Tidying up the mess

BabyStepper

Just been to pick up the car - I love it! So nippy! I'm glad you are all supporting my decision about paying for it with the emergency fund - because it's done now, paid in full! It also feels less worrying with you guys on board, but still, there is a bit of work to be done on the budget.

I am planning to recommence £1,400 payments to the debt at the end of this month. I know, it seems crazy, but I think I can make it work.

As it stands, we have around £200 leftover every month in the joint bills account. I was going to try and let this build up but it hasn't happened that way. Last month the whole lot went to the holiday pot. The same will happen at the end of this month. In the 2 previous months, it was spent on one off things that we don't have pots for, like the dentist, work gear for a 'do' OH went to and stuff for the house that is outwith the budget. It's nice to have that bit of leeway but possibly a luxury we can't afford now.

Going forward this cash will need to cover repaying the emergency fund and also a new line in the budget for the car.

Petrol money will come from my business account - 45p per mile tax free. A quick calculation shows this will likely be £20-£30 more monthly than I used to pay for travel. Not exactly sure yet. I'm hoping this petrol money will also cover the local running around we hope to do in the car. But we need a proper fund for road tax, mot, etc and I'm thinking it will need £100 per month, just in case. OH thinks £50. We just don't know. Maybe £75?

I have lined up one piece of work for this week - £250 that can go straight in the emergency fund. Then around £500 to find - maybe £100 per month? Is that too slow? Keeping in mind it wouldn't be able to start until the end of July.

I need to think this through a bit better. That £200 extra was very handy, the thought of going without it is not amazing. And with summer coming, my wage is definitely going to shrink. It's the same for everyone in my line of work, and usually others enjoy the rest. There will hopefully be enough to pay me £1500 but pretty much nothing leftover.

I'm trying to plan as best I can and just roll with it as we go. Does anyone else think I'm nuts??

Moneywhizz

Hi Babystepper, great news about the car. You will be so much happier not having that long and tiresome bus journey to make any more. As for your plans going forward. I think you should be content with a £500 emergency fund until your debt is cleared. If you find yourself with some extra money from your £200 surplus at the end of any month you could always add it to the EF but to try and do without that money will probably restrict your life too much again and make you miserable. If you really have an emergency between now and debt freedom, you can always use the extra that you pay above the minimum payment for a month or so. You are so determined to get this debt cleared by this time next year and you may not have any emergencies between now and then so I don't see much point in decreasing your debt repayments unless you really have to. Under normal circumstances an emergency fund is vital to stop getting into more debt but the worst that can happen in your case is that your debt free date would be put back a little. I know others might not agree but at the end of the day it is what works best for you and I think paying your debt as quickly as possible is really important to you.

BabyStepper

Moneywhizz, thank you for your words of wisdom. I can't tell you what a difference the car will make - first journey to work on Monday instead of taking the bus - exciting!

Also that's a good idea about keeping a smaller emergency fund. At least I have the extra work this week and can top it up to £500. I'm not sure whether to use the extra £200 to at least try to keep building the EF a little - we weren't really in any routines with what we spent it on - it just made life a lot easier to have a buffer - especially as I am STILL discovering things I hadn't budgeted for. I mean, who has a pot for a check up at the dentist or a new door mat when your old one falls to bits? We also used it to treat ourselves last minute to tickets to a local festival - we had a blast. Eventually we will likely just increase our spends and use that for those little things.

Someone suggested £50 per month was enough to put away to cover an MOT etc, anyone have any other thoughts/experiences?

enthusiasticsaver

I think initially £50 a month for the MOT and road tax is ok. Presumably it is Mot'd for a year anyway and by then hopefully you will be free of debt? I also agree with Moneywhizz that having a £500 emergency fund until the debt is gone is fine. You have so much leeway in your debt overpayments that should something happen which you don't have savings for you could do as you are doing at the moment and reduce the debt overpayments for a few months.

I personally hate the thought of debt and using any of our monthly income to repay it so I certainly don't think you are nuts for still trying to get rid of it ASAP.

Budgeting is always going to be a movable feast and having some leeway is a good idea I think going forward. I know some like to budget for every penny and certainly if money is very tight that is to be admired but when you have manageable debt such as yours I don't think there is anything wrong in keeping £100 spare each month for household items, dentist bills etc and if not used it can go into emergency savings or debt overpayment.

Enjoy your new car and the freedom it gives you. You have done so well to get it without adding to your debt.

BabyStepper

Hi everyone

Just a quick update to keep me on track and organise my thoughts for payday.

The car is running really well, no hassle, no weird noises, it's all good. What a luxury it feels like, I've never been so appreciative of a car in all of my life. I love it, definitely a good buy.

I haven't been paid the £250 yet from the extra work I did so the emergency fund remains at £250 at the moment. Will top it up the second that cash arrives.

I decided on £50 for the car fund. Seems reasonable and yes enthusiasticsaver the car is MOTed so by the time it is due its next one I will be debt free. I hope.

There have been no emergencies or disasters. Everything is on track. We have enjoyed several evenings out, driving to local places for walks on the beach or in the forest, all made possible by the new car and barely costing a thing except a few pennies in petrol. It's so good.

Other than that, a quiet time of trying to be frugal and plotting to get rid of the debt. I don't know what I'll do with my time once it's gone - great problem to have!

DancingInTheRain

Lovely to hear the car's working out so well for you, you sound so content

We put £100 per month into our monthly pots to cover both cars so I'd also agree £50 is a fair amount to set aside.

Once the debt's gone you'll be in an amazing position, it'll be well deserved too, you've worked so hard :T

BabyStepper

Thank you DancingInTheRain, I do feel much more content. And really appreciative of everything I have. I know this is ordinary stuff for most people, but the novelty of the car just now is amazing.

I'm trying to decide what to pay off at the end of this month. I know Lloyds looks like an obvious target, or Barclaycard, but with their balances being so low just now I have completely stopped worrying about those ones. It's MBNA and Santander that play on my mind now. I might put a chunk to Santander, or maybe MBNA. Overall it doesn't much matter but the Lloyds account is already closed, I'm just paying it off. Barclaycard is not closed and we plan to keep it open because they send us deals every month and if the plan falls down then we will have somewhere to shift the MBNA card to next year if need be.

Maybe it doesn't matter. I'll have a think tonight when we're sorting out the wages.

enthusiasticsaver

I would focus on the big two now of Santander and MBNA so you don't run out of time to repay them before the deals expire in December and February. The other two could be repaid in just one month's debt repayments by the time you get to the deal expiry dates and the deals have longer to run so you could just let them run their course until after next February when you tackle them. Of course the larger balances would charge higher interest as well should you not clear them in time. I know you intend to get it all cleared but sometimes things happen and my cautious approach would say get rid of the troublesome ones first. Whatever works for you though.

Glad you enjoying the car. Sounds like it has given you great pleasure and made your life easier, two great reasons to prioritise that for a month or two over the debt.

warby68

Love it, BabyStepper

Time for a name change I think, more like GiantLeaper to me

Car is giving you benefits above and beyond the practical which is great

Because you are paying the debt so aggressively its like an in built emergency fund. If something crops up you can just pay less for a month. I agree to watch your deal expiry dates as they are looming and you'd probably be quite hacked off it you ended up with a few months of interest to pay.

enthusiasticsaver

BabyStepper wrote: »

[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
[STRIKE]Hitachi loan £970.60[/STRIKE] PAID OFF
[STRIKE]Overdraft £2,000[/STRIKE] PAID OFF
Santander cc £3,435.67/£2,965 0% Dec 2019
Barclaycard (3) £1,250/£1,105 0% Feb 2020
MBNA cc £5,325.99/£5,000 0% Feb 2020
Lloyds (2) £907.57/£795 0% Nov 2020
Halifax cc £3,342.25/£2,855 0% Oct 2020

Total May 2018 £21,228.07
Total May 2019 £12,720
£8,508.07 paid off :T:T:T

Only £180 paid off this month but the budget is working and the debt is going in the right direction. I count that as a win.

You have 6 months to clear the Santander before the deal expires which is £495 per month so I would pay that from your £1400 debt repayment per month or maybe £500 if you like round numbers as I do.

You have 8 months to clear the MBNA by February or £625 per month. You then have a spare £280 to spread across Barclaycard, Lloyds and Halifax to cover minimums and maybe the extra to Barclaycard as that also finishes in February and of course you will have the spare £495 from the hopefully repaid Santander in January and February too.