Prosperous & Creative Soul & MFW Year 3

savingholmes
savingholmes Posts: 26,851
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edited 22 November 2023 at 1:12PM in Mortgage-free wannabe
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. 
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
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Comments

  • try_harder
    try_harder Posts: 1,527
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    Lovely new diary .You are doing so well ,look .Good Luck with everything
  • lucielle
    lucielle Posts: 10,597
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    Happy new diary. 
    L
    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: 18,620
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    Happy new diary :)
    "If you can dream it, you can do it". Walt Disney
  • Happy new diary SH - here's to the next stage of the journey! 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00
    Balance as at 31/12/23 = £112,000.00
    SOA CALCULATOR (for DFW newbies): SOA Calculator
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  • Blackcats
    Blackcats Posts: 2,612
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    Glad I found you and happy new diary to you.
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