Prosperous & Creative Soul & MFW Year 3

savingholmes

Two years ago I finalised my divorce and completed on my biggest ever mortgage - £202K and switched from interest only between 2 of us to repayment on my own. I took the term for as long as I could - so 22 years - which means I would be 73.5 by the time I was actually free. I've used my post from 2 years ago as a prompt for this one.

Then I owed £1,479 on a CC on 0% but had a £2K EF thanks to a gift from family. This was compared to the £70K of debt I was in at the end of 2016 including 2 cars. This was my third or fourth debt cycle where previous sums had been in the high 20s and early 30Ks. This was a contributing factor in my divorce as while I'd largely learned the save not credit lesson, my Ex still hadn't.

Financial info:

• I am trying to be debt / mortgage neutral - as my recurring nightmare is losing my job and being unable to pay such a big mortgage. This fear has eased now my EF is £6,119 even after paying £1,336 towards moving plus various monetary gifts to kids. 
• My job is pretty secure with reasonable pay, great sick pay coverage, redundancy pay and a DB pension so while I want a bigger EF and it is a high priority for me it is not as essential as it would be for some.
• My monthly mortgage payment is currently around £950 including a £20 OP. I have over 3 years left of a 5 year fixed rate at 1.84%. It has hefty ERCs but I can theoretically pay up to 10% a year without penalty.
• I have healthy life insurance cover for my young adult kids who have both moved out. 
• I have a will but still need to do a POA. 

Mortgage neutrality:

• Even if I repaid as small a figure as £20 pcm - over the term that would reduce my mortgage by 6 months - taking me to 73 instead of 73.5!! My debate then was whether to pay it directly off the mortgage (certainty) or do it via pension - so get 25% (or more) uplift. I pay £20 directly and the rest via pension currently at the rate of £450 per month. 
• By age 55 I will have accrued full state pension and should be able to get it at 67. (I have checked multiple times).
• As I am only 1.5 years away from being able to access a pension (if desired) - I am seeing pension as my best route forward to mortgage freedom. I'm mainly using the pension route especially as I recently went into the HR tax band. I ensure that all the amount above the HR tax threshold goes into pension. I have a SIPP worth around £3.5K which I transferred to V and AVCs of around ££6.3K (the latter I can use as a tax free lump sum) 
• Originally I'd hoped to transfer out around £186K to give me a 25% TFLS but because annuity rates have risen my small DB pension is has almost halved the CETV to around £100K. I have however learned it pays from age 60 and is worth £4.8K a year so happy with that. 
• I have a second DB CARE pension that is due to pay out c£12.5K p.a. from age 67 - or if I stayed all the way until then - closer to £25k. If I take it at 60 however that reduces by close to a third.
• If I was mortgage free I would need around £23-26K gross to live on I reckon. So if I retire at age 67 I should be more than covered and probably financially better off than I am now - given I pay 8.5% into my work pension currently and have a hefty mortgage and life insurance premiums.
• The question is how much earlier can I 'retire' achieve 'financial independence' so I can pursue my creative side more fully.

So what's this creativity I hear you ask?

• I self published a book at the end of 2020, have almost finished writing the second in a trilogy and have plans for the third. 
• I have written 10,000 words of another book, multiple poems and have unpublished non fiction writing. 
• I love acrylic pouring - a type of art. I'm currently learning to draw and paint figures which is new for me and have more skills gained during my abstract art period than I realised. 
• The biggest obstacle I still need to overcome is self-criticism and perfectionism and actually letting go of stuff.
  
• Throughout my life I've tended to give things away instead of sell them - however - I need to value myself and my work more and actually sell. 

savingholmes

I have spent years of my life hunting down the perfect rural property - which was originally due to be a house with acres of land in the middle of nowhere but I took no action. I've spent the last two years majorly decluttering after Ex took everything out of the loft and stacked it to head height along the landing and in a spare room as he left. I didn't want to risk going up in the loft and falling while alone.

At the end of June I finally took the plunge and put my house on the market and sold it two months later. A month after that I found a split level upside down layout 3 bedroom house with a terraced back garden (no acres) at the top of a hill with stunning views from the back of the house. I'm hoping the move will complete in January.

I deliberately waited 2 years after my original divorce decision to make the change to ensure it was what I really wanted. Where DD initially lived with me post divorce she has since moved out to set up her own home so the timing was perfect.

Moving goals: Anticipated costs £8K (excluding new furniture or any post move renovations)

1) Upfront house move costs Paid £1133/£2,709 ([£448 paid for legal, £585 paid for mortgage, £76 to pay for post redirection, £1,500 to pay for removals) 

2) Balance of likely house move costs  Paid £0/£5,372 (£1,772 legal, £3,600 land tax from equity)

Longer term financial goals

3) £6,119/£10,000 Emergency/Freedom/Home/Moving Fund 61.19%

4) MFW Nov 21 £201,999 with 240 of 264 payments to go - now £186,368 Equity 38% 

5) Mortgage neutral by June 2030 £6,289/£127,466 AVC target 4.93% 

6) FI Age 60 annual income target £12,500/30,000 41.66% 

7) CC Debt free April 22 (now stay that way!!)

Now I'd best log on to my day job so I have something to fund that with

beanielou

Happy shiny new diary. 

Looking forward to the next chapter. 

TallGirl

Happy new diary, you have come so far well done you and some really fabulous numbers in the especially how well provided you are for in retirement and even the possibility of a safe secure early retirement should you wish to. 

Well done on both the books hope you get them out there soon. Must be scary opening yourself up to others feedback especially if you struggle with perfectionism. 

I look forward to continuing to follow your journey 

try_harder

Lovely new diary .You are doing so well ,look .Good Luck with everything

lucielle

Happy new diary. 

L

savingholmes

Thanks Beanie, Lucielle, TallGirl and tryharder

Just a catch up for any new followers:

I am fortunate that since the pandemic I've largely been able to work from home - improving my mental health and supporting my proposed move to a more rural location. I am due to get 8 months back pay in December and an increment which will enable me post move to push my AVCs to a whole new level. I am also due to get a £100 gift voucher for guilt free spends!

I am hoping to cashflow my move entirely from accrued and future savings and that I will therefore be left with between £10-13K emergency fund post move after holding back some of the equity from the sale. This assumes that the surveys don't throw up any surprises on either house causing any renegotiation etc.

I have various conditions that enhance parts of my life and make other parts significantly harder - for which I successfully applied for and got some benefits but these could be reviewed at any time. This tax free money on top of pay rises post divorce has helped me radically improve my savings rate. These health conditions make it hard for me to get out and about - particularly socially - and contribute to work sometimes draining me more than it supports me. Yet work is a huge portion of my life's structure, intellectual challenge and a source of social and related support. I'm not confident I can sustain working full time to age 67 so want to give myself options by frontloading as much money into my AVCs as I can manage post move.

I buy 2 weeks extra holidays each year on top of already generous leave. I also have flexi - I use this to smooth disability related issues mostly. I'd like to create sufficient pension and other savings to reduce my hours by age 60 at the latest, possibly earlier, without damaging my ability to repay my mortgage - which at age 60 is due to be around £127K. I may even stop traditional work by that point - in favour of trying to create an income from what for me is play - art and writing and other creative pursuits. If I succeed in getting anywhere close to £127K in AVCs by mid 2030 - then I may choose to repay my mortgage - or more likely use it to supplement the gap between then and when I qualify for state pension. I will therefore have to consider that in January 2027 when I take out what I assume will be another fix. I'm conscious I may struggle to requalify for a mortgage if I went part time or lived solely off my accrued pensions so may need to take out a longer fix to mitigate that risk.

I want to use the time between now and age 60 to develop my creative skills and see if I can earn a living from them, top up my AVCs and savings and try to improve my health and fitness. I am very overweight currently which negatively impacts my health although since I've gone on some new meds I've been slowly losing weight. I am going to a weekly art class to try and improve my social and give me structure and try new techniques - but will need to find a new class post move.

I vacillate between being overly frugal and over-spending and struggle to work out what's the right balance. That's what you guys help majorly with - that virtual sounding board and encouragement. I tend to want everything now or I'm so future focused that I suffer unnecessarily. I have a cleaner which helps with my disability issues - although unfortunately she couldn't not come today which is a shame as my house is pretty messy but saves me £. I also have a long term counsellor to help manage my mood, bounce ideas off and give me predictable social.

I have £600 ear marked to go into regular saver accounts this pay period - but can't transfer them yet due to account date restrictions on how much you can put in per month.

Right - I've spent far too long on this update (another common problem) and need to return to my day job. Loved my CG veg soup for lunch though.

CCW007

Subscribed - as someone who started following your diary quite recently it's really interesting to read your opening and most recent posts.  You have a really good handle on your financial plans and understanding the options!  

jwil

Happy new diary

EssexHebridean

Happy new diary SH - here's to the next stage of the journey! 

Blackcats

Glad I found you and happy new diary to you.