Future Proofing my life: Deposit saving then MFW journey in under 13 years

I have been reading lots of these MFW diaries over the last few weeks, some 300 odd pages long and tracking a decade or more of life. They have been fascinating, very inspirational and given me some great ideas.   

I am looking to buy within the next year, and then get MFW and o/p as soon as I can. My savings rate, income generation and focus has been a bit lacking over the last few months. The MFW diaries are a great kickstart to remind me that this is a mammoth task but I need to start soon, rather than talking about it and get going on the house bit. I never wanted to buy but 2020 made me realise I do want a place to own and so my pension and MFW journey is about establishing a firm base and future proofing my life.

So this is a diary to keep myself on track with my finances, get some great ideas and start 'eating that frog' as one of the contributors talk about on here.  Just thinking about writing this first entry has got me realising I need to make some decisions and stick to them.

I am single, freelance, a first time buyer and somehow over 50 (not sure how that happened) so I am looking at buying my flat  in the next year then paying the mortgage off in time in the next 13 years max. I may have to wait til next April for affordability or I could probably get a contract based mortgage now but I am wary of taking on such a big debt as my savings do help me feel secure as it's just me. 

Goals
Goal 1: Build House deposit further  to £100k (or £130k  but thats seems a lot)
Goal 2: Buy somewhere nice and  affordable in London  with a balcony, terrace and/or garden  in 2022.
Goal 3: Once I am in the flat then save 15% gross income to SIPP and then all else goes to O/P
Goal 4: Overpay mortgage and get it paid off asap - 2035 is the goal date for MFW

Where I am at
I currently have a house savings of £67,711.70 including stamp duty and solicitor fees etc but this is not enough in London where I live and work.
I would like  to go in at about a £400,000 flat - I would like a 2 bedroom if at all possible as it gives me room for a lodger if I get into difficulties and an absolute requirement is some outdoor space even if its just a balcony but thats probably £425k or £450k so the bigger the deposit the better.

I am aiming to save to hit £100,000 in the next year then buy but that may be too ambitious, £33k in a year...  My current rent is not ridiculous (about 12% gross income) and I love where I live in, I could probably be here for a couple more years if I wanted but the flat prices in London keep rising, albeit at a slower rate at present than outside London.
I can't see me wanting to live anywhere but London as it has been my home for decades and I work here so I need to get on fire and focused as it is a big task ahead and just me to motivate myself and do the work.


3 areas of focus

Savings: 
I have a 6 month EF but this is on current 6 months bills - once I buy, my mortgage will mean it will only be 3 months EF so will need rebuilding asap.

I have a help to buy ISA (the govt help 25% is not included in my totals).
About 20% of my house savings is in a  S&S ISA, I have made £2.5k plus on that so I am happy to take that risk in the market.I invested all the way up last year.

I love the ideas on this forum so I have done my first tilly tidy this weekend and moving my tax savings into a separate 0.6% acct so I am clear that all my one account is just for the house so I can get inspired by the rising balance. The amounts are so big I need something 

Income;
I am freelance and lost a lot of my normal work due to COVID but took on a well paid project that was 5 days a week in 2020 hence my savings, but now is more like 2.5 to 3 days a week so this has slowed my savings down plus of course we now able to go and about again to see friends and family.

I also have a few other small freelance jobs that I do regularly that bring in an extra £500 pm+ but I am wondering if I should try and get a new 5 day a week freelance contract job at a much higher rate  which I could-  but there is long term potential in my current freelance job as a restructure is going ahead  so maybe just a 2 day a week extra job elsewhere might work in the short term -  I have been sticking my head in the sand over this as the 3 days a week has been going on all year and I need to make a decision that supports my goals  but I also want to support the small company and people. 

I also match bet, do low risk casino and also small amounts of football trading -  I average over £4000 annually over the last 2 years - at the end of each month I check all my bookies accounts and then whatever is over my £4000 float (all MB profit and counted as part of my house savings) then that extra gets counted as new income and moved into savings and pension. As I am at 40% tax rate  this is a great side hustle for me.

It is hard to say exactly how much I can save right now as my freelance income varies but if I do want to save a further £33000 in a year  to hit that 100k thats £2750 a month. I was saving more than this last year each month but as my freelance days have dropped I need to really make a decision on how I am going to tackle that and hit my goal.

I have had some pretty lean years income wise but in the last 2 years I moved work away from my dream job to something that I do enjoy but pays the bills more easily. I sadly think I need to keep on this track, and do my dream work on the side in this next year to get me in my flat though, then I can re think. This is about a plan to get me to win in this area of my life, to future proof it. 

I am also writing a programme to sell online as an extra income stream, just editing it now. It is taking forever but I just need to make it a focus as I am allowing it to stop me going after extra freelance work. I keep saying 'when I have finished it then I will update my CV etc'  for months now... 

Budget:
I budget at the beginning of each month and I have done for a decade plus, hence my savings and an ability to be fairly MSE...
I have lots of saving pots for all my expenses eg £200 pm grocery and annual bills.

However I saw on the forum lots of people take the excess they had not spent in one category each month  end and swept it into the O/P fund. I did this with my excess food budget  end July so that was nice to see the savings deposit jump. It also gives me a  great reason to not overspend as then I get the joy of seeing the savings deposit grow faster. So lots of Too Good To Go and yellow labels happening right now ;)

Debt
I only have one debt of less than £6000 which is not interest bearing. I could pay it off but I am choosing to leave it at present and paying it monthly. It annoys me but the £6000 is useful where it is. I have a credit card I only got this year to help with my credit score but I buy things I have budgeted for and then pay it off often within a week. I never want to go in debt again with a credit card, I did it once but having a budget fixed all that for me.


Pension vs Mortgage  - part of the future proof.
Reading so many great diaries where people are looking at their last working years before  retirement and aiming to pay off their mortgage or be mortgage neutral by then has been very useful to focus me.

I saved £15,800 in my SIPP last year (SIPP now at £26k) as I felt very behind and as a higher rate tax payer it is so worth allocating money to my pension instead of house savings with the 40% tax relief.  However this tax year so far I have put in £3034.51 only into my SIPP  as I need to get into my home asap and build up that deposit. Plan is once I am in the flat to then kick up to 15% gross income to pension and then all else goes to O/P

I have a £6600 pa DB pension that kicks in 8 years time which I plan to pause, plus I should get in 15 years time  the full state pension so approx £15,708 per year at current figures.  I know I will need more  income when I retire in 15 years  obviously with the goal of paying the mortgage off as well before then. But with the 40% tax relief I am currently at, I hate pausing my SIPP contributions this year but I think I need to for this year to focus on maximising the deposit and get on the property ladder first. 

Any thoughts on this pension vs savings debate most welcome.


Current 2021 Goals 

House savings 11/08/21  £67,711.70  
House savings goal          £2750  per month         (Aug done but was part July income as well)

Savings £67,711.70 / £100,000

SIPP     11/08/21        £26,731.30
This includes 2021/22 personal contributions  £3034.51 + the hmrc 20% extra so £3,793.13 
I am assuming I will hit higher tax rate status again 21/22 so additional 20% tax relief will come off my tax bill.

Programme £300 per month made once launched

NSD  per month 0/8

Personal goal lose 1 kg per month 
 

How to achieve my goals over the next 4 months...

Get clear what my freelance income allows me to save  each month at current rate of income after taxes and my savings pots. I did save £2750 in August so far but I was paid weird in July and August so it was a 2 month lump saved so hard for correct monthly figures. 

To save £2750 per month  moving forward I need extra income either from more freelance work, or get a new job  OR an extra part time job  so...

First this month August I finish my programme and launch and market it  - earn money from that (£300 /month = goal but this is a figure plucked out of the air)
THEN decide if I need to apply for another part time freelance job or focus on selling the programme.

Pension - put 25% of any MB income to my SIPP at the very least just to see it grow..  so approx £100/month

Tilly tidy bank accounts each Friday to .00 pence at least

8 NSD (no spend days) - I have tried over the last week and failed every day..

Do more competitions (I have done well in the past on this for gifts, entertainment and even won cash)

Look at doing  cashback starting with  my purchase of a robot vacuum - largely financed by gift money)

Ebay £100 of stuff  in August- I need to declutter anyway

Gym 5 days a week, eat well from fridge and freezer, sleep.





"We delight in the beauty of the butterfly but rarely admit the changes it has gone through to achieve that beauty." Maya Angelou

Nov NSD 8/15     Nov  Groceries Challenge  £98.70/ £140  + £13.87/ £100 bulk 
MFW savings 11/08/21  £67,711.70   16/11/21   £78,093.60 /100K  
Nov  savings  £5299.93 / £3,603.01

SIPP   
           11/08/21     £26,644.38   03/11/21      £29,521.02
FIRE   exc home £12k pa 9.84%, £16k pa 7.38%. Current spend inc current rent 8.43% FIRE, 
https://forums.moneysavingexpert.com/discussion/6289577/future-proofing-my-life-deposit-saving-then-mfw-journey-in-under-13-years#latest
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Replies

  • South_coastSouth_coast Forumite
    3.1K Posts
    1,000 Posts Second Anniversary Name Dropper Photogenic
    ✭✭✭✭
    Well you definitely have a plan 🤣🤣🤣! You sound very organised and determined, so I'm sure you'll get there. No helpful advice to add, but I'm looking forward to seeing how it pans out 😀
    Mortgage start: £65,495 (March 2016)
    Cleared 🧚‍♀️🧚‍♀️🧚‍♀️!!! In 5 years, 1 month and 29 days
    Total amount repaid: £72,307.03

    Finally earning interest instead of paying it!!!
  • ElmoRElmoR Forumite
    353 Posts
    Sixth Anniversary 100 Posts Name Dropper
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    It's good to have a plan and something to aim for! That's half the battle.
    Spreadsheeting has helped me a lot, keeps me focused during the long slog. You could try setting some up and also playing with mortgage calculators etc.
    You might want to make a post on the pensions forum board - they'll be able to work out the relative efficiencies of pension/SIPP v mortgage/deposit savings. If you can do salary sacrifice to your pension, that wins financially every time for HRT payers.

    Good luck on your journey :)


    Nov 4th 2020 = mortgage free !!
    FIRE goals : 1. bridging fund of £70K - ~57% achieved. 2. Moving fund £50K - ~0% achieved. 3. Can we have a dream barn conversion? ?K - 0% achieved. Plan B...? Book goal: 70k words - ~36k words written
  • LadyWithAPlanLadyWithAPlan Forumite
    414 Posts
    100 Posts Name Dropper
    ✭✭
    ElmoR said:
    It's good to have a plan and something to aim for! That's half the battle.
    Spreadsheeting has helped me a lot, keeps me focused during the long slog. You could try setting some up and also playing with mortgage calculators etc.
    You might want to make a post on the pensions forum board - they'll be able to work out the relative efficiencies of pension/SIPP v mortgage/deposit savings. If you can do salary sacrifice to your pension, that wins financially every time for HRT payers.

    Good luck on your journey :)


    Thanks @ElmoR I will check out the pensions board. I am self employed so  I am not always HR taxpayer but I am at present.

    I think I will set up a spreadsheet to track end of month spending - although I do love a paper monthly budget as I can scribble all over it ;)
    "We delight in the beauty of the butterfly but rarely admit the changes it has gone through to achieve that beauty." Maya Angelou

    Nov NSD 8/15     Nov  Groceries Challenge  £98.70/ £140  + £13.87/ £100 bulk 
    MFW savings 11/08/21  £67,711.70   16/11/21   £78,093.60 /100K  
    Nov  savings  £5299.93 / £3,603.01

    SIPP   
               11/08/21     £26,644.38   03/11/21      £29,521.02
    FIRE   exc home £12k pa 9.84%, £16k pa 7.38%. Current spend inc current rent 8.43% FIRE, 
    https://forums.moneysavingexpert.com/discussion/6289577/future-proofing-my-life-deposit-saving-then-mfw-journey-in-under-13-years#latest
  • LadyWithAPlanLadyWithAPlan Forumite
    414 Posts
    100 Posts Name Dropper
    ✭✭
    Tilly tidy 0.73p from bank as had a bit extra interest 3p!


    Current 2021 Goals  update
    House savings 11/08/21  £67,711.70   
    TODAY House Savings £67,745.58/ £100,000 
    House savings goal          £2750  per month         (Aug done but was part July income as well)
    August savings extra added from 11th Aug start of the  diary =
    £33.88

    Programme £300 per month made once launched - not finished edit yet
    NSD  per month 0/8 - failing at this
    Personal goal lose 1 kg per month  - lost 0.3kg so far  this month by eating well, in gym 2 x this week and no crisps! :smile:  
    "We delight in the beauty of the butterfly but rarely admit the changes it has gone through to achieve that beauty." Maya Angelou

    Nov NSD 8/15     Nov  Groceries Challenge  £98.70/ £140  + £13.87/ £100 bulk 
    MFW savings 11/08/21  £67,711.70   16/11/21   £78,093.60 /100K  
    Nov  savings  £5299.93 / £3,603.01

    SIPP   
               11/08/21     £26,644.38   03/11/21      £29,521.02
    FIRE   exc home £12k pa 9.84%, £16k pa 7.38%. Current spend inc current rent 8.43% FIRE, 
    https://forums.moneysavingexpert.com/discussion/6289577/future-proofing-my-life-deposit-saving-then-mfw-journey-in-under-13-years#latest
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