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My life in debt
in Debt free diaries
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11 months in and still ticking along. I had hoped to get my debt to under £40000 by the end of the year, but sadly that hasn't happened. Its the last payday of the year today and after paying this months payments I am down to £43234.10 outstanding.
I started in February at £49311, so I've paid of a shade over £6000 in 11 months. All things considered I am happy with that, but definite room for improvement in the new year.
I have 2 payments to go on my loan, which I am really looking forward to seeing the back of. That will give me a chunk of extra money to throw at my credit card with the highest interest and it will be nice to see that balance reduce much quicker than the £70 a month it is dropping at the moment.
It will also mean that my outgoings are no longer higher than my income (currently £30-40 per month difference in pay vs payments).
For the last 4 months I've been considering paying it off using my overdraft but I'm glad I didn't as realistically that is just swapping one debt for another, which would be more expensive.
My aim for this time next year is to get under £35000 - looks doable on my spreadsheet!
I hope everyone has a great Christmas and a happy New Year.
Have you called the banks to see if they are willing to lower their interest rates? Even 1% would help you. Is there any way to lower the interst rate on the overdraft? In the Netherlands there is something called 'quarterly credit', where the overdraft is at a lower percentage, but you have to have a positive amount once every three months.
I've been thinking about what to target next. My loan payments are £401, so going to roll that onto my next target (minus £75 which will bring my income level with my expenditure). The obvious choice would be my MBNA card which has a balance of £6501.26, £5150 which is at 25.9%.
However my overdraft (£4114 at 18.9%) and lack of an emergency fund are playing on my mind. I've come up with the following options:
- Throw everything at MBNA, then the OD. This would pay off the card next March and OD in August.
- Pay the OD first and have it cleared by the end of the year, then hit the cc which would be paid off in October next year.
- Pay off £100 each month on the OD and the rest to MBNA. This would clear the card June next year and the OD in August.
I'm erring towards the 3rd option. It pays off my highest interest card much quicker than at the moment, while also making inroads into my overdraft. While not an emergency fund, it would be a buffer for any unexpected expenses. I'd prefer to save up an emergency fund, and I know it is what's advised, but I just can't square it in my head while I'm paying such high interest.
Interest - urgh. I hate it! No chance of reducing the overdraft interest and asking MBNA led to a resounding no and my cards being stopped (a blessing really as it was the cause of my LBM). I occasionally check if I am eligible for any 0% balance deals, but beyond a couple of 6 month deals followed by sky high interest rates I'm not eligible for anything. No drama and things may change down the line, but it still hurts paying so much interest every month.
Well done on the inroads you have made to date £6k is a significant amount paid off your debts.
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I am rather happy this morning, as this was my first major target on my journey to debt freedom. 6 years of paying over £400 a month.
I now have more income than expenditure, which also cheered me right up. It was incredibly frustrating making payments each month knowing that I was going to have to spend some of the money I had just paid. Now I am in a position to make a significant over-payment to my credit card debt every pay day, instead of maybe £20 per month.
My good mood was slightly tempered as I also got a letter from Barclaycard regarding persistent debt. They have suggested I raise my payment by £50 each month and are going to monitor my account for the next 18 months. Their point is fair enough - I am in persistent debt - its just frustrating that paying off my highest interest card and overdraft is going to take 18 months and then I was going to throw everything at Barclaycard next.
Luckily (with my loan now gone) I can up the Barclaycard payment to just over what they suggest, and still heavily overpay on the others. It doesn't make any difference to my end date, just slightly delays paying off my Fluid card in full.
You have done really well so far 6K is fab! Keep going...debt busting can be tedious at times but little challenges are always useful to keep focused. Look at the challenge board if you havent already.
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I did have a look on the credit card checker part of the site. At the moment I'm not eligible for any 0% cards other than a couple that are short term, then very high interest. I'm hoping that as my credit card debt reduces then I will become eligible. It would certainly be most welcome!
£6385 left on my Fluid credit card at 25.9%. If I could balance transfer this it would save me about £1300 in interest. Would work out as even more as I would use this to pay off other cards, so saving more interest.
I don't really fancy my chance at 40%, but if I keep going hopefully this percentage will increase.
On the plus side the credit checker now shows me with an 80% chance of success with a HSBC balance transfer card.