CC & loan free within 6 years?

bertiewhite

I just thought I’d illustrate my situation and put forward a couple of ways I’ve found to make life financially better for myself.

I got divorced a couple of years ago, gave my ex the house (to avoid her having a claim to any pension) but racked up solicitors fees of around £4000. After renting for a year my new partner (now wife) & I were desperate to have our own house so we got a mortgage and a loan in order to put down a deposit (bad I know but we were desperate). Without going into too much detail I found myself last year with 3 credit cards, half way through paying off the loan and maxing out my £4K overdraft most months.

I took stock of the situation and shifted some CC debt around to take advantage of 0% transfers. Not all of the balances are 0% but the majority of them are. So to sum up my financial situation at present:

Debt
Mortgage…………………………………..£115K
Barclaycard………………………………..£10K
Virgin……………………………………...£5K
Tesco………………………………………£300
Loan 2 years left.………………………….£6K
Overdraft (approx)…………………….…..£2K

Monthly outgoings
Take home pay……………………………£2350

Mortgage…………………………………..£793
Loan payments…………………………….£268
Gas & Elec………………………………....£200
Council Tax………………………………..£108
Water bill…………………………………..£54
House insurance……………………………£26
Car insurance……………………………….£17
Field rent (for 4 horses)……………………£160
Fuel (average)………………………………£150
Barclaycard minimum………………………£240
Virgin min…………………………………..£80
Tesco min…………………………………...£25
Bank overdraft fees…………………………£33

I don’t think there’s anything else commitment-wise.

Now just to explain a bit more, these really are the only financial commitments I have because my wife’s part-time & stepson’s full-time jobs pay for BT phone and food etc. which means I can concentrate on sorting the debt out.

So what’s my plan? Well I’m due to work abroad for 4 months from mid April and I’ll be earning more. Coupled with the fact that I won’t be using fuel means I should clear most of my overdraft by the time I get back. Once that’s cleared I’ll be able toconcentrate on paying off the cards using the cascade method.

I’ve recently re-negotiated my mortgage to £642 per month with Virgin as my LTV had improved and also my energy usage has slightly dropped meaning my DD has dropped to £177. Any other suggestions would be welcomed but I don’t think I can get my DD’s down any further. I know some will say get rid of the horses (and they are worth around £1500 in total) but they do keep us active and stop us spending money elsewhere. I would ideally like to be CC & loan free within 6 years as I will “retire” from my public sector job in 2020 and I want to use my lump-sum & annual pension for good stuff instead of paying off debts.

bertiewhite

Right, I’ve replied to another thread about addressing spending before you can tackle debt and I think I should put what I’ve done as part of my debt-free diary.

Basically, I was always a sucker for wanting to treat the family. I found it hard to say “no” to buying treats for them and always gave in, thinking I’d be Mr. Unpopular if I didn’t. My wife and I have separate bank accounts because I am away with work quite a lot and I like to know that the bills are covered so I decided to use this to my advantage even further.

I now use my wages for everything necessary and by necessary I mean exactly that – bills & debt management. My wife works part-time and my stepkids both have jobs now so a few weeks ago I had them altogether and announced that if we want treats & luxuries in the house then they will have to get them. That way I can concentrate on sorting the debt out because it was the unnecessary spending that was the root problem.

It seems simple and obvious now but like I say – I felt like I needed to buy things to keep everyone happy. I actually feel quite liberated because with the aid of a running balance spreadsheet I can forecast & plan how much I’m going to pay off debts each month whilst at the same time reducing my overdraft and because of that I know that if I’m disciplined for a while I will be back in the position to be able to treat the family again, only I’ll be able to properly afford it this time instead of using credit because I won’t be paying interest and overtime, payments will come down.

Hope this makes sense because it does to me and for the first time in a long, long while I feel in control of my finances instead of other people

bertiewhite

Quite a lot of water has passed under the bridge since I last posted on here so a quick update....

Last year I got promoted and with a new job came a pay rise and a new location. Kids moved out so we downsized. We were able to buy our new house for less than we sold for so our mortgage amount and hence monthly payment reduced. Also, the horses died (naturally) and we decided not to replace them. My loan came to a close and I was still paying quite a large amount on credit card repayments each month so I took out a Tesco Clubcard loan (3.2% I think) to cover most of them and my overdraft which meant a saving of around £150 on debt repayments but most importantly, I know the loan will be repayed within 5 years whereas I might never have paid the CC's off.

The only downside is that my wife is no longer working due to health issues but we do seem better off.

Here are my current figures with figures from 2 years ago in red:

Mortgage…………………………………..£97K 115K

Take home monthly pay……………………………£2559 £2350

Mortgage…………………………………..£566 £793
Loan payments…………………………….£401 £268
Gas & Elec………………………………....£83 £200
Council Tax………………………………..£119 £108
Water bill…………………………………..£37 £54
House insurance……………………………£26
Car insurance……………………………….£26 £17
[STRIKE]Field rent (for 4 horses)……………………£160[/STRIKE]
Fuel (average)………………………………£120 £150
[STRIKE]Barclaycard minimum………………………£240[/STRIKE]
Virgin min…………………………………..£43
Tesco min…………………………………...£25
[STRIKE]Bank overdraft fees…………………………£33[/STRIKE]

I've also cut back on meals out, takeaways etc. started to transfer £200 into a savings account at the beginning of each month. Already I've been going through my spending this month and thought to myself "I'm doing really quite well lately with the amount of 'disposable income' still left over before payday" and then I remembered that I'd already put £200 away as well which was an amazing feeling!!!

bertiewhite

Bumhats, just as soon as I start posting again about some positive news on my financial situation these days, the exhaust went on my car yesterday afternoon.

Luckily though, it was just the back box. I phoned ATS who quoted £85 fitted and they could do it yesterday afternoon. Another quote form my favourite "backstreet garage" said he could do it for £50-60 so it went in this morning. Unfortunately he'd forgotten to quote VAT so it ended up being £79 altogether but it was still slightly cheaper than ATS and given that the car now has 97000 miles on it from new and it's the first time I've had to touch the exhaust, I can't complain.