happihorse's journey to mortgage freedom and contentment…

happihorse

So, following some suggestions from others on here (and turning 40 last year  ) I have been thinking about my pension and longer term financial planning in conjunction with paying off the mortgage...

At the moment I take home about £3,100 per month (after paying £376 into my pension).  My employer pays £563 per month to my pension.  My mortgage is £1,105 per month but I am overpaying by £895.  I therefore have about £1,100 left per month to live off (and enjoy).  Based on the above and a planned retirement age of 60, I will be able to get an annuity which pays an annual income of about £17,830.  That's without any lump sum withdrawal too. 

If I was to increase my monthly pension payment by £500 (with my employers' contribution remaining unchanged) my annual income on retirement (at aged 60) would be about £23,195.    Still not great but a bit better.  In this case my take home pay would probably reduce by around £400 per month so I would need to drop my mortgage overpayment by that amount.  If I can sustain my budget I would be able to continue to overpay the mortgage by £500.

Ideally I should probably stop overpaying the mortgage altogether and pump £1,000 per month into my pension but that would only increase my annual income on retirement to around £28k which doesn't seem much of a reward for investing so much money.  There is also the risk that I won't ever see the money I put into a pension so I am reluctant to put that much into it. 

At present I am on track to repay my mortgage in about 10 years, based on my £895 per month overpayment then some extra from annual bonuses etc.  Reducing my overpayment as above means it will take about 13 years to repay the mortgage.  Obviously my annual income on retirement would reduce if I retired earlier than 60 too.

I still need to think it over a bit (but would welcome any thoughts from people on here).  I am leaning towards increasing the pension by £500 per month and reducing the mortgage overpayment to £500 per month for now with a plan to review this in a few years time.  I am (hopefully) due a small pay rise in May this year so will look to tie it in to that (to hopefully offset the impact on my take home pay).

savingholmes

Great news on the £200.  

On pensions it's a tough call. At 10 years older than you do I am glad my pensions are doing well but like you also want home security

happihorse

savingholmes said:

Great news on the £200.  

On pensions it's a tough call. At 10 years older than you do I am glad my pensions are doing well but like you also want home security

Hi savingholmes - yes, the pensions thing is a tough call.  I don't think anyone can be sure they are doing the best thing (as we never know what's around the corner) but I think splitting between the too does seem like a sensible option.

happihorse

So it's Thursday already - how did that happen?!    Work is manic and we are moving towards a very busy time with lots of deadlines looming.  I will do my best to manage my hours at work but will need to put a fair bit extra in over the next few weeks.  I'm going to try to set myself some achievable targets and a bit of a plan to ensure that I keep up with other things (besides work) too.  Previously I have let so many non-work things go out the window when it's busy at work and it's quite depressing not having much of a life for that period!

In money news, all the monthly payments have now left my current account and I have £20 credit in there.  I have a bill of about £800 on the credit card and I have to admit, I am not sure where that has all come from.    I know there were a couple of bigger essential things (full tank of fuel for the car and 6 months worth of dog worming and flea protection) but it seems there was also a lot of unnecessary bits!    Will do a review of that at the end of the month.  Still on track to clear it on payday and be back in the black.  And have the extra £200 cash which I will use for groceries next month.

I want to make a real effort next month in terms of cutting spends to a minimum and being much more careful about what I eat.  I am wondering if a weekly 'fat class' would be good for me.  Although it means additional spends, if I can commit I will save many times that amount on my groceries.  Something to ponder...

Hope everyone stays safe during the storms.

savingholmes

There's an SW thread somewhere on the forum - if you wanted to give that a go for free. 

I think you still need to split your budget down. You haven't left a lot of money for bills other than the mortgage so that makes it tighter. It feels like you haven't adjusted your other spends accordingly and perhaps fall into the same trap I sometimes do of thinking 'I earn decent money so...' forgetting all the commitments I've already made with it.

happihorse

savingholmes said:

There's an SW thread somewhere on the forum - if you wanted to give that a go for free. 

I think you still need to split your budget down. You haven't left a lot of money for bills other than the mortgage so that makes it tighter. It feels like you haven't adjusted your other spends accordingly and perhaps fall into the same trap I sometimes do of thinking 'I earn decent money so...' forgetting all the commitments I've already made with it.

Hi savingholmes - I will look that out because I need all the help I can get.  Just wondering if the act of physically going to get weighed in will make me more accountable.  Will give it some more thought.

happihorse

So a whole week has gone by since I last posted on here. 

Work has been insanely busy and I still have one main thing left to complete by the end of the month.  Generally on track with everything else work-wise but been putting in lots of hours in to get there.  The big thing might have to get done at the weekend as the deadline is Monday and I won't have a chance to do it tomorrow or Monday.  But it should calm down a bit after that and I will be able to get my life back a bit.  (Or that is the plan anyway...)

My walking and exercise has suffered too - there have been a few days over the last week where I haven't hit my goals of a decent walk, steps and active minutes.  I must get back on track before I fall off the wagon completely and loose all the progress I have made so far.  I am going to get an early night tonight and then out for a walk first thing tomorrow (before work) so I don't miss yet another day.

Not much progress to report on the money side of things either.  Spends have been a bit better and I should hit my goal of getting back into the black at the end of this month but still not really progressing.  At least it's the end of the month so an opportunity to reflect and review over the weekend and then start afresh next week.

Plan for tonight is file my work emails and tidy up a few bits, make a plan for tomorrow, quick tidy round the house and then a cup of tea and bed.

happihorse

Thank goodness the weekend is here! 

It was payday today so I have cleared my credit card and moved £100 into a savings account.  I am going to try to keep that bit back to build up a bit of a buffer.  That leaves just enough in my current account to cover the mortgage and direct debits for the next month plus a bit extra which I may draw out as cash in a few days.

I'm going to aim for a very low spend month in March.  I would like to review my spending from February to see how I can cut back and then make a plan for the month.  I have a fair bit of cash left in my purse form the sale of the horse stuff last week so will try to stretch that as far as I can.

I have so much I want to do this weekend and can't really see how I am going to get it all done!  I absolutely must get the big work thing completed and do a few loads of washing (which I will be aiming to dry outside and air on the towel rails to save paying for a tumble drier at the laundrette).  I will make sure I do a long walk each day and could really do with doing some cleaning and tidying at home and in my car. 

Feeling shattered now after a long a stressful week at work.  Think I may just head to bed now and get an early start tomorrow. 

savingholmes

Good luck with finishing work project. I completely get the weight it lifts when done. Hope you get chance to relax too

happihorse

savingholmes said:

Good luck with finishing work project. I completely get the weight it lifts when done. Hope you get chance to relax too

Thanks savingholmes.

I did get the work project done (just in time) although it did eat up quite a bit of the weekend.  Worth it though not to feel under so much pressure yesterday!  And managed a couple of nice walks and chill time too.  Even managed to get my car cleaned out (though have a few more jobs to do around the house).