I tweeted about our new found Mortgage Free status this morning, and thanks to a RT from Martin Lewis of MoneySavingExpert fame it got quite a lot of interest and congratulations. LOVELY that total strangers will take the time to comment on something like that, so thank you to them! One question that was asked, though, was what tips we could give others, and that got me thinking...
Firstly - start by getting your house in order, financially. Work out exactly what your outgoings are, and what surplus you have left each month. Then check you actually DO have that amount left over - a spending diary can be helpful!
Don't just talk about overpaying, do it! People use all sorts of excuses for not getting on with it - "I don't know if my mortgage deal allows it..." ring the mortgage company and ask! "I don't know how to go about it" - usually it's as easy as asking the mortgage company to increase your Direct debit, and telling them to take OP's off the capital, not the term - that one is important! The big one is usually "I can't overpay enough to make a difference" - oh yes you can! As little as £10 a month starts to make an impact, and you can increase as time goes on. EVERYTHING extra you pay chips away at the interest you will pay over the term.
Fund your overpayments first off by making savings in your outgoings, not by reducing your standard of living. Take a look at your energy bills and if you're not on the best deal - switch! That saving can be added to the mortgage payment. Negotiate a deal with Sky or Virgin for your TV, broadband & phone - haggling with those guys works superbly and again, anything saved can go straight to the mortgage.
PLAN! If you plan upfront where your money is going, and ensure that everything is allocated to where it needs to go, you know exactly how much spare you have that can be used to fund overpayments. We have found that savings accounts attached to our current accounts work brilliantly - at the start of each month when we get paid automatic transfers send money across to those for the things we budget for - car expenses, holiday, household expenses and that sort of thing. Personal spending money gets transferred to our personal accounts, and the joint account then doesn't get touched for general spending, it;s just DD's etc that come out of it. At the end of the month any surplus got transferred to our "Mortgage OP account" and then headed across to the mortgage itselt at a suitable point.
Don't try to cut everything back to the absolute bone. I've read so many blogs over the past few years with people not only cutting back their quality of life to zero, but berating others for not doing the same, and they all have one thing in common - they are not mortgage free now. Go at it steadily but with determination, heat your house, eat decent food, go out occasionally and have fun - those are all the things that will keep you motivated and stop you feeling as though it's too tough. Have fun, but budget for it.
Above all remember that even the tiniest saving can help. Maybe try taking the odd pennies off your account balance each time you log in to your online banking. Turn the thermostat down a few degrees, or if you are on Economy 7 electricity fit timeswitches to your washing machine and dishwasher (please take note the Fire Service urge caution on using appliances overnight/while you are out) so they can run overnight on the cheap rate. Change standard lightbulbs for low energy ones. Stocktake your kitchen cupboards, freezer and larder and challenge yourself to use up the contents thereof so saving money on your food bill.
As we sit here tonight within 4 walls that are entirely owned by us, I can 100% tell you that all the work on it has absolutely been worth it - the feeling this morning when I got off the phone was just amazing. Old habits die hard though - we're not going out for a posh meal, and there's no champagne being opened - instead it's our favourite celebration meal of an indian takeaway, and beer from the bottles we had in the larder already! Does it feel like a hardship? Does it hell!
(ps - I totally appreciate the irony of a Frugal Friday post on a day when I spent £20,606 before breakfast!)