Debt Free 2014

climbingoutoftheabyss

Hi all

I've been a long-time convert to the MSE forum and even though I'm very irregular when I post, I read it frequently and use the information.

Let me give you the background of where I am.

Male, married to a wonderful woman with a daughter. I had a bad record with handling money in my early twenties and thought I had got over that. However....

My problems started when about 10 years ago when I was unhappy with work and thought I could set-up my own business. No need for details but it was an unmitigated disaster, and we ended up in about £50,000 of unsecured debt.

I went through the wringer, a common story on here I would imagine, until my lightbulb moment and reality dawned that I was never going to 'work through it'.

I took the instant decision to return to work, I was fortunate to find a job, even though it was relatively low-paid. We approached Payplan and set-up a debt management plan.

Instantly a weight was off my shoulders, and in hindsight I realised how I had affected my behaviour (and ultimately health).

It hasn't been an easy journey, that first job only lasted a year before I was asked to leave (in hindsight, I wasn't ready mentally for that return to work and the horrific scale of my debt and further hangovers from my stupidity meant that I was preoccupied).

I was fortunate to not only find another job, but one that paid £10,000 per year more immediately. However, this only lasted a year before I was made redundant.

Two worrying months ensued on a run-up to Christmas before I found another job and since then I've been stable, even though I have since moved job voluntarily (again for a an increase in salary).

That probably sounds odd if you're in a long-term job, but my profession is based around contracts and its normal!

Anyway, back to the DMP, by cutting back on spending and all the other MSE ways plus the increases in salary that I've managed to get we've paid in to the DMP for 6 years, increasing the amount we pay each year. By reclaiming bank charges and PPI we have paid-off some lump sums as well.

In sort, we've reduced the £50,000 to £15,000 and I plan to pay off the full amount by July 2014.

This is my diary to keep me moving to that schedule.

climbingoutoftheabyss

So, day one of the diary.

Two good things to report:

1. On working through my monthly spreadsheet I was reminded that council tax (paid over 10 months) isn't due in January or February. As I copy and paste each month I still had it in January's budget - so, removing it has reduced the monthly DD list by £110.00 :j

2. A quidco payment processed and was paid today, that was £103.00 :j (we did all our Christmas shopping on line and through Quidco, plus there was a necessary purchase of a washing machine to replace the broken one).

So, all in all £213.00 up and as today is a NSD, a good one.

climbingoutoftheabyss

One thing that has been bugging me is a default that was issued by Lloyds TSB in 2012.

Now, don't get me wrong, I am aware that it was my behaviour that caused the debt and I accept the consequences.

However, when I started the DMP 6 years ago I was issued with 5 defaults which all expire by March this year. Lloyds TSB didn't issue a default at this time, but despite me making every agreed payment on time for 5 years and increasing my payment each year they issued a default in April 2012 which stays on my account until 2018.

This isn't a huge issue, I don't plan on getting credit.

My problem is getting a bank account for my small part-time business* (which is proving extremely profitable). At the moment I have to do my banking through my personal account (which i know I shouldn't) but I have been turned down for business bank account by banks that are not on my creditor list (a real pain, as I don't want credit for the business, just the ability to bank - the business has a healthy balance sheet).

So, yesterday I wrote to Loyds TSB and asked them to remove the default in accordance with the Information Commissioners advice that defaults should only be issued when there is a breakdown in a relationship between both parties (thank you to an MSE regular for some great advice again). My argument is that as I paid the agreed amount each month for 5 years that there is no break down in relationship.

Not sure if it will work, but nothing ventured...

* The part-time business is legitimate, I don't draw an salary from it at the moment but it is fully registered and I calculate tax via self-assessment (showing this business as zero income).

In 2014 I plan on drawing a lump sum (which will be taxed) which I aim to use to pay-down my DMP.

The only area that I need to firm-up is the business bank account, so far I have been turned-down due to my credit rating. The business (built from a £200 investment) now has a positive balance, trades with a very healthy margin and, indeed, once the DMP is repaid will need a savings account to hold the profits as I will not need to draw a salary from it.

frustrated12

Great start on your journey, you have come so far and the end is near for you. Just keep focused and I'm sure you will get rid of those debts even quicker.

Good luck!

climbingoutoftheabyss

It's a little quiet at the moment, so been working on some calculations.

My aim is to be debt free by July 2014.

Why then? That is when the fixed rate deal finishes on our mortgage. At that point we will have paid 15 years of a 25 year mortgage. Our goal is to move from a Debt Free Wannabee to a Mortgage Free Wanabee and use the money currently on the DMP to overpay on the mortgage and clear that in 5 years.

Looking at the sums now, we pay £440 in to our DMP, so by July 2014 we will have made 19 payments - so a total of £8360.00 against a debt of £15,400.00.

That leaves a balance of £7,040.00 still to find, but I am confident that my part-time business can contribute £5000.00 (after payment of relevant taxes) by that point. So, we will need to find £2,040.00 in 19 months.

As the saying goes, how do you eat an elephant? Answer: one bite at a time. So we need to save £107.00 per month.

Not that simple, as you can imagine after 6 years of being a dedicated DFW'er we have cut everything down and reduced our spending accordingly, everything saleable has gone and there isn't a lot of 'fat'.

However, a look in the savings fund (spare change we have collected when possible) does show about £400.00, so a positive start.

This means we don't have any emergency money, but I think being debt free is more important and saving is our next step.

It is a massive boost to be able to think in terms of being a saver instead of a borrower and shines a little light at the end of a very dark tunnel. There is a long way to go, but we can see an end.

climbingoutoftheabyss

A little progress in the journey as yesterday another default had its six year anniversary yesterday and therefore has gone from my credit file.

That leaves two defaults and a satisfied CCJ, one of the defaults and the CCJ end on the 20th of this month. That only leaves the final default (the Lloyds TSB one discussed earlier in this thread).

Unfortunately, Lloyds rejected my appeal to remove their default dated April 2012, which leaves 5 years still to run.

My only recourse is to appeal to the Ombudsman, which I will do, but can be slow.

So, I have to progress on the basis of that default remaining, which isn't a major issue, but a little disappointing. But otherwise things are going well and savings are up to £450.00.

Good news is that my pension statement arrived yesterday and showed an increase of over £8000 in the last year (its an older plan that I don't currently contribute in to - I will return to investing when I am debt free).

climbingoutoftheabyss

I checked my Payplan account this morning and February's payment is now showing, that has reduced the Payplan balance to £14,608.53 (woohoo, below £15k).

My own estimate on the outstanding debt is a little higher (some interest charged at the initial point of going in to a DMP etc) £15,500.00 (ish).

My focus is this month to change my gas and electricity provider (my fixed rate expires at the end of the month). Hoping for a quidco or topcashback return on that!

Choc-addict

Morning!

Well done on your progress and determination. I too was on a DMP with payplan started Nov 2007 and then went it alone but with similar figures to you (check my sig).

I feel like i'm on the home straight now, as our you! I can't wait to be sub 15k - it's great reaching little milestones and also knowing that I am in a similar debt to most friends etc with cars, cc's makes me feel slightly better. Although I have every intention of having none at all!

Wishing you lots of luck on the last leg of your journey. I'm sure you'll reach that debt free date sooner than you think.

Choc x

climbingoutoftheabyss

Another milestone reached this week.

The 20th March was the 6 year anniversary of a satisfied CCJ and a default, which meant both were removed from my credit file.

I now only have the Lloyds TSB default from last year, otherwise I have a squeaky clean file.

Still no luck on removing the Lloyds default and I'm not holding out much hope of the Financial Ombudsman siding with me, so my aim is to clear that debt so that at least its marked as 'satisfied' and sit-out the 5 years.

On completion of my DMP I'm not planning on taking on debt or changing mortgage (indeed, I plan on overpaying the mortgage with what currently goes on the DMP), so its not a huge issue - more an annoyance.

Otherwise, everything else is going OK, my part-time business officially launches April 1 and is looking really strong. Indeed, my projections are looking extremely conservative (and I erred on the side of caution when putting them together anyway) and I am confident of getting the funds to not only clear the remaining balance of my DMP next year but to also start building up my savings.

climbingoutoftheabyss

I just really wanted to update my diary so that I can read it back in the future.

The overall amount owed is coming down slowly, now down to £13,727.

However, I have now managed to save £1,000 which I will use to clear off one debt that is showing as a default on my credit file (at least if I pay it will show as settled). I have got 15 payments of £440.82 to make between now and July 2014 (my goal date) which is a total of £6,612.30. Add in the savings it approximately £7,700. So that leaves roughly £6,000 to find.

But there is a plan, so I'm still confident I can do it and clear my debts by July 2014, it just requires a lot of work and a lot of dedication and concentration. Bring it on!

climbingoutoftheabyss

When you're on a debt free journey there are ups and downs, and I guess its inevitable that when you've had a protracted spell of things going well that sometimes life deals you one of those sucker punches!

I think I've got to take a lot of blame for this one, I really am too trusting, so when I needed to sell my car (I need a newer one for work) I looked at my options and while I could have sold privately for a little more I went with the 'easier' option of https://www.webuyanycar.com.

Checking online I got their price and made an appointment to sell. I rolled-up very naively ( and very stupidly) thinking that as my car was in good condition that would be the price I would get.

Oh, no no no, that isn't how it works. A webuyanycar representative spent some considerable time looking for minor damage to the paintwork, managed to find a few things that even he called 'minor' and proceeded to revalue my car at £350 less than the online quote.

To say I was shocked would be a massive understatement, I was gobsmacked and actually felt quite ill.

The upshot is that I'm £350 down (that has to come from the small amount I have managed to save) and feel sickened.

Yes I'm too trusting, yes I should have walked away, yes I'm an idiot.

But, you live and learn (I seem to keep getting caught, so perhaps I'm not learning!) and on we move.

C'est la vie