FinancialBliss: My mortgage free journey…

gallygirl

financialbliss wrote: »

Any plan ‘C’s would be most welcome, as I’ve not got one just yet…

:jTo quote the great Sir Michael - "Hang on a minute lads, I've got a great idea." :j

financialbliss wrote: »

PS - plans need to be legal :rotfl:

Oops, back to the drawing board

Lunar_Eclipse

financialbliss wrote: »

Problem(s):
Still not 100% sure if 1,200 a month is realistic. Life keeps throwing things in the way

I need only pay about 498 a month, ie the bulk of the overspend is the mortgage!

A few thoughts on this:

Firstly, you are doing really well and should thus try not to get disheartened when things don't go according to plan, such as the washing machine. However, this does flag up a possible weakness in your (current) plan. Namely the need for an emergency fund. It doesn't really matter whether such things are paid for out of income, savings, mortgage overpayment fund or an emergency fund, but it might affect how you view or feel about the (mortgage) situation. So if this is getting you down and you feel as if you are falling off the MFW wagon, I suggest re-jigging your finances to create an emergency fund for such unplanned events.

Secondly, you need to decide whether you would rather fall short on an aggressive overpayment plan of a higher amount which will get you MF sooner, or would rather it was more realistic and lower, but will probably take you longer to achieve. Additionally, since there is no margin of error in the former, you are more likely to fall off the wagon. But need to remember how well you are actually doing! I would probably opt for a hybrid of the two (is that called sitting on the fence?); a realistic mortgage payment of say £1000/month (I think this is roughly a £500/month overpayment but can't recall your exact figures) and then doing additional overpayments of any surplus money in lean or good months.

Finally, I really believe in keeping things simple. We have been hugely motivated by directly reducing the mortgage as much as possible, instead of chasing slightly better interest rates (which you also mentioned) through multiple savings accounts. We have found the snowball effect to be huge; so use it to your advantage. For this reason, I am cancelling the 8 Halifax accounts I opened recently (not my desire to open so many, one for each child from each parent plus a linked account for all of them that I would rather not have!) at 8%, since the net gain to us equalled about £50 over the coming year. And it's silly to have that many accounts for that amount of benefit IMO. What I was thinking at the time I have no idea. Well I was probably thinking that £50 was £50, until all the envelopes started coming through the letterbox from Halifax - far too much paper! Oh well, I learnt from my slight deviation to the simple philosophy.

Hope that helps your 'planning'.

financialbliss

financialbliss wrote: »

Currently attempting to commit 1,200.00 a month to the mortgage, although to be mortgage free in December 2012, I need to commit 1,364.07 each and every month to the mortgage between March 2009 and December 2012 to guarantee being mortgage free :eek:

Couple 'o' quick numbers, then I'm turning in. Above calculation was wrong. Don't do calculations late at night

As of yesterday, I actually needed 1,365.27 each month to become mortgage free.
After BoE base rate cut today, we just need 1,362.56 each month to become mortgage free.

This is all pretty academic. assumption is that I drop onto the Nationwide base mortgage rate (BMR) come March 2011. BoE base rate is today at 1%. Can't get much lower than that, which means the only way is up...:eek:

Halifax released their house price index status and the index 'blipped' in January with house prices going up. Occasionally post these, but I can't remember if I do them regular or not. May end up reporting these monthly too...

Month / Change / Value / LTV

January: 1,990.83 / 234,013.37 / 24.94%

LTV - Loan To Value. The lower the better - lower can get you better mortgage deals, as you're less of a risk. Anyone with a LTV of over 75% may end up getting a better re-mortgage deal by overpaying to get the LTV down.

FB.

Julu

Hello FB & other regulars,

Have sat and read the whole of this thread in one hit - big gold stars to you FB, you're such an inspiration - and all the very best for achieving your goal (though I have a feeling the 'news' you have may have a negative impact on that???)

Have been (trying) to live a relatively MS lifestyle over the past few months, and have found myself being drawn deeper and deeper in. Then last week, I started reading through the MFW threads - amazing, something I hadn't even considered!

Very briefly, my situation is this:

Bought current property in 2002 - mortgage free (yes, we were relatively well off at the time). Then due to a series of really bad events (including the failure of a business into which we had invested far more money than we actually had (I know, don't...), we had to raise some cash pdq (to satisfy the sharks in the huge money pit we'd created). Long story short - we took on a mortgage of (wait for it!) £498,000. This in itself is major, but add to that it's over a 30 year term, and the wage earner was 53 when it was taken out, you can probably guess, it's not an easy situation to be in.

I'll leave you all to think about that for now, and I think a good many of you will feel fantastic about your achievements and current situation (as you should!)

xx

Floxxie

FB,

Plan C - Does Mrs FB earn any extra money now from activities such as eBay, cashback sites, match betting, mystery shopping etc.?

If not, then she could start this before little ones disappear off to nursery and school. A good income is perfectly possible and can be tailored depending on her free time - which if it anything like mine, is very little but is enough to make a difference to the mortgage pot.

Sure you'll find the right solution or mixture of solutions.

Floxxie

setmefree2

Julu wrote: »

Hello FB & other regulars,

Have sat and read the whole of this thread in one hit - big gold stars to you FB, you're such an inspiration - and all the very best for achieving your goal (though I have a feeling the 'news' you have may have a negative impact on that???)

Have been (trying) to live a relatively MS lifestyle over the past few months, and have found myself being drawn deeper and deeper in. Then last week, I started reading through the MFW threads - amazing, something I hadn't even considered!

Very briefly, my situation is this:

Bought current property in 2002 - mortgage free (yes, we were relatively well off at the time). Then due to a series of really bad events (including the failure of a business into which we had invested far more money than we actually had (I know, don't...), we had to raise some cash pdq (to satisfy the sharks in the huge money pit we'd created). Long story short - we took on a mortgage of (wait for it!) £498,000. This in itself is major, but add to that it's over a 30 year term, and the wage earner was 53 when it was taken out, you can probably guess, it's not an easy situation to be in.

I'll leave you all to think about that for now, and I think a good many of you will feel fantastic about your achievements and current situation (as you should!)

xx

Good luck clearing that monster

Regards
SMF2

Lunar_Eclipse

Julu wrote: »

Then due to a series of really bad events (including the failure of a business into which we had invested far more money than we actually had (I know, don't...), we had to raise some cash pdq (to satisfy the sharks in the huge money pit we'd created). Long story short - we took on a mortgage of (wait for it!) £498,000. This in itself is major, but add to that it's over a 30 year term, and the wage earner was 53 when it was taken out, you can probably guess, it's not an easy situation to be in.

Not an easy situation, no. But having been in the situation of being able to buy your house (presumably worth more than 498k due to the mortgage) mortgage free, I have confidence that you will conquer this set back. Life has a habit of getting in the way of plans!

Most importantly, although the business venture did not work out as you had hoped, you opted to take this risk, in pursuit of a dream, as opposed to doing nothing. Better to regret the things you have done than regret those you haven't.

Good luck with your frugal ventures and hacking away at that mortgage.

Lunar x

StuartGMC

Lunar_Eclipse wrote: »

Secondly, you need to decide whether you would rather fall short on an aggressive overpayment plan of a higher amount which will get you MF sooner, or would rather it was more realistic and lower, but will probably take you longer to achieve. Additionally, since there is no margin of error in the former, you are more likely to fall off the wagon. But need to remember how well you are actually doing! I would probably opt for a hybrid of the two (is that called sitting on the fence?); a realistic mortgage payment of say £1000/month (I think this is roughly a £500/month overpayment but can't recall your exact figures) and then doing additional overpayments of any surplus money in lean or good months.

LunarEclipse
I think that's solid advice for FB, a bit like appraisals (I've just completed these for my staff at last :j) with objectives which are SMARTA

Specific
Measurable
Achievable
Realistic
Timebased
Agreed

FB I think if you back off a little, then your aims will be more realistic and achievable, helping to reduce "stress" associated with the very high targets you've set. Step back and look at the broad balance, your children will soon very much benefit from exposure to other cultures around the Med etc for example, something which you can't get back timewise. There will be increasing costs related to schooling, clubs (uniform groups or sports, additional costs of private lessons e.g. music, sport etc). Look at the broader benefits of say a 2014 clearance target and what this would allow you and the family to do, for example?

Worked on current salary wouild mean as and when increases occur you can then improve on the OP etc? Would offsetting be better for you, so you have the savings (and any extras) reducing interest costs but still available to you? I think many lenders have a lower limit of either £30k or £50k to get this, but you simply take the extra and pay it back in! :rotfl:

For Mrs Bliss, part-time work would be a major benefit but ideally do a few solid days rather than spread hours over the 5 working days - I say this because when hit by their illness(es) you only need to cover a couple/three days from your leave not all five in the week. Similarly for the major holidays you need only put them in holiday clubs for a few days a week?

I would recommend though that in chatting to Mrs B that her income is used to "provide extras" for the family. Early in my discussions with OH returning to work part-time after DD was born we viewed the extra income as the means of going on a nice holiday, and other extras. This is more motivating than reducing the mortgage, but, of course it in effect does this by contributing more than just the costs of the extras e.g. school trip away one week a year at £250-300 per child?

As you say, projecting interest rates is fraught with danger now. My personal view is inflation will kick off in 2010, and if the Government still try to control this via Bank of England interest rates, the latter will have to rise rapidly? I think there are a few people looking at this early and considering fixing/capping now.

Hope these thoughts help in looking forward over the next few years.
Best wishes

pavlovs_dog

wow!

I've just discovered this thread (I should be writing an essay but that's another matter ) and I am seriously impressed! I know that I will be anally retentive when we eventually buy our own place (hopefully at the end of the year) but you have really raised the bar Financial Bliss. I'm in envy/awe of all your spreadsheets and graphs. How I long for a house so I can join you in mortgage free nerdyness!

It's odd, I'm a linguist and most definitely not a numbers person but reading this thread feels like I've found nirvana! Its is horrifying and yet very motivating to realise how much your house costs you per day in interest, and how quickly that comes down by chucking a few extra quid at the mortgage. If our 5 year plans maps out as intended we'll have renovations to pay for and a (small) wedding to finance before we can seriously think about overpaying the mortgage. We're fortunate that we have an emergency fund already saved should something blow up or we loose our jobs, which should cover approx 6months of our forecasted outgoings, so that's one less thing to slow progress. I echo the previous poster's recommendation that you create such a pot so that you know all other money is indeed spare money and can be used worry-free to help reduce the mortgage.

I'm also quite interested by your suggestion of extending the mortgage term to lower your repayments. Assuming your credit rating is sound then the stirling work you have done on reducing your LTV ratio should ensure you get a halfway decent rate. The secret then is finding a product that allows overpayments without penalty, otherwise you are shooting yourself in the foot. In the current climate one has to question the prudence of a product where you can only overpay once or twice per year, as the interest returns on that money in the meantime would be minimal. That said I suppose it must be countered against potential savings over the life of the mortgage.

So many possible calculations... think I need a cold shower

Lunar_Eclipse

StuartGMC wrote: »

LunarEclipse
I think that's solid advice for FB, a bit like appraisals (I've just completed these for my staff at last :j) with objectives which are SMARTA

Must be that time of year; DH has had his staff reviews this week! Thanks for explaining the second 'A'; only ever used SMART, but SMARTA is much better where more than one person is involved.

We have an offset mortgage with FD. No minimum requirements for money offset, but it is understandably capped at the full mortgage amount, i.e. in theory we could offset the full mortgage. Highly recommend it.

FB - are you going to enlighten us all? soon. please. curiosity might just kill the cat.