£100k Debt Free in 4 1/2 years - My Debt Diary

ThankYouAndEnjoy! · 10 April 2007 at 7:14PM

Hello

I have been viewing the MSE threads now for some months and have been inspired by both the successes of MSE'rs whom have fulfilled their goals, and those MSE'rs whom have had their respective 'lightbulb moments.'

As a result, i have decided to keep my very own Debt Free Diary. I will look at it in some interest in the coming years, learning from the decisions i have made in order to, hopefully, achieve my aims.

So; where do i start? A little about me. I’m 23, work for a High Street Bank (please don’t hate me!! LOL) and am expecting my first child, a baby boy, in 13 days!! My partner and I get paid, accumulatively before Tax, £35,000. This goal, therefore, is going to be one that is going to take some frugal and disciplined acts in the next 4 1/2 years.

I’m lucky enough to have, as you can see from my sig, a Stock Investment that, all things remaining equal, will 'earn me' some £34k. This is obviously a BIG chunk of my target, and I am well aware that this investment could either go Up or Down, in the forthcoming years. The Investment is a Work Scheme, so the minimum i walk away with is £15,000 (my original investment). If i can, over the next 4 1/2 years, pay the difference (£100k - 35K = £65k) then this will be a massive success; hopefully ensuring long term security for my family.

So ... how am I going to achieve my goals? TBC on next Post

ThankYouAndEnjoy! · 10 April 2007 at 7:34PM

Ok

So, I’ve changed my Sig to reflect my current Debts and my progress - I've decided to update my Sig every Sunday, unless I have something important to add. Interest is charged daily on the Mortgage, so every 7 days should give a good account of my outstanding debt.

Steps taken -

1- Set up a £500 monthly payment, to be paid on the 03rd of each month, to overpay the Mortgage (maximum allowable amount)
2- Set up a £100 monthly payment, to be paid on the 21st of each month, into my savings account.
3- Removed £3k from my ISA to pay the Credit Card in Full and contribute to the OverDraft - Figured this was a good idea as both are at APR's above ISA % rate (expected in next couple of days)
4- Any monies left over each month, will be transferred to the savings account.

My monthly mortgage is £485.63, so effectively I am contributing £1085.63 toward the mortgage each month.

In exactly 12 months, my monthly contribution to the Work Investment finishes. As we are easily coping without the money today, the £250 will be set up to be paid into the savings account, therefore £350 monthly payments into savings. In 12 months, I will be able to confirm the value of the Investment; however, I have worked out that should I keep they shares, irrespective of their value, I will net £2k in dividends each calendar year. Should I remove shares up to my CGT allowances per year, dividends will be reduced by approx 1/4 per year, until complete holding removed (assuming share price remains constant)

The next year will really determine the likelihood of our goal. Whilst share prices and dividend yield are out of my control, the money I save is; it is therefore incredibly important that we maintain a sensible monthly spend.

Fingers Crossed .... : D

poppy_f1 · 10 April 2007 at 8:35PM

good luck sounds like you have it all figured out

chevalier · 10 April 2007 at 9:10PM

You might want to pop an SOA on here, there might be areas where we can spot some savings for you
best of luck
chev

ThankYouAndEnjoy! · 10 April 2007 at 9:37PM

Hello

Ok....

Our S.O.A

Income - Approx £2175/month (after Tax + Insurance)

Outgoings

Investment - £250/month (12 months remaining)

Anglian Water - £15/month
Broadband - £49/month
Contents Insurance - £7.51/month
Life Insurances - £57.58/month
Buildings Insurance - £33.80/month
Npower (Gas + Elec) - £43/month
02 - £18.99/month
02 - £35.99/month
Sky Digital - £21.75/month
Southend BC - £73/month
TC Licence - £34.14/quarter
Food - £80/month

LloydsTSB Loan - £72.54/month - 5.9% ova 7 years
NationWide Mortgage - £485.63/month ova 34 years (5.09% fixed for next 4 years)
Carpet Loan - 140/month (10 monthly payments - Interest Free)

Total Outgoings - £1065.79/month

Taking the above in account, we should have £750 per month left over. After both 'Step 1 & 2' are taken into account, we should have more than enough to live on.

Any thoughts?

lambanana · 10 April 2007 at 10:01PM

Good luck with that!
£49 a month seems a lot for broadband though...who are you with and can you change?

Kaz2904 · 10 April 2007 at 11:00PM

I hope you save up and buy your buildings and contents insurance yearly from now on. If you do it through quidco then you can get cash back. I'm going to try and get separate b&c ins this year so that I can get cash back on both- how fab would that be?!
Your mobile phone bills are really high. Why? Do you phone people on the same network? I think orange are now letting you call orange phones unlimited for free?

newmum1 · 10 April 2007 at 11:20PM

Dont forget once you have your baby you will receive your child benefit and maybe tax credits, but in your goal above have you included or accounted the fact that your income will drop whilst you are on maternity leave and child care costs when and if you return to work???

ThankYouAndEnjoy! · 11 April 2007 at 8:06AM

In response to a few questions

lambanana wrote:

£49 a month seems a lot for broadband though...

This pays for Bulldog Broadband, Free evening and weekend calls and also our telephone line rental. Its contracted for another 7months but i use it all the time so feel the sum is somewhat justified

Kaz2904 wrote:

Your mobile phone bills are really high. Why? Do you phone people on the same network?

My girlfriend’s phone is £18.99. This was purely for her own safety; would rather pay £18.99 per month and know its usable 24/7, rather than pay-as-you-go and find there is no credit. My phone bill is £35.99, i went into this contract 7 months ago, and still have 11 months remaining so no change yet :rolleyes:

newmum1 wrote:

Dont forget once you have your baby you will receive your child benefit and maybe tax credits, but in your goal above have you included or accounted the fact that your income will drop whilst you are on maternity leave and child care costs when and if you return to work???

We have purposefully left out tax credit, child benefit and childcare costs for a few reasons

A - Not sure how much we are entitled to with Child Benefit/Tax Credits
B - My Girlfriend works as a nursery nurse, resulting in a discounted rate for childcare.
C - I have compressed my working week into 4 days (8.75 hours per day) and have every Friday off. I will therefor be looking after our baby on Fridays; whilst not affecting our take home pay!

The Income - after Tax Approx listed prior has the Maternity leave element included. Unsure how many hours girlfriend will work per week, but calculations have been based on her bringing home equivalent to current Maternity Pay.

southern_chick · 11 April 2007 at 8:31AM

sounds like you have it all under control, good luck and please keep posting
SC XX

ThankYouAndEnjoy! · 11 April 2007 at 12:32PM

ThankYouAndEnjoy! wrote:

Steps taken -

1- Set up a £500 monthly payment, to be paid on the 03rd of each month, to overpay the Mortgage (maximum allowable amount)
2- Set up a £100 monthly payment, to be paid on the 21st of each month, into my savings account.
3- Removed £3k from my ISA to pay the Credit Card in Full and contribute to the OverDraft - Figured this was a good idea as both are at APR's above ISA % rate (expected in next couple of days)
4- Any monies left over each month, will be transferred to the savings account.

5 - Contacted Nationwide today to arrange Mortgage Payment @ £491.05 per month fixed.

It was confirmed by Nationwide that for each overpayment of £500 i made, my monthly mortgage would reduce by £5 or so. Obviously, i want to pay as much as possible. This new arrangement will reduce the term of the mortgage, instead of reducing the monthly payment.

£100k Debt Free in 4 1/2 years - My Debt Diary

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