I've got myself into a MASSIVE debt in 9 months...

Teacher2

More money from another person renting the spare bedroom and from your job seems very positive for the new year.

I advise putting the extra 'out of harm's way' by direct debiting any increase straight into paying off debts.

In my household (and it's something we have told our children over and over) we say 'save the payrise, never spend it.'

The reasoning behind this is that you have budgeted and got used to living off what you currently earn and so you don't actually need any payrises to survive. Therefore, the payrise (or extra from another tenant or reduction in expenses) can be spirited away without your noticing a difference. Firstly you can use it to pay off debts and secondly, when they are paid, you can save a lump sum.

5erge

A lil bit of advice from me;


When I used to be in debt the first thing I did was:


A. Cut up my credit cards.
B. Concentrated on paying the highest APR card first.


It's imperative you are being honest with yourself, ask yourself every time you want to buy something; Can I afford it? and Do I need it? You know what the answers are going to be but you have to have the will power to curb your spending, the same goes for your wife.


Work out what your debt is and what your wife's debt is then challenge each other to see who can clear the most each month.


There are plenty of helpful people on this forum, people that have been in this situation, people that WANT YOU TO SUCCEED. Now go and sharpen those scissors!


Des

rogue999

Hi Weebit, with regards to future earnings, i'm worried you are relying to much on this. Things don't always go to plan for lots of reasons. Whilst you are earning a decent wage now, get the debts paid as quickly as possible (without loosening the purse strings!).

We are all only an illness, accident, redundancy or even having a child away from big problems.

My husband and I both had decent average paying jobs 10 years ago, then we had 2 kids and I went part time. My husband had an illness which meant he had to change jobs and he now only earns minimum wage. It's been difficult as we had overspent on holidays etc when we were paid well enough already. I wish we'd been wiser, but I guess everyone would be with hindsight.

Sorry, not wanting to put a downer on your careers! Just bear in mind A LOT can happen in your work life and home life, and it's not always a clear path up the career ladder. Please don't rely on money you haven't earned yet to pay this off.

weebit

rogue999 wrote: »

Hi Weebit, with regards to future earnings, i'm worried you are relying to much on this. Things don't always go to plan for lots of reasons. Whilst you are earning a decent wage now, get the debts paid as quickly as possible (without loosening the purse strings!).

We are all only an illness, accident, redundancy or even having a child away from big problems.

My husband and I both had decent average paying jobs 10 years ago, then we had 2 kids and I went part time. My husband had an illness which meant he had to change jobs and he now only earns minimum wage. It's been difficult as we had overspent on holidays etc when we were paid well enough already. I wish we'd been wiser, but I guess everyone would be with hindsight.

Sorry, not wanting to put a downer on your careers! Just bear in mind A LOT can happen in your work life and home life, and it's not always a clear path up the career ladder. Please don't rely on money you haven't earned yet to pay this off.

I'm totally NOT relying on future earnings. True, nothing is guaranteed in this life but I'm not pinning all my hopes on being debt-free with the help of a payrise. Obviously, any payrise I may receive will help to pay it off faster, but I'm not relying on it any way. In fact, it's perfectly plausible that my next job will pay LESS than my current job in which case my repayments will reduce also.

Obviously I hope that doesn't happen and I hope to be earning more, but in no way am I relying on it. It's just in my nature to think ahead and plan things, in fact that's what I do for a living, so naturally it spills over into my personal life!

weebit

I've decided to update my signature with details of my debt and aim to update it periodically with the latest total. I've also put a DFD on there. Although my projections show I could potentially be debt-free by August 2018, I've given myself a little leeway because inevitably there will be some months when I won't meet my targets! Still, £50,310 in 3 years would be an incredible achievement if I can do it.

All being well, next months total should be apx £49,482 or less

UrbanDanceSquad

patman99 wrote: »

Not quite sure why UrbanDanceSquad has such a 'thing' about emergency funds, but I am glad the op sees it from my perspective.

I didn't have such a 'thing' about emergency funds (not quite sure why patman99 had quoted the word 'thing'?).

But here is the 'thing' which stands out with regards to your perspective:

patman99 wrote: »

Even though I have a load of debt

Your perspective is one of Emergency funds are a priority over the real emergency: debt.

Spin it as much as you like, but debt is an emergency.

weebit

I see this has been moved to Diaries... makes sense!

So i'm getting to the end of my first full month of using YNAB and it's really opened my eyes. With a few days left of the month, we've overspent overall by about £70 on what we've earned. I'm putting this down to 2 things, the biggest one being Christmas (which I didn't save for) and also due to both me and my wife being paid before Christmas so we've been spending that money now rather than waiting till January, resulting in several red arrows. The test will now be staying within budget in January.

The biggest eye-opener was how much my wife spends without logging it on the app. I reconciled her account and there was about £80 of unlogged spending. I can forgive about £30 of it since that was her Christmas present from her to me so I understand why she didn't log it, but the other £50 contributed towards our overspend this month.

An update on renting out the spare room, we have a friend who is potentially interested in moving in so we'll see what happens there. Potentially, he could move in much sooner than if we had to advertise it, which means fewer days of it not saving us money!

weebit

I've just made my first "extra payment" of the year - £171 to my Nationwide Credit Card. This means the balance I had on there at 19.9% is fully paid off, leaving just the remaining balance of apx. £6,200 at 9.9% till end of November :j.

Now, the next debt I'm going to tackle is the £1,970 I have in my Halifax overdraft. They charge £1/day, so there is no advantage to pay this off in stages. Therefore I have decided that I'm going to keep money aside each month earning either 3% or 5% interest (depending on which account I keep it in). I don't expect to earn much interest, perhaps a few quid only, but that's better than nothing at all! Once I have the full amount to pay to the OD, I'll transfer it in and close the account. I'm expecting this to be before the end of April.

(FYI, I don't use this account at all, it's left over from my student days. My statement literally consists of a £31 payment going in and the apx £31 a month charges going out each month!)

Fletchasketch

Is 9.9% the highest rate of interest you're paying (other than Halifax)? If so, great, if not ten he money would be better going to pay off another debt, rather than in the savings account, Congrats on the overpayment though!

weebit

Fletchasketch wrote: »

Is 9.9% the highest rate of interest you're paying (other than Halifax)? If so, great, if not ten he money would be better going to pay off another debt, rather than in the savings account, Congrats on the overpayment though!

I have 14 different debts at 19 different rates! the 9.9% is from a balance transfer. My highest debt (now that the 19.9% is paid off) is 18.9% which I have £1,520 at. Last month I was charged £24 in interest on that debt whereas the Halifax charge £1/day (or £31/month if you prefer). This works out at about 18.5% for my amount of debt.

I also wasn't sure which one to pay off first, so I did some calculations and it show I'd save about £70 in interest by paying off the Halifax Overdraft first.

(FYI, my next highest debt is at 16.9% and I have about £11,000 at this rate on 3 cards... that is until a few more balance transfers expire at least).