Determined to be debt free in five years!

Debtfreein5yrs · 28 March 2017 at 12:15PM

According to a debt tracking app that I'm now using my debt free day is 10th Feb 2023. This is nearly a year longer than I aiming for !
Will have to find ways to cut back further and earn some extra money. Still determined to be debt free in 5 yrs

Debtfreein5yrs · 28 March 2017 at 12:20PM

Thank you angelpye

Only just started using YNAB myself but I'm really liking it already.
You look to be doing really well at reducing your DFD:T

Debtfreein5yrs · 31 March 2017 at 4:25PM

Well I've now spent a whole week (literally because I've been off work on annual leave) reading about how to manage finances and become debt free. I've read books including ones by authors such as Dave Ramsey and Tony Robbins, read articles on the internet, signed up for YNAB and read literally hundreds of threads and diaries on this forum.

Everything I've read has convinced me that it can be done provided the motivation remains strong.

Whilst I love the idea of following Dave Ramsey's model of 7 baby steps I have to admit I'm not entirely comfortable with paying off small debts that are currently on 0% interest before paying off larger debts that are having large amounts of interest added each month. One of my first goals will be to build an emergency fund but I don't see the logic in transferring the money into a savings account that pays next to nothing in interest whilst paying £40+ per month in overdraft fees?!
I fully understand that the bank can pull the overdraft if they want to but they haven't up until now after many years of debt so I think I'm going to take the risk that it won't happen until we've paid off the overdraft and then built up a separate emergency fund. Hope this makes sense?

As I've already said my conclusion after so much reading is that it's actually the motivation that's the key to success. This has made me more determined than ever to track every penny that we spend and to budget for everything that we need. My plan is going to include using YNAB on a daily basis and snowballing methods but to also adapt the plan as I go along when other 'debt busting' opportunities come along

To maintain my motivation therefore I intend doing at least one 'debt busting' task every day (hopefully more) and to record what I've done in this diary.

For example today my 'debt busting' tasks have included :-

Formulating my plan ..... clear OD first, then save £1000 as emergency fund, then start tackling
highest interest rate debt first.

Contacting one creditor who had sent me a offer to knock 60% off what we owed a few months
ago. It's only a very small debt of £52 from several years ago which has been passed to Lowells so
I decided to be really cheeky and offer them just £10 which is a discount of 80% to clear it once
and for all. It's the first time I've ever made a full and final settlement offer so I just want to see if
they are prepared to go so low. If they do then the £10 won't make a huge difference in the time it
takes to pay off my overdraft and if they don't then I've still got the option to offer them the £20 that
they wanted at a future date.

To be honest I'm not really comfortable with making full and final settlement offers. Almost feels like I'm doing something unethical. After everything I've read though I'm now convincing myself that the original creditors have had much more back than what I ever borrowed in interest and charges and that the debt collection companies will have bought the debt for next to nothing?

In other debt busting news I've also baked a couple of cakes!! Had lots of ingredients that needed using up sat in my cupboards so decided that I could save a few £'s on the shopping bill and have a treat at the same time

enthusiasticsaver · 31 March 2017 at 5:10PM

I think getting rid of the overdraft first is a good strategy. Having an emergency fund is important and will help with budgeting but if you are paying £40 a month for the overdraft it is more critical to get rid of that first.

£52k is one large consolidation loan!! Did the debt arise for a specific reason? Home improvements, new cars or just general overspending? You are obviously aware now but all consolidating debt does is delay you actually dealing with repaying the debt. Glad you have realised this now and hope you manage to bring your dfd nearer than 2023. How much are you paying off the debt in total each month?

Determined_diva · 31 March 2017 at 5:43PM

Hi Debt free

Good luck in your journey - I am going to subscribe to your thread!

What debt tracking app do you use? This sounds interesting!!

Thnaks :beer:

DDx

Debtfreein5yrs · 3 April 2017 at 6:10PM

enthusiasticsaver wrote: »

I think getting rid of the overdraft first is a good strategy. Having an emergency fund is important and will help with budgeting but if you are paying £40 a month for the overdraft it is more critical to get rid of that first.

£52k is one large consolidation loan!! Did the debt arise for a specific reason? Home improvements, new cars or just general overspending? You are obviously aware now but all consolidating debt does is delay you actually dealing with repaying the debt. Glad you have realised this now and hope you manage to bring your dfd nearer than 2023. How much are you paying off the debt in total each month?

Hi. Thank you so much for your reply and comments.
The consolidation loan arose for a number of reasons. Basically I unexpectedly had to work part time for over 5 yrs due to unforeseen circumstances. This was never in our plan and the financial loss of over half of my good salary hit us really hard. At the time our focus was on other things (health related) and so money was the last thing we worried about. We knew that when things improved I would be able to work full time again but we didn't expect it to take so long. By the time I was able to return to full time employment we had racked up huge debts and at the time the consolidation loan seemed like the best way forward. In hindsight it was the worse thing we could have done.
Now we are both back to earning really good salaries we are hoping to be able to throw in an extra £800 per month to clearing our debts in addition to the £1200 we already pay to the mortgage and secured loan. We might even be able to pay a bit more depending on overtime payments but we're not taking them into account as it's not guaranteed.

Thankfully the health issues that started the debt in the first place resulted in a happy outcome so to be honest we don't regret my years part time. Just wish we had handled it better at the time

Debtfreein5yrs · 3 April 2017 at 6:16PM

Determined_diva wrote: »

Hi Debt free

Good luck in your journey - I am going to subscribe to your thread!

What debt tracking app do you use? This sounds interesting!!

Thnaks :beer:

DDx

Hi DD
Thank you for your lovely comments and for subscribing to my diary

The app is called Debt Payoff Assistant which I'm using in conjunction with YNAB.
Both have really helped in sorting out our plans

Debtfreein5yrs · 3 April 2017 at 6:43PM

Not had chance to post for a couple of days but still working hard at sorting out our budgets and debt busting.
Had a meal out yesterday with a family member that we don't see very often. It had been planned for ages and we didn't want to cancel as family are very important to us. We did change the venue however so that we could use a loyalty voucher that we have had for ages. This covered the total cost of one meal and all the drinks so reduced the bill by over £25. In the end the total bill for 3 of us was less than £35. The main thing was that we had budgeted for it. We also parked the car further away and saved the £3 that we would normally have paid to park

We've also not done a grocery shop this weekend other than picking up a few bits of fresh food. My debt busting task for today is to meal plan for the week based on food we already have in the freezer and cupboards. In this I'm also going to plan packed lunches for both of us. Hopefully this will save us quite a bit and we will eat healthier!!

In other news I've also decided that we need to have a massive declutter! Our house is full of stuff we never use or need (another reason why we're in debt) so it's time we sorted it all out. Unfortunately there's nothing individually of great value, just general clutter, accumulated over the years from a growing family but we should be able to raise some extra funds by doing some car boot sales etc in the future. In the short term as time is tight at the moment my goal will be to sort the 'rubbish' and get rid of things bit by bit. I'm going to aim for at least one de-cluttering task a day as well as one debt- busting task on the basis that little and often will make a difference.

Today's tasks that have been completed are :-
Debt busting - sorted bank and set up all new standing orders for debt repayments
- meal plan for the rest of the week including packed lunches from supplies already in
house.
- NSD
De-cluttering - sorted one cupboard
- thrown away 2 bags full of recyclable packaging
- one bag empty glass jars ready to go to tip

I'm sure this diary is going to keep me motivated

Debtfreein5yrs · 29 April 2017 at 1:40PM

It's been 26 days since my last post. During that time things have happened that has made me more determined than ever to be debt free. I'm not going in to what has happened as things are now hopefully back on track but it has set my debt free journey back by a month. Thankfully not a huge amount of damage financially, more the time aspect of 'debt busting' that's been affected but it has opened my eyes even further as to how important it is to be debt free.

Today therefore is a new start. I'm going to put the past month behind me and restart my budgets

I'm also determined to improve my health. I've realised that there's no point in becoming debt free and planning for retirement if I'm not going to be fit enough to enjoy it!
Going to plan to eat much more healthily, cut down on the alcohol that I drink (not that I drink excessively currently!) and find ways to do some exercise.

Going to be a long haul but it's got to be done

dawnybabes · 29 April 2017 at 3:19PM

Totally agree - you need to look after your health - it's pointless if you make all the savings and pay the debt off but not able to enjoy it

Determined to be debt free in five years!

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