Tidying up the mess

[Deleted User]

I am indeed reading! Refuse to take any credit for being the current inspiration though - look how well you're doing, that's all down to you and your hard work. :T

Less than £7K and 2/3 of your debt gone - definitely giant leaps rather than baby steps :j :j So pleased for you, you'll be DF before you know it

BabyStepper

Just a quick update to keep me on track.

Me and OH have made a plan for Christmas spends. We have just about enough in the gifts pot to cover pressies, except for each other so that'll have to come from our personal spends. Christmas shopping has started with a budget, nothing like a last minute panic to blow the budget so I'm getting started early. Travel plans have been sorted and costed, petrol coming from the petrol expenses fund in December. Let's hope we have reasonable weather and it can all go according to plan.

We had another small problem with the car. Fortunately it only cost £15 to fix at the local garage, I was SO pleased I can't even tell you. Need the car pot to be increased asap.

I dug out some dresses from the back of my wardrobe for the wedding. They're a bit tight...:o This is the worst possible season for trying to lose a pound or two but I need to try. I have no money for a new dress! Matched betting pot up to £240. :j

Me and OH had a chat about where to focus our efforts once the debt is gone. We've rearranged the list in terms of priority but haven't decided on any figures yet. We'll review it in a week or two and try out some numbers. It's very hard to imagine having £1400 - ish to manage every month. I expect we'll need to review it every month for a bit.

Other than that, nothing much doing here. Trying to stay warm is a bit of an effort, it's blimmin' freezing!

Blackcoffee, I am waiting with baited breath for your debt free day to roll around. I am so pleased for you, you have really worked a miracle and I'm hoping to be right behind you.

BabyStepper

I'm struggling to sleep tonight, not feeling well, bad cold has now gone to my chest. Bleh. I've not been updating my diary as much as I'd like so I thought I'd share some news.

FINALLY our mobile phone deals have come to an end. OH did all the research (like a true frugal superstar) and we have switched from £67 per month for both (I know, back in the days before our lightbulbs had come on) to £14 per month for both. :T Bizarrely the deals are better than our previous ones with more data. This was the last bill to be dealt with, wow those mobile contracts are long! So £53 per month saved.

Me and OH have also been working out what to do once the debt is gone. 3 of my previously listed goals can happen straight away. Contribute to my pension (10% so £150) , increase food budget (by £50) and spends budget (by £100). So that's £300 accounted for.

We don't have figures yet for the others, saving a bigger emergency fund and creating a business account pot. Saving for a holiday will be a mid-term goal requiring £200 per month saved for the holiday we have our eye on in August..Saving for a car and kitchen will be much longer term.

So £900 divided by 4 savings pots - I'm thinking we could just lump it all in together to begin with and see how we get on. I need an easy plan to get me started!

Anyone else have any thoughts about managing money once you're debt free?

I'm off to try and get some sleep.

warby68

I think the key is to actually manage it, especially such a large surplus.

If you have plans for it, even just rainy day money, its unlikely to be used for frittering. It keeps your spending as active deliberate decisions. A single account with unallocated riches sloshing around could be too tempting.

This is personal but if you plan to have a family, having reserves for maternity/early years is a great idea.

Goals can be short term, medium term and long term.

Getting it set up to be more 'automatic' is good too - you would still review but not have to spend hours every month.

Don't be afraid to live life again either - I don't think this is you. Your first allocations are in the 'living life' categories. But 'extremes' tend not to be sustainable either way.

So pleased for you

BabyStepper

Thanks warby - you give some great advice, especially about not having one big slush fund. I think I need to create some specific and measurable goals and get on with making them happen. It's not easy. Also just beginning to realise that once the debt is gone we will be left with...absolutely nothing. Some equity in the house and a small emergency fund but essentially nothing much.

We have a big surplus because instinctively we did not buy as big a house with as big a mortgage as the banks told us we could. We were advised many times during the process that we could spend much more than we did. Must have had a lightbulb flickering somewhere in those days, very glad for it now.

enthusiasticsaver

Good news on getting the mobiles down. That is quite a saving.

On the subject of where to save and whether to split the savings into house/car/holidays etc I like to keep things simple and just have one account with a spreadsheet which allocates the savings into car, house, holidays. We tend to allocate according to plans made. This year and last year we were putting in a new kitchen and bathroom so monthly envelope savings were weighted towards house. We have booked two big holidays next year so most is going to holidays. We keep enough in car for maintenance and insurance for both cars but do have a lump sum in a bond for replacement cars which we sometimes add to when it matures. We don't need it for three or four more years though so just roll it over.

My DD did as you did and didn't take the maxim7m mortgage because they wanted kids and I suggested they build in childcare (other than GPs) Very wise decision. Just because banks will lend you an amount it does not mean it is sensible to take that much. You have a great opportunity to build up some savings from next March is it?

BabyStepper

Yes, next March, all being well and going according to plan. I know you have given me lots of good advice about this before, somehow it doesn't seem to sink in though! I need to keep hearing it! Maybe one account for savings, but with a note on my spreadsheet about how the savings are allocated? It's so hard to imagine how this will all look, never been in that position in my life. Part of it is trusting myself to not just go mad and spend all our savings, pretty sure that won't happen though.

enthusiasticsaver

BabyStepper wrote: »

Yes, next March, all being well and going according to plan. I know you have given me lots of good advice about this before, somehow it doesn't seem to sink in though! I need to keep hearing it! Maybe one account for savings, but with a note on my spreadsheet about how the savings are allocated? It's so hard to imagine how this will all look, never been in that position in my life. Part of it is trusting myself to not just go mad and spend all our savings, pretty sure that won't happen though.

The thing is you have spent the last year or so paying down debt and thinking where money goes. I don't think you will go back to your old ways of spending. Nothing wrong with allocating yourself more spends but after Christmas it will give you and OH a chance to think about some long term aims and goals. Holidays, new car, maternity leaves maybe or home improvements. Initially though I would focus on your 3-6 month emergency fund with part of your 1400 surplus. It is a large amount so you can afford to spread it around as you say. Some into your pension, some into more spends/food and some into a holiday fund. We have a large surplus as we have no mortgage and divide it into one of 3 envelopes as I said, car, house, holidays. It is then allocated so you are unlikely to fritter.

Moneywhizz

There is no way you are going to suddenly start spending your money needlessly after all the planning and sacrifice of the last couple of years. You have already earmarked some of the money for more immediate goals so then it is a case of prioritising your other goals. I would say definitely having a healthy emergency fund and a car fund is a priority, as well as building up some money in your business fund so that you can take the same salary all year round. I don't think you need to have your money is separate savings accounts. Just find the best interest rate and put all your money there. The key is to have a detailed spreadsheet that shows exactly what pot the money belongs to. I have been doing that for years and it works really well without too much maintenance. Can't wait to read about yours and Black Coffee's debt free date.

BabyStepper

Here's the scores from this month's debt repayment. Managed the full £1,400 as planned but could not resist changing the order and paying off Lloyds in full. I may live to regret this, still plenty of time for my plan to fall to bits. However, this is how it looks now with only 2 debts left.

[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
[STRIKE]Lloyds (2) £907.57[/STRIKE] PAID OFF
MBNA cc £5,325.99/£2,835 0% Feb 2020
Halifax cc £3,342.25/£2,675 0% Oct 2020

Total May 2018 £21,228.07
Total October 2019 £5,510
£15,718.07 paid off :j:j:j

The envelopes are filled up for Christmas events, only a couple more gifts to buy and we're sorted. There won't be any more debt repayment until next year but when I look back at last Christmas I can see how far we've come. So pleased.

And we've put our tree up. :xmastree: