Mortgage Free in 5 - 10 years

savingholmes

Well done on being debt free again. A 3-6 month emergency fund could be a good thing to aim for. £1K is a great first step.

LegoHead

CountingPenniesClaire said:

Generally a bit of diversification in your savings/overpaying mortgage is good. It’s a bit boring I know because you don’t see big inroads but a bit in pensions, a bit in savings (stocks/cash - whatever you’re comfortable with) and overpaying or offsetting mortgage is generally a good idea.

Pension has obvious benefits as is tax free (especially so for higher rate) and depending on age can compound over the years and make a big difference but it is always a balance between living in the here and now and planning for the future. 

Whatever you choose to do, you’re asking the right questions and giving it the thought it deserves.

I am aiming for 15% contribution to pensions at the moment. 5% me, 3% employer and hoping for minimum 7% bonus each year, but that could go up or down. 

I want to clear the mortgage in 5 years which is achievable with SSISA and 10% return yearly. However I also want to get the balance right and as you say live in the here and now so trying to convince myself I would be happy if I changed that goal to 10 years. I think even 10 years would be a great achievement, but it feels so far away.

I have mostly been running on autopilot and following the baby steps ideas from Dave Ramsey. It gave me the push to get on with the debt free drive and emergency fund. Now I need to figure out how quick I want the mortgage gone.

LegoHead

savingholmes said:

Well done on being debt free again. A 3-6 month emergency fund could be a good thing to aim for. £1K is a great first step.

Yes I am thinking 6 months would be good before starting investing all my spare money each month. Maybe even 12 months as then I would be really comfortable and less stressed about investments going up and down.

LegoHead

checking in as I am really fighting the urge not to get a loan and buy a camper van. Have been accepted in principal for £40k loan at 9.9%. Trying to talk my way out of this one. One of my goals now it to buy a camper. I currently still have a very cheap and unreliable citroen berlingo that I could chuck a few quid at and make reliable again and have a nice little camper.

Temptations are tough!

savingholmes

Well done for owning the temptation. 9.9% isn't a great rate though. Given how quickly you cleared the debts - how long would it take to save? Could you set yourself a target of saving a huge chunk of that and then consider whether you want a loan for the remainder or not?

LegoHead

savingholmes said:

Well done for owning the temptation. 9.9% isn't a great rate though. Given how quickly you cleared the debts - how long would it take to save? Could you set yourself a target of saving a huge chunk of that and then consider whether you want a loan for the remainder or not?

I have still been debating the decision. Have settled on I would rather have the spare cash each month to spend as I wish than tie myself up into a loan. The stress of the loan outweighs the fun of an expensive camper. However I have not completely gone off the idea of a new van. Will probably sell my other car I paid off the last loan for and get a newer Berlingo or equivalent. I I did this then I could have money left over from the sale to put towards to Mortgage free fund.

I wrote a note to myself in my budgeting spreadsheet saying well done for not buying the expensive van and to concentrate on the mortgage free journey.

My finances are very good now. I give myself about £500/month to spend on anything completely guilt free. The rest goes towards to bills and savings.

As of next month will be saving £500 to NS&I emergency fund, £500 to investment Stocks and Shares ISA and £50 overpayment on mortgage. My mortgage interest is only 1.22% so don't really need to do overpayment but it feels good to do a little.

Figures today are as follows

Yearly bills pot : £700
Emergency fund in NS&I : £4500
Mortgage : £132,265 remaining

Sg28

Why are you saving into ns&i? Theres better rates available.

My preference would be stop overpaying and stop the SSISA (I feel 5 years a bit short) and stick it all in high interest savers and fixed rates. You get 6% fixed at the monent and over 4% easy access. 

Then clear the mortgage as soon as your fixed rate ends. 

Sg28

And dont buy the camper! Thats such a waste of money in interest payments. Pay the mortgage off, use the excess spare money to save for it!

LegoHead

Sg28 said:

Why are you saving into ns&i? Theres better rates available.

My preference would be stop overpaying and stop the SSISA (I feel 5 years a bit short) and stick it all in high interest savers and fixed rates. You get 6% fixed at the monent and over 4% easy access. 

Then clear the mortgage as soon as your fixed rate ends. 

I like a gamble is the reason I am putting some into NS&I. Yes it probably isnt the best return. At some point I will stop paying into it as this is my emergency fund pot. I think if I can get it to cover 6 months bills then I will put the money elsewhere.

I am not sure savings accounts are good for me as it may push me into higher tax bracket. Will have a look at this option though. One thing I dont like about Shares is they used to stress me out having to constantly watch them. A guaranteed savings rate would be less stressful for sure.

South_coast

You could look at a cash ISA to complement your S&S. You can put in up to £20k per tax year between the two and there's no tax payable on the interest, the same as there's none on any investment gains