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

LadyWithAPlan

Tuesday Update - 

I am sure I will stop daily diarising but it is keeping me focused at the start of this.

Recipe ingredients Vs MFW

I was desperate this morning to try this new stuffed courgette recipe as I bought some courgettes reduced, however I am lacking an ingredient.. very large tomatoes to slice to form a ‘bed’.. but in an effort to be a NSD I am refusing to spend today.. I also need yogurt and some fresh veg. I do though have  a few tiny baby plum tomatoes and chopped tomatoes so they will have to do instead..  It is currently baking in the oven and I have high hopes for it.

Ebayed my first thing in years!

Inspired by so many MFW diaries – especially the ones I have been looking at who were linked on their Mortgage Free Roll Of Honour entry.. I can see getting income from a multitude of places is often mentioned as well as many NSD inc one diary where she regularly did 24 or 25 NSD per month! I have a lot of hardly used perfume so if I could get some cash from that it would declutter my flat and get me to my next goal £70,000 quicker.

 So I have ebayed one thing and I have another 6 to go on this evening.

Plus I have put up 3 things for sale in my local neighbourhood whats app group where we often sell and gift stuff away as will save postage, ebay fees etc.

 

Grocery Challenge

I have just seen and joined the grocery challenge –  which states ‘ a single adult lady on average spends £25 on grocery and £12 eating out each week”.  Oops and I thought I was doing well.  My grocery budget is £200 a month not including my entertainment + coffee/restaurant budget.

So I have set a goal between the 16th Aug and 31st Aug that I will spend just £70 on groceries as  spent £93 already in last week or so and I have a full half freezer so I think I can get away with just fresh veg, fruit, yogurt, eggs and of course any yellow stickers….

 

House savings going up

My Marcus monthly interest came in £18.04 so in an effort to hit house savings of £68,600 (woohoo)  with an invoice that got paid yesterday I added it as below. I put slightly too much tax away earlier in the month and  so against my current expenses so I can treat this invoice as tax free for once.

£591.21  savings Marcus (takes this acct to £41,400)

£121.46  20% to my S&S Isa (part of house fund and I like percentages – I am happy to take the risk on this)

£131.89 to my utility fund – I forgot when I started my diary I have moved £500 out to help liquidity at the beginning of the month so effectively I had moved £500 from  a current utilities savings pot to my house savings. So I will pay that back in over the next couple months.

  I have an ongoing nightmare with a certain dual energy provider – I had to take it to the Ombudsman to get it sorted (so much paperwork and I got so angry for their lies (such as ‘she has never called us, she has never given us a reading, she has never contacted us or paid us’ – all of which I had to disprove with years of screenshots but worth it in the end)  .. I am still not fully there -  I am still without a gas meter for THREE years! They were useless then the pandemic hit.  So they agreed to only charge me standing charge for gas until they sort it out, and as I prepaid £600 without a bill (never again) and they saying my payment already calculated in their figures  but I cant see where …. And they cant prove it to me… it is a Game of Thrones level saga .. so I am saving up as I know I will have a one off £500 plus bill to pay already. Free heating last winter = a deal…and if they don’t hurry up it will be another winter … so maybe I will not harass them for my meter post pandemic….

I do have an electricity meter that since starting this MSE diary I have started staring at it. £1.11 used yesterday with washing machine, oven, WFH, vacuum etc.  I am experimenting if using my halogen small oven  is better than my full free standing oven for cooking single items. (what has MSE done to me!)

 SIPP - added  in my SIPP 5% £46 to my V SIPP

 I can’t bear to invest nothing (self employed and aiming to be  again a HR taxpayer this year) so I bought another single unit of Vanguard Funds plc FTSE All World High Dividend Yield UCITS ETF  - VHYL as dividends starting to kick in, I buy at least one or 2 of these  VHYL units every month as well as other funds but as I am moving most my spare cash to my house deposit that might be it for the rest of this month.  I generally have accumulation funds in everything but it is quite fun seeing some dividends come in although I reinvest them immediately.

Both my Sipps are lower than Saturday’s valuation  so I will do an update of that at the end of the month as pointless getting crazy about small market movements. It really shot up last week so it is a correction.

Offset mortgage thinking

With my dozens of savings pots I think an offset mortgage will be the way forward after my first 2 year fixed. I will not hit that 10% OP in the first year as I will need to up my SIPP contributions hard plus the cost of moving etc.. But so many MF MSE are saying how great the offset mortgage was especially as we all save – I now see I have an additional £19,685.78  elsewhere in tax savings, EF and all other savings pots and bank accounts. Lovely to add up – I have never had this much cash in my life! So my £100k savings aim for a house deposit is completely within my reach even though it is a massive number.

 I may need to start thinking about moving new cash into house savings and less into my various pots .. clothing, gifts, vacay (got a wedding coming up that is the only one planned left this year) etc.  However I am sure when I move I will draw some of them down in an effort to get to that 80% or even more magical 75% LTV.

 

So house savings now at £68,600 so I can go colour in another 2  squares on my board – they  in £500 increments and I started that last summer.

 

Green Jinn

 has okd me so I have just claimed £4.13 back which although I have not received it yet has gone straight to my savings – I have tilly tidied it to £5 so £68,805 by day end 

NSD today so 3/8

I got to the gym as well. 

 

Grogged

I guess I can scratch butlering off my side hustle list then! 🤣🤣🤣

If you're into your ETFs with VHYL (which we also have), you might consider V3AM as well, as at £4 they're a lot cheaper and are also ESG.  The downside is that they pay less (around half of VHYL), which is the same as their other global funds, but VHYL tends to grow at a slower rate.  It's swings and roundabouts.  We hold VEVE and VWRL as well and overall, they've all returned about the same - VHYL has more dividends and the rest more growth.

Are you going to swap energy providers?  It looks like a good time to get a fixed one or two year deal with the proposed hikes and green levy being discussed.  You can get some good cashback deals as well.  Can't believe what your current one has put you through.

LadyWithAPlan

@Grogged thanks for popping by. I think I have every ETF and most of the funds in V by now. I do have some V3AM but will look to weight more. I like Global Small Cap, the Germany ETF and Asia Pacific ex Japan (as figured last year OZ/NZ etc were coping better with the pandemic than the 'West' and some Asian countries eg Singapore etc ahve had to lock down before so...but to be honest I am now fairly well covered, I just like to time my entries.

I deliberately went very underweight in the UK whilst I did invest a lot (for me) in the swing up last year. I then started buying the UK in October (beyond the international funds I owned) and which have thus also finally done well. I can see though I am now for my liking slightly overweight in the UK so the next round of purchases will be more international based.

I also have a much smaller HL SIPP as well  to hold some property trusts, ( 2 x international) and a Asian property ETF , a UK property REIT,  and also a Supermarket REIT which is providing growth and dividends plus a couple shares. Happy to give you the names as I researched a lot. 

LadyWithAPlan

7 Day Diary anniversary and fear sets in

I would love to know how people tackle having a big mortgage over their heads?  All advice most welcome.  As in the fear of so much debt, how do they deal with it? I have never had a mortgage (first time buyer here) nor any real debt   and  7 days from the start of this diary it is already changing my heart and focus. 

Is this where I finally have to grow up and take on responsibility?

Today I freaked myself out a lot in both a good and bad way, as it has been confirmed today  I could get a new contract   and thus a contract based mortgage.   This would get me a HUGE mortgage, so big it frightens me. Of course I am freelance SE so the contracts are all on weekly/two weekly notice periods so I am used to saving to ensure I have enough to cover me.

I have also realised scarily, that I could really go get a mortgage NOW  (rather than waiting til after tax year) –Aprill 22 so NeverNever Land basically …  but  I also need to tackle first  the emotion and accept it is a choice I make that will change my life .

The sheer size of any mortgage let alone a £300k plus loan as a single person is intimidating and will stop my free relaxed lifestyle.. However I have never run away from a challenge in my life – this is both good and bad….

Whilst I am not planning to go max mortgage size I do want a 2 bed (in case I need a lodger) with a balcony or garden in London, I  was planning to save til I got to £100k and a 75% LTV mortgage,  I am now at £69k  savings approx plus will need fees and stamp duty on top. (I have a EF fund as well, saving pots and tax set aside and some pension. Just no home.)

- I am thinking already a M to F lodger in as soon as I can, maybe even in the master bedroom. Just to help extra at the start

I was thinking a £400k flat (outside central London) but I am looking at  more forever £450k homes which I could get  mortgage size  but would mean now on just £70k deposit plus fees/SD I need to save next we are talking a £380,000 mortgage.  84% LTV    - It is a huge number.

 

I also have been working just 3 days a week for the one company on a restructure (from FT) and half  day a week for another for this year so my income has dropped slightly but I have been too relaxed about it. That needs to stop today, I need savings to go back to last years levels – sometimes £4k a month.

If I decide to go get a mortgage it means

 -       I have to get a job that fills the other two days a week for  a safety cushion OR a higher day rate

-       &/Or get my programme finished and get that selling

-       I have to ensure my dream job that I stopped thru COVID gets brought back in but it needs to pay well. I can’t be messing around charging much less for that kind of work than my current finance project mgt role. not with a 300-380k mortgage.

-       I will need to accept that my ability to live a free life, largely doing what I want  and travel whenever - unfettered by huge bills (I rent and live cheaply and have some good savings) will be altered by this choice I make as I will need a consistent large income  and a good focused budget to pull this off. – I have lived on a budget for a decade so that at least is in place  Over 15 to 18 years.

-       It also means the sooner I start the sooner I will be in a MF home, I am over 50 so really the time is now.. I keep putting it off.

-       I could do as so many MF people do and go super frugal  for a short period to save up massively and then get OP. I know this cant be long term, but reading peoples countdowns  to MF with 25 NSD and cutting every bit of their budget to the bone – I could do that til I got in the house and then breathe and then get focused again.

 

I am off to do a SOA now on my current income  and play with a mortgage calculator on what is realistic if I biught in say the autumn with no other changes.

Any tips much appreciated especially on the fear side of deliberately saddling yourself with debt – I have never done it.

MatyMoo

I was younger than you and not in a particularly well paid job when I got my first mortgage.  My original mortgage was 60% of my monthly salary and I had a second job to enable me to eat 😱 I really struggled for the first 5 years and had no holidays in that time. 

My logic was always if the worst comes to the worst I can always sell the house!

I also considered a lodger several times but actually love my own company and didn’t really want to share my space. But it was always there as an option if thing’s went t*ts up. 

I know you currently have low rent and this will be a big jump in living costs for you but it’s not a ‘bad’ debt to have as you will still have an asset that will (hopefully) rise in value. 

Having paid a mortgage for 28 years, two house moves and an addition to my mortgage for home improvements in that time, I became mortgage free 4 years ago 😃

LadyWithAPlan

MatyMoo said:

I was younger than you and not in a particularly well paid job when I got my first mortgage.  My original mortgage was 60% of my monthly salary and I had a second job to enable me to eat 😱 I really struggled for the first 5 years and had no holidays in that time. 

My logic was always if the worst comes to the worst I can always sell the house!

I also considered a lodger several times but actually love my own company and didn’t really want to share my space. But it was always there as an option if thing’s went t*ts up. 

I know you currently have low rent and this will be a big jump in living costs for you but it’s not a ‘bad’ debt to have as you will still have an asset that will (hopefully) rise in value. 

Having paid a mortgage for 28 years, two house moves and an addition to my mortgage for home improvements in that time, I became mortgage free 4 years ago 😃

Thanks for the comment, it is much appreciated.
I definitely need the reassurance that other people have also felt the scariness of such huge debt and somehow won through. 60% wow  - I am figuring mine out as self employed so variable income... well done for going from that to MF!
I was thinking lodger - hence I am noe refusing to look at one beds .. but yes I could get a 2nd or 3rd job if I need. I do have the ability to earn in different fields so that is one on  my side... Or I could even get a proper job for 12 months (not done that in decades..) 
Hope you are enjoying your MF

MatyMoo

LadyWithAPlan said:

Hope you are enjoying your MF

Loving it but as broke as ever 😂 I took on 3 dogs and only work 4 days a week now!

I can always sell the house 🤣

badmemory

Just suggesting that you bear in mind that once you actually own all your property you will not have rent to pay so you don't need quite as big a pension "pot".  But I certainly wouldn't think of taking a pension contribution holiday.  Your plans sound good.

LadyWithAPlan

MatyMoo said:

LadyWithAPlan said:

Hope you are enjoying your MF

Loving it but as broke as ever 😂 I took on 3 dogs and only work 4 days a week now!

I can always sell the house 🤣

I can see me borrowing that saying. I really want a dog...

LadyWithAPlan

badmemory said:

Just suggesting that you bear in mind that once you actually own all your property you will not have rent to pay so you don't need quite as big a pension "pot".  But I certainly wouldn't think of taking a pension contribution holiday.  Your plans sound good.

Thanks indeed for reminding me. I think owning my own home by/before retirement age needs to be a real number one goal in my life so I do have to stand up and take some kind of move on the first flat purchase this or next year latest despite my fear. The actual price of the flat - what they will give me a mortgage for is bigger than the mortgage size I want to take on.

I have a £6600 DB from 60 and should get full State Pension. My SIPP is at £27k now and made 10% contrib so far this tax year. as a guess post tax level (self employed and freelance so always fun estimating data ahead). I am pausing the SIPP now to focus on deposit, only adding in small amounts, then back the SIPP up once I am in.

It all points to me getting more income in which is completely doable tbh.