The Long and Winding Road

t2rry

This seems like an appropriate thread title given the very long path we have to walk to get even close to mortgage free, but we're certainly thinking about it and have been taking note of small milestones already.  Hopefully this thread will see our walk turn into a canter.  Except with one significant and self inflicted bump in the road!

I am a long time DFW diary hopper, but finally taking the plunge into the MFW boards after a few years as an inbetweener - a debt free saver not focusing on the mortgage.

So, long and winding story short, we bought a house in 2021 with a 75% LTV mortgage totaling £394,000.  Fixed for 5 years at 1.8% with a payment of £1,350pcm.  We have since done the house up and with regular payments we have brought the mortgage down to £370,000, which now represents approx. 50% LTV (due to simultaneous house value increase).

We are hoping to extend this/next year and plan to take out additional borrowing of £80,000, taking us to the 65% LTV bracket and adding approx. £420 to our monthly payment (hopefully will be less than this as rates come down a little, we'll be taking that as late as possible into the process, possibly around 6 months time)

When we first took out the mortgage, our interest per day calculated to be over £21 per day, it is now down to £18.70.

So my idea is to track all these elements:

Mortgage total:  was £394,000, now £370,000

LTV: was 75%. now 50%

Interest per day: was £21+, now £18.70

Time remaining: 29 years 4 months

I'll then add in the additional borrowing with the same metrics once it has been taken out. In the meantime, I am squirreling away as much as we can into savings, hence the signature targets in place for 2024.  Once the additional borrowing is in and we are paying out for it, our ability to save will obviously be diminished by that £420 (or so) per month but we will still have scope to continue building savings and hopefully that will only increase moving forward - touch wood. Thanks for reading so far, any tips and tricks welcome, any ideas of other things I should/could be tracking also very well received.

beanielou

Happy shiny new diary 

redofromstart

wishing you luck with your journey.

t2rry

Thank you @beanielou and @redofromstart - I'm anticipating a slow but long lasting one!

t2rry

Staring longingly at February payday in the distance and this additional borrowing however many months away and I'm thinking of reviewing our outgoings like we've not done for a while.  We have some lifestyle creep, albeit lifestyle creep we debated hard before entering into. that I'm thinking of stripping out...and yet struggling to decide:

Cleaning
- We pay £78 per month for two visits (2 hours each time) from a cleaner.  We justified it because we both work full time, actually more than full time if we're honest as I am both employed and self employed and the latter encroaches on our weekends a lot.
- We pay £30 every 6 weeks for the window cleaner.  Windows still never look clean, as we approach an extension build maybe I could just drop this and do it once in a while ourselves until the house is finished and look at it again then?

My own personal care:
- I get my nails done, £30 per month.  Justified because otherwise I am very frugal when it comes to personal care, I buy limited skincare and make up, when I do it's from the supermarket, I buy fewer clothes than is probably necessary and I have a very small wardrobe.  I get my nails done because otherwise I am embarrassed by them, always have been, tried everything to keep them nice (I don't bite them, but they are very weak) but nothing but getting them done properly works.
- I get my eyebrows done too, £30 every other month.  Justified for same reasons above to save me time and effort (that I probably just wouldn't do except maybe once in a blue moon) 
- I get my hair done, £100 every 3 months, obviously getting it coloured for that price, been to the same salon for years, I'm sure it would be cheaper elsewhere but trust is a big deal, if I didn't get it coloured I'd look unwell but maybe I could drop this to once every 4 months at the very least or maybe for now I just batten down and accept looking bedraggled for a while

The only other things we have that aren't necessary are for the kids, the usual extra curricular sporting stuff, we won't take those away.  Otherwise it's our in-month unplanned spending across the usual; food/petrol/birthdays/social/clothes/miscellaneous and I never feel like we're able to do much about these, we don't go out much, we rarely get takeaways.

We take home approx. £5,350pcm, we save around £1,300 of that, we also save pretty much all my self employed income (average of £10k per year after tax & additional pension contributions).  That is plenty, but our additional borrowing will add around £420 payment, which takes that £1,300 per month down to £880.  I realise this is a first world issue, but given all the above 'non-necessary' items add up to approx £180pcm, it feels like a decent chunk proportionally.

I'm back and forth on it a lot, OH points out that it's all 'my' stuff, and it's the only 'my' stuff that really exists, but I've done without it before.  I feel like with such a large expense around the corner, maybe we should cut back to bare bones for a while.  I don't know, where should the line be!?

beanielou

I don't think an average of £68 pm is bad for personal care.
Your cleaner costs are average I think.

t2rry

Thanks @beanielou I hadn't framed it that way before.  I'm going to compromise with myself and reduce frequency, even £100 every 4 months instead of every 3 etc. means I won't go without, but feel like I'm cutting back a little.

End of the month here so officially £817 reduced on the mortgage, additional borrowing looking like it'll come towards the end of the year so in the meantime we squirrel away as much as possible.  Car tax due this month so not the best month for savings but automated savings puts away £800 plus an extra £400 from zero based budget and I have self employment income hopefully landing this month and next that will give us a boost as well.

t2rry

Random detail about a savings approach - 

I have one of the NW regular saver accounts, at 6.19% interest, which I max out with £150 contribution monthly. 

When I realised it had this 'round up' thing attached via my debit card, I set it up - it takes any spend on the debit card and rounds it up to the nearest £1, putting the difference into the savings account.  It also has a double up option so it literally doubles whatever the round up amount is, which I have also turned on.

I didn't think much else of it, I averaged round ups of £13.55 per month last year, which doesn't impact the monthly limit of £150 I add in.  

Now, I only use my debit card to pay off my credit card, which we use for all spending for a) the purchase protection and b) the cashback

That said, I never let a balance sit on the credit card, we spend on it as though it's coming from the current account because as soon as we spend, I pay it off, thereby never falling into the trap of spending what we don't have (and is within budget)

This month I have realised that I can maximise the money going into the savings account by regularly paying off in amounts of £x.01 - that equates to £1.98 in round ups, which I can do twice a day - I don't pay things off every day but definitely regularly enough for this to add up pretty quickly - this month I've paid an extra £45 (so far) into the savings account (I do budget for the round ups because I'm a zero based budgeter, so I've increased the budget pot for these) 

Maybe most will think what a giant waste of time and why don't I just put that budgeted amount (likely around £50pcm) into other savings, but I have a number of regular savers (as does OH) that we already max out, I also usually put a decent amount into my S&S ISA (paused this for now as we have those short term needs for money in the extension plans), but since it's something I'm doing anyway, just adjusting how I do it now and adding to what is my third best savings interest rate feels like a little win each time! 

I find so much of moneysaving for me is psychological, years ago learning to put the money for annual spends into a different account made a huge difference, now zero based budgeting and paying into ours savings first is so good for us, also actively managing our savings either by ensuring we have the best rates on offer, or by automating them via standing orders etc, also works really well for us and I actually enjoy managing our money now, I like seeing where I can make a few extra £ or where I can save a few extra, I think the little adds up to a lot over time and this approach with these savings is a potential £600 a year going into a decent interest savings account that would otherwise have been spent in other parts of the budget or saved in lower rate accounts.

mark55man

Signing up for this journey with you.  Nothing to add yet other than you got this!!

savingholmes

Just popping along to wish you good luck on your journey.

t2rry

end of the financial year (almost) and payday for me tomorrow (OH end of the week but I start our month from my payday)

I've just sent an invoice for my self employment, which should be paid within 30 days - they are rarely paid 'within' the time, usually exactly on the 30 days or often once the date has passed and I have given them a nudge.  I don't account for it until it lands in my account in case something goes wrong but that landing in April will be a brilliant start to the new financial year as it will essentially double my income for the month.

We had an ok March, we were under budget for nearly everything up until this weekend as OH had a night away and it was spendier than I had anticipated so that pretty much ate our underspend, which is a shame but it doesn't happen often.

Annual tasks and chores for this month:
- pay car tax: boring
- car insurance: I was horrified by the first comparison I got for this compared to last year but it seemed to be in keeping with warnings I've seen about insurance increases.  I always get a quote before it's due to arrange just to get an idea that my budgeted amount is correct ahead of the relevant month.  Pleasantly surprised today that two of the other comparison sites threw out much better quotes, even beating last years premium (essentially same terms)

Hasn't happened yet obviously but we're hoping the BofE will start to reduce the base rate soon so that mortgage rates might start to come down before we need to finalise on our additional borrowing.  In the meantime I'm taking advantage of as many high interest savings accounts as I can.  I've just fixed a sum to cover next years tax bill to mature at the end of December ahead of the January deadline, which feels quite nice as it's already there and saved and working for us in the meantime.