Debtfreeforme's 2 year debt-free challenge

debtfreeforme

After years of reading posts by others on here and being inspired to change our situation, I have decided that keeping a diary of our debt free journey might help me to stay motivated! Feel free to make suggestions or just keep me company.
A little bit of background:
I am married with 2 children (aged 5 and 20 months). My husband works full time and I’ve been doing a Psychology degree with the OU for the last 2 years; however I’m taking a break from studying now until next September to be a full-time mum for the first time ever!
Our current level of debt (I am very ashamed to admit) is £34,041 owed to 20 creditors. We have had to default on everything except our mortgage (which we are now catching up with).
Like many, many others this was not gained through the buying of designer clothing and champagne but simply struggling to survive on one income and ‘robbing Peter to pay Paul’ (and John, Fred and Simon J ). We were on a DMP with CCCS but when my maternity pay stopped last year we couldn’t even afford to make that payment. We then went to the CAB and very, very nearly went bankrupt but we just couldn’t risk losing our home so we are now only making token payments to our creditors. I am so glad that we didn’t go down that road not just because of the house but because this way we are going to have to work so hard to pay everything back that I know we will NEVER end up in this position again. Having said that, I do not judge anyone who does choose bankruptcy (my mum has done it recently).
I have had several LBMs over the last few years but this time we are 100% committed to clearing this debt in 2 years or less. It’s going to be a big challenge but we are up for it and know that the sacrifices we are making now will only be for a relatively short time.
The current situation:
20% of every single penny we earn is put into a savings account for full and final payments. At the moment all the creditors are holding interest and charges so we will pay off the smallest first because
a) It will give us a psychological boost and
b) We will have less people to negotiate with – it’s a flipping nightmare trying to keep up with all the correspondence!
A lot of the debts are small so if the creditors accept low-ish full and finals we might just be left with our 1 big debt (a loan) of £14,000 to save for a year from now.
10% of all income goes into a savings account. We will build up a buffer of £500 for emergencies then the rest will go into a high interest account that we cannot touch.
I have heard Exubusi2 call this his ‘money magnet’ and I’m a firm believer in that too. We will probably use it towards a deposit on a bigger house when we’ve paid off all our debts.
After this we’ll be left with around £1500 to pay mortgage, bills and food. EVERYTHING will need to come out of this money so I will no longer have a budget for clothes etc – we will just have to be creative! We will try to top up our income in as many ways as possible – ebay, Mystery shopping etc.
Will try to update every day and apologise in advance for waffling – I don’t get much adult company these days!

debtfreeforme

Yesterday I made our first debt payment since starting our new regime - £114 that we owed the council for Council Tax. It felt really good. A month ago we would have just spent that on living but because I took it straight out of our income I have been able to use it for a debt payment straight away.
On Tuesday we sold our fridge freezer (£100) as it was too large for our kitchen. We bought a second-hand fridge, only 6 months old for £25. So that’s £75 income - £7.50 the savings, £15 for debts and the rest for us! We will save up to buy a second hand freezer as it will help us to save money in the long-run being able to stock up on special offers and batch cook.
I have just accepted a £11 mystery shop for tomorrow.
Today I sold an old highchair for £25 through the local paper and am going to collect a stairgate from a kind freegler later. My husband also got paid today and had £130 in overtime :j. I put 30% straight into the debt repayments / savings accounts and paid our mortgage (inc. £45 towards arrears).
All the extra money will come in handy this week as we had a puncture on our car and we need a new tyre on Friday.:mad: Oh well, at least we had breakdown cover (free of course through our car insurance!) I also have a rare night out on Saturday as a very good friend is visiting from Australia. Will still keep it as cheap as poss though.
I wonder if anyone can help me with a query? My husband and I both have credit card debt with Virgin (MBNA). We haven’t heard from them since last July and when I contacted them they said they were no longer dealing with the debt but couldn’t tell me who was. Now, clearly I’m not going to complain if the debt has somehow ‘disappeared’ J but presumably I won’t be able to clean up our credit file if I can’t pay it off and have it marked as ‘settled’ can I?
Hope you're all having a good day.

debtfreeforme

Have just paid another £130 of our mortgage arrears and have left enough in account for the rest of the bills. That means everything else that comes in this month (tax credits, child benefit, ebay) is ours to spend on groceries, petrol etc.