Prosperous soul, mortgage neutrality & creativity Year 2

A year ago I'd just got divorced and was about to take on my biggest mortgage ever at £202K over 22 years. I was terrified I wouldn't make it. I'd had a long history of repeated debt cycles the worst peaking at £70K at the end of 2016 which I'd got down to £1,479 in November 2021 but feared I'd never be free. Thanks to some wider family help I had an EF for £2K. I hoped if I was lucky that I could be CC debt free in a year and OP £20 a month and if I was really lucky add £50 a month to my non-workplace pension and perhaps get to an EF of £3K. I was in debt on my water bill of around £150.

Mortgage neutrality: I am hoping to develop a tax free lump sum that is big enough to pay a lump sum off my mortgage if I choose to. I have a number of pensions - which I plan to use as part of my C0ast FI journey.  I also want to reduce my hours and work more flexibly as I near retirement age.

Financial Progress over the last year:
  • Increased my income 
  • Mortgage down from £201,999 to £194,266 a reduction of £7,733
  • CC was £1479 now debt neutral a reduction of £1,479 - I mostly just use CCs for points and clear in full each month
  • My EF was £2,000 now £4,657 a difference of £2,657
  • Cleared water bill debt - now in credit so difference of £150
  • In credit on energy by at least £450
A difference of £12,469 in net worth change excluding pensions
  • DB1 was £3,850 per year  - no formal update but should have risen by at least 5% due to inflation. If that is the case it should now be worth £4,042+ equivalent to an increase of £192 per year. If that was multiplied by 25 like they do with FI - then that would be the equivalent of a DC pot growing £4,800. 
  • DB2 was £9,551 per year - at 1/4/22 it was worth £10,657. This is my current pension - and this is an increase of £1,106 per year. If that was multiplied by 25 that is equivalent to an increase of £27,650 in a DC pot.
  • DC Pot £3,643 - despite adding £312.50 to this gross - it's now worth £100 less than this time last year at £3,543. So in real terms -£412 in relative value in the last year given I'd topped it up. Hoping it will recover by the time I come to draw it. I need to investigate whether to switch funds and if there is anyway to make my annual charge lower
  • NEW AVCs I have put £750 in gross so far - and this has grown £7 in just over a month. So starting value £757. This sits alongside my main DB2 pension and can't be drawn independently but would be able to be converted to a tax free lump sum in its entirety if it's not valued at more than 25% of my main pension. This is what I hope to use towards the mortgage at a future date.
A difference of £1,955 on actuals in a year. If however FI multiples using 25x are used then this equates to an improvement of £33,107.

This means that providing I live long enough to draw my pensions - then my net worth increased by between £14,442 or if the 25x rate applies then £45,576.

In addition, my SP entitlement will have a grown by a year meaning I am on target to hit full entitlement by around age of 55. I was contracted out at some point so this my not be as clear cut as that.

Non-Financial Progress
  • Prioritised health and wellbeing
  • Undone years of neglect - and invested in help in the home and garden and in new clothes for me
  • Had several UK holidays etc
  • Decluttered
  • Lost some weight
  • Written some more of Young Adult fantasy book 2 
  • Made new friends

Achieve FIRE/Mortgage Neutrality by mid 2030
1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF)
2) Mortgage neutral by June 2030 AVC £7,613/£127,466 AVC target 5.97%
3) FI Age 60 annual income target £12,500/30,000 41.66%
Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements


  • Happy new diary and just look at how far you've come in a year, so ins[irational! Great goals and I'm sure you'll achieve them, looking forward to continuing to cheer you on x
  • lucielle
    lucielle Posts: 10,580
    First Post Name Dropper Photogenic First Anniversary
    You’ve come so far. Happy shiny new diary. Please remind me what AVC stands for. 
    Total Debt Dec 07 £59875.83 Overdrafts £2900,New Debt Figure ZERO !!!!!!:j 08/06/2013
    Lucielle's Daring Debt Free Journey
    DFD Before we Die!!!! Long Haul Supporter #124
  • jwil
    jwil Posts: 18,573
    First Anniversary Name Dropper Photogenic First Post
    Happy new diary!  I really love your progress report, look how far you've come in a year!
    "If you can dream it, you can do it". Walt Disney
  • beanielou
    beanielou Posts: 89,274
    Academoney Grad I'm a Volunteer Ambassador Mortgage-free Glee! Name Dropper
    Happy shiny new diary  :)
    I am a Forum Ambassador and I support the Forum Team on Mortgage Free Wannabe & Local Money Saving Scotland & Disability Money Matters. If you need any help on those boards, do let me know.Please note that Ambassadors are not moderators. Any post you spot in breach of the Forum Rules should be reported via the report button , or by emailing [email protected]. All views are my own & not the official line of Money Saving Expert.

    Lou~ Debt free Wanabe No 55 DF 03/14.**Credit card debt free 30/06/10~** MFW. Finally mortgage free O2/ 2021****
    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.

    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    ***Keep plodding*** Out of debt, out of danger. ***Be the difference.***
    One debt remaining. Home improvement loan.
  • Great to read your update - i look forward to following your plans
    Mortgage restart June 2018 £119950Re mortgage August 19 £110470, … Mortgage November 22 £85600 final 0% CC 3300Home renovations - £65000, mid 2018 - mid 2022
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