Reducing Debt - being accountable and taking responsibility

DrSpendLittle · 24 September 2017 at 4:55PM

wishingthemortgaheaway wrote: »

If you are using YNAB though, you won't get into trouble or pay out more than you have. When you register a spend, it reduces the balance on the (for example) groceries budget, but you can record it to the credit card 'account' when you pay off the credit card just do a transfer from the correct account to the credit card to make everything balance properly.
(Or have I missed something about the way you use YNAB?)

Yes, that is what I've been doing. Its more the mentality of using a CC for spends that I was getting at. But, yes, I agree, if you've got a tight budget and yes ynab correctly, it shouldn't be an issue at all.

DrSpendLittle · 24 September 2017 at 4:56PM

ChasingSunshine wrote: »

I also pay for pretty much everything on my credit card for the cashback. Only starting to get to grips with YNAB as this is my first month using it. I think as long as you are recording the transactions and the money spent transfers to the credit card account in YNAB then it will no longer be available in your petrol or groceries categories and you shouldn't overspend

Hi Chasing, good to hear you're doing to same successfully. Seems to be going well so far for this month and using ynab seems to be the secret to success here!

DrSpendLittle · 24 September 2017 at 4:57PM

CP2016 wrote: »

My partner uses his credit card for buying fuel. It's budgeted for and when we enter the transaction in YNAB the budget moves from the petrol category to the credit card category. I think the trick is only spending according to your YNAB budgets and ignoring the bank balances when deciding if you can afford it. If you do that you should always have the budget in your credit card to clear it each month.

Yup, spending according to the ynab budget and not the balance on the CC has been helpful here - having a water tight budget and using that to track spends seems to be working! Glad to hear it works for you too!

DrSpendLittle · 24 September 2017 at 5:00PM

glass_half_full wrote: »

Hi DrSpendLittle,
Love your diary by the way. I heard Martin Lewis on R5L yesterday talking about using a charge card to generate cashback, the example he gave was the Am*x. I think once the discipline of budgeting and spend control is well established, it could be a good idea. I haven't used a credit card since my LBM but I think I am going to give this a go since it is effectively free money.

Hi glass half full, thanks for dropping buy!

I've been using my John Lewis credit card for food spends to get the cash back and it seems to be working well - as the others say above, as long as you're spending to budget and not to the available balance on the CC, and sticking to a water tight budget, all should be good.

I think I've been watching too many Dave Ramsey videos and getting too obsessed with his way of things. As long as the debt is coming down in a sustainable way, I see no problem with using CCs for cashback.

DrSpendLittle · 29 September 2017 at 8:08PM

Ooops, Its been ages since I last logged in. Had a such a busy week at work that I've not had the mental energy to spend much time web browsing. I have, however, kept on top of the budgeting and will end the month nicely on budget.

Today was payday. I've already done my October budget and I'm all set.

Will check in over the weekend for a good catch up on diaries and outline Debt Slaying plans for this month.

DSL :j

DrSpendLittle · 30 September 2017 at 9:08AM

My debt slaying plans for October are as follows:

£600 off CC1
£300 off CC2
£157.91 off car loan

The total is £100 lower than my goal of paying £1000 off my CCs per month, but I was short £100 for the new boiler.

But, the main thing is I'm now in a position to pay for the new boiler with cash and not use credit, which I'm really pleased about. It will cost me £610 (we've £1000 already saved) and I've already put away £500 from a work fee that arrived this week. The extra £110 comes from Octobers budget.

I have an important birthday this month that I've already budgeted £150 for during Sept / Oct. I bought the gifts yesterday on my JL CC (to get points) so I will clear the remaining balance assigned for October tomorrow.

I've accrued £115 of work expenses this month. Ugh. They're currently sat on CC1. I'm not 100% happy about this, but they will be reimbursed at the end of October, so no biggie. The £600 I intend to pay off CC1 this month will wipe them out so no interest payable. I quite like my new anti-cc usage feeling.

I have another £30 of work expenses from June due at some point over the coming weeks which I will put in my emergency fund (its not in good shape. £20 I think. Oops).

All in all, September has been fun, challenging and rewarding. I got a handle on budgeting but I did still get that 'running out of money' anxiety as the end of the month neared.

Nonetheless, I managed to: pay £1000 off my debts; maintain a lifestyle that I'm perfectly content with; and, save £100 towards presents and car maintenance. I'll drink to that!

wishingthemortgaheaway · 30 September 2017 at 9:24AM

Sounds like a successful month all round financially. Damm boilers and cars.

DrSpendLittle · 30 September 2017 at 10:16AM

wishingthemortgaheaway wrote: »

Sounds like a successful month all round financially. Damm boilers and cars.

Car payments. That's all I think of whenever I see a new / nearly new car :rotfl:

DrSpendLittle · 30 September 2017 at 10:18AM

wishingthemortgaheaway wrote: »

Sounds like a successful month all round financially. Damm boilers and cars.

p.s. I love your '100 payment countdown' - what a brilliant way of dealing with large debt repayments!!

enthusiasticsaver · 30 September 2017 at 10:30AM

DrSpendLittle wrote: »

Checking in to say hello and keep up to date.

Working from home today so no fuel or car parking costs. NSD so far but we have no clue what to have for dinner. We have stuff in but not too sure on a recipe just yet.

Super busy at work for the next two weeks, so hoping time flies by to 29th when its payday! Whoooo!

No movement on debt or spends since I last updated.

I've been using my JL partnership card for all food spends this month. The money I assigned to my groceries budget in ynab on 1st September is still sat in my current account. I will pay off the full balance of the card on the 30th using said funds. I do this because I like getting the Waitr0se £10 vouchers. But I also like the comfort of knowing I have the ynab groceries money sat in my current account as a buffer against any unforeseen direct debits (there are none, I'm 100% sure of this, but I just can't shake that old debt fuelled anxiety of having no money in my account to cover DDs). Totally psychological, but it works for me!

I'm tempted to do the same for fuel spends too. That way, I keep the assigned money for both categories (around £300 per month) in my current account until the last day of the month to alleviate random debt anxiety hangover, and then pay off in full on the last day of the month. Positives to this are that I will get more £10 JL vouchers and demonstrate good use of credit. Negatives are what Dave Ramsey always refers too - you spend more using plastic than you do using real money. Plus, it can encourage that 'buy now pay later just this once' mentality which invariably leads to the debt spiral we all know and loathe.

With all that said, I'm confident that I can stick to my budget and only spend what I have assigned that month. I guess I could pay half off half way through the month as a temporary measure / precaution? Does anyone else use credit cards like this to generate cashback? What lessons have you learned? Would you recommend it? Are you really against this practice? Let me know

DSL

I have a Santander 123 credit account (and a JL partnership card) and my DH is an additional user. He is a notorious fritterer and when he retired last year I organised for him to have an additional card on the Santander 123 credit card simply for buying food and fuel as we get 1% cashback on supermarket spends and 3% on fuel spends (old terms and conditions and I think it is less favourable now). He is actually really good now about only using the card for food and fuel and it helps us to keep the overall spend on budget. I just look at the balance and can see if we are in budget as I know we don't put anything else on it. The cashback is also good. We pay all our credit cards off in full by direct debit but we have a large cash buffer as the Santander 123 pays 1.5% interest on savings up to £20k so our emergency fund is kept in there.

I use the JL partnership for large spends for furniture, white goods, decorating etc and that all comes out of our house budget.

It works for us and although I don't like credit cards and the temptation some people have to not pay it off every month we are disciplined savers and spenders and use it to our advantage. Our food and fuel money earns 1.5% in Santander 123 until the bill paid and we get cashback on the credit card spend. I also find the Santander spendylitics app a good way of keeping track of what we are spending and where our money is going.

You sound pretty disciplined so I would think that the method would work for you too.

Reducing Debt - being accountable and taking responsibility

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