Thirty something dreaming of not paying mortgage 2 March 2019 at 2:00PM edited 18 September 2021 at 4:33PM in Mortgage-free wannabe 315 replies 26.1K views

kaycastle

Part 3: All the way to 5 figures in 5 years

I'm now no longer in my twenties so updated the title of this topic

We've gone from a mortgage of £228k at the end of 2017 to ~£184k so I'm really pleased with how much we've done there and its so nice to see us heading further away from £200k.

We're expecting our first child and in order to make sure we have flexibility after maternity leave I've switched to piling everything into savings and aiming for mortgage neutral - that way we can divert money if required as I think I will likely go back part time/unsure how much childcare will cost us.

We'll have about £30k in savings by the time I'm on maternity leave. We are at £22k right now. According to the budget I'm not expecting to have to dip into these savings much during maternity. So hopefully should have the bulk of it to be free to make the best choice for us. Whatever is leftover can go towards loft extension fund and mortgage neutrality.

I do need to keep in mind that by the time we have a second child we will need ~£45k for a loft extension which I'm determined to save the money for as I'm loathe to increase the mortgage.

The mortgage won't move too much until after maternity leave - it will be around ~£172k at that point.


Reflection on previous story:

• For the last ~18 months I'd been overpaying the mortgage £1000 extra each month.
• In 2020 I did get nice and healthy - I even did a 10 mile run!
• Oh and we never did get to go on those two holidays we booked for the first time in ages due to pandemic But got all money back in the end I guess.

Previous story:
Part 2: All the way to 5 figures in 5 years
Summary of first 2 years
- Found our forever and first home in the south east
- Put down a 40k deposit for a mortgage of 228k!! Wahhhh! Was very sad when all that money went out the account
- Home has needed a lot of work so we've spent the last 2 years stripping walls, and working really hard. Most recent has been putting in an absolutely stunning kitchen ( so exciting) and thats been the biggest spend and last big spend for a while!!
- In our mid-late 20s, so really proud and happy that I'm happily married and we saved so much for our home.
- Just remortgaged on a fixed rate for 5 years

The year of 2020

- My goal after reading some inspiring diaries is to get the mortgage under £100,000 by the end of the 5 year of term!! Its such a crazy goal, I'm both nervous and excited. The mortgage is around £208,500 (haven't checked this month). So yep, a really really long way to go.
- I'm about to start a new job and its more than I've ever earned before!! I'll be bringing home over £3000 a month which is just crazy...ahhh!
- We've treated ourselves to two holidays abroad which we haven't done in years and feel like we really need those to have a bit of fun and adventure. So excited to have proper time away which isn't time off painting!!!
- I want to get super fit this year and healthy so I can live my life to the fullest. I've started doing HIIT in the past week and being really healthy in my diet.

The big goal

My biggest reason for paying off the mortgage is being able to work less and just having freedom of choice. Security for when we're older is such a big thing for me. I want to avoid just upgrading house as salary grows - that would be an easy thing to do but I want to have financial independence more than anything.

My current total savings: £9050

MrSaver96

With your pension, can you contribute more with immediate effect? You should seek to maximise your contributions so as to maximise employer contributions (up to whatever they are willing to match). Start that now and you’ll thanks yourself in 20-30 years time!

ebam_uk

kaycastle wrote: »

I've been stalking diaries for a while now. And have gained a lot of tips but I'm still not doing as well as I hoped and know there are things I could do better. So by starting this diary I'm hoping it will encourage me to just keep getting even better at overpayments.

I live in the south east, married and I'm in my late 20s. I'm a good saver but I could be better at knowing where my money goes. My big dream is to overpay the mortgage and have a healthy pension so we can retire really early. I'm not a big spender so hoping this is achievable if I'm good!

We love our home - We picked it so that we could live in until we retire and downsize as the fees/hassle is so crazy. All we will need to accommodate our future family is a loft conversion and we want to to re-do the kitchen hence the massive savings I'm putting away. I would never want to just keep growing my house/debt as we grow older.

We brought our house for £269,000 and started mortgage of £228,041 in October 2017. Tried to save as much deposit as we could and couldn't wait to stop renting so just went for it finally.

Money details:
My husband and I go 50/50 on mortgage and we roughly split up the bills evenly, he pays more of the council tax.
My fixed costs each month:
My half of Mortgage: £455.00
My portion of council tax: £44.00
I pay for BT (internet): £33.99
My mobile: £15.60 (apparently due to increase this year bleh)
I pay for gas/electricty: £55.00
My mortgage overpayment: £300.00 (I try to treat this as fixed so I never stop! :j )
Train to work: £181.20 (Always increasing. Even with 15% discount the price has gone up over £20 in 2 years)
Gym: £42.00 (Cancelling this from April 2019. Probably the most silly decision I've made in the last few years)
Netflix: £5.99
Transfer to savings accounts: £650

My income annually:
£38900 (Will decrease by 2% as part of salary sacrifice pension from this April but I think I am getting a pay rise too so we'll see how that pans out!)

My current total savings: £6500

My money left over for food/entertainment each month:
£563.58

I want to get better at tracking where that £563.58 goes!! It doesn't all go and my money does tend to trickle up and the extra leftover covers the bills that aren't monthly like water bill twice a year and buildings insurance etc. And also I try to use this for weekends away/holiday budget. I think I go to the pub too much. Hoping this diary will make me a bit more accountable for myself on this front!

I'm also trying to make sure our LTV is really good for when our fixed term is up in October 2019. But I also really want to do our kitchen. Not sure whether to aim for the increase in value more - we've done a lot of work in the past 2 years. Re-did the bathroom and toilet...they were absolutely awful with carpets on the floor. Decisions. Decisions. Ahh.

Mortgage is at £215,765.98 as of February.

With my over payments apparently I'll be mortgage free 7 years earlier (if I've calculated correctly) so some time around 2036 when I am 44 but I want to aim for below 40. If that's even possible somehow.

I need to start seriously thinking more about pension - from April my employer's contribution will be 6% and mine 2% so a total of 8%. I did the good thing in the last few months of tracking down one old pension pot I had from first job which was about £360 and almost finished the transfer process into my one main pot. My pension pot is about £5000 currently.

Hi

Well done so far, you are doing well, definitely look to either get a SIPP and/or maximize more of your pension. Also look to up your salary and get a better pension deal if you switch jobs and up your salary in the future.

Put any excess maybe like (£100) per month in a ftse tracker fund too if you can.

Are you planning on having kids? Think about childcare vouchers too!

kaycastle

Hiya MrSaver96. I'm not sure but I will ask next week.
Whenever I look at pension calculators it seems so impossible I'm after about an income of £16,000 a year (provided I've paid off mortgage and done everything I need house wise)... and according to the calculators if I'm doing it right I need to be doing a 20% pension contribution at least and trying to get my employer up to 8%.
I think I need to make sure I'm filling in this calculator right. Although technically I save 28% of my monthly income a month at the moment and thats because I need that new kitchen and loft conversion...once thats gone I can greatly reduce my need for saving cash and up pension contribution.

kaycastle

ebam_uk wrote: »

Hi

Well done so far, you are doing well, definitely look to either get a SIPP and/or maximize more of your pension. Also look to up your salary and get a better pension deal if you switch jobs and up your salary in the future.

Put any excess maybe like (£100) per month in a ftse tracker fund too if you can.

Are you planning on having kids? Think about childcare vouchers too!

Thank you There are childcare vouchers at my current workplace - we're planning on having 2 kids. I think I'm on a good path to promotion at the moment but that's never guaranteed. I think if I wanted a higher amount I'd have to go to London but then the train fee would go up and I know if I worked in London my spending on food/drinks would increase. But If I don't get to the next step in my career within the next year I'll definitely be looking elsewhere.

I will have a read of ftse tracker funds - is that pretty safe then?

newgirly

Hi kaycastle, best of luck with your new diary

gallygirl

kaycastle wrote: »

I will have a read of ftse tracker funds - is that pretty safe then?

If you're in it for the long haul, yes, but the value of funds can fall bla bla bla. I wouldn't just look at FTSE trackers - there are all sorts out there - global, US, emerging markets etc. And make sure it's a low cost tracker such as Vanguard. Where is your current pension invested? Can you amend this if required?

With regards to your left over money, if I was you I would add up all the non-monthly bills like water and insurance and pay that amount into a separate savings account every month. That stops 'lumpy' bills and you can 'borrow' from the water pot to pay the insurance etc. I think I had about eight 'pots' when I did this, including dentist, Christmas/birthdays, house insurance, car insurance/maintenance etc. Took a while to get a spreadsheet set up (you are using spreadsheets aren't you _pale_) that I was happy with but then it was easy to update/monitor and it was a buzz at the end of the year when I could overpay the surplus .Then what is left is easier to monitor and also hold yourself accountable - you can't 'lose' £50 spent on junk and justify to yourself you had a heavy month bills wise .

I agree with advice given elsewhere that you should prioritise pensions over mortgage overpayments but also completely understand you wanting to ditch the debt asap. Also LTV is important - how close are you to dropping into another bracket by October?

In your position I'd be sticking most of the regular non-house savings into a pension and use any 'windfalls' to overpay the mortgage. Some examples:
Council tax free months
Quidco/topcashback payments
Money off vouchers, e.g. £5 off £40 spend or even 50p off - overpay the mortgage by the same amount
Rewarding yourself for not buying that cup of coffee etc.
I don't know if you've come across the term Tilly Tidy on any diaries? Basically Tilly, who used to be active on here while she still had a mortgage, used to 'tidy' her bank account every day by rounding down to the next whole pound and either pay the difference straight off the mortgage or transfer to a savings account and then make a larger payment. You could do it weekly if daily is too much and do a Mega Tilly Tidy to the next £5 or £10. With internet banking it takes seconds to do and keeps you motivated.

The most important thing though is that you're thinking and planning ahead - well done :j.

kaycastle

Thanks newgirly

gallygirl wrote: »

If you're in it for the long haul, yes, but the value of funds can fall bla bla bla. I wouldn't just look at FTSE trackers - there are all sorts out there - global, US, emerging markets etc. And make sure it's a low cost tracker such as Vanguard. Where is your current pension invested? Can you amend this if required?

Its the "people's pension" its invested in at the moment. I'll enquire whether the provider can be amended as I'm not 100% sure on that. Are there any providers that are considered particularly good?

gallygirl wrote: »

With regards to your left over money, if I was you I would add up all the non-monthly bills like water and insurance and pay that amount into a separate savings account every month. That stops 'lumpy' bills and you can 'borrow' from the water pot to pay the insurance etc. I think I had about eight 'pots' when I did this, including dentist, Christmas/birthdays, house insurance, car insurance/maintenance etc. Took a while to get a spreadsheet set up (you are using spreadsheets aren't you _pale_) that I was happy with but then it was easy to update/monitor and it was a buzz at the end of the year when I could overpay the surplus .Then what is left is easier to monitor and also hold yourself accountable - you can't 'lose' £50 spent on junk and justify to yourself you had a heavy month bills wise .

I do indeed have a spreadsheet, my work involves being good at these so that comes in handy. I'm intrigued by these pots, I just got a notification about my next dentist appointment next week! I'm going to have a think about this as I think I'll need to bring my OH a bit more on board to do that properly. We still have separate accounts - I've instructed him on a monthly transfer to savings but beyond that not much as he finds this kind of thing a lot less fun then I do. It is raining today though....so I think I'll go bribe him with a cup of tea

gallygirl wrote: »

I agree with advice given elsewhere that you should prioritise pensions over mortgage overpayments but also completely understand you wanting to ditch the debt asap. Also LTV is important - how close are you to dropping into another bracket by October?

In your position I'd be sticking most of the regular non-house savings into a pension and use any 'windfalls' to overpay the mortgage. Some examples:
Council tax free months
Quidco/topcashback payments
Money off vouchers, e.g. £5 off £40 spend or even 50p off - overpay the mortgage by the same amount
Rewarding yourself for not buying that cup of coffee etc.
I don't know if you've come across the term Tilly Tidy on any diaries? Basically Tilly, who used to be active on here while she still had a mortgage, used to 'tidy' her bank account every day by rounding down to the next whole pound and either pay the difference straight off the mortgage or transfer to a savings account and then make a larger payment. You could do it weekly if daily is too much and do a Mega Tilly Tidy to the next £5 or £10. With internet banking it takes seconds to do and keeps you motivated.

The most important thing though is that you're thinking and planning ahead - well done :j.

I love the sound of a Tilly Tidy - thats brilliant! That appeals to my brain so much

When you say stick my regular savings into a pension - do you mean my workplace savings or one of those SIPP personal pension things?

LTV - so at the moment I've come down from 85% in the beginning to about 80% at the moment. To get down to 75% I'd need my mortgage to be £201,750. Currently it is £215,765.98 as of February. And the mortgage is up in October. I think I'd be about 7.5k off of that even with overpayments at the moment. But my savings at that time will be more than the amount I'm short for if I want to get to 75%. Getting to this does look like it might bring down the monthly payments by about £60 which looks nice to have a monthly mortgage payment in the 800s rather than 900s :P

And also when I do my LTV projections, I know it sounds silly but I don't take into account the value increasing as I find that too subjective and I just tell myself if the value has increased then that's a bonus. We have redone bathrooms and a few other light improvements and we are in the south east in an area that usually trickles up in value but I'm just not willing to put it into my calculations as something I "know".

gallygirl

Its the "people's pension" its invested in at the moment. I'll enquire whether the provider can be amended as I'm not 100% sure on that. Are there any providers that are considered particularly good?

DK anything about that I'm afraid, mine is with HL but I think there are better ones. Maybe another pensions board question?

When you say stick my regular savings into a pension - do you mean my workplace savings or one of those SIPP personal pension things?

Don't suppose it really matters though I liked to keep mine separate till I went into drawdown. Maybe because it meant extra spreadsheeting opportunities :rotfl:. Another pensions board question?

LTV - so at the moment I've come down from 85% in the beginning to about 80% at the moment. To get down to 75% I'd need my mortgage to be £201,750. Currently it is £215,765.98 as of February. And the mortgage is up in October. I think I'd be about 7.5k off of that even with overpayments at the moment. But my savings at that time will be more than the amount I'm short for if I want to get to 75%. Getting to this does look like it might bring down the monthly payments by about £60 which looks nice to have a monthly mortgage payment in the 800s rather than 900s :P

And also when I do my LTV projections, I know it sounds silly but I don't take into account the value increasing as I find that too subjective and I just tell myself if the value has increased then that's a bonus. We have redone bathrooms and a few other light improvements and we are in the south east in an area that usually trickles up in value but I'm just not willing to put it into my calculations as something I "know".

Oh, worth going for the better LTV then. I'm with you on house price increases, I only looked at it once a year really.



Lots to think about, exciting times!

kaycastle

Thanks Gallygirl.

I did pensions calculations earlier for both myself and my OH. And we've decided to up our pension salary sacrifice contributions:
- I will increase mine from 2% to 14% (if I can, I still need to check with work this week)
- He will increase from 4.5% to 10% (he can as he recently got a form for doing that)

If we stuck with this, not counting salary increases or anything, at 55 we would get about £90k between us as our 25% lump sump and then just over £10,000 a year after that. Which was a vast improvement on the current projection of about £30,000 between us and £1000 a year or something ridiculous like that.
That's the most we can achieve right now while still doing current overpayments and putting away savings, and having a few small holidays/city breaks a year. But once we've paid for kitchen and loft conversion over the next 10 years we should then be able to up that even more.
And we're on track to pay off mortgage with those overpayments by at least 44 so as soon as that is done everything can be thrown at pension and savings to possibly try to get a frugal type of early retirement by about 50.

Money will be tight by going up to 14% but that will be with the £300 over payment per month and the £650 per month savings still. I'll see how it goes and see whether I can save anymore.

I think I'll assess heavily this week and ask a few questions on the pensions board too. But for now I'm going to play a board game and have some free beer that we won recently yay. But I've decided for Lent I'm going to give up weekday drinking and also continue my running, especially as I'll be cancelling my gym membership. Although I do need new running shoes as I've got shin splints from mine and they are falling apart. Will see how the month pans out

Also I went through budget and his moneys for the first time in a while and discovered my dear husband had still been paying a cancelled insurance policy at £28 a month for the past 2 years!!!! At least that has stopped now but ahhhh.

Mortgage_Minimiser

You are really getting on top of this whole MF thing now... I love reading your diary!

Boo to the insurance payment, but yay to having cancelled now. Look forwards not backwards..... even lok at what that £28 per month would do to the mortgage

Keep it up!

MM
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