Feeling positive about banishing a decade of debt

pippa_pelada

I've also been thinking of all the big money events we've got coming up in the next 6 months - 

Christmas, obviously. We’re having my parents over on Xmas day and my step kids and good friend on boxing day but due to covid, that will be it. No nights out in pubs etc so the big expenses will be food and drinks for those two days where we won’t scrimp at all. The rest of the month we’ll be careful.

Hubby's got a big birthday coming up, god knows what we’ll do because I think there will still be covid restrictions in Feb.

Then we have a trip up to Scotland and we’ve only paid the deposit on the house so far. I’ve just checked and there's a balance of £535 to pay.  We will have to factor in spends for the week and a hotel on the way up and on the way down. I don’t feel guilty about this as we won’t have had a proper holiday for over two years by the time we go. I’m also factoring in the 2 months of not paying council tax for this trip and I’ll have freelance money then too.

pippa_pelada

I've just been pottering about the house thinking about finances and realised that I have no idea about the state of the finances of anyone I know. I mean, I know when someone buys a new house or a new car but I don't know the details of those purchases and the impact they might have on their lives.

Other than with my husband, I've never discussed things like  APR, size of debts, budgets, overpaying loans/mortgages, pensions, savings etc or anything that makes me slightly squirm as it seems to personal to ask about. How can that be? Is this us as a nation or is it my own issues and my own circle of family and friends? Nobody knows about the dire state of our finances as I never thought to go into detail with anyone (other than my parents when I had my LBM last year) and nobody's ever asked. 

I still feel a lot of shame about the mess we got ourselves into so I can't imagine opening up about it any time soon but it's making me wonder if anyone I care about is also struggling as I'd have no idea. It just struck me as very odd!

evebeme

Oh pippa, you have no idea how much others are in your place, living from one pay check to another. Your story really resonated with me. My late husband was born with a silver spoon in his mouth. Get in financial trouble...no sweat, mom and dad would bail him out. Then he married me. Poor devil. lol

I'm English by birth but was living in Canada when we met. I remember my frugal mam counting every penny. I grew up to be very much like her in that respect. No credit cards for me. There was many arguments in our house about his spending but I held firm. No, you can't call on mom and dad, instead, you can grow a pair.  He did.

We were married for 25 years until he died of cancer. I was left in a good financial position thanks to getting a grip on money early on.

 Good luck to you.  Eve

astrocytic_kitten

Seconding you’d be surprised how many people are in your place - I’ve never discussed numbers with friends (too embarrassed!) but when I did start opening up and saying I was paying off debt so could we do cheaper things when meeting up than our usual dinner / drinks / etc I was amazed how many came back saying they were also paying back debt and would be over the moon to cut costs. I always felt it was a dark ugly secret that despite being outwardly successful I was in this mess, but a surprising number of friends in similar jobs who I thought were more responsible than me and would never have that happen were in the same position. 

Sounds like you’re doing really well so far - and I’m impressed you’ve sorted out online mortgage account and how to overpay, that’s been on my to do list for years!

pippa_pelada

@evebeme Yes, I think you’re right. It’s so hard to ask people about finances though. Maybe I will start being more honest about our situation to see if it helps anyone else if they’re struggling to talk about it. I’m glad that you managed to get a handle on your joint finances early on, financial worries can be destructive in a relationship. To be fair to hubby, he's not the only one to blame in our case, we've both been guilty of living in denial for far too long, he's just a bit slower to have his LBM but I think he's getting there. 

@astrocytic_kitten I know what you mean about assuming that people are more financially responsible than they are. I think people who know us would be surprised at the mess we’ve got ourselves in as hubby has a good job but often it’s all a house of cards (credit cards!) It must have been such a relief when you could be open with your friends and not try to keep up the pretence. And thank you, looking at your signature you look as though you’re kicking !!!!!! too!! The overpaying of the mortgage was the simplest thing, I just needed the online log in which was easy once they’d sent a letter with the code for the online app

pippa_pelada

I paid a further £50 on the mortgage yesterday and I’ll pay a further £30 later in the month bringing the amount up to £100. Going forward, I want to overpay £100 a month as that should be manageable.

I realised that when I started this diary at the start of the week, I wasn’t entirely honest with myself about how much we actually owe. In my head, I didn’t factor in hubby’s car loan as I considered that as just one of life’s necessary expenses but the truth is, it’s still debt and should be included as such. The actual debt figures WERE horrendous but I can confront it now as we’re making huge progress.

So, the actual amount we owe including the car is £35,073 but that’s down from £56,000 this time last year so when I look at the figure in that context, I’m not half as scared as I would have been if I hadn’t taken control a year ago.

Yesterday I worked on the calculations for paying back the debt should nothing change financially over the next year and we stick to the budget I’ve worked out for both paying off and saving, this time next year I’m hoping we will have saved at least £5000 and paid off a further £17,000.  

These are goals for 2021 and I know that life may well get in the way but I need to focus on what’s potentially achievable. I'm excited!

pippa_pelada

Here are December's numbers. I'm aiming to update every month

Savings in December - Savings Pots - £1540, Emergency Fund - £400, Premium Bonds - £500

Total savings = £2440

Overpaid the mortgage by £100

Secured Debt (need to look at what out 0% finance options are once we've renegotiated the mortgage in April)

NW loan - £17085 at 12.10% APR, Car loan - £8088 – don’t know APR yet

Unsecured debt - Credit card - £9900

Total debt = £35,073

vixx_123

Would the loan be unsecured debt? My car finance amount (i.e.., what I see on statement) includes the interest. When we had a loan, that also did and so the debt was reduced when we paid early.

Following your journey with interest 🙂 

pippa_pelada

Hi Vixx, thank you for joining me on the journey!
To be honest, this is all very new to me since finding this forum in the last week. I'd never even thought about the terms unsecured and secured debts so I'm chucking around the descriptions and haven't really got a clue! Any pointers on the difference between the two would be gratefully received!
I've looked for a way of overpaying the NW loan and haven't found it yet but I'm sure it's possible so does that mean it's unsecured? We pay £160-£170 of the £550 a month in interest alone. As for the car, I don't know any details about that yet as that's something that hubby sorted when his balloon payment was due and it's financed through the garage. The monthly payments are £577 a month and I'm assuming that includes interest but I've not seen a statement yet. I'll get hubby to sort that this week so I know more about what I'm dealing with. 

joedenise

Loans are only secured if you borrowed against your house as far as I know.  Most loans would be considered unsecured.

As to overpaying the loan your best bet is just to contact NW and ask them!