Here we go again....

Frufru23

I realised earlier that it's been 5 years since I started my Mortgage Free Diary....

Things didn't exactly go to plan.
-The first 3 years went fairly well and the balance of 134k reduced to 53k
-Apart from momentary times of being "good" I continued to spend too much
-We decided to invest in our first B2L
-We extended our house (we were torn between "making do", moving or improving)
-We realised that we needed to start thinking long term in regards to our pensions and S&S ISA's rather than purely focusing on being Mortgage free

So, despite an all time low of 53k o/s on the Mortgage, we now have:
-Mortgage Balance 112k
-Some cash savings spread around several NW Flex Direct accounts (5%) and several Tesco accounts (3%)
-We've each just started our new NW Reg Saver accounts (5%)
-We've some long term savings in S&S ISA's invested mainly in Vanguard LS 80's and a slice in both a World Tracker and a US Tracker.
-We've now both got SIPPS, invested in the same as the S&S ISA's.
- One BTL

The mortgage is on a 10 year fix at 3.14% - seemed like a good idea when we organised it 18 months ago, however, in hindsight we should have left it on the NW BMR.

Income varies monthly but currently "spare' money will be invested between the two NW Reg Savers with a small amount left for the S&S ISA.

For anything that we get in additional to the typical monthly income, I'd like to split it between Mortgage OP, additional S&S ISA and cash saves.

We don't have any automatic OP's set up at this moment in time. However, I OP'd £2500 this month when both of our NW Reg Savers matured. The 10 year fix has a term of I think 23 years on it, but I really want to aim to have it cleared for when the 10 year fix expires.

My previous approach was to throw everything at the mortgage, but I knew it was a flawed approach as I wanted to build up long term savings, invest in a B2L and also I knew we'd either move or improve our home.

So, I feel like the new approach will be more balanced. The challenge for me is to stick to what I've budgeted and not waste/spend the £££'s.

(That said, if we'd stuck to the old plan, we'd have been mortgage free now and I can't help think that it would have been a wonderful feeling & achievement).

MallyGirl

Seems like a good plan. We also focussed on paying off the mortgage till now - and will do it pretty much next month when the last endowment pays out - but we will be 50 now so are switching to investing in a S&S ISA. We have gone for Vanguard LS 60 due to our ages.
We also have NW, First Direct and M&S reg savers taking the max.
We have company pensions and historical pensions from previous employment but now need to build up a decent retirement fund so that we get a choice on when we choose to sell this house to liberate capital.
DD goes to uni in 4 years time so we didn't want to tie our money up in
SIPPs in case she needs it
Good luck

Frufru23

MallyGirl wrote: »

Seems like a good plan. We also focussed on paying off the mortgage till now - and will do it pretty much next month when the last endowment pays out - but we will be 50 now so are switching to investing in a S&S ISA. We have gone for Vanguard LS 60 due to our ages.
We also have NW, First Direct and M&S reg savers taking the max.
We have company pensions and historical pensions from previous employment but now need to build up a decent retirement fund so that we get a choice on when we choose to sell this house to liberate capital.
DD goes to uni in 4 years time so we didn't want to tie our money up in
SIPPs in case she needs it
Good luck

Thanks for dropping by ... It's a job to work out where to allocate money - such a difficult balance to get right and we'll never really know whether we went about it the right way until we look back and reflect years from now!

I originally split my contributions between LS60 & LS80, then ended up putting all of it in to LS80.... (for a brief time it was all in LS100, but since I only have my Sipp and no other pension, I decided to de-risk it ever so slightly and go back to the LS80...)

We're 39 & 41 with two DS's aged 12 & 7.

gallygirl

So interesting reading others going through the same issues I faced!

Did you invest in the btl?

Being mortgage free is a very clear, tangible goal as opposed to paying money into a SIPP or S&S ISA and, to a certain extent, hoping for the best! What age do you want to retire? Have you read any retirement blogs or been on any sites? A rough rule of thumb is that you can withdraw 4% a year and 'probably' never run out of money. So if you want an income of say 10k in today's value that's 'only' 250k you need. I'm sure you're a very long away from it but if you reinvest all dividends it will grow, slowly but surely :T.

That gets more complicated (but easier to achieve) if you factor in that at some stage you'll get state retirement (assuming you manage to get 35 years contributions), so that's less you need there. And if you have a btl that will have the mortgage paid by then that's less again.

Good luck

PS MallyGirl - cool name . I have the same regular savers but our M&S ends next month and I can't renew as we have no DD's

MallyGirl

gallygirl wrote: »

PS MallyGirl - cool name . I have the same regular savers but our M&S ends next month and I can't renew as we have no DD's

I have 2 Alaskan Malamutes - one is my avatar - hence my name.

Really no DDs? Gosh! I have lots of unavoidable ones - council tax, fuel, water, TV license - plus lifestyle ones - pet insurances, contact lenses

Frufru23

gallygirl wrote: »

Did you invest in the btl?

Yes we did I forgot to add it to the list... We only have the one and always planned to have a couple, however the changes to Stamp Duty and tax have put me off a little. I still think it's a worthwhile investment, but am not ready to plough in to another at this moment in time.

gallygirl wrote: »

What age do you want to retire? Have you read any retirement blogs or been on any sites? A rough rule of thumb is that you can withdraw 4% a year and 'probably' never run out of money. So if you want an income of say 10k in today's value that's 'only' 250k you need. I'm sure you're a very long away from it but if you reinvest all dividends it will grow, slowly but surely :T.

It might sound crazy, but I don't really know at the moment. I enjoy what I do work wise, but of course that could change!
It's interesting what you say about the 4% rule... I guess I need to do some number crunching to see what kind of pension pot would be realistic to aim for. I currently have around 80k in my sipp and am adding £240 net, so £300 with tax. Plus, additional tax relief if I end up being in the 40% bracket when I do the self assessment - it's difficult to work it out exactly as my income varies.

gallygirl wrote: »

And if you have a btl that will have the mortgage paid by then that's less again.

We're on a repayment and are definitely aiming to have it paid off. Depending upon how lucky/stressful the whole B2L thing is between now and retirement will depend on whether we sell up and invest the proceeds (after CGT) in to funds and use for income or keep and use the rental income.

We'd ideally like another, but we'll have to see whether the government continue to make it more difficult to "invest".

gallygirl wrote: »

Good luck

Thank you :T

Frufru23

Gallygirl..... I'm so pleased that you posted on my thread...

I've just been off messing around with a savings calculator and spreadsheet and can see that even if I continue to invest "just" £300 per month in to my Sipp, then in 25 years I'll have approx 300,000 and thats assuming 3% growth (which of course, we'd assume would be higher).

The 4% draw down you mentioned would then equate to £12k p.a

Other half would also have his Sipp (we've just started with the same contribution as mine) plus an old NW pension which has a current value of around £75k.

And then, we'd have the B2L (hopefully), S&S ISA's (which I guess we'd assume a similar income draw down of 4% from) and any state pension that may still exist.

It's not enough to buy a yacht and cruise the Caribbean but it's actually far better than what I'd hoped for. I've actually been stressing quite a lot about the money situation recently, but this has made me feel a little better

Thank you

MallyGirl

Frufru23 wrote: »

We only have the one and always planned to have a couple, however the changes to Stamp Duty and tax have put me off a little. I still think it's a worthwhile investment, but am not ready to plough in to another at this moment in time.

....

We're on a repayment and are definitely aiming to have it paid off. Depending upon how lucky/stressful the whole B2L thing is between now and retirement will depend on whether we sell up and invest the proceeds (after CGT) in to funds and use for income or keep and use the rental income.

We'd ideally like another, but we'll have to see whether the government continue to make it more difficult to "invest".

We had wondered about BTL but at the moment I can't face the hassle - and OH's ideas and mine do not match.
He wants to buy a holiday let in the Lake District that we can use when it is empty. We live 280 miles from the Lake District! If there is a problem with it we would have to pay someone to deal with it as we both work full time and have a teenager still at home. That would eat into any profits, plus holiday let mortgages are pretty thin on the ground.
I would buy something more traditional BTL locally but the CGT and stamp duty changes have made that less attractive. Plus, I know who would have to deal with everything and it wouldn't be him - he has never really worked out that I moved from part time to full time some years ago and just don't have the bandwidth to take on anything else.
At least we both get 10% from employers into pensions when we put in 5% and are both 40% tax payers. I am looking to max out the 2 S&S ISAs each year if poss - I won't know quite what cash flow is really like till the mortgage is really gone.

Frufru23

MallyGirl wrote: »

We had wondered about BTL but at the moment I can't face the hassle - and OH's ideas and mine do not match.
He wants to buy a holiday let in the Lake District that we can use when it is empty. We live 280 miles from the Lake District! If there is a problem with it we would have to pay someone to deal with it as we both work full time and have a teenager still at home. That would eat into any profits, plus holiday let mortgages are pretty thin on the ground.
I would buy something more traditional BTL locally but the CGT and stamp duty changes have made that less attractive. Plus, I know who would have to deal with everything and it wouldn't be him - he has never really worked out that I moved from part time to full time some years ago and just don't have the bandwidth to take on anything else.
At least we both get 10% from employers into pensions when we put in 5% and are both 40% tax payers. I am looking to max out the 2 S&S ISAs each year if poss - I won't know quite what cash flow is really like till the mortgage is really gone.

The Holiday let in the Lakes sounds like a wonderful romantic idea but I'm with you - when you look at the practicalities it could be a pain. You'd need to worry about letting it out and as you say, you'd need to employ a management company to take care of any issues which as well as being costly, could be quite stressful too.

Thankfully our B2L has gone quite well so far, but I know that at some point it could take a turn for the worse, I think that's part of the reason I'm nervous about investing in another.

Your S&S ISA's will still potentially give you a good return over the long term and without the hassle of the B2L's. :T

You pension contributions sound wonderful! No such luck here unfortunately!

MallyGirl

yes - I would like to still be in a fit state to enjoy my retirement
I expect we will work for at least another 10 years as we both quite like our jobs, they are with big and successful companies and they pay well.

gallygirl

MallyGirl wrote: »

Really no DDs? Gosh! I have lots of unavoidable ones - council tax, fuel, water, TV license - plus lifestyle ones - pet insurances, contact lenses

We live in Spain so only have a few credit card DD's and life insurances left in the UK.

I'm with Frufru on the btl - doesn't sound right for you at present at least.

Frufru23 wrote: »

I've actually been stressing quite a lot about the money situation recently, but this has made me feel a little better

Knowledge = Power :T.