Statement of intent

StuartGMC

gallygirl wrote: »

Emmmm, that's the phone I've won

Well done Gallygirl, that's a great prize you've won. However, the benefits of the phone for web browsing etc means you'll want a tariff which has low price/inclusive web & download.

StuartGMC

As usual after pay day I do a quick review on our position, but today have spent a little longer on it.

Today we are only paying interest on 30.97% of our mortgage due to our offsetting (i.e. offset to 69%) which gives an effective mortgage interest rate for us of 2.67% :j

Then we are sat in a dilmena; as you know I've continued to put monies into Funds via our Stocks & Shares ISAs. Warren Buffet says to be greedy when others are being cautious but cautious when others are greedy. Now we have always looked at these as long term and it presently represents 9.52% of net income invested each month, whilst 19.40% of net salary is saved for scheduled purchases (holiday and car etc) in the offset.

As I write this Bloomberg is running online on the PC, with comment on long term prospects and growth expectations later. Emerging markets noted as still looking a good bet over 2year period..... Our position is that our funds are down 51.38% (a loss of £4663 vs investment) :eek:

I know once mortgage free (at current cost and salary situation) we will have some £19500 per year to save, and if mortgage free from May 2010 this will mean at the "goal" of 2016 when DD is 18, ignoring growth we would have Cash ISAs of £43200 and could have invested £26640 into Stocks & Shares ISAs, plus for our interim needs saved a further £23400, but also drawn some off, so perhaps about £13000 left. So at 51 years old this would give £82840 plus growth on top of this, plus the monies we have already and will save up between now and May 2010. Add to this the investments which we'll continue to make also. So perhaps we could be looking at £100k minimum and say £120k maximum for interest and growth (limited) in the funds? However OH has reminded me of "little" things we need like replacement furniture etc.... mmmm, let's say we'll have £90-100k then.

We should then be able to assist DD if she chooses to remain in education, from our income "easily"

Looking further forward, I have a small annuity kicking in at 60 from prior pension at company whch went bust, and we both have final salary pensions running from 65; wife would get service at reduced amount due to part-time working since 1997, and I would have 37yrs or so service with my present employer.

So the long term position is looking reasonable, I think at this time, and could be further improved if OH increases her working hours too which would improve her pension, but also the income to our household :rolleyes:

Now the issue; I have said we'd review in December if continuing to put the same amount each month into the S&S Funds (UK Smaller Co, Russia & Greater Russia, plus, Latin America). I know we should continue to invest whilst markets are cheap, but, presently this is still leading to losses. I don't want to move to the typical response of getting out and then buying as the market rises. So today I am considering the change thus:

Currently we put a total of £370 per month into the S&S ISA and this combined with offsetting and OP represents our short term investment plan (I know you'll advise on Cash ISA, but we can get into this quickly as noted above, and so I've decided with the mortgage rate of 6.45% the offset and OP is better). I am pondering reducing investment into the S&S ISAs to £220 total and put the £150 per month into additonal OP on the mortgage, raising the mortgage payment to 108% of the amount required, until March. During February and March we can then review for FY2009-2010.

We would then still save 19.40% of salary each month into offset, but only 5.66% into S&S ISAs.

This OP won't significantly impact MF date, but it "feels" more positive than buying funds which then drop in value the following day....

When (If?) I make the decision then I'll post back today, after we've been out to an RSPB reserve for a walk this afternoon :rolleyes:

Comments most welcome

gallygirl

Re the hol - definitely go for it, but $ v v disappointing - says she who's going to NY in Feb.

The situation re funds is v scary. We all know what we SHOULD do but your intention is probably a good choice as it keeps investment going but gives more peace of mind. My pension statement arrived today and I'm trying not to stress over it. Which is hard as it's one where I chose the funds (not a SIPP though) - so I've only myself to blame. From a fairly limited choice I've a UK Special Sits, Far East & Latin America. Statement shows units bought per month so I'm focusing on how many more I'm getting for my money rather than the reasons behind it :rolleyes: .

BTW - the phone will be sold , I have a work phone for which I pay personal calls over the monthly allowance, never more than £10, so never considered it necessary to have personal one. Plus trying to get the right phone/tariff/network would be beyond me .

Hope you enjoyed nature reserve. I saw 2 red kites this morning :T , unfortunately I was driving so couldn't really have a good look.

StuartGMC

Gallygirl thanks; just trying to firm up some details on the location in Mexico but likely to go ahead.

Walk was very pleasant but the windy weather down here kept a lot of the birds on the water or roosting, so limted to a few at a distance or things like longtailed tits stirred up as we passed by. I did grab some photographs of some of the berries and autumn foliage though. Still it was a nice walk with friends and their kids we came back home for dinner and some board games in the evening. Nice and relaxing (if somewhat noisy with the children!).

Regarding the phone; you should get a very good price on it, well done :T
(I can't believe in your organised world that selecting a phone and tariff is beyond you!)

Don't feel too bad about your pension, my final salary scheme is like many company schemes in the process of being "made up" to the funding required for the future; the market has further hit this so I hope things pick up in the next two years before the next detailed review! Presently I'm paying in 10% of my gross salary, and I really don't want it to increase above that.

Regarding the funds, I concur on what you are getting now i.e. about 50% more units for your money. So reducing amount paid in to S&S ISA is a difficult call, because in effect I am not maximising the purchase while cheap and our forward planning does not include the S&S ISAs at this time as anything other than an out-going cost i.e. immediate term is covered by more stable items.

One little item that I needed were refills for my Waterman rollerball; I have never found any real discounts on these refills so they have the market pretty well under control! However, checked on e-Bay and decided to get some via USA, which will cost me about £1.45 each saving £1 per refill; added to this, I'd forgotten I had about £11.50 in my Pay-Pal account from TopCashBack so the cost to me was £3.31 for 10 refills :T

Off now to check Quidco and TopCashBack for retailers and present ideas...

gallygirl

StuartGMC wrote: »

(I can't believe in your organised world that selecting a phone and tariff is beyond you!)

quote]

:think: you really don't know me at all, do you...... I have done quite a few mystery shops for phone companies, and also seen write ups about asking for extras - I would torture myself wondering if I could have got better.....

Well done on pen refills... funny how something so relatively small can put a real spring in our steps!!! Job well done

StuartGMC

gallygirl wrote: »

I would torture myself wondering if I could have got better.....

I see you in a whole new light now

StuartGMC

I've re-run some numbers to confirm the mortgage and investment planning, plus costs to consider.

OH reminded me of a number of items to consider in the spend from now to 2016, so that will be of the order £45k (new (second hand) cars, holidays, furniture etc).

So the maths stacks up thus for our present position;

• Scheduled mortgage payment £312 per month
• Present mortgage payment per month £500
• Saving requirements (having boosted amount required for car, consideration of holiday costs etc) now increased in spreadsheet to £812 per month
• Current Stocks & Shares ISA savings £370 per month

In consideration of plans for MF date and slightly reduced S&S ISA contributions the planned new profile is:

• Mortgage £650 per month (OP at 108%)
• Savings £812 per month
• Stocks & Shares ISAs £220 per month

The impact of this, allowing for our holiday in 2009, is thus:

• Mortgage remaining in Jan 2009 about £19,800
• Considering savings offset alone, 100% offset at August 2009
• However, if I consider the average current a/c balance then in reality it will be 100% offset (give or take a few pounds) from June 2009 at about £16500

Now, I think we will continue with the £650 per month rather than revert to £500 in April 2009. The reason:

• We would have a mortgage of £12k in January 2010
• We can pay it off in February 2010 when OH is 45, and I'll be 45 in March 2010 whilst still having a "minimum" cash fall back position
• Then we would be able to save £1682 every month, or £20184 every year :j rapidly recovering the savings position
• Doesn't look like I can buy the Jaguar XF (2 or 3yr old second hand) until early 2011 but that would be lovely if I can afford to do so and run her :D:D:D (just need the S-Type to remain reliable until then)
• Ongoing holidays, furniture, decorating etc will continue and allowing for £45k for these and cars then we should have around £70k minimum in savings/investments by summer 2016 at which time dd may (or may not) need funding in education etc. Interest and growth(?) in investments would enhance our available cash.
• We should be able to fund dd from monthly income and still be saving enough for our planned spends plus some investments on top.

All this is based on present costs and salaries, which the household budgeting spreadsheet has really helped us to focus upon. Our spending is reasonably in control, and there is hope of me actually getting a pay rise in January (none since July 2007) plus OH continues to get reasonable increases in her local government role.

So is this achievable?
It will be tough especially considering things like the increased road tax, rapid fluctuations in the oil price affecting petrol costs and any unforeseen requirements.

However, here goes for the target, wish me luck! :rotfl:

evab_2

Good luck Stuart, I hope it all works out for you.

We'd love to be able to plan ahead a few years, but with the next round of redundancies planned at Xmas we can't do anything than our pot of savings for the mortgage, money for windows and just getting through the next few months.

The only plan we have for the future is that we will be going to London in 2012 for the Olympics, that will happen no matter what! dd will be 8 and ds 4 then so a great time to go.

R.e hols, we are saving clubcard vouchers for a holiday to Cyprus (probably 2010 now due to jobs) but we're going to have small breaks instead - Xmas in West Wales, back home to Bedford in April (to see family) and probably somewhere in the summer, as well as visiting in-laws in South Wales at some point.

Ev

StuartGMC

Ev
Thanks for your note. As highlighted before, I am aware of the potential for unplanned issues arising having been through redundancy myself, so the above is very much based upon a favourable wind. I recognise 6 years is a long time to plan for in our economy now, but as you've stated, we still need to make plans no matter what.

I hope that the economy improves for you both and that alternative jobs are forthcoming; I guess the children are presently too young to take it on, but I recall the concern at 8-10 years old that the issues in the early 1970s drove home in terms of stress on family income etc.

Your children will absolutely love the holiday you've planned for 2010 and the visits to family if extended a little are probably better than short weekends for all concerned (you and OH also getting chance to nip down the pub for a nice meal while family look after the little 'uns?) so they have much value in themselves.

Best wishes and I'll continue to read your thread with interest.

shopgirl2512

Stuart - I'm really impressed with your forward thinking/planning. I think that's an area I need to address for myself. You are doing a fabulous job and I hope it all goes according to plan! And that you get the fancy car...!:D