Finding a future after debt

ceremony

I'm self-employed and have been having a tough time after a series of health scares and other issues. I'm finally in a good position to start paying off my debts.

Debt Jun 2020   Current

CT    5144    4959 (that includes this year's)
Rent    240    164 (arrears)
CCJ  445    445 (has arrangement)
CCJ    543    500 (being paid back but no arrangement)
Three    40    0
Three    261    261 (has arrangement)
PDL   340    160 (has arrangement)
PDL    114    114 (need to contact)
PDL    200    191 (being paid back but they haven't agreed to arrangement yet))
Washer    509    509 (need to contact)
Business    2200    2129  (not defaulted)

I have around £2,000 in unsecured consumer debt, owe a few years of council tax, and the business has a loan which I've also included.

I have payment arrangements with my rent and council tax. The rent will be cleared in about 5 weeks. The council tax at the rate they initially agreed for me to pay it back (when I was flat broke) would take 7 years! I plan on clearing the rent first and asking them if I can add the extra money from the rent to the council tax to massively speed up how long that will take to clear. I'm being cautious with offering a huge payment arrangement because while times are good right now I'm really scared that things could change again unexpectedly. These are weird times!

I have payment arrangements for one of the CCJs and am throwing spare cash at the other one to try to clear it before bailiffs start moving again.  I also have payment arrangements with most of the other debts. There are two left on the list that I need to find paperwork for.

My credit rating is tanked until 2024 (not that I want any more credit). My goal is to clear the priority debts long before then, build up a £1,000 emergency fund as quickly as possible, then move on to a 3 month emergency fund.  At the moment my scores are 163 according to Clearscore and 494 on Credit Karma. I am checking the reports regularly because it's motivating to see the 'reported debt' going down.

After that, backdate some years that we missed national insurance payments so that we are back on track for qualifying for a pension.

Then save for a house. I'm a council tenant and qualify for a big right to buy discount so it wouldn't take a lot to save up.

Right now my emergency fund has £30 in it, but that's the first time in year's that I've "saved" any money. Being self-employed it's tough to be certain that the 'good times' will continue. I'm hopeful, but I learned my lesson from the bad years and want to make sure I don't fall behind on payments.  So... my commitment is to be slow and steady and just pay things on time!

ceremony

Well, the day after my first diary post and there's already a (modest) hiccup.

I have a Curve card that I use to manage my spending and a U Account that I was transferring money to for direct debits. I started doing that last month and I was feeling really good about things because for the first time in years I had was "ahead" on bills, instead of being broke the week the phone bill landed.

Both those providers have been hit by the Wirecard FCA freeze. So now this month's bills are locked up in a frozen account. That's pretty frustrating! I'll have to check which bills are due on which day and try to get the money together in time.  We should be OK, I kept only a small revolving balance in there. It's still a bit worrying though and reinforces why we need that emergency fund built up.

Tahlullah.H

Hope you get it sorted.

ceremony

Tahlullah.H said:

Hope you get it sorted.

Thanks! Full credit to Curve, they're going to have a solution in place tomorrow (well, today, since it's after midnight now) so that will help a lot.  I still have a month worth of bill money tied up in U Account but they've been sending daily communication since the problem started too. I was able to get into U Account to check my transactions and one of the DDs I was worried about came out before the account got frozen. The next one is supposed to come out on Tuesday but won't be treated as 'late' by the Utility company for at least a week after that so it should be OK.

I can pay the rent and council tax and have shopping sorted for the week so there's some breathing room. I'm "glad" this happened while I'm working from home because we're spending so much less on travel and lunch money that there's a bit of a buffer.

ceremony

The FCA restrictions got lifted and my U Account works now. I'm glad that got sorted fast because it means that I haven't missed any direct debits.

I just worked out that "snowballing" just the minimum payments it will take four years to clear everything. That actually feels manageable. I want to be way more aggressive about clearing the council tax because it's been outstanding so long, but it's comforting to know that getting it all cleared is actually within reach.

ceremony

I hope everyone's enjoying the weekend! I'm having trouble focusing at the moment. Pre-covid I volunteered for a youth group and I just got the news that it's likely they're going to have to leave their venue because the venue owner is having troubles of his own and is thinking of selling up. I'm heartbroken because that group meant a lot to me. The youngsters were infuriating at times but they were so energetic and enthusiastic and it was refreshing. My work is so dry and boring, so it was nice to get out of the house for a bit. I'm not sure what I'll do with myself when life gets back to "normal" now.

I'm plugging away with my payments. I've set up a spreadsheet so that every time I make a payment I can update the balance and watch the percentage owed go down. Even a small payment moves the number and it's motivating. I'm only leaving the house to go shopping once a week at the moment so not spending much at all. I know that this situation isn't going to last forever so I'm just going to take advantage of watching the numbers drop fast for a while!

ceremony

I managed to contact one of the companies I didn't have a payment arrangement with and have set something up for £5 a week. That's good because it means it'll be cleared by the end of the year hopefully. Slightly annoyingly, it turns out that they hadn't been reporting to the credit reference agencies all this time. Now I've got a payment arrangement going, they are reporting... so my credit rating has gotten even worse! It's 484 with Transunion now and it looks like the debt has gone up.

I know it doesn't actually matter. I'm not in the market for more debt and credit scores are just a fake number anyway, but it's irritating the side of me that likes to watch numbers go in the right direction.

I got paid from a client today and siphoned a bit off into the emergency fund, £42 now. Slowly creeping up!

ceremony

The rent arrears are below £100 now which makes me really happy. As soon as that's cleared I'm calling them to set up a direct debit!

Annoyingly, our microwave is acting up. It's a digital microwave (keypad, no dial) and I love it! We've had it for well over 15 years so I guess it's done well. I'm trying to find a reasonably priced replacement that I actually like the look of but they all seem to be knob/dial ones these days... especially in the mid-range. I reckon if I can find a cheap or mid-ranged one I like the look of I'll be able to buy it at the weekend without dipping into my tiny emergency fund. If I can't find a 'nice' one I'll probably try to live without a microwave for a while until a posh digital one crops up in a sale. We mostly cook on the grill anyway.

Tomorrow I'm going for a haircut and I'm going to treat myself to a free coffee at Costa while I'm out. They've given everyone enough points for a freebie as a post-lockdown re-opening present and I can't wait. Free coffee is probably my favourite thing!

ceremony

Haircut done. The place I go to has been forced to put their prices up so it was a bit more than I budgeted for but I don't mind. I've been going there for years now and I really like them. can't have been easy for them being shut for several months.

Emergency fund is up to £46 from the bank's "save the pennies" feature.

I'm expecting a payment from a client tomorrow and will be putting some more towards debts but I'm not sure how much it's going to be. I'm getting a lot of work at the moment but the "getting paid" part is frustratingly slow. I do trust that the money will come through eventually, but it's so hard to budget. It's looking like the microwave will have to wait a bit.

ceremony

Thanks @cloudylemonade13!

ceremony

A quick update - another debt down, nine more to go.

Debt Jun 2020   Current

CT    5144    4839 (that includes this years)
Rent    240    0 (arrears)
CCJ  445    425 (has arrangement)
CCJ    543    500 (being paid back but no arrangement)
Three    40    0
Three    261    256 (has arrangement)
PDL   340    140 (has arrangement)
PDL    114    114 (need to contact)
PDL    200    191 (being paid back but they haven't agreed to arrangement yet))
Washer    509    509 (need to contact)
Business    2200    2081  (not defaulted)

Total remaining: £9,055 - so close to ten percent paid off!

I'm going to take some of the money that was going on rent arrears and put it towards the CCJ that currently doesn't have a payment arrangement, to try to clear that before they try to add more charges onto it, and put some of the extra towards the council tax as well. Even throwing an extra £10 a week at the council tax would reduce the amount of time it will take to clear the arrears dramatically.

At the current rate of making payments, I'd be debt free in just over three years. I've set up a spreadsheet so that every time I over-pay it tells me how much closer I've moved the debt free date. It's motivating to see!