Countdown from £44k.......

Lee-10

Evening All, 
I have decided to start a debt free diary.
I attempted to tackle my debt a few years ago but ended up getting into more debt through house renovations, holidays, and genuinely making irresponsible purchases (thinking i will worry about it later)... Well i have got to the later! 

Before I show you my SOA, i have finally just paid off my ZOPA loan, so I have got rid of one debt. What do people use for budgeting and tracking there debt?
We have no money put away for an emergency fund as yet.

Will happily take on advice, looking to tackle this Would you leave the C/C's at min payment?

Thanks
Lee

Please see below for my SOA:

Household Information:

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 2

Monthly Income Details:

Monthly income after tax................ 3350

Partners monthly income after tax....... 900

Total monthly income.................... 4250

Monthly Expense Details:

Mortgage................................ 965

Management charge (leasehold property).. 2.92

Council tax............................. 208 (Over 12 months)

Gas/ Electricity............................. 120 (Due renewal Oct 20)

Water meter............................. 35

Mobile phone............................ 48 (Myself and Wife Sim Deal)

TV Licence.............................. 13.12

Satellite/Cable TV...................... 50.5

Internet Services....................... 31.  (Understand we pay alot, but only company we can get fibre with in area)

Groceries etc. ......................... 420

Clothing................................ 100

Petrol/diesel........................... 185  (I work away so alot of commuting on weekends)
Car Tax, Servicing, Insurance etc.......... 150 (Into savings to cover both cars)

Home insurance..................... 13

Life assurance ......................... 66.82 (Myself and Wife Critical Illness and life Insurance)

Presents (birthday, christmas etc)...... 100

Haircuts................................ 100

Entertainment........................... 100

Holiday................................. 150 (into savings account)
Personal Savings................. 100 (50 each)

Emergency fund.......................... 0

I-Tunes................................. 10.78

Wife Gym................................ 18.99

Bank Account Fee........................ 14

Total monthly expenses.................. 3002.13

Assets

Cash.................................... 245

House value (Gross)..................... 335000

Car(s).................................. 11000

Total Assets............................ 346245

Secured & HP Debts

Description............................................Debt......Monthly...APR

Mortgage.............................................. 220568...(965)......2.57

Total secured & HP debts...................... 220568

Unsecured Debts
My name:

Description....................................Debt.........Monthly..........APR

Tesco Loan...................................9048.08.......133...............3

Bank of Scotland C/C..................5438.17......57.97.............0          Exp 08/21

Lloyds C/C...................................2963.93......29.64.............0.         Exp 11/21
Natwest C/C..................................9288...........94.78..........0.          Exp 10/21
MBNA C/C...................................3469.06.......35.04............0.         Exp 12/20
Wifes name:

MBNA C/C...................................3229.27......32.29.............0.        Exp 09/21

Sofa Finance................................1059.66......36.54.............0.        

Barclaycard C/C...........................2993.18......67.34.............0.        Exp 01/21

Halifax Loan.................................6276.41........185............3.9

IrishSean

Hi & GL with your diary!

My first thoughts are VWD listing all your debts and when CC 0%s end. You are well on top of where your debts are. Others will go into to cutting those monthly outgoings which, if you're determined to drive down the debts and clear, need trimmed to free up more cash for debts.

Normally clear highest apr 1st, or clear smaller debts to reduce number of monthly minimums.

GL in your journey
👍😀

ryanm8655

Well done for setting all the debts out and the 0% end dates. Doing that really helped me to get my butt in gear.

One thing your SOA doesn’t show is how much you have left over after paying minimums but after adding things up quickly in my head it looks as though you have about £500 spare a month to pay towards the debts. Looking at your expenses I think there are quite a few areas where you can save a chunk more as well. It’s good that a lot of your debts are on 0% as more of what you pay will be clearing them rather than being spent on interest.

First thing I would do is round up all the current minimum payments to the nearest pound and set that as your DDs. You can afford to do this and it’ll make it easier to budget plus help clear the debt more quickly.

Personally, my focus would be on beating the 0% end dates. The loans are all relatively low interest, so I’d just leave them to do their thing.

First focus should be clearing the MBNA card before 12/20 and then the Barclaycard by 1/21. But then you’ve got a mega crunch point next year where £21,000 of debt all becomes interest bearing in autumn next year, so you really need to get ahead of the curve on those.

Paying that £500/month spare towards the cards will get you to £3500 by the end of a year. With the current minimums being paid on the MBNA and Barclays that expire first, you’re going to be about £2k short of clearing them, so the first thing to do is try and find that cash from your budget (around £300 per month). Then from January you’ll have an extra £100 from DDs on those cards plus the additional £800 to put towards the rest of the cards. This should keep you ahead of the curve until about September 2021 and your debt then should be considerably lower, which means you can take advantage of some 0% offers to stop you being lumped with a situation where most of your money is being put towards interest payments.

This is all based on quick calculations in my head, so you may want to set all of this out in a spreadsheet (I do this for my debt and based on regular payments and when deals expire, work out what level of debt I’ll have charging interest and when).

in short and assuming my calculations are correct:
1) set DDs to just above current minimums 
2) set MBNA that expires soonest to current Minimum plus £500
3) find extra cash in your budget by trimming the fat, I’d look to cut atleast £300
4) add any extra cash from fat trimming to the current min on barclaycard and set the dd.
5) as debt clears switch all payments to the next card that ends and so on and so forth.

You want to be in a good position for 0% offers by August 21.

Hopefully you’re saving quite a bit in lockdown so take advantage and hit the debt even harder if so.

In terms of your SOA - haircuts, presents, groceries are very high and cable tv isn’t a necessity, clothes also look a bit high.  Reckon you can get that £300 from those. Gas and electric looks high to me as well...

IrishSean

Agree with all that.
If you cut grocery bill to around £300 by down-shifting to say Aldi / lidl , trim hairdressing then go hard on some of the others (you spend £3600 on entertainment, hairdressers & presents), you could easily bring it to an extra £300 as Ryan Ryan suggests. Clearing debt will give you financial security & peace of mind; you've super equity in your home but there's risks:
What if you were made redundant? Credit + 0% offers tightened dramatically but are coming back are bit; you can & should work to the idea of not getting more 0% offers:
1) you'll clear debt more aggressively
2) it'll keep you super focused if offers are slow at coming in. 
Your mortgage is pretty high; any better deals to cut the %%? Paying debts will improve remortgage offers, base rate rate isn't where anyone wants to be owing 200k+

Maybe mentally put holiday fund in the 'emergency fun' just for the minute (you're more likely to need to fix something than jet off at the minute☺)

£800 x 36 would be near £30k of it gone by May 23. 

If you go at the debts hard and fast now you can def do it; GL💪💪💪

IrishSean

Also are you still spending that on fuel? Can your wife suspend gym payments if not going? Might it be worth looking at a mortgage holiday if you're on a tight timescale for beating the 0% deals? It would be another £3k off your unsecureds. The trade off is lenders might use it to score / rate you more harshly. You could offer to pay interest only maybe for 3 or 4 months? 
As Ryan said put it all out on paper and try to outrun those 0%s as much as you can...

Lee-10

IrishSean said:

Agree with all that.
If you cut grocery bill to around £300 by down-shifting to say Aldi / lidl , trim hairdressing then go hard on some of the others (you spend £3600 on entertainment, hairdressers & presents), you could easily bring it to an extra £300 as Ryan Ryan suggests. Clearing debt will give you financial security & peace of mind; you've super equity in your home but there's risks:
What if you were made redundant? Credit + 0% offers tightened dramatically but are coming back are bit; you can & should work to the idea of not getting more 0% offers:
1) you'll clear debt more aggressively
2) it'll keep you super focused if offers are slow at coming in. 
Your mortgage is pretty high; any better deals to cut the %%? Paying debts will improve remortgage offers, base rate rate isn't where anyone wants to be owing 200k+

Maybe mentally put holiday fund in the 'emergency fun' just for the minute (you're more likely to need to fix something than jet off at the minute☺)

£800 x 36 would be near £30k of it gone by May 23. 

If you go at the debts hard and fast now you can def do it; GL💪💪💪

We have just changed our shopping to Aldi, from Tesco's, granted you cannot get a full shop like other supermarkets, but we have noticed that our weekly shop has came down by £30 this week, that is the first change in the right direction.

We have looked at a mortgage change, I am in a 5 year fixed rate deal until 30/09/20. the early repayment charge is £7500, so stopped when i saw that. 

Agree with your emergency fund suggestion, that is one thing that we do need to make, just to ensure we dont put any hidden expenses back onto our credit cards.

Thanks

IrishSean

👌
Hopefully you'll have a good amount of time to look out more mortgage deals; latter stages of my mortgage I didn't realise there were fee-free products! Also from 2010 onwards the base rate was very low on what was a small mortgage for us so we could overpay what we wanted without penalty. Hammering your mortgage will be a goal when the unsecured is dealt with but first things first😀

Consider comparison sites and all of market brokers for your next deal; rates are mega low 

Your future 0% offers will come through but it might be a trickle at 1st. I'm on the last few grand of my debt and offers are pitiful (though granted i'm not on a f/t wage). 

As I said there'll be others who will offer more budget saving advice but Ryan's debt priority plan above looks excellent☝

Lee-10

IrishSean said:

👌
Hopefully you'll have a good amount of time to look out more mortgage deals; latter stages of my mortgage I didn't realise there were fee-free products! Also from 2010 onwards the base rate was very low on what was a small mortgage for us so we could overpay what we wanted without penalty. Hammering your mortgage will be a goal when the unsecured is dealt with but first things first😀

Consider comparison sites and all of market brokers for your next deal; rates are mega low 

Your future 0% offers will come through but it might be a trickle at 1st. I'm on the last few grand of my debt and offers are pitiful (though granted i'm not on a f/t wage). 

As I said there'll be others who will offer more budget saving advice but Ryan's debt priority plan above looks excellent☝

I agree im going to search the market alot more when i come to renew my mortgage, rather than just accepting a renewal deal with current provider like I did for this one. 

With regards to emergency fund. Would you set up a seperate savings account or just stay with your banking company?

IrishSean

EF anywhere it's not going to be dipped into regularly; e-savings, instant access ISA, even premium bonds if you fancy the chance of winning a cool million in 'interest', hehe. Obvs if you leave it in a current account it will likely get spent. You put in your SOA you've savings set up for a hol fund; that could double as an EF as it's a time of "hols? What are those again?"

Remember if say your white goods break down you can and probably should put replacement on a credit card (but only if it's regular apr, or has no balance, never the 0% cards), as you get extra buying protection. Use your emergency fund to pay that off (in full!). If you need EF to pay for services then just move it into your current account and withdraw cash.

Lee-10

Morning All, 
Update - Managed to save £39 on my house and contents insurance renewal so happy with that.
Paid an extra £200 off the MBNA Credit Card, so making progress to getting the balance low as possible or ideally paid off when due renewal. 

mark55man

Hey Lee - good luck with your diary and your journey.

remember its a long haul, but 3-5 years will go quicker than you think.  my three tips

don't beat yourself up if one or two months don't go as planned, you've already done the most important thing and got started and with some style

you will save more money in the long run by stopping the small regular expenditures than by looking for big one off savings.  I know with lockdown many of them would have stopped already, but it's the taking your own lunch, not buying coffee's that make the difference.  so tighten your belt and then when you are used to it tighten it again 

when you've done the above that is your new normal, that is if you pay off your debt and get back into it old spending habits, well then you're going to get back into debt - simples!  so don't begrudge the lifestyle as it will be with you a long time, just work at it and keep the faith

Not a debt busting tip, but do try and keep the habit of posting regularly,not necessarily every day but once a week - to keep you accountable, and to keep us subscribers interested and able to support you