50k in 5 years

ecoelle

Morning all, well it's been a while.  In fact, it's been so long that my old thread has been closed:( 

I have been on MSE for ages but haven't posted in a long time.  Since then our financial, health, family and general situation has changed a lot so I thought it was time for a new start.  

We took our mortgage out in 2006 and it was for 30 years, which we knew was always going to be too long for us.  We have overpaid as an when we have been able to and now have just over 50k owing. The original date for finishing paying was June 2036, we have changed mortgages and providers over the years to chase better rates and deals, meaning the MF date currently on the existing mortgage would have been January 2031.  For me that's still too long so the new plan is to move to a fixed rate next month, reduce the term to 8years, which will give us a monthly payment the same as we pay now, then overpay by between 3-4k per year to have us MF by September 2026.

I'd be interested to have anyone's input, questions and ideas, and am going to use this thread as a bit of a log of where we are at and how the journey is going.

Xx

ecoelle

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	2,357
Monthly expenses (incl. HP & secured loans)	2,303
Available for debt repayments	54
UNsecured debt repayments	0
Amount left after debt repayments	54

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	211,000
Total Secured & HP Debt	-51,000
Total Unsecured Debt	-0
Net Assets	160,000

Household Information

Number of adults in household	2
Number of children in household	1
Number of cars owned	0

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	341
Partners monthly income	2016
Benefits	0
Other income	0
Total monthly income	2357

Expenses	Amount(£)
Mortgage	620
Secured/HP loan payments	0
Rent	0
Management charge (leasehold property)	0
Council tax	127
Electricity	100
Gas	90
Oil	0
Water Rates	40
Telephone (land line)	0
Mobile phone	52
TV Licence	20
Satellite/Cable TV	11
Internet services	32
Groceries etc.	300
Clothing	60
Petrol/diesel	0
Road tax	0
Car Insurance	0
Car maintenance (including MOT)	0
Car Parking	0
Other travel	50
Childcare/nursery	0
Other child related expenses	0
Medical (prescriptions, dentists, opticians etc.)	40
Pet Insurance/Vet bills	56
Buildings Insurance	15
Contents Insurance	15
Life Assurance	63
Other Insurance	59
Presents (birthday, christmas etc.)	100
Haircuts	10
Entertainment	60
Holiday	150
Emergency Fund	30
Dram Club	30
Disneyland	10
Sofa	10
Disney Plus	10
Scout camp	10
School trips	20
Work food	50
Lottery	10
Online Maths	9
Contact Lenses	16
Tumble Dryer Insurance	3
Dental Care	16
Scouts	9
Total monthly expenses	2303

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	51000	(620)	3.69
Secured & HP Debt totals	51000	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Unsecured Debt totals	0	0	-

Asset Description	Value (£)
Cash	29000
House Value (Gross)	180000
Shares and bonds	0
Car(s)	0
Other assets (e.g. endowments, jewellery etc)	2000
Total Assets	211000

Comments on the results

You have sufficient monthly income to meet your expenses and your minimum monthly debt repayments with £54 left over. You can use this to pay off your debts more quickly or to build/top-up an emergency fund. Whatever your results show, it always pays to seek advice or comments from others. Why not post your SOA details on our Debt Management discussion board or on your preferred discussion forum elsewhere. Thankyou for using the SOA Calculator at www.LemonFool.co.uk

LadyWithAPlan

What a lovely shiny new diary!

 You seem pretty on it and I can see there are lots of clubs and kids costs etc that all add up and I can appreciate you think that important. 

I only worry if cost of living goes up  further as now it’s a tight budget but workable. Obviously gas and electric is super high - and might get worse - are you on a fixed rate there ? 

 My main thought is maybe you could pull in some extra side income such as surveys, eBay etc and put that all as extra OPs as £54 extra a month is not much room 

Or could you choose to pause or lower some of the spends and saving pots temporarily eg holiday and gifts to either beef up your EF or get these OPs done faster. 

I know it’s a balance between having a happy family time whilst your child is young  and being free in your 5 year MFW time scale as once you have no mortgage everything will be easier 

I assume you both have a pension as it’s important that as SAHM you look at this - too many women (you might be a man but same issue applies  ) - sahm have tiny pensions in later life cos they don’t look at this as too busy looking after the home, kids and often elderly relatives

I don’t know much about voluntary class 2 contributions but figure as a carer of a child you get some pension credit for that ? Someone on here will know 

I do know you can even put money in to a SIPP as below a basic tax rate and get the hmrc uplift 
I suggest Vanguard SIPP - you can literally put in £5 at a time 

from hmrc website On under £3600 a year earnings 

f you have no relevant UK earnings or earn less than £3,600 a year, you can still contribute to a personal pension which uses the relief at source method. And you’ll qualify to have tax relief added to your contributions up to a certain amount.

If you’re in a workplace pension, you’ll need to check the type of pension you have with your employer or pension provider.

The maximum you can contribute is £2,880 a year.

Tax relief is added to your contribution so if you contribute £2,880, £720 is claimed from the government and added to your pension. This means a total of £3,600 will be contributed into your pension scheme. 

killerpeaty

Happy new diary!

Work food seems quite high, obviously you do have the room to spend it though. 

I look forward to seeing you progress

ecoelle

LadyWithAPlan said:

What a lovely shiny new diary!

 You seem pretty on it and I can see there are lots of clubs and kids costs etc that all add up and I can appreciate you think that important. 

I only worry if cost of living goes up  further as now it’s a tight budget but workable. Obviously gas and electric is super high - and might get worse - are you on a fixed rate there ? 

We are on a fixed rate until May 2024, thankfully, at the moment we are building credit for the winter.

 My main thought is maybe you could pull in some extra side income such as surveys, eBay etc and put that all as extra OPs as £54 extra a month is not much room 

Excellent ideas, I already do surveys and find Attapoll quite good, also curious Cat, Streetbees, Appinio, Weare8.  I use Shoppix, Huyu, Amzon Shopper Panel and Snap my eats to build up paypal cash and vouchers which we use for things we need or transfer into the OP pot.  We have £3000 saved to pay off as an immediate OP once the new mortgage is signed.  Then our aim is to pay off at least £4K per year from 2024.  we have a lot of this saved already but with cost of living as it is we don't want to have no cash savings on hand.

Or could you choose to pause or lower some of the spends and saving pots temporarily eg holiday and gifts to either beef up your EF or get these OPs done faster. 

I know it’s a balance between having a happy family time whilst your child is young  and being free in your 5 year MFW time scale as once you have no mortgage everything will be easier 

I assume you both have a pension as it’s important that as SAHM you look at this - too many women (you might be a man but same issue applies  ) - sahm have tiny pensions in later life cos they don’t look at this as too busy looking after the home, kids and often elderly relatives

I don't think I have a current pension, I do have an old pension from when I worked in retail and also a few years of a teacher pension, I'm looking into voluntary contributions this week as I'm not sure where we stand.  I have a long term health condition which is very unpredictable and I cannot work full time because of it,  we chose for me to work on a supply basis as it means when I am able to work more I can and when I am having a bout of my illness I can take time to get well again.  It also means we have no childcare costs as my work is term time only and I am able to drop off and pick up from school each day.  

I don’t know much about voluntary class 2 contributions but figure as a carer of a child you get some pension credit for that ? Someone on here will know 

I do know you can even put money in to a SIPP as below a basic tax rate and get the hmrc uplift 
I suggest Vanguard SIPP - you can literally put in £5 at a time 

from hmrc website On under £3600 a year earnings

f you have no relevant UK earnings or earn less than £3,600 a year, you can still contribute to a personal pension which uses the relief at source method. And you’ll qualify to have tax relief added to your contributions up to a certain amount.

If you’re in a workplace pension, you’ll need to check the type of pension you have with your employer or pension provider.

The maximum you can contribute is £2,880 a year.

Tax relief is added to your contribution so if you contribute £2,880, £720 is claimed from the government and added to your pension. This means a total of £3,600 will be contributed into your pension scheme. 

Hi, I've added some notes, I posted the SOA earlier and didn't really explain our circumstances,  as a couple we both have variable monthly income.  My OH works in retail and gets a basic salary plus commission, obviously this can mean some months we get more money than others, I also work variable hours as I work in a school on a supply basis.  this month I will receive no pay at all as it has been the 6 week holidays and so I have not worked at all.  Other months I can earn upto maybe £800 so I just calculated our average based on the last 6 months and used that as our income on the SOA.  I know we can survive on this amount so plan to put anything over these amounts into the OP pot each month.  We do our mortgage OP annually so if we need to pull money out throughout the year it isn't an issue.

Bargainhunter30

Not sure if you would consider this but I recommend applying for universal credit. It may help with your variable income and you may find you're entitled to help when your earnings are lower certain months. Also you may be entitled to the government support which keeps being offered, cost of living help etc.

ecoelle

Bargainhunter30 said:

Not sure if you would consider this but I recommend applying for universal credit. It may help with your variable income and you may find you're entitled to help when your earnings are lower certain months. Also you may be entitled to the government support which keeps being offered, cost of living help etc.

Hi, because we have savings we don't qualify for any help as far as I know.  I've checked a few of the different calculators and they all say the same.  Thanks for commenting though x

LadyWithAPlan

Ah the joys of variable income, I am freelance myself so appreciate the need for a larger EF 
It does mean like you I am on my budget harder as I can’t assume money coming in on time 

ecoelle

LadyWithAPlan said:

Ah the joys of variable income, I am freelance myself so appreciate the need for a larger EF 
It does mean like you I am on my budget harder as I can’t assume money coming in on time 

Yes, I want the flexibility but that comes with uncertainty.  We just try and budget for the worst case scenario and then any extra we get is a bonus.

Today we are meeting the mortgage advisor to discuss switching out deal, hoping to avoid the predicted interest rates rise.

L9XSS

Hi. Good luck on your journey to becoming mortgage free. Your timeline is excellent and with perseverance it will happen! Might sound odd but your cash savings are pretty high. Could you utilise some of this to “support pension provision”? I took this route with some savings moving them into a SIPP, benefitting from the 20% HMRC uplift then at 55 years of age taking a small tax free lump sum that virtually overpaid my mortgage. I continued to overpay from my salary from years 45 to 55. I’m now continuing to bolster my pension as im now mortgage free for the next 5 years. Just my tuppence.

ecoelle

L9XSS said:

Hi. Good luck on your journey to becoming mortgage free. Your timeline is excellent and with perseverance it will happen! Might sound odd but your cash savings are pretty high. Could you utilise some of this to “support pension provision”? I took this route with some savings moving them into a SIPP, benefitting from the 20% HMRC uplift then at 55 years of age taking a small tax free lump sum that virtually overpaid my mortgage. I continued to overpay from my salary from years 45 to 55. I’m now continuing to bolster my pension as im now mortgage free for the next 5 years. Just my tuppence.

Hi, I yanks for commenting.  The cash savings are a mixture of things, some is money put away for emergencies, some is in Monzo pots for yearly bills, we save a set amount each month for these, some is our child benefit which we have saved since having our LO, it is picked away in a fixed rate for another 12 months (ish) and some is money which I have to keep to one side in case of a tax bill.  It looks like we have a lot of cash, which we do, but a lot is already allocated if that makes sense.