42k of debt but feeling good!

UKmoneysaver

I've been a frequent lurker on these boards for a couple of years now and had my *real* LBM about 9 months ago.
Despite genuinely having great intentions to pay the debt back more quickly a house move a year ago saw the debt rise.
I always assumed because we earn a decent amount that we'd be okay. Our joint income is approx £4000 a month. However as the debt either creeped down or actually rose it took a while to have the LBM.

The debt is as follows;

Credit Cards: £21000
Loan: £4000
Family loans: £14400
Overdraft: £1300
Sofas: £1000

So why am I so happy?!!

Well because all the debt is now interest free except the loan and I've fixed my payments so that we're now paying £1100 per month off it. And I'm hoping to increase this further.

We've also decided next year to take German students in who come for 2-3 weeks at a time. This should earn us an extra £2000-£3000 a year which we'll use to pay the debt off.

I'm finally convinced we'll get this debt paid off!

January2015

Well done on getting the majority of your debts to interest free status.

Great idea to earn extra income from taking in students. Might look into that myself

Good luck with the plan to clear all the debt. Make sure to cut up those credit cards because, as I know from personal experience, it is soooooooo easy to run up more debt on them.

Muttipops

Well done to you.
Have you also worked out a budget for yourselves and carried out all the usual cost cutting measures such as getting good deals on electric and gas, shopping at least for the basics at Aldi/Lidl and in general curbing your spending so that you get the debt paid off quicker and make the most of your income?

AnotherJoe

Impressive.
Since its all interest free now, and if its still in those separate "buckets", I'd also concentrate on paying off the smaller loans faster so that as they drop off, you get a good feeling for your debts clearing.
Its psychology only, doesn't make any difference financially, but you'll see the number of actual debts you have drop from 5 to 4 to 3 etc. And psychology is how you got into this mess in the first place so seeing them vanish will hopefully help keep you on target.

enthusiasticsaver

Congratulations on getting the debt on to 0% and assuming you use £2k of student money as well as the £1100 you should be debt free within 3 years.

I would also suggest however that you examine why you accrued this debt on a higher than average income and make sure you are now living within your means. Do you have a high mortgage or had periods of redundancy on which you can pin the reason for the debt?

DebtFreeWannaBE

That's great news. It's certainly a good feeling to get back into control of something that had at once felt quite out of control. I was so happy to consolidate everything into one payment and finally see the debt going down. It's a great feeling of achievement.

UKmoneysaver

January2015 wrote: »

Well done on getting the majority of your debts to interest free status.

Great idea to earn extra income from taking in students. Might look into that myself

Good luck with the plan to clear all the debt. Make sure to cut up those credit cards because, as I know from personal experience, it is soooooooo easy to run up more debt on them.

Yeah, we've already had that problem. Far too easy! I don't even know the PIN numbers of most of the credit cards.

UKmoneysaver

Muttipops wrote: »

Well done to you.
Have you also worked out a budget for yourselves and carried out all the usual cost cutting measures such as getting good deals on electric and gas, shopping at least for the basics at Aldi/Lidl and in general curbing your spending so that you get the debt paid off quicker and make the most of your income?

Yes, in fact working out our budget was something I did (for the first time) about 4 years ago. I've since become really good at managing it now and frequently check bank balances etc. I have a cool spreadsheet and I tick off payments as they're made etc.

This month we have started having a weekly pot of cash for food/petrol & days out/clothes etc. Because one thing we found was our 'spare' money was never there come the end of the month! So far it's working brilliantly and actually could mean if we can make it work for the next month or two I'll increase our debt payments further.

UKmoneysaver

Muttipops wrote: »

Well done to you.
Have you also worked out a budget for yourselves and carried out all the usual cost cutting measures such as getting good deals on electric and gas, shopping at least for the basics at Aldi/Lidl and in general curbing your spending so that you get the debt paid off quicker and make the most of your income?

Oh and yes we're Aldi shoppers and don't buy branded stuff anymore. Keeps our weekly shop down to around £80 a week for a family of 5

UKmoneysaver

AnotherJoe wrote: »

Impressive.
Since its all interest free now, and if its still in those separate "buckets", I'd also concentrate on paying off the smaller loans faster so that as they drop off, you get a good feeling for your debts clearing.
Its psychology only, doesn't make any difference financially, but you'll see the number of actual debts you have drop from 5 to 4 to 3 etc. And psychology is how you got into this mess in the first place so seeing them vanish will hopefully help keep you on target.

The only one with interest is the bank loan, so that's going first then one of the CC's has only 9months interest free left so that is next but I'm confident I can get another 0% transfer when the time comes.

But totally agree about the psychology of it. Even closing the old CC's after balance transferring from them felt good!!

UKmoneysaver

enthusiasticsaver wrote: »

Congratulations on getting the debt on to 0% and assuming you use £2k of student money as well as the £1100 you should be debt free within 3 years.

I would also suggest however that you examine why you accrued this debt on a higher than average income and make sure you are now living within your means. Do you have a high mortgage or had periods of redundancy on which you can pin the reason for the debt?

No we don't have a high mortgage, it's £550 a month.

We have had periods of retraining and only actually had 2 years with anywhere near this level of income. There were times when we had to shop on a CC. We didn't rack up the debt on big ticket items it was all small(ish) amounts over several years which as you will know soon mounts up.

We became first time buyers a year ago so the mortgage is a new thing for us but is actually less than previous rent we paid! The 2 yr fix is up next September so I'll have to decide what to do at that point as I think there are lower interest rate deals to be had but I also want to have a mortgage that allows me to overpay as I'm hoping once we're debt free we can attack the mortgage...but one thing at a time