My 5 year plan

fatrab

Honeysucklelou2 wrote: »

Just caught up on your diary. Well done on the debt busting and weight loss so far.

Will you have nursery fees to factor in when Mrs Fatrab goes back to work? Childcare, I have discovered, can be a huge monthly cost.

Thanks!


We're in a very fortunate position where my wife's mother recently took early retirement, lives in the next street from us, drives and is still very fit and able to look after the baby. My wife is going back to work for 3 days per week so her mum will watch the wee one in the mornings and he'll go into nursery in the afternoons on the days that she's working. My wife's office is 5 minutes drive from home, the nursery is 5 minutes walk away from our house and my mother also only lives 5 minutes walk from the nursery so logistically things couldn't be better!


This will cost £72/week but my wife will be paying this mostly through childcare vouchers.

fatrab

I got caught out this morning.

On my way to work the A9 was closed due to an accident and there was no alternative route to take. So I stopped at the first available rest area which was a truck stop.

A small breakfast and a cup of tea was £7.20. £7.20!!!! and it was awful.

The road was closed for about 2 hours but when we got past the accident both cars were fairly intact so hopefully nobody was seriously hurt.

[Deleted User]

Good to see that you've got things covered with regard to childcare, it can get very expensive.

Ouch to the £7.20 :eek:

Hope the rest of today isn't too bad x

fatrab

Have lunch with me for next 2 days and big bag of porridge for breakfasts. Just need to pop to Lidl for some dinners. It's going to be a cheap and healthy week following this morning's blip.

fatrab

Who the heck thought it was a good idea to have pancake day right in the middle of my diet??? So much for cutting out the sugar this week, 3 pancakes with jam devoured already this morning!

I think it's safe to say the diet has slipped over the past 5 days. I think I'll finish work early today and go for a nice wintery walk along the beach while it's still daylight, and try to get into the habit of doing that most of the nights that I'm away from home if possible. Have been going long walks with Mrs fatrab and the pram at weekends (should really start taking the baby too hahaha).

It's less than 2 weeks til payday so the countdown is on for the next step of the plan. Once my MBNA card is gone I can start to focus on the other debts. Still unsure what order I'm going to tackle them and I suppose it depends on whether Mrs' car sells quickly or not, and whether or not it sells for what it's worth.

Car Finance:
6.9% - £18500 - general advice is to pay off highest interest debts first so this would mean paying off my car first. That's the advice I would give to anyone else in my situation. However, I get paid car allowance which covers the monthly payments for the car finance so this isn't a debt which niggles at me.
Mortgage:
3.14% - £65000 - due to re-mortgage in September but I haven't made any overpayments this year, by Sept I will owe £60000, but I could reduce this further possibly the full 10% - £6500 - by overpaying between now and September.
Bank Loan:
3.1% - £6000 - could be pretty much cleared from the sale of Mrs' car but would the money be better paid off higher interest rate debt first?
Credit Card:
0% - £4000 - 36 months interest free and the minimum payment is set at £110 so it'll be completely cleared at the end of the term. No point paying this off.

I'm going to have a play around with snowball & mortgage calculators and see what the figures look like.

fatrab

Paying off the highest interest debt first makes sense all round. It's only a difference of a few hundred quid but I'd rather have that in my pocket than in the finance company's.

So a slight modification to my plan is required. From March, I'm going to pay £100 into the emergency fund and the remaining surplus and any extra monies (tax rebate/sale of wife's car) to my car finance each month.

Continual improvement and constant re-evaluation are worthwhile in this money saving malarkey! It's really easy to take your eye off the ball for a split second and make a silly, costly mistake.

enthusiasticsaver

I still think it is worth overpaying the car loan as it is your most expensive debt and a high balance. Even if it is covered by your car allowance presumably that allowance is also to cover running costs so getting rid of the loan ASAP gives you more in your pocket eventually and puts you in a better position re the next car. Ideally you should eventually move to a car pot where you save not only for maintenance, car tax and insurance but also for a replacement when it has outlived its reliable life.

enthusiasticsaver

Just seen you already decided to go that way. Sensible move.

fatrab

Part of the long term plan towards semi-retirement involves me getting a job closer to home and not needing a car for work at all, which will be nice. I don't want to be travelling all over the country for work when I'm in my 60s. There will be no future HP or willy-nilly borrowing for cars, that's what got me into this mess in the first place!

How I got to where I am today.
I ordered a brand new car in July 2012 and loaded it up with optional extras totalling just under £30,000 all in. It arrived in Feb 2013. 12 months later I'd spent a small fortune on aftermarket modifications and "enhancements" but unfortunately in Feb 2014 the car developed a serious fault. I had to return the car to it's original specification before I could claim under warranty. The car broke down a subsequent 4 times over the following 6 months and ended up having a replacement engine. By that time I'd lost faith in the car, ended up selling it, and was £18000 out of pocket (depreciation, cost of modifying and un-modifying the car). I sold the aftermarket parts and recovered around £3000.

I'd paid the deposit for the car (£5000) on a 0% spending card and paid for the modifications on credit cards too, with every best intention of paying them off on time before the 0% deals ended. But then the problems and additional costs came rolling in.

In amongst all of this we got married (Aug 2013) but most of the wedding costs were covered by gifts from parents, and we didn't have an overly extravagant wedding. We got a package from a nearby hotel for just under £5000 all in, which included cars, cakes, piper, the lot. The honeymoon was £2000 and that also went onto the credit card.

Since then I've been having ups and downs financially. I ran an older car for a while until I got back on my feet, then bought another new car, ran it for a few months and sold it for a profit (luckily) then went back to a 5 year old car which was very economical and cheap to run. Sold it last year and hardly lost a penny on it, again luckily. I then bought the current car, which in hindsight is the car I should have bought back in 2013 as it's more suited to my needs and is perfect as it is without any modifications or upgrades. And was a lot less than £30k!

So I've spent the past 3 years paying down the debt to a certain level, then buying something else, or going on holidays 3 times a year, spending to make myself feel better, but I've been relatively sensible about it by avoiding interest through balance transfers. Apart from the balance transfer fees I don't think I've paid a penny on interest on all of that debt. It just got to the stage that the debt needed to be gone and I needed to change my ways. Light Bulb Moment December 2017!!

I've got £4000 left of the old debt. All my other debt is for the cars or the house, I've got something to show for what I'm paying and they're at sensible rates of interest.

I will never be in that situation ever again.

savingholmes

Congrats on the weightloss and identifying the source of your debt. We like you are debating whether to change our car loan / find a way of paying it off earlier as it is our most expensive debt.