Aaand I'm back - Still have a little Debt...

Esqulax

So, I log in and it turns out I get an 8-year badge, and my last post was in 2011.

Even my Signature is out of date!
Anyhoo, My situation has now changed, and I have differed debts, and a different target!

I have £1114 in Credit card debt.
I have very little outgoings - Gym membership, Netflix. Motorcycle Finance and Insurance.
I live with my parents and all my fuel is all put through work (I use the bike for work), my Mobile is a work phone so No bill there either.

I just lack the discipline to focus up, and end up spending FAR too much on food and rubbish.
After the DFW, I'm wanting to save up about 9 to 10k to go travelling (About 2k will cover the Bike payments while I'm away)- That's a whole other kettle of fish though!

Now, comes the bit that I know I'll get yelled at for...
I have £4200 in a savings account and about £1100 in Cash, stashed in a safe.
I KNOW the smart thing is to pay off the credit card, but I for some reason there's some sort of... I dunno, emotional connection with the savings?

Either way, I have also fired up YNAB and got it working on Linux to assist me. My target is to save/acquire about £1000 per month, along with minimizing my wordly possessions - be it Selling, Recycling, Donating or Throwing out.

I think I can have maybe 3 or 4 No-Spend Days per week - Only limited by the need to fill up the bike with fuel, but I won't count those OR when I spend on stuff I can reclaim through work (Sometimes I need to buy the odd part etc). I work about 35 miles away, so cycling isn't really an option

So, I suppose I'm here for support in saving, clearing the debt and keeping it gone.

tealady

Hi
To motivate yourself to use saving to clear the debt why don't you find how much interest your savings gave you last year and compare it to how much interest your debts cost you. The difference may just surprise (and shock) you.
HTH

Esqulax

Good idea.
I chipped away a little bit by having my work expenses paid directly into the Credit Card account, as long as my main account hasn't dropped into Overdraft, but I have been in the black more than the red this year - Last month was the Bike Tax/Insurance/Service month, but hopefully the 'Envelope system' should stop this from happening next year

Sayschezza

I can understand not wanting to use savings to pay off the credit card as it doesn't, address the problem does it. It's only by working to change spending habits and paying off the debt that way that will change your attitude to spending. Ask me how I know lol.

redpete

So not only do you have a credit card debt but you also use an overdraft. These are both expensive ways of borrowing money (not in the payday loan league but still expensive). Therefore I'm afraid I'm going to shout...

IT IS STUPID TO HAVE MONEY IN A SAVINGS ACCOUNT FOR NO GOOD REASONS EARNING VERY LITTLE WHEN YOU ARE SPENDING A LOT ON INTEREST.

blisteringblue

Agree with Redpete, if you are recent convert to YNAB you can still show a savings buffer, but its a virtual one in your YNAB account. Pay off the credit card and then put the money away "virtually" as if it was your savings account. I do this for Xmas and my annual mortgage capital contribution. Yet its all basically just in my bank account.

Key is to work to your YNAB balance / budget and not look at your bank account other than to reconcile them.

bluesky1989

I don't know what your circumstances are or what age you are but my initial thought was: 'Why aren't you saving to move out of your parents house?'

As you've said you've got very little outgoings - do you pay them rent? I know financially it's easier and wow I wish I had parents who I could live with, but I've seen a few times before when people have been stung by taking big trips away and their families have felt taken advantage of.

I agree with the others, pay off the credit card / overdraft.

patman99

Esqulax, let me put it too you like this.

You have £4200 in a savings account and £1100 petty cash.
The £4200 might earn you less than 3% APR interest. So you get £126 interest each year.

You owe £1114 to your CC at (a guess) 20% APR. This means over each year the debt remains above £1000 you will be incurring £200 in interest.

Pay off the credit card and you will be £74 a year better-off just on interest saved alone.

Take the £1000 petty cash and stick it in your bank where it is both safe and will earn you interest. Open a TSB account and use that for your 'holiday' savings. If you use online banking, you can play the 'transfer games' to move £500 every month in/out of the TSB account in order to get 5% interest on your savings.
Takes a couple of minutes to do each month and if you stick the full £2k in, you would earn £100 in interest.

Esqulax

Ok ok. I'll pay off the credit card with the cash tomorrow.
I have an overdraft available, but I don't go into it often. My sig is out of date by a few years!

@Bluesky1989 - Honestly, its mostly convenience. Mum and dads house is huge, has a pool etc and a Garage in which to store my Bike. I need a garage or at LEAST a back garden with an expensive metal storage for my bike. There is no compromise on that, I cannot have the most expensive thing I have stolen or vandalized. It's also my only means of transportation for work etc.
I've also not had great luck with mortgages and/or finding a house. Everytime I try, there is so much bull... rubbish and red-tape, coupled with estate agents being ... only concerned with the seller. That's a massive rant for another time.

The Holiday plan... Don't tell my parents.. is to not return for as long as possible. Try to get a Working Visa for New Zealand, Maybe work on a boat and learn that trade, possible on to Camp America or some other program. Might try to TEFL in China, Japan or Korea - So the more money I can save the better. I was originally planning to leave in November, but being 33 I cant get a traditional Working Holiday Visa, BUNAC do one for up to 35 year olds, but they have all been allocated for this year (All got allocated in 2 days) and they will be available again 'Maybe the end of this year, maybe the start of next', and if I do manage to get one, they need my passport for upto 2 months, so I can't really be out of this country when I apply, which means it'll be about March when I leave.
Hah! Went off on one there, not so much DFW, but savings.

redpete

Esqulax wrote: »

I have an overdraft available, but I don't go into it often. My sig is out of date by a few years!

I was going by your comment that you are 'in the black more than the red this year' sounded more than not often.

I've also not had great luck with mortgages and/or finding a house. Everytime I try, there is so much bull... rubbish and red-tape,

I'm not sure how much red tape you think is reasonable when you want to borrow many 10s of 1000s of pounds.

Esqulax

@Redpete - When I have dipped into the overdraft, it's been for a matter of days, and only because I've needed to make an emergency purchase, but It's only happened 3 or 4 times since Jan.
I understand what you mean about the mortgage - Maybe red-tape was the wrong thing to say, although the banks are quite cagey about why they will only offer me a low mortgage. I'm all ok with that, it's more the Estate Agents. They are money-grabbing unethical <Insert swearword here>. So many stupidly high charges for essentially sending an email or something.

They have no obligation to the buyer AT ALL, because their commission is on the sale price of the house, so It's about keeping the seller happy to stay with them, and using offers as leverage.
It's not like I've got every penny I own, along with a 25 year loan riding on this. Oh wait.
I'm aware that this is just the reality of it, but it's still frustrating - The last house I put an offer on, I asked for them to take it off the market. They said did that, but out of the blue, the seller told them that she had another offer. I have no doubt that they used my offer as leverage to get someone else to buy for more.
I know 'Thats Life' but it left a sour taste in my mouth.

Since then, I've kindof thought - Maybe I don't want a house tying me down to this city and country, so I suppose it was a good thing.

</rant> (It's one I've been having for the last 3 months)

This weekend was almost a NSD weekend - I spent £2 on a burger, but that money was from £5 winnings from a scratchcard I found while cleaning a company car out.
I need to replace tyres on my bike tomorrow - That's another £250, but I should be able to run that through my expenses.