Time to make this change!

Mahsroh

So, here's my situation. I bought a house in my hometown in the midlands circa 10 years ago. Lived in it for 3 years, moved around a bit for work so lived with parents. Rented property out. Settled in the South East 4/5years ago. Now rent a property down south as a private tenant.

Pretty much immediately after buying my property 10 years ago, the housing market crashed, prices came tumbling down. Value of house fell by about 20% almost overnight. (I bought the property on a 97% LTV but with charges/fees added to the mortgage it was essentially 99%). Since then there has been a gradual climb back up to where it was when I bought it. Conversely house prices in the South East have rocketed in that time, making it impossible thus far to sell my property and get on the ladder in the south east due to a significant difference in property prices.

At the same time, my finances aren't brilliant (not completely disastrous, but not great either) and I do have a fair amount of debt. So, here's the jist of it:

Debt (rounded):
Mortgage £88,800.00 (minimum payments £592/month) Interest rate 5.19% (Consent to Lease)
HSBC Personal Loan £16,250.00 (£271/month) Interest rate 3.3%
Halifax CC £1,300.00 - 17.9% interest
Tesco CC £3400.00 (min payment 1%) - 0% Interest until November '18
HSBC CC £820 (min payment 2.5%) - 0% Interest until early 2019.

Total debt including Mortgage £110,570.00

Property value £110k to 120k (let's say110k for the purpose of this, plus "savings" of circa £1000.00

So in broad terms - my financial position is currently ZERO. If I sold all my assets, I'd pay off my debts. This obviously doesn't include pension pots which would clear all my debts and pay a large chuck off my mortgage but a) that's not what it's there for and b) I can't touch it for another 30years+!!

So, my personal challenge, starting today! Turn my current position of ZERO, to £50,000.00. This to fund a deposit + costs of buying a property in the south east.

I'm not going to do full SOA as I'm happy that I'm generally getting value on my 'essential' outgoings. (though if anything jumps out then please shout). My issue is and always has been overspending on non-essential things!

I was going to set a target of 5years, but just paying off my minimum mortgage payment and my personal loan would get me in excess of £30k within 5 years, with virtually no effort, and I'd hope for some increased value in the property in that time, so let's make it more of a challenge and say 4 years.... That means improving my position by £12,500.00 per year.

My rental income (before expenses) is £600pcm, although after letting agents fees I see about £500 per calendar month. My salary is £2,900 pcm after tax with my rent being £925.00, so without doing a full SOA that shows that there is some scope to vastly improve my position.

I currently overpay on my mortgage by £50 a month (as a standing order) and make the occasional ad-hoc payments, but at the moment my bigger focus needs to be the Halifax CC that's subject to interest, then the Tesco CC which has 10/11months left to run before I start incurring interest. I also pay £75 a month into ISA's which may or may not be used to pay off chunks of credit card debt when 0% periods come to an end - I'll tackle that later in the year.

I'm generally quite good with money, in that I understand it. My issue over the last few years is a tendency to ignore my head and over indulge and spend money on credit cards knowing that it's not the sensible thing to do. I have also had a couple of issues at the rental property which has cost me - new boiler for example. And the £3,400 debt on the Tesco credit card at 0% has pretty much funded a new kitchen at the property as the old one fell into a state of disrepair.

I'm hoping by keeping this thread active on here and gaining encouragement from you guys, it will curb my urge to over-indulge and stop the mentality of "i'll just stick it on the card and worry about it later.

So, here goes, day 1 of the new me.......

[Deleted User]

Good luck on your journey x

Mahsroh

The minimum payment on my Tesco Credit Card went out today. My first bit of debt paid off since starting this thread yesterday.... albeit, pretty minimal! It all helps!


Pay day on Friday though I'm not expecting to make any great impact in reducing my debt in the next month. I have new tenants moving into my property meaning that my first months rent will be virtually wiped out in letting agents fees, so probably just the minimum or 'standard' payments on everything.

copperclock

Hi Masroh. Well done for starting your journey and diary.

Not sure how to word this, as I don't mean to be cruel, but I am not sure if you have had your lightbulb moment. You describe yourself as having a 'bit of debt', but actually you have over £21,000 of unsecured debt.

I appreciate that you have a property that is effectively a savings vehicle (as the tenant is paying your mortgage), but you are also paying rent for yourself so when it's all netted out you are in a similar position to a person with a mortgage on the house they live in, and also a bag of unsecured debt.

It's great that you have a plan and that you have an ambition for the future, but have you addressed why you've accumulated the debt? You say that you've had to buy a new boiler and kitchen for the property you own, but what is the story behind the big loan? I am not criticising. We all know that these numbers spiral really quickly. Is is a consolidation loan? Are you in the 'creeping things back onto credit cards even though I consolidated' phase?

Just some food for thought. Good luck with your journey.

Mahsroh

copperclock wrote: »

Hi Masroh. Well done for starting your journey and diary.

Not sure how to word this, as I don't mean to be cruel, but I am not sure if you have had your lightbulb moment. You describe yourself as having a 'bit of debt', but actually you have over £21,000 of unsecured debt.

I appreciate that you have a property that is effectively a savings vehicle (as the tenant is paying your mortgage), but you are also paying rent for yourself so when it's all netted out you are in a similar position to a person with a mortgage on the house they live in, and also a bag of unsecured debt.

It's great that you have a plan and that you have an ambition for the future, but have you addressed why you've accumulated the debt? You say that you've had to buy a new boiler and kitchen for the property you own, but what is the story behind the big loan? I am not criticising. We all know that these numbers spiral really quickly. Is is a consolidation loan? Are you in the 'creeping things back onto credit cards even though I consolidated' phase?

Just some food for thought. Good luck with your journey.

Thanks for the feedback, all welcome.


I do acknowledge that £21,000 is a significant amount of debt, but I guess from my perspective it's always been sort of manageable, hence I'm perhaps playing it down somewhat. I've never missed a payment for anything in my life, so previously i've never seen it as a major issue. I guess that's where I'm coming to now...... Realising that I cant keep accumulating debt and I actually need to do something about it. Yes, you are right, the loan is (in part) a consolidation loan, but taken out recently, so I haven't got into the "creeping things back on to credit cards" phase yet. I didn't take out a loan on the full amount of the CC debt as this would have been a larger loan and therefore higher interest rates, and two of the cards do still have nearly a year of interest free credit.


I guess that's why I've started this diary. I regularly take out a loan, accumulate more debt on cards, take on a new loan (to pay off the old one) and add my CC debt to it and so on. I'm hoping this diary, along with support and constructive criticism from people on here will help keep me on the straight and narrow.


I've just started a spend log where I'm keeping a diary of everything I spend, to the nearest penny, so I can track exactly where my money is going, because you are quite right, there is a reason the credit card debt is there in the first place, and I need to start spending within my means.

Mahsroh

With pay day tomorrow I still have about £20 left over in my current account so that's going to go straight onto the credit card today ready to start fresh tomorrow. Previously I would have used that surplus to buy a takeaway tonight!! Done well spending very little over the last couple of days. Literally spent £1 yesterday in the cake box at work (!!) and need to pay for parking at hospital later....apart from that, no money spent yesterday or today.


My bigger potential money saving plan over the next two months though is to monitor my fuel spend.....


At the moment I have a company fuel card, which sounds great, but I'm taxed at 40%, so it costs me £190 a month. I've always said that broadly I would spend that a month without the fuel card, so it's worth having as it takes away any risk....I know it costs me £190 a month, regardless of how much fuel / how many miles I do. However, I've never really done any proper analysis


I've just done some very rough and ready calcs for the last year, based on my mileage and I reckon I've put £2500 worth of fuel in the car, whilst it's cost me £2300, so on the face of it, worth having the fuel card, but of course those are very rough figures, and the £2500 includes business miles which I'd be able to claim back if I opted out of the card. I may do the exercise and find I'd be no better off.... but worthwhile checking my spend vs cost over a period of a couple of months. I may also ask accounts at work if they can easily obtain a record of my fuel card expenditure.

Mahsroh

Mahsroh wrote: »

My bigger potential money saving plan over the next two months though is to monitor my fuel spend.....

At the moment I have a company fuel card, which sounds great, but I'm taxed at 40%, so it costs me £190 a month. I've always said that broadly I would spend that a month without the fuel card, so it's worth having as it takes away any risk....I know it costs me £190 a month, regardless of how much fuel / how many miles I do. However, I've never really done any proper analysis

I've just done some very rough and ready calcs for the last year, based on my mileage and I reckon I've put £2500 worth of fuel in the car, whilst it's cost me £2300, so on the face of it, worth having the fuel card, but of course those are very rough figures, and the £2500 includes business miles which I'd be able to claim back if I opted out of the card. I may do the exercise and find I'd be no better off.... but worthwhile checking my spend vs cost over a period of a couple of months. I may also ask accounts at work if they can easily obtain a record of my fuel card expenditure.

Got the info from my employer on this......

My fuel card expenditure since getting my current company car is £1905.00
In that time, I've been taxed £1930.00

£25 difference over a 10month period.... so not a lot, and could easily be £25 the other way over the next 10months.

However, what this doesn't factor is business miles. Because I've had the fuel card I've not been specifically tracking what my business miles are over that period. So that's the plan over the next two months. Keep the fuel card, but monitor what I would have spent (and recovered through expenses) between now and end of March, and compare against my tax liability. I can then ditch my fuel card ready for the start of the next tax year if necessary.

Mahsroh

Morning all,

Had a bill last night from the plumber who'd done some work at the rental property for me earlier in the month. I'd set some money aside for it, but it was a bit higher than I was anticipating, so that was a bit of a blow. So my savings/emergency fund have taken a bit of a hit, but I suppose that's what it's there for. I'll build that back up quite easily with my monthly standing orders... before the next hit, no doubt!

Anyway, hospital all fine yesterday. Need to go back and see him in 6months but no major issues. I was in and out in less than an hour so spent a mahoosive 60pence on parking!! My total spend for yesterday (I paid plumber this morning!!)

Payday today, rent already paid. I've set out my finances for the month and with this months letting agent fees for finding new tenants, it's tight! I may not make any real inroads into my debt this month other than the standard payments, BUT, I'm determined to not use any of my credit cards. In this situation, the old me would have probably ended up putting between £300 and £500 worth of stuff on my card before the month was out!

I am also helped this month by a council tax free month, although I do have a (smaller) council tax bill to pay for the rental property for the couple of weeks between tenants.

Mahsroh

So I've added a sheet to my spreadsheet with all my household accounts on. Along with various plans / aspirations to remove my debt and save at the same time, I've also made a simple chart 10 cells x 10 cells....I.e 100 cells in total. I have approx. £21,800 of unsecured debt, so each cell represents £218. Each time I pay off £218 I colour a cell in! Hoping this will help focus the mind and give me something to aim towards each month!


Probably wont get on here over the weekend, but I'll update on Monday morning as to my weekend spending (or hopefully lack of!)

Working_Mum

You sound in a good place Mahsroh!
I found that simply "being present" about spending money helped me enormously!

I have a trusty method of balancing the cash in my purse and my bank in a little book which I love - it keeps me focussed on what is important. I set out goals and leave myself motivational notes on post-it notes to keep me focussed!!

I say to myself that it took me a long time to get into this mess and it i going to take me a long time to get out - this helps keep my head in a good space.

Good luck as you move forward!

Mahsroh

Working_Mum wrote: »

You sound in a good place Mahsroh!
I found that simply "being present" about spending money helped me enormously!

I have a trusty method of balancing the cash in my purse and my bank in a little book which I love - it keeps me focussed on what is important. I set out goals and leave myself motivational notes on post-it notes to keep me focussed!!

I say to myself that it took me a long time to get into this mess and it i going to take me a long time to get out - this helps keep my head in a good space.

Good luck as you move forward!

Thank you. I downloaded an app yesterday too so I track everything I spend when I'm on the move. It's fine when I'm in the office and have my excel spreadsheet in front of me, but when I've tried to track my spend in the past, i'll log on on Monday morning and try and remember everything I spent over the weekend and either miss things off, or realise that I spent more than I'd planned/thought. Hopefully the app will keep me constantly updated and help to focus the mind a bit more.