Statement of intent

StuartGMC

Have been keeping this thread updated more often than I thought (thanks to those of you with interest keeping me going!). So updating this original post to reflect the position end March 2009

Mortgage: Repayment mortgage commenced October 1994, moved schemes within B Soc and always overpaid a bit (but birth of daughter in 1997 severally impacted the disposable income). Remortgaged June 2006 to an Offset Flexible mortgage with NatWest. Only took 10yrs as over-payments had saved us 3yrs already (when interest rates had been higher in the 1990s than now).

Edited to give update 29 March 2009
See relevant posting here

Present position (also see bullet list below):
Mortgage is now £18009.80
Offsetting at 99.50% so mortgage interest charged in March was £9.43

Overpayments at [strike]61.52% now 108% from November 138% 1 December 2008 141.64%[/strike] 156.92% of scheduled payment from 1 February 2009

Expected MF Date: [strike]See post #81 in this thread, as I think we should be able to clear by December 2012, not August 2013 as planned in June (total saving 8yrs 10months from 25yr mortgage). Note below comments on investments also to explain why we haven't aimed to clear in 3yrs. [/strike][strike]This is the major change in review during September and October and a further increase in OP (the interest charged each month). It seems very feasible for us to be 100% offset by end of September 2009 even allowing for our holiday year. This is 10yrs before the original 25yr term, and if plans hold together, we will have rebuilt sufficient rainy day funds to actually pay off the mortgage in 2010 possibly as early as May February 2010 based upon review Oct 2008[/strike]Now aiming for October 2009, which would reduce savings (quickly rebuilt) but clear mortgage at 15yrs saving 10yrs. Now just 7 months away from potential MFD:j


Objectives
1 Clear mortgage before daughter is 16 (Dec 2013) and put same amount per month (11% net pay) into Cash ISAs to save funds for demands when she is 18 (University or whatever). Target MF date no later than June 2013, and looking like [strike]December 2012 May 2010[/strike] Feb 2010 latest, but aiming for Oct 2009

2 Continue to invest in Stocks & Shares ISAs ([strike]9.63%[/strike] 5.66%net income) [strike]and look to increase by minimum of 10% per year each of next 5yrs, [/strike]because now they are cheap and should grow in future years to give solid return above interest rates in savings, say, 2011 onwards. Will aim to return to increased amounts once MF. Feb 09 update, increased to 7.39% of net income. Expect to be investing at maximum £3600 per year each from April 2010 plus the £3600 Cash ISA each. Now increased to £300 per month,

Have thoroughly reviewed the investment planning and in Feb 09 modified as detailed here

3 Continue to always save to buy things we need current target is [strike]23.76%[/strike][strike] 20.90%[/strike] 29.87% of net income at Feb 09 income per month which covers holidays, decorating, replacement white goods etc. This is close to the 30% I am more comfortable with, but it should be about 44% of income once MF.

4 Buy Jaguar XF in [strike]2010 or[/strike] 2011 to replace my current S-Type I know, this is not exactly an economy drive, but I love it and it makes me smile whether on the 27miles to work or a long trip to family - "happiness" quotient high, and my treat! This is one area that will need review carefully and I think 2011 will be optimistic as we've increased cash into the mortgage for now. Update for March 2009, the 3.0 Diesel S XF is getting rave reviews, has good economy (42mpg combined cycle), 0-62 in 5.9s and best of all it's a British built car.

5 Make savings where realistic & Maximise use of things we buy/spend on but still enjoy the pub and life now, don't defer to some future date.

6 Get more exercise use leisure club membership more and go cycling with family now I've bought a bike after 16 years without one! In 2009 this needs more focus. This really has fallen by the wayside with wife's ill health and my motivation - need to address in April

7 Convert total position of small debt to positive position in 2009 As noted below, spreadsheet gives total position on mortgage owing, cash savings and ISAs. Want to convert from £3600 debt to £3500 positive by end 2009, but Stocks & Shares performance will influence this! In Feb 09 we were for a short time net positive for the first time since we had the mortgage and in March continued this progress:j

Comments on progress, at 29 March 2009:

• March 2009 - It will be tough to make the numbers stack for October but determined to do so if we can.
  
• March 2009 gave some good news on the investments which have improved this month with the Funds ISAs now increasing in value. Whilst there may be set backs in the months ahead, growth of about 8% in the month is ok and confirms our positiion to keep investing whilst units are cheap but still pound averaging too.
  
• March 2009 and we had to make a "distressed" purchase for the fridge, info online helps and the one we have now will have to suffice; just when do you "plan" to change appliances so you get time to choose?
  
• March 2009 Incurred further unplanned costs due to oven element failing, but more importantly the fridge failed (an AEG just 5.5yrs old!) just before wife was taken into A&E for breathing problems and in there for 4 days. Quite stressful overall.
  
• March 2009, NatWest have decided not to reduce offset mortgage rate, so it remains at 4% whilst our equivalent interest rate is 0.16%
  
• February 2009 - interest rate on mortgage dropped to 4%
  
• February 2009 - modified the investments in the S&S ISAs
  
• January 2009 - need to read around investment information in more detail to assist in planning strategies for 2010 and beyond
  
• 27 January 2009 - For the first time since having a mortgage, our total net position was positive this weekend :jnow need to hit the 100% offset in the summer :rolleyes:
  
• 27 January 2009 - only paid £17.61 mortgage interest this month
  
• 2 January 2009 - mortgage now only £19868.77 so it is on target :j:j:j
  
• January 2009 - need to spend some time researching investment vehicles etc to prepare for discussion with professional input to plan for 2010 onwards
• January 2009 - unplanned costs of about £500 on car due to electronics problem :eek:
  
• January 2009 - purchased required new clothing for family online from Next pre-Christmas sale, should save about £600
  
• December 2008 - New glasses had to be varifocal, cost £338 :eek:
  
• December 2008 - OH saved about £500 on curtains by modifying readymade ones from Next, rather than made to measure.
  
• December 2008 - interest rate cuts mean overpayment is now £377 per month with mortgage payment total of £650 (138% OP), plus £220 per month to S&S ISAs and £812 to our savings.
• October 2008 - Have had two payments from Google Adsense this year from my web site totaling £107.06
• October 2008 - Saved £200 on the cost of buildings & contents insurance plus improved cover
• October 2008 - Purchased replacement bike for DD, saving £75
• October 2008 - Weekly groceries spend; food (inc alcohol) £73.72, cleaning & toiletries £9.98. So this is very good to see.
  
• October 2008 - switched gas and electricity supplier to BG, and for the first time fixed, to Sept 2011 with a 13.8% premium over online prices at Sept 2008. Need to watch gas futures markets and monitor other suppliers in Q1 2009; contradictory advice from "prices will increase" to "gas futures are dropping so prices will decrease in 2010".
  
• August 2008 - Due to increased costs, our scheduled savings have scaled back to 29.03% of net income from some 33%. The saving for cars, holidays etc has dropped from 23.67% above to 19.43%. Presently, the ISA contributions remain at the increased value applied in April, but lack of a pay rise in combination with increased costs is making itself manifest
  
• August 2008 - Data on household expenditure is now starting to become reasonably accurate for petrol & car costs, plus groceries (£93.24 per week of which £76.23 is food and drink). Clothing & Shoes needs longer to generate an accurate view (£266 being high due to holiday/summer clothing and back to school items)
• August 2008 - I have continued to try to overpay mortgage by a set amount each month, plus the interest charged each month (totaling 61.52% of scheduled payment)
  
• August 2008 - as post #136 indicates I have reviewed energy supply and moved to 2011 fix with British Gas. An initial 13.8% premium, but it should mean a saving over the three years, especially based on expected Q1 2009 increases
  
• July 2008 Wife's car insurance quote cheaper than 2007, whereas I had allowed a 15% increase (we must both be getting old.... )
• July 2008 starting to gain good data on monthly spends but need to run for 4 months to get a realistic trend in budgeting spreadsheet eg clothes purchases high presently as we didn't replace much in the past year or so, food also as we ran down freezer for scheduled defrosting.
• July 2008 Have run a few calculations on mortgage, overpayment, offset and time to be 100% offset (see post #81 in this thread). Looks like December 2010 latest for 100% offset, so good progress here and then we can put the mortgage payments into savings at that time.
• July 2008 monitoring of "alternatives" which have acceptable quality compared to previous purchases. 3 items alone will save £62.88 per annum
• In June 2008 Updated my budgeting spreadsheet thanks to comments and input received here. Now has detailed sheets to monitor groceries and one for clothing & shoes, these then feed real data on spend to main sheet rather than the estimate used before.
• June 2008, OH has started to look at alternatives for some of our groceries and this is also captured in the spreadsheet to show the annual total if the change is acceptable.
• In May 2008, bought myself a new bike (50% off so only £150!) now daughter has "suddenly" found cycling is fun. Must ensure I use it for exercise and fresh air with family.
• In April 2008 increased ISA investments by 12.1% so exceeded 10% target, just hope we can maintain whilst costs are increasing rapidly. Reallocated funds from poor UK market to riskier Latin American Fund
• In April renewed breakdown cover and got an insurance quote on S-Type to compare with present insurer. Current insurer was £230 cheaper than the "offer" from alternative. Stayed with DirectLine!
  
• In March did check we get best tariff on electricity and gas. Do every 6 or 12 months
  
• Always read gas & electric meters each month, enter online so DD is as close to spend as it can be. Always add consumption to spreadsheet to easily get comparisons for switching based on kWhr consumption
• In February called Virgin Media to discuss "value" of package offered; now get £14.50 reduction every month and no new contract
• Use hair clippers at home to cut (what's left) of my hair every 2wks. Cost £36 in 2006, saving £4 per month (3x return on investment and still working well!)
• Have improved spreadsheet at home now, and have full information to the penny on where we stand on regular costs, payments, savings and investments, mortgage debt and "grand sum" position. 30 May we only owe the world £3600 in total
  
• So want that debt position to reverse so in 2009 we show positive position even accounting for mortgage.
• Use filter coffee at work, equivalent price 6p per cup vs 15p per cup from vending machine and sooo much nicer!
• Try to use TopCashBack for online purchases (Feb, TV stand - saved £11.50; May bike - saved £3.50)
  
• Always enter petrol and consumption data in household spreadsheet (this provides true cost per month running, confirms fuel economy and automatically predicts date to schedule for next service).
• Daily check accounts online for current, savings, mortgage and credit card (avoid fraud and maximize offset)
• All expenditure on credit card each month (keeps cash for offset), then set to pay 5 days before card is due - Action: review now that electronic payments should be faster, may be able to reduce to 2 days keeping in account for 3 days longer
  

Thanks for reading.
Stuart

Little_Mama

Some interesting points there, good luck with the plan.

LM

StuartGMC

Despite saying I may not keep a diary regularly updated yesterday, a few more thoughts here. Also, thanks to all of you who post on the site, great encouragement to do better.

Well, our offset will take a hit later this month as we have the balance to pay for the annual holiday, so about £3000 will come out of the savings. Also, heading to Crete and the 20% increase in the € over the past year will mean higher expenditure on holiday based on the exchange rate. That said, the family deserve a good break and it is one of the justifications we offer to our daughter regarding mum working half the week and hence DD has to go to out-of-school morning and evening Mon-Weds. Since she was small, DD has been very open to explainations of this sort and even finds Spendaholics fascinating (since she was 8!), noting concern that debt can accumulate if not understood. We also chat openly about finances and budgeting etc so it seems natural to her as she grows. I hope she is learning about money in a gentle way without being fearful, as the personal financial world is far more complex now than when I grew up, and she will need to be savvy in her planning.

Anyway, back to topic; we will need to recover savings ASAP to bring offset back on target, but, as I hope we don't need to replace cars this year then the nominal £4.5k annual allowance towards our car replacements can sit there offsetting. I used to change cars every 2 years, never brand new, but rather 6 or 12month old and always funded from savings, whilst OH has older car with low annual mileage. I had to change frequency of car replacement when daughter came along and kept cars a little longer. Bought the S-Type in 2006 as my "why am I working all these hours" treat (03 model 3yr old - couldn't afford newer!) but I am enjoying it, and, despite fuel costs (57 mile round trip to work each day) I intend to try to keep her a bit longer, ideally until I can replace with a 2-3yr old XF, although fuel prices may change this replacement vehicle plan!

If the replacement of savings goes well, and I can get us to 100% offset next year whilst still funding the Stocks & Shares ISAs at close to 10% net income, then, our savings cash will be put into Cash ISAs to avoid tax on the interest. Hopefully this portfolio will balance debt clearance for the mortgage and investment diversity.

I'll do a deep review of our Stocks & Shares ISA commitments and the specific Funds in September, but will continue to review generally in the interim. Currently boosting Latin American fund at much faster rate than the two UK funds to get a reasonable sum in place. Will then look at top slicing as Latin America is of course a High Risk fund but these investments are based on 5-10yr period and I hope are now at the lower end of the price likely in future years. Of course pound averaging via the monthly DD helps this.

In addition to above comments, I guess I should note OH is a great cook (one of the reasons I fell in love with her 23 years ago!) so we usually only have meals cooked from raw ingredients, with meat from our local butcher. She made some lasagna and chilli Friday to "feed the freezer" for the days when we rush between work, community commitments or daughter's swimming lessons etc. We worked out that these 12 portions cost £10.50, and we're talking generous adult portions too! She's just cooking a whole leg of lamb as Tesco had them on offer cheaper than a free-range chicken; again the lamb will make several meals (don't tell our butcher we bought at Tesco though!). We do pay for free-range etc as ethically this is our preference even though there is a price associated with it.

Right, I'd better start to look at € exchange rates to plan the cash purchase.

StuartGMC

I should have noted, yesterday was a low spend day. As I said earlier, bought a bike a couple of weeks ago after a break of 16years. The family all went cycling yesterday in that wonderful weather. We did a 14mile run (remember DD is only 10yrs old) and stopped for a pub lunch. No CO2 output or petrol used, and a really nice few hours together.

As they say, "you never forget" and I have quickly got my balance back after those years not cycling. but I have to admit though, need to get used to a saddle again

Must try to ensure I continue to use it through the "summer"....

setmefree2

Hi StuartGMC,

Just wanted to wish you good luck:T

StuartGMC

Setmefree
Thanks for the encouragement.
Stuart

setmefree2

My youngest loved spendaholics as well - and he was about 8 too when he started watching! I think it was all that excess - bottles & bottles of champagne, shoes, clothes, etc.:eek:
I have always worried about the way banks seemed to try to get young people into debt - but hopefully some of that pressure will have gone now (with the credit crisis). Well we can hope can't we?:rolleyes:

StuartGMC

SetMeFree, interesting to see how the programme attracted attention of children.

I've started a thread on teach kids about money if you want to chip in:
http://forums.moneysavingexpert.com/showthread.html?p=11380811&posted=1#post11380811

gallygirl

setmefree2 wrote: »

My youngest loved spendaholics as well - and he was about 8 too when he started watching! I think it was all that excess - bottles & bottles of champagne, shoes, clothes, etc.:eek:

Mine too - now she loves You Are What You Eat - but salivates at the 'before' table, not the 'after' table. Am I a bad mum .

Stuart, really interesting read, em, not an accountant are you by any chance . £3,600 is nothing & will be turned around in no time :T

Welshlassie

Hi Stuart
Sounds like you are really on top of your situation. Loving the sound of your spreadsheet and would be interested to see a copy if possible. I'm still trying to find the best way of keeping on track of our spending and savings and don't think I'm there yet although it is always improving.

We have a 9 month DS who loves his trike, unfortunately we're not in a position to all go cycling together, but am really looking forward to it when we can, we have recently bought 3 bikes off ebay to do up over the next few weeks so we have bikes available when we are ready to go.

Wanted to wish you good luck with your goals, I don't doubt you will reach your goal next year as you sound really positive, prepared and realistic about the economic sitation. (personal and worldwide)

setmefree2

Hi

Do you think that Latin America will keep on booming? Do you think it's a better bet than China and Asia?