On the Road to Debt Free

DebtFreeMrsC

Hi

I am a long time lurker coming out of the shadows to seek a bit of help and a bit of support.

I have been in debt for a few years now, and finally feel in a place where
a) I HAVE to deal with it.
b) I CAN deal with it.

I know exactly where I got into debt - 3 purchases I could not afford: a house, a honeymoon, and a very expensive wedding album for photos. I also had to buy a new front door a couple of months ago when mine failed, but I am due a repayment for overpaid student loan which will clear this as soon as it comes through.

The second two are small in comparison to the personal loans/credit card debt racked up for the house - I funded the deposit on a loan and CC as I could not sell my former house because of the market.

I know the purchases were silly. My husband and I both agree though that once we dig in and sort our finances out it will be worth it in the long run. And we have cut up all credit cards and buy nothing we don't need these days!!

I am not behind on any payments, and pay above the minimum on everything except the fixed term loan and mortgage. My next job is to do an SOA to see where else I can cut from my budget - although I am currently unsure which I prefer - very big sacrifices and debt paid ASAP, or smaller sacrifices and debt paid more slowly. (Perhaps this means I have not had my light bulb moment, but at least I am moving towards it!)

My first obstacle is that my husband's gran is very old and frail and lives in Ireland. He really wants to see her this summer (not seen her for a few years) as he may not get another chance. The ferry is £300 and petrol will add another £150 at least (flying even more expensive when travel to and from airports is factored in). I'm torn - and looking for ways to try and cut the cost before we make any decisions. It would be so easy to say no if it was just a holiday. :-(

Anyway, enough rambling! You're stories are all so inspirational. I hope I can be half as good as you!

MrsC

cats2012

Thanks for this, I didn't want to read and run so want to add some support

I'm sure there will be areas where you can cut down, I think you probably should make the trip to see his gran but I'd suggest you do your SOA and look to cut down on areas with the specific aim of saving for this trip e.g. "we're going to cut £100 off our grocery bill and not go out at all so we can go" sort of mentality.

in my opinion, debt is a huge deal but it sounds like you are very much aware of it and I don't think you'd ever forgive yourself if you didn't go on the trip and then his gran passed away. as long as you know your plan for afterwards, personally i think it's doable.

HappyMJ

Do not overpay or pay above the minimum on everything. Pay the minimum repayment on everything and any excess in your SOA put that towards the debt which is charging the most interest. However, if you do not have access to further credit you will need to put it into an emergency fund for circumstances as you have described regarding your husbands gran.

DebtFreeMrsC

Thank you. I think you are right - its the mentality that matters.

I also have a penny jar which we empty our coins into at the end of the week, to get into the habbit of saving, and to keep building up a little payment for one of the debts!

I'm trying to find things that I could sell on ebay or a car boot at the moment, or other ways to up my income. That way I can 'earn' us some treats whilst we are cutting back.

MrsC

DebtFreeMrsC

HappyMJ wrote: »

Do not overpay or pay above the minimum on everything. Pay the minimum repayment on everything and any excess in your SOA put that towards the debt which is charging the most interest. However, if you do not have access to further credit you will need to put it into an emergency fund for circumstances as you have described regarding your husbands gran.

Thanks for this - I have one emergency credit card left but sealed away in the bill folder! I've not got my head around my interest rates yet, but will do exactly as you suggest. The problem I'm having is that some of my cards have a monthly interest rate and some a yearly one (i'm googling conversions as we speak!). Also my loan already has the interest factored into the outstanding balance, so if I overpay they automatically reduce the monthly payments and my maths is not good enough to understand the net effect on the overall cost of the loan. I'm thinking the best way to handle that is to save up the full amount to pay off in full?

backinbusiness

Pay the minimum plus £1.

Minimum payments are recorded on your credit file and have a negative effect.

Good luck OP.

BiB

DebtFreeMrsC

backinbusiness wrote: »

Pay the minimum plus £1.

Minimum payments are recorded on your credit file and have a negative effect.

Good luck OP.

BiB

Thanks - looking through my interest rates now. One card appears to charge me more in interest everymonth than my minimum payment! Have I got it wrong.....

My interest rate is 1.3852% and my minimum repayment is just 1% plus fees.

Not a big issue as currently about half the balance is on 0% so the amount of interest added (from the other half of the balance) is less than my actual payment each month, but my offer runs out in a few months so I'm not sure how to calculate the payment I should make. Hope this makes sense.

I will post an SOA soon - but spending like grocercies and such needs to be worked out as I haven't been keeping records.

cats2012

DebtFreeMrsC wrote: »

Thanks - looking through my interest rates now. One card appears to charge me more in interest everymonth than my minimum payment! Have I got it wrong.....

My interest rate is 1.3852% and my minimum repayment is just 1% plus fees.

Not a big issue as currently about half the balance is on 0% so the amount of interest added (from the other half of the balance) is less than my actual payment each month, but my offer runs out in a few months so I'm not sure how to calculate the payment I should make. Hope this makes sense.

I will post an SOA soon - but spending like grocercies and such needs to be worked out as I haven't been keeping records.

I work in credit cards and your minimum payment should be 1% + fees + interest if it adheres to new regulations, as it's supposed to ensure people are always paying something towards their balance and not just interest.

Not all providers have moved yet though, but I believe most have.

DebtFreeMrsC

cats2012 wrote: »

I work in credit cards and your minimum payment should be 1% + fees + interest if it adheres to new regulations, as it's supposed to ensure people are always paying something towards their balance and not just interest.

Not all providers have moved yet though, but I believe most have.

Ahhh. Thats probably the bit I have missed. I will stop panicing that I'm getting into a bigger mess with this card every month!