from hell to heaven

l3xi

This is the n-th unsuccessful attempt to reduce my credit card debt. I've been a lurker on here for a long time, used a different user name last year... tried various methods, ynab, the budget tracker app, tried keeping a paper record of all expenses, none of it worked for me. I was able to reduce my household bills and regular outgoings significantly with the help of this forum. But... I'm not disciplined enough to keep track of all spending and budget for things, in the same way I'm unable to count calories in a diet. I've decided to do it the other way around and come up with my own method and rules, not sure if it will work but here's hoping...

So these are my 5 'simple' but very aggressive rules:
1. After bills spending not to exceed £120 per week. This includes: groceries & toiletries, work lunches, eating out, fun stuff, clothing & shoes, haircuts, mani & pedi, and presents.
2. Credit card bill payments: pay at least £500 per month, instead of minimum payments of £115.
3. (sadly) Use all work bonuses and any money gifts received to pay credit card balances.
4. Stop using credit cards and overdraft.
5. Save £100 per month for holidays. This will double as an Emergency Fund until the end of 2016.

Current credit card debt is £11,700 (£3,000 Lloyds and £8,700 Tesco, both at 0% at the moment). No other loans but a huge mortgage. My credit history is all green, no missed payments. However, I don't have any savings except a uni savings account for my child and a positive balance in my childcare vouchers account.

Target debt levels:

• end of Dec 2015: Lloyds £0 and Tesco £8000 (I'm getting a bonus in December)
• end of July 2016: Tesco £4500 (I'd like to remortgage around that date and need to reduce debt).
• end of Dec 2016: Tesco £0.

Last but not least the Tesco 0% rate runs out in May 2017 so I have a bit of a buffer in case things go pear-shaped.

Any comments, much appreciated. Good luck to all of you!

l3xi

PS. I forgot to mention I'm deep in overdraft this month, £280 (NB. first £300 is fee free so at least there are no penalties for this), but I'm paying this off on Friday. I've already paid my credit card bills for this month.

l3xi

Dear diary, CC payments and the overdraft are paid, and I have £517 left in my Barclays account to spend as I please in the next four and a half weeks, until the next paydate (25th of Nov). Well, not really as I please, that includes groceries (but not school lunches which are budgeted in my HSBC bank account together with all the other regular bills).

Sadly my Tesco debt is actually £8700, not £8500 - I pay by £100 by direct debit every month and rarely check it, so yeah it was £200 more, wishful thinking on my part. I'm mostly focusing on the Lloyds one atm, that £3K needs to go by end of Dec. I'm not adjusting my end of year Tesco target though, as I hope to be able to use part of my bonus to get the balance down to 8K.

This weekend looks like light spending, grocery shopping mostly done, except for bread and some fruit. Not much on the social agenda except for play dates and possibly going for a swim. Half term next week won't put a big dent in expenses either, I'm working and my child is in a holiday club full days all week, already paid for with childcare vouchers.

So I should be able to stick to the max £120 weekly budget until next pay date, if not well under..

Here's to a thrifty month everyone! :-)

fuzzyduck22

Hiya

Very similar here too, can get the big stuff done like bringing down bills etc but not so good at saving/ putting money aside for things etc.

But we can get this debt paid! Good luck!

LittleMissDetermined

Popping in to wish you lots of luck in clearing your debts. I was here a few years ago and then fell spectacularly off the MSE Wagon to come back with even more debt...

I cannot praise enough the support on this site and I am sure you will have seen from your past 'lurking' it's a very positive place to be.

Must be... I'm here on a Friday night!

Anyway, I will be following your diary to whoop you on your way

LMD x

l3xi

Thanks both! It's indeed a great forum, with not only info but great advice and support from people who were or are in the same place. It saved me heaps of time and money!

ShouldaWouldaCoulda

Hello, just wanted to wish you luck in achieving your goals! look forward to following your journey! x

l3xi

First weekend in a very long time when I went grocery shopping and left my credit card at home. In fact I didn't use my debit card either, bought fruit and bread with cash from my purse.

Decided to give YNAB a try again, I have the license afterall.

Also made a list of all credit cards and limits, and thinking about cancelling one or two, as it seems like I have too many. Earlier this year I applied for a 2nd bank account and started using it, and it was the best decision I've made in a long time - I had a dormant acct I never used and switched that to HSBC Advance. Not only that I got £240 out of if (£120 for switching and £120 for saving), but I find it much easier to track spending. I keep all bills in HSBC and except for Vodafone, they all come out around the 1st of the month. I transfer all spending money to Barclays and I try to forget that HSBC exists until next pay date.

So my credit as it stands... perhaps someone can help me on which cards should I actually close.

• MBNA £0 balance, £5000 limit, 16.9%. I don't use this card any more, but it's my oldest credit card.
• Barclaycard Simplicity £0 balance, £5,000 limit, 7.9% lifetime interest rate.
• Halifax Clarity £0 balance, £2,000 limit, 17.95 interest rate. This one I won't close. I use only when I travel because of the no load fees and no currency transaction charges. Never kept a balance on it, always paid in full.
• Tesco £8,700 balance, £9,500 limit, 0% interest for the entire balance until May 2017. Obviously this will stay open until I pay off the balance in full.
• Lloyds £3,000 balance, £4,300 limit, 0% interest rate for the balance until July 2016.

On top of this I have the following overdraft facilities on my account:

• Barclays £2000 limit, first £300 fee free
• HSBC Advance £300 limit, there's interest but I never went into overdraft on this one

Is this too much credit? Should I close some cards? I'll definitely close Lloyds in December when I pay off the balance using my annual bonus (). Should I close MBNA as well?

Also, is it a good idea to reduce my Barclays overdraft limit from £2000 to £300 (the fee free limit)? I never went over £300 because it's so expensive if I use it, so what's the point in having that high of a limit if I don't use it?

The reason I want to limit my credit is because I'm planning to re-mortgage next year and I'd like to be in the best possible place credit history wise. Sadly I won't be able to clear my debt until then so I need to work on other things.

Sorry for the long-winded message. Thanks.

LittleMissDetermined

l3xi wrote: »

Also, is it a good idea to reduce my Barclays overdraft limit from £2000 to £300 (the fee free limit)? I never went over £300 because it's so expensive if I use it, so what's the point in having that high of a limit if I don't use it?

If you never use over the £300 I personally would reduce this as you have plenty of available credit in case of emergencies.

l3xi wrote: »

The reason I want to limit my credit is because I'm planning to re-mortgage next year and I'd like to be in the best possible place credit history wise. Sadly I won't be able to clear my debt until then so I need to work on other things.

It may be a good idea to pose this as a question on the credit ratings forum as you'll get some advice there.

LMD x

l3xi

Thanks, just reposted there. I'm now thinking I don't need the Barclaycard either, but it's the one that has the lowest interest rate.

l3xi

Ok so I decided to keep MBNA (oldest card), Barclaycard (lowest interest rate), and Halifax Clarity (travel). Lloyds will close end of December. Will close Tesco end of 2016 when (hopefully! fingers crossed) it will be paid off.

I reduced my overdraft limit on Barclays from £2000 to £1000. The first £300 is fee free, and the rest up to £1000 would be charged at 75p/day if used (I never used it over £300, but I can't let go of it, as a back up if things go wrong).

I'm working from home most of this week except Wed and Thu, so don't expect to spend too much. We're due for a dental check up tomorrow, it's free for my child and 25% of costs for me (dental insurance I get through work covers 75%). My dentist takes children free under NHS if parents are paying private. Other than that the only spend for this week is groceries, normally on Thu as I have Tesco's mid-week delivery plan.

Oh and my Sky TV subscription is gone, I removed it when the 50% discount ran out. I negotiated with Sky and got free unlimited broadband for another 12 months, only paying line rental £17.40 plus their Intl Talk package £12 (I do very long, think conference calls - local & international - for work, so I need that plan).

I also cancelled Netflix, but I replaced it with Amazon Prime this month - this gives me access to their Prime Instant Video for less than £7/month (£79/year), plus free one-day delivery on anything I order. Freeview TV + Amazon video is more than we need in terms of TV & films.