Mortgage Diary: 900k payoff

Dogslife4

Oh and so I paid off most of my (US) credit card too, which takes total debt down to £899k now. Still a scary number but £7k less than when I started this blog a month ago and headed in the right direction!

Dogslife4

Hey MumofIowans - I don't plan on moving back, I like it here too much. I really like the people more than anything (love Brits too - but am reminded how closed off we can be when I meet other Brits for the first time now).

I am currently on a 5 year visa but have just come up to my Green card processing date which means all being well, it should hopefully get approved any day now. I think this will be the final thing that makes it seem totally permanent as right now my visa is linked to my employment.

liuhutOz

Hey Dogslife, welcome to MFW board :-)

Some of your numbers look big, but it's different when it's in $!
I'm in Aus and I owe $507k on my mortgage, but we earn $180k a year so I'm not too concerned.
From your SOA it looks like you have a really nice lifestyle, maybe have a read of some of the boards and look at ways to reduce some of the bigger spends, especially the food! We still eat out, but we don't eat out all the time.
Holidays to me are also very inportant, we went to Europe last year, but after the flights are paid, they can be done quite cheaply.

Good luck with your journey

hildosaver

Hi there! I guess my main priority if I was in your situation was to focus completely on those debts which had the highest interest rates first - before anything else. If that means delaying overpayments on Mortgages for a while then so be it.

I know the overall debt amount looks massive but you are in a very fortunate position to have a superb income coming in - just think if you put all your spare cash into 100% debt reduction you could be paying off around 70k per year! That is amazing (although probably not realistic but you could certainly hit 60k) - with that sort of repayment level you will be seeing really significant reductions quickly which should maintain your motivation to continue and perhaps even increase it in the future. Best of luck to you.

hildosaver

Another couple of points - for the income you have to only have 10k savings is kinda insane - you should seek to increase that as a priority - maybe set a target of 50k or so within next 5 years? Also, as another poster noticed you say you spend 1000 on groceries every month?? For only 2 adults that is a totally INSANE amount to spend - you could easily at least half that immediately by changing your spending/eating habits a little.

Of course all this depends on the kind of lifestyle you want to live but if I had close to a million in debt I would be thinking long and hard about what I spend every penny on.

MumofIowans

Wow, that's great you got your green card processed so quickly. Everything to do with visas has seemed to be a long and complicated nightmare for us . We do really like it here too, but need to be closer to family. Plus, my visa changed to H4 last year , so unless we apply for permanent residency, I can't work for the next 6 years. Having only one income doesn't really help towards the goal of being mortgage free!

Another website you might be interested in is the Frugalwoods Family. They are also 30ish couple who have saved a !!!! ton and plan to retire early. It's always motivating seeing what people can achieve!

Dogslife4

Hey folks, checking in here. On the point about having $10k in savings only, its a fair comment. The second mortgage on my America house is a HELOC which is a revolving credit line, so it acts as cash insofar as it is bank credit that can be called upon at any time, much in the same way as cash in a savings account (actually more like an agreed overdraft). Therefore it doesn't make sense to hold lots of money in cash while simultaneously paying 5% interest on this line of credit. My goal is to pay this down to zero first in order to reduce the total debt and monthly interest payments, whilst keeping the credit line open to act as a cash that can be called upon if needed.

Our grocery bill is high, but includes meals out. We do spend a lot but have cut back. We actually don't eat out more than once a week but eat very well at home, lots of veg and high quality ingredients etc.

We're making a lot of progress in getting the debt down. Here is today's status compared to where we started only a few months ago:

Mortgage 1 - USA - $558k (372k GBP) (2.7%) (Now $554k)
Mortgage 2 - UK - 161k GBP (4.7%) (Now 160k GBP)
Mortgage 3 - UK - 102 GBP (4.7%) (no change)
Mortgage 4 - UK - 119 GBP (4.7%) (no change)
Mortgage 5 - UK - 50k GBP (3.5%) (no change)
Home Equity Loan - USA - $71k (47k GBP) (4.5%) (Now $63k)
Car Loan 1 - USA - $20k (4%) (Now $18k)
Car Loan 2 - USA - $37k (4%) (Now $35k)
Credit Card - UK - £10.5k GBP (0%) (Now £9.5k)
Credit Card - USA - $8k (Now zero)

We've repaid $24k and £2k. I've also added additional £3k cash to our UK accounts in this period.

That means debt is down from £906k to about £887k.

May is a big month for incomings with bonuses and the like and so I anticipate paying down a further $28k at the end of the month (£19k).

What is interesting is I'm increasingly noticing the spending behavior of friends who are in similar work situations to us. One couple in particular that we know seem to somehow spend everything they earn and more (they probably earn £200k a year) - yet are building up credit card debt and have no real assets. They recently told me they are not paying into pensions, just bought a new house and could only just manage to pull together a 5% deposit. Think £300 meals out at least once a week and sometimes more, exotic holidays, and other expenditure that you wouldn't believe.

I am probably the least judgmental person you will ever meet and so I say good luck to them but it would make me SO nervous to not have anything to fall back on, or to have no options in later life as you have not built up any wealth. At the rate they're going they will be working themselves to death until they drop to maintain the lifestyle. For me I would much rather get on top of the debt as soon as possible and 1. be prepared for a change of circumstances, and 2. have options in later life to not have to work in a stressful job forever.

Laters all!

jodles16

You are making fab headway already! Amazing! Will pop back in again and see how you are getting on!

Jodles

hildosaver

Well done on the progress - great job on clearing that USA credit card.

You are thinking the right way - the only concern I have for you guys is having a backup plan if something goes wrong (god forbid one of you becomes ill and can no longer work - redundancy - family crisis, etc.) these things do happen when we least expect it.

If your income was halved would you be able to pay all your bills for say.. 6 months? If not I would ensure you have enough cash to cover this as a safety net. That is my own aim at the moment (along with paying down our own 4 mortgages).

I realise our incomes differ wildly and generally I tend to live frugally (I believe I would continue to do this even with a much bigger income) so our lifestyles are very different however the goals are the same.

Prioritise your security and those debts with the highest interest rates first. Sometimes small changes in our spending habits can make a big difference - I still think your £1000 per month on food is excessive and you can eat very well without spending too much if you spend the time looking for deals and obviously if you can cook! The difference is that it takes a little more time to look for those deals and to try items that might not be the most expensive (a carrot is still just a carrot even it has a fancy label and an extra £1 charge).

Also you spend £1200 on entertainment each month? That is £2200 in total for entertainment and food per month - would love to know what that goes on?? That is close to the total of my monthly salary (before tax) - so to me that is hard to comprehend. You are in a very fortunate position so make hay while the sun shines (i.e. focus 100% on paying that debt down while the going is good).

Dogslife4

Thanks Hildo and Jodie.

I think I overestimated my grocery and recreational spending. At the time of SOA I was still paying out to furnish the new house, and so I think I may have incorrectly lumped some of that spending in with my regular outgoings. That said I've been really good about reducing unnecessary spending over the last few months (packed lunches!).

I just had a look at everything spent on meals out, groceries, lunches at work (on the few occasions I didn't pack a lunch), a trip to the theatre (including the Uber there and back) , drinks out etc (basically all food and recreation) and over the last month that came to $1663 (about £1150). While still a lot, I don't think this is terrible considering we have done a lot