5 year plan for debt and mortgage freedom

Deeperblue

Jan 26

“Blessed are the young, for they shall inherit the national debt.”
-Herbert Hoover

Bit of a late start for a new years diary, but never mind, it's nice to finally have this little speck of the internet for my own ramblings.


I don't regret getting into debt. Oh dear, I'm not sure Martin or a lot of other people on here would be very happy to hear to say that, but it's true! What I do regret is the fact that now it's here it's hanging around like a friend you agree can stay over a few nights but ends up still on your sofa a month later, eating your food, using your electricity and generally costing you money with very little return.


So, a bit more about how I managed to rack up £23K of debt.


I'm 29 and live in middle England with my lovely husband and little girl in a our dinky little two bed cottage, and it's these three things and my own poor forward planning which has led to me being here. I managed to get through most of university largely debt free (with the exception of the standard student loan which I don't count) but during the final year I took out a £14,000 loan to cover a new car and two holidays to India and America as a bit of a celebration when I'd finished. This could of spelled pretty bad news butbut as it happens the interest was sent as 0.5% above the base rate so is only £30 every 3 months... plus... they were REALLY great holidays! :rotfl:


I was earning a good wage after university and I'm in a very stable job so it never even crossed my mind to do something as mundane with my money as actually save it, so the next 2 years were taken up with more holidays and generally living a nice worry free lifestyle. About 3 years ago is when we had the 'big three' life events; buying a house, getting married and having a baby, all in 1 year.


Of course, nothing was budgeted or saved for, and although the wedding was only small (but perfectly formed, about 25 people) in the space of a year we'd spent £8K on the wedding, £3K or so moving house and £3K funding my 10 months maternity leave. Although some of this has been paid off since finding this website a couple of years ago we've just had to get some work done to the house as the heating was broken and the doors were rotting, so that's added another 4K.


I've mentioned elsewhere about my trials and tribulations with my husband continuing to spend on his credit cards while I've been trying to ebay and card tart our way out of debt... but I'm trying not to dwell on that! I've now taken all his cards away from him and give him £20 a month pocket money so I'm hoping that that problem is sorted, for a while anyway.


I've got this morning off work so I'm going to do a SOA for on here and then come up with my Master Plan for getting out of debt.

~ D.B. ~

Emsky*

Good Luck D.B. I'l be sunscribing for the journey!"

Deeperblue

Jan 26 cont.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1500 I work 2-3 days a week. This is the minimum take home but it can be higher if I get overtime.
Partners monthly income after tax....... 1500 Again, this is minimum take home but can be higher.
Benefits................................ 80 Child benefit
Other income............................ 0
Total monthly income.................... 3080

Monthly Expense Details
Mortgage................................ 812 Repayment type. Can't remortgage at the moment as don't think we really have the equity.
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 110 I know :eek: We have storage heaters only. We have just started using the wood burner in the front room though so hopefully this will come down a lot. *crosses fingers* I have looked at switching but not many options on economy 7 tarrifs.
Gas..................................... 0
Oil..................................... 0
Water rates............................. 35 Not sure if this is right. Will have to check next time we get a bill.
Telephone (land line)................... 15 Cheapest package in our area.
Mobile phone............................ 35 For hubbys and mine, both essential for work. They are up for renewal soon though so OH looking at cash back deals.
TV Licence.............................. 12
Satellite/Cable TV...................... 25 Just reduced this. May knock it down to free view but don't know if we'd need to buy a new box for that?
Internet Services....................... 17 Husband works in internet programming so we need a good reliable connection.
Groceries etc. ......................... 110 Am constantly looking at getting this lower while staying healthy. This includes nappies.
Clothing................................ 5 Just essentials for little girl really.
Petrol/diesel........................... 180 Again :eek: Have talked to OH about getting rid of one of the cars but he's not keen. May have to work on this!
Road tax................................ 20 Not sure this is right.
Car Insurance........................... 68 Main problem here is OHs car as it pretty big. We have price compared though.
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0 This is already taken out of OHs pay in credits.
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 38 Seems high so I'm going to compare this today if I can.
Contents insurance...................... 10
Life assurance ......................... 60 Again, not coampared this yet.
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 5
Entertainment........................... 40 £20 for me and OH a month.
Holiday................................. 0
Emergency fund.......................... 0
Wood.................................... 15For the burner. I have a huge stockpile though so shouldn't need any until next winter I imagine. I am looking for free wood though.
Total monthly expenses.................. 1772


Assets
Cash.................................... 0
House value (Gross)..................... 137000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 140000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 137000...(812)......4.4
Total secured & HP debts...... 137000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
HSBC OD........................1650......0.........19.9
Santandar OD...................2000......0.........0
Natwest Loan...................7900......176.......1
Santandar CC...................4020......40........0
Virgin CC......................4230......40........0
Parents Loan...................4000......0.........0
HSBC CC........................140.......15........16.9
Total unsecured debts..........23940.....271.......-


Monthly Budget Summary
Total monthly income.................... 3,080
Expenses (including HP & secured debts). 1,772
Available for debt repayments........... 1,308
Monthly UNsecured debt repayments....... 271
Amount left after debt repayments....... 1,037

Personal Balance Sheet Summary
Total assets (things you own)........... 140,000
Total HP & Secured debt................. -137,000
Total Unsecured debt.................... -23,940
Net Assets.............................. -20,940

So there we have it. Out of the £1000 left I was spending everything spare in my account on debt (OH on the other hand :mad:) but now I can see everything on internet banking and it ALL goes into the debt pot.

I'm more than happy for people to make suggestions if you can see any ways to reduce things. :T

I'm off to formulate my Master Plan now *evil laugh*

~ D.B. ~

Deeperblue

Hi Emsky :wave:

Thanks for popping in! It was Rachelww1 who inspired me to start this diary really, as I think it's nice to know other people are in the same boat and going through the same things. Plus there are a lot of us MSE newbies around at the moment with it being new year and we need motivation nto to fall off the wagon!

See you soon.

~ D.B. ~

Deeperblue

MASTER PLAN

Monthly Free Income: ~ £1040
Additional Income: ~£150
This is because I'm not paying for car maintainance, wood, tax, water etc. every month as they come as big bills. When these arrive I'll take them out of the interest free Santandar overdraft rather than have money sat in an emergency fund. For me this makes more sense.
Fluctuating income: ~£200-£400/quarter
This depends on overtime and OH's extra work.
I occassionally ebay (but have gone off this since a bad experience), do Pinecone surveys and do the deals for free cash back on GreasyPalm, Quidco Etc.

Current financial state:
HSBC OD........................£924.53..........19.9%
Santandar OD..................£1935.00......... 0.0%
Natwest Loan...................£7838.17..........1.0%
Santandar CC...................£4029.00..........0.0%
Virgin CC.........................£4230.00..........0.0%
Parents Loan....................£4000.00..........0.0%
HSBC CC.........................£140.00...........16.9%

[STRIKE]5[/STRIKE] 6 Year Plan
According to Snowball if I pay £1400/month (inclusive of minimum payments) towards my debts I can be debt free by May next year. 17 pay days :T

Then it'll be time to work on the mortgage :cool:

Snowball say: "If you keep up a monthly repayment of £2500 then you will be mortgage free in 59 months"

Since I'd start these overpayments in May 2012 that would be about April 2017.

Admittedly this does mean finding a considerable amount extra each month come May 2012 but at the moment I have £1050 spare, ~£300 on minimum repayments and ~£820 on the mortgage so that's already £2180 not including overtime.

Though in the mean time interest rates will rise, there will be unforeseen bills and maybe even more babies....

What the hell. I'm givin' it a go :rotfl:

Januarys Plan:
Ok, most of January has gone now but I have paid a bit off the OD's so that I have a bit of breathing room if I big bill comes through the door. Once I get paid tomorrow I'm going to:

1. Pay off the HSBC CC
2. Throw the rest at the HSBC OD

I have to be careful as I'm in danger of going into my own overdraft this month as I'm still waiting for a bill to cover some work we had done on the chimney, which I expect to be about £400. I'm going to work hard to make sure we're out of the HSBC overdraft by next payday.... grrr.... this probably means ebaying again

LittleFatFairy

Hi. Well done you for taking time out to look at everything in such detail. Do you really only spend £110 month on groceries and nappies. If so - how do you do it? x

Deeperblue

Hi LFF,

£110 is tight and I'm helped out a lot with ASDA having really good Whoops'd deals and stocking up on nappies when there on a good offer. I'm a fastidious meal planner and bulk cooker now and aim to make my main meals for 60p/person. Little girl is only 1 and doesn't really eat enough to call it a portion so that plus a couple of quid for cereal comes out at £19/wk. And these are healthy meals with meat in the majority of them.

The one thing that can throw me off target is milk. My little girl drinks GALLONS of the stuff, about 3 pints a day, which can get expensive, but my corner shop does 2 litres for 69p so I'm letting her get away with it at the moment.

I use Asda own brand nappies during the day and pampers at night.

What I'm going to do with this diary is keep a log of all the food I buy and the meals I make so that way anyone whose interested can have a look.

~ D.B. ~

P.S. Just looked up my food receipts from last month: Week 1 £27.48 Week 2 £27.14 Week 3 £21.48 Week 4 £16.82
+ ~£11.04 for extra milk in the week
Total - £103.96

I didn't need to buy nappies this month though so £6 will go into the food money pot and I'll probably need to get some this month.

LittleFatFairy

WOW ... that's brilliant. I will be following closely to see how you are getting on and see if I can nick any ides. I am ashamed to say that for 3 of us I can end up spending £70 to £100 a week!

Deeperblue

LFF,

How old is your little (or not so little!) one? It think that would make a big difference as I can imagine older kids could eat you out of house and home. I used to spend that much not too long ago though. Have you tried switching down a brand? I just get the basic stores own brand for things like frozen veg, tinned veg, toilet paper, cereal etc. and I think they are just as good. I've swapped my supermarket too, shopping at ASDA instead of Morrisons which I find a lot cheaper especially as they reduce items much more than Morrisons.

If you have a diary I'd like to follow too, always good to swap hints and tips :beer:

Take care,

~ D.B. ~

Deeperblue

Jan 26 cont.

Probably going to go food shopping with mum tomorrow as she's got a 10% off ASDA card Plus I did the ASDA price compare thing online the other day and because they weren't 10% cheaper I got a 55p voucher :j *note to self: don't get excited over 55p*

This week I plan to cook:

Spaghetti Bolognese - 4 portions
Chilli - 4 portions
Cottage Pie - 4 portions
Mexican lasagne - 4 portions
Chicken Stew - 6 portions
Tuna Bake - 4 portions

This should cover all my main meals for the week but in reality some will probably get frozen and I'll use them in a few weeks so I can have a cheap food shop at the end of the month

Will write my shopping list tonight but if I spot a mega bargain my plans may change.

On a different note, we've been playing a bit with our new log burner and :heart2:LOVE:heart2: it. It makes the whole house unbelievably warm and best thing is that I'm not spending any money on gas or electric! I feel so virtuous :A

~ D.B. ~

rachelww1

Deeperblue wrote: »

What I'm going to do with this diary is keep a log of all the food I buy and the meals I make so that way anyone whose interested can have a look.

Hiya :wave:

I'm very interested in that. I'm also rubbish at grocery shopping, though am under, slightly for this month. Going to reduce it to £300 budget for this month you never know, by the end of the year I may have it down to £200, with help.

Well done on starting your diary though, as you know I've only been doing mine a few days, but already it has me focussed on my goals. Remember we're all in this together