New year, new goal

RS89

May update. The plan keeps moving forwards, the mortgage balance today is 244.5k it’s so nice seeing it drop month to month. 

You Need A Budget app has been a revelation in budgeting and for the first time have a real handle on what’s being spent where. And I’m really confident that the monthly mortgage savings are accounted for - means everything is now totally automated. And there’s money left over for some niceties too. If you are into this app - our age of money is now 45 days… meaning every £ we spend is 45 days old - quite impressive as it means we are effectively 6 weeks ahead on day to day costs!

No news yet on the job situation so let’s see how that goes. 

Another potential future complication has emerged. When we bought this house we were in secondary school catchment but there is a chance we might not be now. We haven’t accounted for moving in the plan. A similar house closer to the school is probably another 250k on top… that would certainly put a spanner in the mortgage free plan!!!

RS89

June update. Just back from a lovely half term break. Made a bad choice buying currency at the airport last minute and got cheated on the rate… but the time away was lovely. 

You Need A Budget app continues to be revolutionary - enabling real changes to our lifestyle without compromising on the mortgage free journey. I used it to compensate easily for the LTIP shortfall and it helped me realise I was actually over saving and I could cut back less. 

We have now also started to plan for the “post mortgage life”. Whilst the mortgage free date is still 31 months away all being well we can’t meaningfully move that earlier due to when the fix rate ends so extra cash is better diverted to other goals. House extension being no 1. So far a whopping £150 in that pot. The mortgage balance is now around £242k.

Am also starting to look for jobs a little closer to home. I may need to take a slight pay cut but once the mortgage is paid this will not be an issue. 

RS89

July update. June ended up being a bit spendy with extra socialising costs we didn’t budget for. A close family member decided to have an expensive day out for their child’s birthday, plus also a separate day out meant to be cheapo (a picnic in a London park) ended up being extremely spendy! Alone those 2 days out set us back close to £350!

Regardless they were fun and it’s important to have balance in this journey. 

Small win on premium bonds tops up the mortgage pot further, plus some of the investments are doing well… Apple with their AI announcement and Amazon shares in particular. 

So we keep making progress - slow and steady. 2 years, 8 months to go. £240k to pay off. Roughly 90k in the pot. £150k to find in the next 32 months. 

RS89

Busy couple of months but the plan remains on track. Another small win on premium bonds - a few hundred- but that got me wondering if I should be looking elsewhere. 

Read Rich Dad Poor Dad cover to cover. Sold 30k of premium bonds and have put them in stocks and shares ISAs. Half invested in funds half invested in individual shares. A little bit more of a roller coaster day to day but the return should be better. 

The book was quite eye opening really and it’s making me question if paying off the mortgage is in fact the holy grail. What if my money can be invested and the investments can then pay the mortgage? That would mean having investment income of maybe £1k or £1.5k a month, or 15k a year. I would need £150k invested earning 10%… or 250k earning 6%. Which is roughly what I owe on the mortgage. I don’t have that today but my mortgage overpayment strategy means I’ll have that in a pot ready for the day I need to renew (Feb 27). 

TL:DR - instead of paying the mortgage with cash - buy investment that earns 6% and use returns to pay mortgage. Then at the end I have both mortgage paid and the underlying investment which continues to pay out. 

Viable strategy??

Aimingforthegoodlife

I have no idea if it viable, but it certainly sounds good! I think thats what I like best about these diaries, how we all explore our options and come up with different ideas! Amazing progress on the mortgage so far, investments terrify me as I don't understand them at all, it is good that you have the understanding!

RS89

I can’t say that I am particularly knowledgable either. Hence why I bounced my ideas into ChatGPT. I got it to critique and improve the proposed investment portfolio and analyse each stock. I doubt the answer is perfect but I am sure it is better than my own naive brain! 

The key thing that was an eye opener to me from the book was the simple concept that you need income generating assets to pay for costs. So your home is not an asset, but a cost. It generates no income, niche cases like rent a room aside. 

Even MSE recognise the concept as they built in “should you save or over pay” into the calculator. My plan is to take that to the extreme…. Which is not even that extreme. In Feb ‘27 if my math is correct I’ll have accumulated a savings pot the same amount as my remaining mortgage due. 

I could - pay off mortgage, have no savings left. 

Or
invest the money, hopefully earning 8-9%. At 8-9%, enough “interest” or income is generated to pay my mortgage monthly cost in entirety. The outcome is the same. Mortgage is paid, but I retain an “asset” which will continue to pay me income long after the mortgage is gone. 

And if I keep building that asset - then it means I could also fund a house upgrade too - as I could borrow more - with no cost to myself. It would be paid by the investment income. 

Mind boggling really. 

RS89

October update. Never a truer word spoken as the house lives up to its “not an asset” labelling. My oven exploded, so that’s an unexpected cost I have to pay, I had to replace a broken window thanks to the gardener (now sacked after he didn’t own up despite video), and new gardener is twice the price. 

No, having a gardener is not money saving but it is time saving. 

On the flip side, a change to the way my employers pension calculation is done means I am £150 a month better off. So net net there’s a little spare each month that could provide a little buffer. 

Investment performance so far is reasonable, 6.5% in one ISA and 6.7% in the other. Will judge again at the end of the year. 

RS89

A little early but here’s the year in review. 

Mortgage remaining: £230k / £395k

Total overpayment this year: £6.5k
Total overpayment overall: £45k
Total amount in savings pots earmarked for mortgage: c£90k
Unvested share awards: £60k (that vest before mortgage is due). 

Forecast to pay in 2 years time when mortgage deal is up: £230-£90-£60 =£80k 
Funded by regular payments: £36k
Funded by overpayments: 13k £500/ month 24 months
Still to find: £80-£36-£13=£31k or £1.2k a month 
Current savings rate: £1.7k a month

… it’s happening isn’t it? Fingers and toes crossed we have no big shocks coming our way… assuming everything goes to plan… the mortgage is done!

I know it won’t be plain sailing though. We have multiple expenses - it’s a big birthday year next year, the lease on the car is up, and the house is due to throw us a big maintenance bill somehow. 

But for now I’ll ignore that, and have a mince pie and toast what’s achieved so far 🥂

RS89

2026 is off to a reasonable start and we remain on track. 

The ISA has been a bit wobbly thanks to recent steep falls in Nvidia and a couple others but overall still in the green. 

More than made up by a more generous than expected vesting of my LTIP.

Unexpectedly Partners job has been placed at risk so we have that to navigate - in the worst case scenario I am very thankful that we have the pot earmarked for mortgage should the worst happen. 

January proved to be a very money saving month but the bills will only rise from here… partners milestone birthday and we have a lot planned plus it’s looking like I’ll need to replace the shower and house alarm. 

Groceries just seem insane in price these days too. 

To top it off, after I paid my self assessment HMRC have asked me for more tax on top so now my monthly income has fallen by £250 a month.

Still, we stay focussed. I can see the finish line on the horizon. Feb 2027 is the date!!! 2 years from today!!!

beanielou

Good to stay focused. 2 years will just fly in.