Phew, it's been a while since I've given an update! Here goes!
Had I been able to fix 6 months before my 5 year fix ended I would have been able to fix at a rate half of my current % rate. However, given that we were overpaying a lump, we waited until the end of our fix (to avoid any charges), and in the intervening period the fix % rate has actually jumped to more than our current fix!
This quarter, my net worth has gone up from £690k > £736k. Some really big swings in January and March including:
Income
Work - I've managed to get a sizable increase in my wage over the last few months, from roughly £75k > £95k. This is off the back off a pay freeze in my work's pay review this time last year, so this combined with a high inflation rate means I was always expecting a sizable pay increase but it goes without saying I am very happy with this increase!
My wage increase also came with a bonus paid in company shares. These are SOGs (Stock Option Grants), so are only really worth something should the company I work for being bought. I treat these as a bit of a lottery ticket and a nice to have should it actually happen.
Last tax year I was able to duck just under the higher rate tax threshold of £50k by utilising salary sacrifice for my pension (34% me, 6% employer) as well as Childcare Vouchers (£243 a month). This coming tax year will be completely different. I have just stopped my Childcare vouchers as I've stockpiled enough to get the kids through enough breakfast/after school club for the rest of primary school! (at a 50% discount this was a no brainer!). I am also unable to salary sacrifice any more than my current 34% level into my work pension as there's a rule about there being a maximum 20% (my 34% was grandfathered in but if I change it, the max is 20%).
All of this effectively means that with my new bigger wage, to duck under the high rate tax bracket, and thus still be able to claim child benefit for both kids, I would need to put in £44k into my pension for the year. A good chunk of this will be from my salary sacrifice portion (£2660 a month), with the rest coming from a separate SIPP contribution. Obviously this £44k amount is over the annual pension limit of £40 however using the carry forward rule I could utilise previous years allowances.
I'm still in 2 minds whether I do this or not. There is mutterings at work of there being a salary sacrifice electric car lease scheme that I would consider if it comes to fruition in order to maximise the taxable benefits (marginal tax rate of nearly 70% for me between £50-60k factoring in the child benefit!!), but more of that in a separate post I think...
Crypto DeFi - I use 2 platforms for lending out my Crypto holdings, Celsius and BlockFi. I was very lucky to get on Celsius when I could given that it's not currently available to UK customers, as it offers a superior return compared to others available.
Over the 2021/22 tax year I made roughly £900 interest using these two platforms. After seeking some advice, it is apparent that I can use the "miscellaneous / trading income" allowance of £1000 to consider this as completely tax free income... Bonus! I'll be doing my best to get roughly this figure again during this tax year to avoid any complicated tax arrangements.
It's at this point I'll post my referral link for BlockFi for anyone wanting to dip their toe into earning passive (potentially tax free!) income on their crypto holdings. We'll both get $10. https://app.blockfi.com/signup/?ref=ede6e094
Spending
Mortgage overpayment - It's been a busy few months for spending. Me and my wife have been putting some money away over the past year or so in order to throw as much as we can against our outstanding mortgage. This currently stands at £40k and comes out of its fix at the end of April. We've got £20k to throw at it to effectively half it, and we will fix again for another 2 years before saving enough to finally pay it off at the end of that. I say "finally" but I realise that given I'm only 36 this is probably not the best term and I am very lucky to have a) being able to put a deposit down on a house in 2011 when I was 25 and b) benefitting from very low interest rates throughout the duration of the mortgage. However I should at least nod the effort of me and my wife to religious make 10% overpayments each year as well as throwing as much as we can whenever the fixes have come to an end. Mortgage free by 40 will be a huge psychological boost, especially in these interesting times for interest rates (pun completely intended).
The kicker in this tactic is that technically I could have switched to a new mortgage fix 3 months ago, back in February. Now, because I'm a glutton for punishment I've been tracking the 2/5 year fix rates that have been available for me for the past 6 months. Below are the results.
Had I been able to fix 6 months before my 5 year fix ended I would have been able to fix at a rate half of my current % rate. However, given that we were overpaying a lump, we waited until the end of our fix (to avoid any charges), and in the intervening period the fix % rate has actually jumped to more than our current fix!
Given we only have £20k outstanding on our mortgage this jump is a bit annoying but ultimately won't really impact me much in terms of pounds and pence. However, I cannot help but think that if I had a huge mortgage outstanding and was approaching the end of my fix then this increase could potentially be crippling on household expenses!
This mortgage overpayment will be factored in to next quarters stats.
Holidays - Quite a few smaller holidays planned this year with the family, about 3 camping trips (v cheap!!) as well as renting out a cottage in Wales for a week.
I'm also due to go to a wedding in the south of France (Antibes) in a week. I'll subject you all to this in a separate post, but the upshot is that this can be a ridiculously expensive place to have a holiday. The hotel they are getting married in comes with a £350 a night rate, and a beer is about £10 each. HOWEVER I've managed to find an Airbnb on a boat, literally 2 minutes walk away from the wedding venue at £25 a night. I'll let you all know how it turns out!
During the Easter holidays me and my wife took our 2 kids away for a few days down south. We went to Legoland and also into London for some sightseeing. To cut down costs we used a BOGOF offer for Legoland, Premier Inn in Slough (10 mins from Legoland), and hit up some high street shops for discounted sandwiches for the next day's picnic, saving an absolute fortune. I also think that this frugal way of living keeps the kids somewhat grounded and unspoiled. That being said, we did pay extra for Fast Passes in Legoland and in hindsight this was money well spent. It worked out at about £20 per person, and meant we could skip the queues. We managed to get around the whole park, and on the vast majority of rides with time to spare come the end of the day.
Investing
Aside from my company pension contributions - which have increased from £2200 to £2660 a month with my wage increase - I've made no extra contributions to my S&S ISA since the start of the new tax year. This is mainly due to the aforementioned mortgage fix coming to an end, and using spare cash to get the mortgage down.
2022/23 targets
1) - Chuck lump at mortgage (£20k) - Done
2) - Overpay mortgage 10% allowance (£2K) - Not started
3) - Fill S&S ISA (£20K) - Not started
4) - Set aside mortgage final lump (£7k) - Not started
Net worth change
- January - decrease in Bitcoin -£15k
- January - decrease in pension -£5k
- January - decrease in S&S ISA -£5k
- March - increase in pension +£10k
- March - increase in house price +£10k
- March - increase in Bitcoin +£10k
This is how my net worth / assets / liabilities is tracking. Green/red bars at the bottom shows some of my biggest swings up and down ever experienced!
Asset allocation breakdown:
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