Debt and Budget (Reset) plan

shell16

Hey, Ive lurked around the debt Free wannabe diaries for a while, looking for inspiration to clear my own Credit Card debts.  I have always been in debt for as long as I can remember!  At my highest in 2017 it was £25766!  A bit like a roller coaster, balance goes down and then up and its just never ending!  I want to be held accountable for my actions and starting this diary will certainly help me do that, its my 1st diary so im really hoping by putting it on here I will be held accountable!

I have just over £7800 debt on 2 credit cards.  I check my credit score regularly and although its actually quite good, there is always the part of the report which is red or amber for me as Im using either over 25% or 30% available credit on individual cards.

Virgin is £3700 Credit limit
Lloyds is £15000 Credit Limit
(I also have a Barclaycard with a zero balance on and a £6550 Credit Limit)
Total Credit available £25250

CC1 - Virgin £495 left on 0% until 30/11/21 (Then 26.5%)         
CC2 - Virgin £1651.94 left on 0% until 30/09/22 (Then 26.5%)
Total CC1 & CC2 - £2146.94
CC3 - Lloyds £5654.40 left on 3.9% until 30/04/24 (Then 25.5%)

CC1 & CC2 are actually on same card but thought I would split up in view of the differing dates where 0% expires.  Minimum payment is £25 total 
CC3 Minimum payment is £85

I have £188 available to pay on my cards but would be interested to know which I should concentrate on first?

Since lurking on the board I have been making steps to transfer what I can to 0% or low interest in the last couple of months.

Snow balling debt interests me as I can see 1 CC will be paid off quickly in less than a year, but then I think I have the highest balance on 3.9%.

What should I do? Any help would be appreciated.

Thanks

shell16

Updated

Thought I would post an update here.  Ive looked into the Snowball and Avalanche methods and included other debts too that I didnt originally so I have a clear picture of what debt I have not just Credit cards!  Im opting for the snowball method as it looks like I will pay less interest and the term period is roughly the same for both

So here its is, laid bare!

CC1 - Virgin £495 left on 0% until 30/11/21 (Then 26.5%)         
CC2 - Virgin £1651.94 left on 0% until 30/09/22 (Then 26.5%)
Total CC1 & CC2 - £2146.94
CC3 - Lloyds £5654.40 left on 3.9% until 30/04/24 (Then 25.5%)
Loan - £6001.33 16 months left to pay
Mortgage - £99493 11 years left to pay

Total £113295

According to the Snowball method I will be debt free in respect of the above on the following dates if I follow the steps below

Step 1 - for 16 months 
CC1 & CC2 - £102.10 
CC3 - £85 
Loan - £385 
Mortgage - £925 

Step 2 - for 1 month
CC1 & CC2 - £429.34
CC3 -  £85
Loan - £57.76
Mortgage - £925 

Loan - paid Jan 2023

Step 3 - for 1 month
CC1 & CC2 - £140.40
CC3 - £431.70
Mortgage - £925

CC1 & CC2 - paid Feb 2023

Step 4 - for 7 months
CC3 - £572.10
Mortgage - £925

Step 5 - for 1 month
CC3 - £124.83
Mortgage - £1372.27

CC3 - Paid Oct 2023

Step 6 - for 65 months
Mortgage - £1497.10

Step 7 - for 1 month
Mortgage - £1112

Mortgage - Paid Apr 2029

There it is, Im sure there will be hicups along the way.  Would be wonderful to be debt free in under 8 years but I will trully give this my best shot.  I will hopefully keep up with this as im closing in on the next milestone birthday (50's) in a few years time.  I would love to keep you all updated if you are willing to go on my debt journey with me?

Sorry for the long post, thanks for taking the time to read and would love to hear your comments and any nuggets of gold you think I should be aware of and look into.

mumtoomany

Sounds like a good plan. Now to implement it. You will probably need an emergency fund, there is bound to be at least one emergency in the next eight years. Have you worked out how the debt came about? Have you changed so it won't build up again? Good luck on your journey, staying on here will help to keep you motivated. I'll be following along, mumtoomany.

rigare11a

Following you now Shell! Great plan  

enthusiasticsaver

I personally would not deal with it that way but I can appreciate that the snowball system would advise it due to  you paying interest on CC3.  I would aim to clear both CC1 and CC2 by September 2022 when the deals have expired by paying £155 per month to those until next September to clear them in full.  That will get rid of the CC1 deal by November 21 and CC2 in next September so no interest to pay. The remaining £140 to CC3 until next September  and then increase it to £295 in September 2022 and again in 2023 after the loan is gone. That will clear that within the deal period.  Yes you are paying interest on it but it is a fairly low rate. This way you get rid of a card next year so only have to focus on the loan which will be gone in 2023 and CC3 which should also be repaid in 2023. Leave the mortgage until everything else is gone. In fact it makes more financial sense to overpay your pension than pay off your mortgage which is presumably a very low rate. 

Saving for emergencies is a good suggestion

shell16

mumtoomany said:

Sounds like a good plan. Now to implement it. You will probably need an emergency fund, there is bound to be at least one emergency in the next eight years. Have you worked out how the debt came about? Have you changed so it won't build up again? Good luck on your journey, staying on here will help to keep you motivated. I'll be following along, mumtoomany.

Thanks Im really trying to put something into place, its my first stab at this so will likely be tweaked along the way.

I have already set up £75 a month to go into an emergency fund pot, appreciate its not a lot or maybe it is?  The debt came about by using cards instead of money, and simply not paying off the month after.  Also I tend to use the card for anything over £100, dont ask me why I just think at the time that would be better on my card!

The loan was over 5 years and has gone towards a (new to me) motorhome as we have 2 children (12 and 10) and the school holidays cost a fortune to go away on the usual package hols. 

I want to change and coming on here will hopefully make me stick to it, I hate having to pay so much out of my wages every month. I want to be in control and my Credit Cards mounting up is just what my lightbulb moment was.

Thanks for your comment and good wishes.

Four_Seasons

Hi welcome, I will be cheering you on, good luck x

shell16

Four_Seasons said:

Hi welcome, I will be cheering you on, good luck x

Thanks four seasons! Thanks for stopping by. 

shell16

I've just been checking some bank accounts and found 1 i hadn't linked where my save the change goes from use of my debit card.

In addition to setting aside £75 today to start an emergency fund for £500 i also have this account which has built up to a total of £125! 

So I have £195 already in my emergency fund!!  Woohoo!!!

shell16

Afternoon All DFW's!

Well I forgot we had to pay for a starter motor for the car which is £186.70 so I have used my Emergency Fund which i Had £195 in!  I have however completed some positive bits today.

It was my payday on 18th and Husbands Payday today so.....

• Set up specific Piggy banks so I can save for Christmas and Holidays and a standing order to go into these each month for £75 (£150 per month).

• I cant replenish the Emergency Fund just yet as I only transferred £75 yesterday.

• I have also set up a monthly budget, which details all my SO and DD's compared to our household income, this is a living spreadsheet so I will be updating it every day

• Im going to look into doing surveys as this sounds to be quite lucrative and will only add to my income in order to progress further on debt clearance.

Thats all for now, thanks for reading

rigare11a

Hi Shell , 

Sorry to hear about your starter motor, cars just feel like an endless expense don't they! At least thats how I feel about mine.

Sounds like you did some really positive things though  

Have a great evening
Rigarella