June 2020 Net Worth

It’s been a while since I’ve put my figures up, although I have continued to track them myself. I’m not quite sure why I’ve stopped posting them, as I always feel that it’s a way to keep myself accountable. I guess I feel that I’m already keeping a check myself, but it can be useful to share them to anybody who is out there and listening. Normally I would put last month’s figures in brackets for comparison. This month however I’ve put January’s figures in brackets just to show what’s happened since the start of the year. I break down my figures to both include and exclude my house equity. The latter figure is to show how I’m doing in my quest to reach mortgage neutrality.

Debts

Mortgage £98,281.81 (£80,767.87)

Assets

Cash £36,507.46 (£14,988.95)

Money in share save £0 (£15,304 )

AVC’s £5,567.13 (£5,175.36)

Shares £36,282.17 (£33,554.66)

House £250,000 (£250,000)

Total Assets £328,356.76 (£319,022.97)

Net Worth including house equity

£328,356.76 – £98,281.81 = £230,074.95 (£238,255.10)

Net Worth excluding house equity

£78,356.76 – £98,281.81 = -£19,925.05 (-£11,744.90)

There’s probably quite a few things to say about these figures. So first up the mortgage. Clearly from what’s showing above I have borrowed more money on the mortgage. There are a number of factors that came into play with regards to this. I have access to a base rate mortgage through work. Only having to pay 0.1% is a pretty compelling reason to borrow money against your house. It is a benefit in kind, so there are some tax implications, but still you know, it’s 0.1% This is a benefit that work are going to remove for any new borrowing this year. What you have at base rate you get to keep, but if you want to borrow extra, move house or don’t yet have a staff mortgage then tough luck, it won’t be available.

On that basis there was an argument to be made for borrowing extra even if it wasn’t needed and tucking it away in a cash ISA and being up on the deal. I am going to need access to extra money at some point. My boiler is not in a brilliant state. We have a few days every year where it doesn’t work, so we have no heating or hot water. Not ideal, but also not a disaster. Rather crucially though they can no longer get spare parts for it, so it’s no longer able to be repaired when it does hit a problem. So far it’s always spontaneously started working again, but I can’t bank on this forever. My en suite is also not useable due to a cracked shower tray and subsequent leaking through the kitchen ceiling last year. Add that to the fact that the loo in there has never really worked. At some point a total redoing of the en suite will be in order. And my car had been proving very expensive to repair, so I was thinking about replacing it. With lockdown and the consequent lack of driving I’m currently rethinking that, but we’ll see.

Anyway I figured that I would not spend all this extra money for as long as possible, but that I would borrow it and stick it away and earn some interest on it and be up on the deal. I’d done the application just before lockdown with the thought that I wouldn’t draw the funds down straight away. Once everything kicked off Coronavirus wise though I decided to get the money in my bank account ASAP in case they pulled extra borrowing. I was worrying unnecessarily, but it was certainly nice to have the extra cash in my account. So that explains the extra cash in my balance.

The next big thing is the share save money. A big fat zero in there. I had two share saves still on the go, but as the share price dropped like a stone and it became clear that it wasn’t going to get anywhere near the option price anytime soon I cashed them in and took the cash without any penalty. This worked out really well as it allowed me to put the money into index trackers. I finally have got myself a bit diversified. Not nearly enough, but I’ve made a really good start. I’m not doing any more share saves. It’s index trackers all the way for me now. I’ve gone from putting £500 a month into share saves to doing £600 month to Vanguard Index trackers. It’s been my plan all along to do this. I don’t know what took me so long, but at least I got there eventually.

Work do a share match where when I buy £30 shares each month they’ll give me £45 worth for free. If I keep them for five years it’s even tax and NI free. I’ll keep doing them, but other than that I’m done with work shares. I just need to offload the ones I have already. Due to the current share price and what I paid for them I can’t quite bring myself to do that just yet, but at some point I’m just going to have to accept that money is gone and it’s never coming back. The index trackers are doing really well, so I’ll be better off putting the money in there. I’ll start to do that gradually to make sure that I get everything in ISA’s.

I had a share save mature in January. I got totally stung on that. I was in the process of transferring the shares to my share dealing account ready to sell immediately and put into index trackers. It took two weeks to move them across and during that time I could see the price getting lower and lower, I went from having £1200 profit to being so much down on them that it barely seems worth selling them now. At some point they will need to go, but the pain is too recent to make it real by selling and realising the loss.

The values of my shares are up slightly from January, but considering that includes the matured share save where I was saving £500 a month for three years, that’s pretty rubbish. The least said about that the better. I’m not expecting the work share price to recover any time soon. There’s always something with it. First it was let’s just get past the PPI deadline then the price will be better, then it was Brexit (remember that?!) and now it’s Coronavirus and the subsequent economic fallout. I feel like it’s the end of an abusive relationship. I can’t believe I stayed with them so long, what was I thinking, my life is so much better without them in it etc etc etc. The final straw was when they announced that they wouldn’t be paying the dividend. I realise that wasn’t their decision, but I was furious as it was actually the final dividend from last year. We went so many years without one being paid at all, so to have it pulled now is doubly gutting. Maybe that means next year’s dividend will be extra good, but I don’t think I can count on that.

The AVC balance is not looking too healthy either. There seems to be a bit of a pattern emerging here! It’s up slightly, but considering I have quadrupled the amount I’m paying into my AVC’s that’s pretty piss poor. My thoughts on this one are to stop overpaying my mortgage so much and take advantage of the tax benefits of the pension. So I’ve borrowed an extra £20K on the mortgage, but reduced by monthly payment by £200. I was massively overpaying the mortgage, and I still am paying about £80 a month more than I need to. At such a low interest rate though it seemed silly to be bringing my mortgage down. I still would love to clear my mortgage, but for now my priority is to build up enough money in my AVC balance to get my £50k cash lump sum at retirement without needing to reduce the amount of my annual pension. I can then use that lump sum to hopefully more or less clear the mortgage. I’m slightly conflicted on this strategy as the mortgage feels like somewhat of a burden, but for now I’m happy to go with the maths.

So to summarise, I owe more on my mortgage, my work shares have tanked, my AVC balance is not great and my net worth is down. On the plus side though I have a lot more cash on reserve at a very low interest rate that gives me scope to do something useful with. I have finally diversified, even if there is still plenty of work to do on that front. I’ve made the decision to not overpay my mortgage as much but instead to put more into my AVC fund. The index trackers I’ve got are doing well and hopefully demonstrating that I’ve made a good decision with my finances. So I’m going to try and take the positives from what could be a very depressing update. Yes the figures are pants, but I’ve finally got my finger out and made some decisions about my money. Whether they are the right decisions remains to be seen, but as always taking action is a good thing. Action conquers fear as they say, so here’s hoping I’ve made some good choices and I’ll start to reap the rewards moving forward.

August 2019 Net Worth Figures

Last month was not so great for the net worth figures, so let’s see how we’ve done for the month of August. As always I have put the previous month’s figures in brackets for comparison. I show my figures including my house equity, which is always a nice figure to see, even though I know that I’ll always need somewhere to live, so it’s not a true reflection of what I have to live on. I also show the figure excluding the house equity but including the mortgage. Although this seems counter-intuitive, as without the house you wouldn’t have the mortgage, I include it to show how I’m doing in my quest to become mortgage neutral.

Debts

Mortgage £84,107.72 (£84,843.68)

Assets

Cash £16,157.39 (£15,750.70)

Money in sharesave £12,804 (£12,304)

AVC’s £4,486.86 (£4,217.63)

Shares £31,523.07 (£27,982.60)

House £245,000  (£245,000)

Total Assets £309,971.22 (£305,254.93)

Net Worth including house equity

£309,971.22 – £84,107.72 = £225,863.50 (£220,411.25)

Net Worth excluding house equity

£64,971.22 – £84,107.72 =  -£19,136.50 (-£24,588.75)

It’s nice to see a bit of a bounce back of the shares that I own. Last month was a bit of a tricky month, with a big drop in the value of my shares. It’s satisfying to see that this has only been a temporary setback (here’s hoping!) and that things seem to be on the up again.

I’m very happy to dip under the twenty grand mark in terms of how far from being mortgage neutral I am. This continues to be a two pronged attack from me. I’m throwing as much as I can afford towards the mortgage to bring it down and also saving as much as possible to increase my assets. This is a really important target for me. I didn’t formally track my net worth in my last house, but I would periodically do a back of an envelope calculation, and was always delighted to know that my non-house assets totalled more than my mortgage. Psychologically there’s something very comforting about knowing that you could cash things in and pay off what you owe.

Then I decided that I wanted a bigger house for myself and my boys to enjoy now, and to have enough space for them to keep coming home to visit when they fly the nest. I’ve gone back and forwards on this decision about whether it was the right thing to do. We were probably ok where we were, but I’m such a homebody, that I really appreciate the extra space that we have now. And the thing is that I have an asset here that I can sell. There’s no saying that I have to stay put as and when my situation changes. I’ll definitely feel more comfortable though when I’m mortgage neutral.

Pensions, Pensions, It’s All About The Pensions

It’s nice to see my AVC contributions growing there. I don’t pay a lot towards this, it was basically just a pay rise that I got a year ago that I decided to put into AVC’s before I got used to having the money. As I’ve got a defined benefits pension that I don’t need to pay into, I’m in a reasonably good position. Saying that, because the company screwed us over big time as far as this pension is concerned, it’s nowhere near as good as it should/needs to be. So my plan is to try to enhance this pension with AVC contributions and shares.

I was blindly paying AVC’s without much thought having gone into it. This month I decided I needed to do a bit of research, so I’ve been ploughing through some rather heavy documents figuring out what charges I’m paying, looking at how I’ve got my money invested and what my options are when I do finally pull the trigger on work. I was pleasantly surprised on the charges side of things and I already knew that I needed to diversify the investments as it’s all UK based at the moment.

My plan on the pension side of things is to rejig the investments a bit to get a bit of diversity in there and to contact the pension company to ensure that my understanding of what happens to my AVC pot when I retire is correct. It looks as though I can put my AVC balance towards my cash free lump sum on my main pension, so that I’m not taking as much cash out of that side of things and so keep my pension income as high as possible.

I’ve Finally Embraced Index Trackers

I’ve opened up a Vanguard index tracker ISA this month and have put in the money I received from my dividend payments. At just over £600 it’s not a massive amount, but it’s a start. The next two sharesaves that mature I’m buying and immediately selling to get my money along with the profit, and that’s going straight into the index trackers too.

Water, Water Everywhere But None Of It Covered On The Home Insurance

I’ve got a bit of an expensive time coming up. I’ve had some home emergencies this month, with a leaking toilet downstairs and then a more serious problem with the ensuite shower developing a crack in the shower tray and water coming through the kitchen ceiling. Luckily I realised the ceiling was sagging ominously, so managed to poke to a couple of holes in it to avoid total collapse. I seem to have got to it just in time.

I thought I might be covered on the home insurance, but it seems not. There’s a £500 excess for water escape anyway, so it probably didn’t make much sense to claim. I’m not great at DIY, so I got my handyman round to have a look for me. The ensuite basically needs a fair amount of work to get it fit to use again. As the toilet in there is such a shocking design it can’t cope with a single sheet of toilet roll, there’s an argument to be made for starting from scratch with it. I’d keep the shower and shower screen, as they are fantastic, but other than that it’s basically a new bathroom that’s needed.

I’m not wanting to shell out for that just now, but we do need a bathroom that we can all use, as up till this point we’d all been making use of the ensuite as the shower in there is amazing. The plan that I’ve come up with is for him to sort out my main bathroom. Just now it’s only tiled half way and only has a hand held shower and no shower screen. He’s going to take off the tiles, put up wetwall, attach the shower to the wall and put up a shower screen. Total cost under £700. He’s also shaved a little bit off the bottom of the downstairs loo door which would no longer shut because of the leak. That means we can now use it again, and we’re just going to live with slightly wobbly floor tiles that have lifted because of the escaping water.

At some point I will get the ensuite done properly, but in the meantime at least we’ll have a fully functioning main bathroom. Oh, and at some point I’ll get something done about the kitchen ceiling. I’ve got a dehumidifier going to dry it out, but actually it doesn’t seem too bad, and I might even get away with just paining over it. Disaster averted. I always meant to get the main bathroom done at some point anyway, so this has at least forced my hand. Hopefully this won’t impact on my figures too much for next month. These things happen when you’re a home owner, and at least I have the money there to make use of.

Generally speaking I’m really happy with the figures for this month. They’ve definitely perked up a bit since July. There are still changes that I need to make to my finances, but I know what they are and I just need to wait for the right time as far as the share price is concerned. A little bit of tweaking to do with my pension, but nothing too drastic. I seem to have things fairly well automated, which for me is probably the key to being consistent. If things happen automatically with my money without me being involved then all I need to do is set and forget. That’s the plan anyway.