Tidying up the mess

BabyStepper

Thanks girlatplay, I can only give it my best shot and that's what I intend to do. For some people, setting such ambitious targets can lead to disappointment and reduced motivation but for me it seems to work. You can learn quite a lot about yourself on this debt busting journey, it's all good.

girlatplay

It works for me too. I don't like failing so it makes me push myself more haha.

enthusiasticsaver

BabyStepper wrote: »

Also yes, my wage will be reduced given the 2 week Christmas break. Luckily, one week falls in December and the second week falls in January so the impact is limited and I should be able to keep contributing £1500pm. I'm not great at forecasting earnings yet, but once this debt is gone I'll be better prepared. The worst break is in summer, 2 weeks in the same month. It's a killer and I need to figure out how to smooth that over.

Just think next summer you won't need to worry so much as the debt will be gone by then . Our income is lower than our salaries now we are both retired and I have the issue that we have to draw on savings for large things now like holidays, home improvements etc outside of our normal budgeting so I always find having a large savings buffer is the best way of smoothing reduced income. Presumably you will be going for the large emergency fund (Dave Ramsey style) once the debt is gone? Is that step 4 or 3?

BabyStepper

girlatplay I'm exactly the same and compete against myself. 'Aim for the moon and if you miss you'll at least be in the stars' hehe, that sounds tacky but for me it's true.

Wow yes, next summer there should be no debt, if everything goes according to plan. What a thought!

Baby step 3 is top up the emergency fund to 3-6 months expenses. We decided on £10k a while ago, 6 months expenses rounded up slightly, mostly because of my self-employed situation. I love the idea of having a big savings pot for holidays and things, you're so disciplined enthusiasticsaver. Thank you so much for the inspiration. I do need to put together a plan for my business account. I've had a few ideas then keep changing my mind. And at the moment every penny gets used up, but that will change once the debt is gone. I might try and save up at least one month's wage as a starting point. Not yet though, when cash is so tight.

I've got back on the matched betting wagon today and made my first qualifying bet in a while. We still have this wedding looming in the New Year and I need to pull together the cash from outside our usual earnings/spends. Rumour has it that the bride and groom are totally unconcerned about presents and just want us all to be able to go. This is helpful as I just don't think we can match their generous gift to us. I still don't know how much to give though, it will depend 100% on how much we have actually got.

It's nice to be back. I've missed you all.

enthusiasticsaver

Well done on getting back to matched betting and I would not worry about matching your friends wedding gift. Just give what you can afford.

Good aim for the £10k emergency fund. That is the same as ours and I won't let our accessible savings go below that. Even more important to have that buffer when you are self employed.

Great to have you posting again. You have been missed.

BabyStepper

For some strange reason I have had a few of my invoices paid very early this month. I'm not complaining, but I wish it was a bit more regular and predicatable. However, I've spent some time this afternoon sorting the cash and making the £975 overpayment to mbna. The minimums have not gone out yet, but once they have, this is how it looks.)

[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
[STRIKE]Santander cc £3,435.67[/STRIKE] PAID OFF
[STRIKE]Barclaycard (3) £1,250[/STRIKE] PAID OFF
MBNA cc £5,325.99/£3,465 0% Feb 2020
Lloyds (2) £907.57/£740 0% Nov 2020
Halifax cc £3,342.25/£2,705 0% Oct 2020

Total May 2018 £21,228.07
Total October 2019 £6,910
£14,318.07 paid off :j:j:j

The emergency fund is topped up again, car fund will get it's usual £50, matched betting pot is up to £180 so that's good. Need to keep going with that one. Mbna is looking much less scary than ever so I'm also glad for that this month.

I just realised enthusiastic saver that I forgot to answer your question about Christmas. We have a gifts pot, I don't count it as savings as cash goes in and cash goes out. I don't know if we have enough in there to cover Christmas. We both have very small families to buy for so we will likely have to adjust travel plans if we are short and perhaps use our monthly spends for some of it. We figured that would be ok as it will count as our activities/entertainment for December. Well aware this will be our LAST christmas with debt. It is becoming very real now, we are in the home straight!

I'm off to adjust my signature.

BabyStepper

I've had so many ideas about how to manage the cash when the debt is gone. So far they have all just been ideas, I don't really have priorities sorted out or a plan. The only firm decision is that the emergency fund will be £10k.

However, I want to focus on a few goals at once and not be as single minded as I have been paying off the debt. £10k will take a long time to save and I want other things too. If any of you have any thoughts about the following list of things I plan to do, I'd love to hear them.

1. Save an emergency fund.
2. Save 2 months wages in my business account. (for stability and to make managing the cash every month easier, I can pay myself on the same day OH gets paid and also cover any months when I take A/L.)
3. Save for a newer car before our starts costing a fortune. (could happen any minute)
4. Save for a new kitchen. (becoming slightly urgent)
5. Have a beach holiday. (it's been AGES! but this feels like a luxury)
6. Contribute to my pension (ooh, totally urgent, maybe the minute the debt is paid off)
7. Increase the food budget to make things more interesting. Currently £200 per month, is £250 too much for 2 people?
8. Increase our monthly spends to...dunno. What do people with no debt spend on fun/clothes/ haircuts /things like that?

Aside from the wedding in January we have no big outlays next year (yet). I'm thinking of doing a short term plan of 6 months after the debt is gone, taking us up to the end of September. Then review. I've never handled a budget before where paying off debt was NOT the priority. Total novelty.

I've enjoyed catching up on the diaries today. BlackCoffee if you read this, you are SO my inspiration just now!! Keep going, so close!!

Moneywhizz

It's great to read such positive news from you. So close to the end now and you have been really such an example to others trying to get out of debt. All of your goals seem very sensible and some of them are definitely urgent. I would say to put this list in order of your priorities. Like you say pension provision is something you should start as soon as you can because of the tax advantage to you. Other than that you could maybe split your extra money between all these things or decide which ones are more important to you. I think £250 is still reasonably frugal for 2 people but an increase for you might make it seem quite luxurious. I don't know what your current personal spending allowance is, but I allow £150 monthly for that kind of thing. Some months I don't spend as much as that, but then the extra builds up so I usually always have enough to cover whatever I want. I suppose some people would think that is too little but it depends on your lifestyle and when everything else is covered in your budget pots I find that is enough for me. It is very much a personal thing but when you have so many other things you would like to save for I think £150 each is a fair compromise. And I agree Black Coffee is a great example too.

enthusiasticsaver

BabyStepper wrote: »

I've had so many ideas about how to manage the cash when the debt is gone. So far they have all just been ideas, I don't really have priorities sorted out or a plan. The only firm decision is that the emergency fund will be £10k.

However, I want to focus on a few goals at once and not be as single minded as I have been paying off the debt. £10k will take a long time to save and I want other things too. If any of you have any thoughts about the following list of things I plan to do, I'd love to hear them.

1. Save an emergency fund.
2. Save 2 months wages in my business account. (for stability and to make managing the cash every month easier, I can pay myself on the same day OH gets paid and also cover any months when I take A/L.)
3. Save for a newer car before our starts costing a fortune. (could happen any minute)
4. Save for a new kitchen. (becoming slightly urgent)
5. Have a beach holiday. (it's been AGES! but this feels like a luxury)
6. Contribute to my pension (ooh, totally urgent, maybe the minute the debt is paid off)
7. Increase the food budget to make things more interesting. Currently £200 per month, is £250 too much for 2 people?
8. Increase our monthly spends to...dunno. What do people with no debt spend on fun/clothes/ haircuts /things like that?

Aside from the wedding in January we have no big outlays next year (yet). I'm thinking of doing a short term plan of 6 months after the debt is gone, taking us up to the end of September. Then review. I've never handled a budget before where paying off debt was NOT the priority. Total novelty.

I've enjoyed catching up on the diaries today. BlackCoffee if you read this, you are SO my inspiration just now!! Keep going, so close!!

Some really good plans there for the next phase when the debt is gone. I would go for a mix of short term, medium term and long term aims.

So short term could be save up the 2 months wages in your business account and up your personal and food spends. £250 sounds about right for 2 people I think if you are being generous and a little less frugal. We have £200 each for personal spends but could manage on less. Saving for a holiday also sounds good.

New car and kitchen are medium term to long term purely because of the cost but the earlier you start saving for them the quicker you will get there.

I would give your pension priority and keep going on the emergency fund as your long term goals.

enthusiasticsaver

I always make financial plans using costings and time spans. So if you want a holiday next year price one up, divide by the number of months until you need to pay for it and put that aside.

Upping your pension slightly for year 1 and increasing it gradually is the way to go so you hardly miss the money going out. I get the impression you are early 30s and I think I recall you saying you don't have much set aside so aiming for half your age as a percentage is a good start but maybe 10% initially? Don't forget the tax benefits mean it will be less than 10% although as you are self employed I am not quite sure how that works.

You could start just initially saving maybe £500 to £1000 a month to cover all of the medium term goals and decide which is most urgent. I would not overwhelm yourself with so many goals you feel stressed so maybe saving for a combination of things like the car, kitchen and bigger emergency fund is the way to go to start with.