Debt Free by 2013 (not a typo)

Decadent_Debtor

Ok, so here goes, looonnnggg-time lurker, first-time poster, full-time spender!

I guess the best place to start is with a history of how I got here... I graduated in 2006 with the obligatory pile of student debt. Managed to get a great job out of Uni, but based in London and by the end of 2008 my debts had spiralled to £35,000.00(!). I guess that was my original ‘lightbulb moment’, and was swiftly followed by me requesting a transfer back to sunny Yorkshire. A couple of frugal years later, I had cleared most of my debts and saved enough money to buy my first house. It was all going so well I hear you say, well, yes, I guess it was... until now.

I am a relatively ‘high earner’ for my age, but there-in lies the problem. I earn £43k a year basic, which ends up touching £50k after bonuses etc. Not bad for a 27 year old – but all that money burns a bbbbiiiigggg hole in a single man’s pocket. I find myself ‘pressured’ into buying the latest clothes, the latest technologies, the finest foods etc for no reason other than that I feel I ‘should’. I say ‘pressured’ in ‘finger quotes’ (note: you’ll have to get used to those) because the pressure comes entirely from myself. My friends and family couldn’t care less.

So, here I am, January 2012, proudly and publicly declaring my intention to be debt-free by the end of 2013 so that I can be free to make a big change in my life and no longer be a slave to the Direct Debits. Go travelling! Move abroad! Set up a business! Join the Mortgage Free Wannabes – whatever I decide – but I won’t be able to do any of those things with my current debts.

Statement of affairs below, but a couple of health warnings first...

Yes I know I ‘should’ cancel Sky and LoveFilm, and I ‘should’ walk more and not drive etc – but I’m conscious that if I go too far in the cost-cutting then I will end up being as much of a slave to cost-cutting as I am to my current debts. Maybe I’m not explaining myself well, but basically I want to enjoy life AND sort out my finances. I also have quite an obsessive personality and I don’t want this to become ‘a thing’. Anyway, it might end up taking me a little longer, but hopefully I’ll enjoy the ride :-)


Statement of Affairs and Personal Balance Sheet

Household Information:
Number of adults in household: 1
Number of children in household: 0
Number of cars owned: 1

Monthly Income Details:
Monthly income after tax 2,600.00
Total monthly income: 2,600.00

Monthly Expense Details:
Mortgage 946.06
Council tax 98.00
Electricity 30.00
Gas 30.00
Water 30.00
Telephone and internet 30.00
TV Licence 24.50
Sky TV 32.75
LoveFilm 16.33
Food, groceries 200.00
Petrol/diesel 75.00
Road tax (paid)
Car insurance (paid)
Buildings/contents insurance (paid)
Haircuts 20.00
Gym 39.50
Total monthly expenses: 1,542.14

Assets:
Cash 5,000.00
House value (gross) 200,000.00
Shares 10,000.00 (held in trust)
Car 1,000.00
Total Assets: 216,000.00

Secured & HP Debts:
Description Debt Monthly APR
Mortgage 169,500.00 946.06 5.0%
Total secured debts: 169,500.00

Unsecured Debts:
Description Debt Monthly APR
First Direct Loan 12,000.00 300.00 7.5%
Parental Loan 8,500.00 200.00 0%
Barclaycard 7,000.00 200.00 0%*
American Express 2,500.00 100.00 17.9%
Total unsecured debts: 30,000.00 800.00

Monthly Budget Summary:
Total monthly income 2,600.00
Expenses (including secured debts) 1,542.14
Available for debt repayments 1,057.86
Monthly Unsecured debt repayments 800.00
Amount left after debt repayments 257.86

Personal Balance Sheet Summary:
Total assets (things you own) 216,000.00
Total HP & Secured debt -169,500.00
Total Unsecured debt -30,000.00
Net Assets 16,500.00

So there we are. Technically ‘in the black’ on paper, but far from cash-rich. In fact, after paying all my expenses and debts, I’m only left with a pathetic 10% of my hard-earned cash each month – depressing!!!

I’ve got a holiday to the US booked in a few weeks but it’s all paid for and I’ve decided to leave the credit cards at home to remove all temptation. I’m going to spend the next few days and weeks having a good look at the forums, signing up to challenges etc and hope to post updates here on a regular basis.

Looking forward to being part of the community!!!

Decadent_Debtor

Right. Today is the first day of the rest of your life...

So. Good stuff. Started my new regime off with an Aldi shop last night. £24.00 for a full week of groceries! AMAZING!!! I had to top it up with a £13.00 trip to Waitrose to pick up some Heinz Ketchup and HP Sauce (two for £3) and some dishwasher stuff that I couldn't get at Aldi, but I made sure to stick to the basic 'Essentials' range. Really, really happy with myself!

I'm currently sat here tucking into a 'freezer meat' dinner enjoying one of many bottles of wine that I was saving for a 'special occasion'. I honestly could open a bar with all the wine I have lying around the place, hence my new resolution - NO BUYING WINE UNTIL I'VE DRANK ALL THE OLD STUFF.

Bad stuff. Fully intended to wash my car at my parent's place but when I got there they were out of car shampoo etc, so I ended up spending £2.40 at a carwash. On the plus side, the change from a fiver went straight into my sealed jar. Also meant I could fill up at Asda which was £0.02 cheaper than my local garage (every penny counts).

Very bad stuff. My car needs two new front tyres. I kinda suspected this, but it will take a good chunk out of my extra debt repayment money this month. Oh well. Thinking of learning my lesson and setting aside £25 a month or so for other such emergencies. Seems sensible.

Renewed my gym membership, £39.50/month but I can cancel at any time. I know that sounds like a lot but I go at least six times a week (think of it as £1.50 per visit) and it is something I really enjoy, so I'm happy with it. I will however try to cycle there more often... when it gets a bit warmer outside :-)

Still need to trawl through all the other posts on the forum and pick up more tips and inspiration. I did see something on here earlier though which really got my attention...

"The rich stay rich by acting poor and the poor stay poor by acting rich".

That sums me up to a tee! Might get it printed and frame it above my door so that I see it every time I leave the house. Very wise words indeed.

Right, off to watch a bit of trashy Sat night TV now (at least it's free).

beanielou

Welcome to MSE

Why do you have a star next to the barclaycard debt?
Would you be willing to cut down your food budget a wee tad?

Decadent_Debtor

Thanks for the welcome message!

Star next to the Barclaycard is just to remind myself that it won't be 0% forever... it reverts back to 17.9% after 15 months.

DEFINITELY think I can cut back on the food budget at £200/mth - especially after my success at Aldi yesterday. 100% converted!

Anyway, thanks again for the welcome and the tips.

beanielou

You could sign up for the pay a debt in a 100 days challange.
It is a great motivater
Here(I Hope!)

rictus123

Well i have £13,500 debts, earn near enough same as you, between £2,700 and £3,000 a month take home and im planning to save £15,000 on top of paying all that off this year!! Debt free by June/July and saved that by the end of year!! I also am away to America in April. I will follow with great intrest and try to spur you on, hopefully we can keep each other motivated.

Decadent_Debtor

Didn't really intend for this to be a daily thing, but it seems to be working so far. Plus it has been a VERY quiet/cheap weekend.

Good things. I've taken all my showers at the gym this weekend, and also turned the water temp on the boiler down at home - both of which should help with the gas bill. I removed LOADS of junk from the car boot too which will hopefully up the mpg a bit.

After reading some of the other threads on here I am happy to confirm that there is an obscene amount of my unwanted stuff on eBay right now, which I'm hoping will make a contribution to the 'two new tyres' fund.

Oh, and lost another 1kg this week from my weigh-in this morning. Six pack for summer - come on!!! :-)

Tomorrow's DFW task - Ring round for the cheapest tyre quote!

Until then...

caeler

Good luck on your journey!! I completed mine some years ago now, but this website helped so much. I think you recognise for you it is about changing your behaviour and knowing where your desposible income goes each money so you can repay your debts. A spending diary might be the thing but it sounds like your up for this challenge and you don't want to fail. Your monthly outgoings look fairly reasonable and I agree with your comment about not going to crazy on the moneysaving and if your sky and lovefilm are your treats then so be it.

I'd recommend you are realistic about your spending, each month there will be incidentals so I personally give myself some spending money (great if I don't spend it all but I usually do!). That way you won't feel gulity if you need to spend some money but likewise it will help you budget and try not to go over!

I notice your mortgage seems quite high at 5%, is that something you can do something about? Your phone and internet is fine but I think you could do better and although only a few quid a month it adds up over the year. I get BT for £24 which includes unlimited internet and evening/weekend calls. Of course it is BT but that is merely to demonstrate prices!

Groceries is a place to save too but your already on to Aldi/Lidl, I personally love Sainsbury Basic's range and yes even their 26p ketchup!!!. Meal planning and having a freezer week is the way to go. As a single I budget £150 a month and try to come in under, this month is looking pretty good! :-)

Good luck and keep us updated!!

banwa

Welcome DD, I know it's early but well done for posting every day, it really helps keep you focused

With your income, that debt should be gone in no time

Banwa:)

Decadent_Debtor

Evening all. Bit of a midweek update to keep me on the straight and narrow...

Had to replace two tyres on the car, but did a LOT of ringing around and was happy (well, 'content') with the price I ended up paying (£135). I could have got them done for £110 on cheapo tyres but IMHO it's just not worth scrimping on safety - and of course I did a LOT of research online before buying :-)

eBay - WOW! I thought I would get about £20 for my old junk but the bids are already over £60+! Wrapped some items for postage tomorrow (in brown paper 'borrowed' from work - boss didn't mind) and got a few other auctions expiring over the weekend. Really happy! Going to dig out some other items over the weekend and save them up for the next 'free listings' event.

Water temp - I'm lucky that I have a smart meter at home and I cannot believe how much my gas consumption has fallen just by dropping the water temp a notch! It's also stopping me from burning my hands whilst doing the washing up - result!

E-mailed a friend today who owes me a bit of cash. Was a bit awkward, but he transferred 2/3 over to me today with the rest due over the weekend (apparently/hopefully). Lesson learnt - DO NOT LEND YOUR FRIENDS MONEY... EVER!

What else has happened... erm... oh, yeh, tucking into yet another freezer meal tonight. Hoping to clear it out before I go away so I can turn it off and save on the electric. Tight Yorkshireman, I know :-)

Right, going to reply to a few of the kind messages you guys put on the wall then make the most of my night of from the gym by lounging out on the sofa!

PS - watching Heston on C4. Reckon Aldi sell dry ice???

Decadent_Debtor

Caeler - thank you so much for taking the time to reply!

I've taken on your advice RE general spend and decided to allocate £100/mth for those unexpected items. I've also decided to put £50/mth into a car/emergency fund so I don't get stung next time I need two tyres :-)

Telephone/internet - unfortunately I live in the Hull area so we HAVE to use the local provider (KC). It's a total monopoly, and I can't believe it survives in this day and age, but it's all we can do. My package is a little higher than the cheapest one on offer, but this meant I avoided the £200 line connection charge when I moved in. I'll check tomorrow to see when I can downgrade my package.

Mortgage - agree that 5% is high (it's also over 35 yrs :-S), but when I applied for my mortgage (June 2010) it was more a case of who would give me one rather than who I wanted one with! The rate is locked in for 3 years. Once I've paid my debts off I'm going to move over to the MFW board and start making some SERIOUS over-payments.

Thanks again for replying, and well done for making it on your debt-free journey!