Project Mortgage Neutral Begins

ajmoney

Meal plan done, shopping list ready but the idea of going to 2 or 3 supermarkets isn't filling me with joy, I am very tempted just to go to one but I know it isn't very money savvy.

Suffolk_lass

Just be aware that there are two views of your state pension forecast - one assumes every contribution year until the April before you reach state pension age is a full year, and the other tells you what you have accrued to date. In your position you are unlikely to have any incomplete contribution years that you could make up (you can only go back 6) but be aware that as a public sector worker, much of your service was opted out of SERPS unless you declined the default (nobody I knew ever did) - so your years up to 2015 will have earned you basic rate pension (ie the £134.25 per week rate, using current amounts) whereas from 2015 you are earning towards the new state pension (£175.20 in 20-21).

You should also check out self-employed vs voluntary contributions to determine whether and how you might pay these and at what rate (for example exam invigilation is a qualifying occupation to pay the £3.05 a week), or as a self employed music teacher you are in the 9% bracket (or the voluntary contribution rate to make up your years is £15.30 a week this year). It will depend on your FIRE position.

We are currently self funding between stopping work but taking our defined benefit pensions, and our state pension dates.

ajmoney

Suffolk_lass I am not going to pretend I understand everything in your first paragraph or even know where I find out to find out about SERPS options, I haven't managed to get onto that site yet either.  I am always careful what I put on here relating to pensions as I am in a very fortunate position from the way it is calculated or paid into.  I had a meeting with someone last year about my pension and learned a lot, next time I get the opportunity to have another I may ask this question and find out how my benefits weigh against the state pension contributions.

Suffolk_lass

You could have a read around the pensions part of the forum on here for some background understanding to help your FIRE deliberations

ajmoney

I am bored so have been reading some of the other threads.  I saw the 1% challenge and so I though I would have a look at what I have paid since the beginning of the year.

Total mortgage on 01/01/2020 £103,115.88

So far this year I have overpaid £8206.62 which means I have OPd 7.95%.  I normally only take the balance reduction on the 1st of each month due to the interest added but as it stands today my mortgage is at £92844.67 which is actually a reduction of £10271.21 so 9.96%.  I guess the difference in figures will be down to the reduction in the bank rate and the saving of interest by my OPing. 

I had thought of setting myself a target of reducing my mortgage total over the year by 10% but that is likely to be achieved fairly soon.  Having done some rough calculations that may or may not be correct I am going to aim for a 13% reduction in my mortgage since the beginning of the year. I am also going to try and increase my savings by 10% although this is across my standard and S&S ISA so it will be a little market dependant.  If I stick to my planned savings schedule I will be putting in £2700 so this is only £100 over that which I hope to make up in account tidies but with the fluctuation in the markets I am hoping this will be covered.

I think this approach could be a good starting point to my saving and OP targets for next year, using percentages rather than a specific figure.

ajmoney

The balance of my holiday is due to be paid around 17 Jul, I am hoping there will be some better guidance by then.  I don't expect to go for so many reasons not least that my leave dates with work have changed although they would honour them if I wanted to go but I am meant to be sharing a room with a complete stranger which is my main concern.  I know my travel insurance will cover the change of holidays as I deliberately have a policy that covers changes in armed forces personnel leave dates but FCO guidance would mean I don't need to use my travel insurance which would be preferable if it is still in place then.  So much uncertainty with everything right now.

savingholmes

That's a great mortgage OP rate and I love your savings goals. It is hard to know what to do for the best with the holiday. I personally wouldn't want to fly anywhere. Is there any way of finding out whether you could pay a supplement for a room to yourself? Would that make a difference? Is this the swimming holiday?

Suffolk_lass

I was wondering if you had considered a brick filling system for your home - it takes a bit of setting up (either on paper or a spreadsheet) but with a bit of calculation, using your beginning of the year figure, you could divide the blocks into lumps of overpayment and then chart your progress as you go - personally I wish I had this and it would be on the wall in my study with stickers but with less than £10k to go it does not seem worth it with mortgage neutrality achieved over here.

ajmoney

savingholmes said:

That's a great mortgage OP rate and I love your savings goals. It is hard to know what to do for the best with the holiday. I personally wouldn't want to fly anywhere. Is there any way of finding out whether you could pay a supplement for a room to yourself? Would that make a difference? Is this the swimming holiday?

Yes it is the swimming holiday. I don't really want to fly either, current FCO guidance (if it covered early September) should mean I can cancel directly with the company without too many repercussions and as it is a british company I think they would be very helpful.  Without this I need to go through my travel insurance, the bonus is it is included with my current account but I don't know where I stand on premiums etc so need to look into this.

ajmoney

Suffolk_lass said:

I was wondering if you had considered a brick filling system for your home - it takes a bit of setting up (either on paper or a spreadsheet) but with a bit of calculation, using your beginning of the year figure, you could divide the blocks into lumps of overpayment and then chart your progress as you go - personally I wish I had this and it would be on the wall in my study with stickers but with less than £10k to go it does not seem worth it with mortgage neutrality achieved over here.

I don't know how to go about this but I have thought about it, a visual reminder would be a great incentive.