A trip to Debt Free Living...

Gurj247

Firstly Hello to you all,

I would like to begin by thanking a number of people on the board that have helped me out with issues that I have already posted in other sections of the Forum.

I like many people on this forum am a Debt Free Wannabe. I wanted to start this thread to capture all the different things that I am trying to do to have a positive effect on our (wife and I) life, this does not mean being completely frugal and not having any fun, but setting SMART goals which will help us achieve what we want, be it minimising expenses, saving for a holiday, paying off a debt, spending more wisely etc etc.

I look forward to various peoples comments on how I might do things better to achieve my goals quicker.

Debt wise I’m pretty fortunate, between us there are only really two big debts
1 – Mortgage – £120k
2 – Student Loan – Circa £9k left to pay I think

The main reason for this is that my wife and I simply don’t believe in spending money we don’t have, we do our best to live within our means, although there are always exceptions to this

So let’s get SMART* and if needed SMARTER*

• Specific - Significant, Stretching, Simple
• Measurable - Meaningful, Motivational, Manageable
• Attainable - Appropriate, Achievable, Agreed, Assignable, Actionable, Ambitious, Aligned, Aspirational, Acceptable, Action-focused
• Relevant - Results-oriented, Realistic, Resourced, Resonant
• Timely - Time-oriented, Time framed, Timed, Time-based, Timeboxed, Time-bound, Time-Specific, Timetabled, Time limited, Trackable, Tangible
• Evaluate - Ethical, Excitable, Enjoyable, Engaging, Ecological
• Re-evaluate - Rewarded, Reassess, Revisit, Recordable, Rewarding, Reaching

*Note the above is taken from http://en.wikipedia.org/wiki/SMART_criteria

I have found that the above has helped me in my work life, so hoping it will help in my personal life as well as, maybe it will also help you too.

So what are my Goals.

Goal 1 – Replace wife’s car.
Specific – Looking for a Ford Focus TDCI (Ideally 1.8 but possibly 1.6)
Measurable - £3k
Attainable – not a big amount, but given goal 1 being the priority could be tight
Relevant – Safety – wife drives on motorways day in day out in a Ford Ka….:eek: Really not a great car on Motorways:D
Time Frame – 6 months so circa £500/month (started Feb 12, end July 12)

Goal 2 – Reduce Mortgage
Specific – Overpay Mortgage to reduce mortgage term and overall interest to be paid.
Measurable - £4.4k - £550 per month
Attainable – I believe this to be attainable, so long as I can keep myself disciplined.
Relevant – Overpaying will reduce my mortgage term by circa 16 months
Time Frame – 8 months (May to December)

Goal 3 – Savings (for a rainy day)
Specific – Make full use of Tax free savings allowance
Measurable - £5640
Attainable – This is the biggest stretch target which I hope to make but not 100% sure I will.
Relevant – will help to provide a buffer against unexpected costs and big one off costs over the year.
Timeframe – April 2013 – 12 months – Circa £470/month

NOTE 1: I have not made any allowance for my student loan as I will continue to let that be paid back via my paycheck every month, which thanks to the current bank base rate means I am paying off a fair bit off that over the course of the year.

NOTE 2: I have also created forum member financialbliss's mortgage overpayment excel and must say that it is great, if a little depressing (seeing how much interest this mortgage is costing me on a daily basis). This is something that i reccomend anyone that is looking to reduce the term of thier mortgage looks to do, as it does motivate both my wife and I to try and overpay as much as possible each year to reduce the overall term.

So what is the current situation...

Banking:
2x Current Accounts (Barclays & Santander 123 Current Account- Joint)
3x Credit Cards (Barclaycard, Santander 123, Halifax One)
1x Charge Card (Amex)

From the above I shall be looking to streamline my banking. This will be by way of cancelling two of my Credit Cards (Barclaycard & Halifax One) as well as my Charge Card (Amex)

Cashback Sites
Quidco
Signed up with Quidco, as it seemed the best when I did it, I will try to stick with this one for now, rather than opening up multiple accounts on various sites.
Currently I have two cashback Items listed under my account.
Post Office - £40
Comet - £12
Potential Cashback = £52 to date.

Uping My Income
Am currently looking at a couple of ways to up my income, the main one being possibly setting up as a car trader from home. Just doing re-search into this and seeing if it is actually a viable option.

Tracking Spending
Since Feb 2012 both my wife and I are keeping a track of our current spending habits. Detailing most expenses that we incure, thankfully at the moment it appears that month on month we are spending less and less however this month will be an exceptional month, as both our car's require insurance and MOT's, so any savings this month have pretty much gone.:(:(

Gurj247

Step 2 seems to be co put together a Statement of Affairs to see where I am spending my money, so here goes.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 1000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3000
Monthly Expense Details
Mortgage................................ 588
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 25
Gas..................................... 50
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 12.5
Mobile phone............................ 66
TV Licence.............................. 12.12
Satellite/Cable TV...................... 6
Internet Services....................... 5
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 250
Road tax................................ 15
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 10
Other travel............................ 200
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 12
Contents insurance...................... 18
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 15
Entertainment........................... 30
Holiday................................. 100
Emergency fund.......................... 100
Total monthly expenses.................. 2062.62

Assets
Cash.................................... 0
House value (Gross)..................... 180000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 5000
Total Assets............................ 186000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 119500...(588)......3.34
Total secured & HP debts...... 119500....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 3,000
Expenses (including HP & secured debts). 2,062.62
Available for debt repayments........... 937.38
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 937.38
Personal Balance Sheet Summary
Total assets (things you own)........... 186,000
Total HP & Secured debt................. -119,500
Total Unsecured debt.................... -0
Net Assets.............................. 66,500
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Gurj247

Slight update.

Both Mrs and my car insurance are due at the end of this month and through trying the various comparison websites we have managed to get our insurance down pretty well.

• My car insurance is £251 (although I will only pay half (£125) as car is part owned with a friend
• Wifes insurance is £291

So in total insurance will cost us £416 = £34.70 per month.
This would represent a saving of £184 per year (£15.33 per month) compared to last year.:j:j

Gurj247

Another small update.

I am currently going through the process of understanding and possibly getting my council tax re-banded.

Following various checks i decided that this was worth pursuing.
Check the following link for a guide on what to do...
http://www.moneysavingexpert.com/reclaim/council-tax-bands-change

The council have banded my house in Band D (£1306/Yr).
This I would not mind so much, but my home seems to be the only one that is in this band. Both my neighbours are Band C (£1161/Yr).

Having contacted them they have said that they shall call me back to discuss this further with me and provide me with the reasons why my banding is higher.

Gurj247

Another update,

Have now cancelled two of my Credit Cards - Barlcaycard and Halifax. Was told they were closed with immediate effect and that I would receive confirmation in the mail.

Will be cancelling my Amex in the next week, before they take out the renewel fee (due 28th April). Just got to make sure that I maximise my return, so ordered as much stuff as possible with my reward points :D

Gurj247

Gurj247 wrote: »

Another small update.

I am currently going through the process of understanding and possibly getting my council tax re-banded.

Following various checks i decided that this was worth pursuing.
Check the following link for a guide on what to do...
http://www.moneysavingexpert.com/reclaim/council-tax-bands-change

The council have banded my house in Band D (£1306/Yr).
This I would not mind so much, but my home seems to be the only one that is in this band. Both my neighbours are Band C (£1161/Yr).

Having contacted them they have said that they shall call me back to discuss this further with me and provide me with the reasons why my banding is higher.

Having spoken with the Council (Valuations Office Agency) staff they could not tell me why my house was classified as a Band D home. Not very useful. As such they are now sending me out the forms to contest the classification of the property.

Was also informed that in the meantime i should pay my council tax at the Band D level until the issue is resolved, if resolved in my favour (being moved down to Band C) then I would get a refund from the Council.
This annoys me a little as in effect I would be potentially overpaying by £15/mth, which I would much rather be in my account than thiers.

Gurj247

Update -
After having a think about how to best make my spending work for me I have decided to apply for the
"American Express Platinum Cashback Credit Card" - the main being that I believe over the initial 3 month period I will maximise my return hitting the £100 cashback limit. After the promotional period is over I shall use it on odds and sods (mainly supermarket shopping) as it offers a better rate of cashback than my other Credit Card.

Just awating a decision on the application at the moment.

Gurj247

Gurj247 wrote: »

Update -
After having a think about how to best make my spending work for me I have decided to apply for the
"American Express Platinum Cashback Credit Card" - the main being that I believe over the initial 3 month period I will maximise my return hitting the £100 cashback limit. After the promotional period is over I shall use it on odds and sods (mainly supermarket shopping) as it offers a better rate of cashback than my other Credit Card.

Just awating a decision on the application at the moment.

Just got off the phone with Amex and told that my application has now been approved :D

So thats 5% cashback in the first 3 months (upto £100 limit - so spend of £2k should get me that) then 1.25% from then onwards.

I shall be using this for all supermarket shopping and other odds and sods when my Santander 123 credit card doesn't offer me as much cashback.:cool::cool:

Gurj247

So a slight update:

Have recieved our Amex Credit Cards, so now the task of getting as much cashback as possible from them in the next three months.

Cashback Update

• 123 Current Account - total £0.94
• 123 Credit Card - total £7.90

Total Cashback - £8.84:D:D

chevalier

Don't forget that if you do get rebanded the refund is for more than just this financial year, I think it if for 7 years or to when you took over the property. Not sure though.

Gurj247

chevalier wrote: »

Don't forget that if you do get rebanded the refund is for more than just this financial year, I think it if for 7 years or to when you took over the property. Not sure though.

Sadly the house is a new build and i only moved into it in April this year, so won't get much back. In the meantime I will be paying them the council tax at the higher rate, hopefully they will reduce my banding and then i should get a refund on the over payments.

I have now filled in the forms, so they are nearly ready to be sent for re-evaluation (just got to check a couple of things).