Determined to get from £13K to £0 debt!

courage2change

Long time lurker newbie alert! You may wish to click back NOW as the next few posts will be long.. Promise I won’t be offended if you do J

Hi everybody…. Really love what I’ve been reading on this site (for a long time now), and whilst I’ve made some good progress recently on my own, I KNOW this might not last and there will be some very difficult times on my journey so I’ve plucked up the courage to start a diary for 2015 :T

I’m always, always amazed when I read diaries on here and see what is possible. Especially when i get to the "current" posts of the diary and realise "these are actually REAL people doing this!!" Haha. Used to read the diaries and think – “That’s brilliant but I can’t do that / how can I ever clear my debts or overpay my mortgage”. I’ve decided that 2015 is the year that I do exactly what I think I could never do!

Who does this journey involve: myself – 37 (I’m a girl – ok woman), and my 15 year old DD J and we are from the east coast of Scotland.

Have always been very independent and was very financially savvy / a saver when I was younger, so earning quite well, i built up a big deposit and took out a relatively large mortgage 5 years ago (in my attempt to provide my daughter a lifestyle I didn’t grow up with! Haha). :cool:
I love my home (dream home) and can afford my outgoings but it currently runs until I'm 66 and I always wonder where my money goes! No thank you!

The debt started after moving and then savings gone saying -
"oh, how will I pay for our usual big Xmas this year? I know, I’ll get my first Credit Card!" And then, "oh how will we have 2 weeks abroad as usual this year?" etc... Oops! Since then I’ve moved the debt around, added to it, consolidated, reduced it a bit, added some more… well, you know the story! And here I am £13K later! :eek:

My LBM was just before Xmas 2014 and in the next post I will try to outline what I have done since then to start me on my (rest of my frugal life!) journey.

C2C :A

courage2change

Total debt start December 2014: £13,214

I know (from experience and my research on here) that consolidation doesn’t work a lot of the time but I also read advice on here that moving any debt with interest to 0% is a good idea (obviously).. SO, to kick start my plan I decided on a money transfer of £8500 (including transfer fees) with MBNA at 0% (3% fee) for 19 months. :eek:
This has saved me a fortune in interest (as long as I pay or switch before it ends preferably the former!)
Used this as follows:

· £4471 - Paid off high interest HP car in full (monthly payment on this was £199 per month until August 2016)
· £2300 – Overpaid BOS loan, balance was then reduced to £3229 at 12.9% APR. Monthly payment is £156 but it’s flexible and OP’s are easy whereas the HP was more complicated to OP
· £1000 – Paid off OD and closed
· £450 – CC paid off – the balance was always paid in full each month so didn’t have any interest, but I ended up using the £500 limit again each month! This transfer has freed up more of my salary for overpayments / savings! Think I should close this account but not sure if a good idea in case of emergency / large purchases that need protection?
· The transfer meant around £250 in transfer fees but I have saved much more of that in interest on the car and loan. The rest of the debt will be paid by pure hard work!

Since December I have also overpaid the BOS loan by a further £1,236 with:

· £250 overpayment from salary end Dec
· £300 overpayment from salary end Jan
· £500 vested shares
· £186 lots of small overpayments with money saved from weekly food shops, eBay, TCB, account tidies, not having takeaways, driving less so using less petrol etc

Debts as at 5th Feb 2015:

· £1948 – remains on BOS loan at 12.9% - original end date August 2018, current end date March 2016 (30 months early), target end date end May 2015 (39 months early) :j
· £8234 – MBNA – 0% until August 2016, minimum monthly payment £85
· £1764 – HP sofas and furniture – 0%, last payment June 2017, monthly payment £58. Never again will I buy something without saving first….

Total debt start December 2014: £13,214
Total debt as at 5th February 2015: £11,888

= £1326 paid / 10% :j

courage2change

Savings and next steps:

During the same time, I have also saved as follows:

· £1100/£1000 – Emergency Fund = 110%. Want to keep adding to this!
· £500/£1000 – Home improvements / maintenance = 50% (in order not to end up with any more HP!)
· £70/£500 – Xmas 2015 = 12% :A First time for a long time that i have done this!
· £100/£250 – MOT / Service 2015 (May) = 40%
· £50/£100 – Unexpected car maintenance = 50%
· £0/£300 – Car Insurance 2015 (August) = 0%
· £0/£100 – Road tax (Jan 16)
· £0/£150 – DD 16th b-day (May) = 0%
· £180/£? – Future holiday fund = ?%
· £6.42/£50 – Iceland savers (December) = 13%
· £20.92 – Clubcard points (December) = 42% (will be spending less therefore gaining less points this year!) J

In my 2015 monthly budget, I have allocated between £200 and £500 per month to add to these pots.

Whilst I would love to do overpayments using some of these savings to fully clear the loan, this is what caused the debt to accumulate in the first place.

What I have learned from reading on here and from my previous (undiarised) debt clearance attempts: Plan ahead for key annual expenditures so that I don’t have to use the CC or all of the month’s spending money … resulting in GIVING UP!

Therefore, my plan is now as follows:

· Allocate decent “pots” for various monthly spends – I have this in place and it’s worked since the turn of the year really well! I’ve been surprised at how conscious I am of how much is in each “pot” and find myself saving “do I need it / can I afford it” etc :money:. When we put our minds to something it’s amazing what can be achieved… Makes me very annoyed at myself for getting this debt
· Continue to allocate monthly savings to “pots” so I can see each individual target being met and build up the emergency fund to 3 month’s salary (my contract has 3 month’s notice but still…)
· Ensure all regular annual expenditures planned for as much as possible
· If something comes up, no need to panic and throw in the towel – I have an emergency fund! The more I add to this, the more confident I am getting in my ability to save!
· Continue to use additional income / savings from each of the monthly “pots” to make regular overpayments to the loan
· CLEAR THE REST OF THE BOS LOAN – Target date end May 2015
· When the loan is cleared by end of May, I would love to start making overpayments on the mortgage (£162K) but also focus on the 0% debt

courage2change

Plan to clear remaining BOS loan balance of £1,948 by end May:

· £400 - Regular monthly payment of £156 for Feb, March, April and May – monthly interest is currently around £50 but this will reduce each month as the balance reduces (I think?)
· £300 – overpayment end February
· £300 – overpayment end March
· £250 – overpayment end April
· £250 overpayment end May
· £85 FREE cashback awaited from TBC for various things like taking the free trial for a credit report (now cancelled!), all tracked and confirmed – just waiting for this to become payable
· £150 – part of a bonus confirmed for end March
· £100 – expecting to save this from February “spend pots”. I am on track to save around £200 by the end of this month ....but I am not putting huge pressure on myself for this as that’s where it goes wrong for me! I have 3 weeks until payday and the first £100 saved will be OP'd. If I save more than £100, the rest will be allocated to savings pots.
· Leaves £142 – still to find to reach my target date of end May 2015! I’ve currently got bids of net profit of around £15 on my latest eBay lot and will be adding more. I’m also trimming little £’s from the monthly spend pots as we go through the month (not including the £200 forecast savings at the end of the month) so if I keep this up until May I should find this difference of £142!
· I am also currently reviewing all monthly bills and seeing where I can make savings – more to follow on this as advice will be welcome :money:

If I work really hard I could probably reach the goal to clear the loan earlier, but I am trying very, very hard not to get ahead of myself for once in my life!!!

If you haven’t yet given up reading this or haven’t fallen asleep on top of your keyboard / ipad during the process of reading then any tips / hints welcomed! I’m used to talking to myself but would still be nice to have some company!

Thanks for [STRIKE]listening[/STRIKE] reading!
C2C :A

courage2change

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 3412
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3412
Monthly Expense Details
Mortgage................................ 624
Secured/HP loan repayments.............. 58
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 147
Electricity............................. 39
Gas..................................... 93
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 40.37
Mobile phone............................ 37.39
TV Licence.............................. 12.12
Satellite/Cable TV...................... 53.62
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 150
Road tax................................ 15.75
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 80
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 60.99
Contents insurance...................... 0
Life assurance ......................... 42.86
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 20
Entertainment........................... 200
Holiday................................. 100
Emergency fund.......................... 100
Total monthly expenses.................. 2344.1

Assets
Cash.................................... 1995
House value (Gross)..................... 205000
Shares and bonds........................ 1500
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 212495

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 162381...(624)......3.04
Hire Purchase (HP) debt ...... 1706.....(58).......0
Total secured & HP debts...... 164087....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
BOS Loan.......................1948......158.9.....12.9
MBNA CC .......................8234......85........0
Total unsecured debts..........10182.....243.9.....-

Monthly Budget Summary
Total monthly income.................... 3,412
Expenses (including HP & secured debts). 2,344.1
Available for debt repayments........... 1,067.9
Monthly UNsecured debt repayments....... 243.9
Amount left after debt repayments....... 824
Personal Balance Sheet Summary
Total assets (things you own)........... 212,495
Total HP & Secured debt................. -164,087
Total Unsecured debt.................... -10,182
Net Assets.............................. 38,226

snowscreamer

Good luck! Your situation sounds similar to mine (got a bit carried away with credit cards) only mine was mostly on home improvements and a poorly-timed expensive holiday last year. Went from £7500 cash after house purchase completed (end of March 2014) to -£6400 by November. Eeeek! So since my LBM at the end of November I am now learning how to budget for the first time. Previously just spent what I thought I could afford and it seemed to somehow balance itself out. That was all pre-house though!!

Turns out I am relishing budgeting though. Doesn't really feel like we are cutting back yet we now have a £500+ surplus at the end of each month even with planned spending taken into account. Oh and I have become totally addicted to YNAB! If you don't have it yet so you should get it. Taught me a whole different way of thinking about income vs expenditure.

Good luck on your journey!

debtfreeoneday

Will subscribe to follow your journey.. you sound organised and in a great frame of mind, so sure you will achieve your goal.. 10% paid off is great.

I echo the YNAB suggestion.. I love it and it's transformed how I budget and save for things..

Well done so - have a great day!

courage2change

Thanks very much for the best wishes and advice Snowscreamer and DFOD! :beer:

What is YNAB?? :cool: It sounds like something I want even though I don't know what it is :rotfl:

Made an £18 overpayment to loan today.. Need to create a signature.

I also went for the weekly shop and came in £12 under budget :money:

Tonight I do listings for at least 5 new items on eBay. I currently have £20 of bids (net after fees and P&P as long as they get paid).

Need to create a list of phone calls to make - really want to get utilities down - i.e. mobiles / sky.

I did the MSE energy savers comparison last week and I could save £42 a month! HOWEVER I am currently in debit of £350 on my gas and £50 credit on electric so I can't move this until the bill evens itself out :mad:

Hope everyone is having a good MSE Friday!
C2C :A

debtfreeoneday

YNAB - you need a budget, software effectively that helps you manage / plan your budget.. have a look at the video.. I admit it took me two attempts to get it, but I love it and spend way too long messing with it and trying out different money scenarios.

Well done on the loan overpayment, it all adds up!

courage2change

Thanks DFOD! I'll have a look..

Just noticed the balance that you have paid off - WOW - you must be very proud :T Congratulations and good luck getting the rest of the balance cleared soon!

To Do:

Signature - DONE
eBay - 2/5 done so far tonight
List of suppliers to call has been created

Of note: I currently have a sky package but still have virgin for phone and fiber optic broadband (because i was still in contract for that when i moved the tv)......
Sk*y are doing £105 cashback and free BB or fiber for 6 months to switch! After the 6 months free I will still be cheaper each month than at present.

So definitely need to investigate that further :money:

C2C :A

courage2change

Good Afternoon MSE

Didn't get my other 3 eBay items listed last night (the sofa was far too inviting and it was nice to relax!) but i will do more tonight.

Got a message this morning saying that a work night out that I had stupidly agreed to to next weekend has been cancelled :T
That makes me sound very unsociable but I had plotted £25 for it so decided the money angels must want me to overpay instead! So it's now done :j

I'm on a roll with overpayments this week, really hope this focus remains!

The loan has now reduced to £1905 with my plan to clear by end May now as follows:

£400 - 4 x regular overpayments of £159 minus rough interest
£300 - overpayment end Feb
£450 - overpayment end March (including £150 bonus)
£250 - overpayment end April
£250 - overpayment end May
£85 - TCB (all tracked and waiting to become payable)
£100 - i am on track to save around £150 from Feb salary so this £100 is not yet definite but looking good
£20 - net eBay profit minus all fees and p&p based on current bids
£85 - still to find - this number was £142 a few days ago! :T

Once the above has been done, my debt will be under £10K and all at 0%.... Don't like to wish my life away but I wish it was the end May :rotfl:

With the £12 savings I made from the food budget yesterday, I also just purchased 54 x toilet rolls online! Hopefully that is a good bulk buy / money saving and the quality is ok :eek:

If i trim any more of the accounts in the next week or so i would like to add to the savings pots, but i think it's safe to say i'm on a mission to find that £85!

Hope everyone is having a lovely day
C2C :A