Tidying up the mess

enthusiasticsaver

I think cancelling the pension payments is the only thing I disagree with Dave Ramsey about, oh and the fact he suggests clearing smallest to largest debt rather than most expensive first. Cancelling pensions means missing out on employer contributions and tax relief but I know many on here have done the same. Personal choice I guess and if early retirement is not a priority aim you have plenty of time to catch up if you are early 30s.


Really good aim to overpay the mortgage and clearing it 10 years early would be great if you can manage it. I agree with DSL and keeping emergency fund separate is probably the best plan rather than keeping it to help cashflow. How about £10k as an aim? That is a nice round number and a very good emergency fund.

BabyStepper

I was worried when we cancelled OH's pension but at the time there was no other way to make ends meet. It is a lot of money to lose and by the time we are debt free it will have been 15-16 months of no payments. I like the idea of catching up, enthusiasticsaver, might suggest it to OH.

I don't know how much of a buffer I need in my business account, at least one month's wage though, it would be good to pay myself on exactly the same day every month. 1 month's wage would feel safe, 2 months would feel safer still. So maybe £3k? I agree it should be separate from the emergency fund. Working so hard to sort our personal finances has really made the business finances look like a piece of cake.

£10k emergency fund does sound like a good round number. OH is keen to go for 6 months and that's pretty close. I think we both appreciate the safety of an emergency fund so don't really feel so tempted any more to spend it all, DrSpendLittle. We have got the hang of living within our means, and waiting and saving for the things we need. At some points during the last 7 months or so, we did use the emergency fund to help with cash flow, much better than borrowing from a credit card, and we learned the discipline of paying ourselves back. We haven't used it that way in a while, it justs sits there making me happy.

I haven't done a budget for once the debt is gone, so I'm not sure if we will be able to afford £400 per month mortgage overpayment. There is no harm in dreaming though!

This chat has been so helpful. I'm getting back to the main aims of all this, stabilising and simplifying the finances and making everything as secure as it can be while protecting against future disasters. I think my next goal needs to be building up my business account buffer as soon as possible.

Quote number 2 for house repairs should come in today and it's looking likely to stay well within budget. Usual spends are also within budget so we're still on track today.

Thank you good people. You help me more than you know. :A

And btw, late invoice payer finally coughed up and BC2 is now gone. :T

enthusiasticsaver

I think you have done so well with your financial discipline since starting this diary. Having a large amount sat in savings can be tempting but the fact you don't dip into the emergency fund or if you do you replace it shows a leap forward. Building up the business account is a great aim too and certainly essential if SE.

I think in the grand scheme of things cancelling the pension for 15/16 months is ok to concentrate on debt so long as you don't get used to the extra money and forget to reinstate it. I would even make that a priority over mortgage overpayments once the debt is gone. I also would not wait for the 3-6 months emergency fund to be completed before reinstating pension. Even if you are happy to work right up to spa that alone would only give you subsistence income. Lots of things to think about once the debt is gone and your emergency savings goal finished.

Also even a £50 a month overpayment makes a difference on the mortgage. That is how we started and gradually increased the overpayments. Not with big monthly overpayments to start with. We had kids and wanted to do holidays, save for new cars and work on the house etc. Having a balance of living in the present and saving for your future seems eminently sensible. Keep going, you are doing great and have the added advantage of your DH being on board.

Kitten868

1 more credit card section struck off the list! 7 to go and the Hitachi loan will just tick itself off the list anyway. Nothing coming off 0% til the end of the year! You're really taking charge of the debts and smashing them.

Intrigued as to what the home repair is.

So where is this dream holiday going to be? X

[Deleted User]

You're doing so well, it's so inspiring to read about your progress. Your signature is so apt too - 'getting it done' indeed!

GlendaSugarbean

Re mortgages, my current OP is a whopping £33! Better than nowt, I keep telling myself. Even that will e evtuslly reduce the term by nearly 2 years. And in a couple of months I'll nudge it up again, not too much I'm still building an EF.

redmel1621

Just catching up and it looks like things are going really, really well for you right now. I think 10k is a massive amount for an emergency fund, but if that is what you have decided on then go for it. I am only looking at 3-5k for mine, I also agree with others to definitely keep the emergency fund completely separate. Don't just dip into it for small cashflow issues, you could build a separate fund in your business account for that of say £1000-£1500, that just gets left as a buffer so there are no cash flow problems

I have watched Dave Ramsey and I have to admit I am not a fan. He comes across as arrogant to me. I also don't like his policy of never helping anyone, even your own kids with money. I don't think his advice to stop pension payments is the best, but in some cases I can see it might be a necessity. There are numerous other ideas of his that I also don't really agree with.

I'm still LOVING YNAB, as I can see you are too I love the flexibility that is advocates. I love the guilt free budgeting method and the understanding that sometimes 'life happens' and messes things up.

You are definitely going to hit your targets - keep going

BabyStepper

Nothing much to report, just checking in to keep me on track. Waiting for the final quote to decide who will do the work on our house. It's looking within budget so that's good.

kitten868...it won't be a big 'dream' holiday, just a simple week in the sun. There might come a time when we want more adventurous holidays but for now we will be flying from our local airport to the nearest place with a big beach, hotel close by and nothing much to do but swim in the sea and enjoy a slow pace. Getting excited just thinking about it!

redmel...I appreciate your thoughts about Dave R. He tries very hard but I had a cringe moment when he was talking to Chris Hogan (the guy who wrote 'Everyday Millionaires') about how anyone in the states can be rich and it doesn't matter if you have difficulties, are a single parent, have mental health problems or are discriminated against in some way, you should stop whining and get on with it (seriously, this to a black American?) I listened intently for the sound of Chris punching him in the face but it didn't come. I'm coming to realise that Martin speaks much more clearly to me about managing my money. I've started watching his programme too, I love that it looks so cheap but is very effective in getting his message across. And there is nothing arrogant about our Martin and when he sees injustice he calls it out and I love that. Maybe there are other people to be inspired by too, I might try finding other books and things to help.

Hope everything is going ok for everyone.

enthusiasticsaver

I like the basic gist of Dave Ramsey's ethos but he is a bit cringey in that there is no empathy for people's situation which as a white presumably healthy male is arrogant. Everything is not always black and white. Some people though do need the tough talk he dishes out when he tells them to stop whining about not having a holiday or a new car. I prefer Martin Lewis who while straight talking has a degree of empathy too.

Also I am not sure I agree that anyone can be rich if they have to cope with the issues you mention. Wouldn't we all be doing it if that was the case? Will have to see if I can look at the episode on youtube.

Fingers crossed for the house repair quote coming in within budget so you can proceed with your big debt reduction plan in March.

BabyStepper

[STRIKE]Barclaycard (1) £3,044.54[/STRIKE] PAID OFF
[STRIKE]Lloyds (1) cc £434.33[/STRIKE] PAID OFF
[STRIKE]Barclaycard (2) £517.12[/STRIKE] PAID OFF
Santander cc £3,435.67/£3,120 0% Dec 2019
MBNA cc £5,325.99/£5,240 0% Feb 2020
Barclaycard (3) £1,250/£1,250 0% Feb 2020
Hitachi loan £970.60/£548.60 0% March 2020
Overdraft £2,000/£2,000 0% Sept 2020
Halifax cc £3,342.25/£2,995 0% Oct 2020
Lloyds (2) £907.57/£855 0% Nov 2020

Total May 2018 £21,228.07
Total Feb 2019 £16,008.60
£5,219.47 paid off :beer::j:T:D

Nothing much is going to change this month so I thought I'd post the update early. If there is any extra cash it will go to the house repairs fund. We hit £5k + paid off, fully paid off BC2 and the Halifax card went under £3k. Feels amazing.

I'm thinking about changing the order of repayment (again!) to deal with my overdraft first. It's the most vulnerable debt to being called in. I'm also fighting the temptation to start with the smallest, I could pay off Hitachi and the Lloyds really quickly, but this wouldn't set me up well if something goes wrong during this new 12 month plan. It would free up monthly payments to hit the bigger debts harder though. Thoughts, anyone?