Small Steps Out Of Massive Debt!

[Deleted User]

I totally agree with the fear of having money. I have been the same all my life. I did have a little relapse around New Year this year, but now back in control. The whole debt-busting thing is very interesting psychologically. From the initial denial, to realisation, that first rush of hope, the dawning of the magnitude of the whole thing, the fatigue after a while, the feeling of being in control more and more, etc. It's a long complicated process, not just financially, but also emotionally!

GeorgianaCavendish

Moguline wrote: »

I totally agree with the fear of having money. I have been the same all my life. I did have a little relapse around New Year this year, but now back in control. The whole debt-busting thing is very interesting psychologically. From the initial denial, to realisation, that first rush of hope, the dawning of the magnitude of the whole thing, the fatigue after a while, the feeling of being in control more and more, etc. It's a long complicated process, not just financially, but also emotionally!

I completely agree with this! It is very complicated and no wonder that previous attempts in the form of debt-consolidation loans did not work. I'm trying to re-learn a lot of emotional responses while sorting out my finances!

GeorgianaCavendish

Just checking in
I've been quite overwhelmed at work over the last few weeks but slowly getting back to normal. I will update properly soon

Homegrown0

Hope the work stress slows down for you soon!

GeorgianaCavendish

Thanks for bearing with me everyone I am just about to update my debt totals (feeling that it is about time to do this now!) ...

GeorgianaCavendish

March 2019 Debt Total £28,872.41

STUDENT LOAN
£2,521.49 (7 repayments left)

PERSONAL LOAN
£3,787.54 (10 repayments left)

MBNA £6,928.45
£2,494.54 ~ 6.9% (expiring 1 Jul 2019 regular rate 23.9%)
£4,433.91 ~ 6.9% (expiring 2 Dec 2019 regular rate 23.9%)

LLOYDS £1,133
£1,133 ~ 0% (expiring 16 Nov 2019 / regular rate 28.2%)

HSBC £4,000
£1,796.81 ~ 22.9%
£2,203.19 ~ 0% (expiring 31 Apr 2021 / regular rate 22.9%)

BARCLAYCARD £8,274.22
£1,952.48 ~ 19.2%
£6,321.74 ~ 6.9%

TESCO £850
£850.00 ~ 0% (expiring March 2020 / regular rate 34.9%)

PAYPAL £1,377.71
£1,377.71 ~ 17.9%

A bit of background:

The student loan will be repaid in November 2019, I've included it in this rundown because there will be more money available to reduce other debts once this has been repaid. Also it helps me feel motivated to see it going down when other figures may be slow moving

Personal loan will be repaid in January 2020.

We have three credit card promotional interest rates expiring this year, we will be looking to reduce these as much as possible and then to hopefully find new 0% deals. Primary focus at the moment is the MBNA balance.

The focus for the next 8 months is to keep on keeping on with repayments; to make over payments where we can (without "borrowing" this money from emergency fund) and to make sure that we are keeping on top of our budgets and that we are on the best interest rates possible. Once the loans are repaid we'll be able to put a further £730 a month to put towards the credit card debt, so I'm trying to keep that in mind and not stress too much. That is not to say that I'm feeling totally relaxed about the situation, I know that we have a lot of debt and need to address this, but I'm trying not to wreck my mental health by worrying about it when our situation will ease a bit within the next year.

Top priority credit card debt is MBNA

ETA: I forgot to include the Tesco credit card the first time around

ChasingSunshine

Hi, great that you have felt able to list the debt especially as you have had so much going on. Putting it all down is the worst bit but at least you know where you stand now. Completely agree with listing the student loan here because it will be gone so soon that it is as you say nice to have end date coming closer without any extra effort from you. Plus it will be gone soon and a nice boost to be able to copy this list out and draw a line through it.

I know you want to focus on the MBNA card and can see why with the 0% ending but at the moment it is not costing you as much in terms of interest as the HSBC interest carrying bit as well as the barclaycard and PayPal which are also quite high though obviously not as high as the MBNA will be from July.

You obviously have your reasons for why MBNA seems the best to you. I am very numbers focused and so focus on highest interest first. However that doesn't suit everyone as sometimes a particular card just has bad associations or just want particular payments out of your life so the best way is the way that works for you.

Things are going to get better. By the end of the year you will have made lots of progress and have more cashflow freed up with the loans gone and you have a plan to tackle the rest of it.

I'm afraid don't remember how much you are aiming to pay off each month or if you have said but it might be worth running the snowball calculator and see if changing the focus on cards makes a difference to your pay off date. I think you can put in when the offer dates are ending and the follow on interest etc to get the best idea. Do you have an scope at the moment for a balance transfer when you look at the eligibility calculator or is that out of the option right now?

One last thing, I hope you have left a little bit of slack in your budget so it doesn't feel too much like deprivation and mean you end up throwing in the towel or just find it all too hard to stick with.

Sorry I am probably just saying things you have already thought through and have answers for.

GeorgianaCavendish

Hi ChasingSunshine, thank you so much for your thoughtful and encouraging post, I really appreciate all the questions you posed - they are helping to clarify my thoughts about this
I'm feeling better about our ability to handle these debts, even though it is :eek: to see (and publish!) the breakdown again.

I'm glad my decision to list the student loan makes sense I'm also putting it here to hold myself accountable to the commitment to use the money for other debt repayments once the loan is repaid and not disappear with the lifestyle inflation that PositiveBalance mentioned a few posts ago And as you say, I love the psychological boost of being able to cross things off a list! So much that I often write "make a plan" or "write list" as the first thing on my to-do lists

Re: MBNA - I think I'm making an emotional decision about it and it is good to have a sense check from someone else. My reasoning has been that the MBNA minimum payment is among the highest already and that it would be a real blow to have that go up when the 6.9% ends but saying that, my HSBC minimum payment is also quite high because of the 22.9% balance. It would be good if I could get rid of that balance and then set a fixed sum to take care of the 0% part. I need to think about this a bit more and see if I can make a decision that isn't clouded by the fear of going on a higher interest rate a few months down the line. Obviously knowing that the promotional interest rate will end is still a factor to consider but I don't think that the fear-based judgment is actually serving me in this case.

I need to do some sums on the amounts available for debt repayment. At the moment everything feels very piecemeal and we have been thinking of each debt account separately instead of understanding that the whole process can go faster if we have a strategy for putting our repayment funds to the best use. Again, that is something that has been partly driven by emotions (wanting to 'pay back' some of the spending on cards used during a particularly awful time period) and it is time to look at it again.

ChasingSunshine wrote: »

Things are going to get better. By the end of the year you will have made lots of progress and have more cashflow freed up with the loans gone and you have a plan to tackle the rest of it.

This is my mantra for the rest of this year! One of my biggest challenges with debt busting has been not being able to stay with the discomfort of our financial situation and making unsustainable plans for debt repayment at the expense of an emergency fund but also at the expense of everyday life. Then when a crisis happened, not only did we have to rely on credit instead of savings, it was easier to justify additional credit spending (e.g. becoming reliant on taxis or a takeaways when travelling to the hospital or hospice) when we could have made other decisions. I think there is always a place for convenience and comfort at times like this, I'm not saying that I would never have taken a cab or got a takeaway in those circumstances, but maybe the MSE changes in the 'good times' would have felt more like choices than deprivations and been sustainable in the 'bad times'. Hope that makes sense!

Thank you again, your post has been so helpful!

GeorgianaCavendish

I forgot to include the Tesco credit card in the breakdown above (although it was included in the debt total) so I've gone back and added it now

GeorgianaCavendish

Dentist appointment today. I need to have a filling (grr! but not completely unexpected, it's a tooth that was damaged by braces when I was a teenager and finally has got to the point where it needs the filling). I have dental insurance through my employer but I need to check if the full cost of the filling will be covered ... a job for tomorrow!