Mortgage Free: The final countdown

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  • mark55man
    mark55man Posts: 7,922 Forumite
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    Just doing some routine administration on my overall pension fund, and decided to up my MN contribution by £50 by jiggling the monthly investment percentage allocations.  In effect giving my future self a bit less spending money to get the OP pot bigger, earlier.  I know doing it this way (rather than literally OP the building society) is not usual, but squeezing the pennies to get to Mortgage freedom (neutrality in my case) quicker is something we all have in common 
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • savingholmes
    savingholmes Posts: 27,259 Forumite
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    Well done. Automating makes you far more likely to do it.
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF) plus spent £10K+ on home improvements/emergency repairs
    2) Mortgage neutral by June 2030 AVC £8.063/£127,466 AVC target 6.32%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • mark55man
    mark55man Posts: 7,922 Forumite
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    edited 20 February 2021 at 12:48PM
    Thanks SH - so not a numbers update, but I have been thinking a bit more about this, and I now have decided to notionally attribute all my pension contributions from now on to this fund. I have done this as (along with most others on this board) I have decided that slaying the mortgage is my top priority - but for *reasons above* it has to be through a mortgage neutral approach

    In some ways this is a mixed message as in theory I could just say "right that £100K from my pension fund is now my MN pot -job done".  But those savings are all part of what I need to live on mortgage excepted.  So now its pretty binary.  My legacy pot will be looked at for non mortgage income planning, ongoing pension savings pot (£3K for now, will be my mortgage neutral pot - so to that end my OPs will be 100% of mortgage contribution - or about 20% of my gross salary - including 40% from the taxman and 10% from company contributions).  This will accelerate my MN Pot day, but I will do those calculations after my next OP in a week

    I have also slightly balanced the investments I am making in my fund - so mainly still cautious, but now with a little risk to boost (or not!) returns for the longer term. So now 50% bonds, 40% equity, 10% cash or cash like as opposed to 100% bonds.  
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • savingholmes
    savingholmes Posts: 27,259 Forumite
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    Sounds sensible to me. I have all this to come
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF) plus spent £10K+ on home improvements/emergency repairs
    2) Mortgage neutral by June 2030 AVC £8.063/£127,466 AVC target 6.32%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • mark55man
    mark55man Posts: 7,922 Forumite
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    Apart from a little technical knowledge about how it works, and knowing you will never be perfect, its mainly about attitude - I think you have that covered :sunglasses:

    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • mark55man
    mark55man Posts: 7,922 Forumite
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    Having tweaked my spreadsheets, here is my report back for March. 

    My starting OP Mortgage Neutral Pot was £1.7K, and I have added £2657 so far this year. My pot (including growth/loss) is now £4.6K  representing total OP this year of £2891. My mortgage balance is £100K, meaning I am £95.5K away from being Mortgage Neutral.  Current target for Mortgage Neutral is Jul-23, reduced from Sep-24 because of my decision last month to allocate all my monthly pension contributions to my MN pot

    Jul-23 is when the pot will match the mortgage balance (assuming tax free withdrawal), but that's not quite the whole story as I will most likely be taxed at BR when I withdraw the money so the full MN date will be a 3 Months later (and actually paying it off will be limited by my BS to how much I can repay, this will be Dec-26).  Once I know I am covered I can breath easy


    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • mark55man
    mark55man Posts: 7,922 Forumite
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    So in terms of free money - £720 of above sum is extra company contributions and pension tax rebates which I would have lost if paying mortgage off immediately.
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • savingholmes
    savingholmes Posts: 27,259 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Always nice to get free money
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF) plus spent £10K+ on home improvements/emergency repairs
    2) Mortgage neutral by June 2030 AVC £8.063/£127,466 AVC target 6.32%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • mark55man
    mark55man Posts: 7,922 Forumite
    Name Dropper First Post First Anniversary
    Thanks Savingholmes - Yes, free money is always welcome.  It also means that I can be a little more unworried about a strategy that involves a little risk, as it realistically means the only money I might lose by investing rather than saving/repaying, is not only someone else's money, but money that I wouldn't have even had if I hadn't decided to do it this way.  I know its a complicated balance, but as a bloke at the older end of the spectrum I think I have become more balanced, and not wanting one thing to the exclusion of others.

    In case anyone is interested in my fund strategy (slightly constrained by my work provider) for my monthly contributions is
    * 40% - Corporate Bond tracker fund (better in short term than longer term bond funds, less sensitive to interest rates)
    * 40% - Global Equity (split equally between US / Europe and Rest of World) (not happy with too much US exposure)
    * 20% - Gold Related Fund (I'm following a blend of 3 fund and Permanent Portfolio (ie without the cash)

    Fundamentally cautious, but given I won't be paying my last payment to the BS until 2026 I wanted a little bit of potential growth. Having modelled (backtested) this, it shows over 6 years, my worst case is level (ie I get out what I put in, typical return is just over 3.5% and best historic return about double that.  I can live with all that.  A variation of a few months either way on my MFD is not a major trauma

    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • savingholmes
    savingholmes Posts: 27,259 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Glad you've found a strategy your comfortable with. I will be working out my own strategy for the second half of the year once we're debt free - but considering using the balance of this year to save EF of 3-6 months rather than necessarily starting investing this year - or mostly EF anyway. I'm conscious though that I need time in the market. My mortgage comes due in 10 years and currently other than if I can release pension we have no plan in place to pay it.
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF) plus spent £10K+ on home improvements/emergency repairs
    2) Mortgage neutral by June 2030 AVC £8.063/£127,466 AVC target 6.32%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
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