My Debt-Free Journey - The Final Push

PollyOnAMission

Hi GirlyGirl! I've just read your thread; hope you don't mind me commenting.

First of all, you are doing AMAZINGLY well. Congratulations!

Secondly (really hope you don't mind me saying)...your monthly £150 saving. I can totally understand where you're coming from with this and I used to do the same. Then I read this
http://www.moneysavingexpert.com/savings/pay-off-debts
and realised it was daft to be saving at paltry interest when I had debts of higher interest. I know you said you don't want to end up more in debt if something goes wrong with your car etc, but you wouldn't actually be more in debt if the money that would have been saved had paid off some of the debt anyway (and also saved you money in extra interest charges).

Say you saved £150 per month for a year. That would give you £1800 + interest of, say, 3.5% = £1863. In the meantime, that's £1800 NOT spent on servicing your highest interest debt (24.9% ?), meaning your debt is £1800 higher than it would have been. 24.9% of £1800 is around £450 extra interest you'll be paying, just because you didn't use the £150 per month towards the debt. £450 - £63 means you'd be £387 better off. And your debt will be £2250 higher than it would have been otherwise.

Say after a year you had a car emergency and needed to spend some money on it. Even if you had to use credit to pay for it, you'd still be better off than if you'd saved the money all along because your debt would already be smaller than it would have been if you'd been paying into savings. If your car repairs cost £1800, your savings would be £63 and your debt would be £2250 higher than with the debt servicing idea. If you had no savings and paid for the car on credit at your highest rate, your new debt would be £1800 but you'd have saved the £450.

Of course this is all assuming you could get further credit when you need the car money!

I was exactly the same as you, saving every month yet letting my overdraft spiral out of control. I've only just started saving now that my debts are all at 0%. Apologies if I've missed any bit in your diary where you've said you're going to do this by the way; some bits I've read in detail but other bits I've only skimmed!


Congrats on moving in with your OH, how exciting for you It's great that you've found a good'un after the wrong'un who caused you so much trouble!

Polly x

GirlyGirl30

Thanks Polly! I really appreciate the advice and will read through the thread you posted tomorrow (just on my way out now). In a way, I am saving in order to pay off my debts, I would like an emergency fund but there's no need for this to be anything more than around half of what I already have. Once I have enough to pay off the BC + 500 to stay in my savings, then it's going. The 170 was a figure I came to because I want to be able to pay off my 0% card before they start charging me interest on it (i.e put that money away each month and then pay the minimum on that card but at the end of the 17 months I could pay off the balance outstanding without incurring any interest.... does that make sense? I'm a bit clueless when it comes to things like this - hence my debt!). Sometmies I just don't know what to do for the best, and then I end up doing nothing because I get scared! LOL!

Thanks for your support! Not sure how I'd cope without all the good advice I've had from these boards and the wonderful people who post on them

GirlyGirl30

Well based on Polly's advice, I read that thread she posted and I also spoke to my OH (he still doesn't know the extent, just that there are 'debts'), and I bit the bullet, waited for online banking to come back up (Natwest grrrr), transferred £800 out of my savings and paid off my Barclaycard. I think I might still get some interest from this month that I will need to pay off next month, but that's practically another card down! I'm down to 3 now! Woohoo!! They are 3 BIG ones though, but snowballing should be easier and it should also give me a bit more breathing room for the move etc.

Can't thank everyone on these boards enough - after next month's payday and payments my debts should be down to less than £15k.

So it's picking up pace but not quite enough for me still! I'm never satisfied!

PollyOnAMission

Well done you! Using savings to pay off debt is one of the hardest things to make yourself do because our brains are so conditioned to have an emergency fund/cash for a rainy day etc. It will mean you have more pennies in the long run though, yippee!

Are you keeping a spending diary at all? I've found is the biggest motivator to spend less, and also to highlight where those little frittery bits of money end up

Also well done for telling your OH

GirlyGirl30

Thanks Polly, it means a lot! It does feel counter-intuitive to me, but then I'm not the most financially-savvy (as you can see from my debts!), and you weren't the first person to ask me why I had £1000 sitting in my savings when I'd got that x20 in debts! I think the penny may finally have dropped (if you'll pardon the pun).

A spending diary was one of the first things I did when had my LBM, but I must admit since I've been so strict with my budget since then it's kind of fallen by the wayside. I may pick it up again though, to make sure I'm not wasting money on things I don't really need.

Next debt: Natwest CC.... I'm going to snowball the h3ll out of this one... It should be gone by early next year. Wish me luck!

Belle208

You're doing fab well done

PollyOnAMission

Get that spending diary back on the go, girl! You can do it!
Do you have a smartphone? I do my spending log in an app which makes it sooo much easier. I'd recommened it if you need an extra push to keep you going with the spending diary

GirlyGirl30

I have a fairly basic Android smartphone. I did download a budgeting app but it was too complicated to get my head around... have you got a recommendation? I would like something fairly simple that I can key in what I have available to spend on various things (petrol, shopping, etc) and then enter the different amounts into those 'accounts' when I spend out of them. That's kind of the system I had going when I did keep a diary, but I did it all in Excel.

Anyway, to start, I spent nothing today - which was nice! I've got NSDs down to a fine art now, I leave all my change at home so I can't be tempted by the vending machines at work and I have my own drinks/soups that I can have if I want something. Then I was out walking tonight, I walk with my friend and her dogs - I think we covered about 5km which was nice! Again - free! And the lovely sunshine made it all the more enjoyable

Polly, I forgot to give you a HUGE well done for how much you've paid off in the last 4 months. You've done amazingly well, and you'll be DF before you know what's hit you! xx

PollyOnAMission

Aww thanks Unfortunately I've not shaved off more this month thanks to £280 for car tax and service but that's just made me all the more determined for next month!

I'd recommend the Android app called EasyMoney. I've tried a few and it's by far the best, and they have a free trial version

GirlyGirl30

Brilliant thanks, I'll download that now!

Well either way, even with a month's rest for car related expenses (my biggest expense!), you'll be there in no time!