Maternity leave debt legacy - £12,000 to £0 in 10 months?!

debtfreein2020

Hi All

I've been somewhat of a lurker on these boards, and reading everyone else's DFDs. You've inspired me to post my own and get some help along the way as I aim to clear down my debt. I started my DF journey in February 2020 with just over £12k personal unsecured debt after two 12 month poorly paid maternity leaves within three years. I went back to work part time, three days and have set myself a target to have it cleared this year, hopefully by the end of November ready for Christmas!

I've attached a picture of what I've achieved so far, and my plan going forward below. I have cleared down the interest accumulators and recently I have taken advantage of the 0% overdraft offers with Barclays (£750 ends mid-July) and Natwest (£500 ends three months after application) to help clear some CC debt. All debt is now 0%.

I am in the fortunate position I don't have any major outgoings, my husband's business owns our house and my car and pays our main bills. I pay £300 per month into our joint account for the children's expenses and pay 50% of our nursery bill which is around £300 per month too, plus £81 for my phone bill (contract ends in August and I have eyed up a sim-only deal I can move to for £18 per month). So around £700 per month expenses - I don't like relying so much on my husband so my eventual goal once the debt is gone is to save hard and buy a renovation property to flip. We live semi-rurally in the North so this is fairly achievable. I'm also interested in the FI/RE movement but haven't done any great research. Given I still have debt I'm a while off that but do calculate my net worth position at the end of each month off-setting my debt against two small S&S ISA's (one is just a Moneybox one rounding up my spending) and my pension.

Income-wise, I take home around £1,500 per month. I am currently on furlough and have just got a new job starting this week as I wasn't enjoying my original role and it is in a very turbulent sector with potential redundancy on the cards. So for who knows how long but at the moment I'll be earning more than usual. I also have a £300 hen do refund coming my way soon and I'm not proud but I also get a little £100 allowance from my Dad which I've had since university but he's never stopped. 

Ultimately, aside from maternity leaves, the crux of my issue is that I'm a Spendy Sandra with expensive taste. I need to really work hard that going forward. Weaknesses are clothes, home wares and gifts for family during birthdays/Christmas etc. Thankfully other than my two children, all other birthdays are in the first half of the year so I've a while to prep for Christmas. I do use Quidco religiously so that's something!??!

I don't have an emergency fund either so that's another goal, I think from August I'm going to start using that money to build an EF up in the background which I can top up at the end of the year when I've got rid of the debt. 

Any feedback welcome, please be kind! This is a huge change for me..

debtfreein2020

'That money' re emergency fund is supposed to be 'that money from my dad'!! oops

Moneywhizz

You seem to have a handle on this and have worked out a very strict payment plan to get to November debt free. It looks like some of your intended monthly payments are well above your surplus income but I am sure you know this already and know where the money is coming from to pay it. You are doing the right thing getting it paid off so quickly while you are is such a fortunate position. Then you can focus on getting some financial independence and you will already be used to sticking to a strict budget so it won't be too difficult to continue building up your own savings/pension and eventually be FI. 

debtfreein2020

Thank you @Moneywhizz, do you have different accounts for EF / Fun Money etc? I have one empty everyday saver with Barclays already that I can dedicate to EF but I wonder if a fun money budget would help me make better choices going forward.

With that in mind, I'm not sure what is reasonable monthly spend on fun. I'm a bit of a nightmare and do everything to excess, hence my current problems! As you've spotted though this can also go in my favour when I really put my mind to something but staying focused is critical and something I've struggled with in the past. 

Moneywhizz

Yes, you definitely need a different account for Emergency fund.  Lots of banks allow you to set up additional savings pots and separating your money out is definitely essential for good money management. If the fun money is only for you, and not for family fun, I think £100 is a reasonable amount. If you don't spend it all one month, you can let it build up or even pay it to your debt. If you do spend it all, then at least there is a limit on your spending and when it's gone, it's gone and you need to wait till the next payday to refill the pot. 

debtfreein2020

All makes sense, thank you!

Had a good week so far, on my second no-spend day and just received my rebate from the cancelled hen do so that’s another £300 towards MBNA. I get paid tomorrow and can’t wait to clear some more!! If I could get rid of MBNA this month that would be a huge success.

debtfreein2020

Payday!!! Another no spend day too!

Sent £539 to my Barclays OD which now only has £100 on and will clear next week. Sent £415 to MBNA which is my next focus debt to get rid of. Also paid £300 into our joint account and £350 into tax free childcare for nursery fees. Cripes small children are expensive!! 

debtfreein2020

All paid and on target ready for July, £1,284 paid off in June and £4,952 debt remaining. July will be a big month, I think this will be the month my employer decides what to do about my furlough, bring me back or make me redundant etc so need to make the most of my new job and the extra income before I'm likely back down to one income stream in August.
Praying for redundancy, it would sort out my debt and although I am enjoying working hard to clear it down (to some extent..) it would obviously be a huge weight off my shoulders to have it gone. 
As for July, I don't have any major expenditure planned, just a gift for my parents for a significant wedding anniversary and a long overdue hair appointment, probably £250 all in (aside from the usual £700 childcare/joint account outlay). I'm anticipating about £3,270 income, £2,100 debt payments and £1,000 expenses. Anything left I will put towards debt, would love to clear the MBNA card fully this month if I am able.

debtfreein2020

A little update - I have paid the £800 to Virgin and Barclays OD is back to £0 so waiting for payday on Saturday to pay £1,200 off MBNA. On track for July’s target.

Should find out what my original employer is doing this week too but having heard how busy they are (obviously fantastic news for the business and economy) I no longer think redundancy is on the cards so will just be a case of handing my notice in. I will have some holiday pay outstanding (approx £700) so that will give one last hurrah to put against the debt and potentially bring my debt free end point forward by a month which is exciting!!