Does ALL of your surplus income go towards debt?

Ben75

I budget at the start of each pay cycle, and am aiming to build an emergency fund before I throw all spare cash at my debt. It rather depends on what you consider reasonable, but I think setting a reasonable amount aside for entertainment etc is fine as long as you know how much you have available and what you can and can't afford to do. Ultimately for me, its about developing a pattern of spending that will sustainable to pay off debt and build investments once I am debt free. If the debt free date is put back a few months because of this then that is OK by me. Note, however, I am in a self-managed DMP so am not accruing any interest on my debts.

WantToBeSE

Thank you everyone for your advice.

I already have a £1500 emergency fund, so am not too worried about that.

My debt is not on 0% interest, so it makes sense to throw every penny at it, but boy oh boy it can make life monotonous and boring! As long as i pay at least double the minimum payment, i think that's good going?

I'll still pay it faster, but also it means that I'll have a bit of a life too.

Decisions, decisions...

bilko89

Before I came on here, I had no budget. That was a huge problem, so if you don't have one, that's where I'd start.

We differ on the type of debt we have, as I've agreed with all my creditors to freeze interest on my outstanding balances, I'm not sure where your debt is from but mines was mostly a combination of Credit Cards & Payday Loans (one was also a bank overdraft), so don't know if you could go down the route of contacting your creditors and telling them you are in a bit of trouble and want to agree repayment schedules based on the interest being frozen on your account. Worked for me and I had over 12 companies to contact, they all obliged!

Back to your original question, I see you already have an emergency fund, which is great, but do you budget for car requirements? i.e annual insurance, Tax, MOT etc.. Christmas, birthdays? I even budget and put money aside for hair cuts, entertainment (going out) etc..

Once you are happy that you are putting money away for everything you need it for, then I would start upping the repayments I'm sending to creditors. Sorry to ramble on :rotfl:

WantToBeSE

Thanks Bilko.

I do already have a budget. And i already have £700 saved in my car repairs fund. That covers the MOT and any repairs that are needed.
Tax and Insurance come in with my monthly direct debit bills.

My debt is all on credit cards. 3 in total. But a very small balance on 1 of them, which i will pay off in December.

tori.k

Do you have an entertainment allowance within your budget, we budgeted a set amount in case there is something we fancy doing, when the budget is gone it's gone. we just hit our first year of living to this budget and im so chuffed there has been loads of times i've been bored but on reflection it's not been from lack of wanting money to spend or going out but from impatience of just wanting the slate clean asap. So examine at the reasons behind why your bored.
I found I needed a home project so im currently restoring an old leather top desk I was given for free. find your distraction

ratrace

In my humble opinion throw everything at the debt (after an emergency fund has been built up)


this may sound blunt and extreme but NO more “fun time” been there done it, that's one of the reason we are in this mess today, buying things we couldn't afford to make us feel better or saying go on you deserve, you work hard if we are really serious about paying it off


The worst thing about how I got in to debt was just buying crap and gadgets etc.. I didn't need and then selling them all on fleebay for the fraction of the price I paid, after all was sold I was still left with a shed lot of debt and nothing to show for it how mad is that


No more, im not playing this game anymore if I dont have the cash to pay for it I dont buy it simple as that, Im nearly debt free now last two grand to pay off hopefully by the end of the year


sorry for the rant …....

WantToBeSE

tori.k wrote: »

Do you have an entertainment allowance within your budget, we budgeted a set amount in case there is something we fancy doing, when the budget is gone it's gone. we just hit our first year of living to this budget and im so chuffed there has been loads of times i've been bored but on reflection it's not been from lack of wanting money to spend or going out but from impatience of just wanting the slate clean asap. So examine at the reasons behind why your bored.
I found I needed a home project so im currently restoring an old leather top desk I was given for free. find your distraction

No, i don't have an entertainment allowance. Maybe that is a good idea, and to find something to distract me. Thanks, great ideas!

WantToBeSE

ratrace wrote: »

In my humble opinion throw everything at the debt (after an emergency fund has been built up)


this may sound blunt and extreme but NO more “fun time” been there done it, that's one of the reason we are in this mess today, buying things we couldn't afford to make us feel better or saying go on you deserve, you work hard if we are really serious about paying it off


The worst thing about how I got in to debt was just buying crap and gadgets etc.. I didn't need and then selling them all on fleebay for the fraction of the price I paid, after all was sold I was still left with a shed lot of debt and nothing to show for it how mad is that


No more, im not playing this game anymore if I dont have the cash to pay for it I dont buy it simple as that, Im nearly debt free now last two grand to pay off hopefully by the end of the year


sorry for the rant …....

ratrace- that has always been my attitude towards paying debt off too, just throw every single penny at it.
But i am losing motivation week in and week out. If i threw every penny at it, i could clear it in about 9 months instead of a year ( i worked it out) and i am not sure why this is not motivation enough...

ironhide

I know that everyone is in a slightly different boat but we refuse to scrimp on everything just to pay it back a bit quicker. Over the past few years we have seen so many people pass away that it makes you realise that life is too short. Some people may not agree with this way of thinking but in our circumstances, we have made the decision to not cut back on certain things, holidays being one of them, but to live a bit more within our means and save a bit more for what we want. Some people have debts that keep them awake and if I was in that position I would probably throw more at it.

WantToBeSE

ironhide wrote: »

I know that everyone is in a slightly different boat but we refuse to scrimp on everything just to pay it back a bit quicker. Over the past few years we have seen so many people pass away that it makes you realise that life is too short. Some people may not agree with this way of thinking but in our circumstances, we have made the decision to not cut back on certain things, holidays being one of them, but to live a bit more within our means and save a bit more for what we want. Some people have debts that keep them awake and if I was in that position I would probably throw more at it.

Yes i totally agree, if it was keeping me awake at night then i'd definitely work extra hard and scrimp to pay it off. As it is, i could afford to double the minimum payments without too much difficulty at all.