My Debt Free Journey

abaka

So, took a recent stockade of my debt situation and realize how bad things have gotten.  I've had pretty high credit usage for a number of years but constantly just swapped to 0% deals and never took a great concern towards it as it was always more than manageable.  My debt was around 11k around the time the pandemic started spread across 4 cards  This wasn't concerning.  However, when the pandemic started I took out a loan and planned to clear my debts with the loan because of fear about job security....and I knew that my family could survive and service the loan easier than paying monies across several cards if something happened to my job.

However, I discovered my job was very much safe and instead of clearing the debt, I ended up spending the money....Then across the last 12 months I've more or less just spent just as much as I was paying on my cards each month so my debt was just getting larger. 

Today I find myself in around £23k credit card dent plus almost 7k personal loan card and it's mainly a result of just not paying off legacy debt, letting it go onto long by constantly switching to 0% whilst building debts on other cards.

My debt looks like this as of today from highest to lowest.

Halifax  - 6737 (4.9% Apr until 2027 which works out as £130 per month)

Halifax - 4941 (0% until Feb 23)

Virgin -  4191 (0% until Nov 23)

PayPal - 4059 (0% until Mar 23)

Virgin - 3748 (0% until Oct 22)

Lloyds - 2947 - (I pay interest on this but I'm about to do a balance transfer on this for 14 months)

MBNA - 2778 - (0% until Nov 23).

I'm going to be tackling this using the snowball method. I feel like I should be tackling the accounts that expire soonest as they are the ones that worry me.  However, I would also like to not have to as make as mamy payments each month so I want to reduce the number of companies I owe to.  And I also hope that if I can clear the MBNA and make a serious dent in the Lloyds by the time October runs around I might be able to get a 0% offer to transfer it.  Similar plans/hope for the Halifax which expires in Feb 23.

I plan on spending around £850 a month on these debts which is affordable to me....I've been more or less been paying similar amounts each month but my issue was that I was spending just as much!! Me and the wife transfer around 750 each month into our joint account to cover all household bills and also pay £140 each a month for childcare.  So everything else in my bank account will be addressing the debt (minus my £20 a month for my phone).  My wife also plans on giving me some money each month to help address the debt as some of the debt was accrued when we had a lower income due to her maternity leave (I insisted on paying for things so as to help convince her to take the maximum time of work, but never let on it was going on credit cards until I had my "oh !!!!!!" moment!).  

I also have a very vast collection of movie props/costumes which I've collected over the years.  It's nice to have and probably has caused some of the debt, but right now I'm happy to sell things which I can always buy again (in the correct way!!) once I'm debt free...Some of it will be high value items and then the odd smaller value.  My plan is to keep the higher value items which I wouldn't be able to replace as a way of holding onto them, but also as an asset in case !!!!!! really hits the fan.  For example, I have an exact replica of a Proton Pack from Ghostbusters which is valued at around £4000+, but this was a labour of love for 18 years to build so I'm determined to hold onto that until I have literally no other choice....It is irreplaceable so if I sold it, it's gone for good....And this thing only grows in value each year!

My overall plan is to be debt free of the credit card debt by September 2024 which considering the price I'm paying each month is more than feasible, but will be dependent on how I tackle the interest once 0% offers expire.

abaka

So first day update and I've already made a massive dent in the MBNA card just from selling on FaceBook. after making my minimum payment and using money from sales, I have reduced my MBNA card by £1100 to £1877 which just feels incredible.  

I'm sad to be parting with the items I've sold but apart from one, they're all replaceable (when I can afford to replace them without using debt) and the one that can't be replaced, I'm least sad about it going.

I'll continue to sell and release funds from parting with things I've collected, but I'd be surprised if I make such huge gains moving forward.  I think if I can regularly supplement my payments for next 3 months with about £100-200 extra from selling items, I'd call that a huge win.

I've also made contact with people I've purchased items from.  One vendor has kindly offered me to refund me to help with my issues so that's another £135 due to come in once the refund clears.  I have a huge payment of £550 which the vendor understandably can't refund me....but is going to ask around to see if someone else will take the order on at which point he can refund me.  If that happens - The MBNA account could be wiped out within the next month (I still have to make my big payment of whatever money's left over - Usually around £300)

abaka

just had my first set back
Forgot I paid for my wife and my brothers membership for a football club to ensure tickets.  I had hoped to cancel the subscriptions as I won't be attending this season but completely forgot about them with everything else going on.  There's £75 gone I wasn't budgeting for.....and I worry it's going to put me in my overdraft until Payday.

Despite wiping off £1000 I'm now feeling deflated by a £70 charge.  Just shows how bad my debt vs disposable income really is

WinterWarrior

Good luck and well done so far.
Are you sure your proton pack will always go up in value? It may be worth selling now while the ghostbusters follow up movies are happening. I only say this as I read recently that certain memorabilia loses value as the age groups of that following die off..eg Elvis, The Beatles, etc. So people who bought things at the height of popularity are left with things not many younger collectors follow or care enough about anymore. Just a thought. I struggle with hoarding things that meant a lot to me, even though they are really just taking up space if I think about it logically! 

abaka

I'm fairly certain the value will continue to rise. The movie prop community is very passionate and doesn't seem to suffer the effects you've talked about. The value continies to appreciate because I built mine using exact components used to produce the ones in the film which are all increasingly difficult to find nowadays as they were all 40's/50's pneumatic fittings. 

One particular component recently someone managed to find attached to an old "piece of junk" found in a dumpyard was sold for £850 and that is just one tiny component....When I bought mine, they weren't as difficult to find (15 years ago and mine cost only £200)

Plus as I say, whilst my debts are very high, I'm able to comfortable service them at present....I would only sell that item if I was at risk of losing my house or struggling to put food on the table.  I'm nowhere near there at present.  This may sound selfish but it was a lifelong ambition of mine to build this and it's one of my proudest possessions.....Selling that would feel like a waste of the 20-30 years I spent chasing that dream.

Anyway another few items sold last night and the MBNA is reduced to 1770....It feels incredible to think I''ve wiped over a grand from that card....and all being well, there is every chance I could potentially clear that card by end of next month.  A quick win like that makes me more optimistic I can do this....I have to of course be careful that the quick win doesn't make me think this is easy and not something I need to worry about....which could slip me into old ways!!

LeeXenon

Wiping that grand from your MBNA is huge, that's a decent % of your overall debt and will ultimately bring your debt free date closer. Congratulations and well done so far, keep it up.

abaka

Thanks.  It's so crazy.  On Sunday when I really had the "!!!!!! have I got myself into" moment...I spoke to Money Advice Centre and the guy was so insistent that the only way I could get out of this is an IVA and I went to bed thinking I was going to do it....However, that doesn't sit right with me, I ran these debts up...I will pay them back, I don't want to just write it off.

I do think that call and the pushy guy trying to sell an IVA was my wake up call.  Because if I had kept spending more than I was clearing...An IVA would have ultimately been my future.

It's up to me now to stay focused and ensure that is very much Plan Z!

I've also discussed today with my local credit union....I could borrow 16k on a 0.5% interest rate which would clear out almost all of my credit cards and commit me to only £400 a month meaning the other 400 I spend could still service the debt.  Again, I'm keeping that as my plan B, It may be worth considering when my 0% percent offers expires but I believe what I'm doing right now will continue to work.

In the space of 4 days I've realized just what I can do myself and what options I have to support me and that is liberating....I've a long way to go and it won't be as easy as I will eventually run out of big ticket items to sell.  I do however have news.  A friend of mine who has always been jealous of a Tricorder from Star Trek with working lights/sound that cost me around £550 3 years ago (It's part of the debt!) has offered me £500 for the item, he'll not be able to pay until next month....But I have a serious chance of wiping out the MBNA within 2 pay periods!!

LeeXenon

Some of this reminds me of me a few years ago. I had several credit cards before I became active on these forums and some of these were charging me a fair deal of interest, I was looking for ways out including loans, balance transfers etc.

Ultimately the route I've gone down was to pay the debt off little by little and I've managed to get my debts onto 2 0% cards (plus my vehicle on HP which is too far gone to benefit from now). I contacted a debt agency to see if they could offer me support and they too suggested an IVA. I decided against it in the end, as that would have kept me in debt for MANY more years than just paying it off myself, which like you, I can afford to pay it off eventually.

Funnily enough I managed to educate my partner about balance transfers in the past few weeks, she had been paying £40/mo in interest on her card every month for at least the past year, that's nearly £500 down the pan! I found getting the debts centralised onto two cards worked best for me. I considered loans, although it just increased my overall debt too much in the end./

It sounds like you're being very level headed about attacking your debt and have a solid plan in place, the challenge is keeping motivated and keeping it up. If you find yourself struggling, write yourself up a "future" budget plan, make sure you include that £800 you're spending clearing debts into your budget and see how much better off you will be. This is what I do and it gets me giddy every time as I'm spending £829.40 (plus PADs) clearing my debt at the moment, so much money!

sunshine_raincloud

Just wanted to say welcome and congratulations on the amazing progress you have made so far! I've subscribed to your diary to cheer you on. Sounds like you are very motivated!

I am not a debt management expert but I have seen a lot of people more knowledgeable than me posting on here advising against the consolidation loan route. I personally have found Dave Ramsay's baby steps the best to work for me. Saved an initial £1000 EF so if anything comes up it doesn't go on a CC. After that doing what you are doing and chipping away at debts one by one starting with the smallest. It feels so good once a card finally bites the dust! 

abaka

LeeXenon said:

Some of this reminds me of me a few years ago. I had several credit cards before I became active on these forums and some of these were charging me a fair deal of interest, I was looking for ways out including loans, balance transfers etc.

Ultimately the route I've gone down was to pay the debt off little by little and I've managed to get my debts onto 2 0% cards (plus my vehicle on HP which is too far gone to benefit from now). I contacted a debt agency to see if they could offer me support and they too suggested an IVA. I decided against it in the end, as that would have kept me in debt for MANY more years than just paying it off myself, which like you, I can afford to pay it off eventually.

Funnily enough I managed to educate my partner about balance transfers in the past few weeks, she had been paying £40/mo in interest on her card every month for at least the past year, that's nearly £500 down the pan! I found getting the debts centralised onto two cards worked best for me. I considered loans, although it just increased my overall debt too much in the end./

It sounds like you're being very level headed about attacking your debt and have a solid plan in place, the challenge is keeping motivated and keeping it up. If you find yourself struggling, write yourself up a "future" budget plan, make sure you include that £800 you're spending clearing debts into your budget and see how much better off you will be. This is what I do and it gets me giddy every time as I'm spending £829.40 (plus PADs) clearing my debt at the moment, so much money!

Yep...Very similar.  I have a 3 month budget already wrote up....I'm doing a mini review at end of each month plan to review progress, but also see what new lines of credit have opened up (solely for combining/collating debt)  Whilst my goal is debt free, my sub goal is very much reduce the number of creditors I have.  I doubt I'll get anything soon, and my immediate focus is ensuring I get a 0% offer for the two cards which will be due interest within 6 months....but maybe in 12 months time I may have reduced the debts to the point where I might be able to combine on a 0 or low % transfer.

The weird thing is, I'm getting excited about clearing and making an extra payment anywhere I can!!  It's the same manic approach I had to spending and accumulating the debt - but there's not an ounce of me wants to spend.  I'm very much all about clearing right now!

abaka

sunshine_raincloud said:

Just wanted to say welcome and congratulations on the amazing progress you have made so far! I've subscribed to your diary to cheer you on. Sounds like you are very motivated!

I am not a debt management expert but I have seen a lot of people more knowledgeable than me posting on here advising against the consolidation loan route. I personally have found Dave Ramsay's baby steps the best to work for me. Saved an initial £1000 EF so if anything comes up it doesn't go on a CC. After that doing what you are doing and chipping away at debts one by one starting with the smallest. It feels so good once a card finally bites the dust! 

Most of our general household bills come out of our joint account.  Me and the wife do pay in a lump sum each month and there's a good balance in that account if we do hit any surprises.  I am toying with setting up an EF...but I worry that I'll spend it, maybe once I've cleared more of my debt, I can trust myself!!  Right now, I want every single penny going towards the debt.

I've read the risks about consolidation loans being bad ideas, and I see why.  It will only be useful if I can't get a 0% offer when my Virgin & Halifax balances end as it will allow me to pay a lower interest....and it also helps with one of my other goals of having my debts in one place as opposed to spread across as many as right now.

I'll see how I get on, this is very much a learning curve for me!!!

I am also looking at Non Spend Days.  I haven't actually had any this week as I've been to the post office everyday, but I am keeping a closer eye on my balance.  I'm not going into my overdraft ever again!!!

Today my wife and daughter took a nice walk and treated ourselves to ice cream.  My 2 year old loved it.  £9.95 but well within budget.  Tomorrow we're also going to a local Aquarium, tickets were paid for joint account and daughter was free....I have budgeted for a cuddly toy in the gift shop as she's gotten one every time we've visited a Zoo/Farm!