10 years to go .... maybe, with a fair wind

Lauraebrad

It's always going to be a bit slower saving / overpaying over the summer as there seem to be so many extra things to spend money on!  The small one is getting taller at an alarming rate, and actually had to buy new new clothes for him whilst on holiday. 
My 'annual bills' fund is taking a battering this month as the car needs its air con fixing (today) which is an eye watering £350, and I also 'invested' in super early bird tickets for a local festival for 2022 which was £100 for us both.  
So my main aim for the next three weeks before going away with my parents is to really rein back the unnecessary spends and get back on with some better meal planning.  Also to sneak in as many pr0lific studies as possible.
I have a pile of small boys clothes a mile high in the attic which I also need to deal with - I keep seeing v1nted as the new best selling site so will try to have a go at selling at least something that way during August ..... 

Grogged

Well done on the 50s! Great result.

Lauraebrad

Well I didn't end up achieving much in August, and the pile of clothes to sell gets larger.  The small one needed new shoes, joggers AND trainers for school so feeling much poorer now.  
Unfortunately my lovely dad died just over a week ago, so we didn't end up going on our much needed holiday (which was supposed to be with my parents).  He was only 73, and aside from the brain tumour that ended him, was really fit and well, and so adventurous that I'm gutted he didn't get to enjoy the long retirement he'd hoped.  It really brings it home why I'm trying to pay off this pesky mortgage and make savings so that I can enjoy my free time now and in the future, without having to work till I'm 68.  Not everything should be put off for retirement!  
My mum rents their house, so having been helping with her finances over the last few days, it also make me realise how lucky I am to own a house that I can afford, and that I won't still be paying rent on at 68 like she is.  Depending on how her pension pans out (they don't have much in place), I might end up having to support my mum a bit financially which would slow the overpayments - but she is the most important thing at the moment. 

On a more positive note, I was able to make my usual overpayment and an extra £50 this month so £120 down.  Hoping that I'm still on track for £2400 overpayments this year (around 6 months).  Now the autumn has come and I'm back at the computer more, also hoping that there'll be more Pr0lific studies etc to stack up the pennies.  

beanielou

Sorry to read about your dad.
Take care of you.

Grogged

So sorry about your dad, thoughts are with you all.
Take care, G.

powerspowers

So sorry to hear about your dad, Lauraebrad. 

I know it’s still early days, but make sure your mum has a benefit check at some point, there maybe things she’s entitled to if she’s renting and on a low income. 

Lauraebrad

Another month has passed.  Pretty slow on the extra overpayments.  Just managed to scrape together an extra £20 from Sh0ppix, prolific and a little bit of interest from a V1rgin current account.

With everything that is going on at the moment I’m feeling really torn about my overpayments. 

On the one hand I’m seeing the direct result of my mum being in the position of still having to pay rent on a pretty small income.  Thanks for the pointer to benefits check by the way – I think she will be eligible just need to encourage her to cast aside preconceptions and actually apply!!.  My thinking is that, as I’m fortunate enough to be an owner rather than renter, paying off the mortgage ASAP will really secure my future if I end up on a low income.  Also it would give me a lot more freedom.

But on the other hand I’ve been giving a lot of thought to how hard my (relatively limited) money is working for me.  I know that mathematically I’d probably be better off investing my overpayments to allow them to grow rather than paying off a mortgage with a pretty low interest rate.  The thing that’s putting me off is that I’d need to lock my monthly overpayments away in some sort of investment vehicle for a fair few years to enable good growth, and during that time my mortgage balance wouldn’t be going down as fast as it has been!  This would potentially mean I don’t feel I’m making as much progress – and I know if I go down this route I’d need to really change my mindset looking to be mortgage neutral rather than paying off directly.  Also, I still have a slight concern that if the money’s in savings I’d be more likely to dip in to it if needed rather than as at the moment knowing it’s gone to an overpayment and is already making an impact on my mortgage balance.

Ho hum.  Something to think about.  I might be mildly brave (is that a thing?) and change my objective next year to make 50% overpayments and 50% saving/investments. Any thoughts on this?

Other things …. Over the last few months the budgeting really has gone off the boil.  Life took over.  So I really need to get that back in check this month.  I’ve gone back to a zero based budget – just hoping I can stick to it now!

Grogged

The important thing is that you feel comfortable and that you're making progress.
50/50 sounds like a sensible compromise.
I'd plan on locking your investment away for 5 years in something you can't dip into.
I don't know if you already have a stocks and shares ISA, if not v@nguard are cheap and a life strategy 60 should be suitable.
If you're not comfortable with stocks then go for a normal fixed term savings best buy.

We went through the same thought process and for us, we went mortgage neutral.
The big thing as you've said, is changing your mindset.
We now just do small (nearest £5) weekly TT and review our investments monthly.

Lauraebrad

Gah - I'm struggling with maths, which isn't something I usually have a problem with!  I'm trying to figure out what difference investing would make when compared to overpaying my mortgage directly.  But somewhere it's getting very confused in my head!

I have exactly 15 years left on my mortgage this month.  So should be an easy time for mathematical wizardry.

• If I overpay £200 per month it would be paid off 5 years 8 months early (i.e. in 9 years 4 month time).  Over that period I would have overpaid £22,400.
• If I invest £200 per month (£21,600 investment total), with a 6% rate of return, over 9 years I would have £28,711.

Clearly the investment gives me more money.  However, I'd obviously be accruing more mortgage interest over that time than if I was overpaying it directly.  So it's not a simple £6,000 difference ..... I assume therefore I need to work out what interest I'd pay over those 9 years.  How would I even begin to do that?!

What other information do I need to fully understand this comparison?  Any help very welcome - or link to more nuanced online calculators that could help me!!

TIA

Grogged

A very noddy way to do it is to use your mortgage rate.
OP £200 on 1 Jan at a mortgage rate of 1% would save you £202 in the first year.
Saving £200 on 1 Jan at 6% would be worth £212 in the first year.
In that first year your investment made £10 more than the interest saved.
You can plug in your own numbers.