Free By 45

Freein45by45

Hi everybody. I previously had a username and diary here many years ago, but I completely forgot my login, so here I am with a new login and new diary!

My goal is to pay off as much as possible, if not all of my mortgages by my 45th birthday, which just happens to be 45 months away in 2024. I have two mortgages, one is a BTL where I owe approx £72k, and the other is on my home, where my share owed is approx £40k. 

My home is owned with my partner of 20 years, but we’ve always kept our finances separate, so the £40k owed is just my share - he owes a different amount. My BTL is owned with my mother, but a sibling previously had a share too, which I bought her out of. My mother owns 50% outright, and I own 50% with a mortgage on half of what I own. The problem with the BTL mortgage is that my mother has to be named on the mortgage, even though we have a separate legal agreement that it’s just my liability. She’s currently 77, but when the five year fix is up in late 2023, she will be 80, so the chances of us getting a new mortgage fix are virtually nil. 

My mortgage rates are 1.95% on my home, fixed for 3 years, and 2.49% on the BTL fixed to December 2023. I’m paying £234 a month on my home, and about £150 a month on the BTL. 

I’ve flip flopped for ages about whether to pay off my mortgages or to invest in a new BTL. When it comes down to it though, I’m fiscally conservative and sleep much easier when I’ve got fewer debts, so have chosen to pursue the pay off route. I live pretty frugally, so once the liability of the mortgages is gone, my BTL income should cover all my fixed costs each month, allowing me to scale back work, perhaps quitting altogether and just working on my side hustle instead. I earn a good wage at my main job, but it’s not something I want to do for much longer and I’m pretty burned out already. That’s my focus, to pay off the mortgage debt so I can drop the stressful work I do. 

I’m going to post a lot more regularly than I did with my previous diary and keep on track to get this paid off or nearly paid off by my target date. It’s a very ambitious target, but not completely out there. What’s the worst that can happen if I don’t make it? I’m still a few grand short and need to work a few extra months, but turn 45 with two nearly paid off mortgages? That’s still winning in my opinion! 

longway2go

Hi, I just wanted to pop on and wish you luck, sounds like a good target. Have a read of a few diaries to get some ideas, tips and inspiration. 

South_coast

Welcome and good luck. Is the BTL the target for all the OP's in the first instance, given the higher rate/unlikely re-mortgage?

Freein45by45

Thanks both for stopping by! I’m a long time lurker, I love the MFW diaries, so many good tips. 

I’ve noticed a typo in my opening post, my house mortgage should be c£50k owed, not £40k. I wish it was that easy to lose £10k! 

South Coast, my plan is to pay off some of both mortgages, as I can only OP 10% of the original balance of each per year. With the BTL that’s £8.5k a year. Then save the rest to throw at the BTL at the end. The thing is, paying off my home first frees up much more cash to throw at the BTL, even though the interest rate is lower. I need to do some proper spreadsheet crunching!

LeighofMar

Welcome with your new diary. That's a great target. I also am aiming to be MF by 45. I feel it's the perfect age. Old enough to know what we want, young enough to make it happen and enjoy it. Best wishes. 

Freein45by45

Thanks LeighofMar!

I'm not sure what's wrong with me today, I didn't make a typo in my OP, I do owe approx £40k, not £50K on my home mortgage... So I've gained and lost £10K today!  My actual figures are below:

Home mortgage owe £38,840.81

BTL owe £71,875.27

Total owed £110,716.08

Jointly, we can OP by £18,600 per year on our home mortgage, and I can OP by £8,490 on my BTL.  I've OP'd both to the max for this year's allowance.  Next year's OP allowance for my home kicks in on 1st September, whereas on my BTL it's on December 18th. 

My plan is to make an OP on 1st September to my home of £8,600 from money I already have in cash.  Then I will save up and make (hopefully the full) OP on my BTL on 18th December, or thereabouts.  I will retain my emergency fund of c£7K and my S&S ISA of c£8K and not deplete these unless I need them for a job loss etc. 

As I already have £8,600 saved to make an OP, technically, this lowers my total balance to £102,116.08.  As I'm planning to pay off my mortgages in 45 months, this works out at exactly £2,269.25 I need to find each month to pay off the mortgages. 

This is a very challenging amount - I have been regularly saving £1,800 per month from my salary and BTL profits, which has been easier than not in Covid times, where I have no childcare to pay, limited petrol and working from home.  To save more than that and find £459.25 extra per month will be very hard, particularly if/when I'm back in the office and paying childcare again.  Other sources of income other than my main job are my side hustle, which has the potential to fund some of the extra, or perhaps working full time, but I'm not intending to do this permanently or on a regular basis, and potentially bonuses, although I'm not expecting one this year given the current climate. Additionally, our home mortgage is a repayment one, so we are paying off the principal amount each month as well, so this is all helping to reduce the balance and hence the amount I owe on one of the mortgages. I'm a very frugal person, so there isn't really much space to go to frugalise further, my outgoings are generally low, I need to look at my income for the extra money.

I'm also not going to make a good start on the challenge this month, as I have a lot of expenses due on my rental property, so I doubt I'll make anything from it this month, meaning I'll be down significantly on the £1.8K I usually save.  This is an anomaly, as I've not had to pay anything on the BTL this year until this month, but it does eat into my ability to save.  It's also my son's birthday and although I save monthly for birthdays and presents, it's still likely I'll spend more than originally intended on this, so will have to scale back.

I'm hoping that as I progress with this challenge, my side hustle will grow, allowing me more savings, my main job income will grow, so I can save more, and the amount I pay each month for both mortgages will also decrease, also allowing me to save the difference.

If I "only" manage to pay off £1,800 per month, the amount I'm typically saving anyway, this would be a timeframe of 56 months from today, so 11 months longer than my target of 45 months.  Therefore, if I can meet the challenging target, I get nearly a year of my life back from paying the mortgages.  Conversley, if I don't meet the 45 month target, I'll probably be within a year of meeting it, so the timeframes are not too horrific either way.

That's just my initial thoughts on this based on actual numbers, sorry for the rambling post!

yogavibes

Just stopping in to say hi and all the best of luck  

Freein45by45

Thanks Yogavibes

This afternoon, I've cleaned up my kitchen, as I'm back to work tomorrow after a week off, and my kitchen is my office now.  I've made a nice meal with all veggies from either our allotment or garden - I love this time of year for veggies! I've packaged up two customer orders from my Et5y side hustle and taken them to the post box.

We're now watching the grand prix highlights on channel 4 plus 1, having avoided social media/the news today, as we gave up Sky a few years ago.  I don't miss Sky at all to be honest, I love Formula 1, but it did end up taking over my weekends to get the value out of the Sky package (especially as we only had it for F1), and all the rambling blurb is available on YouTube anyway.  Saving over £250 per year!

I'm not looking forward to going back to work tomorrow, no doubt there will be close to 500 emails to deal with, and clients ringing me at 5 past 9 to catch up.  Also, I have no childcare tomorrow, so my poor little boy will be left to fend for himself in front of the TV for most of the day.  Luckily I'm only working 3 days this week and have childcare for the other two days so he won't be as bored then.

My plans for the week are to sort out a few of my son's old clothes to try and sell on Facebook/Ebay as the charity shops aren't accepting donations at the moment, and to list at least 5 items a day on my Etsy shop, which has been a bit neglected this week.

Freein45by45

Well my first client didn’t ring until 9.14, so at least I’d had a coffee before I got fully into work mode today!

Not a bad day, made £7.50 from my Etsy shop, listed 5 more items and all food eaten meal-planned from the freezer. 

Freein45by45

I had to pay my son’s school milk for the next half year today, a “voluntary” charitable donation at work, and my own monthly charitable donations came out of my account today. So I’m now £50 lighter! I posted out yesterday’s Etsy sales this morning so that job is off the list, and listed 5 more items.

For tea we had salmon and potatoes, broccoli and chard and herbs all from the garden. I’m trying very hard not to waste food to keep our groceries down. Grocery spends has crept up during lockdown, so need to reign it in!

Tomorrow is a day off work. We don’t have much planned, I’ve booked an outdoor, socially distanced craft activity for me and my son for £3, but my phone says 90% chance of rain, so I’ll probably be holding a brolly! Last summer I managed to find at least one free thing to do every week over the summer holiday, often two things, mainly in the local libraries, including Lego, robotics and science experiments. This year, nothing for obvious reasons, but we’re really missing having creative activities. Fingers crossed the weather forecast is wrong!

FtbDreaming

Ooh you’re very good at scrimping... I used to be but then the kids got older and more demanding and it all went out the window. I remember when I just had the 2 girls they were aged 4 and 1 at the time and I was absolutely skint but we managed to do things right through the summer at least 2 or 3 days a week and spent virtually nothing. Nowadays even a cheap day out is £50+  

whats the school milk? We don’t have that. We used to have snack which was £1 a week but that was just in reception. My eldest is starting high school in September and gonna have to pay bus fares and dinner money so that’s £100 a month before she’s made new friends and starts asking for money to go out with them. 

What do you sell on Etsy? My 11 year old is a good artist... would it be unethical to put her to work to pay off the mortgage 😂

good luck in your diary anyway! I’m just trying to catch up with the newish ones on a similar start to me x