Mo’ mortgage mo’ problems

daisyfrau

Finally decided to start a mortgage-free wannabe diary. Hopefully keep me on track, and hopefully future-me will like seeing how far I’ve come.

Wish me luck! :money:

daisyfrau

Balance is 375k :eek:
Term is 26 years

Plus we want to extend at some point but we are willing to sacrifice that if necessary! :rotfl:

Never made an overpayment - would like to start doing this now!

beanielou

Happy shiny new diary

AnotherJoe

Are you high rate taxpayers ?

daisyfrau

Thanks BeanieLou! I hope it’s going to inspire me to keep plodding along chipping away at it!

AnotherJoe - yes both of us. Why?

Happier_Me

Because you may want to consider increasing your pension payments instead of overpaying your mortgage, to reduce the amount of 40% tax you both pay:). Assuming you don't already do this!

I understand the desire to pay off your mortgage particularly given the big number you have. There are both practical and psychological reasons for doing this and it does save money.

I'm now mortgage free but I took a more leisurely approach to getting here than I initially planned... because when I turned 40 I became obsessed with retirement planning. I redirected some of the overpayment money to addressing our pension savings gap... and I would have diverted alot more if I had paid higher rate tax. For me this journey is about becoming financially independent, whilst still having a life and finding a balance between the financial and psychologically beneficial decisions we have to make along the way. So why do you want to overpay?

If you're not already maxing out your pension savings to reduce higher rate tax, then it's worth considering this option, because it is the wiser option from a financial perspective.

daisyfrau

Thanks for that top tip! I will look into it this!

Mind you - I will be going part time from August so I will drop down back out of the higher rate band.

But the principle about looking carefully at balancing mortgage payments vs retirement planning still applies. What gets me is how much more “valuable” mortgage pounds are now vs in say 10 years relatively speaking, due to inflation. I want to get interest down and definitely overpay, but I would also hope we could invest some of that value into our retirement pots...

daisyfrau

£300. So proud!:j

We’ve reviewed things and as others have suggested here we took a closer look at saving for retirement rather than just paying down the mortgage. We estimate we are about 24y from our ideal retirement ages, we want to retire together (hubby is 6y older) and so trying to maximise savings for that. Family is probably complete - still haven’t managed to have a second child sadly! Would be very happy news if it happened though!

Am working part time now as planned, so much better since leaving that stressful role but the hit on my pension is very hard to swallow!! But my mental health, family life, marriage and everything else is SO much better!! Honestly. I think it’s been very good for my health to reduce my working hours. It’s just a little bit of a shocker to think how much more could save if worked full time, but hey ho - I can’t have it all!!!! House is cleaner and tidier too, and almost all our meals now home cooked, freezer stocked with healthy home-cooked food. To be fair we weren’t tooooo bad before - have always avoided ready meals - but we were having a frozen pizza meal every week, and hubby and I were having a super unhealthy takeaway curry approx once to twice a month! Not healthy and not moneysaving either!! All stopped since July!! Doing inventory of pantry now. Finances slowly being sorted to maximise returns, instead of languishing in low value accounts.

Our grand plan is to build up emerg fund to sufficient level (6 months expenses( and then focus on long term savings. We will limit mortgage overpayments to £300pcm for now - our new mortgage aim is to qualify for 60% mortgage by end of our fixed term in 5y. Right now we’re at btwn 15 and 20%. We have reduced term by 2 years compared to last mortgage so that’s good too!


Feeling pleased overall!!

LeighofMar

That's a great overpayment. Congratulations.

daisyfrau

Thanks LeighofMar! Have enjoyed reading your diary too!!

Today opened two Nationwide FlexDirect current accounts to hold our emergency fund and earn some interest. Not appearing on my online banking yet - got confirmation emails for the solo one but for the joint got an email saying we need to do further checks so hopefully there’s no issue.

Once they’re up and running online I will park £2.5k in each. Will set up the third acct in hubby’s name next month as 1. I don’t have the full 7.5k needed for the 3 accts until after payday on Wednesday, and 2. Because hubby’s gets paid at random dates in the second half of each month I need to keep a buffer of 1 months bills in cash in the current acct to pay our bills. It’s annoying keeping track of what is owed to the emergency fund whenever money comes in but hey up.

I’ve tried using YNAB twice but found it hard to get on with and quite complex, even though I have 2 degrees haha! I don’t know I just use a very simple spreadsheet I found somewhere on here and update it each month - it gives me a good forecast which I can tweak as needed, but it obviously lacks the tracking expenditure aspect which makes YNAB so strong. I guess I may give YNAB another go - my finances are getting quite complex now so I’m sure it will help me stay on top of that complexity and help prevent mistakes. But I do wish the general ”principle” I learnt in uni of keeping all explanations simple enough for a 6 year old to understand was universally applied!

So anyway - I still have to set up a standing order from our Lloyd’s acct to send over £1000 a month to each of the Flexdirect acts as that’s the requirement for those accts. that £1000 will then ideally be swiftly moved on into savings elsewhere - once I identify and set up next highest easy access interest bearing acct I can find. Plan is to overpay £300pcm, and save £2000pcm into various funds starting with EF.

Am hoping to have 12k (3 months expenses) in the EF by end of November and then we will slow down rate we feed this fund. Target is 24k. I do need a new car - my fiesta is 14 years old and on its last legs. Budget is £5-7.5k and we want to pay cash so will prob divert money there in the early part of 2020. My ideal mum car - a Tiguan - is prob not going to be in my reach, haha! My true love is the XC60 but I had to get real. I’d like to buy something I can run into the ground like I did my fiesta, relatively low mileage (30k or less) 17 plate or earlier. Will be buying around April next year I think. We’ll see.

Hubby also needs a garden office. Works from home in our smallest bedroom, not quite a box, box and a half maybe! Big desk, then the other two walls lined with bookshelves and almost all floor space is covered in piles of boxes of stuff. Not very nice feng shui energy I would say - quite cluttered although meticulously neatly as he is a neat freak.It’s not really fair on him as he works very long hours in a tiny room and we always dreamed of putting a lovely very large garden office-plus-family room in our loooooong garden when we bought this house. For now, he does need to declutter his stuff and then I would love to investigate putting the remaining boxes into the crawl space flanking our loft room. He’s not keen on that as lots of papers so he wants a temperature- and moisture-controlled environment for his stuff. Fair enough. Regarding the garden office: I think that’s realistically going to come in around £35-40k all in to get one he can work in year round and keep his stuff in. We won’t ever get that money back but as this is our forever home and he works bloody hard I think that’s fair enough. He’s definitely earned it over all these years, never complaining and through so many house moves, and he deserves it.

All of this alongside the concurrent dreams of extending the house (we can forfeit this if it comes to it - the cost of doing this in the SE is phenomenal!), saving more into our pensions and for retirement, updating and redecorating the house we have! So - lots of financial goals over here!

Not sure how to time the car purchase and the office - ideally we would put some lump sum money into retirement/pension sooner rather than later to benefit from conpunding, but equally if my car didn’t start tmo I wouldn’t be surprised!!

daisyfrau

Just a quick update.

2nd overpayment was made last month: £300
Next one due next week, aiming high for £300 again
Nationwide Savings currently sitting at £9.5k
Still on target for 12k savings end of this month - fingers crossed nothing major comes up!

Keeping head down and chugging along.

Daughters piano lessons stopped yesterday. Agreed with her teacher she’s a bit too young still. So that should give us an extra £100 a month to save!

Christmas will be with hubbys family abroad. Will be cheaper than doing it at home as this one (flights/car hire) will be paid by hubby taking extra dividends from his company, so my usual monthly category allowances should suffice despite it being December! We always do a secret Santa for presents so each adult only buy one present each, for one of the other adults, and then we share the kids between us so me and hubby will buy an additional gift for one of our nieces/nephews. By hubbys family don’t have lot of money so the present budget is usually £15-£20 per gift, so that no one feels awkward. I enjoy the simplicity of it especially as for us Christmas isn’t mainly about the gifts or the food!

On Christmas Day their tradition is to have a simple meal of potato salad and Vienna’s. Again sounds crazy but they’ve done it that way for years and years and I think it’s great. They do have a beef roast dinner on Christmas Eve, so nobody starving on Christmas Day, and on Boxing Day we all bundle into his uncle’s house for a big dinner of pork roast and beer sausages with all of the family (usually about 25 of us with the kids!!) So overall it’s quite an MSE Christmas (aside from the travel costs!).

Looking forward to it.