Learning to walk before I run

edinburgher

@Alchemilla - I probably would've just said it was for a relative - you are much less of a feartie!

I did a few ee-kway-zons in my budget spreadsheet and realised that I wouldn't be able to pay off all unsecured debt by due date. I have squared things by creating a wee sum that bordered on the circular and that informed me that I had to pay another £561.33 towards my CC, which I have done. The smaller CC will be paid off by the end of next week, leaving just the biggie to batter into submission

At the risk of facing the eternal wrath of Martin MSE, I am giving thought to paying off my student loan. Ignoring interest, letting the loan run out naturally at c. £100 every 4 weeks for the next 3 years is cost neutral with paying the thing off now. As I'm going to pay it all off anyway (barring a £17k+ pay cut), I may choose to get rid of it. It would improve my walking around money by £80-90 every 4 weeks. It's currently 1.5% interest. While this is less than our mortgage interest, I'm going to be paying my mortgage for 20+ years, so no difference to cashflow at this point. Thoughts? My dominant thinking at this point is that inflation is going to remain brutal and while we have a fix for our energy (so no extra stress on this front until 2023), our cost of living is going to go up and our income is going to go down over the next year...

powerspowers

Labyrinth is fantastic! We’ve got the original but have played 3d and the boy wizard version with friends. 

I mull on the student loan issue too, have similar figures to you paying £91pm and about 6 years left to go. I started a small overpayment when I first started working as it upset me that I accrued more interest than I was paying off. I’m still paying £35pm to chip away at it, although I understand the argument not to. It’s addictive! 

Alchemilla

What's a feartie @edinburgher?

edinburgher

@powerspowers - I did clock the fact that you were OPing yours on your diary - you've saved my lazy Covid brain a follow up question

@Alchemilla - literally person who is afraid of things, a bit timid

South_coast

Ditch the student loan! Getting rid of mine and not seeing that depressing deduction on every payslip was a fantastic feeling! 

Karmacat

Interesting about the student loan - since it's only 1.5% p.a., the logic says not to pay it off.  But it often says not to pay the mortgage off too - so basically, you do the right thing for you.

The only thing I wonder about is that if you pay it off, and times get harder as they seem to be doing, would you have needed that money for something else?  Otherwise, I can well understand the attraction of getting rid of the monthly payment.

edinburgher

@Karmacat - that is a consideration - but perhaps not that big a risk? In real terms, the impact would be roughly -£4,000, but each month that reduces by £90. I know we're living in strange times, but I've been in steady professional employ for 15 years with no gaps. That period included both the great financial crisis and Covid, so I'm feeling cautiously optimistic 13.5 of the years were public sector (or public sector-ish, which probably explains the stability). Still mulling it over, CCs can be paid first in any case.

£200 paid off CC.

SuperSecretSquirrel

I don't regret repaying my student loan early Ed. We focused on the mortgage first, as the interest rate was much higher than the student loan, but once that was gone the student loan was next.

In your case, with a bigger mortgage, I can see the attraction in improving monthly cashflow now rather than optimising every penny along the way.

Back in December I repaid my stooze cards early to improve cashflow and financial visibility/clarity ahead of starting a new kind of budget plan. Quite similar to your current thinking really - not the optimal route in terms of pound and pence over time, but worth it for other reasons.

Baileys_Babe

If it was me I would pay off the student loan (1 less debt), but ring-fence the extra money in my pay and save that up to cover an incident like @Karmacat is mentioning or if things do get squeaky and you need to use it you are making a conscious decision to and it not just disappearing into every day spends without you feeling the benefit of clearing the debt.

edinburgher

@SuperSecretSquirrel - thanks mate - your input is always valued  

That big mortgage is very much in my sights, but it will need to wait its turn. My current timelines are:

• Immediate) pay off unsecured debts, save to EF
  
• Near term) baby arrives, £5k income reduction over one year (covered with cash currently on hand), save to EF
  
• Next six months) loft conversion
• 6 months+) save for extension, EF and small OPs
• 1 year+) EF covered, max Mrs E sal sac arrangement (26% salary to pension), save for extension, small OPs
• 3 years) extension and remortgage
• 3 years+) private childcare no longer required, all of the above, split remaining cash between S&S ISA and OP

Haha - we sure do like a plan on MFW

@Baileys_Babe - we do have an EF budgeted for on my budget spreadsheet and the plan is to take this to £12,000 in the fullness of time. Depending on the cost of our loft conversion, there is a good chance that this time will be quite short. We took out additional borrowing for what was originally intended to be a loft conversion and extension. It quickly became apparent that this wasn't realistic on our budget (I blame our choice to hire an architect who has frankly been a disappointment and claimed to know nothing about budgeting). We have the option to a) pay back any excess as an OP or b) just to keep the difference, use it as an EF and live with the consequences.

Since starting my diary again, I've made a lot of changes to our budget and we're financially much healthier than we have been for years. I am reasonably confident that if we go with b) that I won't squander the opportunity to continue with good habits and saving.

Now I feel like I'm just babbling, sorry