Small Steps Out Of Massive Debt!

GeorgianaCavendish

PositiveBalance said:

That sounds like a plan!

If you are in therapy I would personally consider it an essential bill as you must be there for a reason. However, I understand that you have to draw the line as to what is/isn't essential somewhere so perhaps you need to draw it somewhere close to there?

It always winds me up when people state that cable/satellite TV is not an essential (although a small amount of chocolate in the food budget definitely is)!

Hmmm ... good point. I have so far been considering "essential" bills as things that keep a roof over our heads and food on the table, but there are other things that are very important to me that I would not (maybe could not) want to give up if I was in an Emergency Fund Situation.  
I have found saving anything while servicing such an enormous level of debt to be very hard, practically carving it out of the budget and mentally allocating money to savings instead of debt repayments. I have been doing some dubious accounting about how much we "need" to have in an emergency fund and telling myself - very much like the wildly optimistic debt repayment plans that I used to sketch out for myself! I need to revisit my definition of "essential" and perhaps adjust my plans! 

I was stressing a lot about taking the whole of the 0% period to repay the MBNA and Tesco balances, but clearing the HSBC balance "on time" is really stretching me. I think that I can just about do it by the end of August (so I'll have a few weeks of interest being generated) but I don't think it is sustainable for another 12 months. I think that once HSBC is done, I will reduce my debt repayment total to an amount that is still going to clear MBNA and Tesco within the 0% period but not at such a punishing pace and instead plump up the Emergency Fund and keep other money in savings. 

GeorgianaCavendish

Just to add to the above, the reason for relaxing the repayment pace once HSBC is out of the way is that I want to get some practice in at saving money before my debts are completely cleared. It might sound stupid, but I am really scared of clearing these debts and then running up another batch soon afterwards. 

PositiveBalance

I don't like the idea of the 'dubious' bookkeeping. It sounds like the start of a slippery slope backwards.

Whatever you decide you need to make it *realistic*. Otherwise you won't be able to stick to it, then feel bad about it which will encourage out-of-control spending and voila...the vicious circle restarts.

Be smart. Don't be like the historical figure you are named after.

GeorgianaCavendish

PositiveBalance said:

I don't like the idea of the 'dubious' bookkeeping. It sounds like the start of a slippery slope backwards.

Whatever you decide you need to make it *realistic*. Otherwise you won't be able to stick to it, then feel bad about it which will encourage out-of-control spending and voila...the vicious circle restarts.

Be smart. Don't be like the historical figure you are named after.

I'm having another LBM about my "optimistic" (or "dubious" ) emergency fund planning. I need to spend some more time thinking about this, especially what my EF goal I should have. I've been working on 3 months basics, but I probably need to think more like 3 months of all expenses as a minimum. 
This diary really is the continuing financial education of Mrs Cavendish  

GeorgianaCavendish

I've been thinking quite a bit about my spending issues. I think one of the tricky things about debt busting is that it masks a lot of my money issues rather than address them properly, because I have found a way to make debt payments feel sort of feels like spending. I have a big problem with letting money sit in my bank account and always feel like the best thing to do is to 'spend it' on something valuable pretty much as soon as I get paid before it has a chance to trickle away. I've managed to convert this urge to spend from stockpiling toiletries to making debt overpayments, but I worry what will happen when the debt is gone. I think the mental switch from being a spender to a saver will be the hardest thing. 

So I've decided that I'm going to practice saving money while I'm tackling my final 12 months of debt repayments. I'm going to do this by putting some money into a locked Monzo pot each month, part of this money is coming from saved expenses and part of it from my "overpayment fund". I'm still going to make sizeable debt payments each month, but I'm going to consciously save some of it and teach myself that I can be trusted with "extra" money. Given that all my debt is on 0%, so as long as I do pay it off within the 0% periods, I don't have the same need to do it ASAP. 
I think that now is a good time to practice saving. I have about 40% of my debt on a 0% rate expiring in mid-August, and I want to clear the entire balance before 1st September (if not by the time the 0% expires), so I have a realistic goal that doesn't feel so far in the future that it would allow time for this plan to derail. 

GeorgianaCavendish

And now, just to completely contradict what I said in my last post, I made some overpayments in April which has brought my overall debt figure down to £12,850  

HSBC - £5,250
0% rates in order that they will be paid off (HSBC applies payments to the oldest balances first) 

• £239.35 exp Apr 2021
• £1,749.30 exp Sep 2020
• £514.50 exp Sep 2020 
• £1,425.17 exp Aug 2020
• £1,321.68  exp Aug 2020 

TESCO - £1,425.00
0% until April 2021 

MBNA - £6,175.00
0% until April 2021 

(I feel a bit silly about 'tidying' the HSBC and MBNA balances but it really bugs me to have 'untidy' balances!   )

Naomim

Hi GC,  

As I've followed you from the beginning, I thought I'd pop back to your first post and your figures there.

"I have taken stock and I have over £35,000 of personal debt on loans and credit cards, which does not include my Student Loan (around £18,000 but I need to check the last statement). I have no savings at all and am living pay day to pay day."

You have come such a long way!  Be proud of yourself.  

I think it's a good idea to get yourself into the "saving" mode.  Is there a goal that you have in mind for this that might help keep you on track?  For me this is the first time I have not dipped into my "savings pot" to have to stop us going over the overdraft and actually starting to think of it in terms of an emergency fund.

Naomim

GeorgianaCavendish

Thank you Naomi! It is really good to look back to where I was at the beginning of this diary and recognise the difference to where I am now  

I think the biggest goal would be buying a home - so saving towards a deposit! It used to feel so out of touch but now it seems like something that could be achievable (with a lot of hard work!) 

brizzlegirl

Great progress GC, hope you’re having a good weekend 

Isitdoable

GC, I've just caught up on your diary as I have been AWOL due to this whole Covid nightmare!  Just wanted to say that I still find your journey and your drive very inspiring.  And I am incredibly envious of your emergency fund, even as it is.  We are so much in the sh** right now because of having nothing, and its really cemented in my head the importance of addressing this.