Small Steps Out Of Massive Debt!

GeorgianaCavendish

November Debt & Savings Totals 

Savings :
3 Month Emergency Fund :100% funded  
Moving Fund : 100% funded 
LISA : 30.6% funded (for this tax year)

Debt : £8,675 .00

TESCO - £150.00
0% until April 2021 
(This will be gone at end of November) 

MBNA - £5,700.00
0% until April 2021 
(set payment of £100 per month, to be revised again at end of November) 

Virgin - £2825.00
0% until March 2022 
(set payment of £50 per month) 

GeorgianaCavendish

This month I have been feeling really neurotic about money. I think giving up the lease on the London flat and achieving a couple of savings goals has paradoxically made me more stressed than when I was working towards those goals and had much higher outgoings. Money is still such an emotive subject for me and I'm finding that any big change (good or bad) takes me on a bit of an emotional rollercoaster. I'm once again trying to find the balance between focusing enough to make progress but not so much that it becomes an obsession, so with that in mind I thought I would recap the good, the bad and the ugly of what I've done this month : 

1) moved savings to interest bearing account I put my Emergency Fund and Moving Fund savings from Monzo to Atom Bank savings account - I feel better with these savings being "out of sight" and pleased that they are at least earning a tiny amount interest compared to literally nothing in Monzo. 
2) added a new fund to my pension  Contributions from this point on are going into a fund with a higher risk rating - I've been thinking about this since the beginning of the year and finally got round to doing it this month. I haven't moved the existing funds to the riskier pot as they are in a With Profits Fund and there is a penalty for switching out of it (looks like about 8K) and I can't reconcile "losing" this now with potential gains over the next 30 years. Intellectually it makes sense but emotionally I'm having a hard time with it, and I need to feel like I'm making gains not losses. Maybe my attitude will change in next year or so as I feel less vulnerable with debts 
3) faffed around a lot with financial goals Huge time suck and I felt very conflicted about what to prioritise. The advice from users here really helped me to get my head straight! 
4) had a call with a financial adviser A free intro call with a financial adviser who has a podcast. I really just wanted a grown up to tell me what to do with my money, but wasn't prepared for the sales pitch and huge fees. They also have a kind of workshop community with other users, but it seems really targeted towards entrepreneurs - lots of tips on growing businesses etc. Not applicable to me and I have no time to dedicate to a side hustle. Have ditched this idea for now! 
5) tried YNAB again They are so good with free trials, I think this is my fourth go with the software! Must say that I like it a lot more now that I feel that our expenses are more predictable, and I like using the Goals function for the different categories. I don't like not being able to set my budget month to run with my payday, but maybe a day will come when I feel that I'm out of the payday-to-payday cycle! 
6) set up lots of Monzo pots I've now got a Monzo pot for each short-term "set-aside" goal (things like annual subscriptions, haircuts, clothes, Christmas, holidays etc) these match categories on YNAB and I like having the money separated like this. It also helps keep me on track and accountable for short term goals and feel like I'm getting ahead of certain things. 
7) listened to too many personal finance podcasts Probably related to #3 and #4 - I wanted reassurance that I was doing the right thing. Unfortunately, I just got distracted and stressed out - getting too much info and opinions is as bad as not having enough, so I've decided to take a break from these for now.
8) had a meeting with my boss  I had a really good, honest meeting with my boss this month. Lots of focus on professional development in 2021 which is great! I was given a heads up about pay rise / bonuses being much reduced this year which I was completely expecting, but no specifics yet as the pay reviews are done at the end of the year. Also reassurance about safety of jobs / no plans for reduction of employees etc. I feel reassured because stress about redundancy has been at the back on my mind since the start of the pandemic. I'm not saying redundancy will never happen, but I feel like its ok to really focus on debt repayment and funding my LISA - rather than keeping that cash on hand in case I lose my job. Clearing the debt now while we have reduced outgoings will make a huge difference to our finances when we are back to normal life!

GeorgianaCavendish

Obviously, I spent a lot of time thinking about money this month! I have made some positive steps but on the whole I have been really stressed about "doing the right thing" and I don't want this level of worry / obsession to become a regular feature in my life.

enthusiasticsaver

Great update and glad you are getting to grips with pensions. Obviously higher risk means potentially higher rewards but higher potential for short term loss but you are young and have time should the market go into a downturn. Our investments in a relatively cautious portfolio are up 9% as at today though so no sign yet of any market correction. With all things investment wise though don't panic and sell when markets fall. If you are likely to do that you are better invested in a more cautious portfolio. 

I sensed in earlier posts you were conflicted on which goals to focus on. You could maybe do as I do and just work on your finances maybe one day a week for an hour or so so you don't become obsessed and keep changing your focus. For ever financial guru you listen to you can get an opposite opinion so I agree just settle on one or two you can relate to rather than listen to loads. 

The monzo pots are a great idea. I don't have our savings separated any more but did when money was tighter. Just helps with budgeting. You are doing brilliantly and hopefully you will become less neurotic about money as time goes on. I think you have spent so long telling yourself you are bad with money you can't quite believe you are now in control of it. 

astrocytic_kitten

You’re doing so well! Sounds like you’re feeling more settled about priorities and finding a balance. 

I’m weirdly happy you’re on the YNAB bandwagon now as I love it so much 😂 the budget month bugs me too, what I’ve done over the time I’ve been using it is get to a place where I have enough in my account to cover whatever comes out in the time between payday and the end of the month. I’m lucky that I only have smallish payments coming out in that period and all my big bills are mostly the 1st of the month though....and I almost always have to do a budget shuffle for a grocery shop after payday, as much as I try to get ahead on that.

Agreed personal finance stuff can be really overwhelming. I really like myfrugalyear on Instagram, all of her posts recently have really resonated with me. It’s not so much personal finance telling you what to do as much as it’s looking at the emotional side of spending and money. I keep on meaning to check out her other stuff.

GeorgianaCavendish

@enthusiasticsaver you have really hit the nail on the head. I have such an ingrained belief that I'm bad with money that I have a really hard time accepting that I'm in control now and am capable of making good decisions! 
I think limiting the amount of time I spend on managing finances is a great idea. I like the idea of having a designated time slot for financial tasks. If something is preying on my mind outside of that I can add it to a to-do list or "to worry about later list".
(I have a "List of things I thought I wanted to buy" on my phone, when I get those obsessive spendy urges I add the item to the list and often that is enough to interrupt the cycle of browsing and buying). 
I'm happy to leave the pension investments to do their thing in the background, in previous years I barely did anything beyond checking the annual statement and I'd like to get back to that to be honest! My new fund is a global growth equity tracker, it's not the highest risk rating - more like medium-high (if that is even a thing!) and I picked it with the intention of leaving it alone in the long term. At some point in the next 10 years, I think I will seek proper advice about my pension strategy and when to move to lower risk investments but for now as long as I've got the plan about contributions sorted I think that is all I need to do  

@astrocytic_kitten I'm really enjoying YNAB at the moment, and weirdly looking forward to the 1st Nov when the budget ticks over to a new month    I will check out myfrugalyear on Instagram now - thanks for the recommendation! 

enthusiasticsaver

There is a medium high rating on investments and yes in the early years that is where it should go then you downrisk as you get closer to retirement. I like your idea of having a list of things to buy and then realising you don't really want or need them. I do that with a food diary on my phone when I feel the urge to break into biscuits or cake. The act of recording the calories on my diary makes me realise I don't really need one. I have a perpetual struggle to keep to a healthy weight so the food diary keeps me on track in much the same way your list keeps you solvent. 

GeorgianaCavendish

Managed to get the Tesco debt repaid this weekend, feels really good to get it gone! 

I’ve noticed that another offer came through on my HSBC card but this time for 1.9% for 12 months rather than 0%. I wonder if this is the start of the 0% deals drying up ... definitely need to take that into account with calculations for the MBNA balance. 

enthusiasticsaver

Great to see that Tesco gone. Are you redirecting the £150 to MBNA now? The 0% deals are not going to be as frequent I don't think. If you pay £250 a month that will make it £4700 by April when the deal finishes. Hopefully there may be a few 0% offers after Christmas. 

badmemory

I too think 0% will be harder to come by in the future.  Banks have to make their money somehow & if their normal sources have dried up then they will have to look elsewhere.  I am just hoping that they don't go the possible HSBC route & start charging for an ordinary current account.  If they do then the worries about %ages on cards are going to be a very minor worry.  I remember what they used to charge back in the day when most of your bills were paid in cash.