Smash These Debts - The MR2Jay debt busting mission

mr2jay

Here we are - Friday again

So......

Another £100 paid off the Council Tax

Actually paid £25 off the credit card but had to spend £18.38 of shopping after an expensive weekend at my sister's wedding. That effectively means I have paid another £6.62 off the credit card. Not much but better than nothing

Over 4% into our debts now and over the £500 mark in 4 weeks - quite pleased at that

mr2jay

What a weekend!!!

Had an Japanese car event that has ben pre-booked for a while at Santa Pod Raceway. I wasn't going to go but as I am not one to waste money and couldn't sell on my ticket, I decided to go. This was a weekend event, starting 8am Saturday and finishing 4pm Sunday

Now traditionally it is a major party on the Saturday night, involving large amounts of alcohol, dodgems and good company. As I am on an economy drive, I decided that rather than buying in booze, my homebrew would do the job. Took along a fairly large amount and it worked a treat. Traded some with our other club members when I fancied a beer and was informed that I should sell it!!!

OK, I know it is illegal to do it but the compliment makes me proud

So, on to the debt busting. With the double bank holiday, this means that my wage for this week took a serious bashing. Having said that, I was still able to smash another £100 off the Council Tax bill, taking my overall repayment to over £600....

Not far off the magical £1000 now - That is my first milestone after all

slowlyfading

You're doing great! :j :j

mr2jay

Thank you so much - encouragemnt always helps to keep us on the right track

I actually sat down with the BH this last night and talked honestly and openly about what we are doing. She is becoming far more open about how she feels about this exercise and, despite being one of life's pessamists (as opposed to myself who could be classed as a realist), she is starting to feel upbeat about our chances of clearing them.

I think the weekly bill smashing I am doing and showing some positive results is starting to rub off on her.

As she is out of work at the moment, we have started thinking outside the box for any ways she can pull in some money, no matter how small. We have signed her up to "Market Force" to do some mystery shopping and have now completed the first assignment through them. Got a second one lined up for next weekend as well. We know it isn't a serious amount of money but, at the end of the day, it is far better than nothing at all. She is also working on some recipes that can be frozen if we buy in bulk and is researching any other ways we can save money/make money.

The biggest change is in her attitude. When I began this journey 5 weeks ago, it was very much me pulling the situation in and working out an escape plan myself. This has changed dramatically now as I have proved it CAN be done. Her role is now to see how we can free up more money, increasing our disposable income to throw at the debts.

We sat and talked long term as well last night, talking about how we are now learning ways we can live comfortably within our means, freeing up money to save and build for the future once the debts are gone. This is an amazing step forward for us as we had realised we were living week by week, unable to dream as it were.

So, we now have a goal. Our aim is to have the debts cleared and saved enough to buy a house OUTRIGHT (probably through auction) within 10 years. OK, so we are only at the beginning, but an aim like that is a very concrete target to aim for that is going to make us set for life. With no mortgage and no rent, it means that no matter what, we will always have a roof over our heads.

mr2jay

OK, just done some rudimentary maths here to try and work out a Debt Free Date plus give us some idea if 10 years for a house outright is realistic....

Taking an AVERAGE debt payment of £175 per week (once we are running properly rather than chasing our tails here), Our debt of £12,800 (roughly) will take 74 weeks to clear. Now, 74 weeks equates to 1 full year plus 22 weeks, so rounded up (to be safe), this gives us a target of 18 months to clear all £12,800 of our debts.
Our debt free journey was started on the 14/05/2012, making our DFD 14/11/2013.

Taking this one step further....

It is possible to continue using this £175 per week average to save once the debts are gone.

£175 x 52 weeks = £9100 per year to save

BUT

I also have an extra £40 per week going into our rainy day fund (emergencies etc)

£40 per week over the 18 months above equates to just under £3,000 saved as an emergency fund (ample I think )

So, adding the £40 to the £175 equals £225 per week saved.

£225 a week for a year = £11,700 per year saved

Our target to be able to buy a house is 10 years - subtract the original 18 months to clear the debts and that leaves 8.5 years

So, 52 weeks a year = 422 weeks to save @ £225 per week = £94,950 saved

Hmmmm.....

As this is erring on the side of caution, I would expect there to be more in there in 10 years.

What do you think Guys? Possible?

slowlyfading

It is possible, but remember (I know you've set up an emergency fund) that things have a habbit of not working out just how you'd want them too.

What are your thoughts about saving for a deposit, then getting on the property ladder and overpaying your mortgage? Just as another idea....

mr2jay

I think this is more of a dream, an aim, a hope - something tangable to aim for....

We also need to bear in mind that this is based on my CURRENT rate (which is up for review in the next few weeks where I am likely to be getting an extra £2 per hour).

Due to my work situation, a mortgage at a reasonable rate is not possible. I am a contractor and, as such, do not have a permanent work situation. Although I know that work is solid and I have 2 or 3 back up plans in place if it did go wrong all of a sudden, a mortgage company does not.

Lastly, I am working myself toward initially being debt free, so clearing the debts then getting a new, far larger one seems to be going backwards in my own mind.

slowlyfading

mr2jay wrote: »

Lastly, I am working myself toward initially being debt free, so clearing the debts then getting a new, far larger one seems to be going backwards in my own mind.

Credit cards are considered bad debts, and so should be avoided where possible. A mortgage is the way most people are able to begin to start to own their own property, so aren't considered as bad.

Are you renting at the moment? If that was me, the thought of paying someone else's mortgage for the next 10 years or so whilst I saved for one of my own, doesn't seem like the best plan. But, each to their own I guess. We are renting at the moment and are also saving for a hosue deposit, and both me and DH agree that it's better to be paying our own mortgage down, once we have one, then paying for someone elses.

Just another point of view - if your aim/dream is to buy one outright, then good luck!

mr2jay

I think, although this is a dream, it is a long way down the line....

Without a doubt, the main point we need to get over is clearing off what we owe. Maybe evaluate our position after that to decide on where we go from there...

With buying, the main issue we have is that my work is quite transient, with me moving from city to city when a new contract breaks. Until I can find a good base that is central to a majority of the contracts offered, rent offers the best alternative to having a permanent home

slowlyfading

Sounds like you've got it sorted out then! But yes, debt busting first! and you're doing great with that...