Leaping from debt free to self employed

CreditCardJunkie

I have finally managed to clear my personal credit card debt (£3393.22 in around 13 months). Regardless of the amount, paying off debt is like going on a diet, until you realise it's your lifestyle (and behaviour) that you need to change, you'll end up going in circles.
DH is on board with blitzing the remaining debts (a combination of not having enough savings when things broke and a few unnecessary spends (ahem! sofa) at the start of my journey). This has highlighted the need for an EF, which while on stat maternity pay we just didn't have enough extra for saving towards. Thankfully I am returning to work in June (albeit on less hours than planned due to downturn in business) so we will have more money available to get these paid off & build savings.
Debts
Boiler (this went while I was on maternity leave and needed replaced) - £1844 at 0% until Jan 2022
Sofa (I know..definitely wasn't an essential but we decided on a leather one and I am glad after the amount of times DD was sick on it & with the dog it's so much easier to keep clean!) - £330 remaining BNPL (ends Sept 2020)
Washing machine - £160 remaining BNPL (ends Sept 2020)
Total: £2334
We will definitely clear the BNPL amounts before the interest free period is up, but still undecided about the boiler. Perhaps due to the uncertainty we should focus on savings rather than busting to pay off this interest free debt much earlier than the offer period. In any case I will be dividing up the amount by the number of months interest free remaining and paying that off each month to ensure it is paid before the offer runs out.

------
Update Jan 2021
I changed the title of my diary from "Phase 2: Joint debt and learning to save" to "Leaping from debt free to self employed" as I felt the titled no longer fitted my diary.
When I cleared my own personal credit card debt in May 2020 I picked up a couple of clients (almost by accident) in the company I'd registered while on maternity leave. I felt it was a bit of a dream and the extra cash would help pay of our joint debt quicker. A few things happened and 6 months later I quit my day job in favour of pursuing my business. Let's see how the next chapter unfolds, trying to stay debt free while building up some savings.

Sarahwithlove

I think it's a good idea to pay what you need to for now each month to get it paid off before end of interest free period. Maybe work out what kind of emergency fund you think you need for if say one of you lost your job and then get that's saved. Then after that work on overpaying the boiler. Good luck it's totally doable and hopefully be easier once you're back at work as you have shown you can work to a budget so other than the extra expenses you might occur from work you will have money to save 

GeorgianaCavendish

I think this is a great idea. I am also in the same phase, trying to change habits and save money while repaying debt in the 0% periods. You are so right that it is like a diet! 

Good luck, we can do it! 

CreditCardJunkie

Thanks @Sarahwithlove & @GeorgianaCavendish
I'm not exactly sure what my new wage will be as I'm salaried and get paid the same amount every month. Once I get paid in June DH and I are going to work out how much we can afford to put in savings alongside the debt. Lockdown for us, I think like many has helped ease the temptations of eating out which was a biggie for us. We have a budget for this so hopefully we can stick to it as lockdown begins to ease!

Sarahwithlove

You can do a salary calculator which would tell u how much tax and NI will be deducted. I found it to be fairly accurate. I think going cold turkey has made us all better with budgeting eating out etc. 

enthusiasticsaver

Well done on getting rid of the credit card debt and I agree focus on repaying the BNPL amounts initially and saving for emergencies.  You have 18 months until the boiler repayment is due so you could either divide that £1844 by 15 and start making repayments after the BNPL deals have been repaid so start in October 2020 or just save in a savings account and pay it off in full in January 2022.  What I would say is check on all of them what happens if not repaid in time as from experience all these BNPL are extremely expensive if you do not pay them off in time (even to the day). 

CreditCardJunkie

Plodding along til payday, a business opportunity has come my way which will allow me to save a considerable amount of money each month. For this reason DH and I have set ourselves the target of becoming totally debt free by Christmas. It is definitely doable, provided everything goes to plan (ie keeping our jobs in these scary times) and we are disciplined! 
It sounds silly, but I have turned down this business opportunity previously, and I think it was due to my personal debt. I think the debt took a lot of my head space and prevented me from doing certain things that would have actually helped me pay off the debt. Sounds strange I know.
Super excited for my first pay without personal debt repayments! 

CreditCardJunkie

Joint debt total down to £2104 from £2334. A little disappointed that we didn't get off to a flying start, however we've a weekend away at the end of July paid for & food shopping is just costing so much at the moment! Just waiting for my pay to go in tomorrow to see how much we can afford to put in savings.

CreditCardJunkie

Bills all paid. Have put some savings into pots.
£100 for new house fund
£100 for vet bill fund (planned procedure which is £550)
I have an additional £100 left over in my savings account not allocated to anything in particular... Not really sure what to do with it! Perhaps it should be the start of my EF. 
Would be interested to see how others save in pots etc 🤔

CreditCardJunkie

Pay day and a nice little dent this time, joint debt total down to £1895. Another £100 into savings for vet bill fund so that's £200/£550. August is due to be a spendy month with lots of bdays and we're both finally able to get haircuts so nothing extra into the house fund or other pots this month.

CreditCardJunkie

Debt total down by £5 to £1890 😭
Actually pleased it's not any higher than last month considering in addition to August being a spendy month anyway, we've had to buy a new car seat for LO, our fridge went so we had to replace it AND DH's engine blew...
Could. Not. Write. It.