Sept 2021 - The debt free longstop

Mr87

Hi all - a few of you might have seen my original post on DFW, that can be found here: https://forums.moneysavingexpert.com/discussion/6108143/help-with-cc-debt-please-general-advice/p1. I thought this would be a good idea to keep track of things and to stop annoying everyone by bumping up my original post Also, I can descend into inane ramblings here. I'm not going to repeat all the background. My peak debt was slightly higher than I stated in that post: £10,866.09. I've worked out that I can probably achieve freedom from debt by September next year, possibly earlier if I push REALLY hard.

I also mentioned I had knocked off £450 in my first month since posting that thread. Words can barely describe the elation I felt when it happened. Credit card debt had always been a number that moved around, up and down (mostly up) and only sizeably reduced when I had a nice windfall (e.g. a bonus). On reflection, I now know why I always (ridiculously) used to think of bonuses as milquetoast - in a world of living beyond your means, where you do not follow your finances closely, it was just a number that moved another number, rather than a genuine reward. I won't be making the same mistake again.

A couple of things have happened recently that are material to my financial position, one of which I am almost embarrassed to write down, but it would be dishonest of me were I not to. The first thing is that I have recently got more work moonlighting - this will be paying dividends (literally!) later on in the year, and I'm optimistic this will be a genuine springboard and cut great chunks out of my debt. The second thing (which I embarrassed to say) is that I have just received - completely unexpectedly, I might add - £5,000 from my mother. She has just retired and received a redundancy package plus a tax free lump sum from her pension. The £5k is 'for me and the family'. She gave an equal amount to my brother and his family. I am embarrassed because at a single stroke it essentially halves my debt problem, but it also underlines the immense privileges I have in my life. Ironically, I almost feel as if the money could not have come at a worse time - I have just recognised my debt problem by myself and I am taking my first steps to dealing with it, and I was going to do it without getting a bail-out from somewhere else. It is for that reason I have stuck it in a stocks and shares ISA - all of it - and I will forget about it for a good few years and continue on as if it were never there. Obviously I am immensely grateful to my mother and communicated as such. But it is now there for the future - for my kids - and I will not touch it. It is also the only sizeable savings/investment that I currently have. It's probably not the rational thing to do, but it felt the right thing to do.

Things I have been doing:
- Me and my wife now have monthly chats about our finances. I prepare an abridged 'balance sheet' that lists all my/our debts, cash, assets, and so on. This has felt like a real game changer, my wife NEVER looked at the finances in the past. Well, now, that's changed, and it's a massive weight off the shoulders!
- Tax planning. This seems a bit of an odd thing to be doing to get out of debt, it has actually been quite difficult but it makes a difference! A few days before the end of the tax year I stood to lose the marriage allowance my wife gives me, so I did some 'emergency' charitable giving. It also affects the High Income Child Benefit Charge. As a silver lining, I realised that all the charitable giving I have been doing all these years have been tax deductable when I've previously been paying the higher rate of tax. AND you can claim National Trust and Cadw memberships as charitable giving (gift aid) for tax purposes. WHO KNEW?! I haven't done the calculations yet, but I stand to get a few ££s back from HMRC for a few years' worth of backdated claims.
- Financial planning. Our mortgage deal is up Jan '20 so we're planning for it. Some nice bank statements showing income up, expenses down, cc balances down.
- Life planning. We are expecting our third child in July. The other half is nervous about coronavirus (understandable) but I'm optimistic the situation will have shifted long by then.

Enough rambling for now.