Katy goes debt free in 2021
SpendthriftKaty
Forumite 14 Posts
Hi, I've been lurking for a bit because I really want to try and change my habits and get much better with money. I've already made a lot of progress, I did get into a lot of debt when I was younger and I'm a lot more careful now. I do work, I'm self employed, I do a mixture of private (self-sourced) work and contract-based work for other providers. I'm not in a great deal of debt, nor am I struggling to service it, but I also would like to be debt free, feel more in control and have more long term financial goals. I've been self employed a long time now and don't really do working for other people - I have had jobs in the past, but setting my own schedule/taking time off when I need rather than when a boss says I can/working alone suits me better. Working as I do on a contract/referral basis, I tend to build good and long lasting relationships and many of my clients I've had for years, but in all honesty I suck as an employee, doing the 9-5 thing and negotiating office politics. Not for me. I have ADHD and I suppose that's something to do with it.
I have, however, realised that preferring this way of working comes with its costs, and one of them is that I have little capacity to carry debt and must cut my cloth. My attitude has tended to be, if I want it I get it, and this really needs to change if I'm going to build some security for the future. I'm late 30s and haven't much pension, only from when I have been employed so contributing to that has been patchy. I want to change the living invoice-to-invoice cycle that I've got into as that is putting me in a place where I do end up putting little things on my credit card and if I can't pay the full amount off, it does add up after a while. I really don't want to be in the position I have been in a few times in the past where I had a lot of debt and struggled to meet it. My parents bailed me out once after uni after racking up a bunch of student overdraft and cards I couldn't pay off and my partner also helped me out a few years ago when I had a dry patch at work and no savings to fall back on. I have done better since in that I've never needed to call on others to help me with my debt, but having no debt would be even better! Since that dry patch, I've done a part time distance postgrad to improve my work prospects and get more specialised, higher paid work in my field and it's so far paid off, work is better and more consistent and in general better paid.
Current debt:
Santander loan (which I took out to pay off a credit card that had got close to its limit and I was struggling at the time to make more than min repayments) - 2994.47. Monthly repayment is 162.20. I originally took out £5k so have paid a fair bit of this off but never made more than the min repayments. APR 10.4%
Santander credit card - £530.57. I usually pay more than the min repayment on this, which is 12.27 at the moment. APR 19.2%
Graduate overdraft (interest free until July 2022) £1750. This was at £2000, I've reduced it by £350 since I finished studying and started working more hours.
Total: £5275.04
My goal is to pay all this off by the end of 2021. I live with my partner who has a f/t job and earns quite a bit more than me so my contribution to the bills is around a third, he pays two thirds. We have a joint account for bills/mortgage. We have separate finances except for bills and mortgage and very clear that my debt is my responsibility. My working hours are increasing next year and I've just got some work from a source that pays better so I ditched a lower paying client for them for 2021, so I'll finally be in a position to tackle this. After putting aside for tax and my business-related expenses and my share of the bills, I have on average around £800-1200 left depending on my workload, if I've taken any time off, etc. But in cashflow terms some of my income is weekly and some monthly. Out of that has to come my mobile phone (£35 - had to up my contract due to lockdown and working from home) my debt repayments, travel, petrol, my share of groceries, my gym and coaching fees, and anything that's 'mine' rather than jointly used. I am looking at ways to save and make extra repayments from Jan, realistically because I'm taking time off at Christmas and will have a reduced income, overpaying anything isn't likely to be possible this month, but next year if I can plan better I won't be living so month to month (and in some cases week to week!). I tried doing a SOA on lemon fool, but it's difficult on variable income, I think this will be easier to do once I've started working with my new client and have more predictable income coming in. I've thought about getting Monzo and doing 'pots' and wondered what people here thought of that.
I guess I'm looking to tackle the credit card first as that's highest interest and then move to making overpayments on my loan, which I haven't done before. I have £2000 in savings which is my emergency fund, tax, and where I save up for my sports coaching and competition fees - I compete regionally in my sport so I'm semi serious about it but I'm not competing for Britain or anything!
Looking forward to meeting you all and having some accountability on my journey to debt freedom and greater financial freedom for the long haul!
I have, however, realised that preferring this way of working comes with its costs, and one of them is that I have little capacity to carry debt and must cut my cloth. My attitude has tended to be, if I want it I get it, and this really needs to change if I'm going to build some security for the future. I'm late 30s and haven't much pension, only from when I have been employed so contributing to that has been patchy. I want to change the living invoice-to-invoice cycle that I've got into as that is putting me in a place where I do end up putting little things on my credit card and if I can't pay the full amount off, it does add up after a while. I really don't want to be in the position I have been in a few times in the past where I had a lot of debt and struggled to meet it. My parents bailed me out once after uni after racking up a bunch of student overdraft and cards I couldn't pay off and my partner also helped me out a few years ago when I had a dry patch at work and no savings to fall back on. I have done better since in that I've never needed to call on others to help me with my debt, but having no debt would be even better! Since that dry patch, I've done a part time distance postgrad to improve my work prospects and get more specialised, higher paid work in my field and it's so far paid off, work is better and more consistent and in general better paid.
Current debt:
Santander loan (which I took out to pay off a credit card that had got close to its limit and I was struggling at the time to make more than min repayments) - 2994.47. Monthly repayment is 162.20. I originally took out £5k so have paid a fair bit of this off but never made more than the min repayments. APR 10.4%
Santander credit card - £530.57. I usually pay more than the min repayment on this, which is 12.27 at the moment. APR 19.2%
Graduate overdraft (interest free until July 2022) £1750. This was at £2000, I've reduced it by £350 since I finished studying and started working more hours.
Total: £5275.04
My goal is to pay all this off by the end of 2021. I live with my partner who has a f/t job and earns quite a bit more than me so my contribution to the bills is around a third, he pays two thirds. We have a joint account for bills/mortgage. We have separate finances except for bills and mortgage and very clear that my debt is my responsibility. My working hours are increasing next year and I've just got some work from a source that pays better so I ditched a lower paying client for them for 2021, so I'll finally be in a position to tackle this. After putting aside for tax and my business-related expenses and my share of the bills, I have on average around £800-1200 left depending on my workload, if I've taken any time off, etc. But in cashflow terms some of my income is weekly and some monthly. Out of that has to come my mobile phone (£35 - had to up my contract due to lockdown and working from home) my debt repayments, travel, petrol, my share of groceries, my gym and coaching fees, and anything that's 'mine' rather than jointly used. I am looking at ways to save and make extra repayments from Jan, realistically because I'm taking time off at Christmas and will have a reduced income, overpaying anything isn't likely to be possible this month, but next year if I can plan better I won't be living so month to month (and in some cases week to week!). I tried doing a SOA on lemon fool, but it's difficult on variable income, I think this will be easier to do once I've started working with my new client and have more predictable income coming in. I've thought about getting Monzo and doing 'pots' and wondered what people here thought of that.
I guess I'm looking to tackle the credit card first as that's highest interest and then move to making overpayments on my loan, which I haven't done before. I have £2000 in savings which is my emergency fund, tax, and where I save up for my sports coaching and competition fees - I compete regionally in my sport so I'm semi serious about it but I'm not competing for Britain or anything!
Looking forward to meeting you all and having some accountability on my journey to debt freedom and greater financial freedom for the long haul!
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Monzo is super easy to set up and use and no fees so what's to lose? If you set it up and run with it for several months tweaking as you go then it either helps or not. Me and hubby use Monzo for savings, treats and pocket money and both love it. Might not be for you but only one way to find out for sure.
Living a little whilst planning ahead is good if you have the flexibility to do so. You have time to pull things back into better shape but you'll be surprised how quickly that time goes so discipline and focus on the goals is required to stay on track. If you falter and stumble, dust yourself off and look/move forward - if possible, learning from your fall.
Good luck
MFW date 2nd Jan 2024
Literally counting the days! 🥳
This morning wasn't good because I woke up to a message saying my Santander loan payment had meant I went over my overdraft limit. I'm waiting for invoices to be paid at the moment, my clients are good payers but I probably won't be paid until Friday at the earliest from my two main clients. This means borrowing from my EF to make sure I don't get charged (I won't if I pay money in the same day). I'm a bit worried about how I will manage Christmas and into January because I'm off work for 10 days due to seasonal closures, clients being on holiday etc - and I need some time off too. I suppose I can use this time to try and plan, do my budget for next year, etc.
Debt is now:
Santander loan 2836.30 (monthly payment went on it today)
Santander credit card - £495.57.
Graduate overdraft (interest free until July 2022) £1750.
Total: £5081.87
Would be really good to get this total under £5k by the end of 2020!
I've got my debt under £5k, so that feels like a bit of a landmark! Quite happy about that. I know I don't have as much debt as some folks on here but given my history and also my self-employed status it's enough to make me feel uneasy. My work is quite stressful and though it's reasonably well paid, I wouldn't mind getting to the point where I don't have to do quite so much of it! It's also hugely inspiring to see how others have managed to pay down much bigger amounts and the support everyone gives each other, it's really lovely and actually makes me motivated to pay off my debt and save more.
Next thing is to deal with Christmas without breaking the bank...that'll be easier said than done.
Santander loan 2836.30 (monthly payment went on it today)
Santander credit card - £395.57.
Graduate overdraft (interest free until July 2022) £1750.
Total: £4981.87
EF: 1600