The Edcawber Principle

edinburgher

Cheers Beanie - a wee bit more sleep last night - but not much.

£45.36 paid off CC.

SuperSecretSquirrel

Hi Ed

On the subject of extra borrowings and possibly going IO, how risky would this be if for example you or Mrs Ed (or both!) were for whatever reason unable to work for a while? Would dropping to a single income be devastating or just an inconvenience?

We've considered taking out a mortgage to buy a bigger house ourselves, but decided to stay as we are for now. The current house is imperfect, but sufficient for our needs. We opted to stick with it for a while rather than lose our very comfortable tiny monthly outgoings.

You are definitely more adventurous and nowhere near as risk averse as me, but just throwing it out there as something to consider carefully (I'm sure you already have done, but no harm making sure!)

edinburgher

Hey SSS!

On the one hand, extra borrowing obviously increases risk (as the repayments are higher), but IO actually reduces risk (over the term of the mortgage) as you're not repaying the capital (repayments drop). Granted, there's a risk of total failure (i.e. one or more of us lose jobs long term and we can't sustain any type of mortgage), but that risk would still exist for a relatively high monthly payment mortgage regardless of rather or not it was IO.

I don't think additional borrowing per se is a big risk, as we wouldn't spend more extending than comparable houses have sold for in our neck of the woods. In the event of a catastrophe, we should at least get to keep our existing equity (£70k or so).

You have to remember that you are a bit of an outlier - most people need two incomes to pay off their homes these days. Shelter pointed out last year that almost 1/2 of private renters in England are one pay cheque away from ruin I draw what comfort I can from the fact that I've been working since 15 without being made redundant and I work in the public sector (quite hard to lose a job at all, never mind without a reasonable pay off). Mrs E's job is possibly less secure, but represents just over 40% of our wages.

You've always done very well re. earnings from what I recall and it's also worth noting that our first (cheap, haggled) flat cost 1.5x what your house did, so there's obviously a difference in local housing markets. That's not intended as excuses or whataboutery, just a reflection on the differences in our situations   I think if I was in your shoes I could afford to be very cautious as well, but living somewhere where houses are a bit dearer, I can't build in as much protection/buffer as you do. If you think I'm bad "adventurous", just think how every poor sod living in London on normal wages must feel!

I think you are secretly the guy from Retirement Investing Today, who wants to live off a 2% withdrawal rate or somesuch.

*Edit: £39.51 paid off CC - must be less adventurous

SuperSecretSquirrel

Fair point on the difference in house prices Ed...

This house was reasonably priced (as far as houses go), but the perfect house here would cost another 100k-150k on top of this one. In some other areas that might not be a big deal, but to me that's a huge amount of money! For now at least we've decided to hang tight. We might live to regret it (if house prices increase the gap will widen) but in the short term we're more focused on peace of mind.

We're quite comfortable with a pipe and slippers lifestyle in our quiet backwater, but it does mean that we'd probably have a harder time finding alternative employment if we lost our jobs. I guess this is a big part of why I'm cautious, what works for us here doesn't necessarily apply to others elsewhere!

I knew you'd have a solid answer but I do like to play devils advocate

badmemory

SuperSecretSquirrel said:

I knew you'd have a solid answer but I do like to play devils advocate

Isn't that what we are here for?  To make people think things through, to mention something they may not have thought of.  Even on very rare occasions to do the OMG no, because people do have to make their own decisions based on their own circumstances.

edinburgher

It's a huge amount of money to me as well SSS! I don't seek to minimise that, but I don't get to fret about it too much as I couldn't get a job that pays as much without a big commute. I wouldn't have been able to have Fridays with DD that way, so no regrets.

We aren't particularly "lifestyle" here, either. I think we've been to restaurants maybe 4 times in the last year, 2 of which were freebies. 

Here's hoping for a low spending FIRE for you and and outsized house prices if and when we downsize or move 

edinburgher

Absolutely exhausted this morning! Took Night Nurse capsules last night and while I don't think they made me sleepy, it is proving hard to get up today. Not ideal, DD has swimming lesson this morning.

Mrs E has been paid, our walking around net worth is now roughly -£1,000! Nearly positive!

£79.51 paid off CC. Wish I was done already, stocks and shares appear to be on sale today

Suffolk_lass

I've never really had any confidence in those paracetamol mixture remedies myself. It doesn't sound as though it really did the trick for you either. I favour two paracetamol and a goodly swig of Boots Pholcodeine BP is the best option to get a decent night's sleep when general cold and flu-like lurgy strikes (cheaper too!) - this approach was endorsed by the local pharmacist I consulted when I had my last asthma inducing lurg. 

Admirable CC attention BTW - oh, and I'm sold on the IO extension, just in case you wanted my opinion!

greent

edinburgher said:

 Wish I was done already, stocks and shares appear to be on sale today

Indeed - we put an extra £500 into husband's work share incentive thing last night (last day to top up to max levels for current tax year) (although we're not at that for this year as he's only been in it a few months) and I'm trying to figure out how much extra I can throw in Vanguard LS in the next few weeks. I think there will be some more 'discounts' to come, though... 

edinburgher

Cheers S_L - good to get feedback! Might try your tipple tonight. £34 paid off CC after some shoogling.

greent - I think you're right re. further discounts, I'll try and hold on to some cash