Reducing Debt - being accountable and taking responsibility

wishingthemortgaheaway

Sounds like a grand Easter weekend.

DrSpendLittle

It's getting towards the end of the month and my spirits are lifting. It'll soon be payday and my bank balance will be nice and healthy. I'm taking the day off work so having a nice relaxing day.

Our house chain is moving, with surveys taking place and solicitors talking to one another. We received our official mortgage offer this morning and are relieved to have passed that big hurdle Now just all the remaining others to navigate. I'm hoping for a mid June completion date but we all know how these things can change / collapse at a moments notice. Just keeping my fingers crossed each and everyday that it'll all work out. Feeling more relieved now that the mortgage is in situ and our buyers searches are back. Just ours to get underway.

I've been spending some time on our new home budget in YNAB and getting all the line items set up. At the moment we have around 14% of our monthly take home pay unallocated, which is the amount that will go into savings. That'll regularly top up the existing pot of savings we're taking with us. All other costs - immediate, monthly and annually - have been allocated. That 14% is a bit less than I initially wanted to be saving, but the monthly budget I have created is very generous. I think we will be tilly tidying from unspent funds into savings fairly regularly.

It's likely that we won't be saving those unallocated spends initially, at least not for the first 3-6 months, as we will need to buy some new things for the new house (pieces of furniture, a garden shed, curtains etc) and spend some money on decoration and gardening. We will cash flow all this and not dip into the big pot of savings. Unless the boiler breaks of course!

In a few years time, I'm hoping to get promoted at work and will have paid off my student loan (I currently pay £170 per month), which will increase our monthly take home pay and increase the % we manage to save. It'll also cover any (fingers crossed!!) child care costs we will incur, which aren't currently factored into the budget. Things will be tight for a while when that eventually happens but we are prepared for that, though my twins panic is simmering away in the background

The big pot of savings we're taking with us are the equivalent of 20 mortgage payments, so a fair chunk and enough to settle my nerves over having such a bigger mortgage. I need to think through where to store it. We'll need a current account buffer, I'm thinking 6 mortgage payments...? I may split the remainder and put half in an easy access place and half in a harder to access place.


Right, I'm off to have a late brunch and find something useful to pass the time with other than sit on the internet!

DSL

DrSpendLittle

Managed a NSD yesterday and will have another one today. DF has just nipped to the supermarket to, in his words, pick up some stuff for dinner. I quickly retorted with 'get some stuff for the week too!!'. Men, honestly!

Payday on Monday at midnight. I have a bill of £600 to settle next week as part of the house move. Other than that, I should see my savings reach £2,000.

Had a bit of a wobble last night over whether we have gone for a too big a mortgage / expensive house. But I then kept thinking about the longer term and the fact we probably won't need to move again, so we'll be saving on transaction costs. Plus we are on 74% LTV so we do have some wiggle room for selling at a discount if things hit the fan.

At a push I could cover the mortgage and essential bills on my net take home pay, as could DF, but unlike DF, I would need to cancel my pension contributions to cover food / travel We will both have income protection / life insurance policies, so that part of the equation is covered. It's just the impact of the catastrophising / redundancy / serious life event issue that makes me slightly uncomfortable. However, we're going into this mortgage with good financial acumen, no debt and an emergency fund that's worth 20 mortgage payments. I think I'm just experiencing some house move anxiety and placing it on the financial decision we've committed to - I'm not an anxious person, generally speaking, so its a bit new to me. Still, its all natural and I'm rolling with it!

That said, we'll have to be careful to cashflow the initial expenses of moving in. The (fingers crossed!!) new house has some damp that will need sorting (its a very old house). There may be some other remedial things that will need doing to windows and the roof at some point too - we're waiting on our building survey to reveal the extent of these and whether we will have scope to reduce the sale price of the house with the vendor. The boiler is a bit old too, so that will also need replacing at some point. I'm hoping £5,000 - £7,000 will cover most of those significant structural costs and can be cash flowed over 5-7 months. I'll sell my car to cover some - around £2,000 - so we don't dip too much into savings.

What else? This week will be spendy - house move bills to pay, an Ocad0 shop to do and I'm in work most of the week so commuting costs to cover. All budgeted for though. I must be good and take a packed lunch into work!!

We've done well this week to cook out of the freezer / store. In fact, I can't remember that last time I went to the supermarket! Well done us! :rotfl:

DSL

PositiveBalance

Things are looking good, Dr SL.

I think it's only normal to have a bit of a wobble at the idea of taking on a large new debt. However, as you point out, you have serious financial skillz by this point and you have given this considerable thought.

If anything, once you've got your feet under the table in your new house an sorted out the repairs, I feel that paying off the mortgage early may become a new challenge for you.

Once you've cashflowed the repairs, how long do you think it will take you to pay off that mortgage again?! :rotfl:

DrSpendLittle

Thanks Positive! In answer to your last question, ahem, I daren't even think about that right now :rotfl: I think I will perhaps make small overpayments initially, like £20, and then work our way up to bigger ones. Eek!!

It's payday :T :T

I've updated my signature. I now have just over £2K saved :cool::cool:

I will need to spend about £260 this week on house stuff so it'll go down a smidge by Friday.

But, how nice is it having no payments :T:T:T:T

I feel debt free proper now!

ChasingSunshine

Oh how lovely to have all your money to yourself on payday and no payments. Worth all the effort to get the debt paid off. Enjoy!!!

wishingthemortgaheaway

I knew you'd feel more debt free today than you did last month.

Please please please have a little splurge to celebrate debt freeness. I usually buy a handbag, but if that's not your bag (ha ha) choose something else.

PositiveBalance

wishingthemortgaheaway wrote: »

I knew you'd feel more debt free today than you did last month.

Please please please have a little splurge to celebrate debt freeness. I usually buy a handbag, but if that's not your bag (ha ha) choose something else.

I agree! At the *very* least a bottle of something very fizzy! :beer:

DrSpendLittle

Thanks everyone!

I've treated myself to a few pieces of clothing over the past 3 or so weeks. All good quality items that will stand the test of time. It's nice being able to purchase these things and not feel guilty! I've been very mindful of how they fit in my existing wardrobe. That'll do for now.

I feel like my main 'end of debt' treat is the house. By me paying off my debt, we have been able to more comfortably afford it :T:T. Its our dream home, so I'm super pleased and proud.

What else? Not much to update on really. All bills paid. Need to call the solicitor this week to get an update on how the house sale / purchase is progressing. Some spends expected this week.

Having a quiet bank holiday today. Need to pick up some gifts from our local town (click and collect) for a friends birthday and then wrap those. Also need to get some bits and bobs for dinner. And, do a tip run as I've been decluttering (I think HHOD's decluttering has inspired a few people :rotfl:)

DSL

wishingthemortgaheaway

Hi DSL. Hope you are doing well.

You are a capsule wardrobe queen aren't you? Do you have a formula?
Ie x number of tops
X number of bottoms etc.

Can you share please? I'm having a wardrobe sort out....