Long term MFW - 3 year starter plan
greyhoundgirl
Forumite 5 Posts
Hello everyone,
I'm a longtime lurker on this forum, after reviewing the bank accounts today I've finally decided to stop procrastinating and start a diary :j
So, basics first, our household consists of me, my BF, a greyhound, a cat and 2 chickens who think they're in charge...we are definitely done for pets now!
This is our first house which we bought 2 years ago for £202,500 with a mortgage of £127,500. So far I have overpaid around £5,000 since we started in odd bits and pieces, but I would like to get a bit more organised with the budget so I can start setting an amount aside every month to start cracking down on it. BF lives in his overdraft at the moment but is working to get out of it, I've shown him the overpayment calculator where if we overpay £500 a month the mortgage will be gone in 10 years...so he is aware and vaguely on board but it will be mostly me doing the overpaying.
Anyway, the possible future plans are...number one: we could stay in this house for a long time, it's a 3 bed so enough room for kids :eek: that's not on the cards for at least another few years yet though! However, plan number 2 is we have been pondering a move down to Cornwall at some point, OH has family that live down there and it would be a nice change of pace.
So, back to the numbers, the mortgage is currently 2 years through a 5 year fix at 2.74% and standing at £114,562, I am hoping to be able to get it to around £90k by the time the fix is up (secretly aiming for nearer £85k) so either we have under 50% LTV if we decide to re-mortgage and stay where we are or we have enough equity to lower the mortgage by a chunk if we go to Cornwall - if we move it's likely we will both take pay cuts so we will need lower the monthly payments.
After much playing with the overpayment calculators, I think I will need to overpay around £350 per month to get to £90k in 3 years time (or £500 to get to £85k). This should be doable...ish..maybe...
I will dig out all the bills and do an SoA at some point, I know food spends are the worst culprit and I am trying to keep an eye on these...but when pizza calls
Anyway enough rambling for now, I hope I haven't bored you too much and nice to meet you all!
greyhoundgirl x
I'm a longtime lurker on this forum, after reviewing the bank accounts today I've finally decided to stop procrastinating and start a diary :j
So, basics first, our household consists of me, my BF, a greyhound, a cat and 2 chickens who think they're in charge...we are definitely done for pets now!
This is our first house which we bought 2 years ago for £202,500 with a mortgage of £127,500. So far I have overpaid around £5,000 since we started in odd bits and pieces, but I would like to get a bit more organised with the budget so I can start setting an amount aside every month to start cracking down on it. BF lives in his overdraft at the moment but is working to get out of it, I've shown him the overpayment calculator where if we overpay £500 a month the mortgage will be gone in 10 years...so he is aware and vaguely on board but it will be mostly me doing the overpaying.
Anyway, the possible future plans are...number one: we could stay in this house for a long time, it's a 3 bed so enough room for kids :eek: that's not on the cards for at least another few years yet though! However, plan number 2 is we have been pondering a move down to Cornwall at some point, OH has family that live down there and it would be a nice change of pace.
So, back to the numbers, the mortgage is currently 2 years through a 5 year fix at 2.74% and standing at £114,562, I am hoping to be able to get it to around £90k by the time the fix is up (secretly aiming for nearer £85k) so either we have under 50% LTV if we decide to re-mortgage and stay where we are or we have enough equity to lower the mortgage by a chunk if we go to Cornwall - if we move it's likely we will both take pay cuts so we will need lower the monthly payments.
After much playing with the overpayment calculators, I think I will need to overpay around £350 per month to get to £90k in 3 years time (or £500 to get to £85k). This should be doable...ish..maybe...
I will dig out all the bills and do an SoA at some point, I know food spends are the worst culprit and I am trying to keep an eye on these...but when pizza calls
Anyway enough rambling for now, I hope I haven't bored you too much and nice to meet you all!
greyhoundgirl x
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Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1730
Partners monthly income after tax....... 1500
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3230
Monthly Expense Details
Mortgage................................ 587.5
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 138
Electricity............................. 35
Gas..................................... 28
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 0
Mobile phone............................ 17.98
TV Licence.............................. 12.25
Satellite/Cable TV...................... 9.99
Internet Services....................... 37.95
Groceries etc. ......................... 300
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 12.5
Car Insurance........................... 18.5
Car maintenance (including MOT)......... 17.33
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 21.66
Buildings insurance..................... 8.11
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 500
Savings................................. 100
Total monthly expenses.................. 1989.77
Assets
Cash.................................... 10258.1
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 220758.1
Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 114743...(587.5)....2.74
Total secured & HP debts...... 114743....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-
Monthly Budget Summary
Total monthly income.................... 3,230
Expenses (including HP & secured debts). 1,989.77
Available for debt repayments........... 1,240.23
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 1,240.23
Personal Balance Sheet Summary
Total assets (things you own)........... 220,758.1
Total HP & Secured debt................. -114,743
Total Unsecured debt.................... -0
Net Assets.............................. 106,015.1
Created using the SOA calculator
Reproduced on Moneysavingexpert with permission.
Income £1730 (this is also an estimated guess at the moment as I've just had a pay rise so haven't had a payday with the new amount yet! This will also be going up in April next year to around £1825 - another guess at the moment).
Joint a/c £600 - covers mortgage/bills & food (me & BF both put this amount in).
Savings £500 - regular monthly saver. I have been doing this for over a year to build up an emergency funds after we bought our house, I have one easy access savings account with around £5500 in it and another regular monthly saver at £1500 which I am adding to. The account pays interest at 5% for a year so I will keep doing this until the year is up and then transfer it into the easy access account to wait until it is needed. (Hopefully never, hang in there boiler!)
Savings £100 - general holiday/presents/dentist. This goes in every 4 weeks so adds up to £1300 over a year. Have only recently started doing this and hoping there will be a surplus to throw at the mortgage!
Petrol £60 ish a month.
Mobile phone bill £17.98
Which leaves £452.02 left over. I need to start getting cash out for spending money as I don't keep track of where it all goes, I am generally quite good and my current account builds up so I can transfer some into savings etc, but need to get a closer eye on it. I would estimate I spend around £200/£250 on clothes/entertainment a month so around £250 left for the mortgage.
Also, I get paid every 4 weeks so 13 times in a year. I budget monthly so the month where I get paid twice is like a bonus and generally goes straight off the mortgage/into savings.
So, if I add in my extra pay day £1730 / 12 is £144 per month, plus £250 is £394 per month to overpay. Hopefully with some hacking of the food bill we will also start building up a surplus in the joint account which I can also use against the mortgage to get up higher towards the £500 p/m aim.
I am tempted to put less into the regular saver and to put it against the mortgage instead, but the interest rate is v good and I'm not quite comfy with the level of savings we have available in case we had a triple whammy of car blowing up, boiler going and vet bill. I'm planning on getting it to around £10-£12k, then I'll reduce the amount that goes into savings and concentrate more on the mortgage. From the SoA it looks like we have £10k of savings already but £3k of this is for me to do a professional qualification so will be paying this out soon
So, plan is to get £50 cash out per week and not to use the debit card! I will probably fail at this next week already as we have a week off and planning on doing all our Christmas shopping, but then at least it's done and the rest of the month can be cheap. Work xmas dinner & party already paid for and have a dress I can wear so shouldn't need to buy any clothes... she says optimistically!
Right, off to take the dog out and wrap up very warm!
greyhoundgirl x
I like your cash idea, I tried that once will envelopes for different categories for the month but go so confused! I also like having a bank statement as a record of what I spend where, but really if cash limits spending that is the end goal anyway, so I might join you!
Wishing you luck in your journey!
:-)
I don't normally have cash too much so I think I'll start just getting one amount out a week for all entertainment/food out/clothes to try and keep it simple. Hopefully will help stop the little spends which add up to a lot which I don't realise as I don't keep a close eye on my bank statement
Good luck with your journey!
greyhoundgirl x
On the Shared SOA the obvious thing missing is the OH overdraft and any charges on that as those charges eat cash.
On the OD balance that is like a negative saving or a regular debt so you need cash to pay it off.
an unsecured debt line with the amount you are trying to reduce it each month can represent that outgoing to give a more realistic
Amount left after debt repayments.....
The net balance goes down each month(less charges) if you do reduce it if not then the money got spent elsewhere and the diary should identify that.
What you might want to do is a mini SOA for just this money to make sure it is enough
I counted
Mortgage................................ 587.5
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 138
Electricity............................. 35
Gas..................................... 28
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 0
Mobile phone............................ 17.98
TV Licence.............................. 12.25
Satellite/Cable TV...................... 9.99
Internet Services....................... 37.95
Groceries etc. ......................... 300
Buildings insurance..................... 8.11
As a starter that is £1210 already more than the amount you are putting in. (if you include the pets costs if they are shared you are well short)
Does it really last the month?
I would up the amount so you start to grow a surplus in case of a big shop....
......................
What I found useful was to split emergency funds into 2 pots.
One I called the disaster fund which was to cover expenses if there was a loss of income.
6 months min to cover all expenses on total loss of both incomes
If you take out the savings your current spends are around £1400pm so you need around £8.5k, this a pot you hope you never have to use and if it is just one income it lasts a lot longer.
Next is the real emergency fund this is to cover the unexpected and unplanned as this is a cashflow issue it does not have to be that big if you have surplus income you just stop saving/overpaying to cover the bill with the help of a backup pot.
With house/car/pets if you got a big set of bills say £2k, with savings rate of £500pm you can cover that in 4 months if you had £1k saved 2 months and another 2 to restore the £1k
I would say with £10k in your pot you have both emergency and disaster covered and can start diverting to longer term goals like overpaying and pensions.
Now that only works if the SOA has all the planned and actual expenses are on it, this is where analysis is needed to reduce the risks of unexpected and unplanned.
Start with the car, at £500 asset value is suspect it is not new and might need things doing, you have £17.33pm/£208py which I suspect is very low even if you are doing the work yourself.
I work on 1 tyre a year, an MOT and a service + a bit are you doing that for £200? use the last couple of years for a guess if needed.
Then there is the biggy nearly everyone forgets, cars don't last for ever, you need an entry for replacement, some lump them together to build up the pot when the bills get to big there is the cash to replace.
Same for the house have a look around and try to think of the things you will be doing in the next 12 month and longer if you can, for example any decorating planned stick it down even if its just £10pm to start with for some paint later in the year.
Any other spends planned or things you can see might need money in your current 3 year plan window, get them on the SOA.
eg. I think everyone should plan to replace their white goods over a 10year period(if thye last longer great), most people have £1k-£3k worth when you add them, that's a min of £10pm, if already older then the pot needs to be bigger sooner.
one trick with SOA is under estimate the income and overestimate the bills.
if it adds up and you got something wrong there is a greater chance of spare money.
£3k of this is for me to do a professional qualification so will be paying this out soon
you can treat this in a few different ways, if it is committed money you can just take it off the SOA or put a debt entry so the net assets balance.
If you have visibility of future similar spends put them on as spend/saving goal to keep the cashflow picture more realistic.
Since I last posted, we had a few ups and downs but overall managed to overpay around £1500 last year. This isn't as much as I've managed before but we had vets bills of a few grand :eek: which somewhat scuppered the plans, but at least they were all covered by the emergency fund. We unfortunately lost our 12 year old greyhound, but since gained a now 10 month old Labrador, so should probably change my username :rotfl: we had him since 10 weeks so it's been interesting, I'm still wondering if we could hire him out for demolitions with the amount of stuff he's destroyed!
Anyway, updated numbers are as follows:
- mortgage now down to £107,823 as of today. We have about 18 months left on our fix at which point I would like to be around £95,000 when we remortgage. I currently put £300 a month into a separate savings account and every 2 months overpay the £600 (with our bank you have to overpay at least £500 or it just takes it off your next normal mortgage payment, quite annoying!)
- emergency fund/new kitchen savings currently at £13,942, took a bit of a battering last year so working this back up to about £15,000. I also have a regular saver with £2,250 in it so once this matures in June I'll transfer it in. I currently pay £300 a month into emergency fund and £250 into the regular saver which earns 5%. Once the regular saver matures I'll probably open another one if the deal is still going but drop the payments direct to the emergency fund now it's recovered a bit!
- S&S ISA - only just opened this and just going to add £100 a month at the moment, am completely new to investing but thought I'd better start earlier rather than later...
Anyway, that's about it for now, time to go for a run...in the cold
greyhoundgirl x