Work hard now to pay off your mortgage by 30, and retire by 40

[Ieattoomuchsugar]

And to buy a house at 19/20 whatever age

Maybe exaggerating with the ages a bit but these are examples I've seen.

People who've gone without holidays, new clothes etc, lived with the bare minimum and worked endless overtime for years in order to achieve the above.

Has anybody actually done this or in the process of doing it?

I do see the appeal but I personally wouldn't want/wouldn't have wanted to spend my 20s and 30s living that way. I do think life is to be enjoyed, I of course want to save but I am not prepared to go without things I enjoy for such a long time. I think it's better to strike a balance, and I'd rather enjoy life now just as much as when I am 50/60.

My dgp were very frugal because the sensible thing when they were just married was to save enough money to pay off your mortgage ASAP. The plan was that they were going to do a massive luxury cruise thing to celebrate when they were 70. Except both of them had poor health by then, they had paid off their mortgage and had nothing to spend their money on. Two sets of care home fees wiped out everything they had worked for. Dgm was very bitter about how they had been so careful and not enjoyed life more. I'm intending to do just that.

@bitemyarsenic no need for me to convince myself.

Both DBs were able to retire early on civil service final salary pensions. DB1 paid as much as possible so that he could afford to retire early. Unfortunately I dont think he really thought about what he would do once retired. Now he spends his days complaining about his neighbours.

DB2 was made redundant but decided to turn this into retirement. Basically retired too early.

I think early retirement works for some but it needs to have planning to make it enjoyable. DBiL & DSiL retired early and are having a lovely time. It works for them because they have things to do and can afford it. That took planning and preparation.

Ex H and I paid ours off early 40’s by putting extra in and he also worked abroad, we still had holidays. We have now split at 50 and I’ve had to take a small mortgage to buy to house me and kids, he’ll still be mortgage free as doesn’t give a hoot about kids, so it’s not all it’s cracked up to be!

all those people saying they know people who die just after the reture, best to spend it now

Well isn't it more likely that won't die after retiring but in fact get something that means you need care/assistance/ maybe into a care home.

And i'd massivly prefer to pay for a nice care home than rely on a council run one, even if i could get into one, or rely on underpaid carers popping in once or twice a day.

I don't get this. I could have paid a mortgage off if we had stayed in a smaller house. Instead I spend my days in a beautiful house still with a mortgage but enjoy every minute of living here. I could pay my mortgage off now if I wanted to but I'd rather live life to the full

@burnoutbabe

all those people saying they know people who die just after the reture, best to spend it now

Well isn't it more likely that won't die after retiring but in fact get something that means you need care/assistance/ maybe into a care home.

And i'd massivly prefer to pay for a nice care home than rely on a council run one, even if i could get into one, or rely on underpaid carers popping in once or twice a day.

My DM was ill with cancer and then spent the remaining years battling with surgery before dying.

That made me more determined to make sure I saved enough to retire early to enjoy hopefully healthy years.

@burnoutbabe I don't think people are saying not to save for retirement, they are just saying don't throw everything at the future (which isn't guaranteed) at the expense of the now.

In other words, strike a sensible balance.

I don't know why anyone would pay off their mortgage early when there are other more useful and productive places to put any spare money they have. Let me put a few rough figures on this:

Person A and Person B both have a £100k mortgage with 10 years to pay on it and an interest rate of 4%, and £200 per month spare.

Person A overpays their mortgage by £200 per month. Their mortgage term drops from 10 years to 8 years and 1 month. The total amount they pay drops from £121500 to £117200, a saving of £4300 in total. If you look at it another way, by putting their £200 per month to work paying off their mortgage they have increased their wealth by £4300 in a little over 8 years. They can now do what they want with the money they would otherwise have been using to pay off their mortgage.

Person B puts their £200 per month in a stocks and shares ISA. They get a good rate of 13% on it, and over the same 8 years and 1 month that Person A is overpaying their mortgage, they save £19400 into their ISA and the investment goes up in value by £15000, giving a total of £34600. The amount outstanding on their mortgage by this point is £23000, so they could pay this off now and have £11600 still in their ISA, or just leave the money to grow in the ISA and continue to pay the mortgage for the remaining 2 years. Their wealth overall at this point, using just the £200 per month, has gone up by £19400.

These figures make a few assumptions - I have taken conservative approaches to the rates I've used. At this moment in time it is possible to get a mortgage rate of 3-3.5%, so lower than the 4% I've used, and if you shop around you can get that reduced to about 1-1.5% for the first 2-3 years. This borrowing is the cheapest you are ever likely to see (when I bought my first house the interest rates on mortgages were over 7% - houses were cheap but the debt was expensive.) It is also possible to find stocks and shares ISAs that return more than the 13% I've used - I currently have one that is returning 18%. It is always possible that the interest rate on the mortgage could increase and the ISA rates decrease, but while the rate you can make on investments is greater than the rate you pay back on your mortgage, it makes sense to ride that wave and let investments increase.

Our children have investment funds that we have paid little and often into since their births, and the miracle of compound interest will mean that by the age of 18 they will have enough each for either a house deposit or the pay for their uni fees. Which they do will depend on circumstances at the time. When they reach 18 we'll be encouraging them to make the most of the LISA allowances, which will give them £1000 a year free for saving £4000 themselves (which is above and beyond any interest.)

So let me get this straight.
You are supposed to save for a house and pay the mortgage and over pay it while putting away money in a pension while paying bills/childcare/food/ transport/ replacing white goods etc as well as saving enough money to retire, all by the age of 40, 15 years before being able to access your private pension.
Not doable for most.
For most people buying a house and sorting your pension and having a life worth living in each decade is challenging enough. For some not even both is even possible.

Paid off mortgage early
I'm still working FT
Still paying into private pension

Since paying off mortgage I've enjoyed some fantastic holidays, pre covid & an to do lots more travelling in the future

I know the why to retire. It is the WHEN to retire that scares me !

No option to work PT in my current job

@backinthebox

well your examples are good BUT there is also risk involved

Pay off that 4% mortgage - 100% it will be paid off in x years (assuming mortgage rates don't change)

But stocks can rise and fall. Its risky. lots of people don't like that risk. safer to have the guaranteed outcome of paying off mortgage.

But yes, in general, do some overpaying, pay more into pension (tax savings AND maybe your employer matches, save NI too) and pay into shares. A balance.

@PattyPan

Investment income, savings, private pension (most can be accessed from 50 or 55), etc. A job is only one route to income

Yes but the example was 40 .

[quote burnoutbabe]@backinthebox

well your examples are good BUT there is also risk involved

Pay off that 4% mortgage - 100% it will be paid off in x years (assuming mortgage rates don't change)

But stocks can rise and fall. Its risky. lots of people don't like that risk. safer to have the guaranteed outcome of paying off mortgage.

But yes, in general, do some overpaying, pay more into pension (tax savings AND maybe your employer matches, save NI too) and pay into shares. A balance.[/quote]
Eh? You say paying off the mortgage is guaranteed if the mortgage rates don't change. They could change! Mortgage rates were between 5.5 and 8% for the first 13 years of home ownership for me. If the investment rates don't change, then bigger profit there is also guaranteed!

@Whatayear81

Went for a date last night

We spoke about how work, career, prospects, industry

To just sit there and say “oh I retired at 40 and now… well do very little” (yes yes, you can volunteer)

But you don’t have to do very little. I retired at 52: have two very different volunteer roles, made new friends, am a councillor, am a trustee for a charity..etc Never been in a position where I had nothing to talk about.

@IamGusFring 40 year olds can (and should) still have investment income and savings. I think the only way to do this really is by investing whether in financial instruments or in property. Just mentioned private pensions for the sake of completeness as they can still help eg live off savings from 40-50 until private pension comes in.

I am 63 and just not ready to retire yet. I work part time in a job I love. If I wasn't working now I would be volunteering, not just sitting at home doing nothing.

And it's getting harder and harder to save anything. Nothing has really changed in our lives. In fact, we should be better off cos we only have one dc on childcare now. Don't have any debts, other than mortgage. But there's fuck all left each month. But then, the prices of everything have gone up, so it feels like we're actually going backwards. I can't imagine being able to retire at 67, let alone 40 (too late for that, anyway).

Bought house for £150k with £40k deposit, now worth £240k 10 years on with £50k left on mortgage.

So, nothing to do with working hard, just benefitted from a housing boom. The same boom that means people can’t get on the property ladder now.

I am in my mid-twenties and planning to be mortgage free in the next 3 years ideally. I do not plan on retiring at 40 though and nor do I feel I have missed out on anything. In fact I have done more than most people my age.

I left my toxic home at 16 for a first year abroad and never ever looked back. I have kept working abroad, and so have done loads and loads of traveling and amazing adventures, earning pennies (and stayed on pennies for quite a long while) and I have now finally reached the experience level to have reached the niche side of my field to be finally able to earn quite well and have benefits that mean much less cost and way more saving. I actually had a better quality of life when on pennies than on my current salary as I have always been a budgeter (grew up poor) and so always managed to both save and still enjoy life on the cheap and now make up my salary by working most of the time, which is doubly the reason why I want to invest in property so I can look into a career change sooner rather than later.

My immediate goal is to buy an affordable but big & nice enough place cash as an investment within 3 years (ideally by 2024) in a country I really love and loved to live in, use it as a way to then get a bigger/better mortgage (also as an investment) though still easily affordable, in yet another country and pay it off within a few years (ideally in my mid-30’s.)

I have no interest in big mortgages or fancy houses so my goal is to invest in affordable properties in different countries that are appealing (both to me and in general) and that are likely to rise in prices in the next decade and go from there in a way that won’t break the bank or stretch my finances (too much).

My goal isn’t to retire at 40 but to be mortgage-free in my 30’s so I can change career in my mid-30’s (I do feel I will be fully burned out in my current career by then) for something I know will suit me great and provide me with a much better work/life balance (which will feel like early retirement to me anyway!) and where my potentially salary if there is any, could be made up by the rental income from the property/ies. So for me I don’t see it as buying a home but buying myself freedom and future options.

I don’t see myself ever retiring though. I took a 3 months break in between contracts this year for the first time ever since I am 16 and by the end was completely wanting to go back to work as filling up your days become very hard as most people my age either work or study and I am an active and social person so filling up my days shouldn’t be hard or a bore yet it was.

I think being mortgage-free at 30 and even more so retiring in your 40’s is incredibly rare and inaccessible to most people. Though I would say it also depends a lot on goals and motivation as well as personal choices one make.

I disagree that someone who want to be mortgage-free will automatically condemn himself to a life without fun (there is plenty of fun to be had that can be free or cheap & affordable), but someone who want and have kids young is much less likely to be able to do that. My mom had pretty much 4 kids at my age, which means she was struggling to afford us, let alone a mortgage or a potential retirement. She is in her early 40’s, just had a 5th child and can frankly not afford her mortgage (let alone to retire, potentially ever, but definitely not before 67+). Seeing her choices (and living the consequences of them) made me want different ones. I have no interest in having multiple kids I am struggling to afford and who keep me stuck in a low-paid job due to childcare issues. I would much rather get settled first so I can bring in kids without having to worry about affording them + keeping a house over our head (if I do want to). I also wanted to be able to enjoy my life first before investing in something (be it kids or a house) and I feel I have done that and now ready to finally invest and grow roots, and to do that quickly and efficiently I personally favor buying in cheaper places rather than in my hometown/home country where mortgages are quite high and rentability not that great. At the end of the day (most) mortgages are cheaper than renting so for me it’s a non-brainer, and while people think they might miss out on fun if they focus on a mortgage I am more afraid I might miss out on ever buying able to buy if I don’t do it now. The market is already barely affordable as it is now so can barely imagine waiting an extra 10 years.
If I didn’t buy now and was to become chronically ill in 10 years and unable to keep my job, and therefore my salary, I wouldn’t feel I had missed out on fun because I had loads of fun but I would probably feel very stressed about needing to afford rent, and bills etc…
I have had recent health issues (which thankfully for now seem under control) and it’s really reinforced for me the importance of not wanting to worry about rent and bills and not being dependent on my quite physical job to keep a house above my head and fridge full as I am not sure how sustainable that genuinely is. Yes I could drop dead tomorrow and potentially wish I had worked less recently in my last moments but I could also develop an illness and live a the rest of my life incapacitated (and it becomes much more likely with old age) and I would much rather not have to worry about being homeless if that’s ever the case.

Linning so do you own property at the moment?

@CrimbleCrumble1

Linning so do you own property at the moment?

No. I mean I could technically buy cash a much smaller property (that would need some work) in the place I intend to buy now, instead of the type of place I have envisioned but I would rather not. I already have saved up enough for a big deposit and to get a mortgage or a loan (making up the difference of the bit I don’t have saved up). But for some specific reasons I would much rather save the full amount and buy the property I want cash rather than via mortgage (mostly because since I am not planning to buy in my home country getting a mortgage to buy abroad is incredibly hard, irrelevant of my income so it’s “easier” to buy one cash and then use it as a way to get a mortgage for something else if I want to, than it is to get a mortgage from the get-go.)

I am not in a massive rush to buy, happy to save right now. I just ideally want to do it within the next 1-3 years as I really want to move on careers within the next 10 years and so want that out of the way in case I never reach my pay-level again.

I’ve always said that I will enjoy things I love if it means I won’t get myself into debt and I can still save something.

My dad’s cousin was a few weeks away from retiring and he was preparing for a trip-of-a-lifetime the day after he officially retired. He was doing a charity cycle in his city and he suffered with cardiac arrest and crashed into a tree. He died the same day. He was only 55!

I’ve told myself now that if I can afford to do something now then I will. So yes OP I agree with you. Life is too short to postpone living until you’re retired when there is no guarantee you’ll see retirement age.

However I don’t have a large mortgage so maybe I would think otherwise if I did.

@Hairbrush123

I’ve always said that I will enjoy things I love if it means I won’t get myself into debt and I can still save something.

My dad’s cousin was a few weeks away from retiring and he was preparing for a trip-of-a-lifetime the day after he officially retired. He was doing a charity cycle in his city and he suffered with cardiac arrest and crashed into a tree. He died the same day. He was only 55!

I’ve told myself now that if I can afford to do something now then I will. So yes OP I agree with you. Life is too short to postpone living until you’re retired when there is no guarantee you’ll see retirement age.

That's so sad. As you say, life is for living while you're young enough and healthy enough to do it.

@Enzbear

So let me get this straight. You are supposed to save for a house and pay the mortgage and over pay it while putting away money in a pension while paying bills/childcare/food/ transport/ replacing white goods etc as well as saving enough money to retire, all by the age of 40, 15 years before being able to access your private pension. Not doable for most. For most people buying a house and sorting your pension and having a life worth living in each decade is challenging enough. For some not even both is even possible.

@Enzbear

100% agree with this. ^ It's a load of tosh. Much of what a few posters have said doesn't even add up or make a scrap of sense.. They must think some people came down with the last rain shower, if they think we believe some of the nonsensical garbage they've been coming out with.

And as a fews pp have said, who the fuck WANTS to retire at 40 anyway? Even if WAS possible - which it isn't, unless you have a substantial inheritance, or a lottery win, OR you are a famous or rich actor/musician/writer/sports star, or a hugely successful business person whose business had made 10s of millions of £££. (None of which applies to anyone on this thread.)

I believe some people have paid off their mortgage by 44-45, as I do know a few people who have. (No-one has EVER paid it by their early 30s as a few are claiming though.)

Even so, the ones who paid it off by 44-45 y.o. had small mortgages that they took out in the mid to late 1990s or earlier (and the mortgage was usually £40K to 45K or less,) and they were usually small/modest properties, like a small 2 bed flat or 2 bed house, or an ex council house that they got on right-to-buy, and they never moved up the property ladder, they stayed where they were. None of the homes were big expensive properties, and they're all, as I said, people who bought before the year 2000.

Fact is, the vast VAST majority of people could not pay off their mortgage by 35-40. No WAY. And like hell could they retire at 40. Even if they DID pay off their mortgage by 40, what the fuck are they going to live on til they're nearly 70? And I don't, for a fleeting moment, buy the 'I will live on my investments and cash in my private pensions' poppycock.

It just doesn't happen, and it won't happen ...