Time to Face The Music

RelievedSheff

We have decided as a couple that it is time to face the music and start paying down some of our debts. We are lucky that we are both in jobs that pay ok but we have at times been living beyond our means and now it is time to start reining in the spending and making a concerted effort to cut the debt. Moving house last year didn't help, as we all know that always ends up being far more expensive than anticipated and the credit cards took a bit of abuse in the process. But the move was for the best as we are far happier living here. We are in the fortunate position that as things stand we are not struggling to pay back the money but it would be nice to have it in our bank account rather than paying off interest!!

So our situation is that the other half is owing:
Credit Card 1: 0% £600 balance, £150pm payment with the last payment being in December 2020
Credit Card 2: 29.9% £650 balance, £80pm payment 
Car Finance HP:  £4690 balance £251pm last payment February 2022

And I am owing:
Debt 1 (old store card): £46.45 balance, £46,45pm payment last payment next month (woo hoo. This one has seemed to drag on for ever)
Credit Card 3: 29.9% £3700 balance, £200pm payment
Credit Card 4: 0% £4500 balance, £100pm payment
Credit Card 5: 0% £9700 balance, £150pm payment
Furniture Loan: 0% £706 balance, £16pm payment

So the plan is to get the other half's credit card 1 paid off and then put that extra money towards paying off his credit card 2 ASAP and hopefully have both of those paid off by early next year. 

The extra £46 per month from my debt 1 which is paid off next month will be put towards my credit card 3 which is attracting the highest interest rate. Once the other half's credit cards are paid off then that extra will also go towards getting my credit card 3 paid off ASAP. Hopefully this one will be paid off next year as well and then it is time to start paying down the larger balances.

We have also started putting away a bit of money into savings for a rainy day. Not a large amount at the moment just £50 a month into a stocks and shares ISA and every time I log into our online banking I round the balance to the nearest pound and put the pennies into the linked savings account. It is surprising how quickly this is building up and of course with it being pennies it tends to go unnoticed, we certainly don't miss it. When a few of these debts are paid off we will look into raising the amount being put into the ISA each month.

Next April we also need to look at remortgaging the house. We took out a two year fixed rate last year when we bought this house but due to my previous adverse credit history and a pair of CCJ'S this is on a high interest rate of 5.19%. One of the CCJ's has now gone from my credit file and the other small satisfied one drops off my file in July. So we are hoping to be able to remortgage onto high street rates and reduce our interest rate. The hope is that we can keep our repayments much the same as they are at the minute while reducing the mortgage term from 23 years remaining to 15 years.

So there it is. Our plan for the next couple of years. I'm sure there will be ups and downs along the way. It somehow feels uplifting to write this out and to make it a definitive plan of action. 

Thanks all for listening. I will post updates as and when anything of note happens.

natsplatnat

"Credit Card 1: 0% £600 balance, £150pm payment with the last payment being in December 2020"

Is this when the 0% runs out? If not, I would pay less on this per month and pay more toward the card with a similar balance that is accruing interest.

Again, with your cards, unless you have looming 0% interest deadlines then I would reduce all payments to just over minimum (or however much you need to pay monthly to clear them in the 0% period) and direct as much as possible to the card that is already costing you in interest.

Smashingitnow

Nice positive plan. Diary will be good to keep up the determination in the next couple of years. Nice tip on the stocks and shares ISA and putting the pennies away.

RelievedSheff

natsplatnat said:

"Credit Card 1: 0% £600 balance, £150pm payment with the last payment being in December 2020"

Is this when the 0% runs out? If not, I would pay less on this per month and pay more toward the card with a similar balance that is accruing interest.

Again, with your cards, unless you have looming 0% interest deadlines then I would reduce all payments to just over minimum (or however much you need to pay monthly to clear them in the 0% period) and direct as much as possible to the card that is already costing you in interest.

We are concentrating on getting a couple of the smaller debts cleared first.

I know it probably makes sense to focus money on the higher interest debts first but we figured it will be a bit of a moral boost to get a couple of cards paid off first.

natsplatnat

RelievedSheff said:

I know it probably makes sense to focus money on the higher interest debts first but we figured it will be a bit of a moral boost to get a couple of cards paid off first.

Definitely agree with a moral boost... and also having a plan. I'm a great 'plan' lover! Some of mine even worked (with a few tweaks)   There is no hard and fast rule to debt busting (other than to reduce your debt obviously!) it is very much a 'what works for you'.

RelievedSheff

We are just taking it one step at a time at the moment. 

Next month will be step one once my debt 1 is paid off. This will be a relief when its gone as it is a long standing payment plan from 2013 and seems to be been hanging around for a long time.

Then come December it will be step two.

Baby steps and all that! 

RelievedSheff

Another £50 in the ISA today and £16 off the furniture loan so the balance on that is now £690.

RelievedSheff

£150 paid off Credit Card 5 today so the balance on that card is now £9550. I also rounded the bank balance to the pound as well. In under a month this has already added almost £20 to the savings account.

Today we are also taking delivery of our new garage freezer. Now this may not sound like a money saving idea but we found during lock down that buying meat in bulk was a much cheaper way of buying it. When we moved house last year the new house had a large gap for a big american style fridge freezer, our little 55cm wide fridge freezer looked daft in the gap so we bought a new one and stuck the old one in the garage. It came in handy during lock down but we were only using the freezer compartment. The fridge was still redundant so decided to replace it with a full size freezer unit. Last week we sold the old fridge freezer for £60 which we put towards the new freezer.

Next week we have half a butchered sheep, half a butchered pig, a quarter cow and a load of chicken being delivered to load up the new freezer. It has been expensive this first time round as everything has needed buying at the same time but it does work out much cheaper to buy meat this way in the long run and next time it needs restocking it won't need everything at once.

RelievedSheff

We are hoping to have a no spend weekend this weekend. 

We are staying at home this weekend, we would usually be at the boat, and we are getting some jobs done around the house. First job is fitting the kitchen under cupboard and plinth led lights, the front garden and hedge needs tidying up and a few bits of paintwork need touching up in the kitchen. 

We also plan to do a few local walks with the dog to keep him occupied. 

RelievedSheff

Wasn't quite a no spend day yesterday as I forgot we needed to get some fruit and veg in from the local farm shop. £20 spent but that has stocked us up for a couple of weeks now. 

Definitely a no spend day today!

We got the kitchen lights done yesterday and they look great at night. A job well done. 



Today we will cut the grass and the hedge in the front garden and take the dog out for a good long walk. First up though a hearty full English to start the day.

RelievedSheff

£150 paid off credit card 1 today leaving £450 balance on that card. Nearly there with this one, just three more payments to go.

We were scuppered by the weather yesterday so didn't get the front garden done. Instead we had a run out to Matlock Bath in the car. Not quite a no spend day as we both had a coffee so spent £1.80!

Today it is back to work. I'm working from home still but the OH has the commute into Sheffield to contend with. It will definitely be a no spend day today. I have just made the other halves packed lunch and I will have something out of the fridge for my lunch, then we are having lasagne for dinner with stuff from the fridge and freezer.