Starting to budget after years of wishful thinking

LegoHead

thanks everyone, had a bit of a moment of crisis. I have achieved quite alot and think I was a little confused as now I have essentially achieved all I need to keep on top of my finances I had a lot of momentum built up. Now I just need to keep the system ticking along. I think I am getting comfortable with the new state.

I have decided not to clear the loan as I feel better knowing if the worst ever happens I have 6 months money in the bank to cover the mortgage and bills. The loan is going to take under 4 years to clear, but I only have around £500 of interest left over those 4 years so not a huge cost.  

I will never be getting a loan or credit card again. I wont even sign up for interest free credit again. OR the paypal pay in 3 or amazon instalments. It feels genuinely amazing to say that. 

Now I have money saved up it has made me realise that the bigger purchases I would so easily put on credit before are definitely not going to happen again! I find it very difficult to justify dipping into the savings.

I want to redo my bathroom and kitchen. I know they are going to cost me quite alot. I saw some video on youtube that said something like dont try to attain a lifestyle you want, but accept the lifestyle you have and make the most of it. I have accepted what I currently have is good enough, eventually I will make a plan, save and execute. For now I am at peace with my life.

Before I would feel regret and guilt after buying something I dont really need. Now I have given myself a small budget to spend on anything I want each week the guilt has completely gone.

My stress and anxiety was up and down last few weeks and now genuinely feel it is levelling off.

A year ago I could not see the light at the end of the tunnel. Now thanks to all of you guiding me I do see the light and have complete control over getting to the destination. I cant say it enough, but thankyou. I see the same people popping up in all the debt free diaries helping others out, you really are making a difference to lives. 

enthusiasticsaver

Whilst I agree that having savings is a good thing I personally would overpay the loan to reduce that £500 interest bill as I think that is a lot of money and 4 years a long time to have a loan hanging over you. You don’t have to draw out of your savings but maybe make regular overpayments to reduce the interest bill and term. Similarly I would not be anti using 0% interest cards to do your bathroom as long as you set affordable monthly payments to clear within a term. That is making the system work for you rather than you paying the banks interest. Everyone is different though. 

I personally would overpay the loan until it is gone the. Use mix of savings and 0%  credit to do your bathroom/home improvements. 

Well done on turning the debt situation round

savingholmes

Well done on all your progress. If someone came up on the street and offered you £500 you wouldn't turn them down... Just a thought. At the same time I can understand wanting an EF...  I want a bigger EF which is why I'm debt neutral rather than free currently - however my debt is on 0%...

LegoHead

Thanks all, at this moment in time I am just going to turn my back on any future debts even on 0% cards. I am pretty happy with my situation now. I have my weekly budgets that are working for me.

At the end of the month I will see how much spare cash I have and decide if I want to overpay the loan or not. 

Will start reporting monthly on progress from now on

So for my first check of the year I have tried to make it into a more simple and quick task. There was only one nice surprise in the bank of a tax refund after filing tax return for the year. £133 extra is pretty nice! I have decided not to track every tiny little spend I make as I really hated doing it. I think the system I have is adequate. I have two pots of money I can buy stuff from which is either food or the stuff I don't need. If I start needing money for other things or these budgets each week are not adequate I might start logging every item. 

Debt = £11535 = HSBC Loan
Savings = £5747
Balance = -£5788 overall

I am pretty happy with that figure and it will probably be close to -£5000 at start of next month after my next payment and if I overpay with my spare cash at end of month. My remortgage is almost getting to completion now. If you have seen all the issues with Premier Property Lawyers and their cyber attack you can understand this has been a massively long task to complete. Once that is done I will be saving another £73 per month that can be used elsewhere.

Happy New Year everyone

savingholmes

Do you have plans for the £73? OP / Pension / Other?

LegoHead

savingholmes said:

Do you have plans for the £73? OP / Pension / Other?

I decided this morning now that I have a good emergency fund locked away in NS&I that I will plow every spare penny into paying off the remaining loan. Calculated my spare cash for this month and just paid off £535.04 to round the loan down to £11,000. Aiming to pay £1400 off per month so should be debt neutral in about 3-4 months and debt free in 8 months.

As I got my payrise I have started pension contributions again at work. This year I am going to start looking at actively managing my pensions as after being debt free I want to also try and either retire early or worst case have a comfortable amount of pension income in the future.

LegoHead

Having a bad day today. Remortgage has been declined as they think I have a tenancy agreement with my lodger. 

Have created another thread asking for question about this

savingholmes

Glad you will be investing in your pension. Sorry about the remortgage. Hope that you get this resolved.

LegoHead

savingholmes said:

Glad you will be investing in your pension. Sorry about the remortgage. Hope that you get this resolved.

thanks, fingers crossed! Not the end of the world if not as I was just trying to lock in a cheap rate.

Just paid another £270 off my loan from lodgers rent so now down to

Debt = £10730 = HSBC Loan
Savings = £5000
Balance = -£5730 overall

savingholmes

Well done on the debt reduction. I love how fast you've turned things around in a good way