances are that borrowings on the mortgage are still cheaper than a business loan even without tax benifits and unless the business can get money without personal security the risks are similar anyway.

    If there is enough assets that even worst case you get you money back probably not a lot to worry about

    If the business can make a better return on the capital invested then there is no real problem,

    I just think it is important that the personal ballance sheet reflect reality even though they can become quite linked if not carefull.

    The issue you have now is you are generating so much excess personal cash that you need to look at how you invest that, more into the business to get them to grow faster(allthough that has it's own issues) diversify into something else, stock and shares, property, or maybe a holiday!
    Just reread and you covered both, are there pension wrapper benifits in ROI?

    I would start that diversification now from what you have said the mortgage is more than covered allready and as that capital invesed in the business is generating a better return than the mortgage rate just leave it.

    If you go down the property portfolio route you will need cash, again the current mortgage is probably the cheapest you will get, allthough over time you may be able to restructure depending on the rates you can get and tax relief

    Valuing the business is a tough one but something to think about moving forward, depends on the exit stratagy or stratagies, business are worth more than just the assets.

    How they are structured and the finances for them is into the area of specialist but for you it is how to scale/grow and exit plan.

    liquidate(probably worst case so a good low guess)
    sell off.
    grow so they self manage over time(you just draw money).
    get the kids to take over.
    ...

    One important stratagy is that you mangage the key personel risks(probably you&hubby + others) so the business survive if the keys have issues that mean they can't work.
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