Counting Down from £15K

purplehippo276

Hello,

I've been lurking here for most of this year but never plucked up the courage to post.  I had my lightbulb moment in January this year when, saddled with £15K of debts, I got turned down by the bank for a consolidation loan which I had hoped was going to reduce my monthly repayments - which I now realise getting rejected was a real saving grace. 

My debts came mainly from childcare - £3.5K came from an overpayment of tax credits from HMRC that I'm now paying back on a monthly payment plan, and also struggling to make ends meet once childcare costs were paid from my wage - childcare costs accounted for about 60% of my salary.  Compounded with this, poor budgeting meant I lost count of the number of times I was using my credit card to pay for petrol to fill my car not even half way through the month, or for unbudgeted yet predictable expenses like my car's MOT and service.  The boiler also packed in - it wasn't unexpected as it was very old and playing up - but I hadn't budgeted that in and had no emergency fund to even cushion the cost of that a little bit.   My credit card was on a high rate and was paying £100 a month just in interest.  It was a downward spiral, and I thought the only way out was the consolidation loan.    

Thankfully since then I've turned things around though, have a very strict budget, sinking funds for every single upcoming expense (even things like school photos and school milk), have all my debts on 0% interest, and haven't had to pay for petrol on my credit card this year.  I've also been helped along by being in lockdown (I've been really lucky enough to keep my job and not be negatively impacted financially for now) by having no childcare costs for 5 months, and I've been able to pick up some extra bits and pieces of work where I can.

All in all I've managed to pay £8K off my debts this year, as well as building up a £700 emergency fund.  I feel like I've hit a bit of a wall now and thought starting a diary would help provide some motivation and accountability for this remaining £7K.  I am hoping to clear the remaining £7K by July next year, if not sooner, all being well - just finding things hard not seeing the figure go down faster, and getting annoyed that I can't make progress every day.  My credit score hasn't increased much either - not that it's the be all and end all, but I get frustrated when it's not going up as much as I would like.  

purplehippo276

Here's the lie of the land at the moment:
£2636 - Barclaycard 0% - £70 p/m + £165 overpayment + anything else I can throw at it each month
£972.49 - Virgin Money 0% £10p/m
£1900 - HMRC 0% - £50 p/m
£1550 - Shawbrook 0% £45.15 p/m

I'm focusing on Barclaycard first as the interest free offer runs out first.  All being well I should be able to clear it by January, hopefully, before it bears interest in April. My work have told me I won't be back in the office this year, so I have my commuting savings I'm throwing at it just now that I add on top of the £165 overpayment and the £70 minimum, and anything else I save/earn.  I've been averaging around £400 p/m in payments to it over the last few months.  I'm making minimum payments to the rest.

Once the Barclaycard is paid off my plan of attack is the Virgin card, then Shawbrook and then finally HMRC as it doesn't show on my credit report.  Can't wait to pay off HMRC in particular as that debt has been the bane of my life!  

purplehippo276

Also, just want to say how good it feels to get this all off my chest and share with others.  Wish I joined earlier.  

ChangingMyWays89

I agree, it's nice to get things off of your chest around people in similar situations

Beeboo23

Hi OP, what’s a sinking fund? Is that the same thing as an emergency fund?

Honeysucklelou2

Well done on clearing £8k this year - what a great start!

purplehippo276

Beeboo23 said:

Hi OP, what’s a sinking fund? Is that the same thing as an emergency fund?

Hi @Beeboo23 - I’ve read a lot of Dave Ramsey this year so it might be an Americanism! It’s a savings pot with a specific purpose. I bank with Monzo, so I’ve set up lots of digital savings pots in my account for all known upcoming expenses. So I have one for my cars MOT, one for car insurance as I pay annually, one for Christmas, one for birthdays, etc, etc. I’ve budgeted what needs to go into each pot each month, so I make sure that, for example, £25 a month goes into the car insurance pot (or sinking fund) so when the time comes to pay it the money is there and I don’t have to dip into my emergency fund. Using this method has turned my finances around - no more having to put predictable expenses in my credit card, which is what I used to do... 

purplehippo276

Honeysucklelou2 said:

Well done on clearing £8k this year - what a great start!

Thank you @Honeysucklelou2 - I never thought in January when I was applying for a five year consolidation loan that I’d ever be in this position! 

Beeboo23

purplehippo276 said:

Beeboo23 said:

Hi OP, what’s a sinking fund? Is that the same thing as an emergency fund?

Hi @Beeboo23 - I’ve read a lot of Dave Ramsey this year so it might be an Americanism! It’s a savings pot with a specific purpose. I bank with Monzo, so I’ve set up lots of digital savings pots in my account for all known upcoming expenses. So I have one for my cars MOT, one for car insurance as I pay annually, one for Christmas, one for birthdays, etc, etc. I’ve budgeted what needs to go into each pot each month, so I make sure that, for example, £25 a month goes into the car insurance pot (or sinking fund) so when the time comes to pay it the money is there and I don’t have to dip into my emergency fund. Using this method has turned my finances around - no more having to put predictable expenses in my credit card, which is what I used to do... 

I see thank you. I’ll hopefully finally be debt free in October (and then in debt again when I get my mortgage but I’m not counting that). Sounds like a good idea!

purplehippo276

Beeboo23 said:

purplehippo276 said:

Beeboo23 said:

Hi OP, what’s a sinking fund? Is that the same thing as an emergency fund?

Hi @Beeboo23 - I’ve read a lot of Dave Ramsey this year so it might be an Americanism! It’s a savings pot with a specific purpose. I bank with Monzo, so I’ve set up lots of digital savings pots in my account for all known upcoming expenses. So I have one for my cars MOT, one for car insurance as I pay annually, one for Christmas, one for birthdays, etc, etc. I’ve budgeted what needs to go into each pot each month, so I make sure that, for example, £25 a month goes into the car insurance pot (or sinking fund) so when the time comes to pay it the money is there and I don’t have to dip into my emergency fund. Using this method has turned my finances around - no more having to put predictable expenses in my credit card, which is what I used to do... 

I see thank you. I’ll hopefully finally be debt free in October (and then in debt again when I get my mortgage but I’m not counting that). Sounds like a good idea!

Good luck @Beeboo23 - October isn’t far away! That is going to feel amazing! 

purplehippo276

Had a £5.78 cash out from Prolific, so rounded it up to £6 and sent that to the Barclaycard this morning. A nice sneaky payment before the end of the month. When I make a payment I try to visualise what I initially put on the card to get into debt in the first place. In this £6 case it was one of many meal deals from the supermarket, and a snack for later on in the afternoon, because I couldn’t be bothered making lunch to take to work in the morning. Never again! Paying off debt is way more effort than making lunch in the morning!