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Today’s post is a guest post from Fran at The Thrifty Freckles
Financial independence for me is living a debt free life, which means getting rid of my 25-year mortgage as soon as possible.
My partner and I purchased our forever home in May 2019, and since then we’ve been on a mission to overpay a little bit every month.
Our ultimate goal is to reduce the term to 10 years, but we could happily settle for a 15 years compromise.
After some calculations, it was clear we wouldn’t be able to reach the goal if we just continued with our lifestyle: we didn’t have any credit card or loan debts but we often dined out, went on holiday, and generally lived a carefree life.
So we decided to make some changes that would allow us to save more, whilst still enjoying life.
Why overpay the mortgage?
A lot of people argue that money could give better returns if invested in the stock market, especially now that the mortgage interest rate is low. And I don’t disagree with that.
But for me, the peace of mind that comes from owning 100% of your home and knowing that no one can take it away from you, beats everything.
Overpaying the mortgage is as much about money as it is about security.
Getting rid of the mortgage will save us a lot of money in interest, just google “mortgage overpayment calculator” to see how much you could save by overpaying a tiny bit each month.
But it will also allow us to reduce our working hours, or explore a change in career without worrying about a potential salary cut. Or we could sell the house, relocate somewhere warm and enjoy a simpler life. So many possibilities!
The changes we implemented to save extra money to overpay the mortgage
We knew cutting down on takeaways and night-outs wasn’t enough, so we decided to make a series of lifestyle changes and focus on frugality in our day-to-day lives.
I have also explored various side hustle options until I found something I enjoy that is also profitable, an Etsy shop.
Some people might think we don’t enjoy life, because of all the things we have reduced or removed from our lives, and the added stress of a side hustle.
But I definitely don’t agree with that!
I think it really depends on personal priorities, and for us, a debt-free future is more important than a certain lifestyle (often imposed on us by social media).
Buying a house is a big step, and we needed to make sure it was the right purchase at the right price for us. So, to find the right balance we decided to:
Leave the big city
Before buying, we rented a house in London and we loved it.
However, with our budget, we could only afford a flat on the outskirts of London. So we decided to look for properties in commuter distance to the city.
We settled for a 3 bedroom terraced house in Essex, close enough to London for work, but in an area where you can get a lot more for your money.
Live without a car
Public transport outside London can be tricky and unreliable, that’s why most people purchase a car when they move out of the city.
We decided against it, and made lifestyle choices to support that decision: we picked a fairly big town, with all the necessary amenities and a house in the town centre, just a few minutes’ walk from the station.
This way, we can easily get to work, run errands, or enjoy our town high street without using a car.
From the very beginning, we knew we were not ready to entirely give up takeaways and holidays, but we knew we had to make changes to save extra money to overpay the mortgage.
For example, we swapped grocery products with their non-branded equivalent, and we try to cook from scratch more.
We also heavily reduced our meat consumption for environmental reasons and saved loads of money on our grocery bill. We have even attempted to grow our own vegetables!
We used the lockdown months to find more creative ways to have fun at home for free, for example organising themed dinner and movie nights, arranging a picnic in the garden, or playing online games.
We loved it so much it became second nature and we can’t see ourselves going back to the old ways anytime soon.
When we do need to spend money, we try to use cashback whenever we can, and also make the most of the offers, for example, we managed to purchase a laptop for only £100.
In the past year, I tried a few side hustle ideas, like online surveys, receipt scanning, and matched betting.
I was getting decent results, but I wasn’t enjoying it, and it really felt like work to me.
Until I found Etsy.
Etsy as a side hustle
I discovered Etsy as a side hustle a year ago, but quickly decided it wasn’t for me, as I am not creative or artsy.
A few months later I found a course teaching how to make printables on your computer to sell on Etsy and thought “I can do that!”.
I decided to make planners and trackers, as I created some for myself in the past, and I thought I could easily replicate them to sell.
Two weeks into the course, I had made a few products and opened my Etsy shop, Freckles Printables.
Five months later, I have sold over 300 items and made more money than with surveys, receipt scanning, and matched betting together!
I love that I am doing something I enjoy and at the same time helping my customers solve a problem, even if it’s something as simple as organizing their day. Plus this is a totally passive side hustle, so I make money while I sleep or I’m on holiday!
When you decide you want to pay off the mortgage quickly, you need to make changes to your day to day life.
There is no way around that.
However, this is a long term game, and it’s important to find a balance between saving extra money and living a happy life.
I hate to see how big our debt is, but I know I could risk burn-out if I went crazy intense with our debt repayment strategy.
I prefer to make a lot of small changes, rather than completely give up something I love. This way I won’t feel overwhelmed but still see results.
My results so far
So far, all these lifestyle changes are working!
In the first 14 months of paying the mortgage, we managed to cut 9 months off our total mortgage term and saved over £4,000 in interest. If we keep going like this, we’ll pay off the mortgage 9 years earlier.
This would already be an amazing result, but I am confident we will increase our savings in the future thanks to the lifestyle changes mentioned above (along with others), and meet our goal of paying off the mortgage in 10-15 years.
Fran is a Project Manager by day, and a blogger and Etsy seller by night. In her blog, The Thrifty Freckles, she covers personal finance, productivity and how to simplify life.