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Twelve Months To Turn It Around?

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Twelve Months To Turn It Around?

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OK, so here goes! I think my lightbulb has been steadily flickering for a few months now. I really want to buy my own home after renting for years. However, a couple of things have happened which I hope mean I’ve truly had my LBM. Firstly, when I’ve looking into applying for a mortgage, despite the fact I have access to a sizeable deposit and earn a good wage I simply can’t borrow an amount I need to buy anything decent in the area I’d like to. Secondly, I’m a single mum to my daughter. My XH has consistently had access and paid child support since separating seven years ago but recently moved areas, changed jobs and ended up unemployed. The startling revelation that I do actually rely on his maintenance payments to survive due to my high monthly outgoings has made me seriously rethink my approach to finances.

I know there’s some immediate ‘quick wins’ I can be doing to turn things around which will stand me in good stead for when maintenance payments resume and I can tackle my debts more aggressively. Namely:

·       Stopping smoking – no brainer!

·       Creating a budget, monitoring and sticking to it religiously

·       Cutting back in obvious areas like takeaways – I already meal plan yet still succumb at least 2 or 3 times a month haemorrhaging at least £50 a month which could be better spent 

 

I made the decision to start my own diary after actively following lots of other people’s journeys to hopefully keep me accountable but also, I’m keen for advice on how to tackle my debts most efficiently. I understand the principles of focusing on higher interest debts first and snowballing etc. but my personal circumstances mean I’ve flip flopped between overpaying the debt with the highest monthly repayment in order to free up some much-needed cash and the highest interest one. I also could do with squirrelling away some modest savings. I rent my home and don’t run a car so don’t have the same emergency scenarios that others might. However, the Covid pandemic has taught me that a little put by will never be a bad thing. For example, my grocery bill has more than doubled. Under ‘normal’ circumstances my DD would have breakfast at my parents before school and more often than not they would give her her tea before I finished work. She would then spend some of her weekend with her dad so again, I would only need to feed myself. She’s now at home with me pretty much 24/7 and as we all know, kids love to snack! A little buffer would’ve really come in handy to tide me over during this lockdown period.

 

Will add a debt round up in the next post and my thoughts on how to proceed….


Debt @ highest - £17,313.74
Current Debt - £13,543.62 (21.78% paid)
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Replies

  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary

    Klarna - £36.95 – will be paid off Friday.

    PP Credit - £41.83 – will be paid off Friday.

    Loan 1- £770.00 – this is the one I have been overpaying to try and reduce monthly outgoings. The settlement figure is much lower than the outstanding balance now so makes sense to continue with this until it is gone I think?

    Catalogue - £108.54 – paying more than minimums on this one to just get rid. Will clear in 2/3 months without overstretching myself too much

    MBNA CC - £1941.80 – this is on % until 8/12/20 so I have only been paying minimum payments as I have another credit card which is interest bearing. Now I’m wondering if this should be my next focus or clearing the interest bearing one and hoping I can get another 0% deal nearer the time?

    Barclaycard - £2493.44 – this is subject to interest and has been my focus for overpaying up until recently. I’m expecting a refund to hit within the next week or so which will wipe just over £100 of the balance. I’m thinking this should be my priority debt once Loan 1 is cleared?

    Virgin CC - £965 – another balance transfer card – 0% doesn’t expire until 21/1/22 so I’m happy just letting the minimums run their course on this for the time being and will only make extra payments when this is my last remaining debts

    Overdraft - £2100 – I have an arrangement in place whereby this is reduced by £150 per month. I’m happy to let this do its thing but am conscious when I provide bank statements as part of the mortgage application process this doesn’t look great. I suppose I need to know if this is more detrimental than the consumer debt and shift focus accordingly?

    Loan 2 - £4542.39 – the monthly payments on this are manageable but its due to run until January 2023 which is way too far off! I need to check properly how I can make overpayments to reduce this but possibly when my priorities are clearer

    Friend Loan - £1185.00 – this was an attempt to get myself out of ‘trouble’ a year or so ago. It’s not subject to interest and is being repaid at £71.00, obviously it’s not reflected on my credit file either and the friend has been very clear that she doesn’t want me to overpay this while I have other debts to clear. Therefore, I’ve made it a low priority and just do the minimum payment as instructed

     

    So there we have it - £14.184.95 in total!

     

    My realistic target is to have this cleared by the end of next year so that I can start 2022 debt free but…. I have a mile stone birthday in just over 12 months so I’m classing that as my stretch target. Whether I can do it or not remains to be seen but I’m feeling motivated at the moment


    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary
    Payday tomorrow so I'm finalising my budget and hoping I've come up with something approaching realistic....
    Income - £2076.82
    Household Bills - £937.83
    Debt Repayment - £718.99
    Groceries - £150.00
    Gifts - £20.00
    Personal Allowance - £250.00. This probably needs breaking down further but includes my mobile phone bill, lottery syndicate, social stuff, alcohol, clothes, takeaways etc. My plan is to keep a spending diary this month and try to understand where my money goes. I'm already getting invites for nights out and girlie lunches now that restrictions are easing and trying really hard to maintain my resolve!

    In other money news, I've received an email about possibly claiming money back for historic mis-sold loans. Part of me is reluctant to try to claim anything, I chose to take the loan out and this mess is very much of my own doing. But then the other part of me thinks any recompense is likely to be minimal and I'd be silly not to at least try to claim.... 
    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • ImpulseSpenderImpulseSpender Forumite
    195 posts
    100 Posts Name Dropper First Anniversary
    The Spending Diary should be a big help and will be a really good indicator of where you money goes. It will help you to budget in future too. 

    I am feeling the same as you about social events going back to normal, I think I might set myself a rule where I can only accept 2 or 3 social events a month to keep spends down. 

    If its easy to claim and there is no impact to you in trying to claim then I'd say why not give it a go? You never know what could happen...
    August 2019 - Debt £8000
    June 2020 - Debt £190.96
    Saving Pots: House Fund: £2015.21 Holiday Pot: £327.31 Rainy Day Fund: £964.84 Sod it/Treat Fund: £12.06
    Stocks and Shares ISA: £189.65
  • enthusiasticsaverenthusiasticsaver Forumite, Board Guide
    10.8K posts
    10,000 Posts Seventh Anniversary Name Dropper I've been Money Tipped!
    ✭✭✭✭✭
    I would set aside a certain amount for emergency savings so at least you have a small amount put by. Presumably unless your rented house is furnished a broken fridge or oven would pose a problem to you? 

    I would focus on the overdraft and interest bearing cards initially. How did you get to that amount in debt? Just general overspending? I think a spending diary is a good idea. Close the credit cards down as you repay them. 
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected]
  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary
    The Spending Diary should be a big help and will be a really good indicator of where you money goes. It will help you to budget in future too. 

    I am feeling the same as you about social events going back to normal, I think I might set myself a rule where I can only accept 2 or 3 social events a month to keep spends down. 

    If its easy to claim and there is no impact to you in trying to claim then I'd say why not give it a go? You never know what could happen...
    Thank you, I'm thinking of only one or two social outings as I do tend to spend a lot and then it's all the extras like a takeaway the following day. Especially while I'm trying to stop smoking too, avoiding temptation will help initially I think. I'll wait to hear more about the claim, they will email again when the online portal is ready. As you say it is worth giving it a go. Thanks again :)
    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary
    I would set aside a certain amount for emergency savings so at least you have a small amount put by. Presumably unless your rented house is furnished a broken fridge or oven would pose a problem to you? 

    I would focus on the overdraft and interest bearing cards initially. How did you get to that amount in debt? Just general overspending? I think a spending diary is a good idea. Close the credit cards down as you repay them. 
    Thanks, I'm hopeful that I can either save a little of the groceries and spending allowance to start an EF or that XH's maintenance will resume imminently and that can be used for EF and Christmas savings. Once this dreaded loan is paid off that will free up some cash to split between overpayments elsewhere and putting some by for annual expenses like my contents insurance, school uniform for DD and suchlike. Oven is provided by landlord and fridge/freezer replaced around 6 months ago but yes, still need a small pot for these eventualities for sure.

    The debt is really down to overspending, impulsive purchases and poor decisions where I got in to a payday loan cycle when XH and I were still together and he was made redundant. I'm at the point now where I can see this level of debt is not sustainable and it's stopping me moving forward in terms of buying a house, learning to drive etc. So need to focus on that and learn my lesson from this experience. Thanks again for commenting and for the advice, much appreciated :)
    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary

    Payday today! All manual payments have been made and my new debt balance is £13,844.39

     

    Hoping the high of dropping into another thousand bracket will serve as motivation to continue. I am in a bit of a dilemma however. The last couple of months I’ve been transferring my groceries, spends and gifts budgets into savings accounts. The issue with this is, it means I’m getting stuck into my overdraft right from day one. If I don’t move the money out to separate pots, then my monthly interest payment should be less. But can I keep on top of what’s left if it’s all lumped in together? Only one way to find out I guess…..

    What else? Oh, I put a couple of pairs of DD’s outgrown trainers on eBa* last weekend and I’ve had a bid on one pair so that’s a few extra pounds to the pot. The auctions end on Sunday and I’m hoping both end up going. Might have to rummage out some other bits to list but think our local charity shop have had most of it.

    I’ve got a grocery delivery coming tonight and my budget monitoring has paid off already. I popped all the items in a spreadsheet so I could work out how much of the order was to come out of the grocery budget and how much out of my personal allowance. Realised the total didn’t match and a special offer hadn’t been applied properly. So I messaged them and now have £6.70 worth of points to address the difference. What a result! I’ve another delivery booked for mid month so shall have to remember to convert some points and use a voucher to reduce the cost of that one and keep myself on track.

    Grocery budget now stands at £64.46 which sounds low but I have carefully planned and have plenty in the cupboards and freezer too so it’s manageable.

    Personal allowance now stands at £147.30 (bought alcohol on the grocery shop but some of this is to be stashed until the end of September. I’m going on a girl’s weekend away which involves a night in one night and a meal & drinks out the other. Figure if I can get little bits each month it’ll spread the cost. So, a bottle of Prosecco for me and another for a gift purchased so far)

    Think I’ve only got one birthday and a couple of social plans this month so fingers crossed I can keep on the straight and narrow


    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • ChasingRainbowsChasingRainbows Forumite
    15 posts
    10 Posts First Anniversary

    Fairly successful weekend. Online grocery shop arrived Friday evening complete with a smashed bottle of wine. The driver said it would be refunded, when checking my emails later, all 3 bottles were credited! £18 back in the personal spends pot. Met some friends for drinks Saturday afternoon, avoided alcohol and spend came in at just over £10 including getting a coffee for the friend who picked me up and dropped me off. Pretty happy with that. Ordered some refills for my e-cigarette online as it works out cheaper that way so Operation Quit Smoking is underway. Sunday brought an eBa* sale and I found and listed another couple of items. Any money from this or surveys, cashback etc. will be the start of my Christmas savings pot.

    Just need to do some fridge triage and tweak this week’s meal plan accordingly. I’ve decided I’m also going to try to count No Spend Days and have set myself a target of 10 for the month. Should be easy enough if I can avoid buying cigarettes!


    Debt @ highest - £17,313.74
    Current Debt - £13,543.62 (21.78% paid)
  • [Deleted User][Deleted User]
    0 posts
    1,000 Posts Second Anniversary Name Dropper I've been Money Tipped!
    ✭✭✭✭
    Haha, "fridge triage", I like that. X
  • BizzywizardBizzywizard Forumite
    123 posts
    100 Posts Name Dropper
    Hi ChasingRainbows,
    I have just read your diary Good luck with your debt free journey!
    Does your overdraft have interest added or is it interest free? Overdrafts are what really hurt me/us!
    Overdraft - £2100 – I have an arrangement in place whereby this is reduced by £150 per month. I’m happy to let this do its thing but am conscious when I provide bank statements as part of the mortgage application process this doesn’t look great. I suppose I need to know if this is more detrimental than the consumer debt and shift focus accordingly?
    My husbands overdraft is what was killing us each month as the interest was bonkers! We had the same problem with money as soon as you paid in, it gotten eaten up by overdraft and interest! We both switched bank accounts  to -

    Nationwide's FlexDirect account offers a year's 0% overdraft, as long as you haven't had a FlexDirect account before.

    I had £2500 in interest free debt and was able to pay this off, with NO interest. It was hard work but worth it.

    This is the link to Martin Lewis main page about how to get out of your overdraft, it really helped me. https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

    I have two bank accounts one where my salary goes into and mobile and child tax credits goes out of (Flexdirect) and another one just for bills (RBS). I have removed the overdraft facility from both accounts, its nice to be in the black.

    I have an excel spread sheet for each month of the year showing:

    Council Tax (spread over 12 months, this has helped me budget as the two old free months didn't help me at all)

    Mortgage

    Water

    Insurance

    Netflix

    TV Licence

    Gar and Electric (I always give my meter reading and have had £85 back this month as I was charged to much, better that's in my account than the companies)

    Credit card DD (I spread them out over their repayment period, for example £1200 CC for 12 months means I pay £120 a month. 

    Anything else goes into my LISA account (I can only take out 3 times a year). I must say for the last year I have barely brought anything, my focus was my DEBT FREEDOM.

    Hope this helps in a small way.

    Bizzy

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