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Building Up Some Options!

edited 9 June 2018 at 9:48AM in Mortgage-Free Wannabe
14 replies 2.1K views
courage2changecourage2change Forumite
25 Posts
edited 9 June 2018 at 9:48AM in Mortgage-Free Wannabe
Hi Guys


Been a long time since I posted but have remained a lurker behind the scenes and have still been working on the money stuff a lot - today is the day for a shiny new diary :)


Current situation is as follows:


House value = £200,000 and Mortgage = £135,730 and 1.5 years into a 5 year fix, 14.5 years to go. I've overpaid £11k since 2015 and re-mortgaged from an original 40 year term!!!!! down to 16 years at the end of 2016. End age (excluding OPs within this fix of about £3k) is 49. I am single with a DD.


Emergency Fund = £10,000 (around 6 months of bare bone expenses in a standard savings account - might move to premium bonds? - could end up a millionaire haha)


Vested Shares = £4,000 net of tax. Keeping these in equity fund for now but may use to pay CC depending on remaining balance in December 2018.


Slush Funds = £3,790 - will provide the split of this (various pots) in a later post. One of my older diaries talks about not being able to get ahead due to annual expenses not being planned for. I'm now a massive convert into monthly savings for annual expected and unexpected expenses and using this approach has made such a difference to my money situation.


0% Credit Card = £8,900 - I want this GONE by the end of 2018 to allow me to start throwing at savings / the mortgage.


Pension - as well as the slush funds, one change I've made is to start paying more attention to my retirement goals, hence the title about options. I've always had a 10% standard (non contributory :)) pension in place but have recently started adding 5% which also gets matched - really annoyed I haven't been doing this for years. 20% gross now in pension for a 5% contribution. Once the debt is paid I will probably add another 5% to make a 25% gross monthly contribution.


Before, my only focus was on mortgage overpayments - I feel I have taken a bit of a more balanced approach now (and surprised myself into the bargain by doing this as I'm generally all or nothing!).


Plan:
1a. Never take on any more debt and always save cash for the things I want / need. This is principle number 1 for me now.
1b. Always keep EF and slush funds ahead of the game / top up where needed
2. Pay off £8900 CC by end 2018. I think I have a plan... I've carried between £11k and £8k for years - always 0% paying between £100 and £300 a month whilst working on other goals and I tart it around so I don't pay interest. I'm fed up carrying it! I've reduced it £600 in the last month.
3. Jan 19 - Increase retirement contributions to 25%
4. Throw every last spare penny at the mortgage once 2 and 3 complete. Since I started this plan I've always still rounded down the mortgage to the nearest £100 so usually OPing between £30 and £80 a month.

I would love to be mortgage free (or neutral) by age 40 in 5 years. It would be a stretch but if I can re-mortgage for a final fix or some sort in 3.5 years at the end of this one I would be happy! There is also the option of downsizing and paying cash as this house is fairly large and my overall goals and aspirations have changed as I get older. Would be happy being mortgage free somewhere homey and comfortable and maybe this means downsizing to get that more quickly...


It roughly follows the Dave Ramsey plan (been watching a lot of his stuff recently) but kinda not because I'm far too scared to pay off the 0% with the savings that have taken me a few years to build up! His step 2 is to get out of debt with only a £1k emergency fund, so essentially I could do this today leaving me with around £5k (not including slush funds) - but I just can't.
So I'm compromising by stopping OPs (but not pension contributions which he also says we should do) until it's gone forever.


Hoping to post more regularly on this diary as whilst I remain focused, I'm rubbish at keeping them updated!


Happy Saturday everyone!
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Replies

  • One of the things I've done this year in terms of money overhaul was to review all direct debits / payments and made quite a lot of savings:
    a. Moved SKY from £60 a month to £20 a month for standard package / box sets for 18 months (didn't quite have the nerve to cancel in full)
    b. Used MSE energy switch and moved to a smaller supplier who haven't yet increased prices - no fix and no charge to move if they do increase prices. £75 per month gas and electric. Very aware of switching things off at socket / not leaving lights on / minimising gas use etc (easier in the Summer!)
    c. Compared for house insurance - previously £49 a month and reduced to £14 a month
    d. Cancelled £45 monthly Life Insurance that covered the mortgage. I have a work based scheme. If I leave my company I'd need to reassess.
    e. Cancelled other small things.
    f. Moved prime and a couple of other things to annual which I save for in my slush funds.
    My non mortgage direct debits (i.e. council tax, utilities, subscriptions, insurances etc.) are now £400 per month vs. around £600 same time last year.
  • beanieloubeanielou Forumite
    76.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    Happy shiny new diary.
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~**
    MFW. Finally mortgage free February 2021****
    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    It starts with you, it starts from now. *** It is ok to be me.***
    ***Keep plodding***
    Out of debt, out of danger. ***Be the difference.***
  • Thanks BeanieLou - feel very special receiving a message from you :)


    It's been quite an MSE weekend for me here in the Midlands!


    Just paid £50 off the CC = new balance £8850. This came from savings on weekly shop / not using much pocket money so far this month.


    Updated my meter readings with new provider and they said the £75 monthly DD that's just started will be too much so now reduced to £60 - will keep a close eye on this and submit reading every month but I'm really limiting usage these days. The provider hasn't yet hiked prices - they said it will be Aug or Sept before they review this so I'm ready to switch again if need be.


    Upcoming / Planned CC payments:


    I'm due a £50 credit return (been waiting nearly 2 weeks!) from old energy provider and £30 of this will round mortgage down to nearest hundred for June (and make total OP of £80 this month), £20 to CC.


    £25 MSE Energy Club Cashback - think this takes 3 months from switch? Will go straight to CC.


    Refer a friend for new energy provider - got my brother and his wife set up and we both get £50 credit at the start of July - woohoo! That will go straight to the credit card! Wonder who else I can get to sign up as the refer bonuses are currently unlimited.... !

    Hoping to save at least another £10 during next few days by not using spending pocket money (I have a daily allowance) and if so will pay it to CC


    Checked / updated budget:


    Monthly CC payment for the next 6 months will be £325.
    Plus I have a work based saver that is getting £400 a month in it from next payday on and at Xmas I can cash that 6 months out and pay it to CC.


    Determined this balance will be £0 by Christmas 2018 so I can focus on Mortgage OPs!


    Off to do some batch cooking and prep lunches for next few days.


    Have a fabulous Sunday everyone.
  • julicornjulicorn Forumite
    1.4K Posts
    1,000 Posts Third Anniversary Name Dropper Photogenic
    ✭✭✭
    Happy New diary! Sounds like you're really determined, and reducing your mortgage term from 40 to 16 years is rather impressive!
    Original mortgage: December 2017, £203,495
    MFW start: April 2018, £201,800
    Current: £113,200 (-£21,000 overpayment savings pot)
  • Thanks so much Julicorn :)


    6 years had passed from the 40 year term when I remortgaged to 16 years so really it made an overall term of 21 years maximum - which when compared to others on this forum still makes me think it's far too long!
    The 40 year term was always to get me on my feet but the original end age of 67 made me feel ill every time I thought of it! I was very house poor for the first 2 years after I moved in but my income has increased about 80% since I moved in so no excuses - it must be done :)


    I'd love to be mortgage free in 5 years.. But even if I can knock off another 6 from the 14.5 that are left it would mean 15 years in total from start to finish to pay it off.
  • beanieloubeanielou Forumite
    76.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    You are doing so well & you are so focussed :)
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~**
    MFW. Finally mortgage free February 2021****
    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    It starts with you, it starts from now. *** It is ok to be me.***
    ***Keep plodding***
    Out of debt, out of danger. ***Be the difference.***
  • Escapar2020Escapar2020 Forumite
    127 Posts
    100 Posts Second Anniversary Name Dropper
    You've made a great start! I'll be following
  • Thanks so much BeanieLou and Escapar!


    Reviewed my accounts this morning and was able to scrape together a £30 payment to CC.


    CC balance = £8,820
    Mortgage balance = £135,730


    Still waiting on the energy refund for £50 - I can see the credit still sitting on my online account so will need to chase again. That will take £20 off CC and £30 off mortgage = round numbers :)


    Anything else I can scrape together before payday will go to CC.


    Will lay out the plan for the remaining £8.8K credit card in a post soon. Best run for now.


    Have a good day everyone!
  • CC balance of £8820 - plan to pay off by end 2018:

    +£8820 Current Balance
    -£20 Energy Refund
    -£50 CashBack for Refer a Friend - Expected July
    -£25 CashBack for Switch - Expected by end August
    -£325 End June salary
    -£100 Joint present - I will get brothers share end June
    -£1950 £325 per month for next 5 months til end 2018


    Total of above already forecast = £2470 which leaves £6350


    +£6350 New Balance excluding above
    -£4000 Shares - do I cash these at the end of the year? :(
    -£2400 Work savers scheme which I can cash at end of year


    Now.... I very badly need a new car and my main principal this year is to have no further debt! I have 120k miles on it and want to run it into the ground. I'd happily drive it forever but I'm paying more and more on maintenance...


    So within the next 6 months I want to reduce the "forecast" end 2018 balance as far below £6350 as I can so that hopefully I have enough to clear the card + also be able to buy a car at the end of the year. This leaves me with £0 debt to start the new year so I can increase pension contribution and start throwing a £750 OP a month at the mortgage!


    So the goal is £6350 to find - lets do this!
  • Afternoon All


    Saved £10 on my weekly shop by only spending £25 so paid £10 to CC.


    Mortgage Balance = £135,730
    CC Balance = £8,810
    Total Liabilities = £144,540 vs. Total Assets = £293,993.


    Net Worth = £149,453


    I've put my numbers together and worked out my net worth (including pension, savings, home equity etc.) so that it helps me feel that driving down the card, even by £10, is still helping me build up the options this diary is for! Whether I OP the card or the mortgage, it's still adding to net worth. Makes me feel better anyway :)

    Chased the £50 energy refund. They said its going through the automated payment process - I said it's not very automated if I'm still waiting 2 weeks later :) Fingers crossed it's here soon.


    Also hoping to save up to £50 on my monthly fuel and fun money allowances to allow for another payment before I get paid. Will need to wait another few days first.


    Off to catch up on some diaries. Happy Saturday!
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