The Start of a New Adventure

canaryfeather · 9 August 2018 at 7:44AM

I'm canaryfeather, a 25 year old who has had her eye on buying a small starter home in the city I work in for the last year. I found a tiny one bed house within walking distance from my work and yesterday the exchange finally went ahead! Completion will take place in just over 2 weeks and I thought that now was a better time than any to start my MFW diary.

I'll be taking out a mortgage for £30,000, and would really like to be mortgage free (or at least mortgage neutral) by the time I'm 30. So that's where I think this diary comes in - Hopefully it'll keep me accountable and help me stop unnecessary spending. (Which I can be guilty of!)

I look forward to joining you all on your adventures too.

Let me begin by asking a question: If you could give 3 tips to a MFW newbie at the beginning of their journey to house ownership/money saving what would they be?

bexster1975 · 9 August 2018 at 8:16AM

Hello, congratulations and welcome :beer:

That is a lovely mortgage size. As for tips:

Do you keep a spending diary? Just a notebook for one month recording everything you spend. Just try to live like you normally do, but write every, single thing down. Knowing where you " waste" money will help you stop it.

When you get a wage rise, add it to your savings/investments/overpayments pot as appropriate. This made a huge difference to me.

Cooking stuff from scratch/ batch cooking is my final one. Groceries are almost always as easy win in terms of cost cutting. If you have Lidl/Aldi near you and haven't tried them you should. Further savings to be had there.

Good luck

Bexster

doingitanyway · 9 August 2018 at 9:00AM

Smart girl being able to walk to work from home is such a great choice. Time, money, exercise, stress. All covered. I wish you luck with your journey.

dark^knight · 9 August 2018 at 10:55AM

Hi canaryfeather,

Welcome to mfw and good luck on your journey.

The three tips:
1, Plan, plan, plan - Plan when you want to be mortgage free by. You can be ambitious, but still realistic.
2, Budget - work out your income, your expenses and then work out how much you can afford to overpay.
3, Cut your costs wherever you can...and if possible increase your income.

julicorn · 9 August 2018 at 11:30AM

Happy shiny new diary!

My advice is pretty much the same as above.

Set concrete goals that are achievable, as well as maybe some 'dream/stretch goals'. Those can be hugely motivating. Small short term goals help as well, as this is more of a marathon rather than a sprint (although your mortgage is nice and small, so I'm sure you'll have it paid off in no time x)

Budget, budget, budget. I use YNAB for this, and it's crazy useful and has made such a difference for me and the friends of mine that use it.

Always think about how you can increase your income and decrease your outgoings. Also, when you get pay rises, resist the temptation of lifestyle inflation as much as possible, but rather put the 'extra' amount into your mortgage or into savings.

Best of luck, and I can't wait to see how you get on!

canaryfeather · 9 August 2018 at 12:29PM

Please see my SOA below:
Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1522
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1522

Monthly Expense Details
Mortgage................................ 250
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 0
Mobile phone............................ 9
TV Licence.............................. 12.5
Satellite/Cable TV...................... 0
Internet Services....................... 20
Groceries etc. ......................... 160
Clothing................................ 10
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 30
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 7
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 200
Holiday................................. 150
Emergency fund.......................... 0
Total monthly expenses.................. 1073.5

Assets
Cash.................................... 7000
House value (Gross)..................... 135000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 142000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 30000....(250)......2.5
Total secured & HP debts...... 30000.....-.........-

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

Monthly Budget Summary
Total monthly income.................... 1,522
Expenses (including HP & secured debts). 1,073.5
Available for debt repayments........... 448.5
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 448.5

Personal Balance Sheet Summary
Total assets (things you own)........... 142,000
Total HP & Secured debt................. -30,000
Total Unsecured debt.................... -0
Net Assets.............................. 112,000

Comments

I also have £150 going into my pension each month via salary sacrifice. I'm also keen to travel, so have allocated some money each month in order to achieve this aim.

bexster1975 · 9 August 2018 at 6:12PM

So here's an interesting thought. If you paid £448.50 a month off your mortgage, assuming an interest rate of 3.5% ( it was the default) you will be clear in under 5 years.

Bexster

bexster1975 · 9 August 2018 at 6:15PM

Need to check you don't have ERC on the mortgage.

Bexster

canaryfeather · 9 August 2018 at 6:30PM

bexster1975 wrote: »

Need to check you don't have ERC on the mortgage.

Good question. I have a two year fix so should be able to review the situation at that point.

doingitanyway wrote: »

Smart girl being able to walk to work from home is such a great choice. Time, money, exercise, stress. All covered. I wish you luck with your journey.

The time aspect was my main concern. At the moment I'm doing an hour commute each way, and I'll now have either a 10 minute cycle or 25 minute walk. Can't wait!

canaryfeather · 9 August 2018 at 6:34PM

julicorn wrote: »

Happy shiny new diary!

My advice is pretty much the same as above.

Set concrete goals that are achievable, as well as maybe some 'dream/stretch goals'. Those can be hugely motivating. Small short term goals help as well, as this is more of a marathon rather than a sprint (although your mortgage is nice and small, so I'm sure you'll have it paid off in no time x)

Budget, budget, budget. I use YNAB for this, and it's crazy useful and has made such a difference for me and the friends of mine that use it.

Always think about how you can increase your income and decrease your outgoings. Also, when you get pay rises, resist the temptation of lifestyle inflation as much as possible, but rather put the 'extra' amount into your mortgage or into savings.

Best of luck, and I can't wait to see how you get on!

Thank you so much for the advice. I haven't heard of YNAB before so I'll check that out!

dark^knight wrote: »

Hi canaryfeather,

Welcome to mfw and good luck on your journey.

The three tips:
1, Plan, plan, plan - Plan when you want to be mortgage free by. You can be ambitious, but still realistic.
2, Budget - work out your income, your expenses and then work out how much you can afford to overpay.
3, Cut your costs wherever you can...and if possible increase your income.

Thanks. I feel like my plan is pretty ambitious, but I'm definitely dedicated to get there!

bexster1975 wrote: »

Hello, congratulations and welcome :beer:

That is a lovely mortgage size. As for tips:

Do you keep a spending diary? Just a notebook for one month recording everything you spend. Just try to live like you normally do, but write every, single thing down. Knowing where you " waste" money will help you stop it.

When you get a wage rise, add it to your savings/investments/overpayments pot as appropriate. This made a huge difference to me.

Cooking stuff from scratch/ batch cooking is my final one. Groceries are almost always as easy win in terms of cost cutting. If you have Lidl/Aldi near you and haven't tried them you should. Further savings to be had there.

Good luck

Bexster

I don't currently keep a spending diary, but I'm definitely going to start. Pretty sure that a lot of my cash creeps away without me realising.

I'll be living 5 minutes away from Aldi, Iceland and Home Bargains, and about 15 minutes away from Lidl so I'm pretty sure my grocery costs are going to reduce significantly!

julicorn · 9 August 2018 at 7:04PM

canaryfeather wrote: »

Good question. I have a two year fix so should be able to review the situation at that point.

Just make sure you're allowed to make large overpayments, basically. Lots of providers charge you the ERC if you pay off more than 10% of your starting balance in any given year

The Start of a New Adventure

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