Debt Free By 2020

debtfreeby2020_3

Hello everyone!

Thank you for stopping by to read my DFD. My name is Lynsey and I have started out on my debt free journey. Over the last few years I have made many silly mistakes with my finances. I figure now that I am almost 30, I need to grow up and get my life in order. I thought I should start out my diary with a debt confession post.

Debt Confession

My problems with money started in 2015. I was a doctoral student and I had just run out of research funding. I was fortunate enough to have a grant from a well-known medical research body, which paid a tax-free stipend of £2000 a month. Did I save any of it? Absolutely not. I squandered the lot on clothes, partying, foreign trips...the usual things that students spend their money on. I also funded my wedding from it, so I suppose that I have a husband to show for it! :rotfl:

When that money ran out, it was a sharp shock. I got a job as an educational consultant but it paid nowhere near the same as my doctoral stipend. Did I live within my means? No. Do I regret it? Hell yes. I ended up in considerable debt. Not as much as many of my friends but enough to make myself uncomfortable. It did encourage me to focus and get my doctorate finished. I passed in 2015 and now have my first grown-up job, which pays an ok salary.

What were the consequences of my actions? Well, I was in overdraft every month. I had an interest free £1000 overdraft with RBS on their student account. I was into that at least £500 a month and I have literally just gotten out of it this month. Not by underspending. Too late for that. I decided to use a 0% money transfer deal on my Barclaycard to get out of it. I have 18 months to pay that off, which is completely doable. All of the perks from my student and graduate accounts have ended so I pay £6 for entering my overdraft every month. I also have other debt on my credit card.

As a self-employed educational consultant, I was liable for tax and National Insurance contributions. In my mind, I didn't have enough to save for the tax bill and was planning to do this when I was in full-time employment. Still, I didn't put the money away. I hadn't learned my lesson. I was making more money when I was a doctoral student than in full-time employment and was struggling every month. I put the £3000 tax bill on a credit card.

Here is the really stupid thing that I did. I decided to take out the personal loan for £5000 with the intention of paying off the credit card. When that money landed in my account, I had pound signs in my eyes. I did pay off the credit card and had £2000 leftover. I spent this on a holiday instead of keeping me afloat. In hindsight, I should have made a one-off payment to the loan to reduce the monthly payments, but I didn't. Instead of getting rid of the card. I kept it for 'emergencies.' Emergencies on this occasion turned into clothes I didn't need, holidays I couldn't afford, Christmas, evenings out...ridiculous. Absolutely ridiculous.

Honestly, I am ashamed of what I have done. I am an educated woman. A woman with a doctorate. I really should know better at this stage.

The Damage

So what is my total debt?

Barclaycard: £3196 - accruing monthly interest
Tesco Bank: £4026/£5369.00 - the £369 is pre-paid interest.

Enough is enough. I am going to attack this debt this year and stay out of it for good. I will post my plan of attack in the next post.

Thanks for reading,

Lynsey

Debtnomoreplease

Hi, welcome. Just wanted to check in and say good luck on your debt free journey.

Must if not all on here know exactly how you feel, and how easy it is to become I financial mess. But the main thing is, you're fixing it and you seem very determined to do this, so just wanted to say good luck.

enthusiasticsaver

You live and learn so try not to beat yourself up too much. You now know that consolidation does not work and if you read many many threads on here you will see so many people try and fail to clear debt that way.

I always say there are two important lessons to learn before starting to clear debt.

One is you cannot borrow your way out. Consolidation, constant balance transferring does not work. Many people trick themselves into thinking they have cleared it when in reality they have just moved it. Consequently they never learn to budget and live within their means.

The second is that saving for yearly costs, unexpected car or house repairs, holidays, insurances, Christmas etc and emergencies is as important as clearing the debt. Many many times people throw as much as they can to the debt only to then fall into the merry go round of having to use debt again when something unexpected comes up. Eventually of course something always does come up whether it is an unplanned and unsaved for holiday, a large car or house repair bill, a period of sickness or vet bills, dentist bills, etc etc etc. You get the picture.

foxyloxy11

Hi DEBTFREEBY2020 I'm hoping to be debt free by October 19. Did the same as you stupid, then more stupid but have learnt and will never go back.
i agree with the post above about emergency savings. I follow the Dave Ramsey approach so the first thing i did was save £1000 emergency fund before tackling the debt.. This way when life happens i have the money to pay for it and don't need the dreaded credit cards. it has been going really well and when life has happened a few times it's been great having savings.
If you haven't heard of Dave it's worth going on youtubey and watching peoples debt free screams to keep you inspired. Helps me and when you see what peopl have achieved it's inspiring.
Good luck

debtfreeby2020_3

Debtnomoreplease wrote: »

Hi, welcome. Just wanted to check in and say good luck on your debt free journey.

Must if not all on here know exactly how you feel, and how easy it is to become I financial mess. But the main thing is, you're fixing it and you seem very determined to do this, so just wanted to say good luck.

Thank you so much! I appreciate your support. I am completely determined. It's like someone has lit a fire under me.

debtfreeby2020_3

enthusiasticsaver wrote: »

You live and learn so try not to beat yourself up too much. You now know that consolidation does not work and if you read many many threads on here you will see so many people try and fail to clear debt that way.

I always say there are two important lessons to learn before starting to clear debt.

One is you cannot borrow your way out. Consolidation, constant balance transferring does not work. Many people trick themselves into thinking they have cleared it when in reality they have just moved it. Consequently they never learn to budget and live within their means.

The second is that saving for yearly costs, unexpected car or house repairs, holidays, insurances, Christmas etc and emergencies is as important as clearing the debt. Many many times people throw as much as they can to the debt only to then fall into the merry go round of having to use debt again when something unexpected comes up. Eventually of course something always does come up whether it is an unplanned and unsaved for holiday, a large car or house repair bill, a period of sickness or vet bills, dentist bills, etc etc etc. You get the picture.

Hi there. Thanks for your support and for the excellent advice. I have established a small 'bill pot' for planned expenses. For example, I have my water bill coming up next month. I usually pay this by DD but I actually have the money to pay it in full this time :-)

I agree that consolidation is not the way forward. I have learned that the hard way. I am not going to BT anything this time. I will suck it up and take the interest, as I feel that I will lose my motivation with another 0% for 18 months offer.

debtfreeby2020_3

foxyloxy11 wrote: »

Hi DEBTFREEBY2020 I'm hoping to be debt free by October 19. Did the same as you stupid, then more stupid but have learnt and will never go back.
i agree with the post above about emergency savings. I follow the Dave Ramsey approach so the first thing i did was save £1000 emergency fund before tackling the debt.. This way when life happens i have the money to pay for it and don't need the dreaded credit cards. it has been going really well and when life has happened a few times it's been great having savings.
If you haven't heard of Dave it's worth going on youtubey and watching peoples debt free screams to keep you inspired. Helps me and when you see what peopl have achieved it's inspiring.
Good luck

I LOVE DAVE RAMSEY! I watch the show every day for inspiration. Wow! The amount of cash American people are allowed access to is frankly mindboggling! Can you imagine a UK bank giving a mortgage to someone with so much debt?

I have started my emergency fund. I have £200 in there and will add another £100 on payday (roll on Wednesday). I also have a small fund for bills. I am trying to keep this topped up to £500 - I suppose Dave would call that a sinking fund.

On a technicality, I am doing the debt snowball, which is something that MSE folk would not advise. My lowest debt happens to have the highest interest rate, so I am going to attack that. The one thing I am going to do differently is make small extra payments to my debts while I am building the emergency fund.

Lilith1980

Welcome to the forum! I started my debt free journey not too long ago when I got billed the last of my uni fees and now have a bit more disposable income to pay them off (I'm a doctoral student too and no loan/stipend).

Half the battle is seeing the light and making the decision to get thing sorted. Good luck on your journey!

debtfreeby2020_3

Lilith1980 wrote: »

Welcome to the forum! I started my debt free journey not too long ago when I got billed the last of my uni fees and now have a bit more disposable income to pay them off (I'm a doctoral student too and no loan/stipend).

Half the battle is seeing the light and making the decision to get thing sorted. Good luck on your journey!

Hi Lilith! Thank you for taking the time to reply. My squandering of money is even more embarrassing when there are hard working doctoral students like yourself out there, who are self-funding. I hope you are making headway with your debt and that your research is going well x

foxyloxy11

debtfreeby2020 wrote: »

I LOVE DAVE RAMSEY! I watch the show every day for inspiration. Wow! The amount of cash American people are allowed access to is frankly mindboggling! Can you imagine a UK bank giving a mortgage to someone with so much debt?

I have started my emergency fund. I have £200 in there and will add another £100 on payday (roll on Wednesday). I also have a small fund for bills. I am trying to keep this topped up to £500 - I suppose Dave would call that a sinking fund.

On a technicality, I am doing the debt snowball, which is something that MSE folk would not advise. My lowest debt happens to have the highest interest rate, so I am going to attack that. The one thing I am going to do differently is make small extra payments to my debts while I am building the emergency fund.

I'm doing the snowball too and doing the same as you with the extra little payments! Nice to meet someone who loves it as much as me. I watch his show each day too and love it when he gets all RANTY ha ha I've subscribed to the thread and will follow along

MeenaM

welcome! I also LOVE Dave Ramsey, I listen to his pod casts every day and watch the YT videos , he is so inspirational as are all the debt free screams , I'm doing my best to follow him with the debt snowball