November 2021 Savings, plus other updates

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November was a blur, here are a few highlights:

  • My house purchase was completed! I nearly cried with relief!
  • My niece was up for half-term and was with me when I went to the estate agents’ to pick up my house keys. She helped me choose new carpets!
  • My sister came over for a quick visit from Hong Kong – it was so good to see her after nearly 2.5 years. She helped me choose some new lights for the living room! I was able to hand over some family Christmas gifts for her to take back. Unfortunately, she’s still not quite home yet, as she’s currently 5 days into a 21-day quarantine in a hotel…
  • Not everyone’s cup of tea and certainly no ‘Game of Thrones’ but am loving  Amazon Prime’s adaptation of Robert Jordan’s high fantasy series, ‘Wheel of Time‘. I’ve read all 14 books and one of the the most fascinating things is hearing how the names are pronounced (yes, in my head, I’ve been pronouncing them wrong!).
  • I was awarded Employee of the Month at work, which was a real surprise (though of course, very much appreciated) as I’ve just had my head down, doing my job, nothing which I thought was exceptional.

So, how did I get on with my savings this month?

I saved 13.5% of my net salary.

The above includes £39.20 from doing Prolific surveys.

Shares and Investment Trusts

No new investments, I just topped up existing ones.

Current share/IT portfolio can be found here.

(Entire portfolio here)

Future Fund 

A wobbly final week of the month for the stock markets due to concerns caused by the Omicron variant of the virus – indeed so big is the concern, that our works’ Christmas party has been cancelled – but I ran my numbers the evening of 30th November so avoided the plunging ‘Black Friday’ values.

Not that there was anything to celebrate, my Future Fund stayed pretty much the same at £227,349.

WIth one month left, here’s how the graph is looking (I’m continuing with the original graph, rather than the house-purchase adjusted one):

Well, it was too much to hope for a V-shaped recovery but steady as she goes. Perhaps there will be a Santa’s Rally!

Dividends and Other Income

A decent month for dividends:

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House Purchase Post: Part 1

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So much to write on this, so I’m just going to talk about the money side of buying my house first.

Bloody ‘ell, BTL

The plan had originally been to sell my buy-to-let (BTL) flat to fund my house purchase. However, my flat is caught up in the cladding polava and unless I wanted to make a massive loss by selling it to a cash buyer, that route was closed to me.

So plan B was to attempt to remortgage, to release some equity.

Alas, the lender valued my flat at a big fat ZERO as it did not conform to the new fire safety regulations.

To pile on more financial stress, the service maintenance charges on my BTL for the past year have trebled, to pay for a Waking Watch.  Although I believe a new fire alarm system has now been installed resulting in the WW no longer being employed, I have yet to see what the final bill will be to ensure that my flat will fully comply with regulations and secure the coveted EWSI certificate which will allow me to sell the property. I have already been advised that us leaseholders will not qualify for full government rebate, so await with dread on how much more I will have to pay.

Since I couldn’t release any equity, I had no alternative but to accept the loan from my parents and dip into my Future Fund.

The BTL has been a good investment but I will very likely be selling it – receiving rental income isn’t part of my FIRE plan. Assuming prices haven’t plummeted for such properties in the area, the equity I get from the eventual sale should repay the family loan in full and might even fill the hole that has been made in my Future Fund.

“Dead Pledge“

As per a comment I made on Monevator’s recent post which suggested that making payments on a mortgage was a form of saving, it was with some trepidation that I took on board the biggest debt of my life (on my own) at an age when many are (or close to being) mortgage-free.

At my age (the wrong side of 50), the length of the mortgage term was restricted – I certainly wasn’t offered 30-year deals!

As I went through the application with the mortgage advisor (which was all done online and over the phone, versus the face-to-face interview at the building society which I had for my first mortgage, armed with paper copies of my bank statements and payslips!), I was surprised at how much I could borrow on my own.

Some would say ‘get the biggest house/mortgage you can afford’ with these (current) low interest rates, but since I’m still aiming for FIRE, I was mindful of the size of the mortgage payments. I didn’t want to feel like the mortgage was a noose around my neck, it needed to be affordable and I needed to be comfortable with it.

So in the end, my budget didn’t cater for the biggest house I could get and I ended up with a mortgage with a LTV (loan to value) of 64%, which gave me affordable repayments and a bit of spare which I will need to split between saving for FIRE and a fund for future ‘house renovations’.

There will be some who will think that the deposit I made should have been smaller, that I could have invested the extra cash and made the most of investment returns. I did consider that but knowing me, it would have just caused me both investment stress and stress over higher mortgage payments so I did what I did for better peace of mind.

Anyway, I’m on a 2-year fixed repayment mortgage, 1.25% interest. It makes my mind boggle that the interest rate for my first mortgage over 20 years ago was 8% – let’s hope we never see those kinds of numbers again!

My mortgage term is 22 years so I’ll be in my early 70s when it’s paid off (earlier of course if I make overpayments).

How do I feel about carrying such debt into my old age?

I didn’t feel comfortable with it at first but it’s likely that when my DB pension kicks in at age 65, the 25% lump sum can more or less clear the balance of the mortgage, so I will have options when the time comes.

My mortgage payments will be more than what I am paying my parents for living in their house but at least my utility bills will be lower, which will provide some offset. However, until my parents sell their house, I will be paying 2 lots of bills but I chose to do this rather than be caught in a chain.

My savings rate will unlikely to ever reach its previous dizzy heights but I’m resigned to this – I think if I can achieve a savings rate of around 10%, I will be happy with that until things settle down cost-wise. Need to be smarter with some of my expenses and hope that the stock markets continue to do their thing for my portfolio.

Other House-Buying Costs

I wasn’t planning to get my property during the stamp duty tax holiday so I didn’t join the frantic and desperate race to try to complete before the end of July, although there had been a chance to complete before the end of September to pay a reduced amount. Sadly, this didn’t happen (the seller and then my solicitor were on holiday so three weeks were lost) so it was with a grimace that I paid out over £7k in stamp duty – ouch!

With some time on my hands before I move in, I decided to get all the rooms redecorated/painted, new carpet, floor tiles and fitted wardrobes.

Getting people in to do all the work during such a busy period has been a right pain and the labour costs have not been cheap – I feel like I’m just bleeding cash and will be so glad when it’s all done.

I do have an actual moving in date set but still so much to do (and pay for) before that happens but at least things are moving forwards.

 

October 2021 Savings, plus other updates

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Highlights this month:

  • At last, I had a mini break away from home! As mentioned in my last update, I went to London – I had tickets to watch the NFL game, Miami Dolphins v Jacksonville Jaguars. It was a great weekend – an enjoyable match with a sellout crowd in Tottenham Hotspurs’ beautiful stadium. The following day, we spent some time wandering around Camden, sampling some expensive beer and food and then happened across probably one of the coolest and most fascinating shops I’ve visited in a long time – I didn’t buy anything, just enjoyed the sights and the music!

It was a great atmosphere and yes, I did know what was going on (mostly!)

Walking into this shop was like walking into another world

  • I went to the cinema to watch the latest James Bond film, ‘No Time to Die’ – have always loved Daniel Craig as Bond.
  • Enjoyed another great Manchester FIRE meetup in the pub – great to interact with faces old and new. There were around 20 of us who turned up. Anyone who’s interested in these meetups, sign up to Financial Independence FIRE – Manchester.  Events are alternately online and face-to-face, so the next one will be online on Friday 26th Nov.
  • And finally, I am sooooo relieved to say that I have finally exchanged contracts on my house, with completion due to happen early November! More details soon – so much (more) to do!

So, how did I get on with my savings in October?

I saved 14.4% of my net salary.

The above includes another £25 Premium Bond win, and £42.24 from doing Prolific surveys.

Shares and Investment Trusts

I started switching out some of my bond ETFs into a defensive investment trust, Ruffer Investment Co.  Monevator recently did a two-parter on the 60/40 strategy but I was already getting a bit antsy about the portion of bonds I held in my portfolio and wondering what I could do. Despite not holding anywhere near 40%, I was feeling it was still on the high side.

I won’t ditch them completely but will likely switch some more into other defensive investment trusts.

Current share/IT portfolio can be found here.

(Entire portfolio here)

Future Fund 

After removing the funds needed to buy my house, my Future Fund has dropped to £227,413. It’s not half as bad as I originally envisaged – as suggested by regular commenter Jane In London, I asked my Mum for the max amount she would loan me (that I could still cover with the eventual sale of my BTL) so this meant that I didn’t have to dip so far into my own funds.

I had to sell some equities (from my S&S ISAs) to release some cash and fortunately, I sold little bits of my portfolio over July and August when numbers were green.

I’ve been dreading doing this graph update.

Regular commenter Kid Cocoa suggested rebasing the graph, as if the house money was never part of my Future Fund, so that its removal didn’t cause me any distress. I did that and this is what it looks like:

 

[edit – original post had the wrong graph]

Looking good, with the markets bouncing back after the drop in September.

However, for consistency and because I feel like I need to see the consequences (and feel the pain) of my actions, this is what the graph actually looks like:

Oof! Looks almost like the crash back in March 2020, although there’s very little hope for another V-shaped recovery, haha!

My Future Fund’s value is now what it was in March 2021 so I’ve only really lost 7 months. My FIRE plan is still intact and unchanged – this is fine, I don’t feel so stressed about it any more.

Anyway, as horrid as the graph looks, I am already looking forward seeing it go back up again.

Dividends and Other Income

A more average month for dividends:

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Board, not Bored

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2020 was a bit of a blur – I think like many, I was just going through the everyday motions of life, doing what I should be doing (work), trying to “stay safe” and attempting to maintain my sanity.

At some point, my eyes must have glazed over from looking at my FIRE and investment spreadsheets too much (what else was there to do back then?) and I decided to make things a bit more visual (and interesting).

I set up a ‘Countdown to FIRE’ Trello board.

Trello is a free to use collaboration tool, generally used for projects – an online equivalent of a whiteboard with a load of sticky notes.

Snapshot

Anyway, I forgot all about it until recently so here’s the updated board in all its glory.

I’d never used one before (for work or other) so it’s pretty basic; I’ve just muddled my way through trying stuff and making the most of copy and paste but I think it might be useful for me to view my goals in a different way, instead of them being hidden away in various spreadsheets.

I use the term ‘useful’ loosely, it’s more a motivation tool, rather than anything which is helping me reach FIRE, or even measuring my progress in a meaningful way.

Interestingly, the goal ‘Buy a home?’ had originally been in the ‘Future Goals (3-5 years)’ section so as mentioned previously, it was always part of my overall plan – it was just brought forward unexpectedly.

Anyone else use Trello or other visual tools to track their progress to FIRE?