FinancialBliss: My mortgage free journey…

financialbliss

While I was at work on Friday Mrs Bliss emptied and counted the cash our son's / daughters savings jars, borrowed some of my mortgage petty cash :rolleyes:, sorted and bagged it all up to pay into the kids savings accounts.

Went to the building society today and left both kids to go to the cashier themselves to get into the spirit of saving...

Daughter was reluctant to hand money over, but in the end handed over a bag of coins and notes plus her bank book and then got her savings book back. Seemed disappointed that she got less back than she handed over.

Son went up to counter, handed over particulars and then started studying the leaflets on the counter. Saw one in particular and in a clear and unhesitating voice spoke "INVESTMENTS". That's my boy... :rotfl:

Took leaflet away, to which I joked, please read up and I'll ask questions later. He is only five, but he is a very bright young child!

FB.

black_taxi_2

tell him about compound interest

gallygirl

black_taxi wrote: »

tell him about compound interest

Then ask him to explain the banking crisis please :rolleyes:

financialbliss

In recent months we have been puting £1,025.00 a month to the mortgage. I recently talked about adding a further £75.00 on a permanent basis to take the mortgage total to £1,100.00 each month.

I said I’d get around to discussing why I thought this was a good value – here’s the maths behind my thinking:

Savings. If I save £75.00 a month for 4 years and 3 months (or 51 months), at the end of this period, if I presume a reasonably generous interest rate of 5%, I would have a total of £4,259.11. This is made up of :

Capital: 51 x £75, ie £3,825
Interest: £434.11
Total: £4,259.11

Mortgage. In the past, I’ve scored an own goal for being far too optimistic with repayment or other stats. Currently, when I come of my fix, I’m placing myself on a theoretical rate of 7%, then upping it by 1% per year until mortgage free.

While this is a worst case scenario which I hope won’t happen, I’m using this method of determining mortgage rates in scenarios 1 and 2. The only thing that differs between the scenarios is the payment per month.

Mortgage scenario 1. If I continue with £1,025 a month towards the mortgage until the mortgage ran it’s course, I’d end up mortgage free in July 2014. Over this period, I would get charged about £7,476 in interest.

Mortgage scenario 2. If I up the mortgage payment to £1,100 a month until the mortgage runs it’s course, I’d end up mortgage free in March 2014. Over this period I would get charged about £6,675 in interest.

The difference in the interest between scenario 1 and 2 is £801.15 – more than the £434.11 I would have made in savings interest, therefore I should get better value from overpaying than saving.

If all these numbers are too much for you, I’ve put this into a spreadsheet in Google docs:
http://spreadsheets.google.com/pub?key=tApYHqBleG_rX1CS9TpuKCw&output=html

I still think I should throw as much as I can at the mortgage and as soon as possible. Hopefully there are no fatal flaws in my spreadsheet logic.

I have now altered our internet banking to overpay by £201.97 to up our payment of £898.03 to £1,100.00. I am doing this for 2010 currently, and will review this at the end of next year.

Financial Bliss.

financialbliss

financialbliss wrote: »

Secondly, I started making a note of our water meter readings too. Except this month I couldn't read the numbers as the inside of the meter has fogged up with water. Will get around to emailing water company this week sometime for their thoughts on the matter, as if I can't read the mater, then they won't be able to either.

Would be nice for a free meter replacement, but not too sure about paying for a replacement. Depends on the cost.

Above was from 5th October. Our water company phoned us mid-October after I emailed them informing us they would do a free check of the meter and replace if found to be faulty.

Got in today to a postcard from the water company informing us they had replaced our meter free of charge due to it being "damaged / faulty".

Nice new meter reset at zero. I can see some monthly water stats coming up in the new year as I've pretty much no idea how much water we use on a month by month basis!

FB.

setmefree2

Nice one:T:T I've no idea how much water we use as we don't have a meter. Good Luck:T

RosieTiger

gallygirl wrote: »

Then ask him to explain the banking crisis please :rolleyes:

As FB said, he's bright and he's 5. So probably has a far better understanding of this than Fred the Shred and the other Muppets we had in charge of the banks !

FB's son for the B of E Advisory Ctte. !

financialbliss

skcollobcat10 wrote: »

What software do you use to get the Payment v reduction v interest graph, I think this is excellent. All I can say is that if your mortgage amount is reducing be grateful for this and good luck with what you have done so far.

Hi skcollobcat10,

Nothing more than Excel - Excel '97 in fact. I've got the ful office suite. Ok, over 10 years old, but still works and does what I need. I've been venturing into Google docs recently, but still make use of Excel.

Collect data and enter into Excel. Generate and tweak graph until I'm happy with results. Then select graph and take a copy to the clipboard, paste to paint and save as a JPEG image. Create an account / log on to an online storage solution, eg photobucket and upload the image to there. Once it's "online", link to it via this diary.

I've got the 2012 graph as a desktop image on my PC at home as a reminder of where I want to be in 3 years time...:rolleyes:

The payment v reduction v interest nothing more than a 3D bar chart. I started off with a flat graph but that looked quite boring.

FB.

financialbliss

Barclays monthly saver. This matured today. Was paying £250 in a month over 12 months, so got the £3,000 capital back plus £133.86 interest - the rate on the account at the time of opening was fixed at 6.0% (correction - 7.75%).

Not bad considering if we'd not have opened it, the cash would probably have sat in our Nationwide e-savings at 0.45%, ie less than the BoE base rate.

Currently, we've pushed the cash back into our Egg savings - best rate we have at present, but I've just had a quick scan of Barclays again and they are currently offering a 4.25% regular saver.

May open another one, but need to time it so that we feed the account as late in the month, so we can feed again on the first of the month, plus I'm not loyal to any one establishment, so need to take stock of the current regular savings market too.

Financial Bliss.

pawlala

is there a minimum payment per month for that Barclays regular saver?