Small Steps Out Of Massive Debt!

GeorgianaCavendish

I'm back with a renewed commitment to debt-busting. I'm not going to lie, the last 6 months have been really difficult and I've been avoiding my Diary because I haven't had any wins to post. BUT, this has been a valuable resource for me and has really helped me to get my head straight and take control of my financial life. I was contemplating starting a new diary and asking for this one to be deleted, so that I could start with a "clean slate" but I'm sure that one day in the (distant) future, I will want to look back on my journey out of debt - and the downs, more than the ups, are really where I've learnt my lessons about managing my money.

I'll be updating again soon with my current situation and financial goals

GeorgianaCavendish

This is where I am now, there are three new entries which are house-related debts. (I say where "I" am now, but it is a joint snapshop of where me & my husband are now, we're tackling them together but to keep things simple, I'm in control of the spreadsheets! )

Total debt is £32428.58

HSBC Personal Loan : £8332.30
Interest rate 8.9%, 22 payments left

Credit Card Balances

MBNA £7190.43
£3021.4 @ 6.9% (rate ends 9th July 2019)
£4169.03 @ 6.9% (rate ends 2nd Dec 2019)

Barclaycard £8997
£6373.16 @ 6.9% (until paid off)
£2623.84@ 18.6

Lloyds £3314.16
Interest rate 0%, promo rate ends September 2019

Tesco 1 £772.50 Balance Transfer
Interest rate 0%, promo rate ends 27 June 2018

Tesco 2 £1163.19
Interest rate 0%, promo rate ends 8 Feb 2019

Paypal £1600.00
Interest rate 17.9%

Very 1 £250.00
Interest rate 0%, until 28 Sept 2018

Very 2 £809.00
Interest rate 0%, until 30 April 2019

Priorities and Goals

2018

My first priority is to pay off the Tesco 1 debt (£772.50) before the 0% promo rate finishes at the end of June. I called Tesco today and that balance would revert to 29.2% so I am very keen to get rid of it! I am expecting a bonus payment of around £750 in May so I will use that to clear the Tesco 1 card (will have at least two minimum payments of £25 each made to that card in the meantime).
Once I have paid off this card, I will close the account.

Priority #2 is Barclaycard 18.6% (£2623.84) which is where any subsequent debt overpayments will be going. I got a little bit obsessed with making overpayments last year, which sounds good in theory but was to the detriment of an emergency fund and forward planning for expensive events/times of year. I'm still going to strive to make overpayments but I'm going to pace myself!

Priority #3 is Very - I want to ensure that these are paid off before the 0% interest periods end because the normal interest is 39.9% :eek: I'm allocating £50 a month at the moment, which will take care of Very1 (£250 at 0% until 28 Sept 2018) and half of Very2 (£809 at 0% until 31 May 2019)

Priority #4 is Paypal - at 17.9% this is the highest interest rate after Barclaycard. For the time being, I'm aiming for a £50 balance reduction every month. This should be achievable with a small 'top-up' to my minimum payment. I'm also reducing the credit limit on this account so that it sits at £50 over the balance.

I've made the decision not to apply for any new credit (either balance transfer cards or a better personal loan rate) until the end of the year when I will be looking at moving Tesco2 and Lloyds before the 0% rates expire. I want to give my credit rating a chance to recover and secure the best rates possible for the balance on the 'expiring' cards.

2019 Goals

I want to be able to pay for our insurance policies upfront in early 2019, we did it this year and it has made a huge overall difference. I'll double check the renewal figures from this year, I think if we use those as a target then we'll be on track.

My other to-do for 2019 is to convert my Student Loan repayments from PAYE to direct debit. I checked the balance on my Student Loan today and I'm down to £6018.78 I did the sums again, and it makes sense for me to continue with PAYE-deductions for another 12 months but I will revisit in April 2019 and probably convert to direct debit.

Seasidegal58

Hi Georgiana - good to see you back!

Your priorities and goals appear spot on! Good idea to get rid of the Tesco first and I agree that any overpayments shouldn't be made to the detriment of your emergency fund. That's when things begin to spiral off course as you have found out!

Looking forward to your updates.

enthusiasticsaver

Welcome back and I think you are right with your priority debts and the way you intend to tackle them. I am a big fan of emergency savings and think you definitely need to tackle that at the same time as debt busting otherwise you will constantly be playing catch up with needing to use credit in an emergency because you have no savings. Same goes for saving to pay for annual insurances as you save a lot by paying them in one hit rather than monthly. Good luck.

DrSpendLittle

Welcome back! Your debt prioritisation sounds good and I think its smart to let your credit file recover for a while before applying for new 0% balance transfer cards towards the end of the year when they are needed.

I'm going to do the same thing with my student loan. I think my balance is around £9k and I will keep on PAYE for another year or so and then snowball the hell out of it next summer to get rid of it once and for all!

Good to have you back!

pidge04

Sounds like you have a clear and robust plan of action! Good luck to you!

thegirlinthegreenscarf

Welcome back! Sounds like you mean business!

Mummy_bear

Welcome back,

We're at very similar outstanding debt levels at the moment.
I'm glad you'd chosen not to delete this diary. Reading your journey, the ups and downs, will always be inspirational to someone out there. It provides a realism.

GeorgianaCavendish

Thank you everyone! I was really nervous about coming back and posting our updated financial situation, but I'm so glad I did because I feel better already

A financial win that I forgot to post about was getting a 0% travelcard loan through work, repayments are automatically deducted from my salary every month. I'm saving just under £300 a year doing it this way, which now I think about it is a good chunk of the cost of our insurance renewals. I'll do some budget tweaking and see if I can put that into savings!

JoJoC

Hi GC! Lovely to see you back

Sounds like things are on the up after a tough few months and you have a great plan in place.

We're getting there...slowly but surely!