Debt Free by '23

MidsHollie

I have survived a month of a debt free diary, so time for a January round up, and a comparison to December.....

Extra income earnt: £315.12 (December = not tracked)
Debt paid off: £1144.34 (December = £938.83)*

Spends:
Groceries: £144.54 (Dec £140.12)
Fuel: £94.36 (Dec £176.58)
Eating Out: £51.12 (Dec £99.51)
Entertainment: £27.50 (Dec £30)
Other: £68.45 (Dec £119.32)

So at least my grocery spend is pretty consistent! As I didn't budget anything for eating out in January, I think it's pretty clear that I should budget something in there. I've also managed to cut down my "other" spending, which this month has consisted of fitness, hobby and garden stuff, which in my world counts as 'wellbeing' spends!

But I guess the real meaning of this is in how much debt I have paid off in total. When I actually set my mind to it, and really started counting at the end of December, my debt was £32934.53. Now it is £31696.22*. I know that by tomorrow, once the start of the month flood of DDs and SOs happens, my debt will be below £31000. My next couple of targets are to get the CC that I'm currently working on paid off, and get the starting number of my debt to a beautiful looking 2! I think that both of those will happen once I get my end of March pay, so April will be a month of smashing goals! I wonder if I could get the CC paid off sooner...…

*Just a note to say that I started tracking my spends and debt payoff before I stopped using the cards and totalling up my entire debt. So the numbers don't quite work out, but that's ok, the focus is fierce now!

BankMoth888

I knew I'd pick up some good tips from your diary. I really like how you set individual targets for parts of your debt (getting below certain thresholds) AND you make it sound like a fun challenge too. I'm going to use that idea instead of just chipping away at a big scary total. Thank you for the inspiration, keep going!

MidsHollie

I knew I'd pick up some good tips from your diary. I really like how you set individual targets for parts of your debt (getting below certain thresholds) AND you make it sound like a fun challenge too. I'm going to use that idea instead of just chipping away at a big scary total. Thank you for the inspiration, keep going!

Thanks BM
I have always found it helpful to break big targets down in to smaller chunks (as someone who uses goals at work on a daily basis, this is second nature!). Therefore, any target will be celebrated, whether that be a certain percent paid off, getting in to a new number bracket (eg. 31999 is to be celebrated when its dropped from 32001!), or a debt within my debt snowball. I'm not sure how your debt is BM, but if it is multiple debts, I would recommend using the snowball method, I'm getting closer top paying off my third debt this way. Its motivating knowing that I owe money to less people, and that I can focus 100% on one debt at a time. I enjoy using the challenges on this forum: 1 debt vs 100 days and the 1% challenge.
The card that I am working on at the moment is now under the £600 mark. That's down from £1893.04 when I started out! I'll get that paid off on my next pay day, and that will mean that my debt will be less than £29999 too!
I've done some batch cooking this week, and some frugal meals too. Today was the first time for a while I bought something from the work shop. Won't make a habit of that!

FootyFanDan

Great to see you are making great strides in your journey, I love how even the smallest of wins gets celebrated and gives you a real sense of achievement, I can see how this would be motivating. Quick question you use the snowball for debt are you just paying a set amount and then paying of a chunk to the cheapest debt or are you just putting all your debt money to one debt and then moving on after that is cleared. I am struggling to make a choice on the best way haha. Keep up the great work

MidsHollie

FootyFanDan wrote: »

Quick question you use the snowball for debt are you just paying a set amount and then paying of a chunk to the cheapest debt or are you just putting all your debt money to one debt and then moving on after that is cleared. I am struggling to make a choice on the best way haha. Keep up the great work

Hi Dan,
I am paying minimum payments a on all my debts, and then everything spare goes to the smallest debt. I'm lucky that currently all my debt is interest free, but even if it wasn't I think I would still use this method for the motivation. So here is what I have done:

Barc balance £100 - paid off first, now £0
V12 balance £267 - paid second, now £0
HFax balance £600 - all spare money going to this. This has come down from £1800 at the start of Jan
Virgin balance £2300 - minimum payment of £25 getting paid to this
Car Loan balance £8200 - minimum payment of 300 to this
Family Loan £19500 - no minimum payment for this, so nothing getting paid to this.

Once Halifax is paid off, all my spare money will go to Virgin. Once that's paid, all will go to the car. And once that's paid, it will finally be the family loan, Once I get to the family loan, as it will be my only debt, there will be at least £850 a month going to it, so although it looks like a huge amount now, it will drop considerably each month as that will be my focus. Does that make sense?

FootyFanDan

MidsHollie wrote: »

Hi Dan,
I am paying minimum payments a on all my debts, and then everything spare goes to the smallest debt. I'm lucky that currently all my debt is interest free, but even if it wasn't I think I would still use this method for the motivation. So here is what I have done:

Barc balance £100 - paid off first, now £0
V12 balance £267 - paid second, now £0
HFax balance £600 - all spare money going to this. This has come down from £1800 at the start of Jan
Virgin balance £2300 - minimum payment of £25 getting paid to this
Car Loan balance £8200 - minimum payment of 300 to this
Family Loan £19500 - no minimum payment for this, so nothing getting paid to this.

Once Halifax is paid off, all my spare money will go to Virgin. Once that's paid, all will go to the car. And once that's paid, it will finally be the family loan, Once I get to the family loan, as it will be my only debt, there will be at least £850 a month going to it, so although it looks like a huge amount now, it will drop considerably each month as that will be my focus. Does that make sense?

Thank you This makes perfect sense, I think this might be a good option for me to pay my debt like this, lots of mine don't have min payments set as most have defaulted so I generally just pay a huge chunk to one till that is cleared and then move on to the next but I think I might split this across all my debts and pay a bigger amount to the lowest balance to get it paid.

Yeah while the balance on the family loan will drop very quickly once you start making payment of that £850.

Thanks again for explaining

EchoB

Just read your story so far, you’re making great progress, will subscribe when I’ve worked out how to in the new forum! hopefully I can take on some of your motivation :-)

MidsHollie

EchoB said:

Just read your story so far, you’re making great progress, will subscribe when I’ve worked out how to in the new forum! hopefully I can take on some of your motivation :-)

Thanks Echo. This forum has so many motivational and inspiring people. Nice to hear that I am one of them!

I paid another £50 to my CC today, from the leftovers in my current account, that aren't allocated to direct debits. It is a little bit worrying having so little lee-way in that account, but I'm not sure why, I don't need extra money in there! When the minimum payment comes out for my other CC,I will have surpassed what I paid off last month, which I thought would be impossible! Going to try and keep the budgeted spends down to pay off even more this month. Not sure how that will go as I have some spendy plans next week.

I am away from home this weekend and on the drive I was reflecting about money worries I used to have. I was disorganised, and would always have to have multiple credit cards with me to make sure I knew the pin number, or had enough balance left to buy whatever I needed. This time, I knew I had my Monzo card and didn't need anything else as all my budgeted money for the month is in my Monzo pots. It's amazing how freeing that was, not to have that worry. I can't imagine the feeling that I'll have when I have no debt and a good emergency fund. 

Sarahwithlove

WEll done on your journey so far. It seems like you have a plan and are sticking to it fairly well. Good luck. 

MidsHollie

Sarahwithlove said:

WEll done on your journey so far. It seems like you have a plan and are sticking to it fairly well. Good luck.

Thanks Sarah.

I sold some things on ebay over the weekend so sent another £25 to the debt. My CC balance in now under £500, which is great to see. I'm amazed at how quickly it has come down. I'm trying to be frugal but few things working against me this week. Trying my best to mitigate for this with surveys, mystery shopping etc.
When I look at the whole of my debt pay off, I have paid off more already this month than last month (by £6!). I'm still feeling motivated, although challenged by getting the right balance of a life vs no life. I think I'm getting it about right. I'm really seeing the results of the consistent effort too - it's actually quite fun!