Driving Down Debt

ThatKiss

Just a quick update as I've not been around (and still waiting for broadband in the new flat!)

The big news is that I'm no longer in credit card debt! One of the cards is even in credit after a couple of interest refunds.

Still waiting for the finances to shake out with higher initial payments on a number of monthly costs (council tax, mortgage etc) but after the deposit/fees etc were paid I was able to wipe out the credit card and still have some cash in an emergency fund.

With a whole new set of monthly costs in mind, I'll likely take til the end of the year to allow things to settle down a bit, then look at other outstanding debts - i.e. Car loan and maybe my student loan - with a view to unlocking some cash which can then be saved elsewhere towards home improvements and the ultimate goal - restoration of the classic.

ThatKiss

*Stumbles through a rip in the space-time continuum*

Crikey, ello there. Bit dusty round 'ere innit? Cobwebs left right and centre!

Bumping this thread as I'm now on another debt-free mission. This'll be a long one, so lets get ourselves comfortable and fire through a montage from where we left off!

Filling in the Gap

• Bought a flat
• Paid off last of credit card debt
• Spent a year enjoying city living [STRIKE]perhaps[/STRIKE] waaaaaaaaaaaaaaaaay too much
• Expensive bad luck along the way (d'oh!)
• Unwanted change of job role reduced income
• Racked up a new £12k of credit card debt
• Met a girl and realised I had to wise up
• Spent a year stabilising - balance transfers, downgrading car etc
• Back on the debtbusting trail!

That's a brief summary, but I have to admit the main factor in racking up debt again was mental health - living alone for the first time along with the temptations city living could offer - every night

Key, though, was that all minimum payments had been met so no negative markers on my credit files, which meant I still had a decent platform to start digging my way out of the mess I'd created.

Realisation & Rectification

The catalyst to pull my head out the sand was winning £500 in a prize draw in December 2017, at the same time as I got an unexpected work bonus. I'd known my financial situation was spiralling the wrong way but I didn't know how to put the brakes on.

That cash gave me a bit of a buffer to start sorting the flat out (ie furnish the spare bedroom) and pull my head out the sand. Moving back into my previous job role and returning to my prior income helped as well!

I basically spent the entirety of 2018 stabilising:

• Stopped going out every night!!!!!!!
• Sat down and worked out the debt totals
• Took out a third credit card to ensure all debt was on 0% interest
• Decided my main car wasn't worth what I was paying for it and downgraded for half the monthly outgoing
• Paid off student loan a few months early
• Paid off (interest free) mobile phone finance halfway through term
• Reviewed all outgoings and cut out all unnecessary subscriptions etc
• Stopped having so many takeaways!!!

Of course there were blows along the way; The TV and cooker died within a couple of months of each other and while I saved for a new TV, the new cooker had to go on credit card as did some required building repairs.

So the situation became £12k of debt split, interest free, over two cards, plus a PCP deal for the new car. As before, the car is a necessary evil so I'm treating it as good debt and as such not counting it as a debt in terms of this thread - same goes for the mortgage.

At one point I managed to rack up £1k on the third card (my oldest card) which I'd kept for emergency spends and credit score purposes.

Having paid that off over a couple of months, while servicing the other two cards as well, I realised that I could do a lot more to bring down my debt, and hopefully get to the stage of saving for things rather than paying in arrears.

The Present

So come the end of 2018 and a review of the situation. Roughly £1k had been paid off each of the 0% cards to leave ~£10k debt as of December's statements, split across four end dates. Roughly speaking:

£3.5k - end June 2019
£500 - end August 2019
£3.5k - end December 2019
£3k - end May 2020 (May need to check this!)

And so came the challenge to myself. The debt was split roughly 70/30 across the two cards, with the earliest 0% expiry dates across the larger card. Could I pay off the £7k from CC1 before the end of 2019? And although there's a bit of leeway in terms of expiry, at a stretch could I pay off the £3k on CC2 by then too?

So far, progress has been good. Aided by a successful (and larger than expected) PPI claim, I've managed to pay an increasing amount each month so far this year, and the first £3.5k is a thing of the past already. The £500 should be done by the end of April as well leaving 8 months to pay off the other £3.5k from CC1.

The Future

By my estimation, CC1 should be cleared in October so although I don't think I'll be able to pay off CC2 in full by year end, I should be able to make a dent in it and have it paid by around Feb 2020.

In terms of budget, I'm now in a position to live off the lower wage I'd experienced in 2018, and the additional at the moment is being directed firstly to a savings account as a buffer, and then ultimately to paying off debt.

At this stage I've opted to run with a £200 permanent emergency fund, rising to ~£500 from the buffer each month. Card payment direct debits are included in the main budget so are being topped up by the current excess.

Once I have CC1 fully paid off, I'll snowball CC2 with both the direct debit amount and the excess so that is potentially easy meat.

Financial goals after card paid:

• Increase permanent emergency fund to £500
• Save towards replacing kitchen
• Increase permanent emergency fund to £1000
• Save towards replacing bathroom
• Increase permanent emergency fund to a months salary
• Save towards replacing windows
• Refinance Car 1 to keep beyond end of PCP period - pay off over 18 months
• Pull Car 2 from it's hidey-hole and get it restored!

As for the girl? She knows about my debt, knows I'm sorting it and... who knows? :beer:

ThatKiss

So reviewing my initial post compared to the above update - it took more than 6 years to finally make that PPI claim! In a way I'm glad as it's helped the present situation. but sitting on it for so long is pretty ridiculous.

Losing weight and getting fitter? Urm... On and off I guess. I'm no fitter than December 2012 and I suspect I'm much fatter. I don't have scales to use anymore!

That said, I do tend to go up and down with the seasons so maybe when I have some spare cash I'll buy some scales and see where I am.

Humdinger1

TK well done! Not only have you paid off shed-loads of debt, but you've also had a true light bulb moment re what it's worth spending your money on. Having been on a similar journey (but with business and personal debt of over 100k now paid off over several years) I think that some high paying careers do almost require a mental health issue of some sort to do and be accepted by colleagues- and that last is essential to do many such jobs. It can range from one that needs medical help to an aspirational mindset that can work up to almost delusional (nothing will ever go wrong; I'm entitled to all this because I work so hard and am so talented. All of this may be true but it doesn't help people get out of debt, and suits the lenders perfectly). I actually feel grateful now for what the debt taught me; that was plainly the size of the lesson I needed. I now make less money; have no debt apart from the mortgage; and have more savings and disposable cash as well as my feet firmly on the ground. This is none of my business TK, but with my debt coach hat on, I wonder if you're finding the classic car worth it? Anyway congratulations again. Humdinger

ThatKiss

Jings, almost six months since I last posted again. I have been diving in and out, reading other threads for motivation, but not really much to update with.

In my last post I set out a couple of targets, and an estimation of how I hoped things would pan out.

ThatKiss wrote: »

Could I pay off the £7k from CC1 before the end of 2019? And although there's a bit of leeway in terms of expiry, at a stretch could I pay off the £3k on CC2 by then too?

By my estimation, CC1 should be cleared in October so although I don't think I'll be able to pay off CC2 in full by year end, I should be able to make a dent in it and have it paid by around Feb 2020.

The good news is that CC1 will be paid off from October's pay! Now, it technically won't be paid off in October as the DD comes off at the start of November, but I'll be able to roll some of the additional payment I would otherwise have made into CC2 :j

Now, it's not all been plain sailing, but I have been MSE about things. Summer is my most expensive time of year at the best of times, but I had an unexpected stag doo trip to fund, and subsequent wedding.

Throwing every spare penny at the "big" CC, ie CC1, meant I didn't really have capacity to add this into the budget, so I did the next best thing and swapped out my "spare" third credit card for an interest free spending card. Not the optimum scenario, but this was going to be part of my future credit mix in any case so it essentially just brought that step forward.

So, going forward my revised short-term goals are:

• Pay off CC1 with next direct debit (start of Nov)
• Pay off CC2 around February. Cancel CC2.
• Pay off CC3 around May
• Treat myself to a Nintendo Switch with the spare money I suddenly have :rotfl:

EDIT: Done a bit of forecasting - CC2 should be gone in Jan and CC3 in March

Longer term goals remain as stated in my last post, though Car 1 is due it's balloon payment next summer. CC1 should give me an interest-free cash transfer to finance this and then I'll aim to pay off at a similar rate to my existing finance, with spare cash going into savings which will pay this off within the 18 month target, if not much much sooner.

When I can, I'm also aiming to be able to pay things like council tax, tv license etc annually in advance, as I think this works better for me in terms of the way I manage my finances.

And just to finish, I'll answer this:

Humdinger1 wrote: »

This is none of my business TK, but with my debt coach hat on, I wonder if you're finding the classic car worth it?

Definitely! It might not have seen the road for more than about half a day in the last few years, but when I bought it way back in 2009 I knew what I was getting into. It's more like a pet than a car, and I know that when I do come back round to get it recommissioned, it'll provide miles of smiles!

On top of that, I've seen far too many people I know sell similar cars and go on and on and on about how they regret it - I know I'd very much be in that boat too, so I'm not going to get myself in that situation

ThatKiss

Home insurance (buildings & contents) renewed at £100 less than I was quoted to stay with my current provider, and £25 less than I paid last year Paid on CC1, but this will still be cleared at the end of the month so no change in the overall situation.

Car finance company have been in touch wanting to “review my account” which I guess means they want to talk me into buying a new car. Not happening

Might be able to make a bonus payment to CC3 come payday as I’ve accidentally given up booze for the past fortnight so have saved a bit of cash there. Wonder how long that will keep going (not long if I keep watching Scotland football matches :rotfl:). Normally I’d have a pretty big night out the first weekend after payday, so its weird feeling a bit more relaxed about money in the middle of the month.

This is the hardest part of the month in terms of debt as you want to see more progress but it has to wait until payday... and thats yonks off!

ThatKiss

So, a sense of achievement this weekend, as pay came in at the start rather than end of the weekend, so the monthly money juggle took place on Saturday rather than this morning.

Achievement One: The "Big" Card, the one I'd targetted to pay off this year, will be gone come direct debit day next week. Apart from the value of the direct debit, the balance is completely clear!

Achievement Two: Managed to pay a chunk off the next target card. By my calculation this should be paid off in January Only one card to go after that.

Achievement Three: Being off booze has now reached a full month, which probably helped the above a bit! Also cancelled a beer delivery subscription to help this continue (I'm not, though, going teetotal. Just picking and choosing a bit more. Taking back control?)

I must admit I have been a little bit naughty. I promised myself a reward when the cards are all cleared, but I brought it forward a little bit, in part as a reward for getting rid of the big card, and partly as I reckon it'll keep me out of the pub over the winter.

The purchase has gone on the interest free card, and I don't think it'll affect the end date of paying off that card, so no harm, no foul? It does come with a free 6-month subscription to Spotify as well, so that's essentially £60 back

ThatKiss

Direct debit went out today so that’s the target card officially cleared! This is one I’m keeping at its pretty reliable for balance/money transfer offers most months so it’s handy to keep around - especially given I’m planning on a money transfer to fund the final payments on Car 1.

Will have to do some jiggery pokery around direct debits at some point this week to switch focus to the next card, which is due to be cleared in January. When it’s paid off, this card is for the chop

ThatKiss

So it appears the new target card won’t take their regular direct debit if I make overpayments beforehand, so I’m going to cancel the DD and just manage it manually - I do the monthly money shuffle as soon as I get paid which is well before the payment date in any case, and it’ll be paid off in January then the account closed down.

Having spotted the DD not being taken for the target card, I held off until the next statement was generated before manually paying, just in case. Side effect being the minimum payment this month has already been paid.

I’m in the mid-month rut where not much is happening, though I should have some money coming in and going to target card on Friday.

The card I paid off last week generated it’s statement today, confirming a balance of £0.00. BOOM!

ThatKiss

Payday today so payment of just under 50% of remaining balance to the target card. Smaller payment to be made mid-Dec which means there’s a chance the card will be paid off come the end of December, a month ahead of schedule. More likely to be mid-January, however.

I don’t think this changes the target date of March for the the final card to be paid off, but will update my spreadsheets this evening to confirm.