We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

24 months to debt freedom

Options
1356719

Comments

  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options
    Thanks @enthusiasticsaver that’s very good advice! It’s so ridiculous, I find myself adding things mindlessly to an online basket every day! I really don’t need the stuff I’m adding, just go down a rabbit hole without even thinking about why. Crazy. 

    It’s been rough but we’ve lots to be thankful for as well and we are looking forwards 🙌🏻
    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options
    Debts at LBM 

    Next bill £197.23
    Phone - £335.33
    iPad - £695.10
    MBNA CC - £7429.55
    B/card CC - £11527.04

    Total debt - £20,184.25 (apart from the next bill all debt is 0% interest) 

    If you’d asked me how much debt I was in I would have said about £16k. It’s amazing how much you can lie to yourself, ignore cc balances and conveniently ‘forget’ things like a phone and an iPad because you’re just paying off a small amount monthly. Talk about being an ostrich! 

    Since my November pay check I’ve completely paid the next bill and the phone off, minimum payment on the MBNA card (that’s what I set my DD up for) and also £379.41 off b/card 

    Total debt paid in November - £985.97. Slightly less than I was aiming for but I also paid my pet insurance in full this month which will free up an extra £20 a month. 

    New debt balance - £19,198.28. Still hideous but already not beginning with a two so I’m pleased. I also feel sick about just how much money I’ve been wasting over the last few months. That number could have been so much lower! 

    Since this is my first month funding all my lovely pots and getting used to the budget, I do still have a small buffer which I haven’t decided what to do with yet. I do desperately want to pay off debt but I’d also like a bit of an emergency fund saved quickly as a buffer. Don’t want a rogue washing machine or other breakage to derail me. Any suggestions gratefully received. 

    As you can see, I favour the snowball method. The only slight fly in the ointment is that the Barclaycard minimum payment is a much higher % than the MBNA so takes a bigger % of repayment than I’d like but c’est la vie. Once they’re down to a more manageable number I’ll see if I can combine them. 

    I’ve set my December budget so that I can pay my iPad in full which will mean minimum payments on the credit cards but from January I’ll have two debts left and can make big overpayments. Will also try and find smaller overpayments throughout the month to get the debt gone faster - the payment a day challenge looks good. 









    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
  • joedenise
    joedenise Posts: 16,815 Forumite
    First Post Name Dropper First Anniversary
    Options
    I would definitely set up another pot for an Emergency Fund so that if you do need a new washing machine for example that you won't end up putting on a CC and adding to your debt.

    By the way I have far more pots than you but then I've been adding pretty much everything into pots for about 6 or 7 years now and keep adding new ones!  Not sure exactly how many I have now but there are loads!  Might actually add it up one day.

  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options
    joedenise said:
    I would definitely set up another pot for an Emergency Fund so that if you do need a new washing machine for example that you won't end up putting on a CC and adding to your debt.

    By the way I have far more pots than you but then I've been adding pretty much everything into pots for about 6 or 7 years now and keep adding new ones!  Not sure exactly how many I have now but there are loads!  Might actually add it up one day.

    Thanks for the advice - nice to see someone else with loads of different pots  too! Feel like there’s more things I need to save for but emergency fund will come first 👍🏻
    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
  • shell16
    shell16 Posts: 1,354 Forumite
    First Anniversary First Post Name Dropper Combo Breaker
    edited 3 December 2021 at 9:16PM
    Options
    CL21 said:
    joedenise said:
    I would definitely set up another pot for an Emergency Fund so that if you do need a new washing machine for example that you won't end up putting on a CC and adding to your debt.

    By the way I have far more pots than you but then I've been adding pretty much everything into pots for about 6 or 7 years now and keep adding new ones!  Not sure exactly how many I have now but there are loads!  Might actually add it up one day.

    Thanks for the advice - nice to see someone else with loads of different pots  too! Feel like there’s more things I need to save for but emergency fund will come first 👍🏻
    Its scary when you see what you owe written down and as you say sometimes more surprising!

    I'm not that much further ahead in my debt journey only starting mid August.  I'm in the process of adding to an Emergency Fund, I've set a £500 Limit for now due to Christmas, but I think a fair few on here have around £1000. 

    I'm liking the snowball method too. Unfortunately my largest debt isn't interest free (around 75% of the balance I have is fixed at 3.9%, with other 25% full interest 😕). 

    I noticed on my credit report that my lowest debt is using more of the credit limit because its a low limit. This is the only real negative on my report the credit usage. It made sense to tackle this first hence the snowballing method. So I'm also aiming to improve the red colour to at least Amber 🤣

    I've also set up lots of pots and opened a starling account which is fab!

    **I use an App called Debt Payoff planner,  its really good. You can choose snowball or avalanche method and both give you a projection of your debt free date and what you need to pay each debt **
                                                                                             

     Debt Free - 04/03/23.  Total LBM August 2021 £15410.70

  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options
    Thanks @shell16 - you’re right about the emergency fund. £500 will be enough I think until I can get some fully funded pots and making serious inroads on the debt. Was thinking I’ll maybe do my payment a day to the emergency fund to start with and that way I can still make progress on the debt and save in the EF. By the time I sweep my buffer and any leftovers in to the EF this month, it should be close to £250 which is a decent start. 

    Love that you’re putting your % of debt paid off. You’ve done so well since August 🙌🏻
    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
  • shell16
    shell16 Posts: 1,354 Forumite
    First Anniversary First Post Name Dropper Combo Breaker
    edited 3 December 2021 at 9:21PM
    Options
    CL21 said:
    Thanks @shell16 - you’re right about the emergency fund. £500 will be enough I think until I can get some fully funded pots and making serious inroads on the debt. Was thinking I’ll maybe do my payment a day to the emergency fund to start with and that way I can still make progress on the debt and save in the EF. By the time I sweep my buffer and any leftovers in to the EF this month, it should be close to £250 which is a decent start. 

    Love that you’re putting your % of debt paid off. You’ve done so well since August 🙌🏻
    Thanks I'm really trying to get CC2 gone so I can start to concentrate on CC3. Join the payment a day thread. I'm the counter upper this month🤣

    I make a payment every day, even account round downs of a few pounds all add up over the Month. 
                                                                                             

     Debt Free - 04/03/23.  Total LBM August 2021 £15410.70

  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options

    Join the payment a day thread. I'm the counter upper this month🤣

    I make a payment every day, even account round downs of a few pounds all add up over the Month. 
    Off to join it now 🙂
    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,778 Ambassador
    First Anniversary First Post Name Dropper I've been Money Tipped!
    Options
    I am a big fan of EFs so would definitely say you need to keep a buffer.

    There are two reasons for this.

    The first is that there is nothing so demotivating as to have to add to the debt when you are trying to repay it. If you have an emergency like your washing machine/fridge/car breaking down and you have no savings the only other option is to use credit. Having an EF gives you another alternative to using a card and does not throw your debt repayment plans off piste.

    The second reason is that for anyone wanting to get into a different mindset when it comes to personal finance saving and budgeting is at least as important as the plan to repay the debt. Moving away from cards towards using savings is the best way of doing that.

     The ideal way of paying off debt accrued in the past is to set a budget, save in pots for expected costs like insurance, car and house repairs and Christmas/holidays, save a buffer as an EF and allocate an affordable amount towards the debt which should ideally be on 0%. Buying stuff from then on should not be done on cards as you are trying to get away from the idea that credit cards are free money. Studies have proved that most people buying on cards spend more and with less thought than if using savings built up over a period of time.

    Buying on credit is borrowing from your future income to pay for stuff you bought in the past. Fine if it is within a plan and on 0% interest but if reading these diaries tells us anything it is that things can change. No one knows if they may lose their job tomorrow, have to go on reduced income or get sick so having as little debt as possible helps us all to deal with life’s financial hiccups. 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • CL21
    CL21 Posts: 253 Forumite
    First Anniversary First Post Name Dropper
    Options
    Thanks @enthusiasticsaver you are quite right. The mindset change is the biggest thing that needs to happen for me. I’m absolutely shocked at the money I’ve been wasting so far and I’ve done it completely blindly. Time for a wake up call! EF will be built first 
    Credit Card 1 - £6249.99 £4,900
    Credit Card 2 - £13,481.47 £12,985

    Total debt - £19,731.46 £17,885

    Emergency fund £930
Meet your Ambassadors

Categories

  • All Categories
  • 344.8K Banking & Borrowing
  • 250.6K Reduce Debt & Boost Income
  • 450.5K Spending & Discounts
  • 236.9K Work, Benefits & Business
  • 610.8K Mortgages, Homes & Bills
  • 173.9K Life & Family
  • 249.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards