It’s that time of the month where I disclose my finances to you in full and update you on my progress towards achieving financial independence and early retirement.
But first off, I have to apologise!
I completely skipped a month on these reports (October 2020). The reason is, we moved house in October and there was large sums of money flying around our accounts like nobody’s business which made all the numbers look completely skewed.
It also meant that we had no mortgage payment for a whole month while we were between paying off the last mortgage with the sale of the house in October, and waiting for the first payment to be taken at the beginning of December.
There’s still a few other outliers in here, which I’ll point out. But last months was just crazy, so I just skipped it.
As you go through this monthly report, you’ll see snapshots of the spreadsheet I use to:
- Track my expenses
- Estimate my retirement expenses
- Work out my FI number (amount of £ needed to leave the 9-5)
- Track debts
- Track savings
- Track asset & equity
- Track my net worth
See here for a copy. My readers get 20% off! 👇
So, without further delay, here’s the monthly update for November 2020
Expenses for November
Quite a few differences from last month’s report.
Namely, out mortgage amount. I’ll be mentioning this a few times throughout, but anyone that’s been following these updates know’s that we’ve just moved to a bigger house. I won’t get into the reasons here, you’ll have to read the previous reports for that.
Obviously, being a bigger, nicer house in a far nicer area, it costs more. We’re fortunate enough to be extremely hard workers and very good savers and have been able to settle into our forever home at the age of 30.
The decision wasn’t taken likely, of course. It’s a fair sized mortgage. But, the quality of life that not only the house, but this area affords us is worth every mortgage payment!
No, money can’t buy happiness. But hard work, and financially savvy decisions have granted us the freedoms to enjoy our new home and location.
You can also see that our living costs table is full of zero’s and odd amounts. This is just where we’ve been going through the process of switching to new providers for utilities and other services at the new property and either haven’t been billed yet, or been billed extra for ‘set-up’ costs, like with our internet for example. It definitely is NOT £46/month!
I’m also not entirely sure how we managed to spend £780 on food shopping last month… I think this is a slight glitch in Yolt, the tracking app I use. It wasn’t linked to my credit card so was just picking up the payments I made to it (which there are a lot of). I’ve obviously lost track of what payment was for what purchase and some non-grocery spends have ended up in there.
Definitely has NOTHING to do with the few trips we made to M&S for some posh grub! 🙄
Anyone who’s read my previous reports knows that I work out my FI number using the expenses from the previous section and adjusting for retirement lifestyle (no mortgage & loads of holidays).
Not a huge amount to say on this one, but I’m definitely ahead of target on the worst-case 12% return for my personal investments.
As I’m currently up >50% for the last year.
If I keep that up, I’ll be retiring even earlier than planned!
LOVING the trajectory of this chart. The pension investment growth is looking healthy!
You can see I’ve added a new line in the Non-pension savings table called, GIA.
This is to track the contributions we’re making to our General Investment Account which is also connected to the purchase of our house. We took advantage of a government scheme, available in the UK called, Help to Buy.
You can borrow up to 20% of the properties value from the government which is interest-free for 5 years!
After 5 years, you either start paying a huge amount of interest and rent on the loan, or, you pay the loan off. Either with cash, or by selling or remortgaging your house.
A lotta people in the UK don’t prepare for this. They’re taking out HUGE loans from the government with no plan for how they will repay, not considering the fact that remortgaging in 5 years time isn’t that straight forward. As you’ll have 5 working years less to take the new mortgage out for.
So, if you borrowed 20% of a £500K house, you have to find that £100K to pay the loan back. the odds are, it might not be as easy as simply adding that £100K to your mortgage when you 5 years older and cannot increase your term. It means your monthly payments will sky-rocket. That, or you just have to sell the house, give the gov. back what they’re owed, and downsize.
Oh, and I forgot to mention… what you pay back is not the original loan amount. It’s the % of the properties value you borrowed. So if that £500K house you bought is worth £550K after 5 years, yep! You gotta find ANOTHER £10K!
But, it works both ways. If the property value decreases, you don’t have to pay back as much!
So, how are we not getting reared by the government on this?
Simple. Because we could afford the mortgage without the help to buy loan if we wanted to. But why would we borrow money and pay interest on it when the government is offering to give us a huge contribution loan, interest-free for 5 years!
Think about it.
We borrowed around £64,000 from help to buy.
If that was on our mortgage, we’d e paying 1.89% interest on it.
Instead, we’re paying around £700/month into an investment account and placing it all in an S&P500 ETF, which should yield between 9-12% over that 5 year period…
Makes sense, right?!
House Equity & Assets
You can see, the house value has taken somewhat of a dramatic jump compared to the previous property.
And yes, that outstanding balance includes the help to buy loan I mentioned above.
The other adjustments here are where I’ve had our cars formally valued. Much to my amusement, they’re worth MORE than I had estimated.
I’ll take that!
Now, admittedly this doesn’t look great! Our debt load has jumped by £150k 😥
However! This is all down to the house. And, as I mentioned before, the quality of life we have here is worth every penny.
Not to mention the fact that we’re both doing well in our careers are more than comfortable with the mortgage payments we have.
The plan for early retirement has NOT been impacted. That’s the main thing here.
Sure, i could retired a few years earlier if we’d stayed in the old house. But we got to a point where we f*cking hated that house. So, I’m not sure it would have been worth it.
There’s a lot to consider when planning your journey to early retirement. The sacrifices one person is willing to make will be different to those others make.
Everyone’s journey is unique.
And this is the important part. The new property hasn’t negatively impacted my net worth.
In fact, it’s boosted it slightly due to the bargain we got on the new house.
It’s also been boosted by my investment returns, which I mentioned are pushing >50% for the year now.
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