Follow the Yellow Brick Road 2023

KajiKita

SandyShores said:

KajiKita said:

savingholmes said:

You should multiply it by 365 and then by the remaining number of years you would otherwise have paid it... 

Oooooh ….. (Notes carefully for future calculations!)

KK

About £250

Fabulous 😊

KK

SandyShores

savingholmes said:

Are you going to put your NI savings into pension? Could give you a big long term boost before you get used to having the extra £. You'd then get tax back on top of any gains... (or risk of loss).

Not at the moment - I'm not that organised, but that's a good idea as its a good amount - I reckon about £650.  

savingholmes

Good luck whatever you decide.

SandyShores

I've just paid another £450 off the mortgage.  I was keeping it back to buy a new piece of furniture but have decided that, while I'm deciding what to buy I should just pay it off the mortgage.  I'll save for my furniture while I'm deciding.  I've also got lots of stuff to sell again, so I need to start clearing out and making some money.  The plan is to start paying all those little bits off the mortgage too.  I've just had a look at my spreadsheet for the next few months and realised part of the problem is paying a weekly direct debit through P-Pal linked to my CC, but then not settling it as I go.  It means my CC balance is steadily rising - I'm still paying it off every month but I don't like that it wipes out all of my spare money - feels a bit like I am paying for stuff I've alreay had (and I don't like that!).   In future I'll be putting the monthly/4-weekly amount in a spare current account and then paying it off the CC as its direct debited.  It means I know exactly what's left and will encourage me to budget a bit more.  I also had a look at the MSE mortgage calculator and worked out what the increase in interest rates will do for us in 18 months time / what various overpayment amounts look like.  I'm anticipating we will still be able to pay off the mortgage before retirement - fingers crossed - although if we have to go into retirement we should still be okay and/or Mr Shores will do a drawdown.  All decisions to be made later, but good to know the options - and it will encourage me to start paying those small amounts off the mortgage - they all add up.

LadyWithAPlan

Yes CC's are a nightmare for the overspend.. All the research shows we dont feel the pain of spending on a CC - and then of course we have to clear it at the end of the month. Using a CC even very wisely (I always pay off in full and often did what you do and send amounts throughout the month over to it) I still spent more than I planned 
This MIT 2021 study is v interesting on it  .. I am now adding immediately anything I buy on CC into ynab as it very quickly kills the dopamine   

MIT Sloan study shows credit cards act to “step on the gas” to increase spending

They found that credit cards serve to ‘step on the gas’ by putting costs out-of-mind regardless of the price of the product. More specifically, the study revealed that credit cards drive greater purchasing by sensitizing reward networks in the brain, involving the same dopaminergic reward center (the striatum) that is exploited by addictive drugs like cocaine and amphetamines

SandyShores

LadyWithAPlan said:

Yes CC's are a nightmare for the overspend.

Agree with all of that LadyWithAPlan.  It was definitely getting out of hand and I've been buying things when I want them rather than spreading my purchases out.  I've got a lot of stuff to sell and I need to spend my time doing that rather than pressing the purchase button so often

Thought I'd have a look at my earlier post/plans to make sure I keep on track:

At the end of 2024 I'd like to be able to say I've:
Achieved more at running and had a regular weights session (yes and no)
Bought as little as possible but sold a lot of stuff on V1nted (5 items listed in Feb)
Reduced the number of trips to the supermarkets (started this)
Got to a place of 51% equity (started - currently 31%)
Planned more meet ups with friends and family - near, far and wide (started)
Used the sewing machine and started lots of those purchased crafts (once craft room finished)
Made another three blinds and bought three sets of curtains (once craft room finished)
Read lots of the books I've bought (started on novels, need plan for non-fiction)
Found a less stressful job (no, but see above and am working on making the current one less stressful)
Made a decision on taking one of my pensions e.g. larger lum sum vs larger pension (yes but will delay)Done a few of those social activities I keep on about - crafts, driving, climbing. (this and all below not started)
Continued shaping the garden incl. veg plot (raspberries/salad are okay in shade).
Replaced a shelf unit in the garage with another set of hooks.
Found a less stressful job (no, but see above and am working on making the current one less stressful)
Won £1m on the PBs (well you can hope).

All within my seven goals:
1. Physical Health / Fitness - making sure this is visibly prioritised
2. Environment e.g. decluttering and decorating - see above
3. Family / healthy work-life balance - see above
4. Career and Learning - plan in place, just need to put this into action
5. Financial - 2024 is time to focus on the mortgage (but save the reg. OPs for the H2B)
6. Creativity - art, sewing, knitting etc - some social - see above
7. Spiritual / Personal Growth / Inner Peace - reached by 1 - 6 

Glad to report I am on the right track and its all within reach.  

savingholmes

Well done on your goals and the OP. It's lovely when you are heading in the direction you want.

SandyShores

Credit card statement is in and its over £1k - which I knew of course because I keep track - but the spend button is definitely off now.  

I'm not sure what I'll do with the extra NI but that £50+ a month will definitely come in handy this month once I've paid down the CC.

Thanks @savingholmes, its made me realise that I need to prioritise myself for the next 12 months.  In 2025 I'm planning to reduce my work hours and take a big chunk of my second DB pension.  There'll be a lump sum to pay towards the mortgage and a few extra £s to OP each month, and I'll look forward to putting that on my signature  .  I'll continue paying into the third DB pension and I've worked out I should have around £25k total pension when I reach SRA, hopefully with the mortgage paid off that should be plenty.  Mr Shores' pensions are a work in progress still - he needs to contribute a couple of extra years for full SP and he has a pot of around £100k (and a small pot of around £5k), plus his current employer pension.  If we don't tap into his funds for the mortgage he should have about the same as me - we need to do a review of his pensions and make sure we put enough in, but paying off the mortgage pre-retirement is our focus really.

savingholmes

Having a plan to be able to reduce your hours within a year sounds great. Exciting stuff. Check out whether there is any way to create a tax free lump sum to sit alongside that pension via AVCs as if there is it could be a good option. Also ensure you check out whether the reduction in pension from taking it early pays off or if there is any other way of achieving the same goal while maximising your long term pension.

SandyShores

Thanks @savingholmes, I definitely need to look at AVCs. 

I think the larger lump sum is our best chance of achieving mortgage free by retirement (apart from the PB win ).  I have thought about extending the mortgage into retirement but that means paying interest for a longer period; and claiming a smaller pension means less tax (some of which would be higher rate while I'm still working).  There also won't be any financial benefits in delaying taking my DB pension any later than next year so the choice is larger tax free lump sum vs larger taxable pension and which would be the best financially.

Its difficult to calculate - so many factors - but I found a really informative post in a thread called Pension - higher lump sum or lower lump sum.  Its helped me get my head around it, but its a good point I'll re-do the calculations again at the end of the year to make sure - these are some of things to consider:

" hugheskevi said:

The key things to consider in decisions like this are:

• Commutation rate
• Rate of income tax paid now and in the future
• Life expectancy

Start with life expectancy. The ONS has a calculator at this link. "

Break even point for me is mid-late 80's but its difficult to say what life will be like then and whether that extra c£2k a year on top of around £25k will make a huge difference.   I know very immobile people and very mobile people of that age and who knows what 25 years will bring or what will be important to me by then, I didn't predict that last 25 too well .

Payday has been and I've paid another £1k OP to the mortgage - whoop woo - and I've also paid over £1k off the credit card with just the minimum dd to be collected. The credit card is more or less sorted now - it was becoming very confusing as I was putting household regular spends on my card, then not claiming them back and so all the budgets were getting mixed up with budgetted amounts.  Those regular spends have been transferred into a separate account and I'll pull them into my account when the spends go through.  That leaves our household account clear for ad hoc household spends (and bills) and it will be much easier to budget.  I'm sure there will be some more changes to make it simpler, but for now its fine.