My Debt-Free-Wannabe Diary

DontDoDebtKids · 20 July 2006 at 10:49AM

Hi all,

I've been reading through various diaries on this board for some time now whilst trying to become debt free myself but have been struggling, so I've decided to garner inspiration from everyone on this board and post my progress here.

Like some others on the board, I don't think my debts stack up to anything like as much as other peoples, but a debt is a debt is a debt.

As an avid reader of the Motley Fool, I'm also quite keen to start investing but there's no point when you owe money to people!

Over the past year I have managed to keep my debt on relatively cheap deals (I'm quite proud of myself really) but have recently transferred my debts to cheap life of balance deals as the 0% credit cards seem to be drying up.

I'll post a Statement of Affairs in my next post.

DDDK

gallygirl · 20 July 2006 at 11:03AM

Welcome, look forward to your SOA, you're on the wagon!

DontDoDebtKids · 20 July 2006 at 11:03AM

The Dreaded Statement of Affairs

Bank Accounts

HSBC -£26.89 (Interest Free o/d £500; Total o/d £1500)
FD £496.02 (o/d £250)
FD Joint £19.61 (no o/d)

Credit Cards (Oh dear)

Morgan Stanley £1,180.16 (£1,088.74 to pay 16/08)
Capital One c£3200 (at 0% until October then 15.9%)
Texaco (now Lloyds) c£2000 (at 3.9% LOB)
BA American Express c£6500 (at 4.9% LOB)

NB I pay off Morgan Stanley every month from FD as it's my cashback credit card and I don't want to pay 14.9% interest.

Loans

Student Loan c£3000
Egg Loan £6,852.06 (@7.9%)

Cashflow - Income

Salary £1,828.17
Rental Income £630 (this month, normally about £690)

I also do some matched betting, which has earned me about £400 so far.

Cashflow - Outgoings

This is a bit more complicated! Half my salary is designated for spending and, of that £200 goes into the Joint Account for bills for the house and for food spending.

Spending (to FD) £714.67
Bills (to Joint) £200.00
Mortgage £615.98
American Express £185.00 (3% of balance)
Egg Loan £139.75
Capital One £100.84 (3% of balance)
Texaco/Lloyds £48.00 (3% of balance)

Cashflow

In: +£2,458.17
Out: -£2,004.24
Net: +£453.93

DontDoDebtKids · 20 July 2006 at 11:16AM

The Plan (as it stands)

The reason I allocate half my salary for spending is that I'm quite bad at stopping myself buying stuff. I'm getting better. But I've been unrealistic in the past about how much I really can stop myself, so this is an effort to wean myself off spending lots! As can be seen from my credit card bill this month, I'm not doing particularly well...

The other half is for debt paying and then, once I have cleared my debts, for saving and investing.

My total debt is £22,732.22 but, excluding the Morgan Stanley card which is coming from the spending account and my student loan which comes out of my salary, can be adjusted to £18,552.06.

I'm paying off £473.59 a month already and have £453.93 to pay off the most expensive debts (the much loved snowball effect). Total £927.52 a month.

Based on this, it'll take 20 months to pay off just the capital but not the interest. I'll do some better calculations and post them here in a bit.

I'll let you know how I get on...

lazy&indebt · 20 July 2006 at 11:32AM

Well done! And I like your screen name!!! Very detailed and it seems you really have your head screwed on. You'll back back at this post in 20 months time with fond memories!

DontDoDebtKids · 20 July 2006 at 1:07PM

Using http://www.whatsthecost.com/snowball.aspx

The Bottom Line

It will take you 21 months to pay off these debts if you snowball correctly. During that time, you'll pay £887.00 in interest.

If you paid the same amount per month, but changed the order in which you paid your debts so you weren't paying the highest interest rates first, it would cost you an additional £470.00 in interest.

Date.......................Total Debt
August 2006............£18,552.06
September 2006.......£17,702.24
October 2006...........£16,848.48
November 2006.........£15,995.69
December 2006.........£15,152.53
January 2007............£14,303.38 NB Capital One Paid Off
February 2007...........£13,445.77
March 2007..............£12,576.67
April 2007.................£11,708.51
May 2007.................£10,833.28
June 2007................£9,954.39
July 2007.................£9,068.69
August 2007.............£8,178.89
September 2007........£7,283.56
October 2007............£6,381.80 NB Egg Paid Off
November 2007..........£5,475.86
December 2007..........£4,565.59
January 2008.............£3,652.15
February 2008............£2,734.93
March 2008................£1,813.50 NB Amex Paid Off
April 2008..................£888.92
May 2008..................£0.00 NB Texaco Paid Off

Wow. 21 months!.

DontDoDebtKids · 25 July 2006 at 11:53AM

I've been calculating my debts historically in Excel, and have found that actually my debts haven't really been getting better!

My peak debt was actually in April 2006 and was £19,273.46.

I think keeping my eye on this in a diary is a very good thing and you lot should be able to keep me on my toes a bit!

Reading ehallett's diary, I've been inspired! I would love to clear a debt a month but don't think that's possible! However, maybe I should have a target at least...

Target #1: Pay off Capital One debt before the 0% interest period finishes (October 2006) - balance approx. £3,200.

Wish me luck!

scottishspendaholic · 25 July 2006 at 12:10PM

Hey DDDK,

Well done for starting your diary!

It seems like you are in pretty good position with a good inceom so hopefully in less thatn 2 years you'll be debt free - hooray!

Well done and I'll keep reading!

scottishspendaholic x

ZTD · 25 July 2006 at 12:24PM

DontDoDebtKids wrote:

I've been calculating my debts historically in Excel, and have found that actually my debts haven't really been getting better!

In the early days, it's the interest that you're mostly paying. By the time your debts are cut in half, you have much less than half the time to go.

Play around in excel and you'll see how it goes.

DontDoDebtKids wrote:

Wish me luck!

Good Luck! And hang in there.

Molanole · 25 July 2006 at 2:01PM

Gosh, it seems like such a minor thing to add but I would strongly advocate keeping something as simple as a spending diary if you are, as you say, aware that you have difficulty stopping yourself spending on "stuff" as you say. It's when you do this religiously you realise how much the odd pound or three on the way to work, at lunch, on the way home, all adds up to and it can be quite horrifying.

The killer for me is always buying stuff on line. For some reason my brain fails to recognise that I have actually spent money.

Anyway, well done on starting your diary and good luck!

DontDoDebtKids · 25 July 2006 at 5:17PM

Molanole wrote:

Gosh, it seems like such a minor thing to add but I would strongly advocate keeping something as simple as a spending diary if you are, as you say, aware that you have difficulty stopping yourself spending on "stuff" as you say. It's when you do this religiously you realise how much the odd pound or three on the way to work, at lunch, on the way home, all adds up to and it can be quite horrifying.

The killer for me is always buying stuff on line. For some reason my brain fails to recognise that I have actually spent money.

Anyway, well done on starting your diary and good luck!

Thanks for the suggestion Molanole. I keep track of my spending in Microsoft Money at the moment but I don't find that I spend all that much that I don't know about. What happens is that I get to the end of the month and it all adds up...

What does stop me spending money is thinking, just before I buy something or spend money, that it will only add to my debts and that I should be investing it, not spending it!!! Some things, however, can't not be paid for (e.g. car service, petrol) obviously but MSE is a wonderful source of info on how to do things/get things cheaper!

Cheers for the support everyone. It's taken quite a long time to get this far and has been more down to luck (in the form of promotions and bonuses) and restraint than actively paying down my debts every month. This site has helped loads in getting good deals on credit cards, loans, mortgages, insurance and other things but now I just need to put everything I can towards paying off the debt.

Repeat to myself: 21 months to go, 21 months to go, 21 months to go...

My Debt-Free-Wannabe Diary

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