Where to start?

tro127

Hi guys,

I have been a lurker on this site for a while and am always impressed by how motivated and responsible people on here are. I'm 2 years into a 35year mortgage term with just under 120k to go. It just seems an unattainable target to become MF and wondered how you all got started?

Just signed up to get internet access to my mortgage account so that I can possibly start overpaying and have a better view point of my account, ball rolling!!

LindsayO

I agree it seems very daunting, such a large sum of money (I've got a mortgage of 105k)
I've found some good ideas on this site for example mysearchfunds gives you money just for doing internet searches.
I think deciding to actively engage in the quest to be mortgage free is the first step, rather than just wishing it would go away

tro127

Hi Lindsay,

Much easier just wishing the mortgage away but that doesnt seem to do anything! Got Martin's budget planner so trying to workout how much I could possibly overpay without leaving me and the OH pennyless.

Welshlassie

Hi Tro127
I understand where you are coming from (ours is £193k) but in order to get started you need to work out how much you can afford to overpay, even if it is £5/10 per month. To do this you need a good budget with all your annual outgoings accounted for. Have a look at Martins Budget Tool fill this in and see what you have left over each month.

You then need to minimise as many of your regular outgoings as possible, eg utilities, phones, groceries etc have a look at this article. Don't forget you still need a life, you really can minimise outgoings and still go out, eat good food and have a holiday every year, you just need to set your priorities.

Find ways of making extra money, Lindsay has mentioned a few, but if you have a look at this forum you'll get loads of other ideas, such as ebay, mystery shopping, surveys etc.

When you know how much you have extra to overpay put it into an overpayment calculator, I like eggs, here it will then show you how much interest you will save and how much time you will cut off your mortgage. Once you pay your first overpayment you'll be addictted and be working out how you can find extra money to overpay more next month.

Be warned :rotfl:

tro127

Thanks Welshlassie, just been reading your MF before 40 thread. Would love to achieve that and I don't think its too unrealistic given that I have just under 15 to go. Need to set myself a target like that longterm but my first aim is to be sub 100k. If I could do it before my 5year fixed rate ends (04/11) I will go dancing naked in the streets!!

Welshlassie

tro127 wrote: »

Thanks Welshlassie, just been reading your MF before 40 thread. Would love to achieve that and I don't think its too unrealistic given that I have just under 15 to go. Need to set myself a target like that longterm but my first aim is to be sub 100k. If I could do it before my 5year fixed rate ends (04/11) I will go dancing naked in the streets!!

Why not sign up to the MFW 2008 thread. Set yourself the target of sub 100k and then see what you can do to reach it. We're all here to spur you on and even if you don't quite reach your target you will have made a significant dent in it.

torbrex

My mortgage has never been what most people would call very big, highest was £26000, but it was big enough for me on my wages at the time in 1992, I have never been a high wage earner so it is all relative.
My turning point was when I switched to a flexible mortgage which allowed me to pay extra at any time with no charges. My monthly payment consited of minimum required plus all the extras that I gleaned from other sources. For example, I switched utilities suppliers and saved £24/month, that went straight into the monthly payment, I changed my weekly shopping to Lidl and saved about 27/month, that went into the pot, I also put in any wage rises or bonuses that I got at work, going on the principal that I never had it so I wont miss it.
It all comes down to this, I took out a 25 year mortgage in 1992 and will be in a position to clear it next January so all those little bit extra payments have made all the difference.
Good luck with your target.

setmefree2

We tend to think of our overpayents as chunks of £500, that way we have little targets to achieve rather than something massive.;)

tro127

Thanks everyone, you all make it sound like its not as daunting as it seems. Feeling pretty motivated at the moment so its a good time to start. Have a holiday booked and paid for in October so its not like I dont have anything to look forward to so can encourage myself to knock down that mortgage!

Alion

I found looking at the whole mortgage totally unrealistic so instead I devised a 5-year plan. I worked out where I wanted to be (£125k) in 5 years and then worked out what I'd have to do each month to achieve it.

Have now added a 2-year plan as well as the fixed rate expires after two years and would like to have a 25% stake in the house so I can get a better rate.

StuartGMC

Tro127
As noted above, do sit down and review your expenditure. I bet most of your regular outgoings are by direct debit, so you know your monthly commitments.

Keep you petrol receipts, supermarket etc receipts for 3 months to start getting clear spend picture.

Then look at annual costs like buildings & contents insurance, car insurance, road tax, car service (add allowance for tyres every 2 years), allowance for decorating costs spread over a few years etc. Add on your holiday (good for body & soul) including the costs to/from airport, parking and cash when away. Remember to include allowance for clothes and shoes and similar. Total and divide to give monthly equivalent.

Look at your items that need replacing every few years:
PC - every three years?
TV - every 8-10yrs
New furniture, washing machine....
Replacement car
Decorating costs
Garden costs

Do you have / expect to have work done on the house; windows, soffits & guttering, need a new bathroom etc. and plan for when you'll need the cash. You need to save for these not put the money in the mortgage then not have it when required.
Again put on a monthly basis.

You can now add up - true monthly costs and those for annual costs, and add your "savings requirement" to determine what residual cash you have. This is your baseline for your overpayments. Of course, make the "savings requirement" amount work for you either in offset or put it in a Cash ISA.

If you put this in a spreadsheet you can update against net income, so watching that residual sum, you will see it perhaps increase by £10 per month as annual car insurance is cheaper. Immediately, you'll see you can increase your OP.

I have a note under my thread here to strip out personal data from the spreadsheet I use, so will make a start soon as these are just the items I pulled together to get a handle on the basic financial position.

We have overpaid since 1994, but, only in 2005/6 did I really start to get a handle on costs and relevant position via a spreadsheet I have expanded and optimised regularly since then. I think if you start now, you'll really make a good early start and the earlier you start the quicker you'll clear the mortgage debt bit by bit.

Good luck