It’s gonna be a tough year ahead.
Looking back on what happened in 2022 (crypto, real estate market) and the increased mortgage payment arising from the interest rate hikes.
As mentioned before, my crypto portfolio basically got wiped out.
On top of that, there are two mortgages, two personal loans and one re-financed insurance (interest only) to be taken care of.
A new car is coming in a few weeks to replace my crippled Toyota and to utilise the government’s “One-for-One replacement scheme”.
The new car will be paid off in cash as I have nearly maxed out all my borrowing power.
I also have to pay my annual salaries tax in two batches; 80% was due in January and the remaining 20% in April. My whole December paycheck was not enough to cover the first payment!
Sometimes I just wish they would do a PAYE here like in the UK, but I guess a bit of financial discipline should also do the trick.
Debt outlook
It took me about 5 minutes to consolidate all the major debts and recurring payments into a table.
According to the table, a large chunk of my monthly income in 2023 (and the coming years) would be used to service all these debts. Or in other words, I need to be raking in at least $80,000 (US$10,200) a month just to fend off the banks and the taxman.
That is if they keep the interest rates flat. Any increase in interest rate means that I will need to pay even more.
Some of them, like the UK mortgage and the re-financed insurance, allow me to pay in excess to reduce the outstanding loan capital. It will help reduce the monthly payment.
That was one of the reasons I took out the relatively cheap personal loans in November last year, intending to use them to pay off the more expensive ones.
I am also hoping that my UK buy-to-let issues will be resolved in 2023 and thus relieve a bit of my financial pressure. The property is undergoing major renovation by the developer and has already been vacated for more than 20 months. Luckily I was told that the developer would reimburse my loss rent. I will probably dump most of the compensation into the mortgage once I have received it.
It is not fun to see when £1,000 is drained from my account each month when it was supposed to be rented out and paid for the mortgage with some pocket money left.
Goals
My goals this year are to keep my finances in order and pay off a significant portion of the UK mortgage and the refinanced insurance.
- Reduce the UK mortgage to less than £100,000;
- Reduce the refinanced insurance to less than US$100,000;
- To maintain a positive cash flow for the year.
It’s definitely not going to be easy, but I hope my investment return this year will be better than the last. And honestly, it would be hard to be that bad again.