Time to destroy the debt

Cyrus

Time to destroy the debt.

After finishing University, moving from one of the cheapest places to live to one of the most expensive and going on a massively expensive three week holiday to the states I managed to build up quite a bit of debt. At the worst point it was just over £8400 but I’ve already managed to bring it down a bit to about £7000. The only thing I can be proud of and need thank all you guys on the forum is that I have never payed any interest on any of my debt by using 0% on purchase cards and balance transfers (this excludes my student loan, I like to ignore that…).

The way I’ve worked my financial motto of never pay for debt is balance transfer a couple months before the 0% is due to run out onto another card that’s got a good time allowance on 0% balance transfers. I would then close the account that was now cleared ready to be offered some tasty 0% balance transfers after about 12 months. AND ALWAYS SET UP A DIRECT DEBIT FOR AT LEAST THE MINIMUM!

So at this point in time I have 3 credit cards on the go:

(1) Bank of Scotland - 0% on purchases and balance transfers until July 2014 - balance = £70.00

(2) First Direct Gold Credit Card - 0% on balance transfers until November 2014 - balance = £108.04

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £5078.70

So credit card (1) and (2) will be payed off by the end of this month which will leave me with just credit card (3).

I also have an overdraft with Bank of Scotland and due to an error on their part, I pay no interest on this too (They have left it as a student account even though I graduated in 2009… score!).

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1659.96

So with over draft a possible time bomb I have decided to focus on getting the balance down to zero as quick as possible.

The plan is - 10 monthly payments of £166 starting from August 2014 ending in May 2015.

Alongside the over draft repayments the direct debit has been set for (3), minimum payments of 1% of the balance. This will continue until June 2015 when the over draft has been cleared. The direct debit repayments will then increase to £210.

So, from June 2015 till October 2016, 17 monthly payments of £210 = £3570.

So when the 0% balance transfer runs out on (3) the balance should be about £930. An easy balance transfer to another card but most likely due to bonuses from work it won’t be needed.

This is the plan but a plan made on assumptions, and as my Dad has always said “assumptions are the mother of all **** ups”. Worst case I could loose my job not even be able to make the minimum repayments, the bank of Mum and Dad would have to be called upon. Best case, apart from winning the lottery, is I continue to get quite a decent bonus and pay rise from work over the next two years and all this debt will be payed off sooner than expected.

My aim of this thread is quite selfish, I just want be able to monitor my progress and look back when it’s all payed off. If anyone gets any helpful tips then that’s an added bonus. Also if you see any holes in my plan please let me know.

Cyrus

(2) First Direct Gold Credit Card - 0% on balance transfers until November 2014 - balance = £0.00

So as an update:

(1) Bank of Scotland - 0% on purchases and balance transfers until July 2014 - balance = £70.00

(2) First Direct Gold Credit Card - 0% on balance transfers until November 2014 - balance = £0.00

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £5078.70

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1659.96


Total = £6808.66

Cyrus

Got confirmation today that my First Direct Credit Card account (2) is now closed. One down, three to go.

Mega tight at the end of this month though as road tax is due and need a few parts for the car to get it ready to be MOT'd.

Another 0% on purchase credit card is looking more and more inviting...

Thistlewhistle

Hi Cyrus,

Following your progress with interest - hope you don't mind me nebbing in!!!

Doesn't it feel great to blast one debt out of the water! Even if it's only a small amount it feels like you're moving forward. Well done.

I'm about to start my Debt Free Wannabe Diary myself and have a similar debt to you. Perhaps we could support each other?!

Thistle

Cyrus

Thistlewhistle wrote: »

Hi Cyrus,

Following your progress with interest - hope you don't mind me nebbing in!!!

Doesn't it feel great to blast one debt out of the water! Even if it's only a small amount it feels like you're moving forward. Well done.

I'm about to start my Debt Free Wannabe Diary myself and have a similar debt to you. Perhaps we could support each other?!

Thistle

Yo Thistle,

Thanks for the comment, yeah it feels awesome. That card had £3000 on it 18 months ago so good to finally give it the chop.

Yeah for sure, get your diary started and I'll check it out.

Cyrus

(1) Bank of Scotland - 0% on purchases and balance transfers until July 2014 - balance = £0.00

Update:

(1) Bank of Scotland - 0% on purchases and balance transfers until July 2014 - balance = £0.00

(2) First Direct Gold Credit Card - 0% on balance transfers until November 2014 - balance = £0.00

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £5078.70

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1659.96

Total = £6738.66

Cyrus

Been a month since my last update, only paid the minimum on the CC as it's been an expensive two months with car's MOT, road tax, holiday and girlfriends birthday. According to the plan; I'm due to start paying off my OD in August by quite a hefty monthly amount, £166. And continue paying off the minimum on the CC until the OD is payed off.

So as an update:

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £5027.92

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1660.00 (I transferred out £0.04 to round it down to a nice number, OCDish, I might have a problem...)

Total debt: £6687.92

Cyrus

So, after pay day I fired £166 into the overdraft and then the minimum payment for the credit card came off, £50.78. Had a wedding at the beginning of the month at the other end of the country so spent my monthly budget for fuel in the first 8 days... Going to be a tight month again.

So as an update:

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £4977.65

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1494.00

Total debt: £6471.65

Cyrus

That time of month again for an update. Been an average month spending wise, got a wee bit of overtime this month so that helped out. Still sticking to the plan, so far so good.

So as an update:

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £4927.88

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1328.00

Total debt: £6255.88

Cyrus

Another month another chunk of debt payed off. Treated myself to a few wee bits, maybe more than few but I did get an extra payment this month for being on call. Still probably spent more than I should so this month is going to be tight...

So as an update:

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £4878.61

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £1162.00

Total debt: £6040.61

Cyrus

So still sticking to the plan but I'll probably have to miss the next repayment on the OD next month due to xmas and new year plans. Payed in this month though so here goes...

(3) MBNA Credit Card - 0% on balance transfers unit October 2016 - balance = £4829.23

(4) Bank of Scotland over draft - 0% unit they find out (which could be anytime) - balance = £996.00

Total debt: £5825.83