Time to take command

cybercat

I worked away for a long time. From an earnings perspective I have done quite well for my family. My earnings have increased by a substantial amount based on progression (x160%), but along with that increase we have the cost of living, 2 new additions to the family and a growing amount of credit card debt.

While it is all relative, £19K of credit card debt is not great for me. It eats into any disposable income we would otherwise have, and limits our options for anything like going on holidays.

Yesterday I took charge of the finances. Why? My partner had fallen into managing all the financials for the house because I worked away. She needed access to all the accounts, and was there to keep an eye on things - but with the addition of 2 new family members, a increasingly hectic after school schedule and a growing anxiety over the CC debt, I've finally gotten off my fat backside and decided to manage it.

I'm sharing this mostly to force some sort of commitment on my part to take this seriously, and to make some effort. I'm also keen for any advice and suggestions from others that have worked their way out of a CC headlock.

I'll start with what I am doing right now.

1. I've identified some software that I feel will suite me. I'm trying a demo version of moneydance - partly because it runs on Linux, partly because it has the ability to write your own plugins (I can code) and partly because I have tried in the past to do this in Excel and Google Docs and it was a pain.

If moneydance works out I'll pay the £31 one-off. Nice features include a sync app for your phone, using a Dropbox account to shuttle manually entered transactions to the main software and account status back to the phone.

As I learn more about this I shall share here if there is interest.

2. I've started importing as much historical data as possible from my bank and credit cards. Santander offers a reasonable amount of historical data in plenty of finance data formats. HSBC on the other hand - sheeesh. Anyway, at some point I'll have to write some code to scrape the historical transactions, but for now I've got the last 8 weeks.

3. Once I've got the data for all accounts I plan to do some quick analysis of spending habits - and set some reduction targets on non-essentials. Small but achievable goals.

4. At the same time I am in the process of shifting balances around, scoping up promo offers on cards I already have capacity on to ensure every penny is at 0% interest. I can use moneydance to schedule shuffle alerts when these interest free periods are due to expire.

5. Longer term goals include, ensuring that we freeze the amount we are paying back.

By freeze I mean whatever the minimum payments are now - continue to budget for that amount going forward, even though the balances will be reducing.

The goal is to focus on one card at a time with overpayments - with my initial approach being hit the one which has the least amount of 0% on [any suggestions?].

I've set a stretch goal which is to overpay by £330 each month. We do make overpayments, but it has not really been coordinated or focussed so balances have been reducing but it feels like throwing rocks at a tank - I want to blow the tank up

6. Additionally we are attempting to sell a lot of stuff we have accumulated that we can afford to be without - I'm a hoarder by nature, so while I don't have lots of stuff worth £100's, we do have a lot of smaller items that collectively add up to £100's. So the approach I have taken is to create a £100 bucket. We keep ebaying/selling stuff until the £100 bucket fills up, then throw that at the card.

Now that might seem like common sense, but we have been poorly disciplined in the past and rationalised decisions in the past like this: "well we overpayed with that extra bit of money we got, so we don't need to pay the full amount - lets get a takeaway/go somewhere/buy something".

So the disciplined approach I hope to take is say, hey on Card A we paid the minimum + the £330 overpayment + we have this extra £100 - tank goes boom!

I did some estimates, but I hope to halve the CC debt within 20 months.

I hope to keep this thread up to date when I can, I'm hoping it will form part of a better more disciplined routine.

12_month_challenge

Hi

I am in a similar situation to you and have received some positive,valuable advice on here.

If you go on to whatsthecost snowball calculator it lets you put all your debts ito it. It then calculates it all for you and tells you how long it will take to clear.
I also have been juggling cards etc and have done a snowball calculator, and put the results on my email so I can check it regularly.

Already I am itching for payday so I can pay the extra on my first card and pay them off one by one.

Best of luck

cybercat

Ha, while you were writing your reply I was actually reading your thread!

I've not finished reading through your story yet, but it was awesome to see such positive and pragmatic advice from the community - to be honest it helped me a lot reading it.

I've already read through this B]daveramsey[.]com/blog/how-the-debt-snowball-method-works[/B having asked the question in my post about the best strategy for approaching a stack of credit cards. I noticed someone had kindly shared a reference in your post. Now I know! I stress over the APR like my other half, but this makes perfect sense.

Have you not been to Home Bargains before! an stuff in there is so cheap - I'm thinking we might skip using Tesco for at least cleaning products and toiletires and go their instead. We've phased most of our food shopping to Lidl (which I secretly love) except the fresh fruit and veg is aweful (others?).

We had our head in the sand, ignoring the issue, but you know what my biggest concern is, I know that right now we can easily smash these credit cards, I just worry about losing the energy or momentum.

I think thats why the above strategy for smashing the smallest card first appeals doubly so. It will be such a boost, and hopefully keep the enthusiasm up.

As a side note and general question to the rest of the forum - I'm looking at educating myself a bit more and wondered if anyone had experience with the Open University’s free course entitled 'Managing My Money'. If not I'll review it. Enrolment started a week ago - 100% online so I need to catch up.

12MC - good luck btw - we should keep swapping war stories.

12_month_challenge

Hi again and so glad your feeling more positive already.

I now have all my direct debits on the day I get paid. So while I am tucked up in bed my wages go in and my direct debits go out.
Hence having bills paid and leaving me with what I have left to steam through CCs.


Small steps is what I am doing and I found that reading through other peoples diaries and success stories is a great boost to keep you motivated.

Only a week ago I was at a point where I thought I would never be able to do this, however there is proof right here on this sight that it is definitely doable.

Keep us updated and best of luck

FireWyrm

cybercat wrote: »

If moneydance works out I'll pay the £31 one-off. Nice features include a sync app for your phone, using a Dropbox account to shuttle manually entered transactions to the main software and account status back to the phone.

I've just taken a look. I do like it. I'm a YNAB user (which doesnt work on Linux except in Wine) and often thought that it would be nice to write some custom extensions to the software to do what I want.

cybercat wrote: »

2. I've started importing as much historical data as possible from my bank and credit cards. Santander offers a reasonable amount of historical data in plenty of finance data formats. HSBC on the other hand - sheeesh. Anyway, at some point I'll have to write some code to scrape the historical transactions, but for now I've got the last 8 weeks.

On the other hand, Halifax offer OFX and QIF as standard and TSB do QIF quite happily.

Analysis your past transactions is a useful exercise in that it gives you an idea of future trend, but dont get hung up on it. The aim is to look forwards and change your habits, not keep on with old and naughty ones.

cybercat wrote: »

3. Once I've got the data for all accounts I plan to do some quick analysis of spending habits - and set some reduction targets on non-essentials. Small but achievable goals.

Why small? Go for broke, challenge yourself. You'll be suprised what you can achieve quite easily.

cybercat wrote: »

4. At the same time I am in the process of shifting balances around, scoping up promo offers on cards I already have capacity on to ensure every penny is at 0% interest. I can use moneydance to schedule shuffle alerts when these interest free periods are due to expire.

Yes, alerting is one of the things that bothers me about YNAB. There really aught to be a better way to do this.

cybercat wrote: »

5. Longer term goals include, ensuring that we freeze the amount we are paying back.

Your first goal should be to ensure you do not spend any more money on the cards. As so often happens in these cases, you end up in twice as much trouble as before due to continued spending patterns.

cybercat wrote: »

The goal is to focus on one card at a time with overpayments - with my initial approach being hit the one which has the least amount of 0% on [any suggestions?].

Not always the best or most efficient option. You might want to look at a snowball calculator which calculates the most efficient payment path taking into account factors such as interest and period.

cybercat wrote: »

I've set a stretch goal which is to overpay by £330 each month. We do make overpayments, but it has not really been coordinated or focussed so balances have been reducing but it feels like throwing rocks at a tank - I want to blow the tank up

Treat debt like a payment. You are not paying debt, you are paying a bill and it must be paid on time every month without fail. It gets paid first above all else other than priority bills. The secret is to pretty much automate it and forget about it.

cybercat wrote: »

Now that might seem like common sense, but we have been poorly disciplined in the past and rationalised decisions in the past like this: "well we overpayed with that extra bit of money we got, so we don't need to pay the full amount - lets get a takeaway/go somewhere/buy something".

Been there, done that. Got the T-Shirt. You are making the first critical step which is getting some sort of accounting software in place. You cant run multi-thousand pound per year budgets with a finger in the air and a hope in your heart. If everyone ran their household budget like a business account and they had to answer to HMRC for every transaction - they wouldnt be in half the trouble most of them are.

cybercat wrote: »

I hope to keep this thread up to date when I can, I'm hoping it will form part of a better more disciplined routine.

Probably better to move it to the Diary section then since this is more of a running board rather than a static 'read stories' board.

cybercat

Hey FireWyrm!
MoneyDance is not to bad. Manually confirming and categorising 12 months of transactions was a bit slow - the UIX leaves a lot to be desired, mostly through lack of obvious keyboard shortcuts that would make processing transactions in batches a little easier. I am planning on looking at the Python API for it, might try some NLP or even machine learning on the transaction label to improve auto-categorising.

I've found that most offer QIF or something else to import, I took your advice, and I've concentrated now on saving/clawing back money and budgeting.

With you on the snowball calculator. I quickly put something together myself to help me. I initially ordered overpayment priority to the lowest remaining balance, and sorted everything into ascending order after that.

I've also added some additional sections that allow us to see immediately what those extra £50 here £20 there outside of our main overpayment plans can do.

I've since tarted a balance around, so the lowest figure on a CC is also the one with the highest rate. I'm now treating the snowball and interest rate as two things deal with agnostic to each other - continue repaying lowest to highest balances, whilst tarting balances around once the 0% expires - but 80% of the debt is on longterm 0% periods.

So with the snowball calculator, some initial areas I've identified we can claw overpayments from, we are looking at CC debt free by Feb 2017. That's almost £20k we will clear if we stick to the plan.

Good shout on the debt as a payment - we have DD setup for each one, but the overpayment will also have an additional standing order setup on the 1st of each month - thanks!

Finger in the air perfectly describes how we have managed our finances.

To date I have:

* Decided to sell a car ( we have 2 on finance) - this will claw back a decent wedge each month, plus the TCO factored in [tax, tyres, fuel, mot, service, insurance].

* Giving up boutique coffee - I worked out how much I spent each month on coffee - I'm too embarrassed to say, but shamed enough to do something about it.

* Just dealt with Gas & Elec. Was E.on Fixed v6 - switched to V14 which saves nearly £200 a year - plus the lowest exit fee so can switch around if the numbers work out. New plan kicks in March. Signed up to the Cheap Energy Club service for future notifications.

* Improved meal planning and food shop budgeting (we didn't do that bad - but so much impulse buying).

* Had a massive garage clearout - based on very modest estimates and some time watching end price of similar/exact items, I've pulled out about £250 worth of stuff for ebay.

That's my completed/partially completed actions for now. I also plan to haggle with Virgin Media - any pointers on package downgrades part way in (over 6 months). It's the TV part of a TV, Phone, BB package, literally useless to us.

I started wombling - found about £2.80 in change between out and about and loose change from the garage clear out. Found about 50 clubcard points and I didn't realise till I looked, but had 1058 e.on points now converted to Tesco (not technically a womble).

My aim is to be able to say "debt free" by end of next year (2016). So if I can find a few extra pockets of cash to flow towards the CC I can actually watch months drop off the end date on my calculator.


*** MODS - can you switch this to the DFW Diary forum please - either I'm too new or users don't have that functionality ***

FireWyrm

cybercat wrote: »

Hey FireWyrm!
MoneyDance is not to bad. Manually confirming and categorising 12 months of transactions was a bit slow - the UIX leaves a lot to be desired, mostly through lack of obvious keyboard shortcuts that would make processing transactions in batches a little easier. I am planning on looking at the Python API for it, might try some NLP or even machine learning on the transaction label to improve auto-categorising.

Perhaps. I tried the other day with it, but I just dont like the way that the budget it laid out. I make extensive use of master/sub categories in my budgets and apparently not being able to do this bothers me no end. The only thing I could see that was an improvement on YNAB was the calendar with reminders but really, that isnt too hard to get around. I was initially intrigued with the idea of an API, but honestly, I couldnt think of much I actually wanted to do and there dont seem to be too many others who thought so either judging by the 'market place' offerings (all 5 of them).

Give YNAB a look. There is no API, but I know for a fact it runs in Wine. It is a well thoughtout and well executed piece of software. It is free for 34 days, so, nothing ventured in a looksy. It may work better for you.

cybercat wrote: »

I've found that most offer QIF or something else to import, I took your advice, and I've concentrated now on saving/clawing back money and budgeting.

You know the old saying; take care of the pennies and the pounds take care of themselves. It is absolutely true. I refer you also to the Micawber Principle. Every penny you can save is a penny earned for you at a later date. If you work diligently, in about a year, you will suddenly realise you have never had such a balance in your accounts. I've gone from minus £2000 to positive £6000 in a year, just by taking care.

cybercat wrote: »

With you on the snowball calculator. I quickly put something together myself to help me. I initially ordered overpayment priority to the lowest remaining balance, and sorted everything into ascending order after that.

Did you take into account when the dates of 0% offers are ending? Balance transfer fees should be taken into account also. Tarting from one card to another can quickly become expensive if you are paying hefty fees each time. Better to pay off the earliest ending debt first in that case.

cybercat wrote: »

So with the snowball calculator, some initial areas I've identified we can claw overpayments from, we are looking at CC debt free by Feb 2017. That's almost £20k we will clear if we stick to the plan.

Ah, the word is IF. This is where most people fall flat on their faces first time and where you must be most diligent and disciplined. It is an area that is often overlooked in the rush of a busy week and the feeling that a bottle of wine is deserved. If you know you are going to need these types of 'frivilous' spending, then it is counter productive to pretend that it wont happen. Build it into your budget first off and see where you go from there.

cybercat wrote: »

Good shout on the debt as a payment - we have DD setup for each one, but the overpayment will also have an additional standing order setup on the 1st of each month - thanks!

No problem. I've found that debt paying is best done silently and as much beneath my notice as possible, just like paying taxes. If I actually contemplate my tax bill each year, I end up frothing...same with debt. It is easiest to pretend that the money never existed in the first place and wasnt yours anyway.

cybercat wrote: »

Finger in the air perfectly describes how we have managed our finances.

Does for most people (me included) up until we see the light. In retrospect, it is obvious and I dont see why more people do not embrace basic principles of accounting. In times past, we might have had an excuse in that many people were only semi-literate, but we have computers, software and education at our command. We should all, without fail, be using it. As it is, most homeowners are going to get a shock when their fixed rates come to an end and they have to face the inquisition that is the mortgage market review now required by law. Finances always used to be examined in depth by the bank, but we have grown lazy and stupid in the last 20 years expecting it to just be ok instead. Best get into the habit of proper accounting now and just keep it up as a way of life going forwards.

cybercat wrote: »

* Decided to sell a car ( we have 2 on finance) - this will claw back a decent wedge each month, plus the TCO factored in [tax, tyres, fuel, mot, service, insurance].

If the car is on finance, it is not yours to sell - unless there is a separate credit loan that you are intending to satisfy. In any event, be very sure that you can satisfy the debt before you sell the car as it is a depreciating asset.

cybercat wrote: »

* Giving up boutique coffee - I worked out how much I spent each month on coffee - I'm too embarrassed to say, but shamed enough to do something about it.

Costco do 1Kg of Lavazza beans for £7.99. You can buy a cafetiere for £14 from Argos and a spice grinder from Amazon for about £15. Those three together will keep you in coffee for a month.

If you can, get a costco card...trust me. Worth every penny.

cybercat wrote: »

* Just dealt with Gas & Elec. Was E.on Fixed v6 - switched to V14 which saves nearly £200 a year - plus the lowest exit fee so can switch around if the numbers work out. New plan kicks in March. Signed up to the Cheap Energy Club service for future notifications.

Have you thought about non-mainstream energy providers? Co-op do gas/electric. Their cheapest tarriff heats and lights a standard house for about £980 a year. The standing charge is only £70 a year - something I'm pretty sure you are not getting with E.on.

cybercat wrote: »

* Improved meal planning and food shop budgeting (we didn't do that bad - but so much impulse buying).

A dry wipe board marked up for 31 days and markers should be looked at too. We plan meals monthly and only what is needed is purchased. Does wonders for the food budget I can tell you. If you want to see how I handle budgets in YNAB for food, search some of my posts with YNAB in the title.

cybercat wrote: »

That's my completed/partially completed actions for now. I also plan to haggle with Virgin Media - any pointers on package downgrades part way in (over 6 months). It's the TV part of a TV, Phone, BB package, literally useless to us.

Hmm...

First off, haggle with them on the price of line rental. I got Sky to accept £140 annual payment for line rental if I paid it all upfront and broadband thrown in for free. Line rental is a rip off and BT are doing it for £12 per month. If you argue with Virgin and can show that BT are cheaper, chances are they will price match.

TV....we ditched it over 12 months ago and never looked back (along with the license fee). Honestly, you would be surprised the amount of time you have 'spare' if you dont have a box to run to. I bought a PS3 instead and we watch catchup occassionally. I say ocassionally because I have many other things to occupy my time such as sewing, reading, painting, cooking (for fun...yes, it does happen), crafts, writing etc. As part of this, I have been setting aside £50 a month for 'entertainment' which is intended to purchase any box set the family want. So far, I havnt spent much of it at all.

cybercat wrote: »

My aim is to be able to say "debt free" by end of next year (2016). So if I can find a few extra pockets of cash to flow towards the CC I can actually watch months drop off the end date on my calculator.

Nice feeling isnt it.

cybercat wrote: »

*** MODS - can you switch this to the DFW Diary forum please - either I'm too new or users don't have that functionality ***

You cant move it, only Mods can. If they dont, just start another thread over there and link back here.