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  • FIRST POST
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Sep 12, 11:07 AM
    • 744Posts
    • 3,282Thanks
    SuperSecretSquirrel
    Onwards to freedom!
    • #1
    • 8th Sep 12, 11:07 AM
    Onwards to freedom! 8th Sep 12 at 11:07 AM
    Hello and welcome to my MFW diary. Not sure how often I'll update as I'm going down the boring 'increase monthly mortgage direct debit' route, not the more interesting to read 'random repayment as and when a bit of extra money is made' route. Still, no harm in starting a diary here, even if it's just for me to look back on in a few years time!

    It seems like a good idea to start with a bit of background, so here goes...

    We bought our house in July 2010 with an 87k repayment mortgage, fixed for 10 years at 5.29%. Nearly two years of 525pm standard repayments allowed us to rebuild our savings, but after 20 monthly payments (over 10k paid out) the mortgage balance had only dropped around 2.5k thanks to all the interest being paid...

    We decided to make a small start on overpaying - small overpayments early on have quite an impact over the long term so why not start small and ramp up later? March 2012 we made our first regular overpayment, 50pm. Amazingly, if we were to keep up with this 50pm over the life of the mortgage we'd be mortgage free nearly four years early (Nov 2031) and save ourselves a tidy bit of interest. Not bad rewards for just 50 a month!

    A few days ago I decided to step things up a notch. From next month the regular overpayments will increase to 250pm, 200 less will find its way into my long term savings (paying 2.8%, minus basic rate tax), 200 more will find its way to the mortgage provider. Makes a lot of sense looking at the interest rates! I'll keep on saving in a normal savings account though and won't be putting every penny into the mortgage - I'm used to seeing my savings grow monthly, and like to try to be prepared for any eventuality, so I'll keep on squirelling away a chunk of my income in savings each month. I know this isn't the most efficient option in terms of reducing interest payments, but it's a balance that keeps me sane, if there's any major disasters the savings are there to fall back on, that kind of peace of mind is well worth a few pounds! Anyway, here's where the numbers get really interesting - by overpaying 250pm for the life of the mortgage we'd be mortgage free nearly eleven years early (Oct 2024). Wow!

    Seeing the massive savings I started looking into this stuff in more detail. We're allowed to overpay up to 10% of the mortgage balance each year without penalty. I don't want to increase overpayments over 250pm right now, but maybe after another year or so of growing my savings I'll step up the overpayments to 500pm. Two years later the overpayment would need to drop to 450pm (to avoid penalty), year after that drop to 400, and the following year drop to 350, and the years after that drop to 250 at which level the op's would have to remain until the end of the fixed period (August 2020). If we were to follow this plan, at the end of the fixed period our mortgage balance would be around about 20k which we could pay off with a lump sum from savings. Mortgage free fifteen years early, at age 36, sounds awesome, and what's incredible is that it also sounds very realistic.

    At the moment overpaying is my project. OH and I have our own accounts that our wages are paid into, and a joint account that we feed monthly to pay the bills. As I earn a little more I also do the grocery shopping, pay a few extra bills, and overpay the mortgage. Beyond feeding the joint account OH's income is none of my business, it can be spent on whatever OH likes, same goes for my income. This works well for us - if I want to splash out on a new computer game or a night out or whatever I can do so without needing to consult OH, and if OH wants to splash out on a night out or clothes or whatever no need to consult me. We're both debt averse and savers by nature, so as long as we spend less than what's coming in and all the bills get paid all is well. I'm hoping that seeing the mortgage balance reduce might convince OH to get involved in overpaying the mortgage (or at least split savings into two pots, one 'spendable' short term pot for holidays and home improvements etc, and a long term one earmarked for paying down a lump sum on the mortagage), but there'll be no pressure, if OH joins in that would be excellent, but if not that's ok.

    Finally, I know life doesn't always go smoothly - anything could happen in the next 8 years, babies, redundancy, armageddon, "the best made plans of mice and men, often go awry"... But if things don't go to plan, nevermind, we'll have made a great start on the mortgage regardless, any overpayments we make early on will benefit us later on, so we may as well give it a shot while circumstances allow It's nice to remember that circumstances can go up as well as down too - maybe there will be payrises and good fortune along the way that make achieveing the target easier, who knows!
    __________

    January 2014 Update:

    Things have changed quite a lot since I first started this diary... The new aim is to hit the MFiT3 target of a 40k mortgage balance by end 2015, and to have 40k in savings by that time too, making us mortgage neutral 20 years early! Anything can happen, but I think it's time to aim high!
    __________

    March 2015 Update:

    We did it! We are mortgage neutral (savings balance higher than outstanding mortgage) and are locked in to achieve the MFiT3 stretch goal of mortgage below 40k by the end of the year I'm going to keep this diary going, the aim is total financial independence now!
    __________

    January 2018 Update:

    Paid the mortgage off in full today (12/01/2018)
    Last edited by SuperSecretSquirrel; 12-01-2018 at 8:42 PM. Reason: We did it! :D
    Mortgage free in 7.5 years (17.5 years early), now aiming for financial independence.
    MFiT-T5: 27.6% (4/36)
    FI (exc SP): 2013 -1%, 2014 3%, 2015 7%, 2016 13%, 2017 18%, 2018 32%, 1/5/19 36.9%
Page 33
    • edinburgher
    • By edinburgher 14th May 19, 8:12 AM
    • 11,486 Posts
    • 61,395 Thanks
    edinburgher
    That's fantastic SSS - go you

    Re. 4 day weeks - are you working part-time - or compressed hours? I'm working compressed hours which is the best of both worlds as regards money and time, but not energy levels
    • crv1963
    • By crv1963 14th May 19, 12:33 PM
    • 846 Posts
    • 1,921 Thanks
    crv1963
    Great SSS. Like Ed I work compressed hours or shifts- I do 13 days/ nights over a four week period thereby getting 4 days off for 3 weeks and 3 days off on the fourth week.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 15th May 19, 7:05 AM
    • 744 Posts
    • 3,282 Thanks
    SuperSecretSquirrel
    It's a mix of both that I do, and OH is pure part time. I go in an hour early tue-fri, which nets me a sat-mon weekend for the price of half a day's salary per week. The fact that we don't have to pay for childcare on a Monday means it near enough works out as a free day off. As an added bonus I don't really notice the extra hour added to each working day My only regret is that I didn't do it sooner!

    Once we're done with paid childcare, if we don't change a thing we'll have weekends together as a family, OH will have her Fridays to herself, and I'll have my Mondays to myself. We'll probably rejig things a little at that point and have a weekly day off as a couple instead.

    The freedom to get things done, or do something as a couple, or even do nothing at all, should be well worth the salary hit. It should also mean that we can really make the most of our Saturdays and Sundays - no cluttering up the family weekends with life admin!
    Last edited by SuperSecretSquirrel; 16-05-2019 at 6:29 AM.
    Mortgage free in 7.5 years (17.5 years early), now aiming for financial independence.
    MFiT-T5: 27.6% (4/36)
    FI (exc SP): 2013 -1%, 2014 3%, 2015 7%, 2016 13%, 2017 18%, 2018 32%, 1/5/19 36.9%
    • crv1963
    • By crv1963 17th May 19, 8:33 AM
    • 846 Posts
    • 1,921 Thanks
    crv1963
    Days off during the "working week" are great, and of course I get paid additional hours payment for working "unsocial hours" at a weekend!

    Time to do nothing is also valuable, as is the ability to mooch about places that are half empty because most are at work or school!
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • Karmacat
    • By Karmacat 17th May 19, 7:52 PM
    • 31,494 Posts
    • 185,707 Thanks
    Karmacat
    I like how your hours sound, SSS, and when it also lessens the childcare you pay for, thats got to be really good
    Downsized and paid off mortgage 2010
    Retired August 2016
    Paid off French mortgage September 2018
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 21st May 19, 7:12 AM
    • 744 Posts
    • 3,282 Thanks
    SuperSecretSquirrel
    I've been working on some figures again I've kept things really simple - working in today's values, and assuming zero growth. This should result in constant purchasing power over time provided market returns match inflation. This is a pessimistic assumption as it's reasonable to expect market returns to outpace inflation by some margin as a rule. I've also assumed that the state pension will be worth the same in real terms as it is now in the distant future, and the commencement date won't be pushed any further into the future - both of these assumptions could be a little optimistic.

    Using this simplified model, it should seem that if I were to continue investing as I am right now in my pension and ISA, I should in theory have enough to cover my share of the normal household spending, until age 200+, in just 7 years time

    ISA would cover the years from 42 to 58, then the pension would take over once accessible, and state pension would massively reduce the burden from age 68. Even if there were no state pension at all, the well wouldn't run dry until I was 78 - and I'd probably be happy to be turned into soylent at that point if we lived in such an uncaring society that octogenarians were dropping dead on the street from starvation

    This has all been calculated with some very pessimistic assumptions in place, and would result in the pot hitting 140% of the start amount needed to satisfy the more standard 4% withdrawal rate (and even that is likely to be too conservative once you factor in state pension!) I didn't expect it to be possible for me to be selfishly FI so soon using such a pessimistic model! It seems mind boggling that a basic rate tax payer (and I'm very firmly in the middle of the basic rate band) could get to that point by the age of 42. It's such a huge departure from the norm that I honestly couldn't believe the numbers for quite some time. We really must spend very little compared to "normal" people. I don't really know how, it doesn't feel like we live austerely in the least, but we must do!

    I'd need to work a further 9 years to qualify for the full state pension, and I wouldn't have any intention of stopping work entirely at 42, so that's exactly what I would hope to do. It seems quite feasible that in those 9 years up to age 51, a bit of part time / freelance work would be sufficient to cover basic outgoings and then some, meaning no need to start drawing down the ISA for quite some time. This would result in a very comfortable buffer being built up.

    By the time we hit age 55, both children could have finished undergrad degrees (if that's the path they choose for themselves). It should be possible for us to help fund those (or in other circumstances help with a house deposit, or whatever makes sense at the time), then fully retire quite comfortably if we so wished. I imagine I'd still do some interesting stuff to keep myself occupied past age 55, and I'm fairly confident that the interesting stuff would result in me earning some extra pocket money

    The biggest and most likely risk to this loose plan would be lifestyle creep. A house move or two, or a luxury holiday habit could change things dramatically, but I think if we hit FI soon enough, and choose to continue working in some shape or form for quite some time after, a little added extra luxury here and there could be accommodated I could well be massively underestimating how expensive the children could become as they grow up too!

    I often find it scary to think too far into the future, "the best made plans" and all that... But barring societal breakdown, economic collapse, health curve balls, etc, all of which are outside my sphere of control, there's a reasonable sketch of a possible future being pencilled in, and I like it! I can spend the next few years aiming for selfish FI, then review my options. I could make a massive change at that point in time and be safe in the knowledge that it would have no impact on my contributions to the joint account, I could keep things steady even without any earnings from work coming in. Nice! I would aim to work in some capacity though, and would end up bolstering OHs position, helping us achieve full/real/team FI a little while later
    Mortgage free in 7.5 years (17.5 years early), now aiming for financial independence.
    MFiT-T5: 27.6% (4/36)
    FI (exc SP): 2013 -1%, 2014 3%, 2015 7%, 2016 13%, 2017 18%, 2018 32%, 1/5/19 36.9%
    • Karmacat
    • By Karmacat 21st May 19, 8:39 AM
    • 31,494 Posts
    • 185,707 Thanks
    Karmacat
    That's brilliant news congratulations! Have some cake
    It's such a huge departure from the norm that I honestly couldn't believe the numbers for quite some time. We really must spend very little compared to "normal" people. I don't really know how, it doesn't feel like we live austerely in the least, but we must do!
    Originally posted by SuperSecretSquirrel
    I have some feedback on this point - me and my sister popped over to Kent for a few days, courtesy of The Sun's holiday scheme. We stayed in a very nice caravan, right next to the sea, in the middle of a beautiful area - and between us, the residential cost was 40, for 4 nights. 5 per night person, and that included gas and electricity in the caravan, plus linens. I didn't see how it could possibly be worth their while to have us occupy their caravan, but my sister pointed out that most people, when they go there, will buy meal coupons at the restaurant, food at the shop, and entertainment vouchers at the one armed bandit centre. Thats where people's money goes. I certainly didn't feel austere in not doing that
    Downsized and paid off mortgage 2010
    Retired August 2016
    Paid off French mortgage September 2018
    • VDOT47
    • By VDOT47 21st May 19, 12:55 PM
    • 252 Posts
    • 706 Thanks
    VDOT47
    SSS - it sounds like you have a very good plan mapped out! In fact, vast swathes of your posts over the last month or so could describe my views, hopes and aspirations almost word for word!

    I am probably a little older than you (reading between the lines) and certainly a few years behind you in terms of current assets and net worth, but I’m really starting now to narrow down a short term, medium term and long term plan for how to get to FI as early as possible!!

    First thing, now that the emergency savings pot is looking healthy (9-12 months of expenses now in place) the next in my crosshairs is to start work on getting pension contributions up!

    I am still hoping that we can be mortgage free (or, at worst, only have a small mortgage left) by 55, but my focus is not on drastically overpaying but instead to maximise the benefits of pensions.

    I do find your thread an inspiration, so please do keep updating us regularly!
    Original Mortgage (Feb '17) 269,995
    Current Mortgage (08/04/19) 234,184
    End Date February 2040 Original End Date February 2042
    • NorthernMonkey1
    • By NorthernMonkey1 22nd May 19, 9:13 AM
    • 264 Posts
    • 1,039 Thanks
    NorthernMonkey1
    Some of your numbers are amazing. A little bit of spending control (alright, quite a lot) and you've totally re-imagined your life around having more days off and heading into full FI.

    It's impossible to see into the future, but its possible to weight the dice firmly in your favour, and right now it looks like you've got the dice VERY heavily weighted
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 25th May 19, 7:27 AM
    • 744 Posts
    • 3,282 Thanks
    SuperSecretSquirrel
    I think you hit the nail on the head there KC... We still do things, normal things, we just save a bit here and there which over the course of the year makes a big difference!

    It's very rare that we head out for a family day out without having packed a picnic for lunch for example, we prefer this to restaurants for many reasons - we know the children will eat what they are given, they (and I! ) can pick at it as and when preferred, we know that the food we prepare is healthy, it's so much quicker to prep and eat a picnic which leaves more time to do what we really want to be doing that day, we all enjoy picnics whereas dining out with small children can be quite stressful, and finally it saves a fair amount of money. I can think of a few examples where we do things a particular way for a whole host of reasons, sometimes without money even crossing our minds, that end up saving us a bit cash. In-sourcing house and garden improvements (learn new skills or refine existing ones, personal satisfaction from a job well done, serves as a good example to the children, quality time as a family if children can "assist", save money), not having a taste for any of the classic vices (improved health and longevity, good example to children, save oodles of cash), various cheap as chips hobbies (fun/interesting/entertaining/relaxing/cerebral, family time, good example to children, save money). I suppose money saving permeates our lifestyle without having been the primary focus for quite some time. As a result our outgoings are pretty low, and our happiness levels are pretty high. The happiness thing becomes something of a self fulfilling prophecy - knowing we could scrape by for decades on a single minimum wage income if necessary does wonders for the stress/anxiety levels. I feel totally relaxed when considering all things financial these days

    Nice job on the EF VDOT47! A year of being able to handle anything a recession could throw at you must have you feeling pretty damn secure already! Best of luck with the continuing journey, I'll be following along

    Can't see that I'll ever stop posting here, it gives me an outlet to discuss things that are totally at odds with the lives my real world friends lead. Even if that weren't the case, some of what I write could be misconstrued as bragging if spoken out loud, and nobody likes a bragging bore (aiming to maintain an 18k per year household lifestyle can't really be considered bragging, but discussing six figure savings would immediately get some people's backs up if they have for example a nice lifestyle but a negative net worth). It's also best not to leave the door open to the begging bowl of more casual acquaintances that might hear of your relatively comfortable situation through a "friend of a friend". No, money talk complicates everything, so this is the only place I discuss money matters other than with OH. I guess what I'm saying is - this place keeps me sane

    Thanks NM I feel like we're in a good place right now, and hopefully things will keep on getting better! I get a great deal of satisfaction from the idea that we might in some way be "cheating the system" with our heavily weighted dice
    Last edited by SuperSecretSquirrel; Yesterday at 7:29 AM.
    Mortgage free in 7.5 years (17.5 years early), now aiming for financial independence.
    MFiT-T5: 27.6% (4/36)
    FI (exc SP): 2013 -1%, 2014 3%, 2015 7%, 2016 13%, 2017 18%, 2018 32%, 1/5/19 36.9%
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 25th May 19, 7:32 AM
    • 744 Posts
    • 3,282 Thanks
    SuperSecretSquirrel
    Continuing the theme of "cheating the system" - I've managed to BT all but 900 of my remaining stooze pot. That's 11.6k that can remain in PBs for another 18 months or so. I like the idea of my totally free borrowed money potentially transforming into a million pounds Even if I don't win the million, a steady stream of free 25 wins still makes me smile

    Once the BTs have settled I'm going to go on a superfluous credit card and current account closing mission. I have my eye on a switch reward from a bank I've never used, and I'm thinking the Spanish account could be the sacrificial lamb I'm looking for - meets all the criteria for the reward and only nets about 25pa these days - a 175 in the hand beats 25pa in the bush I'll grab that switch reward, then close all the old accounts down.

    The one other admin job I've had on my to do list for ages is to transfer my S&S ISA to further finesse the charges. I think I'm with the second cheapest option at the moment (was the cheapest when I first signed up) but now want to move to the very cheapest. I have been waiting for steady waters as I've not felt comfortable transferring while markets are chaotic, but I can't see things stabilising for quite some time yet. I need to look into whether holding off is really necessary, I'd be moving a holding that is 100% in VLS80, to a new platform where my holding would remain 100% in VLS80 - I should find out if the limbo period while transferring would be subject to risk as "time out of the market" or not. Or maybe I should stop dithering and just pull the trigger, once it's done it's done!
    Mortgage free in 7.5 years (17.5 years early), now aiming for financial independence.
    MFiT-T5: 27.6% (4/36)
    FI (exc SP): 2013 -1%, 2014 3%, 2015 7%, 2016 13%, 2017 18%, 2018 32%, 1/5/19 36.9%
    • Karmacat
    • By Karmacat 25th May 19, 8:28 AM
    • 31,494 Posts
    • 185,707 Thanks
    Karmacat
    I think you hit the nail on the head there KC... We still do things, normal things, we just save a bit here and there which over the course of the year makes a big difference!

    It's very rare that we head out for a family day out without having packed a picnic for lunch for example, we prefer this to restaurants for many reasons - we know the children will eat what they are given, they (and I! ) can pick at it as and when preferred, we know that the food we prepare is healthy, it's so much quicker to prep and eat a picnic which leaves more time to do what we really want to be doing that day, we all enjoy picnics whereas dining out with small children can be quite stressful, and finally it saves a fair amount of money. I can think of a few examples where we do things a particular way for a whole host of reasons, sometimes without money even crossing our minds, that end up saving us a bit cash. In-sourcing house and garden improvements (learn new skills or refine existing ones, personal satisfaction from a job well done, serves as a good example to the children, quality time as a family if children can "assist", save money), not having a taste for any of the classic vices (improved health and longevity, good example to children, save oodles of cash), various cheap as chips hobbies (fun/interesting/entertaining/relaxing/cerebral, family time, good example to children, save money). I suppose money saving permeates our lifestyle without having been the primary focus for quite some time. As a result our outgoings are pretty low, and our happiness levels are pretty high. The happiness thing becomes something of a self fulfilling prophecy - knowing we could scrape by for decades on a single minimum wage income if necessary does wonders for the stress/anxiety levels. I feel totally relaxed when considering all things financial these days
    Originally posted by SuperSecretSquirrel
    Happiness Now that we're all supposedly emotionally literate, I don't understand why it isn't higher up the scale of things talked about in the public domain - who would want their children to be earning 300k a year if they cried themselves to sleep, or drank themselves to death? I love the concept of a self fulfilling prophecy you mention above, and I think you're creating that for your kids too, you're stocking up memories for them where you're doing things with them, they're learning, they're being paid attention


    Can't see that I'll ever stop posting here, it gives me an outlet to discuss things that are totally at odds with the lives my real world friends lead. Even if that weren't the case, some of what I write could be misconstrued as bragging if spoken out loud, and nobody likes a bragging bore (aiming to maintain an 18k per year household lifestyle can't really be considered bragging, but discussing six figure savings would immediately get some people's backs up if they have for example a nice lifestyle but a negative net worth). It's also best not to leave the door open to the begging bowl of more casual acquaintances that might hear of your relatively comfortable situation through a "friend of a friend". No, money talk complicates everything, so this is the only place I discuss money matters other than with OH. I guess what I'm saying is - this place keeps me sane
    For me too! I talk money in general with both my brother and my sister, but we all have such different circumstances (I'm in the middle) that it feels weird to be too specific.


    Continuing the theme of "cheating the system" - I've managed to BT all but 900 of my remaining stooze pot. That's 11.6k that can remain in PBs for another 18 months or so. I like the idea of my totally free borrowed money potentially transforming into a million pounds Even if I don't win the million, a steady stream of free 25 wins still makes me smile
    Originally posted by SuperSecretSquirrel
    I've been paying such a lot of attention to my kitchen I've let slip all but very basic financial admin. Might have time to get started next week between the kitchen tiling and going off for another caravan holiday
    Downsized and paid off mortgage 2010
    Retired August 2016
    Paid off French mortgage September 2018
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