Tidying up the mess

BabyStepper

warby68 wrote: »

PS seriously though, not sure how finances are such a topic for open discussion with so many in your circle. I've never really come across that. So perhaps just opting out of the discussions is a real option too.

There are no discussions really, it's more about the odd pass remarkable comment. They seem to come out of nowhere and catch me off guard. I have decided to ignore them and take BlackCoffee's advice, good for you, but not for me. So far it's working and I feel a lot better.

BabyStepper

I've changed the plan a little...again!

I had a good look at the figures this weekend and have decided to stick with paying off the smallest 2 cards next, Barclaycard in May and then Lloyds in June, and the extra debt cash will be redirected to the holiday fund. This will raise £590 over 2 months, and the rest of the holiday money will come from the places mentioned previously.

Our debt free date of Feb 2020 will stay the same but the final payment will be £890 instead of £300.

It's taken me a while to work out a plan that feels alright and doesn't put me at risk of going completely off the rails and giving up. It's a fine balance but I think this should work.

Thank you all for putting up with my ramblinlg brain trying to work everything out. This is definitely not straightforward but I am seeing progress. And that can only be good.

Dr SpendLittle...you inspired me to organise this break, seems it is possible to have holidays and keep paying off debt.

enthusiasticsaver

That sounds sensible and does not derail your debt reduction plan. Just the three cards will be left by July then.

BabyStepper

I hope so enthusiastic saver I know it's not as sensible as paying off Santander next but I'm going with it anyway. I've still to find the balance, I seem to be either mindlessly spending or going all out with debt repayment. Note to self: find the right balance.

Moneywhizz

Your plan to pay off slightly less in a way that doesn't even affect your debt fee date is very sensible. Having a break in the summer will help you through the long winter months to debt freedom. I hope you find something that you will really enjoy. It doesn't sound to me that you have been mindlessly spending since you started this diary, but you certainly are going all out with your debt repayment. Not many people would have stuck to such a tight budget and done without in order to get this debt paid as quickly as possible. You will reap the benefit next year when you will have plenty of spare money for a holiday or car or both.

enthusiasticsaver

BabyStepper wrote: »

I hope so enthusiastic saver I know it's not as sensible as paying off Santander next but I'm going with it anyway. I've still to find the balance, I seem to be either mindlessly spending or going all out with debt repayment. Note to self: find the right balance.

I think if it motivates you to get rid of two of the smaller debts quickly then it is a sensible way to go especially if Santander will still be cleared by the time the interest free period finishes which by my calculations you will do if you start targeting it end of July.

I am assuming the mindless spending occurred pre LBM? At the moment the vast majority of your income is going towards debt repayment due to you wanting rid of it within a year which was always going to be a tough challenge.

Balancing repaying debt with saving and spending is always difficult but over time it gets easier. I am having similar difficulties in getting out of the saving mentality and into spending. What I would say is that there is nothing wrong with spending (so long as within budget or from savings) as long as it is thought out, so not the mindless variety. I have said many times I had a rule of three with disposable income after accounting for all budgeted items like bills, food, petrol, clothes and entertainment. One third went to short term savings like holidays, small home improvement projects and unexpected car repairs or white good replacements. One third was medium term so long haul holidays, replacement cars and bigger home improvement projects like new bathroom, kitchen or conservatory. The last third was long term saving and overpayments into pension and mortgage overpayments came from this and stocks and shares isas.


You will find your own way of distributing your income in the future either by getting rid of the debt and then allocating the £1400 you are currently paying towards your own priorities or if you slow the debt repayment down the £1400 could be split so you allocate say £900 a month to the debt and £500 towards a car. It slows the debt reduction down though and leaves you with the problem of moving the cards as the deals expire so I think you are doing the right thing by trying to get rid of it asap but I don't doubt it is tough giving over such a large part of your income to debt repayment and essentially putting the other priorities on hold.

If you stick to the current plan of clearing it by next March I would think that 3 months of £1400 would give you enough to buy a reasonable car once the debt is gone so just focusing on that may sustain you until then. It would not be the end of the world if you took out a 0% money transfer card to help you buy the car once the other debt is gone. Balance will come as time goes on and now you have budgeting nailed.

BabyStepper

Wise words as always enthusiastic saver I like your rule of 3 regarding different savings pots - it's not unlike Dave R's except his 3 are spending, saving and giving. It's a good bench mark for me in thinking about how to move forward once the debt is gone. Also reassuring as it's been hard to think of financing a holiday - spending is not coming easily anymore, mostly because I'm worried I will just give up with debt repayment. I can safely say now that will not happen.

It's been a year since I started all this and 10 months since I started this diary. I might do a summary post of all the things I've learned over that time and try to draw a line under old ways of spending and managing money. I have a financial plan for life with the help of everyone on here and Dave and Martin. What a great team.

enthusiasticsaver

I don't think you will give up with the debt repayment as you seem too focused for that. You should give yourself a pat on the back for coming so far in just one year. Almost 40% gone with less than a year to go before your planned DFD is brilliant. I don't think you will revert to the presumably unbudgeted over spending you were doing before starting this journey and yes you will need to learn balance and beware of thinking that being debt free will mean a sudden change in your lifestyle. This is because I don't think you will be able to spend thoughtlessly any more after a few years of watching every penny. After a year or two of the new normal though you will find a way to make things work for you.

I hope you do manage to have a small break this year. You have learnt a lot and acquired some financial discipline which will hopefully be with you for life now. Is overpaying the mortgage with some of your spare cash next year something you will be interested in or is it the car which will be the first focus?

DrSpendLittle

BabyStepper wrote: »

It's been a year since I started all this and 10 months since I started this diary. I might do a summary post of all the things I've learned over that time and try to draw a line under old ways of spending and managing money. I have a financial plan for life with the help of everyone on here and Dave and Martin. What a great team.

Definitely do this! :T

DrSpendLittle

BabyStepper wrote: »

Dr SpendLittle...you inspired me to organise this break, seems it is possible to have holidays and keep paying off debt.

Yay! :T:T

I think its a great idea. As Enthusiasticsaver says, you've got the discipline, you've kept the discipline and you seem very likely to stick to your goal and 2020 debt free date. Little treats along the way are very rewarding and motivating. Enjoy booking and looking forward to your holiday - you've earned it!