Mortgage free by 45

Allotrope

My goal is to clear my mortgage by the time I'm 45 (three years to go!) and give myself a decade to save for early retirement.

A little background - I have spent the whole of my adult life mismanaging money and in debt, I'm ashamed to say. But last month I was fortunate to come into some money and have cleared all my debt and my mortgage down to £24,000. I finally have the motivation to manage my money but need some accountability - hence posting on here. I know how lucky I am, I'm not going to waste this opportunity!

I am going to record and celebrate my savings here, as well as seeking advice. As instructed by so many threads in these boards, I started by doing an SOA, which I will post shortly. Please go gently with me!

Allotrope

SOA removed for privacy reasons (someone I know Is already posting on the forum and worked out who I am...!)

Allotrope

Things I've done to help today
- got my skinny latte from Waitrose - 30p
- bought a friend whose moved house a pontsetta for £6 instead of champers for £20
- cancelled my membership of weight watchers online...wasn't using it anyway!

My friend and I set up a groceries challenge where we took out £100 at the start of the week and put it in a purse and vowed not to pay anything else this week. I failed! Am currently at £110 which isn't great...but it did include £10 for the milk kitty at work, too many lattes from Costa (really need to give up on these) and eating out twice (to a tune of £40, which really comes out of the entertainment budget I guess).

Anyone know of any good apps for tracking my individual money 'envelopes' without actually resorting to envelopes?

genieuk

Good luck,
I would love to be MF by 50 4yrs time.
We also take money out at the beginning of the week been doing that for about 6mths now. Big brother doesn't know everything.

We are family of 6 well 4, two are at uni.
I withdraw £150 give hubby £20 for his coffees at work.
I work shifts and either take a pack up or cook extra to reheat.
Ds has drum lesson - £20
So I have £110 left
for shopping I usually aim at around £40-50. Anything left over is for cinema/meals out/take away (which I hate kids and hubby love rarely have once a month)
DD bus money when we can't collect her
Petrol lucky we can both cycle to work so share who has the car I don't take it generally as have to pay for parking.
With the money left over it's kind of do I want it need it etc
We use Meerkat movies 2for1

I have managed to roll over a few times but hubby is my biggest stumbling block.

Allotrope

Hi genie, thanks for popping by. Wow, four kids (even if grown up), that's some work!

Your shopping budget is low for 4, any tips?

AnotherJoe

Let the mortage run, it's probably only at 2% or so, put the money in your pension and give it as long to grow as possible.,

I know it sounds nice to pay your mortgage off, and it seems like a good goal, but the financial practicality is that the money you save doing that is much less than you'll get on pension returns, especially if you are a 40% tax payer, but even as a 20%.

Allotrope

Ok, so I need to keep track of a few of my monthly expenses, and I haven't found an app yet. I don't want loads of bank accounts, and I don't want to take it all out in advance and stop earning interest. So here's my plan:

1. Open a TSB bank account, get £100 cash back. This will become my main DD account (I currently use Santander for the cash back on their mortgage payments, but since my mortgage payments have dropped so much, it isn't worth keeping this account). It also pays limited amount of cash back on contactless and 3% interest on balances up to 1.5k

2. Open a Nationwide current account. I will put £2000 of my savings in there to earn 5% interest and transfer £1500 across each month. £500 will be transferred directly into the linked savings account for 5% interest and £1000 is my monthly spending money (groceries, petrol, entertainment etc)

3. I will take out £100 a week in cash for groceries, rather than pay on my card, as I find I stick to my budget better that way.

4. I will keep a running total of my monthly spend here so I am accountable (see next post.).

That's it for the moment - enough to get me up and running anyway!

Allotrope

Monthly Expense Tracker - December

Groceries etc. ......................... 110 / 450
Clothing................................ 50 / 110
Petrol/diesel........................... 0 / 60
Entertainment ................20 / 300
Cleaning etc .... 0 / 156

Other:

Allotrope

AnotherJoe wrote: »

Let the mortage run, it's probably only at 2% or so, put the money in your pension and give it as long to grow as possible.,

I know it sounds nice to pay your mortgage off, and it seems like a good goal, but the financial practicality is that the money you save doing that is much less than you'll get on pension returns, especially if you are a 40% tax payer, but even as a 20%.

Well, that's interesting. My mortgage is at 1% interest, so you're right. Hmmm. I will dwell on the but in the meantime I'll keep building on getting me into good budgeting habits. I have to confess, it scares me, putting money into my pension as I can't get it back out! I keep wondering, what if there's a disaster....

AnotherJoe

Your goal you said was early retirement. The key to that is building a bigger retirement fund. If you aren't doing that, then early retirement is just a pipe dream. If you are trying to build that fund by paying your mortgage off and saving cash for the fund, you are doing it with one hand tied behind your back, why would you nut take the money the government gives you ?

Every £1 you pay off your mortgage gains you 1p for that fund. Every £1 you pay into a pension as a tax payer gains you anywhere from 25p to 40p for that fund.

That 25p or 40p you get added as tax rebates will grow at the same % rate as the 1p, but the amount you get back will be 25 or 40 times greater than the 1p. Now you won't get all that because of tax, but even worst case you'll be getting back 5x as much as from paying down your mortgage.

Paying off your mortgage early might make you feel better but it's almost certainly a poor financial decision. Even worse if your employer gives you a pension and you aren't putting in enough to get the maximum contributions from them (maybe you are, I dont know)

You said "what if a disaster occurs", well the answer to that is stop spending money on a cleaner and a gardener and put that in an emergency fund.

Tropically

Even though you need to be on the O2 network, you don't need to go with O2! You can use a company who shares the O2 network like giffgaff. See http://www.moneysavingexpert.com/phones/piggybacking