Words of encouragement & what to do next?

Wardee

Cheers guys, I appreciate the support, I'm yet to apply for a 0% card (I know, I know) it is so so hard like you all say but I just hope to everything it will be worth it when that last payment is paid off and everything I earn is mine. What a strange feeling that will be. I will never go back to the old ways and I will keep ynab going for the rest of my life to always go back if things start going astray! Thank you all again.

Wardee

Thought I'd give you guys a quick update on my situation. After struggling to get another 0% card for the amount I needed I decided to get a loan to consolidate. The interest I'll pay has more than halved now with the loan and both cards are now paid off and I can make as many overpayments as I like at no extra cost which is the plan. I feel this option is better than staying in my current position as I don't feel like I have to throw every single penny at my debt for another year or two but can still be debt free within 2 years by simply overpaying £50 a week or even more if I have extra that week.

Obviously 0% would have been better but it seems a lot harder to get high credit 0% cards since I last applied for a transfer. 

Appreciate everyones words here, it's helped me make a decision that I hope is the next best one, I feel a lot happier right now and less like I'm stuck in sinking sand even though I've improved my financial position a lot over the last few years.

theoretica

Wardee said:

 Scarily I didn't even feel that joyous after paying my last loan payment like I thought I would as that 'saved' money is just going towards more debt.

Do you have savings?  Depending on the person it can either be really tough getting used to seeing money sitting there and not spending it (and need practice) or be much more inspiring seeing a positive balance build up rather than seeing the negative one come down.  Also having enough to shield you from needing to borrow again in the case of 'life happens'.  While having both debts and savings will cost you in interest - and you would be in effect putting borrowed money into savings.  But if you look at the lifetime ISA it would give you more in bonus than you would pay in interest.  I suggest now you don't have 19% interest hanging over you that you build up a bit of emergency savings as well as paying off the debt.  And hopefully there won't be an emergency and it will be a start towards your house deposit.

Wardee

No savings at all, I did have a months emergency savings built up but I put all that into a credit card. I do have a lifetime ISA which I want to start putting money into as like you say the bonus you get is substantial, hopefully my new situation will allow me to save and pay off debt at the same time now and like you say as long as nothing gets in the way can start thinking towards a house. I'd never have been able to think about this a few years ago. The grind will hopefully be worth it!

EssexHebridean

It’s incredibly important that you step away from using credit at least until the loan has gone. Consolidation *can* work,but often doesn’t because it doesn’t create the “process” of paying off debt which helps us to learn our way around budgeting and actually Irving to that budget. If you continue to use cards as well the chances are that you will end up with more debt, not less. Set yourself a target to overpay the loan each month and make that your “process” instead, and you maybe one of the successful ones. 

Wardee

Appreciate the concern, the last thing I wanted to do is borrow again but from the replies here I understood that having two cards at 19% interest was not an ideal position to be in. Cards will not be used (they haven't been used in 2 years since starting to pay off my debt) and I will continue to budget using YNAB as per usual while overpaying every week with any excess funds like you say, that is still my motivation.

I will continue to update with how I am getting on, I literally cannot wait for the day I can say I am debt free but I need to continue to be patient! Thanks again all.

BabyStepper

Just found your thread and wanted to say well done on all your progress so far. You have done so well to stay with it. Do keep going, the rewards are worth it.  

When I got low during my debt repayment process, I used to remind myself that money management is for life, not just for debt repayment times. I started to look ahead to how I would manage my money once the debt was gone, realistically thinking about savings, a bigger emergency fund, how long it would take to build it, also house improvements and moving house, saving for a new car, things like that. Life costs money. And if you don't manage your own money, someone else will. Like the bank, or a credit card company, or pay day loans, or...you get the idea. The debt repayment phase can get boring, but there are better times coming, times you won't get to if you don't repay the debt.

Good luck, although it doesn't sound like you need it. You're nailing this.    

Wardee

Thank you so much, it's certainly not been easy and I hate (maybe too strong a word) myself most days for getting into this mess, especially when I have seen my wages whittled away each and every month. I try and put a positive spin on it and know that it's made me realise the importance of budgeting and money control now.

It does feel like I've made a backwards step with the loan as the interested has been calculated for the loans term already rather than per month so YNAB has put me further into debt but I know it's the right decision long term if I stick to the overpayments. I definitely won't feel suffocated if I have a low income month for example now due to Christmas.

Congratulation to yourself as well, you have done a lot better than me in the time frame looking at your sig, I could do with some proper tips from you on money management!

EssexHebridean

Don't hate yourself - think about it this way, if someone else was in the same position you are in, would you hate them? I'm guessing not - you'd be compassionate, try to support them, and give encouragement. Do the same to yourself! 

Also - front loaded interest on a loan can be great if you make overpayments! It means that in fact the "headline" figure you see now is more than you will in fact be paying back! 

Wardee

That's a good way of looking at it thank you. It's certainly made me realise what you can live without in life and to take pleasure in the little things over being consumed by having the latest tech etc.

That's why I'm trying to stay positive regarding the loan, I know it's not a true figure and and overpayment of £50 a week works out at £1300 saved in interest over the loan term.