An end-of-year financial review is good way to put everything in perspective. It’s the end of 2018 and my portfolio is relatively small. Because of this, I don’t feel the need to do monthly updates reporting on the extra €6 I earned. However, now is a good time to review my progress and take stock of my investments and my goals. I outlined financial goals in this earlier post when I started this blog

End-of-Year Financial Review – My Goals

The most important part of a financial review for me is the goals. There are two things you need to do here.

Firstly, you need to review your financial goals at regular intervals to make sure that they are still relevant. It’s OK if they are no longer relevant because your life is constantly changing. Feel free to tweak or rewrite them in order to keep them relevant and keep you focused.

Secondly, assuming nothing has changed much about your goals, you need to make sure that you are taking steps towards achieving them.

1. Switch Mortgage
2. Save for a deposit for an investment property
3. Put some of my savings to work through Peer2Peer lending platforms
4. Continue to use my current house as an income stream through rent-a-room (house hacking)
5. Continue to overpay my mortgage to reduce my debt
6. Reduce the amount of “stuff” I own and my spending by adopting a frugal and minimalist lifestyle.

Goal 1 – Switching Mortgage

I tried to do this twice this year. I failed twice too. In both instances I went via a mortgage broker and I didn’t expect to be successful in the application. I came a lot closer the second time round though.

First Switch Mortgage Attempt

In March 2018 I identified Haven as the best variable rate available on the market. Haven are a subsidiary company of AIB and we’re offering 2,000 to switch. My current mortgage is with AIB and the broker put in a call and found out that they are legally considered to be a different company. Because of this, they looked at my AIB mortgage as a new switch application regardless of it technically being the same company. However, I proposed the wrong term for the switch and the application was rejected.

Second Switch Mortgage Attempt (Short Version)

June saw the introduction of a very competitive fixed rate mortgage rates from both Ulsterbank and KBC.

I am someone who hates debt so I have been overpaying my mortgage by an average of 500 per month for the last year and a half. Yes, I know, mortgages are “cheap money” and it makes more financial sense to invest that money.  Paying off my mortgage early is more appealing to me for the psychological benefits. Owing nothing on my primary principal residence will make me happy. So fixed rate? That means you can’t over pay your mortgage right? Wrong. You can actually repay up to 10% of the principal in addition to the standard repayments under KBCs fixed rate mortgage product.

Suffice to say the second attempt to switch was unsuccessful due to timing. I have a very complicated employment situation. The short version of the story is – my demonstrable income was too low at the time of the application.

The Long Version

The longer version is I have one permanent part time salary that comes with overtime with one employer. I have one fixed term contract with another employer. At the time of application my payslips didn’t show the overtime and the fixed term contract had only been renewed once. They need fixed term contracts to be renewed twice to consider the income as stable. As a result they would only consider the income from my part-time permanent contract which was deemed “below threshold”. No bank will consider rent-a-room income as part of a mortgage application.

So what now? I tried and failed twice but as a result I learned much more about all the fine details of the process. Since then I have diligently making myself look better on paper. By March 2019 I will have:

• 6 months of payslips showing basic salary and overtime from one job.
• a second fixed-term contract from my other job (this allows that income to be considered.
• bank statements showing regular savings transferred into the credit union.
• A reduced total mortgage amount due to over-payments.
• P60s showing an average gross income of 35,000 over the last three years

Hopefully this will be enough to secure a switch to a lower fixed rate mortgage of 2.7% for 3 years with a mortgage term of 30 years. This would reduce my monthly mortgage amount to below 500 Euro and allow to save/invest more on a monthly basis.

Goal 2 – Save for a Deposit for and Investment Property

This goal is a little bit of a swing and a roundabout. The cold hard fact is I have 10,500 in the credit union but I have another 10k tied up in Peer2Peer Lending platforms. I’ve been trying to put at least 200 per month into the Credit Union to have some evidence of regular saving for my planned mortgage switch application. I am keeping an eye on markets and also researching some planned national infrastructure developments that may improve capital gains in some areas. I won’t be ready to move on this until after I switch mortgage and after Brexit.

Goal 3 – Put Savings to Work in Peer2Peer Lending platforms.

I put a chunk of my savings and also continue to invest on a monthly basis into a few different P2P platforms. I started with Mintos and have since signed up for a total of five different platforms. In 2018 I grossed just over €500 on these platforms. Here is an overview.

P2P Overview 2018

Right now I am specifically looking to invest in short term loans. This is because I want all principal amounts repaid by around April 2019. As a result I will have the option to look at withdrawing all my funds to use towards getting an investment property or simply reinvest the funds.

Goal 4 – Use my House as an Income Stream

I have had two new tenants since September 2018, both are paying 500 per month which includes Wi-Fi, bins, gas and electricity. Both tenants are nice guys and we all get along very well so far. I hope they are happy to stay on. I am watching average rents in my area and the wider Dublin area closely to make sure I am providing value for money and good standards of accommodation. If you have a good tenant, it’s worthwhile to encourage them to stay.

Rent-a-Room Overview 2018

Goal 5 – Overpay my Mortgage to Reduce my Debt

I made steady progress on this front in 2018. As I mentioned above, this is a huge psychological motivator for me. I would LOVE to have my home paid off entirely. For me it means a real sense of security. I took out my mortgage in 2012 for 122,000. It currently stands at €81,201. Not many 35 year-olds in Ireland can say that they own a 3 bedroom semi-detached house AND say that being mortgage free before mid-forties is a realistic goal. I am very, very fortunate.

Any progress I make with this goal will save me thousands in interest down the line. I am averaging €500 per month extra repayments on an average monthly repayment of €635. I make the odd extra contribution through my coin box – any change I have gets collected and put off the mortgage. Taking the ASDA approach here – “every penny helps”.

Goal 6 – Become a Frugal Minimalist

This goal is one of the easiest to achieve and massively rewarding. Over the past year or two I have downsized all of the stuff I own and I can honestly say that it feels great. I have exactly what I need and no more than that. For example, my wardrobe contains exactly enough clothes for my day-to-day needs. As a result, I buy more expensive items which are better designed and more durable.

We are now past the shortest day of the year. In 2019 I am considering taking advantage of the Bike to Work scheme to reduce my dependence on my car, save on diesel, get more exercise and help to protect the environment.