Keeping Motivated During Debt Free Journey

Sharon87

I've been on these boards for a while now. I had my LBM earlier this year. I've started budgeting with YNAB and it has been an eye opener to how much I was actually spending.

After 3-4 good months of paying off debt I feel like my debt free journey is going to take a while, and the temptation is always there to spend money on entertainment purposes.

I have £12,800 worth of debt - which is all on 0% or low balance transfer of 4.9%. I am paying around £300/month to my debts - but obviously there's a small bit of interest on my 4.9% card. I am also building a small emergency fund for when I'm not in work - I work contracts. My savings account pays 6% and is locked in for a year. I also have £500 earning 3% which was what I saved up on last year's regular savings and is my emergency fund.

I feel I don't have much money for entertainment purposes after my rent, food, bills and debt payments. I've given up some things including my personal training sessions, buying music/spotify.etc I did give up Sky for a while as well, but I have it back as I missed it.

But I just feel it's going to take ages to pay off my debt. I do extra transcription work to get a bit more money, but I do find myself losing motivation sometimes, my social life suffers.

I am also about to become an aunty, so I know there'll be lots of trips to visit my new niece, which will eat into my entertainment budget! (about £16 return for a day trip, a lot more for overnight trips!)

How do other people keep motivated during their debt free journey?

FinallyDebtfree2017

I think it is important to keep the end goal in mind and to split the full amounts into smaller amounts.

When you achieve 10% for example treat yourself to something small to celebrate this victory.

You need to still be able to live and enjoy life.

Good luck on your journey

Sharon87

What kind of small things to use to celebrate? My perception of small may be different than yours! The thing is I try to stick to my entertainment budget each month (between £50 and £100 depending on what's planned and how much money I have), so whether that's a gig ticket or a trip to the pub. I do occasionally enjoy life, but I guess it's just I'm used to spending more - hence the debt!

I know once the debts are paid off I now earn enough to do what I want. I am in the dilemma of wanting my debts off sooner but struggling with lack of social life! Last month I did pay off another £100 on my credit card.

I do also have a holiday in 2018 I'm saving up for, I don't want to use credit cards for it! So I'm saving up for that every month too!

I think maybe I just need to get back to the gym on a regular basis to keep myself occupied and get fitter again! I just wish I had a gym buddy to motivate me!

bettyboo71

If you miss the gym, look for cheaper alternatives - it is impossible to know what to suggest unless you say what you like to do at the gym?
You could do an SOA, showing all your income and outgoings, so we could make suggestions, or you could keep a spending diary to analyse where your money goes.

Motivation is a difficult one, and often the end goal seems too far away. Your holiday can certainly be seen as a 'reward/treat', and something worth focusing on. As you have chosen to get Sky back, you really do have to view that as a treat, otherwise you wouldnt have been able to give it up.

I think the key thing that everyone on here comes to realise is that changing your habits to become debt free does usually mean a lifestyle change. You acknowledge that the lifestyle you had was not sustainable, so you need to change it - that has to involve sacrifices.

And keep coming back here to read suggestions and success stories to help with the motivation :-)

tealady

Hi you say most cards are interest free, are you snowballing? If you are not it could bring your debt free date a bit quicker.

chelseablue

tealady wrote: »

Hi you say most cards are interest free, are you snowballing? If you are not it could bring your debt free date a bit quicker.

What is snowballing?

tealady

Hi sorry I didn't explain.
Basically it means paying as much as you can to the card with the highest APR and minimum payments to the rest. Then when you have paid off the first card start on the next.
HTH

Sharon87

Yeah. I've looked at snowballing but it's hard to work out which to pay off first sometimes! As I do have a permanently low balance card but some others expire in 4-7 months time and then I will need to find a new balance transfer at a low fee or risk paying 17.9%.

I find snowball calculators unreliable as there's too many variables and took many 0% transfers on one card!

I have a budget so can do an SOA to post. But there's not much I can change in terms of bills and my food budget is down to minimum without compromising on healthy food.

Maybe I could give a break down of my debts and someone could suggest the best way of snowballing?

Sharon87

Here are my debts and savings:

Tesco savings at 3% in Current Account: £500.88
HSBC Regular Saver at 6% - locked until June 2017: £580
TOTAL SAVINGS: £1080.88
Monthly outgoing minimum: £30/month to regular saver

DEBTS: (debt / credit limit)
MBNA LOB 4.9%: £4665 / £6600
Pay £45/month approx
0% cards:
HSBC: £1753 / £2000 (till Feb 2019).
I pay £44/month approx
Fluid: £1583 / £3300 (Till June 2017)
Pay £25/month
Halifax £2564.86 / £4900 (£1534.86 expires Jan 2017, £1030 expires Feb 2018)
Pay £60/month (minimum is only 1% of balance though)
Barclaycard £3350.32 / £5200 (£1131.90 expires April 217, £839.56 expires Feb 2017, £1387.86 expires May 2017)
pay £75/month approx

Total debt: £13923.80
Total savings: £1080.88
Net worth: £12842.92

Blank credit cards:
Tesco: Limit of £2000
Natwest: Limit of £1700

Now MBNA, Fluid, Barclaycard and Halifax all frequently offer me 0% deals. Halifax are usually the best 0% deals - they have offers usually 15 or 18 months for a 3% or a 1.5% fee, depends on the month. Fluid and MBNA aren't as great as the fee is 3.5% and Barclaycard is a bit hit and miss.
Tesco rarely offer 0% deals and Natwest only do low life of balance transfer with a fee. I'm thinking of closing the Natwest one!

Now I know I'm paying more interest on my MBNA than the money in my Tesco account, but that is my emergency fund, just in case I don't have a job and need to pay rent - I can't pay rent on a credit card.

I just need to know with everyone's expertise what card is best to pay off first? All the interest rates are very similar after the 0% deals expire (between 15.9% and 18.9%). What should I concentrate on and should I try and do any more balance transfers from my 4.9% MBNA card if I get the right offer?

Any advice would be appreciated. I will also post my SOA so you can see how much I hope to have for debt repayments!

Sharon87

Here's my SOA. My pay is based on working the average month, this month I got paid a bit more than that, not sure why! I sometimes also earn a little extra - between £50 and £250, sometimes nothing! But it's not consistent work so I've left it off. My month by month budget is slightly different as I don't always spend money on all items I've budgeted for every month, but it's more the annual cost. Like TV licence, I pay it up front.I will also get 2 council tax free months this month. I live with one other person who's a student, so that includes the 25% discount!

I've just heard my housemate's planning on moving out at end of October, so I will try and get a non student to fill the room and then I can pay less council tax! And if I decide to live with a couple, they can pay a bit more rent and I can pay a bit less on my room and bills will be split more. So potential of more money if I want to live with a couple!

Entertainment includes everything from meals out to pub to gig tickets. My savings are usually more than £30, I tend to put some of the spare cash either towards debt or savings or both! It's just how much do I save for the holiday in 2018? Ideally £150 a month, but then my debt takes a back seat... or do I pay off debt, then use credit to pay for the flights and pay it off before I go on holiday? Ideally if I ever use credit I would want to pay it off in full the next month. Otherwise I get into debt like I am!

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 1929
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1929

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 730
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 20
Gas..................................... 21.5
Oil..................................... 0
Water rates............................. 14
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12.12
Satellite/Cable TV...................... 21.99
Internet Services....................... 10
Groceries etc. ......................... 130
Clothing................................ 25
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 150
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 10
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 30
Gym..................................... 20
Total monthly expenses.................. 1457.61


Assets
Cash.................................... 1080
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 1080

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
HSBC...........................1753.13...44........0
Barclaycard....................3350.32...75........0
MBNA...........................4665.53...46........0
Fluid..........................1583......25........0
Halifax........................2564.8....26........0
Total unsecured debts..........13916.78..216.......-


Monthly Budget Summary
Total monthly income.................... 1,929
Expenses (including HP & secured debts). 1,457.61
Available for debt repayments........... 471.39
Monthly UNsecured debt repayments....... 216
Amount left after debt repayments....... 255.39

Personal Balance Sheet Summary
Total assets (things you own)........... 1,080
Total HP & Secured debt................. -0
Total Unsecured debt.................... -13,916.78
Net Assets.............................. -12,836.78

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

ani*fan

Hi there Sharon87 :hello:

You're budget looks good so you are absolutely on the right track. Well done for taking this in hand. Every day you don't increase the debt is a massive victory, reducing the debt is another huge score. You're doing it!

About snowballing, I understand your problem. It sounds very easy to say 'pay down the highest interest debt first'. But if your highest interest debt is a low % for the life of balance, and your 0% cards are due to run out in a few months, then how do you know what to prioritise? I want to make a few suggestions.

You said that your cards offer you lots of 0% deals. Great! I think you need to get ALL your debt moved to 0%. That way, every single penny you pay to it reduces the total. Take up an offer of 0% and get it shifted. Every penny really does count.

I also think you could do with simplifying it all. Your debt is over 5 cards right now, your Halifax card has 2 different deals on the go. Could you use some of the credit still available on your cards to try and streamline it all a bit? And move the balance of one over to another? Just something to think about, it's a lot to keep on top of as it is currently set up.

Once everything is on 0% your priority is the card where the 0% balance runs out soonest. You need to be confident that you can get another deal when the current ones end, which I think you can by the sound of it. Good. £1534.86 on your Halifax card runs out in January next year, that's quite soon. Once everything is moved to 0%, this one needs to be your priority. You then have £839.56 on your Barclaycard running out in Feb 2017. That needs to get targeted next.

Only you will know if you can pay this lot off before the deals run out. Your extra income from work sound very handy indeed! And it depends how hard you want to go at it.

About keeping motivated, yes it's hard, but the bottom line is that your previous lifestyle was not sustainable. Neither was mine. With our salaries, we will never be in a position to spend recklessly and not have to worry about it. Those days are gone and they were not real anyway.

It is quite a skill to manage your money well. Not many people in our world can do that! Be proud. I think it's great that you're saving for a holiday, and that you have an emergency fund. Those are both great goals and very helpful. I take holidays too and have no intention of giving them up on this debt free journey. They mean so much to me and I guess what I'm saying is, figure out how you want your new lifestyle to be, what's worth the cost, and what is not and just sustain it. Don't punish yourself, just take sure the debt is going down, even if some months that is quite slow.

Best of luck. I'll follow your progress.

AFx