I keep a household budget spreadsheet, one tab of which represents our savings.
Some of our savings is in traditional savings vehicles (ISAs etc.), but some of it has been used to overpay the mortgage.
Our mortgage permits us to make overpayments, while keeping our monthly payments the same; the overpayments are deducted from the capital balance owing and have the effect of reducing the term of the mortgage. The overpayments can be withdrawn at any time but this would extend the term of the mortgage back towards its original date.
I can't work out whether it makes sense to include these overpayments in the total of our savings or not. They currently form part of our emergency money in that they are liquid and could be used if we were hit with some large unforeseen event. But, at the time that the mortgage reaches term (in about 11 years from now), the money effectively evaporates and will no longer be available for withdrawal as it has been used to pay off the mortgage.
Am I being unwise to include this in the "Savings" category, and how else should I represent it if not as "Savings"?
At present we have about 1 year's income in savings but about 1/3 of this is in the mortgage overpayments, which are reducing the term by about 6 years (from Jan 2032 to March 2026). (Given how poor savings rates are at the moment, it's very tempting to put more towards the mortgage as well...)