Target : 0 Debt

Mendry

Hello All

After reading in for a while and taking some steps, I have decided to take the plunge and post.
I am turning 30 in April and have set myself the goal of turning 31 debt free.
It should be achievable and in the last 3 months I have really zoned in on my budget - what a shocker it was when I looked at exactly where my money was going.

Current Debt:
Student Overdraft (no fees for another 1.1/2 years): £1250
Personal Loan Fixed Term : £615.70 (657.86 after interest in remaining 7 repayments)
Credit Card: £432.03

I also have a Cash Isa where I am stashing away money to reverse my Overdraft when the fee free period ends (or for any emergencies as my credit card limit is £500 and I do not want to use it ever again). there is £420 in it.

Tips/Advice is welcome.
Good luck wishes are also welcome :T

Regards

EssexHebridean

Good plan stashing money into the ISA against emergencies/overdraft.

To work out where you can make others savings then it would be a good idea to put together a Statement of Affairs (SOA) and post it here so people can look, dissect and comment. You'll find a link to it in the sticky post at the top of the board.

Once you hit £500 in the ISA you can cut the Credit Card up, yes? ;-)

Mendry

Here goes:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1380
Total monthly income.................... 1380

Monthly Expense Details

Rent & Bills .................................. 480
Mobile phone............................ 15
Groceries etc. ......................... 250
Clothing................................ 50
Travelcard............................ 150
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 150
Future Holiday................................. 100

Total monthly expenses.................. 1225


Assets
Cash ISA.................................... 420

Total Assets............................ 420

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Personal Loan..................615.7.....93.98.....22.79
Student Overdraft..............1250......0.........0
Credit Card....................432.03....20........18
Total unsecured debts..........2297.73...113.98....-


Monthly Budget Summary
Total monthly income.................... 1,380
Expenses (including HP & secured debts). 1,225
Available for debt repayments........... 155
Monthly UNsecured debt repayments....... 113.98
Amount left after debt repayments....... 41.02

Personal Balance Sheet Summary
Total assets (things you own)........... 420
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,297.73
Net Assets.............................. -1,877.73

moneyonmymindsam

Hello


You have a very sensible budget - well done!


I would knock off the future holiday and £100 off groceries per month


This would give you a further £200 in over payments to chuck at your debt ??


Debt would be gone in 7 months so you could then have £355 each month to put to a well deserved holiday.


Good luck on your Journey well done for taking the first steps to tackling the debt. 31 sounds a lovely age to be debt free .


Good Luck !! so may amazing people here to support you along the way .

EssexHebridean

Mendry wrote: »

Here goes:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1380
Total monthly income.................... 1380

Monthly Expense Details

Rent & Bills .................................. 480
Mobile phone............................ 15
Groceries etc. ......................... 250 You can easily knock this down by £100
Clothing................................ 50 Is this clothing you actually NEED, or just want?
Travelcard............................ 150
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 150
Future Holiday................................. 100

Total monthly expenses.................. 1225


Assets
Cash ISA.................................... 420

Total Assets............................ 420

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Personal Loan..................615.7.....93.98.....22.79
Student Overdraft..............1250......0.........0
Credit Card....................432.03....20........18
Total unsecured debts..........2297.73...113.98....-


Monthly Budget Summary
Total monthly income.................... 1,380
Expenses (including HP & secured debts). 1,225
Available for debt repayments........... 155
Monthly UNsecured debt repayments....... 113.98
Amount left after debt repayments....... 41.02

Personal Balance Sheet Summary
Total assets (things you own)........... 420
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,297.73
Net Assets.............................. -1,877.73

I'm going to suggest a slightly different angle from moneyonmymindsam above - in that I think at the age you're at to be setting money aside against a future holiday is a sensible thing. HOWEVER I'd suggest adding that to the savings that you're making elsewhere, and stashing the whole lot into your ISA at the moment, that way it's there if you need it and it boosts your emergency fund.

Potentially by cutting back on clothes and groceries, and allowing for the £40 odd you already show as surplus, you can be saving £165 a month into the ISA. Add in the holiday money as well (not sure how far into the future your holiday plans are) and that gives you £3300 saved this time in 12 months if you stick to your plan. In 7 months time your loan payment finishes and you have an extra £93 a month to boost it still further. Better still, all that saved money will be working for you and earning you interest...good eh?

enthusiasticsaver

I would agree with the above. Cut the groceries and clothing and maybe the entertainment until you are out of debt and divide the savings between your isa and overpaying your credit card or loan. The personal loan is quite a high interest rate. Can you overpay it?


On the plus side your debt is relatively low and you are young so you will do this quickly providing you can be disciplined. I would disagree about cutting up the credit card but just resolve to use it and pay it off in full each month once you are out of debt just to show you can manage it as one day you might want further credit like a mortgage and having a sensibly run credit card account will be a point in your favour. Just do not pay the banks any interest - ie pay off in full or only 0% deals.

Mendry

First, I would like to thank you for taking the time to have a look and provide some helpful advice.

I will try and answer some the questions raised.

I have actually only started taking better care of my budget in the last few months: before then, I had no idea how much I was spending on groceries. I am sure there are savings to be found there, just unsure if 40% is a realistic figure - Take into consideration that I already cook and eat pretty healthy - I shop at Lidl (80%) or Tesco (20%).

I very seldom buy clothes that I don't need, but the ones I do need I do spend a bit more on. I have recently started working in a business environment so that cost means £600 a year on suits shirts ties shoes + gym wear. I am unsure if this is too much or too little as I have recently undergone a career change which has meant suit instead of jeans..

As for holidays, I am indeed planning on putting that money into the ISA, as I will not come close to hitting the yearly limit anyways, so should not be a problem to withdraw it when needed. I plan to travel in April (for my 30th) and even though I am a very smart traveler, I have the travel bug and I know I will spend some money on it, so it is best if I account for at least some of it.

At what point is worth considering paying the credit card in a lump sum if at all?

Mendry

The personal loan can be settled at a cost of 1 month's interest if paid in a lump sum. I am unsure if I could overpay on my monthly installments ?

EssexHebridean

No sense in paying off the loan early if it will actually cost you to do so. As for the CC, as it's charging you interest, I'd say get yourself to the stage of having a full £1,000 in your ISA, then pay off whatever remains on the card with the following months savings money plus whatever you need to take out of the ISA. Then from the month after you have additional cash to go to the ISA.

On the groceries thing - I budget £150 a month to cover food, basic toiletries and all cleaning products etc. That includes buying meat mostly from farmers markets or direct from producers, we buy free range eggs and buy as much as possible in the way of British, rather than imported produce. That covers two of us and the only real extras above and beyond that are the occasional takeaway or meal out. If I can do it for two people, I'm guessing you can do it just as easily for 1?

If you know you're going to be travelling, then yes it makes sense to set aside money for it. Good planning.

Mendry

Small update:

I have done December on £150(maybe even slightly less) for groceries - and it was a lot easier than I thought. Just really paid attention not to waste food (portioned up any spare bits and got a "free meal" out of it quite often?!) - often bought and froze meat (something I had seldom done before as I always shopped on a fairly daily basis). Clothing expenses however are budgeted about right..

I will have a really thorough look at expenses over January and see where i can make more savings.

Will update figures later.

Regards

Rebel_Cause

I managed to get myself debt free by the time I turned 30. Great feeling!

I wish you all the best!