Something to aim for

Dragonrider · 10 September 2017 at 10:30PM

Hi all,

I've been a MFW for a while now, and often browse this board for inspiration. There are some v good ideas on here!

I've been overpaying for years just by increasing my monthly DD, and have sometimes had an extra push to take more off the balance each month, but never sustained it.

However, life has got complicated, and I now need to focus on getting the balance down quickly....

Newly single with young kids, my ex has agreed to give up all equity in the house in return for me giving up all claim to his pension. Fortunately, seeing as I am on a pretty low part-time salary, he's also agreed to remain on the mortgage for the remainder of the current fixed term - which is 5 years, finishing in August 2022. I can afford the repayments at the moment with tax credits and child maintenance.

I therefore have 5 years to either get the balance down to where I can afford to take it over on my current salary, or increase my salary dramatically. I'm going to try to do a bit of both!

This diary is going to track my progress and keep me motivated, and I'm open to any brainwaves people might have along the way.

Current mortgage balance is -359,337.18!!!! Oh help!

Currently overpaying an automatic £77.31 by rounding up my DD, and am hoping to overpay another £200 per month in order to take £1k off the balance each month. This will hopefully be doable - I have been keeping a detailed spending diary for the past 4 years, so have a good handle on my outgoings, and where I can cut them. This will bring me down to just under £300k at the end of the 5 years.

One of the silver linings of divorcing is that I'm in complete control of the finances - no OH spending £15 per day on coffees and lunch, or having to have the latest £200 gadget - gotta find the bright side, right?!

Dragonrider

bubblycrazy · 10 September 2017 at 11:07PM

Good luck! That is one heck of a big mortgage! Your spending diary record will definitely come in useful.
Do you have the agreement with your ex in writing?
An SOA can be very useful.
Is there the possibility of increasing your hours in your current job or are you thinking of something working from home?

wishingthemortgaheaway · 11 September 2017 at 5:16AM

Dragon rider, sounds like a challenging situation, but you also sound like you have a solid plan.

Have you taken financial/legal advice over the house equity vs pension pot situation? If your mortgage is £360k, You'd have to have a huge amount of equity for it to compare to the size of the pension pot.
In my experience several ex's have suggested this as a divorce settlement solution, but when the other half has looked into it, it has rarely been beneficial to them.

A couple of friends have had written into the divorce settle ment that the partner who's left cannot make an application for their share of the equity until the youngest child is 18, or when they leave full time education but the equity they have rights to is set (as a % I think) at the time of the divorce. This means that the person who lives in the house and pays 100% of the mortgage payments from this point onwards, gets 100% of the benefit of what they have paid when the house is either sold, or they buy the ex out.

Hope this makes sense.

Wish.

Dragonrider · 11 September 2017 at 8:41AM

Hi bubble, hi Wish :wave:

My LTV is currently 50%, so the balance is actually slightly tipped in my favour - my solicitor thinks I've done OK. Additionally, my ex is paying more maintenance than the CMS says he should - he's being honourable in that regard, at least.

We're just in the process now of getting it court approved, so by the time the 5 years on this fixed rate is up, it will be both approved by the court, and I'll hopefully have 5 years' worth of evidence that he's paying the maintenance on time.

My littlest doesn't start reception until next Sept - so in theory that would be a sensible time to up my hours. However, because I work in London, I have a 1.5 hr commute each way, so actually have to pay for 3 hours more childcare per day than I work :eek: So I need to work out the numbers carefully to make sure I'm not making myself worse off. If I could get promoted before then, the numbers become much better, so that's the plan this year - get promoted!!!! Maybe easier said then done, but something to focus on.

Dragonrider

Dragonrider · 12 September 2017 at 6:15PM

So I thought I would put down on paper how I'm planning to find the £200 to overpay the mortgage every month, in order that I can take £1000 off the capital each time. By doing this, I should get under £300k by the end of my 5 year fix. I will think about what I want to put in my signatures too!

Bills all go from one account, and I put in £1000 per month. This sounds an awful lot, but it covers everything from council tax to annual insurances to hobbies to school uniform. Anything regular I can budget for is covered by this account. I aim to always have £1000 in reserve here, so any extra from each month can be used towards OPing. I've got all my utilities down as low as they can go (couldn't believe how big a reduction I made by not using the tumble dryer!!!) except my mobile contract which runs out next week.

Childcare is a massive outgoing for me with 4 kids under 9, but littlest starts reception next September, so only one more year of pain!

Then my spending is as follows:

Me (travel to work, lunches, fun, make up, clothes, haircuts etc) £250

Groceries £400

Diesel £100

General spending (doing stuff with the kids, kids clothes/books etc) £200

I then have a separate account for presents £100 (I take all birthday presents out of this during the year, and then what's left at the end of the year is my Christmas budget) - so I'm not going to count this in my monthly total.

So total is £950 per month.

Having done a bit of thinking, I have a few ideas.....

1. Walk/cycle to the station rather than taking the bus. This would be a saving of £1.50 per journey, so potentially £9 per week (2 journeys per day, 3 days a week)
2. Take all my lunches into work, so another potential £9 per week (I usually buy a £3 meal deal)
3. Proper meal planning to take at least £50 off the grocery budget
4. I've just switched to a much cheaper, more fuel efficient car so should start to see savings here but not sure how much yet
5. Cut down spontaneous hot chocolates in cafes with the kids - with 5 of us it quickly racks up!

I'm hoping that finding £200 should be possible by doing all of these in combination, possibly leaving myself some wriggle room too for those days when it's tipping it down and I can't face the bike!

But I'm going to hold the £150 in reserve in my bills account so that if I have a horrible month I don't have to use the credit card.

Fingers crossed, I'll keep you posted on my progress!

Dragonrider

wishingthemortgaheaway · 12 September 2017 at 6:25PM

Sounds like you have a plan.
If you use your bills account for annual bills instead of monthly ones, do you keep track of how much is in there for each bill? Or is it just a single big pot?
I'm thinking of you empty it each month (apart from the £1k buffer,) does that mean some months you'll purposely use the buffer amount?

Sorry, I don't know if I've explained that very well.

MichaelDH · 12 September 2017 at 6:44PM

Hi Dragonrider

Welcome! Sounds like you have some good ideas for cutting costs. The money saved meal planning and taking packed lunches to work really adds up. Re. childcare costs, have you ever thought about hiring an au pair? One of my cousins did this a few years ago as worked out cheaper for her than child minder for her three children. Might be worth looking in to.

Dragonrider · 12 September 2017 at 6:56PM

In any individual month, I don't go over £1000 moving out of the bills account. I've managed to spread my big annual expenses out over the year, which helps. So this account has actually been accumulating over the past year, to the point where I had about £2500 surplus in there.

The time when I might need to reassess is when council tax restarts next spring - for various reasons I paid this year's in one lump sum so it's not coming out of my account at the moment.

I've also got about £5000 in easy access as an emergency fund, so if the system doesn't work and I find out I've paid out too much too early, I can readjust.

Hopefully it will work out overall.

Dragonrider

Dragonrider · 12 September 2017 at 7:02PM

Hi Michael :wave:

I think I will swap to an au pair next year - I decided not to this year as my youngest is only at school half days, and I wasnt comfortable with an au pair just out of school having sole care of a little one. But next year, when I just need before and after school care, then definitely!

Thanks for the suggestions, keep them coming!

Dragonrider

pinkypig · 12 September 2017 at 8:51PM

Hi DR :wave:. Our situations have parallels although my kids are older. It can feel blooming daunting tackling this as a single parent but you sound very motivated and organised so you can and will do it:)

Your bit about the silver lining and being in control hit a chord. Though a little scary, its incredibly liberating and every victory, however small is yours to celebrate and feel proud of. The sense of purpose it has given me has been invigorating.

Wishing you the very, very best of luck. Subscribed in order to cheer loudly from the sidelines:D

PP x

Dragonrider · 12 September 2017 at 8:58PM

Hi pinkypig :wave:

Thanks so much for the words of encouragement!

You're absolutely right about the feeling of liberation, as well as determination and an energising effect. I know that there will be v hard times (I still get v down in the evenings when the house is quiet) but there is a sense of freedom as well.

Will happily follow and cheer you on also!

Dragonrider

Something to aim for

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