Mortgage cleared in 9 years

user15

After initially taking out a 30 year mortgage, I cleared it after 9 years, using all my savings and making the max 10% over payments each year.

- Savings have all been used up, except £500
- I have no emergency fund
- house is worth approx. £425,000

Whats the best thing to do with the money (£1400) I am now saving instead of paying the mortgage every month ?

MovingForwards

Savings and pension.
It's worth reading through posts on the above boards to have a look, apply to your circumstances and ask further questions.

mi-key

I would definittely use some to build up a rainy day fund, maybe £5K - £10K. If something came up on the house like the boiler needing replacing, your car blows up etc.. it's always handy to be able to get that money quickly.

ManekiNeko

Agreed, start with one month's salary as a rainy day fund and building up to 6 to 12 months. If you've not heard of it, this is sometimes termed an FU Fund, but essentially it's freedom to make all the ethical calls you like at work, to turn down a stressful project you don't want, to leave a bad boss, or to not worry during a round of redundancies. Freedom to travel or whatever you wish to do, on a whim.

After that, it depends - is your home what you'd consider your forever home? Any works need doing to it? If there's nothing obviously needing expenditure, then yes, I'd move on to retirement planning. This might be investments, a pension, or a mixture of the two.

You might enjoy the Mr Money Mustache blog for working out exactly how much you need for retirement (among other things). After that, it's set and forget until you're there, which should free you up mentally and emotionally to think about what you find meaningful in life and pursue that in your free time while waiting to hit your retirement number.

I've had good mileage thinking about what legacy I want to leave for the world - and that's much more than how much money I might leave someone, it's purpose and meaning stuff. What would you work on if you didn't need your job? What would you need to have done to look back at the end of your life and feel, yeah, I lived a great life?

Also, you might like to consider if you'd find it rewarding to give to others, or to charity, while working on retirement. For instance, to help a relative with a life goal like taking a gap year or buying a home. There's a lot of charities out there too. You know this already ofc - it's just something I've enjoyed (giving to charity) in the past when I had the financial position to do so regularly. It was meaningful to me because rather than feeling powerless about, say, an awful thing I heard about on the news, I could pop a charity dealing with that issue a chunk of change and feel I was playing a role in reducing pain and making change in the world.

Hope some of that's useful for you ☺️🙏

ManekiNeko

Oh, and huge congrats on repaying your mortgage 🎉 that's huge

user1977

If you no longer have a mortgage then this doesn’t sound like a mortgage-related question! You’ll be better looking at the investment etc boards instead.

penners324

Definitely pension, rainy day fund, holiday and having fun fund

MattPearce

Incredible effort. This is something I am aiming for. 

MattPearce

Don’t suppose you fancy sharing how you did it, or your story how it was for you?

user15

MattPearce said:

Don’t suppose you fancy sharing how you did it, or your story how it was for you?

It was very difficult, sometime when I made an overpayment, I would ask the bank to refund it, thinking have I made the right choice. Its obviously saving interest in the long run, but because the mortgage we take out is over such a long time we get used to making these payments, and find it difficult seeing your savings balance go down.

Other sacrifices were also made, such as new cars, holidays. Especially when you see friends, and people you know doing all these things.

user15

MattPearce said:

Incredible effort. This is something I am aiming for. 

Thanks very much