Mr and Mrs P's journey to freedom - destination 2020

MrParr

Hi everyone in MFW world!


I have plucked up the courage, after years of lurking, to finally start my own diary.


I know this is the typical start you see to a lot of diaries but it does take a bit of courage to bare your soul in a public forum as I am sure all the other MFW forumers with diaries know!


I was inspired to start this after reading MrBloater's diary yesterday and suggest you check his diary out as well (disclaimer - other MFW diaries are available!)


Anyway, now the ice is broken and without further a do, here is our story......


Mrs P and I are both 33. We have our first baby boy P on the way at the end of September so, although I have been an avid lurker on here for some time, this has probably brought things into sharper focus.


We have a lovely 3 bed detached house in the village we both went to school in, which we bought for £120,000 in 2009. It needed quite a bit of work doing to it and we have almost finished it (does it actually ever end?!!?).


It is probably worth around £150,000 now and as of today, the mortgage stands at £73,110.59 with just over 12 years left to go. However, we would like to pay it all off by the start of 2020, which is going to mean some serious OPs!


Atm, we are 4 years into a 5 year fixed deal (YBS at 3.49%) that has a 10% cap each year on OPs so we're currently paying a £650pm OP. This give us a 7 year to zero timescale which is still good but is 2 years too long!


My main motivation for starting a diary was that whether it is 5 or 7 years until we become MF, it seems like a long time and I was hoping for some help with motivation and to break things down into more bite sized chunks so it is more managable, both financially and mentally!


I am conscious of this being a long first post so I will leave it there for tonight.


Further details to follow and to help with this, I am taking requests for the information to help you, help me!


Lots of love, Mr P xXx

ourcornercottage

Could you think about opening a special account for mortgage savings that you don't touch so any extras (on top of the ones you already make) that you would have OP'd can go in there and at the end of your fix pay that amount off too. You never know you might do it in 5 years. You can make an extra payment when you get to the end of your current fix and if you fix again, start the savings again :-)

Tilly_MFW_in_6_YRS

Morning, I'd check out Edinburgher's MFW diary as he has a great approach to saving, investing to make your money work hard.

In terms of increasing disposable income I would keep a spending diary to understand where your money goes. This should enable you to cut costs and if nothing else, budget, as you can review your last year of spending. It's no different to controlling project costs at work, but not necessarily at home. Transferring my work approach to home has been key to us bludgeoning our mortgage.

Welcome to the forum, I can truly say it's a supportive and friendly environment. Much advice available.

Good luck, Tilly

gallygirl

MrParr wrote: »

My main motivation for starting a diary was that whether it is 5 or 7 years until we become MF, it seems like a long time and I was hoping for some help with motivation and to break things down into more bite sized chunks so it is more managable, both financially and mentally!

I found information was key. Spreadsheets are your friend Build in things like:
- What do you owe?
- What % of your house do you own?
- Daily interest
- Monthly interest
- % paid off since start of diary
- Total paid off since start of diary
- Original end date, planned end date, current end date - days 'saved'
- Interest saved
etc etc

That way there is always some progress being made and the next goal to aim for. I have a low attention span and it helped me stay on track :T.

MrParr

Morning and thanks for your replies.


ourcornercottage that is a good idea on the savings account. We have our savings/emergency fund spread over a few accounts/ISAS atm and I haven't focused on those for a while so that can be a job for the 'to do' list.


Tilly, I will take a look at Edinburgher diary later and have a proper read through yours as well. I really enjoy following everyone's journeys on here and have got a lot of great ideas along the way as well. Not sure I have ever found an internet forum like this one!


Those KPIs gallygirl are going straight onto my budgeting spreadsheet. I do love spreadsheets and have mine all colour coded and everything! I might need to research on how to calculate the daily interest and interest saved figures but it can be another job to pass some time and get closer to that MF date.


Off to make a coffee and start work on our SOA. Also, it's pay day! :beer:

MrParr

Please let me know if I miss anything but here it is....


(All figures are monthly unless stated)


Income

£4,247.67 but will drop to £3,103.12 during Mrs P's maternity leave later in the year.


Outgoings

House

Mortgage £634.40
Council Tax £149.00
Water £59.40
Gas and Elec £82.00
Internet £19.94
Lottery £20.00
Life Ins £5.85
Food £250.00
Telephone £3.00 (plus line rental - see below)


Mr P

Spending money £300.00
Gym £18.99
Den Plan £14.45

Mrs P

Spending money £300.00
Gym £17.99
Den Plan £14.54
Fuel £60.00
Mobile £11.50

Other

Mortgage OP £650.00
Credit Card £depends on what one offs we have bought the month before but these are always 'needs' rather than 'wants'.


Annual costs

House Ins £296.43
Telephone Line Rental £144.00
Mrs P's Car Ins £179.25
Mrs P's Car service £140.00


I am lucky enough to have a company car and phone so no costs there.


Mortgage

As of 29th June 2015 £73,110.59


Savings

As of 29th June 2015


Mr P ISA £2,049.90
Mrs P ISA £2,781.30
Barclays Saver £14,972.68


Total £19,803.88


Emergency fund required (6 months expenses exc OP) £11,766.36.


Not sure what else to include but feedback and critique more than welcome.


Mr P xXx

ahem_47

Mr P

There will be far better judges on here than I but one quick observation.

What returns are you getting on your savings? You have £15k in a savings account that is paying you what exactly ..... and is presumably taxed?

The beauty of Edingburgher's thread is he is getting people to think more about their future and how early they will be able to enjoy the fruits of their labour - definitely worth a good read.

Good luck on your journey - if you stick with it on this board I predict you will meet many forks on the road that will re-focus your thoughts.

Enjoy

MrParr

Thanks ahem and I am definitely going to have a good read of Ed's diary. He mentions matched betting a lot at the outset and I am quite interested in understanding that more in addition to the other topics.


I have looked at our 3 savings accounts this morning and was shocked to find that the interest rate on the 2 ISAs, which have around £5,000 in combined, are at 1.28% and the Barclays everyday saver, which is around £14,000 is at 0.25% before tax!


Number one priority on the 'to do' list!


Off to check the savings section....... catch you MFWs later!


Mr P xXx

PrincessLou

Looking at your income in comparison to your mortgage, you look to be in a very good place. Do you know how much you have left over each month?

I don't know whether you've mentioned it but do you have a plan of action or a time frame for your mortgage free mission?

gallygirl

Your mortgage is £634 a month, £7608 a year.

You & Mrs P both have £300 a month to play with. That's £6200 a year.

Just saying .

Seriously, that is a LOT of money to play with. Cut it in 1/2 and you take around 5 months off your debt free date.

The other way to look at is for your future selves. If you can both manage to 'only' spend £150 a month on 'nothing' and keep that up for ever that is £90,000 less you'll need to save for your retirement :T. That is worked out on £150 x 12 x 2 = £3,600. To spend that every year you'd need a pot of £90,000, with a withdrawal of 4% per year. At present your discretionary spending would cost you £180,000 to fund :eek: - and that's on top of your essential spends _pale_.

MrParr

Hi PrincessLou, thanks for popping in. I do appreciate we are in a good position.


At this moment in time, we normally have a surplus of approx. £1,500 pm that goes straight into the savings account.


Timeframe is to be MF by the time the clock strikes 12 on the 1st Jan 2020 and the plan of action has 3 stages as below:


Stage 1 - Continue OP at 10% until current mortgage deal runs out in December 2016 and save as much as possible by then as well. I think that all being well, we should probably have at least £30,000 saved by then (maybe more).


Stage 2 - By the end of the deal, the mortgage should be down to around £55,000 (I need to recheck my calculations on this) and at this point I planned to make a reasonable lump sum payment (15,000 to £20,000 depending on how much we had managed to save).


Stage 3 - Find the best deal to clear the remaining £35,000 to £40,000 in the remaining 3 years and continue to pay as much off every month as possible.


Very loose in detail as there are a number of variables that I don't know what they will be yet, such as how much a baby actually costs in real life, what the interest rates will be like at the end of next year etc etc.


I have to admit Gallygirl that I have never thought of it like that so thanks for pointing it out and challenging me on it. Exactly what I was looking for.


I must admit, because we are in such a good place I haven't really focused on 'small' things like that as we are doing 'ok' but it appears that it is not such a small thing after all! I'll talk to Mrs P about it later.


I really want to get to grips with retirement planning as well as when we are MF, that is the next challenge to take on.


Mr P xXx