Paid off £30K, about £6k more to go!

muffin74

Hi Copperjar

When I first decided to sort my debts, I sadly had several loans, an overdraft and a credit card. The loans had set monthly direct debits which I paid at the beginning of each month when my salary was paid in. With the credit card I tried to pay more than the minimum each month. When a loan was paid off, I would then rollover the money I had been paying on that to pay one of my other debts. I would increase the monthly payment on my credit card or increase the direct debit on one of the other loans.

The credit card was a higher interest rate than the loans. However, I did like to aim for paying the loans off early if I could because it made me feel like I was crossing off the debts one at a time and simplifying my finances. Also, whenever any extra money came in (such as some PPI refunds I got last year) I put that towards paying off the debts.

Now I have one loan and an overdraft. I paid off my credit card recently so the money I was using for that has now been put towards an increased monthly loan repayment. The loan was originally due to be paid off in August or September but it is now due to be paid off in March or April as a result of the increased monthly payment.

I basically would take a huge chunk of my salary every month out with these direct debits (at one point it was about half my monthly salary but that was unsustainable in the long term so after the first couple of loans were paid I reduced it to a substantial but still manageable level, about roughly 30% of my salary. Now it's about 20%).

Once that money was taken out at the beginning of the month I had to try to work out ways to make what was left last an entire month! I would also do stuff like part time jobs, sell stuff on ebay and amazon and be really careful with money.

I have changed my habits from 5 or 6 years ago and I am now used to living on less. When I pay off my debts, I want to keep that up so I can build up savings and also put the money towards things that I really want such as special holidays or hobbies. I don't want to just waste money on rubbish bits and bobs like I used to when I was in my 20s.

I don't know if that makes sense!! Anyway, I stuck at it for years and I am nearing the end, hopefully!

muffin74

BTW I also contribute to my pension now after a gap of several years. That is why I went from paying 30% to 20%, I thought I should think about saving for the future.

copperjar

Thank you muffin. You've done so incredibly well, I'm envious but inspired! Really fantastic debt busting, well done :beer:
I've worked out how much I can pay off every month still leaving me with a reasonable amount to live on - but then I'm going to be careful with that too and hopefully pay off even more on a week by week basis. Sounds kind of similar to you??

How did you make overpayments on your loan, if you don't mind me asking? Was it a flexible one specifically allowing you to do that? I don't think mine let me...although over paying the loans is a long way off for me!

Well done once again! :T

muffin74

Well as I said I had several loans so when one was paid off I phoned up the bank and asked if I could increase the direct debit on one of the other loans. As an example, say I had 2 loans one at £150 a month and another on £200 a month. When the £150 a month loan was paid off, I just called them up and asked to increase the direct debit on the remaining loan from £200 to £350 a month and they did it. The bank will then send you a letter confirming it and the letter may also tell you when the loan will be paid off.

I don't know if all loans allow you to do that but the ones I had were with Alliance & Leicester, Egg and Nat West and it was possible to increase the direct debits which meant they were paid off a few months early. Nat West were not keen on me increasing my payments and also tried to fob me off when I said I wanted to close my credit card but when I went to the bank in person and repeated the request they did it.

Obviously, banks want you to be in debt for as long as possible as they make more money in interest and charges but I have paid them enough over the years and want to get out of debt asap!

If you have decided to put a set amount per month towards paying off your debts, stick to that every month if you can. If one of your cards or loans is paid off, use the money to pay another one. Always try to pay more than the minimum payment on your credit cards and try not to use your credit cards again (obviously!) otherwise the debt won't get any smaller. I cut mine up so I couldn't use them.

muffin74

PS Copperjar - good luck! Forgot to add that to the previous message!

copperjar

Thanks muffin Well as soon as I get these CCs paid off I intend to pay more towards the first of my loans so will ring up and just ask! I always seem to make things more complicated than they need to be!

muffin74

Freezing day today and had to go to private tuition after work. Did not feel like walking there and back in the cold and dark but that little bit extra every week helps. The child's mum said she would like me to come twice a week so that will be a bit of extra money. The nights are cold and dark but I must think of my goal - DFD!!

There might be another opportunity to earn a bit more. They are going to advertise a couple of management posts in my school in the new year and the head said he would like me to apply for one of them as I am a strong candidate. It will be a bit of extra money but I am not sure if it is worth it when you work out the extra hours and responsibility you would be taking on. Private tuition and babysitting is flexible and it is just normal work, no management responsibility. For the amount of effort you put in compared to being in management, it might be a better deal. I am not sure if I should apply for one of the posts. I have until the new year to decide.

I also have to decide whether I want to stay in my current school or move somewhere else. At least if I am debt free next year I will have more freedom to make choices. When I was seriously in debt I was terrified of losing my job and felt trapped there.

There is a lot to weigh up. I know that one of the reasons I overspent when I was in my 20s was that I had a really stressful job. I don't want to fall into that trap again. Will give it some thought.

NewlySingle

Muffin - I've just read through your entire thread and found it very inspiriational - I'll be tuning in regularly for motivation.
:T:T:TWELL DONE for you HUGE amount of WORK :T:T:T
Nic x

muffin74

Thanks NewlySingle, very kind of you to say so. I wish I had discovered the forums years ago when I was at the beginning of my money saving journey. There were many times I felt alone and that everyone else around me was in a different situation financially. It does make me feel a bit better knowing that there are other people out there and we are all encouraging each other.

NewlySingle

Inspired by you & the forum I started writing down my shopping spends this week ~ thanks to your reply
I'm going to start a diary thread too
Nicxx