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Dreaming of financial freedom!

edited 20 January 2017 at 11:44AM in Mortgage-Free Wannabe
537 replies 58.8K views
ch4rly2002ch4rly2002 Forumite
455 Posts
Fifth Anniversary 100 Posts Energy Saving Champion
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edited 20 January 2017 at 11:44AM in Mortgage-Free Wannabe
Hi everyone reading this!

I hadn't thought about writing my own MFW diary until another user suggested it, so I have no idea if anyone will be interested in what I have to say, but I'll just post it and you can ignore if it's rubbish :p So here's my story...

I turn 30 next month and I would like to be mortgage free as soon as possible. My husband and I work in IT and, at least in my company, it seems to be that most jobs are being moved abroad. My dad also worked in IT was made redundant at 53 before my parents had finished their mortgage so I think that is why I am so anxious about having mortgage debt and would like to pay it off ASAP.

We bought our first house in 2006 and sold it three years later in the middle of the recession for a loss of £6k, which wasn't ideal but it allowed us to purchase a house we couldn't have otherwise afforded as the vendors needed a quick sale so were prepared to drop their price. We moved in to the new house at the back end of 2009 and didn't need to do anything to it, which is a good job as we didn't have any spare money at the time! After a few years I got a job that paid well and we started overpaying on the mortgage, which we decided to do rather than save up as we would get a nice lump sum if we were made redundant. I loved seeing the mortgage go down!

In 2011 my dad was diagnosed with a progressive neurodegenerative illness, which means his brain is slowly dying and was given a life expectancy of approximately 7 years, although it differs for everyone. My parents decided to make the most of their time together and bought a static caravan by a lake, which they lived in happily for a couple of years before my dad started having too many falls to continue living there and they moved into an independent living unit near Holmfirth, which isn't too far from where my in-laws live so it made visiting them all on our weekends up from Nottingham so much easier! By 2014 my dad had deteriorated quite a bit and my husband and I discussed leaving Nottingham so we could live closer to our parents in Yorkshire. At this point, the house was valued at £170,000 and the mortgage was at £108,000. Had we stayed and continued paying the same amount each month we would be mortgage free by 2021 but if we moved we would either have to rent (which we both saw as dead money) or buy another place that would be more expensive for a comparable house so it was a difficult decision. Around the same time my father-in-law got cancer, so we decided that moving up would be the best option. The only problem was that my dad was deteriorating rapidly and it takes ages for houses in our area to sell so we'd miss the last bit of time with my dad in a reasonable condition and could miss being there for the in-laws when they needed us through the cancer treatment process. At this point, I suggested we rent out our house and buy another house closer to our parents. I first spoke to my mortgage provider and asked if there was a way to release equity from our house and move it onto a buy-to-let mortgage then purchase another property. Unfortunately they wouldn't allow us to do this, but luckily MSE sings the praises of London and Country mortgage brokers and as they don't charge a fee I thought it would be worth giving them a call. I am so glad I did! My advisor Adam found me a new residential mortgage and let-to-buy mortgage (which is apparently very similar to a buy-to-let mortgage but it is when you already owned the property when you decided to rent it out) so we could use equity from our house. A couple of months later we moved into our new house and our old house was rented out shortly after.

After 2 years, our fixed deals have just come to an end and this is where we now stand...

Residential mortgage:
Started at £216,000 on 3.29% with no OPs allowed.
From January 4th, the property has 80% LTV and is on 1.99% for 3 years with 10% OP allowed. Started at £204,000 but as I had to guess what amount I would need when I first applied 3 months ago, we were refunded £1,404 so the mortgage now stands at £202,596. The standard mortgage payment £916 but I set the DD up at £1,100 as that's what we paid before so there is an overpayment there without any hardship. I can't wait to see this go under £200k, and then I will set £10k goals.

Buy-to-Let mortgage:
Started at £136,000 on 4.79%, and we started making overpayments of £250pm.
From February the property will have a 73% LTV and will be on 2.64% for 2 years. Again, we applied for this mortgage 3 months ago and I guessed £129,000 but when I checked yesterday it stood at £127,895 so we will be due some money back and will pay that off the mortgage straight away.The standard DD is £638 but I am considering whether to leave the payments at £1,000 as they previously were.

The only fly in the ointment now is that our jobs aren't as secure as they used to be, and there are rumours of redundancy packages being dropped to statutory rates, which I understand isn't very much. This has made me think that we ought to have some savings in case one or both of us gets made redundant. We have £1500 in premium bonds saved up for house repairs but that wasn't much of a safety net. Luckily, we have just received a cheque for £4,900 from my husband's stock that he just sold so for the first time ever we finally have some security. We would have previously put it straight on the mortgage but with the current uncertainty around jobs it is nice to have a bit of a safety net. The timing couldn't be better!

I'll be honest. I'm rubbish with budgets. I don't know how much we spend and I know I could be a lot more careful with my spending. We do have takeaways and eat out quite a bit, mainly because we both work long hours and very tired on an evening and don't want to then spend a big chunk of our evenings cooking. If I'm even more honest, part of it is laziness :( However, I want to change that as I'm sure we could save some real money and be healthier if we cook more so I'm thinking maybe meal plans, online shopping so I don't get tempted by add on products and don't have to give up a load of time to go to the supermarket, and maybe the odd ready meal in place of a takeaway when we're feeling tired / lazy. I am also going to have a look into slow cooker recipes that I could put on in a morning so it's ready for us as soon as we finish working.

My goal is to start logging what we spend and make a proper budget!

Some (limited) financial info:
Husband earns around £3,000 net each month.
I earn around £1,700 net each month.
Rental income, after expenses, is £678 per month.

Mortgage 1 £1,100
Mortgage 2 £322 (£1,000 payment minus £678 rent, assuming we keep the payment the same)
Car loan £500 (ends in October 2017)
Loan to In-Laws £250 (not accruing any interest)
Water bill £26
Council Tax £128
Gas & Electric £94.14
BG Home Care £29.50
Mobile 1 £13
Mobile 2 £20
Sky TV, internet and phone £70.93 (up for renewal tomorrow so will haggle or switch to Virgin)
Car insurance £632 in 2016 (paid in a lump sum in April)
Home insurance £491 in 2016 (paid in a lump sum in December)
Pet insurance £69.61 in 2016 (paid in a lump sum in November)
Landlord insurance £219.21 in 2017 (paid in a lump sum in January)
Rent Guarantee and Legal insurance £125 in 2017 (paid in a lump sum in January)
Gas Safety Certificate £60 (annual, paid in February)

Unsure on food and entertainment costs (really need to get a grip on this) but after paying our credit cards we end up with between £500 and £1500 left at the end of the month, which we have recently been spending on home improvements, insurance, Christmas etc. so we haven't saved much of this. We are also thinking about joining a gym so that might also be another expense in future. If I think of any other expenses I will add them but I think that's pretty much it for now.

I will try and update this as and when I get more information or manage to make savings / OPs. Thanks for reading! :)
Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
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Replies

  • Jessy103Jessy103 Forumite
    1.3K Posts
    1,000 Posts Fourth Anniversary Name Dropper Photogenic
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    Hi ch4rly2002! I'm sorry to hear about your dad and father-in-law, I hope you get to spend the time with them that you want now you've moved.

    I would definitely recommend the slow cooker. We have one and it's so easy to just stick everything in in the morning and leave it to do its thing and then have a lovely meal to look forward to, especially in winter! I tend to do a bit extra as well so I've got some for my lunch the next day or freeze some for another tea.
    We are also suckers for a takeaway and we use the just eat website. I have recently found a survey website called swag bucks and you are able to earn cash back through websites including just eat so if you use just eat you might want to give that a go because the points you get back you can then claim for money direct into your PayPal account or shopping vouchers.

    I have a spreadsheet that I enter all our receipts on and balance it with our bank accounts everyday. It's a good way of seeing what you spend your money on and gives you a good idea what you can cut down on or cut out completely!

    I will cross my fingers for you on the job front and good luck with your diary! (Don't worry, plenty of people will read your diary. I was worried when I first started but have had some fantastic advice and talk to lots of lovely people!!)

    Look forward to reading more!
    Jess x
    Mortgage Balance as of 31/12/20 £61,000
    Mortgage Balance as of 31/12/19 £69,000
    Starting Mortgage Balance (June 2019) £72,000
    2021 Overpayment Challenge: Jan £739.00, Feb £159.38, March £670.00, April £800, May £44.46
  • pjcox2005pjcox2005 Forumite
    856 Posts
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
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    Hey,


    I'm guessing you've checked with your bank but a couple of points:


    A payment of £1,100 against a £916 usual monthly payment on the first house is greater than 10% overpayment. Are you sure you don't breach the terms of the mortgage if left at that amount?


    For budgeting, you may not want to just subtract rent from the total mortgage payment as you'll have tax to pay each year. Have you also considered changing the split of ownership with HMRC, for example if you manage the property, given I'm guessing your other half is a high rate tax payer and you're not so won't suffer on the changes to the interest rules and therefore pay less tax?
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    Thanks Jess :) it has made a big difference being up here and getting to spend more time with family so although it has been a struggle financially at times, it is totally worth it.

    I will definitely follow your advice of making extra in the slow cooker for later!
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    Hi Pjcox,

    Thanks for the reply :)

    I was concerned too about the overpayment but it turns out with HSBC (or at least with our mortgage with them) it's 10% of the outstanding balance at the beginning of each year so we have an allowance of £20k this year.

    I'm not sure about the tax split... yes hubby is a high rate tax payer and I'm not, but we asked an accountant last year when we did our first tax assessment and he seemed to think you can't split it anymore and told us to split everything 50/50. I can try asking another though as that would help. So far we haven't made a profit as we had to spend a lot before we could rent it out (new boiler, which had to be moved up into the loft so there was a lot of labour and parts, redecorating, new burglar alarm etc.) so we won't be in profit for another year or two. In terms of working out profit etc. The above £322 is just how much we're out of pocket in a cash flow sense as we have to fork out for insurance, Gas cert, management etc.

    Thank you for taking the time to read my post and comment :)
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    It's payday today and my Sky subscription ends, which I think makes it the perfect time to make a fresh start moneywise. So, here's my plan of action:
    1. Compare TV, Broadband and Phone packages then ring Sky to see what deal they can offer. If not as good, move to a new supplier.
    2. Enter income / expenditure etc. into tracking spreadsheet.
    3. Create a budget (I'm thinking the envelope system might help me keep to it, but any tips welcome). I'll post my budget on here for scrutiny from you eagle eyed beauties ;)
    4. Create a meal plan and shopping list for the next week or two.

    If there's anything I've missed or if anyone has any tips to help me get on top of my finances, please let me know. Any and all advice is welcomed!
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
  • kirtsypooskirtsypoos Forumite
    3.8K Posts
    Ninth Anniversary 1,000 Posts Combo Breaker Cashback Cashier
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    Hi ch4rly - whilst you're on the sky case, I would recommend cancelling (even if you don't plan to actually cancel!)
    Usually within 2 weeks you get a call to offer you 50% off, if you can hold your nerve it can get better than that - usually 60% off in the last week before it's due to close down, but again if you can hold out you can get more - we let ours lapse then went on live chat the next day and said we would reinstate if we got 75% off our TV package, and also managed to get an account credit. We actually switched to virgin for broadband as we could get fibre for the same price as sky could offer for normal broadband, but TV wise we are in quite a bit of credit with them - was well worth the 4 waking hours I was without TV packages :rotfl:
    :j PAID VERY, Barclaycard x3, Vanquis, Natwest, O/D, Tesco & MBNA x2 PAID :j LBM 24/07/15 - Original Debt: £0/31010.23 (100% paid) :eek:
    Mortgage - £151.316.54 :eek:
  • yorpingtonyorpington Forumite
    252 Posts
    Eighth Anniversary Debt-free and Proud!
    ✭✭
    Hi there,

    Sounds like you and I have the same weakness - the grocery budget :eek: I have found that batch cooking is the key. It doesn't take any longer to make a big chilli/stew/Shepherd's pie etc than it does to make a small one. We portion ours into ziplocs or leftover takeaway boxes and take one out of the freezer in the morning before we go to work. When we get home it's like a ready meal but so much nicer :)

    Slow cooker is also FANTASTIC. When meal planning go through your kitchen first and see what you have and start planning from that or you will end up like me with three of everything :rotfl:

    Good luck on your journey :T
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    Thank you Kirstypoos and yorpington for the excellent advice.

    I spoke to Sky and they aren't offering much off at all - disappointing as they've normally offered us a good deal to stay in the past. I've gone ahead and told them to cancel. We'll see if they ring back with a better deal! Virgin also rang and made a good offer, but they have a similar offer on TopCashBack that would pay £220 if I forgo the Sky Cinema. I'm very tempted. I did tell Sky that when I changed my mobile phone provider they rang back a couple of weeks later with an excellent deal but I'd already set up a contract with someone else at that point so it was too late so if they actually wanted to make a better deal they should do it there and then because if I cancel I'm going to set up with Virgin. They said they couldn't do anything better but who knows! Wouldn't it be so much simpler if they would just offer you their best deal at the time!!!
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    Yesterday was a good day. Made a start on entering financial information into a spreadsheet and didn't spend anything. The in-laws invited us round for our evening meal and we watched a film, lovely evening. Today has been expensive though. There was a coffee morning at dad's nursing home to find a trip for the residents. Apparently the home doesn't fund it so the staff have to find ways of raising funds. I donated £10 for the cake and coffee and bought £10 of raffle strips as it's for a good cause. Now I'm going into Leeds to pick up some stacking bowls that I ordered after Christmas so there's parking and about £12 to pay for that, but I am determined not to spend any more while I'm there and I'm going to try not to buy anything other than essential groceries this month. The only other expenditure I have is to sponsor my brother who is running the London Marathon and Brighton marathon for the PSPA charity (PSP is what my dad suffers from). Last year I had to donate quite a bit as the charity bought the ticket and set a target of £1,500 - that was a lot for him to raise so we all chipped in. this year he got in through a ballot so there is no official target but he's set a goal of £1,000 on just giving. I don't know how much I should donate. I feel guilty that he is doing all this training and will be running the marathon's for dad so I should help how I can buy at the same time I'm trying to focus on paying off debts, saving and OPing the mortgage. Any ideas what would be a good amount to donate?
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
  • ch4rly2002ch4rly2002 Forumite
    455 Posts
    Fifth Anniversary 100 Posts Energy Saving Champion
    ✭✭
    Managed to hold back the spending in Leeds :) I decided to go and do shopping for the week so we are less likely to be lazy and get take away. I thought about what we have in the house and what ingredients I would have to get to make meals for the week out of them. I spent £21 and have food for 5 days. A big improvement on my usual spend! From what I've read on here, I think the main thing that will help with the food bill aspect is planning so I am going to start on a meal plan. Does anyone have any ideas for well priced, filling meals that aren't too difficult to make?
    Mortgage: Mar 2018 -£300,000 / Feb 2019 -£278,500 (LTV 74.26%)
    Student Loan: March 2011 -£18,275.04 / Dec 2019 -£12,246.78
    Joint Savings: Aim £13.5k. Dec 2016 £1,700 / Feb 2019 £14,650
    Loan to In-Laws: Sep 2010 -£48,185.82 / Apr 2019 £0
    Car Loan: Sep 2018 -£16,265 / Apr 2019 £0
    Credit Card 0%: Nov 2016 -£4,500 / Apr 2019 £0
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