Mouche’s adventures with her first mortgage (while coping with her first baby)

Pbr you're still here!!! Yay! I saw your diary was dead and thought you had left MSE. So glad you haven't. How are you doing? How's the non so LO?

Something about the autumn seems to bring me back to my MFW diary. Almost exactly a year after my last entry, I am back. Some things have changed since last year but in other ways nothing has changed at all. I am still working at the same job and still happy. I got a small raise and some stock options this year and am hoping for a promotion and decent payrise in the next 6 months. Most of my team got made redundant (jobs moved to Barcelona) but I am lucky that I did not and that the company has agreed to make me a homeworker. I only go into office once a week now, which saves a ton in commuting costs. It also reduces the amount I pay for after school and holiday clubs as LO is now nearly 8 and is quite happy to mooch around the house during the holidays while I work.

OH's business fizzled out and he managed to get a job in September. He's not happy there though and is trying to find a new job. If he can't he may leave anyway. I have had to come to terms with the fact that his income will never be reliable so I need to keep our regular expenditure to something I can afford on my own. And then when he does have income, it can go into savings. He also helps support his parents in India and their expenses have risen as they have aged and needed more medical and caring support. So it's best really to leave his income out of the equation.

I have a colleague who is a finance whiz and he has really got me into Dave Ramsey's Baby Steps and Financial Independence bloggers (my favourite is The Escape Artist). Working from his advice, I have been trying to overpay my mortgage like crazy. I always was of course, which is why I have this diary, but I have tried to turbo charge it. Dave Ramsey's baby steps (converted to UK money) are:

Baby Step 1 – 1,000 to start an Emergency Fund
Baby Step 2 – Pay off all debt using the Debt Snowball
Baby Step 3 – 3 to 6 months of expenses in savings
Baby Step 4 – Invest 15% of household income into pension
Baby Step 5 – College funding for children
Baby Step 6 – Pay off mortgage early
Baby Step 7 – Build wealth and give

Step 1 to 3 I'd already had in place.

Step 4 I kind of already had because I have always put the employer-matched amount into my pension. But OH had a minimal pension because his employers never matched anything in the days when it was not compulsory. I have set up a private pension for him now and though there's not much in it, the total does come to 15% of our household income.

Step 5 isn't really relevant in the UK but I am paying for private school for my son and I will think about uni a bit further down the line.

Step 6 - this is the main one! Instead of putting as much as I could spare towards the mortgage, I decided I would use my savings to overpay the maximum amount allowed (10% of outstanding amount) at the beginning of the mortgage year and then save it back on a monthly basis. And do the same again next year. I know i am fortunate to be able to do this - it's mainly because I have always saved into different 'pots' without realising that the total amount was more than I would ever need at any one time. And i was losing money by holding it in lower-than-inflation-interest savings accounts.
I am still super-cautious so I still keep a decent amount in cash ISAs. And of course I am limited by the OP cap on our fixed rate mortgage. But by changing my approach from pay-as-much-as-I-can to pay-as-much-as-I-am-permitted-to, I've brought our mortgage amount down quite a bit.

And finally Step 7. After paying the max permitted on the mortgage, I still have money left in non-emergency-savings. So I have learned about passive investing and have started a monthly investing plan. I still need to work out the kinks here as I need to combine a bit of investing I did earlier with my new plan, but the point is I have started investing my savings in index funds regularly.

I am also trying to earn more money - I have three possible sources for this:

• Matched betting - I have made about 4,000 from this in 1.5 years and I will keep at it.
• Freelance editing - I have done this off and on from when I was on my career break. It's time-consuming and doesn't pay a whole lot but I do enjoy it so if the situation arises that I have more time/ less money than expected, it's an option
• Selling stuff - I have Marie Kondo'd my house over the course of 2019 and though there is still a bit left to do, what I really need to do now is sell all the stuff I couldn't bear to throw away

I also need to stop frittering away money on unimportant stuff. So to achieve that, I am tracking our expenses through Toshl. I am also going to start tracking NSDs again.