Driving Down Debt

ThatKiss

Payday, and for the first time what feels like forever, a morning spent booking travel to a gig!

I've this gig coming up at the end of September and another trip early October so I've been sure to set cash aside in the budgets for these, while still paying into savings. For the coming couple of months my side gig payments will also go to the spends credit card after the phone purchase earlier this week.

To clarify, I could have paid cash for the phone as my savings more than cover it, but it makes sense to collect even the pitiful interest when I can spread the phone cost at 0%.

ThatKiss

The worth of money being set aside in a savings account made very clear this week - the motor went on my fan oven. Only 3 years old so I was reluctant to replace - I went for a repair instead and was able to quickly move the cost across from my savings account.

I've not quite progressed to having a dedicated savings account and separate emergency fund yet, but having seen the value of it, I'll be working towards having that in place going forward.

Did some admin this week regards an old savings account that was registered to an old address and the card had expired etc. This is where one of my side gigs pays into (albeit I immediately shuffle money around when it arrives) and I was only accessing through the bank app. Of course, new phone blew away the logins etc so I went into the branch and sorted it all out. Just waiting on a new card arriving so I can re-register the app.

ThatKiss

Did some admin today, the new bank card mentioned above arrived so I was able to re-register on the app, and handily my side gig paid up today as well so I was able to shuffle that to my credit card. Nice timing!

I also got my home insurance renewal through so have organised to switch providers for a ~15% saving on my renewal price.

Since I was looking at all this, I went ahead and sorted out November's budget and threw together a tracker to see when my credit card is due to be paid off. If not the end of November, then it'll be the middle of December so not too bad, especially considering the trips I have this next week and next month. I'll have a clearer picture when I do December's budget at the end of October.

Have a good weekend everyone.

ThatKiss

Just a quick update - it now looks like January will be card payoff date.

I've been a bit ill-disciplined about paying it back and not keeping spends off it either so progress there is a little slower than anticipated.

I am, though, still reducing the balance and still also adding to savings on the flip side, so I'm not too worried about the situation - just trying to maintain the psychology of the savings going up and card coming down.

ThatKiss

January isn't going to be card payoff date - I'd budgeted ahead and somehow missed service/MOT for car number the first. D'oh! Reduced the amounts planned to go into savings and to come off the card to take account of that, though I am thinking now that the whole point of having a savings account is to pay for things like this up front.

I've read about this on a few diaries, people who've struggled to control debt and got themselves to a good place on that side of things, but can then become miserly and reluctant to spend money on the other side.

I might need to look at splitting out the savings further to have a "savings" savings account and a sinking fund that sits at, say, £1k and gets spent and replenished as required, that way I still have the psychology of seeing the savings going up without the psychological block on using it for planned expenses like services and MOTs etc.

ThatKiss

Quick update as I've not posted for a couple of months. Christmas navigated safely and though January felt like a slog, we've made it to payday.

After the above update, I created a new account to hold a £1k sinking/emergency fund which has been untouched thus far (though the aforementioned service and MOT are today, so fingers crossed!).

Savings are slowly growing again after having the £1k split out from them, and clearing the credit card is progressing too. The card should be paid off in a month and I'll also start to see a fair amount go to savings at that point.

Final thing - I've a pay rise taking effect from the start of February so will see how that works out in real terms and adjust the budgets as appropriate - likely to be a small rise in my monthly spending fund and the majority going straight to savings, though I may also take the opportunity to increase my pension contributions.

ThatKiss

Things change quickly sometimes!

Going back to the title of this thread, my initial aim was to pay off debts so I could restore an old car - the classic. That's still not happened with life getting in the way. The priority for savings etc now is to get the flat done up, and as such the classic has continually been bumped down the road.

A couple of weeks ago an opportunity came up to buy another classic car (lets call it Classic 2?) for a very (too?) reasonable price which, when I did the sums, I couldn't pass up. 

Upshot is I now have a 2-year personal loan added to my outgoings, which in combination with the aforementioned pay rise works out pretty much cost-neutral. Once Classic 1 is recommissioned I can then either sell on Classic 2, or hold it as an appreciating asset. Classic 1 will be retained, that's non-negotiable

On the card front, the above led to a little spending on up-front costs (tax, insurance) which pushes out having a zero-balance til the end of March, but at this point it's pretty much negligible. Savings also continuing to grow, so flat-type things will also be progressing shortly.

Humdinger1

@ThatKiss it's none of my business and my views may well be influenced by an EXH who was keen on classic cars: but do you think you've had your LBM? Everyone does this process differently and it could all work out well...but you've just taken on extra debt while wanting to clear it.  As I say, I may be prejudiced by past events.  I remember when 10k EXH had in a pot he viewed as to buy a classic car had to be spent on essentials at the time of the credit crunch when we'd just taken on a large mortgage then my self employed contract ran into trouble.   He viewed that money as for a fixed, unalterable, sacred purpose.   I understand that classic cars are things of beauty- but whether it's that; impossible interest rates; addiction to substances;  just wanting to paint a glossy fantasy life on social media; or anything else, no one that I've seen on here or IRL gets out of debt by spending.  I've been deep in it myself  - well over £100k at its height - now clear. Shifting that took a rewire and deciding not to spend is a necessary painful part of it I found.  I do some voluntary debt coaching now too.  Please excuse my plain speaking.  We all wish you well and coming to terms with discretionary spending is essential.  The fantasy is compelling but just lures you further in I find. This is not to ignore the huge progress you've made on clearing debt or to rain on your parade; perhaps classic cars are a red rag to a bull with me?! Humdinger 

ThatKiss

Hi @Humdinger1, thanks for the post!

I have no desire to go back to indiscriminate spending and building up credit card debt with no plan as to how or when it will be paid back. In fact if you look over my last few posts, I've actually struggled with bringing myself to spend money already saved up.

Equally, I believe debt - used correctly - can be a tool to be leveraged, so I don't mind carrying a small (and I do mean small) balance on an interest-free credit card or having a small, structured, and short-term loan.

I understand this depends on the mindset and discipline of the individual, and before going ahead with this one I did all the calculations to make sure I wouldn't be shooting myself in the foot.

I kept this thread open after paying off my daily car last year for the accountability and support posting on here brings so I really do appreciate your plain speaking and critical eye!

ThatKiss

Payday again. A bit of a rejig with savings accounts as an existing account I had but wasn't using, upped it's interest rate to be higher than Marcus. As a result I've left £1 in Marcus to keep the account open and moved the rest of my savings across to the other account. Every little helps.

Nothing much further to report - everything is ticking along nicely at the moment.