Head Up, Keep Positive, Eye on the Prize

ThisLife

I have decided a diary is the way to go to keep me accountable on my way to debt freedom.

A potted history - I have been in debt virtually the whole of my adult life, from my first year in college when I was offered a credit card along with my first bank account, to now - many years later! I'm a bit of a nerd with numbers, so have kept on top of payments and always knew how much I owed to who and when the payments were due. But somehow, that never extended to keeping a budget, ever. It never occurred to me that I needed a budget - unthinkable now. So I would spend on my credit cards each month and then pay the minimum when the payments were due. Of course, this was never going to work.

Fast forward to Summer 2017 and I found some paperwork from years before where I had consolidated about £35,000 of credit cards onto the mortgage. I had also done it before and now I was in the same position again! That was my LBM there and then. I decided I had to do something about it and I couldn't go on like this any more. I had £42,000 of credit card and loan debt, a mortgage and 2 additional consolidations. So I set my sights on the £42,000. It was hard, as I had no real wriggle room, once the minimum payments were made. I found out about Dave Ramsey, read his book, listened to his podcast. I read lots of advice on here. I went for it, I budgeted, sold anything I could find that I didn't need and by Christmas 2020 I was down to £14,000.

I needed to update the car last January, so did the calculations and did a cash transfer from one of my credit cards at a low interest rate to pay for it. This is the only time since 2017 I had used a credit card and did it mindfully. That took my debt back up to £26,910. I carried on paying down the debt this year and now my debt stands at £22,459.19.

I'm not using my credit cards and everything is budgeted, but the payoff rate has slowed down. I need to get back that urgency I had at the start and I really, really want this debt gone in as close to 2 years as I can make it.

So, eye on the prize, my prize is to get this debt gone so I can think about early retirement in years to come. This will not be possible while I am carrying debt, so it has to go ... for good.

ThisLife

The ‘Head Up, Keep Positive’ part of the title is to remind me to do just that. I often can feel quite negative about myself, especially when it comes to my weight, which can go up and down quite spectacularly! I have quite a long commute to work and back and it’s so easy to buy snacks for the journey and at lunchtime. So I know that knocking that on the head will not only help my health, but also my budget.

So I’ve bought myself a Thermos soup flask and prepared some soup for tomorrow’s lunch. Also, I’m leaving my purse at home so I can’t be tempted. I know I should be able to resist, but I know I’m not at that stage yet. Here’s to a non spend day tomorrow and the start of something positive.

Nintud

Good luck. You’ve already made huge strides today in debt reduction. You’ve got this.

ThisLife

Thanks @Nintud for stopping by and the good luck wishes. 

I just want it done. To actually have a month where the bills are just the normal household ones will be amazing! It’s not something I’ve ever experienced, so it will be a novel experience.

NSD today. Money left at home, so no chance to spend anything.

CRANKY40

Just out of interest - as you have a long commute do you have a contingency plan if you get stuck somewhere without money? My 17 year old son carries a £5 note on him at all times. If he spends it on trash he has to replace it out of his own money. In the entire time we've done it which is about 3 years it's only been needed twice. Well done on the debt clearing so far. 

ThisLife

Yes, that has been on my mind. To be honest though, if I had cash on me at the moment I would be really tempted to spend it on the way home or at lunchtime. I was driving home tonight thinking that if I had had some money on me, I would have stopped and got a treat. That sounds really weak of me, I know. But once I’m in the swing of things again, it won’t be a problem, but I’m not there yet. 

When I did the Dave Ramsey approach at the start, he is all about ‘cash is king’ and I was really good at taking out the cash I needed each week and spending that according to my budget. We do pretty much everything through a joint debit card now, with a bit of slush money left over each for our own bits and pieces.

Maybe I should take one of my credit cards out with me. I know I would never spend on that, but would have it in case of an emergency?

ThisLife

So, here are my numbers

Virgin     £6,165 (0% until 6/22)
HSBC    £2,630 (0% until 7/23)
MBNA    £13,664.19
              (3.9% until 8/24 for £4,500, the rest         

               3.9% until 12/23)

So total is £22,459.19

My two mortgage consolidations are £9,133.96 and £14,600.37

As these were to consolidate debt, my total should really be £46,193.52, but I’m just going to concentrate on my current cards and clear those and then move onto the additional mortgage consolidations later.

 When I started in summer 2017 the total (cards/loans/mortgage consolidations) was an eye watering £79,424!!

To get to that level of debt, it sounds like I was always going on holidays, buying clothes, shoes and spending outrageously … but I really wasn’t. This is what happened through not having a budget, having access to easy credit and just spending more than I earned unchecked for many years. 

CRANKY40

Maybe make yourself an emergency kit and keep it in the boot of your car. Bottle of water, blanket, some snack bars, that kind of thing. Stuff you'd want if you were stuck somewhere in the cold for a while. You could tuck a credit card in the middle of it all so it's too much faff to even go looking for it unless you really need to. 

shell16

Just thought I would check in with you.  Good luck on your journey, I will be cheering you on.

Do you have an emergency fund in play (following Dave Ramsey?) Thats a must so you do not have to resort to credit cards?  

ThisLife

Thanks @CRANKY40, that’s a good idea. I’ll keep an emergency card on me for emergencies. A little emergency kit is a worth doing too. You never think you’ll need something like that until you do.

Yes @shell16, I have an emergency fund of £700. It was £1000, but we’ve had to dip into it over the past few months. When I first started I used to listen to the Dave Ramsey podcasts every day in the car, I was properly addicted! I have a few pots on the go too, car insurance, Christmas, holidays etc. These have been depleted over Christmas though, so need to be more realistic about what goes into them. 

We had a run of not knowing what we were having to have for tea, getting home late and getting a take away. It really adds up! So that’s banned this month. Back to menu planning and only buying in the food needed for that week  … and going shopping with a list.

ThisLife

Going to aim to make £5 per week on Prolific Academy so £20 per month on average. That will got to card which 0% is due to end first. I quite enjoy those surveys. Every little helps …