Mortgage Diary: 900k payoff

Dogslife4

Hi All,

My Wife and I are working on getting to debt zero. It will be a long journey as we have significant debts but I thought it would fun to keep a diary and share the journey. I am also can be bad for overspending and then get frustrated that I can't pay things off fast enough, so I think keeping a diary will help me to stay focused.

Ours is a little different as we have some investment property and some overseas (US). We are 100% committed now to getting debt to zero including any BTLs, and to not take out any new debts unless for rolling over existing deals etc.

Backstory is that my wife and I are in our late 20's and are living in the US, having moved from London about a year ago. We both work in tech and have well paid jobs that have allowed us to save and invest our money over the years, and so despite having a lot of (mostly mortgage) debt I feel like we are in a good financial position.

Why are we so focused on cutting the debt? We both work in very stressful jobs with long hours and both dream of either early retirement, or taking a long career break - we want to do this when we are in a position to have a good lifestyle and couldn't do this with mortgages and debt to pay.

Debts -

Our total debt is pretty significant at a little over 900k pounds and consists of the following:

Mortgage 1 - USA - $558k (372k GBP) (2.7%)
Mortgage 2 - UK - 161k GBP (4.7%)
Mortgage 3 - UK - 102 GBP (4.7%
Mortgage 4 - UK - 119 GBP (4.7%)
Mortgage 5 - UK - 50k GBP (3.5%)
Home Equity Loan - USA - $71k (47k GBP) (4.5%)
Car Loan 1 - USA - $20k (4%)
Car Loan 2 - USA - $37k (4%)
Credit Card - UK - 10.5k GBP (0%)
Credit Card - USA - $8k

Total debt - 906k GBP.

Monthly Income
Rent (UK) - 3325 GBP
Combined monthly salary (after tax/deductions) - $15k (10k GBP)
Bonuses - $1.8k (average) (1.2k GBP)
Total = 14.5k GBP

Outgoings

Mortgage repayments (UK) - 2100 GBP
Mortgage USA - $2900
Home equity loan - $270
Car 1 - $450
Car 2 - $730
Credit card - 200 GBP min payment
Bills - $300
Food/recreation/other - $3000

Total - 7200 GBP

Which means we have about 7k GBP/$10k left over per month for extra payments - this is averaging out annual and quarterly bonuses so some months are better/worse. We have $10k cash savings, and we invest in a stock plan and pension, which comes out of pre-tax money so is included above. This means we can focus on repaying debt and not worry too much about putting cash aside.

This is my plan:

Feb - pay off USA CC and make $3k over payment to home equity loan - $11k paid off
Mar onwards - overpay max to home equity loan until zero

Then - tackle car loans
Then use US money to start paying off UK mortgages

I hope the different currencies don't make this confusing or that including investment property doesn't detract from what this forum is all about, my objectives are the same as others on here in terms of paying off mortgages in order to become free financially . Also I hope this isn't in poor taste since I realise most of my debt is out of choice and I read a lot of diaries on parts of this forum where people are in genuine financial hardship - appreciate my challenge is nothing like theirs.

choccielover

Everyone has a different journey and a different starting point, Yours isn't fundamentally different to anyone else's and all that's really required around these parts is a desire to pay off your mortgage early

Good luck with it, if you look at it proportionally, your income vs debt isn't so different to a lot people's.

Chocs

diamondsonly

Hi Dogs4life, I agree completely with Chocs. Yes the total may seem huge but compared to the income ratio etc its similar to a lot of MFWs on here.
Its all about prioritising and making small changes that can lead to a shift in the overall way you deal with your finances. I promise it doesn't have impact your lifestyle its about making smart choices.
A huge welcome!! it gets very addictive so be warned ;o)

Diamonds xx

newgirly

Welcome dogs life 4 have you been on mr money mustache's blog? He is a 30 something retiree based in the USA. Also you may want to take a look at edinburgh's thread here in the mfw section, he is investing to retire early too, all the best!

SueP19

Hi Dogslife4

I echo other op's and welcome to a great board

As has been said your numbers may be :eek: but % wise they are similar to many.

It appears you have 50% disposable income :T but I bet you wonder where is goes :rotfl::rotfl:

A spending diary is really really helpful, if only to see how much money fritters away and so does doing an SOA

http://www.stoozing.com/calculator/soa.php

Good luck

Dogslife4

Thanks all for the kind words and advice. I will definitely check out Mr Money Mustache's blog! Today was payday (every two weeks) and is a bonus month but was a bit less than expected. I was still able to make a car loan payment that was due and make a $2k overpayment on my home equity loan, so my balance is down to about $903k from $906k so at least it is moving in the right direction! With the new house and the move we've had to buy all new furniture etc. (hence the credit card balance) so this was the first month I was able to pay off any of the principle on the home equity loan - it feels good seeing that balance come down a bit at last. The credit card balance is due at the end of the month so I'll use the cash we have to pay that off in full, and then my wife's salary at the end of the month will replenish our cash - so that will be another $8k paid off

I have some time this morning after getting up for a very early call so will have a go at doing the SOA now.

Dogslife4

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 6200
Partners monthly income after tax....... 5000
Benefits................................ 0
Other income............................ 3320
Total monthly income.................... 14520

Monthly Expense Details
Mortgage................................ 500
Secured/HP loan repayments.............. 3743
Rent.................................... 0
Management charge (leasehold property).. 200
Council tax............................. 450
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 0
Mobile phone............................ 50
TV Licence.............................. 0
Satellite/Cable TV...................... 50
Internet Services....................... 0
Groceries etc. ......................... 1000
Clothing................................ 150
Petrol/diesel........................... 60
Road tax................................ 0
Car Insurance........................... 100
Car maintenance (including MOT)......... 50
Car parking............................. 5
Other travel............................ 50
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 10
Buildings insurance..................... 50
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 1200
Holiday................................. 400
Emergency fund.......................... 25
Total monthly expenses.................. 8268


Assets
Cash.................................... 10000
House value (Gross)..................... 1291333
Shares and bonds........................ 30000
Car(s).................................. 35000
Other assets............................ 0
Total Assets............................ 1366333


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 50000....(500)......3.4
Secured Debt.................. 47133....(181)......4.5<
Car 2..........................13333....(285)......4<
Car 1..........................24667....(487)......4<
Mortgage 5.....................372000...(1334).....2.75<
Mortgage 4.....................120000...(340)......3.55<
Mortgage 3.....................102000...(297)......3.95<
Mortgage 2.....................161000...(819)......4.7
Total secured & HP debts...... 890133....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
UK CC..........................10300.....200.......0
AMEX...........................5000......200.......0
Total unsecured debts..........15300.....400.......-


Monthly Budget Summary
Total monthly income.................... 14,520
Expenses (including HP & secured debts). 8,268
Available for debt repayments........... 6,252
Monthly UNsecured debt repayments....... 400
Amount left after debt repayments....... 5,852

Personal Balance Sheet Summary
Total assets (things you own)........... 1,366,333
Total HP & Secured debt................. -890,133
Total Unsecured debt.................... -15,300
Net Assets.............................. 460,900

Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using other browser.

PrincessLou

Hi and welcome to the MFW board - you are amongst friends :j

Looking at your SOA, the things that stand out for me -

1. Your mortgage is £500? Is this a mistake? I thought earlier on in your post you said it was £2100?

2. What does your entertainment budget include? £1200 is a huge amount of money to be spending.

3. £1000 on groceries for two people? That is four months worth of groceries for our household of four people!! :eek::eek::eek::eek::eek: Do you really eat all of the food that you buy or does a lot of this get wasted? Do you meal plan, etc?

Good luck with your journey

Dan83

WOW 900k debt! That's like 36 years of my salary!

Good luck with it all, I'll read it regularly.

Dogslife4

PrincessLou wrote: »

Hi and welcome to the MFW board - you are amongst friends :j

Looking at your SOA, the things that stand out for me -

1. Your mortgage is £500? Is this a mistake? I thought earlier on in your post you said it was £2100?

2. What does your entertainment budget include? £1200 is a huge amount of money to be spending.

3. £1000 on groceries for two people? That is four months worth of groceries for our household of four people!! :eek::eek::eek::eek::eek: Do you really eat all of the food that you buy or does a lot of this get wasted? Do you meal plan, etc?

Good luck with your journey

Hey thanks for the response and great questions! Very busy few weeks so sorry for the lack of response until now. On point 1. - that 500 is just one of 5 mortgages, the other 4 show up in the next category in the SOA, although it would be lovely to have 500 a month going out for the mortgage haha.

On 2. (and 3.) these relate to the fact my wife and I do go out for meals a lot, we do skiing trips and things like that and this is where it all builds up. We put a lid on it in last month or so, there was a $400 meal out that finally gave me the realization that we were wasting way too much money this way! We actually eat very well at home and rarely if ever waste any food, we eat super healthy when we cook for ourselves and so will be doing more of this in the future. I have even started taking packed lunches into work.

This month was an expensive month despite cutting back on the more stupid expenditure (like above!). We have a couple of trips planned over the next 10 months and I bit the bullet and paid for all of our flights etc. I just wanted to get these costs out of the way so we could focus on debt payments in the coming months.

So anyway, it was a pretty good few weeks as we both got paid, and I also had $2k of stock options come up which got transferred over to me. I was able to pay off another $1500 of our home equity loan and $1000 off our mortgage (standard monthly payment of principle). So we're a few K's closer to our goal! Next month should be better but we will have a couple of unusual one-off type bills that come up. April-Sept is looking pretty free and clear though so I expect us to power through the debt in those months. I just filed my taxes too and it looks like we have hugely overpaid, so may get as much as 10k back - that, a couple of lean months, and my bonus at the end of summer I am hoping will be enough to totally clear the home equity loan, which means we can start focusing on the UK debt and the car loans.

MumofIowans

Hi dogslife4! I'm also in the US, although in a different situation to you. I was going to say the same thing re: your SOA. Your grocery bill is huge!! That will definitely be a place were you can save some $$. I love Mr Money Moustache - there is a forum on that website too that I have found helpful for US advice, but I didn't find it has the same community feel as MSE. Do you have plans to move back to the UK? That's most likely our next move, unless DH finds a nice, high paying job somewhere much warmer than Iowa :rotfl: