Eating the elephant

Seanymph

Sandringham was lovely, and I bought our Christmas gifts for our American friend.

The most excellent news is that Mr Sea has said he will work summers once we stop. Only five days a week mind, although i suspect he will go to six in time and persuasion, so, much less stress about funding our travels and a real possibility that once the mortgage is paid off and the van funded we can go.

How lovely.

Seanymph

http://meaningfulmoney.tv/2015/09/09/mmp126-pay-off-mortgage-early-or-invest-for-the-future/?utm_campaign=coschedule&utm_source=facebook_page&utm_medium=Meaningful%20Money&utm_content=MMP126:%20Pay%20off%20mortgage%20early%20or%20invest%20for%20the%20future%3F

The meaningful money guy has a podcast this week about whether paying off your mortgage is a good move - thought you may find it interesting.

Seanymph

Well as it goes up, so it goes down - OH asked at work about working the Summers, but only weekdays - and they aren't keen.

Each operator works with two labourers - his labourers would want to work seven days a week, and it wouldn't be fair to make them only work week days.

Not something we thought of, but true nonetheless.

So, back to the drawing board.

£65,577.33

Playing_with_Fire_2

Re - interest charges. Yes, you are right the daily charge for interest should go down as the capital paid off goes down. If it isn't then check that the interest is calculated and applied daily (some are done monthly), and check that the OPs are being applied correctly to the account (sometimes they try to mess you around). Are the jumps in interest related to bank holidays - the interest will accumulate but it might take longer to apply to the account.

I also find it baffling the variation in what people need to stop work (and not saying that their maths is wrong, just the number of working years they will trade for flying at the front of the plane, buying more stuff or living in a bigger house). I think confidence to adapt or earn some money if the markets tank is a big thing.

I'm currently mortgage free and looking into becoming un-mortgage-free in efforts to speed up the early retirement.

With your current interest rates, the uncertainty in the market and what I see of your future plans I would plan to pay off the mortgages until you can get to a lower interest rate compared to inflation. But keep an eye on it.

Great news about the plan to work over the summer, that sounds like a game changer in terms of bringing the date forwards.

misscousinitt

Hi Seanymph

Just popping to say Hi and congratulate you on your successes so far - have caught up with your thread and hope to stay caught up!

MCI

Seanymph

Thanks both - Playingwithfire you seem to be appearing on all the threads I am reading at the moment - spooky!

I think my online mortgage totaller has got a glitch - it's not moving. So no doubt i'm in for a bit of a shock sooner or later.

I have had a week off work with a hurty knee (old motorcycling injury flaring up) so have been trawling through in my waking moments and trying to educate myself.

The OH still has zero interest in finance.

My dilemma is about paying the mortgage - or putting it elsewhere.

There are diehard anti's for paying off the mortgage on other boards. And I think I understand the logic too.

The compounding thing works on investments too, get them in hand and you will get more return than the mortgage interest saved, pay off the mortgage later in life when you don't need as much money...

But I worry my interest rates will go skyhigh sooner or later - paying off the mortgage would be £227 a month in interest I would no longer pay - I would have more disposable income left to choose to invest - I would feel better about it.

So, I vacillate between putting my money to a mortgage overpayment, or putting it elsewhere.

We are, as repeated to boredom - looking to retire and get a campervan - but it's working out how to do that - retirement wise currently we stand to get about £4k a year between us from pensions (not impressive!).

I did a quick audit this morning - we have just over £6k kicking about in accounts, which isn't much to be honest. But I have been using 'spare' cash to pay off the roof (we have over E10k in our French account, but I haven't counted that because it is earmarked as roof money).

So, what comes first?

The mortgage overpayments?
More into savings?
More into retirement investments?
Should I increase my pension payments?

How do you work out what order to aim it?

Darpett

To be fair I don't do one over the other, I do a combination of all of them.

Whilst I know by OP'ing the mortgage I will be protected against any interest rises in the future I cannot access them again in an emergency so I have and EF fund that I maintain at a certain level. If it drops because I have had to spend it I focus on topping it up. Prior to having an EF at a level I felt comfortable with I did mainly save with a few OP's if I had additional funds at the end of the month. I saved up gifts of money and then would split it 50% OP, 50% fun money. Now its 50% investing, 50% fun money.

I probably invest an equal amount to my OP HOWEVER I have an eye-watering interest rate of 5.59% if it was lower (which it will be in the future) I will divert more to investing.

I have a good work pension scheme fortunately. Is the joint income of 4K on top of the state pension? If it bothers you is there someone you could contact at work to see if you could increase contributions? Is it worth it? Sometimes the extra you would get is so small you would be better off saving it even with the tax benefits.

I mentally use savings or investments to 'offset' my mortgage.

It's horses for courses, I am happy to do what I do but many people feel the burden of a mortgage more and so it is 'better' for them to pay it off earlier even if the maths doesn't agree

The more you research the more comfortable you will feel with your decisions. And remember this is your life and your plan, you can feel free to change it to suit if and when you want to

Good luck.

Seanymph

Thank you Darpett.

Yes, it is on top - the OH has an old, defunct pension at about 2k income a year, I have an LGPS which currently stands at about the same (Mine is a DB scheme) and OH has just taken out another one through his current employer with the NFU - last month.

On our current ones I pay 5% they pay 20% (so 25% going in every month, and an annual accrual of 1/40th average salary). OH has an employer paying 4% and he pays 6% - that is not linked to salary as a payout.

So we have 4k now on top of State pension, but it is hopefully going up every year! (but not by much)...

And the AVC's for me are in a completely different scheme and very expensive - from memory last year they were looking for about £350 a month.

I am currently taking your approach, and popping it wherever I feel a deficit currently - but I'd like a more scientific way of allocating 'spare' money i think.

This month we have around £1,500 left over - (house insurance came in) - I COULD put all of that into the mortgage, or a savings account, or the premium bonds/campervan fund, or the ISA retirement fund.

Choices choices...

Darpett

A nice decision to have to make

I tend to go for the free-form approach otherwise I tie myself up in knots with 'analysis paralysis'.

I would be a bit biased with my choice if I was you as we have a camper van and love the freedom it gives us. We hired one first to see if we liked it and what we liked and didn't like and got a reasonable second hand one that suits us.

Happy decision making

Seanymph

Well I have been very MSE

I did the electric annual thing on the site here, and saved £153.00. And this very day I have renewed the house insurance, and saved £93.00 on the renewal fee.

I am also over on Pensions, failing to understand advice

Still, cheque is clear, money is there, and all I have to do now is decide where to put it.

I think the first £500 chunk will be to the S & S Isa. That isn't increasing enough to keep me on track for a five year target to cease work at all.