Refresh: My 6 year journey from -5 figures to +5 figures (it was 4 years, but I messed up)

Bizzywizard

Agree with One step at a time. Cancel Experian £15 a month (you can also get a free score from Clear score and Credit Karma). I would also cancel the lottery, that's another £20 saved, which could you straight off your debt. I only do the lottery as a treat  for me when there is a massive rollover.....but I never win!  £35 off your debt straight away each month.
Have you spread your council tax over 12 months not the normal 10?
My Tv license is about £13.29 a month, yours is £7?
Mobile phones are too expensive, when are you out of contract? Needs to be sim only, it can be silly cheap!
I know others like EF on this forum, but Martin Lewis states to use savings to pay off interest incurring debt. Please see the main site, for Martins advice on this. it makes perfect sense.
Do you have an excel spreadsheet for the next year?. This really helps me plan and see what goes in and out. 
Do you have a bank account just for bills with no overdraft? I have £900 that goes in at payday that pays all the bills.

ellipticalorbit

One-step-at-a-time said:

Definitely cancel Experian - if you join MSE credit club you get the full report free of charge.

Thanks - this is a good suggestion while still allowing me to see my report. I feel I need to be on top of this as much as my monthly budget to ensure I maintain control and on the right course to become debt free. I'm not sure if it's just psychological, but I feel once the numbers start to move on the dial and I see my utilisation drop and score improve, it'll be positive re-enforcement to keep doing everything I can. I'll look into MSE credit club just now!

ellipticalorbit

warren80 said:

You have made a really good start. I admire your organisation and planning. One of the things that I have realised is that having a plan removes 90% of the stress. 

Thanks for the words of encouragement - I completely agree, a plan brings it under control and removes most of the stress, and there is no point worrying about what you can't control so I'm just cracking on with fixing things now. Thankfully my income allows me to do that and hopefully will continue to do so. It's great seeing your first diary entry too - really motivating seeing others in somewhat similar circumstances tackling their debts too, makes me want to do everything possible to clear this and never wind up in this position ever again.

ellipticalorbit

Bizzywizard said:

Agree with One step at a time. Cancel Experian £15 a month (you can also get a free score from Clear score and Credit Karma). I would also cancel the lottery, that's another £20 saved, which could you straight off your debt. I only do the lottery as a treat  for me when there is a massive rollover.....but I never win!  £35 off your debt straight away each month.
Have you spread your council tax over 12 months not the normal 10?
My Tv license is about £13.29 a month, yours is £7?
Mobile phones are too expensive, when are you out of contract? Needs to be sim only, it can be silly cheap!
I know others like EF on this forum, but Martin Lewis states to use savings to pay off interest incurring debt. Please see the main site, for Martins advice on this. it makes perfect sense.
Do you have an excel spreadsheet for the next year?. This really helps me plan and see what goes in and out. 
Do you have a bank account just for bills with no overdraft? I have £900 that goes in at payday that pays all the bills.

Thanks for your reply - this is really helpful! I'm cancelling Experian right now and will cancel the Euromillions too - you're right, it's another £20 saved and funnily enough, I've never won.

Yes, council tax is spread across 12 months - it's really important for me all costs are equal and accounted for across the year.
Yes, sorry I should have said - the household bills I've included on my SOW are my half of them (my husband pays his half). So our council tax is £13.54 a month so my share is £6.77 - I think I rounded up to £7.

My mobile phone contract is very high, I've got another year on it - to be honest I took a new plan with unlimited data and calls last April after working from home in lockdown for only a month racked up an unexpected £245 bill as I spent hours and hours a day on meetings. Anyway, we now use video conferencing software provided by my company, but this wasn't an option at the time and I'm fully tied in now for another year so will look to reduce when I get the first opportunity to.

I do have an excel spreadsheet - it's actually got a weekly budget built in it taking me from now (early 30s) all the way up to retirement. While it's really important for me to long range plan for being mortgage free in 15 years time and have a good pension, I'm more focussed on the 5 year plan in it if I'm honest. I probably use this to manage my costs and ensure I'm on track with my weekly and monthly target daily - maybe a little obsessive but helps me control progress and not fall off the wagon.

Yes, I've got a bank account for my personal bills (such as my phone contract, car insurance) and a joint account for household bills (mortgage, council tax, tv licence etc) with no overdraft. I do an automatic sweep from my account into this as soon as I'm paid every month to cover the joint bills and I've got direct debts in place for all the debt repayments as well as personal bills. I tend to check the balances daily too, to ensure there is nothing unexpected and there is always enough there. We have a small float in the joint account after all bills come out of about £500 to ensure we're never down to zero.

Thanks for your helpful advice - open to any and all other suggestions of things to think about.

ellipticalorbit

I've had a sleepless night (just couldn't sleep, nothing to do with finances) which has given me a lot of time to think about finances amongst other things and I realised my forecast wasn't as accurate as it could be. I'd been assuming my monthly pay off and monthly interest would remain static in my forecast every month, but the reality is that as I pay more of the balance off every month, the amount of simple interest I pay on the monthly balance will decrease. It's something I've been aware of but with baby brain in full whack at the moment I hadn't tackled how to forecast the reducing interest trajectory in my budget.

Well, it's been a productive morning and I've now forecast that in for every card I have and had my husband sense-check it for good measure. I've also made two other changes - I've forward forecast the new monthly net salary and reduced childcare costs, and secondly I've now amended all of my credit card accounts so I'm paying a flat amount every month. Instead of my minimum payments reducing in amount as my balance reduces, I want to ensure I'm paying a flat amount into every card every month, thus ensuring more balance and less interest is paid and ensuring my new forecast will remain accurate.

All of the above has had quite a surprisingly large effect on my overall plan and means I'll actually be debt free a year earlier than I originally thought. So target is now August 24 rather than August 25 for being completely debt free, which is really motivational and I'm super pleased if I put in the hard work I should be able to achieve this.

I've now signed up to MSE credit club and I've cancelled the National Lottery and Experian direct debits so feel like I'm really starting to wake up and take action!

New plan of record is as follows:

2021: Cease all credit card spending immediately and permanently, chip away at the balances and continue to pay off the loan. Pay off the business bills (which are all budgeted for now and payments underway)
June 21: Remaining debt will be CC £50,594 and Loan £18,061
Dec 21: Remaining debt will be CC £47,422 and Loan £14,263, all business bills paid

2022: Continue as above while building nest fund to start paying off chunks into the credit cards in order of highest APR first (avalanche) - the nest fund will also act as a safety net to keep me afloat and cover all bills and debt monthly payments in case the worst happened and I lost my job. My job has to give me 3 months notice to make me redundant, and I've got 1 month's severance accrued so I figure if I aim to have a further 2 months of costs saved gradually this gives me a 6 month safety net, in which I'm pretty sure I could find a similar level of income as I'm currently making the least I've made in the last 5 years and have never been out of work. I know it's popular preference to scrap the safety net and avalanche the debt first but I feel I need this security for my family in place in case the **** hit the fan first and foremost. I'm not worrying about it too much though, there is a quote I love which goes, "A bird sitting on a tree is never afraid of the branch breaking, because its trust is not on the branch but on its own wings". Enough said.
June 22: Remaining debt will be CC £44,012 and Loan £10,465
Dec 22: Remaining debt will be CC £40,587 and Loan £6,667, savings will be £5,000

June 23: Remaining debt will be CC £35,271 and Loan <£5,000. Pay off the largest APR remaining balance in full (e.£8,859)
Dec 23: Remaining debt will be CC £23,206 and loan <£5,000. Pay off the 2nd largest APR remaining balance in full (e.£2,960)
Jan 24: Remaining debt will be CC £18,965 and loan <£5,000. Look to move remaining cards to 0% - lower APR % as soon as possible
June 24: Loan is paid off. Remaining debt will be CC £16,432. Consider whether it'd be lower interest to consolidate any remaining interest charged card balances into a loan if credit report means it's an option by now. Pay off the 3rd largest APR remaining balance in full (e.£6,346)
Aug 24: Remaining debt will be CC £8,484. Pay off balances 4, 5 and 6 (£1,952, £2,816 and £3,715) leaving me completely debt free

elbree

Hi @ellipticalorbit! I love the positivity and the level of detail you are bringing to this. It's clear you've had your LBM and there's no going back. It's great you've shaved a year off and I'm sure that as time goes on you can bring that date forward. I've seen people on here chip away huge debts using selling and saving methods like Tilly Tidying. I know you're concerned about your credit score meaning you can't get 0% balance transfers yet but have you tried? You can do a soft search... Even a small balance transfer would reduce your interest and be worthwhile. Finally are there any tax rebates you can apply for? Professional fees or WFH? Good luck with your mission! 

ellipticalorbit

elbree said:

Hi @ellipticalorbit! I love the positivity and the level of detail you are bringing to this. It's clear you've had your LBM and there's no going back. It's great you've shaved a year off and I'm sure that as time goes on you can bring that date forward. I've seen people on here chip away huge debts using selling and saving methods like Tilly Tidying. I know you're concerned about your credit score meaning you can't get 0% balance transfers yet but have you tried? You can do a soft search... Even a small balance transfer would reduce your interest and be worthwhile. Finally are there any tax rebates you can apply for? Professional fees or WFH? Good luck with your mission! 

Hi Elbree, thanks very much for your reply - it's really helping me being part of a community while tackling this amount of debt.

I definitely feel I've had my LBM and there is no going back although I know I'll need to keep myself in check along the way. I've always worked excessively hard and I'm really conscious my go to position is often that I work hard so deserve to reward myself with [a luxury holiday / a 4 figure handbag / nice clothes / nice furniture / nice meals out] and I think the biggest risk of failure is allowing myself that instant gratification when I've not actively saved for something. I'm very aware I need to break these habits for good and stop putting these types of purchases on credit thinking I can afford it when I don't then pay them off while I had the money. A lot of expensive holidays, a wedding and all of the above is how I got into this mess in the first place. I think the challenge will therefore be the balance of what, if anything, I allow myself out of my income over the next 3 and a bit years, while I clear the debt.. do you have any advice on how to tackle this and any tips to help? I know it'd be unrealistic for me to do nothing for 3 years 5 months and my worry is if I don't allow some small allowances along the way I'll burn out. Maybe I'm just worrying unnecessarily. I guess I'm more worried about a complete lack of holidays than anything else - I can live without new clothes etc for 3 years, particularly as I've got a beautiful wardrobe to fit back into post new baby.

The Tilly Tidying is a great suggestion and I think I'm going to dive into this over the next few months on maternity leave - I've got a number of things to sell which I think will help with this. I'm interested in the saving methods you mention - is this saving from the sales proceeds or something different? The other thing I'm doing is I've currently got the business bills which are due at the end of the year invested to try grow them a little - I've been pretty successful in making 4 figure profits historically and while there is a risk and no guarantee I figured I'd spread the investment across some funds and a small number of shares with stop losses on them to minimise the risk and so there is a reasonable amount of asset allocation.

I've looked into tax rebates and re-claimed everything I'm due - I've one rebate due from HMRC later this year but I've ring-fenced this amount to clear the final business bill already. I wish there were more rebates I were due but that's just wishful thinking on my part. I have done a soft search for 0% cards and also loans with a lower APR than the cards in January but no luck, the only hits were things with extortionate APRs after the 0% period like Marbles, Aqua etc or loans with 20%+ APR so I don't want to go there. I figure if I can eat into the debt over this year then maybe I'll have better luck by the end of the year or next year. It does kill me a little bit though knowing I'm paying £700 a month on interest on the cards alone but now I've seen by reducing the balance I reduce the interest I'm on a mission to do that!

elbree

I definitely find that I can be REALLY frugal for short periods, like one or two months and then I have to loosen up a bit. Go out for a meal, buy a new dress. Then I can be really frugal again! Someone on here suggested a 'fritter fund' - say £50 to spend however you like, going out for coffee, a lunch or two or new shoes just so you dont feel too deprived. If you're feeling virtuous and haven't spent it you can always put it on a card at the end of the month (or put it in your holiday pot). If you feel like holidays you can't give up as a family then don't but maybe stay local for a year or two or factor saving for holidays into buffet. Frankly getting on a plane with a baby would have been my idea of hell so I've been quite happy glamping and staying with friends whilst my daughter was little. Just as she's now a reasonable human the world closes down! Tilly Tidying is where you round down all your balances at the end of day (to 0 or 5, whatever you prefer) and pay into your savings or off debt. It's usually only a few pounds but it really feels good making a payment every day and chips away at the total. Other savings challenges are on here but that one is my favourite - it appeals to my OCD and need to have done something productive every day! Finally on the cards - does it matter if the card has a terrible APR after the 0% ends if you won't let that happen? If you moved £500 or £1000 over (whatever you could definitely pay in the 0% period) it would still be a saving. You would have to juggle carefully but you don't have to move a whole balance - if that makes sense? That was a long message, sorry! Hope you've had a good day! 

Coffeekup

Hi welcome to the forums and congrats on your LBM. That's some big numbers you have there fortunately you have an income most can only dream of. I'll note things that have flagged up to my eye's.

Your mobile ...which you've addressed.
Buildings and contents...appears way high especially as you split the bill's with your partner.
Credit score is meaningless it's your history that the lenders look at, lenders don't see your score.

You said in a post you have some other things that come out of your account could be cancelled or cut back on. Personally i would post a full SOA, then others could give you better/more accurate advice/information on what to do moving forward, the picture becomes clearer once things are written down. 

Is your husband a big earner? Is he aware of your debts? Does he have any debts? Does he have any savings? If so could he do an interest free loan to help pay reduce one of the debts or even pay one off?

3-4 years may seem like a long while but it'll soon pass, it took me 7 years to pay my debts off although not as big as yours I earned far less, setting "mini goals" helped me.
I'll presume your paying the minimum payments on all c.cards (never a good thing).
I'd up all minimum payments to the nearest £50 in your case...

Description...............Debt.....Monthly...... New set monthly payment (through direct debit)

Credit Card 1..............12864.....384.......£400

Credit Card 2......................4830.....136.......£150

Credit Card 3...................11987......321.......£350

Credit Card 6....................7484.......187.......£200

Credit Card 5....................9922.......278.......£300

Credit Card 4....................4946.......132.......£150
The "mini goals" to help keep me motivated, would be throw any spare cash at c.c.2 once that's paid off, put £100 extra on to the highest Interest debt (c.c.1 in this case), and use the extra £36-50 to nail down the next mini goal (which for me would be) c.c.4. Once this has gone re assess what you owe and set yourself another mini goal. (I'd also do another soft search for 0% transfers by this time)
Granted doing the above you may pay a bit more interest over the next 3-4 year's, but in the grand scheme of things it'll be minimal and help keep you focused and reduce the stress.

Having different pots for future outgoings/expenditures helped me (and still do)...i.e. holiday's/car/breakdowns/Xmas and birthdays/emergency fund and in your case maybe a pot for next year's taxes?.

I wish you the best of luck and don't stray, hope to see u in the mortgage free wannabe forum soon.

ellipticalorbit

elbree said:

I definitely find that I can be REALLY frugal for short periods, like one or two months and then I have to loosen up a bit. Go out for a meal, buy a new dress. Then I can be really frugal again! Someone on here suggested a 'fritter fund' - say £50 to spend however you like, going out for coffee, a lunch or two or new shoes just so you dont feel too deprived. If you're feeling virtuous and haven't spent it you can always put it on a card at the end of the month (or put it in your holiday pot). If you feel like holidays you can't give up as a family then don't but maybe stay local for a year or two or factor saving for holidays into buffet. Frankly getting on a plane with a baby would have been my idea of hell so I've been quite happy glamping and staying with friends whilst my daughter was little. Just as she's now a reasonable human the world closes down! Tilly Tidying is where you round down all your balances at the end of day (to 0 or 5, whatever you prefer) and pay into your savings or off debt. It's usually only a few pounds but it really feels good making a payment every day and chips away at the total. Other savings challenges are on here but that one is my favourite - it appeals to my OCD and need to have done something productive every day! Finally on the cards - does it matter if the card has a terrible APR after the 0% ends if you won't let that happen? If you moved £500 or £1000 over (whatever you could definitely pay in the 0% period) it would still be a saving. You would have to juggle carefully but you don't have to move a whole balance - if that makes sense? That was a long message, sorry! Hope you've had a good day! 

Thanks for sharing this advice Elbree. I wasn't sure if the expectation (I'm not entirely sure whose - maybe my own?) was once you commit to debt free diary and process you can't permit any little treats for yourself so it's really reassuring to see other people do frugal sprints then maybe have the fritter fund as you say. I think that would work really well for me as it'll keep me on the right path without feeling too restricted. I'll definitely look to establish a small fritter fund / holiday pot.

My husband and I have had a long chat about holidays and agreed we will allow ourselves one foreign holiday a year with a strict budget in 2022 and in 2023 until I've cleared the debt, unless we decide it's too much to manage with a young child, in which case the fund for that can get thrown at the debt too. We're quite lucky we have somewhere we can go in the summertime in the UK for a week's break for free so I think between this that should be plenty to stay motivated.

Ah, I hadn't understood the Tilly Tidying - that's a really neat idea and appeals to my OCD too! Great way to do something productive every day like you say.

That's a really good suggestion about considering the 0% cards which then have high interest rates - I'd just seen the APR and thought it'd take me longer than 6 months / 9 months to clear a full balance so didn't want to go near it. It's a really good suggestion to explore and only move what I can definitely pay off in full by the time the 0% interest period ends. Perhaps I should do this after all. I think it'll take some working out what that would be once I know any credit limit offers and duration for 0% as until next spring I really don't have any extra leftover cash to throw at clearing a balance due to paying off the business. It does make me nervous the idea of more cards - I'd just need to be sure anything I move to it can be fully cleared before the high APR sets in. Needs some investigation - I'll report back once I've looked into it some more.

Thanks for your reply and hope you have a good day!