Debt free by October 2017

AshfordSteve

I've been lurking on here for a while and thought it was time to start posting.

My wife and I have a debt problem which we can deal with as long as we stay focussed and don't slip back into bad habits. When I first met my wife in 2007 she was starting a PGCE course and had some debt from when she had been working as a holiday rep. I saved hard and we purchased our first house in 2009, however we had been living in a fully furnished flat so needed to buy everything for the house. We also got married just after we moved, which is not something that I would recommend. After the wedding we had a five week honeymoon, although we did save money by staying with friends for most of the time.

My wife has studied and worked in a number of countries so we have friends spread all over the world that we've spent money going to see. We've been to America, Cyprus, France and Australia over the last six years which was wonderful but we are still paying for it.

Unfortunately my wife has had problems managing her money in the past and although I helped by transferring some of her CC debt to low rate cards in my name we never addressed the underlying issues. We have recently moved house so that my wife has a considerably shorter commute to work, and we are living in a much nicer area than we were before. The downside is that our mortgage payments have gone from £600 a month to £900 a month, however that is fixed for five years.

Since the move my wife and I have sat down, re-organised our finances so that all our expenditure comes out of one joint account, while we also have our own accounts for spending money. We have also worked out a budget and I have created several spreadsheets to track everything. We have also started to meal plan and do online shopping to keep our food spending under control as we had been spending over £400 a month on food for the two of us and our three cats. Our initial aim is to get down to £320 a month, and then continue reducing it gradually.

When we added up what we owe on credit cards and overdrafts in July when we started on this journey it came to £40,130 :eek:. This is not including the two cars we have on PCP plans, the loan we took for a new kitchen in our old home which still has 2.5 years to run, or the 10k we owe my parents. We are in the fortunate position of having a very good income as our net income is around £5500 per month, which means that we can clear these debts without having to make major lifestyle changes apart from keeping more of an eye on our finances and food spending.

I have snowballed things and that gives a DFD of October 2017, based on paying £1200 a month. This is doable for us and when the kitchen loan finishes in April 2016 we will have an extra £240 month to throw at it.

My goals are as follows:
1) to be clear of CC and overdraft debt by October 2017
2) to repay what we owe my parents by October 2018

If we can achieve these goals then we will be in an excellent position when we come to remortgage in May 2018 and should be able to reduce our term considerably.

So far we are doing well and have paid £2080 off in two months, we just need to keep it up which this diary should help us to do.

scottishspendaholic

Hello Steve!

Welcome! It sounds like you've got a great plan to follow & you are both on the same page.

Hopefully this doesn't sound like too much if a personal question, but do children feature in your plans for the next few years?

Good luck!

AshfordSteve

Hi Scotty,

kids are a possibility, but unlikely as my wife has PCOS. We are going to the fertility clinic, but they are not being very helpful and just keep telling my wife to lose weight without offering any practical help. The possibility of kids is another reason for wanting to get our finances sorted as our income would take a hit if my wife was off on maternity leave. I also do not want any decision about when returning to work to be based on money.

Steve

AshfordSteve

This week has been a bit hectic, so I have not had much time to post. It has also been a bit of an expensive week. I had a day off work on Monday so went to the local driving range and spent £19.75 on a card for 600 range balls. However this did save me money as if I had bought the balls each time I went it would cost £35. On Tuesday I was back at work and spent £9 on treats for my staff as it was my birthday. I also spent £9.10 on some Dermol 500 lotion, which is the only thing that keeps my skin under control and should last for three months.

Wednesday and Thursday were better days as they were NSDs. On Friday I spent £3 on lunch as the bread at home had gone mouldy. On Saturday I went to a different driving range as I had a few hours to kill while my wife was occupied, and spent £6.60 on some balls and £1 on a bottle of water. I did however resist all the shiny new clubs in the shop. I also had a haircut on Saturday at a cost of £22. This morning I've had a golf lesson with my local pro, which cost £30.

My total spending this week is just over £100:eek: The next two weeks should be a lot better. Last month I had 23 NSDs and spent less than £100, so I can be frugal.

Our chest freezer has decided to die this week, although we did not lose too much food as using the boost function kept everything frozen. We have had to pay out £150 for a new one which is being delivered today. However the good news is that we are staying well in budget on our food shopping this month and have only spent £145 in two weeks, compared to the £200+ we would normally have spent. Hopefully the money we save within our food budget will offset what we've spent on the new freezer.

My target for next week is to have six NSDs, wish me luck.

AshfordSteve

This week has been a good one so far. Monday, Tuesday and Thursday were NSDs, and on Wednesday I spent £8.77 on medication for my wife. She's given me £5 back, so I'm only £3.77 down. Monday was also productive as I sent a letter to cancel a GAP insurance policy on a car I no longer own, which will get me a 50% refund.

I had to submit my hours at work this week and it turns out that over the last five weeks I did an extra 12.5 hours, which will give me an extra £300 or so gross at the end of the month. I also earnt £285 gross via a staff incentive scheme which will pay out in December. So far this week I've done an extra 3.5 hours which will give me £85 gross at the end of November. I've also earned a further £55 in the staff incentive scheme.

Our shopping this week will be around £80, which takes our spend to £225 so far this month. We are away for a few days at the end of the month, and don't need to buy anymore cat food or wine this month so we should stick below £280 this month which will be a major achievement for us considering we were spending in excess of £400 a month.

MrsSmith2013

Hi Steve, thought I would pop in and say hello. You sound like you have a good plan in place, and I do love a plan! All my plans are in excel spreadsheets, a wonderful tool for deby busting!!

Will subscribe to your diary and hopefully help spur you along in your journey.

Good Luck!!
Mrs S x

AshfordSteve

Hi Mrs S, thanks for the support. I love excel spreadsheets as well - I've got at least half a dozen at the moment tracking various things. I find this time of the month frustrating as I'm waiting for a few statements to come through so I can update everything.

Last week was a long week at work, and I ended up doing 4.75 extra hours, and earned a total of £65 in the incentive scheme. I did end up buying some more medicines for my wife last week, and we were both unwell on Saturday so paid out for a takeaway. My total spending last week was about £25, even if it was spread over four days, totally wrecking my NSD target.

The one benefit of DW being ill last week is that it meant she didn't have to go on strike, so we won't lose any money there, and she didn't have to drive to work either.

This week has been a more sensible one at work, with only half an hour extra. I have however earned £70 from the incentive scheme. I think I've got £185 banked so far this month, but will need to add it all up at the end of the week.

We've also done our shopping online tonight, and spent just over £30 as we are away for part of next week. In total this month that gives us a spend of £235, which is a major improvement for us, and what we have saved pays for the new freezer we had to buy.

There should be some money left over at the end of the month, which means that we should be able to clear DW's dorothy perkins card which is down to about £400 outstanding, and we should dip below £37k outstanding in total.

AshfordSteve

This week was a profitable one at work. I've done a few extra hours, and earned £125 from our incentive scheme. So far I've done 7 extra hours this pay cycle (to be paid at the end of November), and since the start of September I've banked £515 from our incentive scheme, which will pay out at the start of December. I'll be aiming to add a further £200 to that next month as well.

DW has done well with her money this month, and has managed to save £200. This is going to go into our Christmas fund, so that we don't have to borrow anything at Christmas. I should also have £100 left, which will go towards paying something off. DW's Dorothy Perkins statement came through the other day, and has just under £400 on it. That will be cleared on Friday using the money we have left over at the end of this month and by bringing forward our normal direct debit payment. It feels like we are making progress!

AshfordSteve

Here is our SOA. We only moved house in June, so it is basically the budget we drew up then. I plan on reviewing this in the new year, when we will be able to have more realistic costings on some things, such as gas, electricity, water, and fuel. DW and I get £400 each a month for personal spending. This is money that we can do what we want with, and is also used to pay for things like haircuts and clothes.

There are some services we pay for with one payment - our internet is in with our phone bill and our gas and electric come out as one payment, so the splits on those may look odd. Buildings insurance also includes contents.

We have 3 cats at home - their food costs are included with our groceries.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3500
Partners monthly income after tax....... 1960
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5460

Monthly Expense Details
Mortgage................................ 898
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 148
Electricity............................. 40
Gas..................................... 37
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 22
Mobile phone............................ 82
TV Licence.............................. 12
Satellite/Cable TV...................... 32
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 275
Road tax................................ 0
Car Insurance........................... 67
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 28
Pet insurance/vet bills................. 24
Buildings insurance..................... 24
Contents insurance...................... 0
Life assurance ......................... 16
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 100
Emergency fund.......................... 0
personal spending money................. 800
bed loan................................ 36
Kitchen loan............................ 238
Cars (PCP).............................. 672
national trust.......................... 10
Professional fees....................... 36
Union fees.............................. 14
Pension................................. 90
Total monthly expenses.................. 4191


Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 0
Car(s).................................. 25000
Other assets............................ 0
Total Assets............................ 225000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 170000...(898)......4.89
Total secured & HP debts...... 170000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
First Direct CC................2789......84........5.9
Virgin CC......................3640......36........0
Halifax CC 1...................13830.....138.......10.9
RBS O/D........................750.......25........18.9
Barclaycard CC 2...............2636......75........25
Halifax CC 2...................1308......32........25.9
John Lewis CC..................1760......52........16.9
Barclays O/D...................1392......25........17.7
Dorothy Perkins................391.......25........29.9
Next...........................639.......62........26
RBS CC.........................2475......56........0
Barclaycard CC 1...............5640......138.......6.9
Total unsecured debts..........37250.....748.......-


Monthly Budget Summary
Total monthly income.................... 5,460
Expenses (including HP & secured debts). 4,191
Available for debt repayments........... 1,269
Monthly UNsecured debt repayments....... 748
Amount left after debt repayments....... 521

Personal Balance Sheet Summary
Total assets (things you own)........... 225,000
Total HP & Secured debt................. -170,000
Total Unsecured debt.................... -37,250
Net Assets.............................. 17,750




I don't know what the interest rate is on barclaycard 2 - DW is going to find that out, so I have estimated at 25%. Virgin is 0% until Jan 2014, RBS CC is 0% until June 2014, and they will both revert to 18%. First Direct and Barclaycard 1 were life of balance special offers, with no option to add to them. Halifax CC 1 is so high as we moved money from DW's cards that were at much higher rates.

AshfordSteve

I'm glad there's only a few days till payday - just because I want to finalise what is left over at the end of the month and use it. Last weekend was expensive as I spent £100 on euros for a trip I'm going away on this week. Saturday night was a bonus though as a works meal out for DW and I only cost us £20 rather than £60 or so. Unfortunately I then spent £25 of what I had saved on a bottle of whisky today - but I did save £10 on that.

I have still got £115 left in my personal account. I think I'm going to put half of that into my christmas fund, and half into paying the debt down.

AshfordSteve

At the end of October our total was down to £37,115, and the DP card has now been cleared. Our next target is the RBS overdraft, which is now our most expensive debt. Although the APR is 18.9%, they also charge a £6 per month fee for the privilege of using your overdraft. Given that we owe £720 on this account, the effect interest rate is 28.9%. This account will be cleared by the end of the month.

I have also worked out that each extra hour I do at work is worth £14.49 net, and the incentive scheme pays out at 60% of gross. This will make life easier in tracking what I am going to get paid.