AllHail's Debt Free Wannabe Journey!

AllHail

Hey guys,

A quick introduction to myself and how at the ripe old age of 23, I found myself in debt and my plan to get out, for good!

Growing up, I was always dead set against taking on any form of debt, even down to lending a few quid from a family member here and there. I couldn't stop thinking about owing somebody money when I did, so I decided when I was younger that if I wanted something, I would save and buy it.

Then came the unfortunate series of events that have lead me to where I am today, £6000 in unsecured debt (loans and CC) and a PCP car loan worth another £12,000!

It all started when I turned 19, and had a letter from my bank to say that I needed to visit the branch to change my account from an U19's "baby" account, to an "adult account with more benefits and great offers". As soon as I sat in the chair with my "personal advisor" I could smell the commission she would be making from me signing up to all of her "great offers".
At first, I declined all offers for credit cards, loan facilities, pay per monthly accounts and other little policies that I just MUST have to survive to my 20th birthday!
After about an hour of back and forth, I was convinced by the advisor to open a small credit card to start building my credit rating, ready for the mortgage I would no doubt need in the future.. £500 initial limit, to "get to know the ropes" with it.

Worst mistake I ever made

Since then, it has been a slippery slope of paying off a credit card, cutting it up, then convincing myself I just NEEDED that new pair of trainers, xbox or big nights out with the lads reverting to contacting the credit card companies and asking for a replacement card!

I had my LBM a while back, I can't pinpoint exactly when or how it came about, but ever since, I have started eliminating debt, saving more and actually thinking about my purchases, before I make them!

I have been following some American "personal finance" bloggers along with an in-depth study of the Dave Ramsey plan, hours and hours of YouTube video watching others in a similar position, taking positive steps towards living a debt free lifestyle.

What I've done so far

So far on my "debt free journey" I have:

1. Cut up both of my credit cards (limits of £500 and £1700)
2. Contacted my mobile phone provider and reduced my tariff from £49 to £7.50 per month
3. Contacted my credit card company and negotiated a rate decrease from 29.9% to 9.9%
4. Created a monthly budget for spending and saving
5. Sold a load of stuff I didn't need/want or use on Gumtree or eBay

My current state of affairs

I currently work as a recruitment consultant in the construction industry so my income can fluctuate month to month depending on commissions, bonuses and incentives.

Incomings - £1400 per 4 week period
Outgoings -
Rent - £200 per month (shared rent with girlfriend, living in a cheap area)
Car Loan - £200 per month
Insurance - £48.96 per month (9 months, about 3 months left)
Bank Loan - £276.25 per month (£4997.49 remaining, 22 monthly payments remain)
Credit Card - £300 per month (£900 remaining, minimum payment is around £12pm)
Gym - £29.95 per month (just cancelled this so last payment Jan '16)
Phone - £7.50 per month
Fuel - £35 per month

Total Outgoings - £1097.66 before savings and living costs (food, entertainment etc).

I currently look to save around £150 per month in 'sinking funds' to cover one off payments like car insurance, car tax, holiday spending money, car repairs (although as the car is new, I am covered for most things under the warranty).

The remaining money I use for food, entertainment and any other AdHoc expenses that I might come across during the month.

I should add, I get paid 4 weekly, meaning I actually get paid 13 times in a year.

My plan moving forward

Moving forward, I am getting paid at the end of this month, and my rent and most bills have already been paid, so I am planning on using as much of the "free" funds I have to clear my 1 remaining credit card balance of £900.

I will be using Dave Ramsey's debt snowball method to try and pay down the debt as quickly as possible, allocating all spare funds towards each debt until they are paid down completely.

My car loan is also a PCP agreement, which means I can voluntarily terminate the agreement once half of the original loan amount is paid back, which happens to be about 23 more monthly payments, or around £4600 at the moment.

I live in walking distance from my office so I walk everyday, meaning I spend about £35 a month on fuel at the moment, if that. Although over the Christmas period I will be using the car a lot to visit family who live a distance away, along with my girlfriends family who also live in different cities.

How I reduced credit card interest rates and mobile phone tariff

It's actually quite astonishing what you can do by simply picking up the phone and asking for things. In my line of work, I am on the phone all day every day either selling candidates to a specific client or selling a new job to a particular candidate so I have picked up the nack of asking for things from the outset and have found it usually works!

My credit card is with Barclaycard and was a 31 month interest free offer I took up over 3 years ago, after which the interest jumps from 0% to 29.9%!
A quick phone call to Barclays, explaining that I'd been 'offered' a better deal with one of their competitors, followed by asking if they could do anything with the interest rate to keep me using their services, resulted in a 24 month interest rate reduction from 29.9% to 9.9% (on current balance, all future purchases would still be charged at 29.9% - although I have cut up the card and have no intention of using one ever again so that wasn't an issue for me).

My mobile phone tariff was a stroke of luck accompanied by again, simply asking for a better deal. I must outline here that I didn't just ask for a reduction from £49 to £7.50 in one go, this has happened over time, as I don't really use my allowance each month, so I never go over my bill.
I am currently with Tesco mobile for my contract (sim only - 1 month) so I called the helpline and explained to the operator that I wasn't ever using my full allowance. The really helpful advisor talked me through my options before telling me that she would just reduce my tariff from £49 to £22.50 at first, followed by a call a month later to reduce it again to the £7.50 it currently sits at. For that, I get 500 minutes, 5000 texts and 500mb of data which is more than enough for my personal mobile considering I use the business mobile and landlines at the office for most of my other calls.

Sorry for the really long read but I hope this diary keeps me inspired and can help inspire others in a similar situation to get rid of the debt for good!

AllHail

AllHail

Happy New Year folks!

Just a quick update after the holidays!

Christmas went well, I received everything I asked for from Santa so that was a bonus! (saves me buying it!)

I managed to pay off an extra £100 from my credit card balance bringing it down to £800 before I was paid this month, which was nice.

Payday 31/12/2015

Incoming: £1408.78
Outgoing: £1184.99

Rent:

---

£200
Car Payment ----£200
Car Insurance ---£48.96
Bank Loan

---

£276.25
Gym

---

£29.95 (last payment)
Phone

---

£7.50
Credit Card

---

£407.33
Fuel

---

£15.00 (topped up before payday)

Current Balances

Credit Card now stands at £400.00 (will clear next month)
Bank Loan now stands at £4721.71 (before this months interest is added)
Car VT amount stands at £3900(ish)

Thanks for reading!