TravelGirl84's DFD

TravelGirl84

Sarahwithlove said:

TravelGirl84 said:

Sarahwithlove said:

TravelGirl84 said:

Sarahwithlove said:

TravelGirl84 said:

Sarahwithlove said:

I’m in a leasehold property and dreading how much it’s going to go up by this year. I pay mine by direct debit at the moment as they don’t charge extra for this. Hopefully you won’t get any more unexpected surprises on that front.

It’s hard sometimes to get the debt free vs living balance right, but just think the sooner you have them cleared the sooner you can save up for all the things you want to do.

After seeing your posts about monzo I think that’s made my decision to leave things how they are. Good luck with rest of your journey.

Hi Sarahwithlove 
Thank you for stopping by!
It seems like there is so much trouble with service companies. We have a residents meeting this month which will be really interesting as people are pretty irate at the moment!
Debt free vs living balance is really hard. I'm reconsidering my money options at the moment. If I had £5k to pay off I would just smash it over the next year and not do alot else (except for some big things that are already planned), but at the moment the figure I am at is £26500 without interest, and I just don't think I am the kind of person who can do nothing for maybe the next 3 years+ (realistically). I have quite a few things to consider but I'll keep this diary posted! 

That's totally understandable. Maybe you need to look at long term realistic options for you. What would you be able to live on comfortably per month without feeling like you are missing out. For example I allow myself one takeaway coffee a week and to go out twice a month for dinner so that's why my personal spends is slightly more than most. But it helps keep me focused and on track. I don't feel so bad about saying no to some things if I know I have others coming up 

I definitely agree with this. I need to look at the long term and take in to account things in the near future as well. For example, I wanted to clear my help to buy last year but for a couple of reasons I couldn't. If I had of, then I would have been paying another £160 a month. I could do that now but it leaves me a little tighter obviously, so I need to see what I can do to make sure I can comfortably pay this. We're having our pay reviews at work soon, so once I know what the deal is I can get my spreadsheet out and update the figures and see where I'm at. I love a spreadsheet. I think I need to plan my financials around my works financial year 

Just remember that there's a good chance some of your household bills will go up as well so remember to budget for that as well. I understand why you want to get out of the help to buy loan but make sure you don't over stretch yourself doing so. Is it worth holding off for a bit longer and getting yourself a bit more sorted in terms of your finances 

That's a good point about the bills. Perhaps I need to add a buffer. I'm going to try and pay my car insurance up front this year so that should save me some pennies, then I can start saving for that over the following year for next year.
With the help to buy, I have just re-mortgaged so I have it for another 2 years, so I have time to plan and also hopefully I'll get another raise next year as well. If I don't take it on end of next year, I'll fall in to having to pay interest on it for the second half of that term, which will be about £40 or £50 a month, down the drain. If it comes to it and I can't then I can't, but I really want to try and take it on. I'm going to look at reducing my credit min payments so they are more manageable which should help. 

Is there any way of clearing some of the credit so that you're not paying so many min payments come the end of the 2 years? 

Yeah this is what I'm trying to do. I have a loan and a credit card. If I can put them in to one I can reduce it by £50 a month. I can then use that in the meantime to start saving for the fees to sort the help to buy out which will be around £700. Alternatively I can spend the next year or more paying off my credit card, but once that's paid off I'm still only paying £50 less a month, so although it might cost me a little more in the longer term and I know some people might say I'm going about it all wrong, but it will all be in one place and I can get money saved for the fees and a bigger emergency fund, and also do things that I want to do. I'm still going to make some extra money on the side with side hustles and I can either save that or use them to overpay the loan. Mentally it will definitely make me feel more in control as well, plus if I don't end up paying off that card or putting in to the loan, it will reduce the mortgage I am offered. For some reason when I looked at it last time, having a loan was fine but having a credit card really affected it.

enthusiasticsaver

I am going to urge you not to consolidate your credit card debt into your loan. I know you say you can overpay your loan and it will be in one place but the loan charges interest and the credit card is 0%. You are lucky you can still get deals with a fairly high level of unsecured debt so I would take advantage and throw everything at the credit card to pay it down. It also means you might possibly build up more debt on the credit card having moved it on to a loan leaving you with more debt. 

I also dont think you are in a good enough position yet to take on a bigger mortgage. If you can stay focused, carry on budgeting and repaying the loan whilst overpaying the credit card you will see results. When does the 0% deal finish on the credit card? 

Sarahwithlove

I have to agree. You need to pay off the credit card not add it to the loan. 

The reason a loan is better for mortgage is that you have a monthly amount you pay and that's it so they just take the monthly amount off the amount you have available to pay your mortgage each month. 
I have to also raise concerns about you taking on the mortgage. I understand you will be paying extra interest but I think your priority needs to be paying off the credit card, then the loan, then look to remortgage when you have no other debts and can make an overpayment to bring the interest overral paid back down. 

Sarahwithlove

I also can't help but wonder where you are going to find the extra money for the mortgage payments if you can't find it now to pay off the credit card? Maybe you need to start viewing the credit card as a compulsory payment and pay the extra you would have to pay on the mortgage and see how realistic the budget is for you 

enthusiasticsaver

Sarahwithlove said:

I also can't help but wonder where you are going to find the extra money for the mortgage payments if you can't find it now to pay off the credit card? Maybe you need to start viewing the credit card as a compulsory payment and pay the extra you would have to pay on the mortgage and see how realistic the budget is for you 

That is actually a really good suggestion. Whenever we have been faced with an increased outgoing or reduction in income we have done a trial to see if we could live within the new budget. Hence three or four years before we took early retirement I worked out our expected income in retirement and invested the difference between our salaries and our expected pension income. You could do the same and work out what your increased mortgage would be and until you actually take on the HTB loan you could pay the increase off your credit card which should be your priority. 

TravelGirl84

Hi All

Thanks for your comments. 
I haven't made any firm decisions yet, I'm just throwing ideas around in my head. 
In terms of the mortgage, this isn't for another 2 years, so I'm not going to be making any decisions right now about whether I will be doing it or not, and I'll have no idea until then whether I would even be given the mortgage. However if I can manage it then I would rather pay extra in a mortgage then throwing interest down the drain. With help to buy after 5 years, you pay interest, and not the loan. It's a complete waste. 
I can find the extra money to pay off my credit card in all honesty, I just haven't been using it for that. I also don't have any plans to use my credit card. I haven't used any of them for months and I'm managing to pay for everything up front. If I can't do something I want to, then I don't do it. I will need to cancel two of the cards and keep one for absolute emergencies. 
Once I get my pay review I will be looking again at where I stand and what I can do. 
I do know however that I can't spend the next 3 or 4 years having no life whatsoever, so I need to find a balance. 

FootyFanDan

Hey, 

Sounds like you have some tough decisions to make coming up. One thing i will say is you already seem like you know getting rid of the debt is not a short term fix. If you knew you could hammer it and pay off in a year that different, your debt is going to come down over a long term so you have to find a way that you are comfortable with (as well as a time frame) It strikes me that you have to find a balance as if you force yourself into a corner with overpaying whilst doing no fun things you are more likely to go completely off track. 

You can do this but once pay review is up i think your financial rethink is a good idea Every journey is different