Quarter of a million reasons to be Mortgage Free!

coxj2901

I've made another overpayment today of £250 but have realised that the November target is stretching to say the least. However, I'd rather aim for those overpayments and fall short as opposed to lowering the target and achieving it easily!

I think in reality both the November and December targets will be hard to achieve but I should have more spare funds available from Jan 2016 onwards once Christmas is out of the way. I'll need to have a think about how I can generate some more money in this next 4 weeks by perhaps selling some stuff on ebay in the run up to christmas.

Nov-15 Target

Monthly Overpayment Target . . . £1750.00
Actual Monthly Overpayments . . . £506.00
Shortfall / Surplus . . . . . . . . . (£1244.00)


Total Summary - Nov 2015 to present

Cumulative Overpayments . . . £506.00
Cumulative Interest Saved. . . £384.00


Building work

The building work we are having done for the annex is also coming along nicely and they have started to build up the walls, giving us chance to see the extra floor space that will be created.

smallholdingsister

Welcome and Good luck!

You must love your MIL.

Luckyinlife

Great graphs and i would never brick a garage up haha im only joking
that's because i plan to build 1 early next year hehe

Totally agree with you with aiming high and falling a bit short than not trying to aim high at all

Have you worked out what the min payment is to get it payed of in the time frame you want ?

coxj2901

Luckyinlife wrote: »

Have you worked out what the min payment is to get it payed of in the time frame you want ?

Thanks for the post - We're lucky in a way because we've never parked the cars in the garage and it has only ever been used for storing "stuff / junk". It appears that the more space we have the more junk we accumulate, which I guess could be referred to as Parkinson's Law!

With regards to the minimum payment, to clear the mortgage in 8 years would require minimum overpayments of £1,750 per month :eek: However, if i get anywhere close to that I would consider it a major success :T

Luckily, the MIL is great! We get on superbly and she has been very kind to us over the years so it's nice that we can look after as she approaches her later years

coxj2901

I've made an overpayment today of £650 which edges me closer to the November target.

Nov-15 Target

Monthly Overpayment Target . . . £1750.00
Actual Monthly Overpayments . . . £1,156.00
Shortfall / Surplus . . . . . . . . . (£594.00)


Total Summary - Nov 2015 to present

Cumulative Overpayments . . . £1156.00
Cumulative Interest Saved. . . £926.00

Building Work

The building work on the annex is continuing at a rapid pace and the windows are finally in now so we can start to see what it will look like from the outside. We are pleased with the workmanship so far!

coxj2901

I've managed to scramble together £594 which has been paid towards the mortgage today meaning I have hit my target for November :j

Nov-15 Target

Monthly Overpayment Target . . . £1,750.00
Actual Monthly Overpayments . . . £1,750.00
Shortfall / Surplus . . . . . . . . . £0


Total Summary - Nov 2015 to present

Cumulative Overpayments . . . £1,750.00
Cumulative Interest Saved. . . £1,422.00

I need to put my thinking cap on for December's target now but It's nice to see that my efforts this month have knocked ~ 3 months off my mortgage!

freshcotton

Hi Cox

Well done on your progress. I like the idea of breaking things down into monthly chunks as it illustrates just how much progress you are making. I think il try this for myself!

Good luck

Dalradian

Glad to see you stretching yourself in first few months - it does help the focus and shows it can be done. Do you tend to get different amounts from the business each month, averaging over the year, or are you counting dividends separately from income.

MFW_ASAP

Congrats on your overpayments, you're doing really well!

Just a though on your SOA. Your income is really high, but your contributions to your pension is really low. While it's great to make overpayments, you can't neglect your pension. I've seen several posts on the MFW board where the overpayers say they will simply pay more into the pension once the mortgage is gone and they have all that free cash. However every financial website states that it's much better to pay a resonable amount into a pension over a longer time-frame than to pile money into a pension over a shorter timeframe.

There are also potential banana skins such as illness, accidents, income reductions, etc. etc. that could happen in the future that can negatively impact a decision to blitz a pension later in life. With you running your own company, a pension is a great way to reduce your tax bill.

Also, remember to factor in the extra expense of having another person in the house, especially if that person is elderly and at home all day with heating requirements and electricity for the TV, plus extra water for bathing and washing clothes, etc. Our water bill, gas and electricity bill is pretty much doubled by having our two family's on the same meters (we have my mum and dad living in a granny annexe)

A final question that's a bit nosy to be honest , so please don't respond if you don't want to. I don't understand how you have such a high income and still qualify for child benefit and tax credits. I'm on much less but had to 'sign off' CB when they brought the limits in a few years ago and I haven't received tax credits for years. How have you managed this because if you've found a loophole then I'm getting onboard!!

coxj2901

Hi MFW_ASAP, you make some good points! In response to your comments I have been thinking about my pension contributions for a while and was unsure whether to start increasing them sooner rather than later but I haven't so far because the mortgage balance makes me nervous! It's a lot bigger than it should be for someone of my age and I really wanted to have a good old blast to reduce it now that my unsecured debt has all but gone.

However to make matters worse my wife doesn't have a pension at all so my first priority was to start a pension for her. It makes sense to split our tax allowances once we reach retirement with all other things being equal so from January we will start contributing £250 per month to her pension scheme.

I have around £25,000 in my pension scheme which again is a small amount for someone my age so I need to increase this sooner rather than later and as you say it is tax efficient to have an employers contribution on top of my personal contribution. This will be on my list of things to review Q1 2016!

It is also a good point mentioning the extra running costs of the annexe. I need to factor these into next years budget as this will obviously have a negative impact on our disposable income.

With regards to your last point my understanding was that you lose the child benefit when 1 member of the family earns more than £50,000 per annum. When we set the company up our accountants advised me to split my shares with my wife and the majority our income is received through dividends. Therefore neither one of us has gone above the £50k threshold so far. It seems a strange rule that we can earn £99,999 as a couple and qualify but if I was the sole wage earner and earned £50,001 we wouldnt qualify :huh:

Hi Dalradian,

We receive our dividends monthly so I have tried to equalise them on a monthly basis for the purposes of this thread although with the best will in the world they invariably change depending upon the companies circumstances. For example Dec, Jan and Feb are our toughest times for cashflow in the business