Net worth update: August 2017

Net worth update (1)

I continue to be a light-weight blogger at the moment, but there have been some HUGE changes in our family recently which means some of the blogging and financial planning have had to take a back seat temporarily. This does not mean I have forgotten our debt pay-off plans but it does mean that the pay-off will probably be slower than expected. The big change? I am pregnant…and babies take up a lot of room…and we are having to sort out house out to be able to fit one more person in it! This means we are doing home improvements to shuffle things around and spending money on the house that we would have been putting to debt. I am very excited to be having one more child and a sibling for our son after our fertility struggles, but the money we have been spending recently is giving me slight anxiety. Here are the monthly figures…

Our net worth increased by £102 (or 0.14%) from the previous month. This is very low for us, but in August I paid £2,030 in MBA tuition fees, accounting for the majority of the cash decrease. We made a £425 over-payment to unsecured loan 1 and added £862 towards our emergency fund.  Our emergency fund goal of reaching a balance of £5,000 by the end of 2017 is currently on track, but knowing about the costs we have coming out before the end of the year, I am not sure we will make the full £5,000.

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Here is how we did against our mini-goals:

  • Increase our net worth each month, by any amount
    • Achieved. Our net worth went up by £102.
  • Make £50 per month from side income (e.g. matched betting, freelancing, etc.)
    • Achieved. August was a great month for matched betting. I profited £355.96 mainly from a couple really good casino and football offers. There was no other side income this month.
  • Spend £400 or less on groceries and toiletries each month (previously we spent £500 per month)
    • Not achieve. We spent £495.02 on our groceries and toiletries. This goal has been hard for us to achieve and we need to work harder on it. We have been so busy and doing lots of small trips to the grocery store instead of properly planning ahead and getting everything in one weekly shop.
  • Make an over-payment to unsecured debt each month, whatever amount
    • Achieved. Overpaid £425 into our largest personal loan.

I am happy with our progress again this month, but with a baby stuff on the horizon I may have to amend our mini-goals so that they are in line with our new plans. Although our debt pay-off plan is probably going to be delayed, I know for certain that whatever happens we will not be taking on any more debt. In the past we would have taken out debt to do home improvements, but we will not do that anymore. Our debt may be with us a little longer than we had hoped but it will never ever go up, I can promise that.

 

Net worth update: July 2017

Net worth update (1)

I am officially a light-weight blogger! I have been so overwhelmed with life ‘stuff’ this month that I have not posted a single other blog post than my net worth update. I am disappointed, but blog posting was at the bottom of my to-do list behind MBA studying, summer holidays, medical appointments (more on this another time) and work. I am going to be nice to myself and not put too much pressure to blog more than I can. I am sure I will get back to more posting when things calm down. Now to the monthly figures…

Our net worth increased by £3,588 (or 5.23%) from the previous month. We made a £220 over-payment to unsecured loan 1, but also needed to withdraw £452 from our emergency fund to pay for a new fridge.  Our emergency fund contributions in July were £730 so overall our emergency fund increased in the month and our goal of reaching an emergency fund of £5,000 by the end of 2017 is still on track. I must say that all the advice I received to build an emergency fund before focusing solely on debt pay-off was crucial this month. As soon as we realised our fridge was broken we went straight to the emergency fund and there was no stress at all!

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Here is how we did against our mini-goals:

  • Increase our net worth each month, by any amount
    • Achieved. Our net worth went up by £3,588
  • Make £50 per month from side income (e.g. matched betting, freelancing, etc.)
    • Achieved. July was a decent month for matched betting for me. I profited £146.18. I did not make any other side income, but as I was very busy this month I am pleased with this number.
  • Spend £400 or less on groceries and toiletries each month (previously we spent £500 per month)
    • Just missed. We spent £406.62 on our groceries and toiletries. This is only just over our £400 goal.
  • Make an over-payment to unsecured debt each month, whatever amount
    • Achieved. Overpaid £220 into our largest personal loan.

I am very happy with our progress again this month, but with a few changes on the horizon I am aware that these large monthly increases may not be possible for some time. I can’t say much more about our changes just now, but will update as soon I am able to confirm what changes lie ahead of us…

 

Net worth update: June 2017

Net worth update (1)

It’s my favourite time of the month, where I get to update on the progress towards our goals! After having a negative result at last month’s net worth update, I am pleased to say we are very much back on track. Our net worth increased by £4,962 (or 7.8%) from the previous month and we managed to overpay an extra £2,000 towards our largest personal loan.

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A large part of this increase is due to the compensation we received from British Airways for them cancelling our flight. We received just over £1,500 in compensation. In the past if I had received this money I would have definitely spent it on another holiday, or stuff for the house, or extra nights out. Instead I plowed it right into the principal of our largest personal loan. That felt good!

Last month I also set some mini-goals. Here is how we did against these:

  • Increase our net worth each month, by any amount
    • Achieved. Our net worth went up by a healthy £4,962
  • Make £50 per month from side income (e.g. matched betting, freelancing, etc.)
    • Achieved. As mentioned in my recent side-income report, June was a good side income month. I made £113.49 working at the polling station at the UK snap election; £83.55 in matched betting; and £40 in swagbucks vouchers.
  • Spend £400 or less on groceries and toiletries each month (previously we spent £500 per month)
    • Achieved…kinda. We spent £382.15 on our groceries and toiletries while we were home. But we also had a week on holiday in New York so if were home that extra week, I think we would have gone over. This will be hard to hit in July.
  • Make an over-payment to unsecured debt each month, whatever amount
    • Achieved. Overpaid a satisfying £2,038.29 into our largest personal loan.

I am very happy with our progress this month, but I know that we had an usually good month so am cautiously optimistic that we will beat our original goal of paying off all our unsecured debt by the end of 2018.

 

Net worth update: May 2017

Net worth update (1)

After writing my savings strategy post and thinking about long-term goals, I was starting to feel very excited about eventually becoming debt free. I kept imagining what financial independence will feel like and was feeling super motivated to get us to debt-free status. But when I put together my net worth update for this month, my motivation took a nose-dive. A few things happened that put me off track and it felt like in the short-term nothing was really happening. Here are the figures:

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Our net worth at the end of May 2017 was £63,637. This is £25,641 higher than last month, but only because I added in my husband’s personal pension (SIPP) worth £26,090. Taking out the pension value, our net worth actually decreased by £448. Short-term debt increased by £22 because I refinanced our second loan for a lower interest rate and ended up taking out a loan for a slightly higher amount than what was due on the previous loan. I put this increase into savings, but it does not feel nice to see a debt balance increase, whatever the circumstance. Add onto this the financial fiasco with British Airways last week and the payment of quarterly MBA fees of £2,030 this month and, well, the combination just makes me feel like I am crawling slowly towards financial independence rather than running towards it.

To help me with motivation, I am going to set some mini-goals for the rest of 2017. I am hoping that with these short-term goals I can see more visible progress towards our overall strategy. My goals will be:

  • Increase our net worth each month, by any amount
  • Make £50 per month from side income (e.g. matched betting, freelancing, etc.)
  • Spend £400 or less on groceries and toiletries each month (previously we spent £500 per month)
  • Make an over-payment to unsecured debt each month, whatever amount

I will update against these goals each month now until the end of the year.

 

Five recent frugal victories

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Since starting this blog a few weeks ago, I have become extremely focused on the actions we take as a family and how they affect our debt pay-off plan. In the past, we would spend throughout the month hoping we were within our budget, often getting to the end of the month, tallying the figures, and saying “oops, we overspent again”. Now, through the help of this blog, my whole outlook has shifted. I think about every transaction. And I now want to celebrate every small frugal victory in the knowledge that each small saving is a step towards financial freedom. Inspired by the #5frugalthings meme, here are five frugal victories for our family this week, big and small:

  1. I normally pay £2 per day to park at my work car park. On Thursday, I drove into work 45 minutes earlier than normal. I was so early that the car park attendant had not yet arrived (he arrives at 7.30am) and I got into the car park for free!
  2. I made a huge batch of vegetable soup last Sunday with leftover vegetables.  It was enough to feed me and Mr Small lunch for 3 days.
  3. I was picking up my son from a friend’s house and noticed his friend’s twin bed. I mentioned to the other boy’s mother that my son was still in a cot bed but we are planning to get a twin bed for him soon. She said she had a spare twin bed frame in her garage that she was going to donate and asked if I wanted it. “Yes please!” I shouted – perhaps a bit too excitedly. We will pick it up next week. 
  4. I completed a survey for a University research project and received a £5 Amazon voucher for participating.
  5. Not really a frugal thing, but I worked out the amount of SIPP contributions needed to push Mr Small under the higher-rate tax threshold and then set up a direct debit to transfer this amount to a SIPP fund each month.

I’m linking up with Cass, Emma and Becky in this week’s ‘Five Fabulously Frugal things I’ve done this week’ linky.

 

Our savings strategy

oli-dale-139169.jpgNow that I have declared our ambitious plans to pay off our debt and mortgage in 10 years, I suppose it is about time that I set out exactly how we might be able to do this.

It will not be easy, especially since we have debt from fertility treatments,  MBA tuition fees, and a house move. So yeah, it’s a going to be a long journey. Here is how I think we can do it:

  • Firstly, and this is absolutely fundamental to our plan, we are now living well within our means. Our monthly income is more than enough to cover our expenditure. Here is what our typical monthly income and expenditure looks like, including regular transfers to investment/saving accounts:Screen Shot 2017-05-12 at 20.01.25So even after £800 transferred to savings and investment accounts, we have £1,632 left over. Over the next year, this surplus will be earmarked to pay for the final year of my MBA course. We will hold it in our main bank account (we get 2% interest in there up to £5k) until the fees are due.
  • My MBA will be paid for in July 2018. At this point, assuming only minimum debt repayments have been made, our unsecured debt will total around £16,500. We will start to over-pay our highest interest (3.4%) debt by £1,000 per month. The £632 remaining will be kept in our main bank account for annual family trips and other non-emergency yearly costs.
  • Following this plan, our highest interest debt will be paid for by March 2019 and our next highest by June 2019. We will then only have our mortgage outstanding.
  • We plan to then snowball our debt towards the mortgage, plowing £1,416 into a  stocks and shares ISA on the premise that our mortgage interest is less than 2% whereas annual returns on stocks will be much higher than this. We will also divert our SIPP investments to the ISA so that it is not locked away for when we want to pay off the mortgage.
  • Finally, assuming all goes to plan (fingers crossed!) we will have saved the value of our mortgage in an ISA by April 2027 and exactly 10 years from now we will pay the mortgage off all in one go!

Here is my net worth forecast (excluding the value of our house and any emergency funds held in cash) at the end of December for the next 10 years if all the above goes to plan:

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I have made some assumptions in working out these figures. They are:

  • We will receive an average of 5% annual return on investments in stocks.
  • Salary increases will not be invested, but kept for annual cost of living increases.
  • The ISA allowance will increase to £21k by 2020.
  • We will not incur any penalty to pay the mortgage off early.

I would be more than happy to receive any comments on if our plan could be improved in any way.

After the mortgage is fully paid, we will then work on retiring within 3 years from that. Using those dates, I will be 49 and Mr Small will be 55, at which point he can cash in his work final salary pension and SIPP. This may not seem like early retirement, at least compared to the extreme early retirees out there, but for us it will be less than 15 years after we start our financial independence plan and we would be absolutely thrilled with that result.

 

 

Net worth update: April 2017

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Our net worth increased this month by £2,044 or 5.7%. This is a good increase for us. On average over the past year we have been increasing our net worth at a rate of only 2.5% so I am pleased with the increase, but also know there is still room for significant improvement.

The main driver for the increase was a boost to our savings accounts as we try and focus on building an emergency fund before tackling our short-term debts.  I cashed out £342 of matched betting profits in April and the stock and shares ISA also performed well.  I  opened up a savings account at our bank which has a 12-month bonus interest rate of 3%. I plan to put £400 per month in there over the 12 months.

The short- and long-term debt payments are the standard amounts, i.e. without any over payments.