Ditching the Debt

GinoOhGinoGinelli

Hello everyone,

I'm a new poster but have been lurking for a while since discovering the forum. I've been reading some of your Debt Free Diaries and felt inspired to start my own for accountability.

I'll be turning 40 in two and a half years and I've chosen this milestone as my (possibly too ambitious!) target debt-free date. My partner and I rent in London but I'd like to be able to get on the housing ladder one day, even though that almost certainly means moving away. Honestly, the idea of ever being in a position to buy a home feels completely unobtainable now.

In the meantime, I've managed to get myself in a real financial mess and sorting it out is my number one priority. I'm stressed (and pretty mortified) to have accumulated a HUGE amount of unsecured debt to pay - £30k! 

I know how it happened. It was a combination of costs incurred due to poor planning and impatience; a period of unemployment and looking for work; an experiment in career change; having to buy a replacement laptop; and moving house and having to buy the various large items we needed to kit it out. On top of this, because my previous salary was lower than my current one, my debt increased as I was only able to pay the minimum payments to ensure they were all covered.

I'm so annoyed with myself for letting this happen. Again. When I was a student I accumulated a lot of debt, which plagued the whole of my twenties. I made late payments and even resorted to pay day loans sometimes as I felt it all spiral. But then as I moved up the career ladder I managed to clear all of my debt and build up a good credit rating. After six (?) years my credit history was blemish-free! 

I had several debt-free years of always clearing my credit cards at the end of the month, but crucially I never created an emergency fund or savings (apart from saving for specific things like holidays). My rollercoaster debt journey saw my old spending habit creep back. Initially this wasn't a massive problem, but for some absurd reason I chose this time to embark on a career change that would involve minimum wage work followed many years of full-time study. I enjoyed the work but finally faced up the reality that it wasn't financially viable for me to go down that path. Perhaps if I'd built up saving instead of debts, or if I'd tried to make the jump a few years earlier. Anyway, I've decided that I need to stick with the type of work I've done for the past decade, as this is the only way I can secure a high enough salary to clear my debts and hope to one day buy a home. I do hope that one day I can find a 'happy medium' career and I'm holding on to that dream to help focus my debt repayment efforts.

I think I've rambled on for long enough! I'm going to work out all my updated figures and put them into a separate post I think.

Amber1980

Good luck! I too have made decisions over the years that I look back on and hugely regret but we are doing something about it now! Don’t beat yourself up,onwards and upwards!And you’re not even 40 yet,keep a positive mindset and wishing you all the best 😊

Hello everyone,

I'm a new poster but have been lurking for a while since discovering the forum. I've been reading some of your Debt Free Diaries and felt inspired to start my own for accountability.

I'll be turning 40 in two and a half years and I've chosen this milestone as my (possibly too ambitious!) target debt-free date. My partner and I rent in London but I'd like to be able to get on the housing ladder one day, even though that almost certainly means moving away. Honestly, the idea of ever being in a position to buy a home feels completely unobtainable now.

In the meantime, I've managed to get myself in a real financial mess and sorting it out is my number one priority. I'm stressed (and pretty mortified) to have accumulated a HUGE amount of unsecured debt to pay - £30k! 

I know how it happened. It was a combination of costs incurred due to poor planning and impatience; a period of unemployment and looking for work; an experiment in career change; having to buy a replacement laptop; and moving house and having to buy the various large items we needed to kit it out. On top of this, because my previous salary was lower than my current one, my debt increased as I was only able to pay the minimum payments to ensure they were all covered.

I'm so annoyed with myself for letting this happen. Again. When I was a student I accumulated a lot of debt, which plagued the whole of my twenties. I made late payments and even resorted to pay day loans sometimes as I felt it all spiral. But then as I moved up the career ladder I managed to clear all of my debt and build up a good credit rating. After six (?) years my credit history was blemish-free! 

I had several debt-free years of always clearing my credit cards at the end of the month, but crucially I never created an emergency fund or savings (apart from saving for specific things like holidays). My rollercoaster debt journey saw my old spending habit creep back. Initially this wasn't a massive problem, but for some absurd reason I chose this time to embark on a career change that would involve minimum wage work followed many years of full-time study. I enjoyed the work but finally faced up the reality that it wasn't financially viable for me to go down that path. Perhaps if I'd built up saving instead of debts, or if I'd tried to make the jump a few years earlier. Anyway, I've decided that I need to stick with the type of work I've done for the past decade, as this is the only way I can secure a high enough salary to clear my debts and hope to one day buy a home. I do hope that one day I can find a 'happy medium' career and I'm holding on to that dream to help focus my debt repayment efforts.

I think I've rambled on for long enough! I'm going to work out all my updated figures and put them into a separate post I think.

GinoOhGinoGinelli

Thank you @Amber1980 for your supportive message and positivity! That's absolutely the best way to look at it. It feels like a long road ahead but we have to start somewhere!

GinoOhGinoGinelli

Hello again, 

I'm back and feeling more than a little frazzled from staring at spreadsheets and debt calculators for hours on end! It seemed like a good day to tackle it though, as it's almost pay day. I've worked out my current debt breakdown. It's fair to say that I have a long road ahead, but here goes! 

End of January 2022 Debt Breakdown 

• AMEX credit card: £3,400 (26.1% APR) 
• Halifax credit card 1: £3,231 (21.73% APR)
• Halifax credit card 2: £5,138 (25.48% APR)
• Zopa personal loan: £17,000 (16.4%) - Monthly fixed payment: £777
• Credit union loan: £2,480 (16% APR) - Monthly fixed payment: £185 per month set payment 
• TOTAL CURRENT DEBT: £31,249 

My main takeaway from this exercise is that my current APR rates are excruciatingly high! Sadly, I'm not currently eligible for most zero or low lost balance transfer cards, but will keep a close eye on this when my balances decrease. The only options that open to me are Fluid etc which only have 6-9 months 0% and wouldn't cover any of my balances in full. I've considered applying anyway and hoping to get the £2,500 maximum to transfer part of an existing balance, but I'm not sure how manageable it will be to have an additional card, needing an additional minimum+ payment each month. I think having so many cards plus the big loan makes it difficult to throw loads at tackling one card seriously at a time, rather than being spread so thinly. Maybe I should do it to save the interest fees, or maybe I should wait to get one with 12 months 0% and then do it. Hmmm....

I have two loans, both of which are high interest for loans but cheaper than my astronomical credit cards. I can also choose to pay them back early without any penalty, which I hope to do once I've tackled the cards. The problem with the loans is that they require big chunks of cash every month which leaves limited amounts for quickly clearing any of the cards.

As well as paying off the fixed loan payments, my plan is to pay as much as I can on the highest interest card to clear that first. And work through my cards that way. I'll pay just over the minimums on the other cards.

I will finally have an emergency fund for the first time ever - £1,000. Mainly because I am due a tax refund for overpaying for months which will be paid to me this month. I hope to then put £100 per month towards it, especially as I have a couple of expensive events this year that I can't get out of.

I opened a LISA a couple of years ago but it has hardly any money in it. My credit union requires me to pay £15 per month towards savings alongside the loan repayment, so there's about £960 in that account. I don't think I can access the savings until my loan is cleared, but will need to check. If that's the case, I'll maybe wait until the remaining loan balance is the same as the savings balance and use that to clear the loan.

GinoOhGinoGinelli

My debt-free journey feels so insurmountable at the moment, so I thought I'd try and focus on some of the positives.

Positive steps I've taken and changes I've made so far

• Meal planning: I've been planning my shopping and weekly meals recently, partly for money-saving and partly for weight-loss, which has been really positive and I've enjoyed cooking a lot more. It's stopped me reaching for takeaways too. I'm also doing Dry January which I think I'll carry on into the next couple of months.
  
  
• Cutting bills & spending: I have gone through all my outgoings and cancelled lots of subscriptions etc. I've removed apps like Amazon, Just Eat etc from my phone. I've sought out cheaper options and switched for most things. I can't switch energy companies at the moment but negotiated a more reasonable bill after they had doubled it recently. 
  
  
• Every little helps: I've started using the round-up feature on banking apps, with a view to adding all the extra pennies accumulated at the end of each month towards debt repayment.
  
  
• Budget, budget, budget: I have an in-depth budget for forward planning and month-to-month spending to help keep me on the straight and narrow. And hopefully, over time it will be a reminder of my progress too.

Bizzywizard

Hi,

I was frazzeled when I found out how much debt my DH was in cicra £20k back in 2018/19. Doing an excel spread sheet helped! As I was writing it down to start...which was bonkers about 8 credit cards to deal with along with the bills!

MY DH did use the fluid cc = but paid it all off in the 9 month period as the apr afterwards was going to be high. 

I always understood that credit unions provided small apr loans ie 3% so 16% seems very high for them. Would they consider using the £960 to clear some of this debt or change the apr? Have you explained you have other debt?

Might be worth adding your SOA and see if anyone can help.

Best of luck

Bizzy

GinoOhGinoGinelli

Hi @Bizzywizard, thank you so much for your helpful suggestions!

That was my understanding about credit unions too. I was really disappointed with the APR, especially as I had taken n loan with them a few years ago to pay for a course, which I paid off on time, and I've always paid a small amount to keep the savings account open over the 10 years I've been a member. so I have a solid history with them.

Maybe I was given a higher APR because my job was 18 months FTC rather than permanent, as they quizzed me about that.

To be honest, I wish I'd joined a different credit union. They also don't offer any kind of debt consolidation loan if you don't have a mortgage, so I can't ask them to increase my loan for the purposes of paying off credit card balances, which is really frustrating. If I ask for a loan increase, they would look at the rest of the debt I have and see it as additional.

I've since seen that other credit unions do offer these loans on an unsecured basis so I'm thinking of joining another London credit union and saving small regular amount, with a view to applying for a cheaper debt consolidation loan to transfer it over to in the future.

I don't think you can use 0% balance credit cards to transfer loan amounts, but maybe I've got that wrong. Perhaps I need to look for 0% balance cards for the credit cards debt, and cheaper loans for my current loans. Not applying for everything all at once though!

anjyeah

GinoOhGinoGinelli said:

My debt-free journey feels so insurmountable at the moment, so I thought I'd try and focus on some of the positives.

Positive steps I've taken and changes I've made so far

• Meal planning: I've been planning my shopping and weekly meals recently, partly for money-saving and partly for weight-loss, which has been really positive and I've enjoyed cooking a lot more. It's stopped me reaching for takeaways too. I'm also doing Dry January which I think I'll carry on into the next couple of months.
  
  
• Cutting bills & spending: I have gone through all my outgoings and cancelled lots of subscriptions etc. I've removed apps like Amazon, Just Eat etc from my phone. I've sought out cheaper options and switched for most things. I can't switch energy companies at the moment but negotiated a more reasonable bill after they had doubled it recently. 
  
  
• Every little helps: I've started using the round-up feature on banking apps, with a view to adding all the extra pennies accumulated at the end of each month towards debt repayment.
  
  
• Budget, budget, budget: I have an in-depth budget for forward planning and month-to-month spending to help keep me on the straight and narrow. And hopefully, over time it will be a reminder of my progress too.

I like that you have added the positives on this post especially just after you tackled the numbers before this which can overwhelming. I agree with the round-up feature on banking apps - I did that last year and found that it really helped especially when you have something set aside for it at the end of the year. 

I agree with the others recommending you post an SOA - when you're ready of course. There'a few regulars out here that can see something with our outgoings and give necessary advice. 

As everyone says on here - acknowledging the debt is already progress enough. There's loads of help on here that can guide us all through. Good luck!  

OldHippie

Hello, 

I'm new to this forum and am busy reading through the posts at the moment. I have been through the same as yourself in terms of debt (circa £50k at its worst) and am pleased to say I'm now debt free other than my mortgage. I didn't manage this until I was 50 so you've got a few years on me!!  (I'm reading up as I want to overpay on the mortgage now).

In the early years of repayment I didn't really pay much attention to interest rates and costs, I just paid off where I felt like it, once I started to realise the error of my ways I quickly changed my approach and tackled highest cost debts first. With hindsight I should have gone into this with a strategy as it would have likely save me a good sum of money.

I got a little bit addicted to following my ClearScore timeline (still do to some degree) as it's a good visual reminder of the way that you are going and it reminds me now that my old ways were not very good at all!

You've taken some really positive steps so far, it's a lot harder than people think to pull your head out of the sand and to start being accountable so well done you. I will be following your progress.

elbree

Well done for acknowledging and getting it all out and written down, it's a faff but also a relief in a way - at least you know the worst now!

I think rounding accounts up/down and 'payment a day' are hugely motivating, I know it kept me going through a long debt free journey - skipping a coffee and paying it off my card instead or just paying a pound every day made me feel like I was always moving forward. It's amazing how little you can live on - for a while at least. Factor in some treats for a month or two down the line when you're starting to feel jaded. 

GinoOhGinoGinelli

Thank you @anjyeah, @OldHippie and @elbree for your good wishes and tips!

That's a really good idea @anjyeah - I'm going to look to do an SOA later this week/early next week when I know what's happening with the money I should be receiving this month. Annoyingly I still haven't received the tax or pet insurance reimbursements I'm due. Once I know if I'm still going to receive them this month or not, re-do my monthly budget too.

That's amazing that you went from £50k debt to debt-free, @OldHippie! And the Clearscore timeline is a good tip, I forgot about Clearscore but I'm going to check it out now.

Remembering to factor in treats is also a good tip @elbree. I feel really motivated at the moment but I know that I'll get bored with it soon enough, but I need to stay focused! I have a trip planned for a few month's time so I have that to look forward to and work towards. I'm going to try and sensible and have a budget for it though!

Thanks again everyone, I really appreciate it