12 months of hard graft to become Debt-Free.

LadyWithAPlan

Well done on the debt pay down - brilliant when you have so much else going on. Glad you are feeling happier and the situation is moving in the right direction. You are doing so well - a complete star!

Have you managed to play with the editing software and work on your photography - any side hustles you can do when he is sleeping etc could help a little - or the surveys or even doing competitions as it takes time but you do win things you can sell or add to the quality of your family life. 


You asked a question before on sinking funds and the EF - I guess you now have a working system - I will share my way in case it helps. Ignore if you have a system that works well already now

At the beginning of each month I set my budget (I am SE so always up and down and rarely it seems paid on time)  and have 20 odd pots for various spends. I have had to be frugal for a long time and I am earning more now but the habits stay with me!

I use virtual pots at my various bank accounts so as money arrives I divide and trasnfer  the correct monthly amount into each pot - starting with rent, food, travel, utilities.. then as more money gets paid in I go down the line

The pots include: 
Groceries,
Bulk food (so the big food items or loads of Toilet paper etc, oils etc),
Treats and entertainment (so starbucks etc),  
future tech, - this is an important one
vacation, 
 annual dues (eg house insurance + annual bills),
utility, 
travel,
gifts,
Xmas (I have a separate pot from normal gifts),
toiletries,
office supplies,
£20 for what ever,
£30 a month for clothing,
home things,
EF,
hair,
and other things I save up for eg a training course.

Regular savers, taxes are put in premium bonds and other savings are also allocated.


Some expenses eg phone, internet do get paid by DD of course so they don't need a pot so I leave that in the current acct. I try to never spend the current account float - all my money gets spent / transferred from my relevant pot)

As i spend throughout the month I then transfer  the money from the correct pot into my current acct or pay my credit card straight off. 
This way I can see my money going down eg I can see my entertainment and treats pot for October is empty as I have spent it all down
I do take cash out for groceries but often may swipe my card then just withdrew  the money from the grocery pot. Again it helps me see what I am spending thru out the month without me adding up spreadsheets or reconciling YNAB - some people like to but I dont.

I do have a separate EF but its more about sudden cash needs (eg invoices not been paid and i need to pay my rent)  as my pots/sinking funds effectively cover most eventualities.

I no longer have a car but I used to have a car fund to cover MOT, insurance, repairs etc which I added to every month so the bills were easier to deal with.

Of course when you start sudden emergencies come up and forgotten annual bills but as I am sure you are finding the more in control of your money you are the calmer it is as even when short you are looking at the issue.


If I have money in some pots eg grocery at the end of each month I will move that into savings but some pots eg my future technology pot I leave alone - at some point I need a new mobile, I bought a new laptop 18 months ago so that  future tech pot is quite comforting as things do break or need replacing.

I look forward to cheering you on in July with your debt free scream

RandomOne

Good morning everyone, happy boxing day! 

I'm ending the year 1 credit card down! This credit card was £21k at its highest, but I've now paid it off in full. I am so pleased!
My final debt is another credit card and the balance is just under £5k. 

Now that my first CC has been paid off, I have about £1k a month after all my bills. But I no longer have any emergency fund. Should I build this up before paying off my debt? I know that would be the sensible thing to do, as an emergency could happen at any time, but I could pay off the CC in 5 months if I put the money towards that instead.
So I'm not sure what to do. 

@LadyWithAPlan thanks for explaining about your pots/sinking funds etc. I think I could do with a system like yours that is more organised, but how do you keep track of it? 

joedenise

I would suggest you start an Emergency Fund, maybe just £100 a month to start, whilst paying off the Credit Card which from what you are saying would still be by your planned July date and you will also have saved up £700 to start off your Emergency Fund.

I try to keep my EF at around the £1,000 mark but like @LadyWithAPlan I use lots of pots (about 40!) which I keep track of using YNAB (a very old version which was bought outright but no longer available).  I did try the new version for the Free 34 days trial but didn't like it as much as my old version.  A lot of people use spreadsheets to keep track of their money or even just pen and paper.  You just have to find which way suits you best.

Spendless

Hi, Happy Boxing Day. Just read through your diary. You're doing well. I would build up an EF at the same time as you're paying off CC debt. Life throws curveballs. Not every emergency can be solved by putting it on a credit card Eg I  use a local independent garage for car repairs. The owner only  accepts cash or bank transfers. If I had nothing in my bank account, I'd have to seek out going to another garage that did accept CC and possibly pay more for the work even before adding in the interest. 

Are you paying interest on your remaining CC? Are you in a position to BT to a 0% card?  

LadyWithAPlan

Well done on the huge cc gone! brilliant news...
The way I tracked for years  (til end Nov) my pots was they were virtual bank pots eg Monzo or Starling you can have as many as you want.
So if at the beginning of the month you budget £200 for food, £100 car repair £100 fuel - i would move  money from my current acct the to 3  so named virtual bank pots..
When I then go to the grocery store and buy £50 of food using my debit card I then transfer £50 from the 'virtual grocery pot'  so I know I only have £150 left in there. When I have no more cash in there I am clear I have spent my budgeted £200 so maybe I have to take from another category is I need more food...


I used this above system well for 15 plus years ...however I am currently using a trial of the online ynab and I have to say I am loving it as it does the above process of my virtual pots  - the ynab dashboard basically does exactly the same as above PLUS it makes it clear that if you overspend on X you need to take money out of Y to cover it ..  and makes you move the money so you can see the cost and how you are covering your overspend.

ynab does have an annual cost but  there is a 34 day trial free. I suggest you watch a few Nick True Mapped out money on yt videos eg this review below  before even setting up the trail - I think you will save more than the annual cost is 
https://mappedoutmoney.com/ynab-review/

Hope all is well at this festive time