Spender to Saver - I want to be Debt Free before I'm 30!

adg89

Hi all,


I've been skulking around the site for a few days now and really thought it was time to post as I can see how helpful and supportive everyone is.


I've accumulated a few debts over the last 3-4 years which have resulted in me still having around £6500 of debt (2 years ago, this was at £11,000). I have a balloon payment coming up on my car (£5,227) in March 2019 and I ideally want to have my debt as low as possible so I can either pay this off with a credit card or having some savings by to use.


I need to do an SOA but here is a summary of my debts:


£5,989 - Virgin Money CC (£2150 interest free until December 2018, £1560 interest free until May 2019) - I cannot move this to another credit card as the amount is too high so I am stuck with my current interest rate and upcoming interest on the remaining from December/May.
£757.94 - Nationwide Overdraft (of which £300 was a payment for a dog behaviourist - I am hoping most of this will be recovered through the insurance claim I have submitted).


It's a lot to pay off in a short amount of time, but in the past 3 months, I have already paid off around £1000 by taking on a second job working two or three shifts a week in a restaurant. Ideally, I want to stop that in the New Year as it's starting to drain me on top of the full-time job I already have.


I have recently started an emergency fund (£15 a week into this whis now at £165) as I am not happy with having to rely on my credit card having to save the day every time there is an unexpected cost. I would like this to get to £500 by March 2019 as this would then cover any repairs needed on the car or any bills we get as our tenancy runs out in this month (we are hoping to renew for another year).


As I said, I will post an SOA in the next couple of days.


I suppose I just wanted to post on here so I can really become accountable for the debts I have and give myself a kick up the bum to make headway on them as at the moment, staring at my accounts wondering how I never have any money (while watching myself spend it on stupid things like eating out etc) is quite honestly making me miserable as March looms ever closer.


Thanks for reading my ramblings and I hope to share with you at least two or three times a week.


adg89

Lewick

Hi adg89,

Sounds like you've made great headway on clearing your debts over the last two years.

I also want to be debt free before I'm 30 so will be subscribing to your thread to cheer you on.

Best of luck!

adg89

Lewick wrote: »

Hi adg89,

Sounds like you've made great headway on clearing your debts over the last two years.

I also want to be debt free before I'm 30 so will be subscribing to your thread to cheer you on.

Best of luck!

Thank you, Lewick!


It's been a slow & steady approach and there have been stumbling blocks this year which have set us back but we are finally feeling like we are getting somewhere!

adg89

So I have filled out the budget planner but I don't think this is the same as the SOA?


I want to just see how much I have going out at the moment as I want to set it against my main income. The second income from the restaurant fluctuates each week so although it's there, it's unreliable for the figures.


Ideally what I need to be doing is sending everything I am earning from the restaurant onto my credit card (currently around £80 a week for hours worked). We are using the tips to help my partner pay their outstanding credit card debt (CC1: £425, CC2: £1150) but everything we earned this month went onto the dog behaviourist last week (dog has severe anxiety which is leading to her showing nervous aggression on walks where other dogs are present).


I've seen other SOAs in other diaries - are these the same as the budget planner but just the income/expenditure piece?


I think I'm going to do a meticulous look at mine & other half's accounts tonight to see exactly what we have done for October so far so we can hopefully pay off a chunk of debt in November.

adg89

From yesterday, I am tracking NSDs until end of month.


1/10 so far - today should be an NSD as well so I'm feeling very motivated!


Pet insurance is due out tomorrow which will most likely max out my overdraft but then payday on Thursday for 1st job so I should have a chunk paid off. I'm actually looking forward to payday this month as I feel more focused on my debts since yesterday's post :-)

[Deleted User]

I'm tagging along for your journey as I'd like to be sorted finances wise by the time I'm 30 too best of luck x

adg89

SSDD23 wrote: »

I'm tagging along for your journey as I'd like to be sorted finances wise by the time I'm 30 too best of luck x

Thank you for the subscription! I've returned the favour as I am interested to see how others around my age are tackling their debts!

adg89

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1699.37
Partners monthly income after tax....... 1596
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3295.37
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 196.9
Rent.................................... 795
Management charge (leasehold property).. 0
Council tax............................. 129
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 0
Mobile phone............................ 143.4
TV Licence.............................. 25
Satellite/Cable TV...................... 40
Internet Services....................... 26
Groceries etc. ......................... 200
Clothing................................ 80
Petrol/diesel........................... 50
Road tax................................ 20
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 26.9
Buildings insurance..................... 0
Contents insurance...................... 5
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 33
Haircuts................................ 13
Entertainment........................... 200
Holiday................................. 29
Emergency fund.......................... 60
Total monthly expenses.................. 2202.2

Assets
Cash.................................... 165
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 8165

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 984.65...(196.9)....0
Total secured & HP debts...... 984.65....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Credit Card.............5989......98.4......18.99
Nationwide OD..................757.94....0.........0
Aqua (OH)......................1150......50........16.99
Capital One (OH)...............425.......17........17.99
Total unsecured debts..........8321.94...165.4.....-

Monthly Budget Summary
Total monthly income.................... 3,295.37
Expenses (including HP & secured debts). 2,202.2
Available for debt repayments........... 1,093.17
Monthly UNsecured debt repayments....... 165.4
Amount left after debt repayments....... 927.77
Personal Balance Sheet Summary
Total assets (things you own)........... 8,165
Total HP & Secured debt................. -984.65
Total Unsecured debt.................... -8,321.94
Net Assets.............................. -1,141.59

enthusiasticsaver

The soa is really an account of what you are spending every month or intending to spend on each category. Yours shows a £661 surplus but as you have been reducing debt presumably this has been going on credit card repayments?

A couple of things really stand out initially. I am hoping your car insurance is not £350 monthly? Otherwise this is clearly far too high. Is that a yearly payment? From a budgeting point of view it is best to save car maintenance, tax and insurance in a savings account so you can pay yearly as this is cheaper.

Your mobiles cost is also extremely high. Are you in contract for these? You can get sim only plans for around £10 a month. You should save monthly for holidays, gifts, vet bills and emergencies in a separate savings account. Saving for these things is as important as reducing debt because it means you are not tempted to use credit cards when you have unexpected expenditure.

On the plus side your debt is not unmanageable. I am pleased to see you intend paying the balloon payment and keeping the car presumably rather than go for another expensive HP deal. You seem to have the right attitude and taking on a 2nd job temporarily is a great idea although long term this may have an impact on your health. I too would focus on the credit card until March and then spend next year sorting out your car payment.

The key to sorting out debt issues is really watching every penny and knowing where your weak points are. Many people do things like buy coffees/lunches out during the week without realising these things add up over the months. Do you know how you accumulated the debts in the first place?

adg89

enthusiasticsaver wrote: »

The soa is really an account of what you are spending every month or intending to spend on each category. Yours shows a £661 surplus but as you have been reducing debt presumably this has been going on credit card repayments?

Yes, the surplus has been going on debt for a while. OH and I moved from live-in accommodation for his job to rented accommodation last year so this reduced drastically to minimum payments for about 3 months and the credit cards propped us up while we sorted out new bills and he had to find a new job.

enthusiasticsaver wrote: »

A couple of things really stand out initially. I am hoping your car insurance is not £350 monthly? Otherwise this is clearly far too high. Is that a yearly payment? From a budgeting point of view it is best to save car maintenance, tax and insurance in a savings account so you can pay yearly as this is cheaper.

Car insurance is £30/month - I have put up a revised SOA to account for this. My emergency fund is there for any unexpected costs and I am currently building this so I no longer have to rely on credit cards. Tax is only £20 a year (so another mistake on the SOA there - it's £1.66 p/month as the car was new in 2015 and is very efficient). Insurance is always paid for through my annual bonus which comes up at the same time as the policy renews or I need to change it, but you're right, I do need to start accounting for this.

enthusiasticsaver wrote: »

Your mobiles cost is also extremely high. Are you in contract for these? You can get sim only plans for around £10 a month. You should save monthly for holidays, gifts, vet bills and emergencies in a separate savings account. Saving for these things is as important as reducing debt because it means you are not tempted to use credit cards when you have unexpected expenditure.

We are both in contract at the moment - he is in contract until March 2019, and I am in contract until September 2019 but due to the change in living circumstances this year, I am planning to be in sim-only next year and also want to settle the phone plan before September.

enthusiasticsaver wrote: »

On the plus side your debt is not unmanageable. I am pleased to see you intend paying the balloon payment and keeping the car presumably rather than go for another expensive HP deal. You seem to have the right attitude and taking on a 2nd job temporarily is a great idea although long term this may have an impact on your health. I too would focus on the credit card until March and then spend next year sorting out your car payment.

Yes, we are intending on keeping the car and paying the balloon payment as it would be almost £200 in savings each month as we will no longer be paying the consumer finance company. The second job was because we had to depend on my income only from March to May this year (which was not possible, and I ended up spending an additional £2000 across my credit card & OD for tenant fees/deposit/first month rent & bills etc) but now OH is in a better position with his income, we can really start to make headway. I am planning on handing in my notice there in January as it will be a quiet month for restaurants anyway. Taking the second job was a way for me to be able to help my mental health because the debt was starting to consume me and affecting my 1st job performance.

enthusiasticsaver wrote: »

The key to sorting out debt issues is really watching every penny and knowing where your weak points are. Many people do things like buy coffees/lunches out during the week without realising these things add up over the months. Do you know how you accumulated the debts in the first place?

I have been pretty savvy with certain things in the past year (no coffees/lunches out/quit smoking) or so and I know where the costs have come from - unfortunately most of it was out of our control and was because we do not currently & didn't have any contingency to fall back on. £2000 of my debt was from major dental work I had to have back in 2014, my first car ended up being written off in 2015 so the car I currently have was bought on finance with a deposit so that was another £1500. Moving costs were £1600 in March this year. The rest has been incidental spending where I have been completely unfocused on money in the last few months. Now I'm ready to really tackle it, I really feel like I can refocus on saying goodbye to my debts and managing my finances in a more hands-on way.


OH has been on board all the way through and I couldn't ask for a better support than him.


Thank you so much for your comprehensive reply, enthuiasticsaver. It's very much appreciated!


-adg89

[Deleted User]

It's lovely when your OH is on board isn't it

Congratulations on the step to quit smoking to cut down on costs by the way! Been there and know it isn't easy