Single Parent with Mortgage

JillyC8

I've been reading up on some of the past posts re overpaying mortgages and had no idea there was such a community on here aimed at this - so inspiring. Quick question: do you have to ring the lender every time you make a ensure the e tea comes off the capital? I can make an over payment to my lender on the app, but not sure if they'll just automatically adjust the next month's payment (I read somewhere they do that).

JillyC8

Another thing; how much 'emergency fund' is recommended? I only have around 2 months and want to save at least three/four but also can't wait to start overpaying the mortgage after reading so many success stories on here!

greent

JillyC8 wrote: »

I've been reading up on some of the past posts re overpaying mortgages and had no idea there was such a community on here aimed at this - so inspiring. Quick question: do you have to ring the lender every time you make a ensure the e tea comes off the capital? I can make an over payment to my lender on the app, but not sure if they'll just automatically adjust the next month's payment (I read somewhere they do that).

Lenders differ with what they automatically do, so your best bet is to ask them (or see if it's easily seen on your paperwork - t&c are much clearer nowadays than of old! ) Our lender only adjusts the payment if you ask them or if you make an OP of £1000 or more - so I keep all my OPs to less than £1k and then my payment stays the same and I overpay by that little bit extra each month too

I thought that most lenders automatically took OPs off the capital but have read recently on here of 1 whose lender didn't (took them as sort of prepayments for future months interest, I think) - so again, best to check with them

JillyC8 wrote: »

Another thing; how much 'emergency fund' is recommended? I only have around 2 months and want to save at least three/four but also can't wait to start overpaying the mortgage after reading so many success stories on here!

Am sure the recommended guideline is between 3 & 6 months. We've operated most of our life with less than this (and have had periods of unemployment due to redundancy) but I wouldn't recommend that! What I would say, though, is that if you were off work, your monthly outgoings do tend to be less than when in work - no commuting/ parking costs, no dry cleaning of suits, no need to buy tights (:D) - there is a cost of working so when calculating your monthly outgoings to see what size EF you need you can take that into account a little too.

However, I'm sure someone will come along who has better knowledge of me on this and be able to provide clearer guidance for you x

getmore4less

JillyC8 wrote: »

Thank you Busy Mee, I'll start a diary today! I'm pretty good at budgeting generally but have never kept a day-to-day diary. No doubt it will throw up a few surprises and I know I need to look at my grocery shopping.

Budget is really a plan of where you are going(wanting) to spend your money

Why not do a plan for 2019 and allocate all your income to tasks.
some will be obvious some will be guesses but get income==outgoings on paper for the next year.

You can then monitor the plan with a spending diary to make sure you are on track for the year.

one issue with month to month is not all spends are equal monthly.

A lot are but things like clothes come in batches, and if you go a few months without buying but still spend all the income in those months when you come to buy clothes you are short for the other things that month.

The SOA format is OK as long as you have everything that will use up money for the full year on it.

As an initial guess try to do the 2018 in/out for the year and see if you can work out where it all went.

The reality is you can do a really good job of planning till you know where it has all been going.

Once you have the list of demands on you money you can prioritize those that are important and those that could be cut back or even eliminated.

Once you have the big picture you can work out what your minimum income needs to be should you want to change jobs.

At a min you need to know what the transport cost savings will be.

debtfreewanabee is a good place for ideas.

you could post the SOA for some contructive ideas to review spending

JillyC8

Getmore4less - thank you, this all makes perfect sense ... pls could you tell me what SOA means?! Sorry just getting used to the MSE terminology.

JillyC8

Update: just talked to my lender on the phone and now have a sort code and account number so I can make overpayments. I made a small payment of £25 just to set it up and I can see this will be addictive!
I can usually put around £250 a month in savings so my thoughts are to save £200 into emergency fund each month, pay £50 off on mortgage each month and then look at ways I can pay off more by cutting back/selling on eBay etc.

greent

Is your lender the dark coloured horse one?

SOA - statement of affairs - think there's a sticky at the top of the debt free wannabe (dfw) forum? - a budget tool x

getmore4less

SOA is statement of affairs.
This is a good one and people are used to the format it is used on debtfreewanabee a lot.
http://www.stoozing.com/calculator/soa.php

It is an way to overview finances in a fairly standard format using averages of a full years worth on money on a per month basis.

other formats and budget techniques are just as good and better if you want more detailed look at what is going on.

It can be a good start to collect all the basic information before advancing to other tools or spreadsheets.

The list of things can be expanded as required some categories can be quite broad like groceries and entertainment.

if these are too big split them down groceries could be household, food, alcohol.
Also something may fall into a group but are very much discretionary eg a takeaway is really a luxury, although food you may want to identify a annual budget for those separate from the food.
.......

I think of two funds
Emergency is the unforeseen expense
Disaster is loss of income

emergency fund need to be big enough to cover a few things going wrong and can be topped up.

the disaster fund need to be big enough to cover the expenses till it can be restored.

with benefits it might not need to be 100% cover each month eg 6 months JSA is part of the pot.

JillyC8

Greent - my bank is the Spanish city one :-)
Getmore4less - Thanks for the info, I will look at the link you've sent. I've been using the budget planner from the MSE website which I downloaded many years ago. It allows me to add the tiniest expenses that I might not otherwise have thought of, so is a good tool. I will have a look at the more updated too.s on your links to see if they are more useful.

JillyC8

Getmore4less - excellent point re jobseekers.