MF by age 40! Then I am buying a Mercedes SLK

diamondsonly

Thank you to everyone on this forum and your stories. I now finally feel empowered and motivated to make this leap.

A bit of background I have been contracting through a Ltd company up until November 2013 so was always had a varying month income and main source of income was annual dividends. But now I am a permanent employee since end of June 2015 so feel in a better position financially to make Ops.
We bought our house in 2010 with a mortgage of £187,500 (25% LTV) and have now just come out of ERC as of 2 July. We made £10,000 payment on the same day and it felt great. We are on a 2.79% lifetime tracker and although I would love to remortgage to first direct 5 year fixed we will have to wait until December as I am still in my 6 month probationary period at work.

My new job will bring in £400 a month more after tax but we have decided to put our eldest child into a private pre-prep school starting in September with fees of around £2250 a term. She is only 3.5 and in 2 years her brother (18 months old) will join her. It was either this or spend 40k on moving cost to a smaller more expensive house in an area we don’t like to be in catchment for local state primary schools.
Our house is a good size 3 bed semi but definitely not our dream/forever home. Although we could get a mortgage of around £350,000 plus equity in our house if we sold it for the dream one I would rather be MF.

I really really want to be mortgage free in 7 years at the age of 40. We have 20 years left on our term but I would love to pay it off by 40 and then I can maybe buy myself a nice SLK convertible. I have around £6000 left on my student loan but hoping it will get paid off by next June and then we should have £350 a month extra in our pocket which we will use for OP. I think to be MF by 40 we will need to OP by £1000 a month.
I get a £9750 bonus in January 2016 which after tax is going to be around £4k to use for OP.
I need to support to stay on track and to keep the goal in sight…MF by age 40.

happydays_70

Good luck x
I want an Audi Q5

Luckyinlife

Good luck :]
i love the attitude of not maxing out what you can get i was able to borrow upto 150k but only went for 70k in the aim to be MF as soon as possible

Hopefully yo can smash it and go get a slk

diamondsonly

Thanks for the support luckyinlife and happydays 70. Feeling less optimistic today.

I have opted to buy private hearing aids which will cost 2k and i pick them up next week. Its something I need so its essential spending in my eyes and I am hoping they help me at work

BUT we are now looking to book at week long holiday for August before our daughter starts school. So thats going to be 5k expenditure and OP for the remainder of the year is looking doubtful. Really unnecessary expenditure for us but if we go before our youngest turns 2 we are saving 25% on the cost of a holiday so that's the justification we are using.

I am also doing a MSc which I started whilst on Mat Leave that has so far cost £10,000 and I am half way through, so every time I do a module thats another £2000 spent. (Using CC and paid off in full each month using savings/income).

I am going to have another go on the OP calculator to see exactly we need to OP by each month to be MF in 7.5 years.... Dec 2022 when I turn 40!

Patched

We have the same goal except for the SLK:D
£2250 a term? And there are 4 terms in a year? I dont have kids so i have no idea what costs are, but i can understand why people say having kids is expensive!
Congrats on getting permanent work, that must feel great:)

diamondsonly

Patched there are thankfully only 3 terms in a year...£2250 x 3 is more than enough.
Kid are expensive...worth it but expensive ;o)

Bad spending day yesterday:
£165 spent online for new work clothes although not buying myself anything new for the holiday which my friend will be booking tonight.

Worked out that we need to OP by £900 a month to meet the target MF date
Got £75 from quidco so will pay that toward mortgage.
Just wondering how people make the OP each month? Do you set a budget for example £1000 a month for all expenses and at the end of the month if you only spend £750 then you put the £250 as OP or do you wait till each pay day and anything in current account that maybe left goes in OP before new salary came in?

We spend all our monthly outgoings on 2 different CCs, which are always paid off in full each month (DH has 1 and I have my virgin atlantic) but our payment dates vary so his goes out mid month, and mine end of month. To complicate things mortgage goes out 1st of the month. It’s a mess trying to keep track of what and when everything is due and how much each month as our spending can varying dramatically. I would love some advise on this, its driving me insane.
Should we try and align payment dates to ensure each month on specified date all CCs are paid so we know exactly what is left for OP/savings each month?

Secret_Saving_Squirrel

Hello,

I used to pay £1000 as an op as soon as I got paid, then what was left had to last the month. It sounds as if you have quite an affluent lifestyle as the holiday is very expensive for a week. Are you not tempted to skip it and knock another year off the mf date? I know I would be, especially as the children are so young and would be just as happy in the park - if not happier by not being taken out of their routine?

However, everybody has their own way of going forward and their own ideas about what is negotiable or otherwise. Whichever path you choose it is much better than doing nothing, and I wish you very well in your journey,
Squirrel x

diamondsonly

Thanks Squirrel. You are spot on about the kids and routine etc. The holiday is going to cost just under 3k for a week aug bank holiday for 4 of us and its all-inclusive. The other 2k is for hearing aids which I need desperately to do my job. But you are right it is an expensive holiday and completely uncessary. We weren't going to do the holiday but thought as we are saving the cost of our DS as he's under 2 we thought we'd do one last holiday before school fees kick in. We are definitely not affluent but have a very stressful job (although most peoples jobs are stressful I suppose).

Thanks for the great tip about paying the OP as soon as you get paid. I never thought of that as an option. Will try that out next month

bexster1975

Hi

I think affluence is a perception. To afford £3k holidays for a week and private education for children will be seen as affluent by many on here. You talk about having a very stressful job ( though I agree lots of people would say their job is stressful), is it something you want to be doing long term? What age do you see yourself being able to do this until? I work in a private school and I would say in my experience it isn't worth it before secondary school level. Would not necessarily say it was worth it after that. What you buy are opportunities, not a better education than good state schools ( I have taught in both). If you don't want to do your current job indefinitely, think about a timescale. You can adjust your outgoings accordingly and put more into mortgage/savings/pensions.

The car? I must say it seems an excellent way to be chained to a stressful job for longer. Think about why you want it. It won't be a shiny toy for more than a few weeks.

Sorry if this sounds harsh, just a point of view to consider as you aim for financial independence.

Bexster

newgirly

Hi diamonds only, best of luck with the new diary. I can see the dilemma re education. We moved area and bought a much more expensive 3 bed terrace to get the kids all in good schools, if private school has always been a priority then fair enough. But if its just to save 40k moving , will you really save long term? Apologies if this is a bit personal Its not just the cost of the school fees ,there is a lot more pressure to "fit in" with the other very wealthy kids. Its bad enough at my kids normal state school, parents evening is a sea of mercs and range rovers in the car park!

SavingRaven

Hi Diamondsonly,

Welcome!

We do what Squirrel does and OP at the beginning of the month by a set amount and then the money is gone, we have to survive on what we have left for the month. We also pay into a holiday fund every money as, like you, we have stressful jobs and our holidays are one thing we're not planning on giving up.

It's all about factoring in the costs of OPs and what we call 'the fun fund' and then using the money left after that.

Good luck!
SR