Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Blibble
    • By Blibble 27th Dec 17, 7:37 PM
    • 449Posts
    • 786Thanks
    Blibble
    Up for a laugh? A 23 year old's guide on how (not) to be mortgage free
    • #1
    • 27th Dec 17, 7:37 PM
    Up for a laugh? A 23 year old's guide on how (not) to be mortgage free 27th Dec 17 at 7:37 PM
    Hi folks!

    I'm a fervent reader of the MFW board, and have been meaning to get cracking on my own diary for some time to keep me on the MFW straight and narrow. Unfortunately, the time's never quite been right to do so before now; me and my partner are in a new build house which always seems to throw something up which we hadn't planned for (it's not just older houses y'know!).

    Coming up to the new year, and reflecting on how much we've spent over Christmas (and how badly budgeted it was), I've been thinking a lot lately about seriously attacking the mortgage and now feels as good a time as any. Sooo, a little about us ...

    We're both 23, and moved in to our house in mid-December 2016 in the north west. We're not rich - both earning just above minimum wage - but thankfully have nobody dependant on us financially and are fairly minimal in what we want. We've £127,879.52 outstanding on the mortgage - we've only made minimum payments on the mortgage until now - and the rate sits @ 2.34% expiring August 2018.

    I'll post an SOA (a SOA?) below in a bit; mortgage OPs will initially be on the lower side as we're saving £1000 a month for a wedding too, but hoping we can scrabble together a couple of hundred more a month to put towartds OPs..

    Wish me luck - if nothing else it should be a craic

    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
Page 1
    • Blibble
    • By Blibble 27th Dec 17, 7:50 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    • #2
    • 27th Dec 17, 7:50 PM
    • #2
    • 27th Dec 17, 7:50 PM
    SOA below -

    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 1

    Monthly Income Details

    Monthly income after tax................ 1202.87
    Partners monthly income after tax....... 1397.46
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 2600.33


    Monthly Expense Details

    Mortgage................................ 506.2
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 25
    Council tax............................. 169
    Electricity............................. 38
    Gas..................................... 38
    Oil..................................... 0
    Water rates............................. 36.52
    Telephone (land line)................... 0
    Mobile phone............................ 14
    TV Licence.............................. 12.12
    Satellite/Cable TV...................... 0
    Internet Services....................... 29.99
    Groceries etc. ......................... 160
    Clothing................................ 25
    Petrol/diesel........................... 100
    Road tax................................ 15
    Car Insurance........................... 40
    Car maintenance (including MOT)......... 30
    Car parking............................. 5
    Other travel............................ 5
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 5
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 7
    Contents insurance...................... 7
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 30
    Haircuts................................ 5
    Entertainment........................... 200
    Holiday................................. 40
    Emergency fund.......................... 100
    Total monthly expenses.................. 1642.83



    Assets

    Cash.................................... 9500
    House value (Gross)..................... 180000
    Shares and bonds........................ 0
    Car(s).................................. 1000
    Other assets............................ 0
    Total Assets............................ 190500



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 127880...(506.2)....2.34
    Total secured & HP debts...... 127880....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Total unsecured debts..........0.........0.........-



    Monthly Budget Summary

    Total monthly income.................... 2,600.33
    Expenses (including HP & secured debts). 1,642.83
    Available for debt repayments........... 957.5
    Monthly UNsecured debt repayments....... 0
    Amount left after debt repayments....... 957.5


    Personal Balance Sheet Summary
    Total assets (things you own)........... 190,500
    Total HP & Secured debt................. -127,880
    Total Unsecured debt.................... -0
    Net Assets.............................. 62,620


    Created using the SOA calculator at www.stoozing.com.
    Reproduced on Moneysavingexpert with permission, using other browser.


    A couple of comments -

    a) It's an honest SOA as an average over the last year - I'm not one for glossing over the fact that these numbers will need to change to keep up the level of saving we're after
    b) There are extra sources of income not accounted for in this SOA - roughly £60p/m from surveys is planned, as well as £175p/m or so overtime for me (provided work carry on being happy with me milking them at time and a half!). The grocery shop is also, hopefully, going to get reduced down as well as the entertainment & holiday budgets this year.

    Best see how it goes!
    Last edited by Blibble; 27-12-2017 at 8:00 PM.
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • somethingcorporate
    • By somethingcorporate 27th Dec 17, 7:56 PM
    • 8,866 Posts
    • 8,575 Thanks
    somethingcorporate
    • #3
    • 27th Dec 17, 7:56 PM
    • #3
    • 27th Dec 17, 7:56 PM
    How does your pension provisions look?

    You'd expect a far better (and more tax efficient) return over the long term than paying off your very cheap mortgage.

    Good luck with your plan!
    Thinking critically since 1996....
    • newgirly
    • By newgirly 27th Dec 17, 8:01 PM
    • 6,323 Posts
    • 43,592 Thanks
    newgirly
    • #4
    • 27th Dec 17, 8:01 PM
    • #4
    • 27th Dec 17, 8:01 PM
    Hi blibble welcome well done getting a place at 23 nowadays let alone overpaying the mortgage

    The only thing that stuck out on your soa was the £300 pm management charge? Seems very high! Anyway all the best
    Last edited by newgirly; 27-12-2017 at 8:05 PM.
    MFW 21
    Target for 2018 £40k/£13,632 paid so far

    Mortgage £36,319 4yrs left. Total owed £48,358 plan to clear in 14 months
    • Blibble
    • By Blibble 27th Dec 17, 8:03 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    • #5
    • 27th Dec 17, 8:03 PM
    • #5
    • 27th Dec 17, 8:03 PM
    Aye, but it's more exciting paying off a mortgage than putting money towards a pension!

    Pension contribution is deducted pre-tax from our salaries; haven't got the paperwork to hand but from memory it's only a small contribution (around £50p/m each). It's never been a priority as I've often thought "40 or so years to go", but is certainly something to turn my attention to at some point.
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • Blibble
    • By Blibble 27th Dec 17, 8:04 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    • #6
    • 27th Dec 17, 8:04 PM
    • #6
    • 27th Dec 17, 8:04 PM
    Hi blibble welcome well done getting a place at 23 nowadays let alone overpaying the mortgage

    The only thing that stuck out on your soa was the £300 pm management charge? Seems very high! Anyway all the best
    Originally posted by newgirly
    Thanks

    And amended - £300 is p/a. Shouldn't be allowed to do finances after leftover Christmas prosecco!
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • newgirly
    • By newgirly 27th Dec 17, 8:06 PM
    • 6,323 Posts
    • 43,592 Thanks
    newgirly
    • #7
    • 27th Dec 17, 8:06 PM
    • #7
    • 27th Dec 17, 8:06 PM
    Phew that's good! Sorry the scary face was supposed to be a smiley one
    MFW 21
    Target for 2018 £40k/£13,632 paid so far

    Mortgage £36,319 4yrs left. Total owed £48,358 plan to clear in 14 months
    • somethingcorporate
    • By somethingcorporate 27th Dec 17, 8:08 PM
    • 8,866 Posts
    • 8,575 Thanks
    somethingcorporate
    • #8
    • 27th Dec 17, 8:08 PM
    • #8
    • 27th Dec 17, 8:08 PM
    Aye, but it's more exciting putting as much in to a pension!

    Pension contribution is deducted pre-tax from our salaries; haven't got the paperwork to hand but from memory it's only a small contribution (around £50p/m each). It's never been a priority as I've often thought "40 or so years to go", but is certainly something to turn my attention to at some point.
    Originally posted by Blibble
    Trust me, your 60 year old self will thank you for planning early! I'm ten years older than you sat on £130k in my pension. Personal cost to me has been ~£40k, the rest has been employer contributions, tax contributions and investment growth. You won't get that kind of return from paying off a 2.4% APR debt!

    Have a go at a few calculators and squizz at the pension board.

    There is a psychological factor to paying off your biggest debt quickly but the financial benefit to your self will come from the power of compounding and what this needs most is time!
    Thinking critically since 1996....
    • ricky_v
    • By ricky_v 27th Dec 17, 8:19 PM
    • 305 Posts
    • 173 Thanks
    ricky_v
    • #9
    • 27th Dec 17, 8:19 PM
    • #9
    • 27th Dec 17, 8:19 PM
    Aye, but it's more exciting paying off a mortgage than putting money towards a pension!

    Pension contribution is deducted pre-tax from our salaries; haven't got the paperwork to hand but from memory it's only a small contribution (around £50p/m each). It's never been a priority as I've often thought "40 or so years to go", but is certainly something to turn my attention to at some point.
    Which only costs you £34/month as there's a 32% tax and NI saving. Make sure you're at least matching the employer contributions to their maximum otherwise you'll be turning down free money (albeit free money you cannot access until your 57).

    Good luck!
    • newgirly
    • By newgirly 27th Dec 17, 8:20 PM
    • 6,323 Posts
    • 43,592 Thanks
    newgirly
    I understand that financially in the long term putting extra to the pension is better than he mortgage, but it doesn't take into account other factors like perhaps job security, maternity leave etc.
    MFW 21
    Target for 2018 £40k/£13,632 paid so far

    Mortgage £36,319 4yrs left. Total owed £48,358 plan to clear in 14 months
    • shangaijimmy
    • By shangaijimmy 27th Dec 17, 9:12 PM
    • 2,736 Posts
    • 13,570 Thanks
    shangaijimmy
    New diary! MFW is also great fun!! And you get a great sense of achievement from it! You'll soon be addicted like the rest of us.
    MFW: Turning June 2036 into March 2025... 39//120 Payments Challenge, Diary Reduction £42,061.17
    Aug 2009: £163,051 // Current: £93,938.84 // Avg Daily Interest £4.22
    MFiT-T4 #8 - 74.24% of £41,000
    • pinkypig
    • By pinkypig 27th Dec 17, 9:21 PM
    • 1,258 Posts
    • 10,201 Thanks
    pinkypig
    Welcome . You're going to be amazing. 23? I don't even want to think about what a financial prat I was at 23

    The very best of luck to you both xx
    • originalmiscellany
    • By originalmiscellany 27th Dec 17, 9:45 PM
    • 1,608 Posts
    • 3,883 Thanks
    originalmiscellany
    Great start, and a willingness to attack and overpay from the outset. Certainly what we did in terms of overpaying when we were younger has eased the burden when we moved to our "forever" house. Just checking you are still going to treat yourself to a nice holiday this summer? All work and no fun is probably the wrong balance!
    Feb 2012 - onwards MF achieved
    September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
    April 2018 down to 28.00 months vs 30.04 months at normal payment.
    Predicted mortgage clearing 03/2047 - now looking at 02/2045

    Aims: 1) To pay off mortgage within 20 years - 2037
    • Secret Saving Squirrel
    • By Secret Saving Squirrel 27th Dec 17, 9:50 PM
    • 1,982 Posts
    • 36,752 Thanks
    Secret Saving Squirrel
    Good luck, you are so sensible to start early. I agree that adding to the pension is more financially sensible, but you can't access the money for so long.... Getting your mortgage paid off early will give you a lot more freedom and flexibility while you are still young enough to enjoy it. Maybe do a bit of both?
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years
    • Blibble
    • By Blibble 27th Dec 17, 9:59 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    Trust me, your 60 year old self will thank you for planning early! I'm ten years older than you sat on £130k in my pension. Personal cost to me has been ~£40k, the rest has been employer contributions, tax contributions and investment growth. You won't get that kind of return from paying off a 2.4% APR debt!
    Originally posted by somethingcorporate
    I understand the logic, but would this not apply for most people aiming to pay off their mortgage early as rates will all be broadly similar? Just curious, as it's not advice I've generally seen given out on here.

    Great start, and a willingness to attack and overpay from the outset. Certainly what we did in terms of overpaying when we were younger has eased the burden when we moved to our "forever" house. Just checking you are still going to treat yourself to a nice holiday this summer? All work and no fun is probably the wrong balance!
    Originally posted by originalmiscellany
    We were a bit splurgy on holidays this year gone - we had our first trip abroad together in 5 years to Paris & it was the first time where we've said sod it to a budget and just enjoy ourselves. As lovely as it was, the thought of another holiday's spending with gay abandon is making my toes curl! I think we'll be having a weekend away in spring though - we've both got 10 days holiday or so to use up by May
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • Blibble
    • By Blibble 28th Dec 17, 1:19 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    First day of concerted MFW'ing underway - shop for the 2 of us is done at £22 or so, which is where I want it to be. That does include some bulk pantry filling at B&M, as partner's family are kindly having us round for new year's so 2 fewer meals to plan for! We've also got left-over gammon & turkey a plenty; will be sorting me some batch-cooked curry in a while. We're very keen (NB; keen, not good!) cooks & love Indian food, and turkey curry is a favourite when we get the chance.

    My parents kindly got us a selection of gift vouchers for Christmas. Whilst all were extremely generous, some vouchers were ... better thought out than others. For example, we've got a Cineworld voucher for £25, although neither of us has expressed much of an interest in films and the nearest Cineworld is 35 miles away. The same goes for Pizza Express, so need to see if we can eBay these today.

    Have a swell day everyone
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • greent
    • By greent 28th Dec 17, 3:06 PM
    • 7,075 Posts
    • 72,080 Thanks
    greent
    My parents kindly got us a selection of gift vouchers for Christmas. Whilst all were extremely generous, some vouchers were ... better thought out than others. For example, we've got a Cineworld voucher for £25, although neither of us has expressed much of an interest in films and the nearest Cineworld is 35 miles away. The same goes for Pizza Express, so need to see if we can eBay these today.

    Have a swell day everyone
    Originally posted by Blibble
    Hello and welcome - just a quick note to say check out zeek for selling vouchers - although my disclaimer is I've never sold on there but have bought literally hundreds of pounds worth
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 £124616 01/10 £104927 01/11 £89873 01/12 £76317 01/13 £52546 01/14 £35356 01/15 £12133 07/15 £NIL
    BTL Mtge 12/16 £69786. 2018 OPs (#18) £1068.37/£4000
    Net sales 2018 £519.32/£1000 PAYDOX18 (#15) £18459.38/£18918.90
    • Blibble
    • By Blibble 28th Dec 17, 6:41 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    First OP made today - only a year later than planned! Found a cheeky £11.50 sitting in Paypal account, and £9.49 tidied up from an old, unused savings account. £20.99 OP therefore.

    Went with Ebay for the vouchers in the end - both vouchers were £20, so put them up at £12.50 starting price on auction with a buy it now at £20. Pizza Express has already sold for £20, and have a bid for £12.50 on the Cineworld one. Rolling in it

    Off to pub now to see darts team over Christmas - spending on alcohol is typically a weak point for me (love a dark pint of ale ... ) so this should be fun! I have an unused £20 social budget for the week though, so will try not to feel too guilty!
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
    • Happier Me
    • By Happier Me 28th Dec 17, 7:44 PM
    • 429 Posts
    • 930 Thanks
    Happier Me
    I understand the logic, but would this not apply for most people aiming to pay off their mortgage early as rates will all be broadly similar? Just curious, as it's not advice I've generally seen given out on here.
    It's not advice you often see of the mortgage free wannabe board but it is advice you will get repeatedly on the pensions board. And coming from someone that values being mortgage free it is sound advice. It's very tax efficient to pay into a pension so I aim to do a mix of both.

    There is always a bigger picture though and even more so at 23: wedding, children, house, job security etc. At 42 I can tick several of those things off. I would suggest you don't lose sight of your pension savings, maybe revisit these when you've had your wedding and you have £1,000 spare a month! Your future self will thank you big time if you direct some of this spare cash towards your pension.

    There are a couple of financial things that I regret NOT doing in my twenties and they all relate to pensions:

    1. Not increasing my husband's pension contributions when he was your age. For the price of a couple of takeaways a month we would be sitting on a healthy nest egg. 20 years later we are playing an expensive game of catch up
    2. Not joining my own pension scheme for two years. I really could kick myself!

    You, however, are young enough and clearly switch on enough to learn from the mistakes that others have made on this board
    • Blibble
    • By Blibble 29th Dec 17, 1:37 PM
    • 449 Posts
    • 786 Thanks
    Blibble
    So, after the posts above, I've been considering the pension side of things as well as the MFW side of my finances. I'm certainly not giving up on the MFW aspect of things (I find it far too much fun!), but have decided that, when pay increase comes in to effect in April, I'll be squirrelling the excess into the pension. The pay rise could be anything between £50p/m and £200p/m, and the money isn't required for day-to-day living, so I feel it sensible to put the excess towards the pension. Thanks for the advice everyone

    OH came up pub as well last night, so drinks were bought for two all evening. About £1 of the social budget for the week is left (down from £20), but as I finished runner up in our mini darts tournament I've got £12 of that back. Will use that as next week's social budget, and then pop £20 into the OP pot come next Tuesday.

    Ebay payment has been received for one of the giftcards - net of fees and postage another £17.57 has been moved over. £38.56 moved over since the diary start - £127840.96 to go!
    Wedding fund - £2440.92 (£1912.07)
    OP fund - £1591.49 (£163.67)
    Emergency fund - £0.00 Oops!
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,306Posts Today

8,125Users online

Martin's Twitter
  • Nearly at the Cheshire Show. Doing an @itvMLshow there today and tomorrow. Do say hi if you're there or ask a question.

  • Good morning. I'm on the train to go to the Cheshire Show today to film for an @itvmlshow Roadshow. Looking forwa? https://t.co/T0uKOKyj4I

  • Early days, but so far a huge majority - 19 in 20 people - support legalising cannabis for medical use. Whereas t? https://t.co/a3gJipQITc

  • Follow Martin