FinancialBliss: My mortgage free journey…

StuartGMC

FB
Those look like good decisions. You've always said you were at the very edge in terms of the OP etc, so don't be too down heartened at making these necessary adjustments. We've had a bad month too with wife in hospital and fridge failing but that's all in my thread so won't repeat here other than to note we had higher spend than planned to replace the expensive AEG larder fridge which was supposed to "last" - it managed just 5.5yrs.... :mad:

financialbliss

I said I’d expand on the mortgage payments…

One of my biggest problems is that I’m a bit of an optimist. If you break our spending down, in theory we should be able to afford to pay £1,200 a month to the mortgage and live off the remainder of the income.

Trouble is that “life-things” get in the way, be it washing machines, en suites or other general unplanned spending. So in recent years, we’ve very slowing been eating away at our savings. Wasn’t too much of a problem, but now that we’re sub 10k in savings, I’m feeling slightly more exposed.

So, I’ve decided a change is in order and rather than attempt a forced mortgage payment of £1,200 a month, I’ve decided to take a massive u-turn from optimist to pessimist.

From 1st April, we’re going to commit £1,000 a month to the mortgage. This will be minimum payment. As we get towards the end of the month and I calculate the income and spending – I’m going to throw some of the spare monthly income towards the mortgage on top of the £1,000 already paid.

May sound a bit of a cop-out budget wise, but I’m attempting to keep feeding the mortgage by a good amount, but ignore the 12/12/12 target short term.

Note: I’m not changing my goal – just the attitude towards it…

Where’s the pessimist? Once we step off our fix of 4.79% in 2011, I’ve put us on a theoretical 7% mortgage rate with an increase of 1% every January until it’s paid, ie 8% in 2012, 9% in 2013, and a mortgage rate of 10% in 2014.

In doing this, and completely disregarding any savings we could put at the mortgage to clear it down, I’ve estimated that as a worst case numbers scenario, (apart from redundancy), we would definitely be mortgage free in October 2014,

So, we just now need to keep chipping away at the debt until this October 2014 date is brought forward, ideally to December 2012.

Via internet banking, I've created an automatic payment to the mortgage of £101.97 to top up our payment of £898.03, ie the £1000 a month and set this to run until December this year and intend to keep a close eye on this concept to see if we can maintain our savings but also keep bringing the mortgage free date forward.

FB.

financialbliss

Don't these end of months come around so quickly? Regulars will note that I post the mortgage payments and interest for the month on the last day of the month. So here's how it stacks up for March:

Month: Payment / Interest (per day) / Net reduction / Balance.

January: 1,200.00 / 237.37 (7.66) / 962.63 / 58,537.37
February: 1,200.00 / 210.99 (7.54) / 989.01 / 57,548.36
March: 1,200.00 / 229.56 (7.41) / 970.44 / 56,577.92


Totals (Payment / Interest / Net reduction):

Minimum: 1,200.00 / 210.99 / 962.63
Maximum: 1,200.00 / 237.37 / 989.01
Average: 1,200.00 / 225.97 / 974.03
Grand Total: 3,600.00 / 677.92 / 2,922.08

Comparing March 2008 to March 2009 daily interest was 8.77 per day in 2008 compared to 7.41 in 2009, so it's going the right way.

Funds in place for standard payment of 898.03 plus a new automated additional payment of 101.97 to top the payment up to 1,000.00.

Note: As these figures are to the penny, the mortgage is 56,577.92 today. Paying 1,000 tomorrow will see the mortgage into the 55's. Looking forward to breaking through the 50's barrier - originally expecting this to happen in October, but with throwing less towards the mortgage, this may not happen until December (or perhaps not until 2010).

I'll probably end up analysing our spending for April on or around the 25th, so that if we have any spare income, I can put this into the mortgage and it still clears in April.

FB.

Dreamingalound

great progress FB! such a great inspiration!!!

financialbliss

Just in case anyone is interested, I'm posting four different sets of stats here as follows:

* Monthly mortgage payments and interest charged.
I'll normally post this on the last day of the month, as only then can I get the actual monthly mortgage interest. Been very good in posting these monthly.

* Energy stats.
Started posting these monthly, basically as I realised I could enter them monthly. I supply Scottish Power with meter readings on the first of the month, so I can get a bill for the previous month. Checking diary shows that I'm not always posting these regularly, but I should be posting these on the first of the month.

* Income / spending / savings.
Only decided to post this very recently - to compliment the mortgage stats and to give a rounder picture. Intend to report these by the 5th of the following month, ie 5th April for March data.

* House price index.
I've occasionally posted these values, typically when we've had a big slip in the theoretical value. Again, I've not managed to report these with great regularity. The site I use typically takes a few days to get their indexes refreshed, so you shouldn't expect the HPI values until about the 10th of the month. Decided to start posting these monthly as I'm now calculating the loan to value LTV.

Financial Bliss.

financialbliss

No time like the present, so let's get some energy stats out:

Scottish Power were in the press recently saying they would pay up to 3% interest on credit balances over £133:

http://www.thisismoney.co.uk/consumer/bills/article.html?in_article_id=481252&in_page_id=510

so with that in mind, I've started reporting the account balance in the totals section.

Electric (Units / Cost):

• January: 331 / 36.04
• February: 313 / 33.77
• March: 295 / 32.90

Gas (Units / Cost):

• January: 65 / 68.22
• February: 55 / 57.53
• March: 42 / 45.49

Total, ie Electric and Gas (Units / Cost / Balance)

• January: 396 / 104.26 / 22.75
• February: 368 / 91.31 / 8.45
• March: 337 / 78.39 / 7.06

We're currently paying £77 a month for electric and gas and the £7.06 was the credit amount reported this evening when I put the meter readings in.

FB.

rca779

financialbliss wrote: »

Electric (Units / Cost):

• January: 31 / 36.04
• February: 13 / 33.77
• March: 295 / 32.90

Hi FB,

I know how fanatical you are with your figues, so the electric figues you've posted don't seem to add-up?

Jan: 31 units @ £36.04
Feb: 13 units @ £33.77
Mar: 295 units @ £32.90

financialbliss

rca779 wrote: »

Hi FB,

I know how fanatical you are with your figues, so the electric figues you've posted don't seem to add-up?

Jan: 31 units @ £36.04
Feb: 13 units @ £33.77
Mar: 295 units @ £32.90

Doh!

That will be a typo. I'll just see if the unit info is available on the Scottish Power site and update now if I can, otherwise I'll have to update this evening...

FB.

rca779

AHA, now it makes more sense, nice one FB!

financialbliss

The site I use to calculate our house price via the house price index was updated today. Despite the Nationwide index reporting an increase for March, the Halifax index (that I use) dropped, therefore the our theoretical value dropped in March.

2008 year end house value: 232,022.54

Month: Change / Value / LTV

January: 1,990.83 / 234,013.37 / 24.94%
February: 859.68 / 233,153.69 / 24.63%
March: 3,167.24 / 229,986.45 / 24.65%


I take a snapshot of the mortgage each Sunday and in conjunction with the house price, I can calculate our Loan To Value (LTV).

So, year to date, we're down by 2,036 in value. LTV staying roughly the same - despite the mortgage going down month on month, the value is too!

@rca779 - double checked figures as I posted and they're correct.

FB.