operation "debt free by 25"

wizard3891

Right we currently owe the following

Rac loan £9180 8.9%
Halifax loan £18000 6.5%
Car finance £8600 11%
0% cc (9 months) £1470 (currently alot lower bUt plan to pay next years car insurance in full on it and next balance which brings it to £1470
0% cc (9 months) £2297
overdrafts £1500 13.9%

CURRENT INCOME PER MONTH

ME £1670
GF £1228

TOTAL £2898

OUTGOINGS PER MONTH

Mortgage £383
Rent/service charge £269
Tv licence £11.50
Broadband 4meg £15.50
Home phone £16
Contents £11.68
Mortgage protection £7
Mobiles £50
Gas £30
Electric £30
Council tax £150
Sofa 0% £31
Petrol £120
Food £120

TOTAL £1244

Leaves £1654

OTHER PAYMENTS

Halifax loan £284
Rac loan £208
Car £163

Then throw as much of the rest at the overdrafts and credit cards until clear and then hit the rest.

The other good thing is that currently im on £26363 a year. I have a guarenteed pay rise of 1% over inflation for the next 2 years.

My gf is on £17553.

Now, my gf has got a very very promising interview at a new job on tuesday which will make her wages £25000 a year so more overpayments will be possible

What do you guys think of the plan?

newmoneysaver_2

Your plan sounds great!

The only thing I noticed was £120 for petrol, but not mention of car insurance/tax/mot etc... do you budget for these monthly or pay as they come in?

Sorry, don't mean to sound picky, just making sure all bases are covered!

wizard3891

Insurance- As I said above, paying it in full on the 0% card, its due in oct

Tax- I pay the £100 a year when its due

MOT- no mot needed for next two years as cars new

Service - Ive got 6000 miles till its due, and will pay it in full in the month its due

wizard3891

So does anyone else have any advice?

Does this seem an ok plan, I really cant see us being able to cut down anymore?

Since joining the site I have:

1.Ditched NTL tv and got free view box (saving about £25 a month)

2. Changed contents and mortgage protection (Saving £45 a month)

3. Food shopping down from £200+ to £120 (Saving £80 a month)

Thanks guys

CLAPTON

The plan is fine but you might nevertheless consider making an attempt at producing a more comprehensive budget so you better understand your outgoings.
The budget isn't just for this month but for the next 12 (i.e. the next year) so you need to consider how much you WiLL be spending on Car tax, servicing, presents, holidays, xmas expenses, clothes, any appliances, boys toys, stag/hens does, emergency funds (for the expected unexpected things). If you just pay these when due you dont really see the full picture of your spending and they tend just to go onto the credit card. In addition you need to add things like going out spending, haircuts, any optical/dental/medical, magazines/newspapers, work related costs..lunches and coffees etc., any spending on the house, redecorations, furniture etc.
For the annual costs divide by 12 to get a representative monthly equivalent.
Then you will better see that surplus you really have and can make decisions about how much you want to spend on the various outgoings.
Once debt free of course you can use the budget figures for your annual spend to save these amounts each month so you have the money to pay the bills when they come in.
anyway things look good for you both so best of luck.

dave318

You've made some good savings so far, but as Clapton says, the cash often gets frittered away on small insignificant things, such as haircuts, etc.
Plan sounds good up till now. OD seems to be highest interest rate, so pay off first, then go by highest rates after that. I am sure that you will have looked at snowballing already, and so will have an idea of the order in which to pay off your cards.
Are your 0% cc's for Balance transfer and purchases. If not, watch out about putting insurance on the card. If so, it is a good idea, rather than paying extra interest to pay it by monthly DD.
Going by your figures, after you have paid your loans, you have £999.
I would assume that incidental expenses might come anywhere between £100 and £200 per month, (depending on how much DFW you have become)
At worst, this leaves you £800. At 2% min. payment on your CC's, you would be paying £76 off these two. Leaving £724 to pay off your overdraft. Gone in just over two months.
After that, it would depend on how much you have left on certain loans.
Could you pay them off before your 9 month 0% cards finish. You could always apply for another 0% card. You don't seem to have any problems at the moment, or do you?

Again, we would need more info, but assuming your pay rises, (NEVER ASSUME), you will have no problems.

wizard3891

Thanks for your valid points.

I understand about making everything a monthly sum in order to cover everything.

With £1000 left after the loans at present we are going to use say 750 to start with to hit the od and the cc. This will leave us £250 monthly to use for things that crop up each month.like haircuts,emergency fund, going out and buying things.

Anything left at the end of the month will be used to pay more off the debt.

Then have another £250 aside the next month.

My pay rises are not assumed as they have been agreed via the work union and garunteed for the next two years. feb 07 then feb 08.

Regarding the credit cards, NOTHING and I repeat NOTHING extra will be spent on them. They have been cut up already.

Decorating- Flat is brand new so no plans to do anything with it untill debt free. Also all furniture was brand new so no plans to renew untill debt free.

work related costs- all lunch is from home and included in the food budget.

xmas/bdays will also be covered with the £250 a month set aside, we are not spending alot an anyone or each other for next two years.

If my gf doesnt get the new job (fingers crossed she does), at her current job she gets a garunteed annual bonus of roughly £1500 after tax which covers xmas and car service etc anyway

dave318

Sounding good. You both seem to be under control.

Don't mean to be a pessamist but there will be unexpected additions over the next three years, but you seem to be well organised.

Good luck

ClaireBear23cats_2

hiya

your plan sounds great.

my partner & i had lightbulb moment just over 18 months ago with owing alot of money - similar incomes to yours just under £3K take home pay per month between us. we cut back drastically, didn't fritter money away and realised how lucky we were to have 'seen the light as such' and have now managed to pay everything off. now we buy everything cash & save first before rather than buy now & paying for it later. it is a great feeling when you achieve that.

the 2 loans you mention: i assume the RAC loan is for one of your cars - is the halifax loan @ 18K for a second car?

we decided that we really did not need a fancy brand new car, if your £18K halifax loan and £9K RAC loan are on new cars - tell me to mind my own... but i would seriously consider selling these, yes you'll loose money as you always do on brand new cars - but if you then go for something thats say 3 years old - you will be able to clear a load of your debt from the car sales.

we are now paying our extra cash off our mortgage which is a fab feeling also - still have holidays, go out, decent-ish car and aren't paranoid about being in so much debt! it can be done - great stuff for deciding to get it all paid off. you'll get some extremely good advice on here from so you are on the right track.

cheers, claire

wizard3891

thanks for the advice, any more would be great guys.

Ill post how my gf interview goes. fingers crossed everyone