Small Steps Out Of Massive Debt!

astrocytic_kitten

I feel like I’ve still got some optimising to do of the post-debt life, but what I’ve been trying to do is keep with YNAB, move savings out of my current accounts so the temptation to spend isn’t there, and treat my savings targets as debts - I have my EF target down as a debt in the Debt Payoff Planner app and I like seeing the expected debt free date in that. 

I have one current account for salary and bills which also has pots under it in YNAB for things like next year’s home insurance. I have a second current account for day to day spending / food / etc where I also have pots for things like clothes spending, haircuts, new glasses etc (I keep on thinking about moving this account over to Monzo or similar but never quite get round to it). Each account is its own group in YNAB so the overall group balance matches the account balance.

On payday I move everything out of the salary and bills account other than what is needed for that month and to fill the pots under it. The monthly spending money goes into its account, I use Marcus for the EF, and instant access savings accounts attached to my current account for things like savings for future vet bills / home repairs / Christmas / holidays. Marcus have just cut their rate again, I’m thinking of saving for the 7-12 month emergency fund in premium bonds instead.

It feels like an overly complicated system and it doesn’t maximise savings interest, but it works for me in that once the money is in a separate account I don’t touch it unless I have a vet bill or similar. I also have those accounts as off budget tracking accounts on YNAB so while I can see their balances building there, it’s not showing it as money available to spend. I’m forever shuffling money between YNAB categories in my spending account to make up for going over budget in one, but it’s all spending money so it doesn’t matter. 

Where I’m struggling is in all the random extra money from prolific or online sales, beforehand I’d have put it on the debt but now I just want to spend the money instead (mostly on books or clothes).

redofromstart

That is amazing progress from where you were when you first started posting, so pleased for you.  I love somerset, my grandparents lived there and we used to go for holidays.  Porlock and surrounds, North Hill, picking bilberries, just heaven.

enthusiasticsaver

Great that MBNA is now gone.  I definitely think moving money out of pots is a good idea if you are going to be tempted to dip into them but interest rates everywhere are pretty poor. On the plus side I have stopped chasing rates so no longer keep moving money around so we just have two savings accounts.  One is an emergency cash fund which we do not touch except obviously in an emergency and the other is savings for gifts, cars, house and holidays. The rest is invested in sipps and stocks and shares isas. Premium bonds is a great idea. The cycle 2 work scheme is a good scheme.  We bought e bikes when we retired (living in Cornwall we need them) and my daughter also bought one under the cycle 2 work scheme.  She was pleased with the savings on it. 

Kakiste

I have my snowball fund for paying back family in premium bonds. As others have said it literally means I don't see the money when I log onto my bank and there's not the same temptation to dip into it. 
Plus you've got the monthly prize draw which basically functions like a lottery that you don't have to pay for.

GeorgianaCavendish

astrocytic_kitten said:

I feel like I’ve still got some optimising to do of the post-debt life, but what I’ve been trying to do is keep with YNAB, move savings out of my current accounts so the temptation to spend isn’t there, and treat my savings targets as debts - I have my EF target down as a debt in the Debt Payoff Planner app and I like seeing the expected debt free date in that. 

I have one current account for salary and bills which also has pots under it in YNAB for things like next year’s home insurance. I have a second current account for day to day spending / food / etc where I also have pots for things like clothes spending, haircuts, new glasses etc (I keep on thinking about moving this account over to Monzo or similar but never quite get round to it). Each account is its own group in YNAB so the overall group balance matches the account balance.

On payday I move everything out of the salary and bills account other than what is needed for that month and to fill the pots under it. The monthly spending money goes into its account, I use Marcus for the EF, and instant access savings accounts attached to my current account for things like savings for future vet bills / home repairs / Christmas / holidays. Marcus have just cut their rate again, I’m thinking of saving for the 7-12 month emergency fund in premium bonds instead.

It feels like an overly complicated system and it doesn’t maximise savings interest, but it works for me in that once the money is in a separate account I don’t touch it unless I have a vet bill or similar. I also have those accounts as off budget tracking accounts on YNAB so while I can see their balances building there, it’s not showing it as money available to spend. I’m forever shuffling money between YNAB categories in my spending account to make up for going over budget in one, but it’s all spending money so it doesn’t matter. 

Where I’m struggling is in all the random extra money from prolific or online sales, beforehand I’d have put it on the debt but now I just want to spend the money instead (mostly on books or clothes).

Treating the savings targets like debts is a really good strategy. I need to revisit my budget again now that MBNA is gone and properly reallocate my categories. I ended up moving some of the money in my savings pots (Christmas, Holidays etc) over to a separate account which is harder for me to access - so now I 'only' have Monzo pots that are for 1-3 month spends. It sounds so complicated but it is helping me to get my head round categories! 
I've diverted my "extra money" to a specific category, it used to be going into my haircuts pot but now is in the holiday fund. It feels good being able to put it towards something instead of being absorbed into my mindless spending. Saying that, I don't think there is anything wrong with spending on books or clothes - do you have pots for those? Maybe you could add the money to those pots first, so it isn't being spent straight away? 

GeorgianaCavendish

redofromstart said:

That is amazing progress from where you were when you first started posting, so pleased for you.  I love somerset, my grandparents lived there and we used to go for holidays.  Porlock and surrounds, North Hill, picking bilberries, just heaven.

Thank you so much! I am really loving living in Somerset, and as the weather is getting better and we have some relaxation of restrictions it is really good to explore more  

GeorgianaCavendish

Kakiste said:

I have my snowball fund for paying back family in premium bonds. As others have said it literally means I don't see the money when I log onto my bank and there's not the same temptation to dip into it. 
Plus you've got the monthly prize draw which basically functions like a lottery that you don't have to pay for.

That is a really interesting idea! I think it would be a good idea to put my Emergency Fund somewhere that it completely separate from my deposit savings. I will look into it a bit more! 

GeorgianaCavendish

enthusiasticsaver said:

Great that MBNA is now gone.  I definitely think moving money out of pots is a good idea if you are going to be tempted to dip into them but interest rates everywhere are pretty poor. On the plus side I have stopped chasing rates so no longer keep moving money around so we just have two savings accounts.  One is an emergency cash fund which we do not touch except obviously in an emergency and the other is savings for gifts, cars, house and holidays. The rest is invested in sipps and stocks and shares isas. Premium bonds is a great idea. The cycle 2 work scheme is a good scheme.  We bought e bikes when we retired (living in Cornwall we need them) and my daughter also bought one under the cycle 2 work scheme.  She was pleased with the savings on it. 

I'm so happy that MBNA has gone! (Still haven't had my champagne to celebrate though ) At the moment, moving the money around is to help my mental state (and avoid temptation!) and any interest is a pure bonus. I'm going to research Premium Bonds a bit more, maybe it would be suitable for either my emergency fund or deposit savings. 

I'm planning to get an e-bike when I finally sort out the Cycle 2 Work stuff with work. It would really help if I have to commute to the office (more accurately, to the train station) when we go back to the office. 

GeorgianaCavendish

April 2021 Goals & Debt Totals

MBNA is gone! I've just got Virgin left and I'm aiming to pay this off by the end of the year. 
I have been able to juggle things around so that I could fund my LISA fully for the 2021/2022 tax year and I believe that the bonus will be paid at the end of May. I can now concentrate on building up cash savings for the deposit. 

My credit report is fully tidied up now My credit score has taken a little hit as my available credit has gone down, but I think this is a temporary ding rather than a big crash - it should go up again as I repay the Virgin card. 

No progress on Cycle2Work yet (work being really slow) but fingers crossed for next month!


Debt £2,250.00

Virgin - £2,250.00
0% until March 2022 
(Planning to clear by Christmas 2021!) 

Savings :
Holiday: 24%
Total Deposit Savings: 22.5%

rugbymadfamily

Great news on MBNA!

I'm a fan of pots but also find there is a risk of temptation when the money is sat in my bank account! I've put my emergency fund and my extra pots amounts into premium bonds. Although they are not earning any interest, there is a chance that they could win something. Interest rates are so low, I'd rather take the chance to win something. PBs money can be accessed in 2-3 days if needed which is why I feel safe with it there as is easily accessible, but not so easy that I can spend it when I'm tempted 😉