What would you do (CC Pay off or Mortgage overpay)

mcpitman

Kat78MFW said:

Wow - you are doing so well. It must make such a difference to your work/life balance to have dropped all the commuting and work from home.

Just one thing on your SOA - £400 per month on haircuts. Please tell me that's an error!

May be worth budgeting a bit more for your gas/electric, even if you're currently on a cheap fix as the price will shoot up once your current deal ends.

You look to have a huge surplus each month now so you should be debt free in no time at all. Brilliant - well done. 

Thanks, work life balance has changed beyind recognition, 3 hours a day commuting and a 10/12 hours shift has now been replaced, with a 8/9 hour day at home. 

£400 on haircuts should read £40 per month. Good spot! So that would put me at c£2k spare per month

Gas and Elec - currently going through a horrible process to go onto BG variable rate after my provider went bust.

mcpitman

Brie said:

Presumably the Virgin & MBNA cards are finishing their 0% this month?  Any chance of doing something about that??  Move them on to another 0% somewhere??  

I know people talk about emergency funds and so you've got £5k which is nice but why not sling it at the cards??  For one thing it would make for smaller balances to transfer to another card and so save you on the transfer fee(s).  And should you have an emergency you have the huge available credit on the cards available to tide you over.  Whether it would be better to tackle both the cards at the same rate or try to clear the smaller balance first may depend on what you will get charged should you not clear everything by the time the BT ends.

But well done!  And nice to know you've managed to get along with having to get that new (to you) car just yet.

Morning,

Virgin is 0% until Mar-23
MBNA is 0% until June-23

The £5k savings will be staying where they are for now, if any are used for emergencies, it is immediately replaced. Next plan is to take that to a £10k pot and have £5k for a replacement car sat to one side.

The cars will now get run into the floor, mine is old, has high miles and worth about 2.5p and a cotton bobbin to a trader. For me though; I know the car inside and out, know what needs doing next (nothing, but age related issues like shocks etc will come up soon). For my wifes car, if we did change this would be for electric, due to low mileage usage.

We could probably consolidate to one family car too.

2 yrs to run on current fixed mortgage rate, so being debt free at that time, will enable the family to move to a bigger/nicer home for us.

mcpitman

The other thing we will look at in Jan-22 is the TV package.

I need minimum speed BB at home for working.
Virgin used to be competitive, Sky are extortionate in comparison for the same packages.

Don't like the idea of "Sky Glass" - too tied to a single vendor and if you change TV package, you also need to buy a new telly (dark part of me thinks this is the point of Sky Glass - being tied to one vendor that is "awkward" to move away from).

EssexHebridean

The main things that stand out to me here are on the savings side of things. How come that 5k cash assets figure hasnt increased substantially over the last year allowing that I presume like most of us you spent less on the things like holidays due to the restrictions for C-19? Sometimes when we see figures like that it's because of an "aspirational SOA" - where someone budgets to set money aside for things each month, but in fact it doesn't actually happen - I suspect that's not the case here, but it's worth mentioning. I'd also echo what is said above about the haircuts - if that's NOT a typo then there's something seriously wrong!   

Personally I'd be looking to reduce that presents spend a bit - I know you can afford it but be mindful of what you're leading your children to consider to be "normal" - assuming that this level of spending on birthday and christmas presents is the usual is something that could potentially lead them into debt in the future as they learn to feel that it's what's expected. An idea to consider might be to cut back on the material presents but put the balance of what you would have spent on the children at least into a savings account for each of them towards the time when they want to buy a car or their first property. They don't need to know about it - but it would be a lovely surprise for them when the time comes!

The reduced commute must make a huge difference to your quality of life as well as your finances - it's good to see the reductions in the expenditure in that category! As noted above, it will of course also extend the lifespan of your car before replacement. 

If I were in your position right now I would look to throw that £1700 a month surplus at the cards to get them gone once and for all ahead of the expiry of any new deals. They could be fully cleared before the school holidays next year - if that sounds tempting?! Once that is done, you have the best part of £2k that can be split between OP's to the mortgage, setting some money aside against a new car, and building a bigger longer term savings pot.

Personally, alongside the surplus to the cards, I'd also be looking to see what small savings I can make along the way, and start repaying that money off against the mortgage ASAP if your deal allows. The sooner you start mortgage OP's the bigger the impact - and we started our OP'ing by using that exact method. Initially you start off with £10 saved on energy bills, or £15 saved by not having a takeaway - but as you add more savings over time, the amount can really build. 

Above all - well done on your focus and good luck!

**edit** second page of the thread now showing for me - good news on the type then, so that actually means an extra £360 a month to throw at those cards - meaning that the date to clear them has now moved to late spring next year - getting better! Also means that both can be cleared ahead of the deals ending, which saves some hassle!

Have a look at shifting away from a packaged deal and look at some of the standalone broadband providers. Also means you don't look so loyal to any particular provider, which can mean their deals sharpen up a little... 

(Also - absolutely get the whole "better the devil you know" thing with the cars - my previous Clio was kept to 12 years old/over 150k miles and was only swapped in the end because of the new ULEZ arrangements in London impacting us, plus a couple of higher age related repairs bills incoming - we decided to get shot rather than pay those bills. MrEH's previous two - both Citroen C3's - were bought for a low cost and the aim was always to keep them to destruction - in fact we've been forced to change the more recent one while it was still solid because of that wretched ULEZ thing!). Diesel engines will pretty much go on forever if driven with respect and well maintained - the rest of the car just falls apart around them!)

mcpitman

Thanks for your reply @EssexHebridean really appreciate you taking the time.

To explain a little further.......
Presents - we put £200 a month into a savings "pot", totaling £2.4k per year. That budget includes presents and any events/excursions, costs, decorations, etc that all going long with Bdays and Xmas as well as the presents themselves. The full final "budget" is not always spent and any "surplus" is scraped into the kids savings pots exactly for that 18th Bday boost for a house or car etc.

Broadband - going "non packaged" is what we will look at doing in Jan-22 when the current contract ends. We'll compare cost an usability and see where we stand from there, we are somewhat mildly limited on options as there is no BT line to our address only cable optics and the cost of installing/connecting the line was a deal breaker last time we looked around.

I am comfortable with the time taken to pay off the cards, I tend to pay chunks off every so often and should be able to pay them off before the deals end, whilst compounding savings further.

At all times we are 1 year ahead on costs as all the monthly payments for car insurance, mot, tax, home contents and buildings insurance are paid annually. These monthly contributions are to save the renewal amount for "next" year before the renewal date.

The £5k savings pot is an "emergency fund", ideally that needs taking up to 10k in the short term which I will do whilst paying off the CC's at a slower rate than suggested. I like this pot of money, it stops me spending on CC's when "life events/emergencies" come up and has been fundamental to changing my behaviors on spending at the start of this journey.

You do have some valid points that have made me stop and challenge myself..... is that amount on family presents too much, do I need the comfort blanket of the emergency pot anymore, or should I pay that off the cards and rebuild?

I am hoping to also get some time to revisit the bank statements and see were some money is going, it doesn't "feel" like I have this much spare each month.

I do support my wife and 2 children (and a dumbass dog) every month (as I should and I am proud to do so), so may have some unrealised "financial leaks" to look at.

Thanks again, you have made me think slightly differently.

EssexHebridean

Oh you 100% definitely need an emergency fund - everyone should have that in place, to one degree or another. For someone renting, with no car, a minimum £250. Renting with a car - minimum £500. Own a home, or a car, or both? Minimum £1000. for someone with a pet in the equation too I'd go as far as to say £1k should be the minimum regardless of everything else. In your situation, with your income, and with a car that you know is potentially nearing life end, that 5k seems a pretty sensible minimum to me - your plan to take it to 10k is absolutely the right one.