Getting mortgage free ASAP (another diary thread, soz!)

Pegasaurus

Hi all,

Another diary thread. Going to record my efforts to get debt and, eventually, mortgage free on here. Hope that's not against forum rules. I figure if it feels public it's somehow more meaningful than just keeping a private diary.

Family of three. We have a good household income but we've always been appalling with money. Really wasteful, never understanding the value of money, and continually getting into a cycle of getting deep into debt for no good reason.

We have a mortgage of £314k, credit cards and overdraft of about £3k and a car on PCP that's got nearly three years left.

Rightly or wrongly, I'm putting that unsecured debt on the mortgage because the interest free periods are coming to an end - assuming that our lender agrees. All accounts will be closed as will the overdraft. After a few months I'm going to refinance the car from a PCP to an unsecured loan because we want to keep the car.

The plan then is to commit £500 a month to overpayments on the car loan, and £500 to savings so we never feel the need to borrow again.

Fingers are crossed on the mortgage. Somehow mentally it feels less claustrophobic to feel like unsecured debt is at £0 (car aside) and that we're moving forward rather than desperately trying to claw back the debt.

I feel different now. I think I've finally grown up. I've been living within our means for a couple of months now, when before even a week was beyond me. I'm determined to be good with money. Don't wish me luck, because I don't need it.

Will update once I hear about the mortgage. If it doesn't happen, then I'll need to do a snowball calculator.

Ta!

Tropically

If good luck isn't the right thing to wish you, then I wish you safe travels on your journey!

It sometimes helps to post a Statement of Accounts because people can help provide advice to cut down on spending.

Pegasaurus

Thanks! Will give it a go later. I think I've got a pretty good handle on it. Have already done stuff like trading Sky for freesat, reducing subscriptions, stopping takeaways, weekly budget setting and reviewing, etc, but you never know.

louloubelle79

All the best on your financial journey, once you have that light bulb moment its all a bit clearer isn't it!

atypicalblonde

Don't apologise for starting a diary!

It sounds like you feel in control, liberated and excited. Great start. I agree, an SoA can be very helpful. Will cheer you on from the sidelines!

Pegasaurus

Excellent. Second mortgage on the property has been agreed so high interest cards and overdraft now at 1.74%. The first part of the masterplan is happening. Slightly ironic celebrating an increased mortgage on a mortgage-free forum, but hey ho.

God it'll feel good paying everything off and closing it down once the funds have cleared. Been debating whether to keep one card with a £2k limit in case I ever need to rent a car but I think not. Safer just to close. Will leave the overdraft in place in case of a boiler failure or something though.

Sticking to the budget well. Pleasing. It's actually quite liberating when I was worried it'd feel claustrophobic. I'm saving £40 to £50 a week on food and drinks at work alone.

Boots do a few £1 sandwiches so I'm having those at lunch and it's helped anchor the value of money for me a bit. A fiver is a week's lunches, not something to be sniffed at.

Going to switch our joint account to First Direct. Smile are rubbish and it's £130 for switching. All helps. Especially when I was taxed £600 too much this month because they estimated I'd earn over £123k this year hence no personal allowance. I won't and have corrected them but I won't get it back.

Pegasaurus

Funds released the morning. Credit cards cleared and requests are in to close each account. Have reduced overdraft limit from £8,500 to £500 though there'll be a couple of hundred pounds in it at month end, so won't be in the overdraft IYSWIM.

Next steps: switch joint account to First Direct, refinance car loan once my credit rating is back to 'excellent' and then start overpaying by £500 a month whilst attempting to save a minimum of £500 a month. I know saving is almost pointless with current interest rates, but it's to save up for things like new boiler, holiday, garden renovation, etc.

Also need to sell the campervan to clear the final credit card, but it's interest free until next December and we'll get more money for it in April/May.

No more credit applications ever again is the aim. Car 1 is only 2yrs old so that'll do us for 10yrs at least, and car 2 is only used for a 5 mile roundtrip to the station every day, so even though it's 10yrs old and has 100k on the clock, it should do for a long while yet.

Pegasaurus

So, here we go:

Mortgage (£314k @ 2.79%, £35k @ 1.84%): £350,081.44
Car (PCP, to be converted into loan @ 2.8% once credit rating back to excellent): £15,521.42
Savings: £0

The plan is to sweep at least £1k a month into savings until we have a three month's expenditure emergency fund of £14.5k. Should take about 16/17 months as we have a summer hol spending pot to save for too.

Once we've got the emergency savings sorted, overpayment will commence. Probably of the car loan first, and we'll probably divert £500 a month into that, and £500 into saving for big purchases like getting the lawn converted into artificial grass (it's a swamp, and we have an enormous dog), new boiler and bathroom, etc.

Feels like we've made big progress in a short space of time. Now to keep being frugal. Nailing it!

Pegasaurus

Just a note to big up Boots' £1 sandwiches. Spending a fiver a week on work lunches when I used to spend about £10-£12 a day with coffees and breakfasts.