My Debt Free Journey

Squirrelz92

So pleased you had a smashing holiday with your family You always come back refreshed and ready to tackle everything again Brilliant news knowing your role is secure until the end of March! We all need financial security with the current economic climate so I am thrilled this is one less worry for you  

CONGRATS on not touching your overdraft for 4 months!!!! Is there a way you could request it could be removed by the bank as a big mark in your journey to becoming debt free? x

abaka

I’ve never really thought about removing the overdraft.  As I’ve said previously, I treated it like a reserve fund, but now I’m budgeting proper, I don’t use it.  I would probably keep it there as a back up….I’m anticipating my debt may not reduce as quickly as I hope over the next 12 months.

The 6 month extension on the job is extremely useful…if I get it permanent in 6 months time, even better.

I’m very conflicted tonight, whilst I haven’t used my overdraft.  I have made a small purchase for Xmas.  I bought some stuff for my daughters Xmas presents.  But with the value, my wife and I decided to stick it on PayPal credit.  Means we can pay it back between us on the 4 months interest free @ 15 a month.

Means we try and beef the “joint” account up which usually pays for Xmas presents.  Mainly a decision to ensure we have sufficient funds in our account…times are going to get incredibly tough so I can live with this decision.

Payday tomorrow…..I have around £110 left in my account which will be used to pay towards my Halifax account (my largest debt and the one with the least time on 0%)

My plan is to reduce the 4616 owed on Halifax to around 2k by February when the rate expires which I should be able to move to one of my other accounts, thus keeping me free from interest.

in other news, I have also transferred my Lloyds balance which was incurring interest to my other MBNA account, 12 month interest free…

I’m avoiding thinking too much of October 23 as my mortgage deal expires then, and if I were to cancel early and fix the deal before then would cost me 2k so not an option.  I had hoped I could add a cancellation fee to the value of the mortgage but Halifax won’t let me….I am planning to meet with a broker to see if there’s any other providers who will offer us a deal but allow us to add cancellation charges to the overall deal but not optimistic!  Even without debt I really struggle to understand how people are expected to cope with mortgages at the prices being predicted! 

abaka

So today is payday.  I was able to make a payment of £166 on to my Halifax debt this morning from the remaining funds in my wage.

I also received my cost of living payment from work.  The amount was paid at something like £700 to ensure staff received the full £500 after Tax and Nat Ins....However, unfortunately Student Loans didn't get the memo and deducted extra!!!  But I did come out with approx £420 extra and will be due a second payment in December.  I sent £210 to our bills account and then made another payment to my Halifax (£210).  So, I have managed to wipe £376 of the £4616 balance.

I've been doing a lot of thinking and planning about the coming months.  I really don't see me being debt free by 40 like I planned....I'm also having to plan for a possibility that my income will be lower post March depending on what happens with my job....and with mortgage prices being through the roof in 12 months time when I have to refix my deal, I think I will probably have to carry some debt into my 40s.....As long as I keep a roof over my head by time I'm 40 I'd call that a success.

I will be doing a full breakdown on my debts this month.  The total balances have fallen, but unfortunately due to 2 balance transfers done this month and the fees associated with that, it hasn't fallen by as much as I would like.  Between now and Feb when my next 0% ends should make some serious in roads though!

LittleMissDetermined

I think all we can do is plan with what we know, there are bound to be things along the way (both positive and negative) that can make an impact on our plans and then we just have to re-evaluate. 

Sometimes we just have to be grateful for the position we are in as there are always lots more who are less fortunate. 
LMD x

abaka

Wondering some advice….I’m considering dropping down to a 50% contribution model on my pension.

I have currently paid 8.5 years worth of contributions already.  I have around 31 years before I retire and my retirement age is likely to increase so I could easily work another 32/33 years.

Im considering the 50% model for 2-3 years to increase my disposable income and help get me out of debt a bit quicker and survive any increasing costs on mortgage.  I’m estimating this will likely give me back about £60 a month (maybe more).

My wife is apprehensive about this plan as she doesn’t want a decision made now to affect us in future…Whilst its not ideal even if I did go 50% for 3 years (which is the maximum I would go for), I’d still have 37 years service assuming I retire at 66.

it’s a public sector pension also, so it’s a decent pension.  I think the 50% extra when I have huge bills/overheads and debt is worth more to me than having a bit extra (assuming I make it) when I’m 66.

Keedie

I don't know much about pensions, but with the way that the cost of living is squeezing us, and we are of working age, I shudder to think how tight it will be as pensioners in years to come. I would personally not touch the pension (but I am highly risk averse), or if I did reduce my contribution, I would only do so after speaking to a financial advisor or the pensions team. Also, don't forget it's 50% contribution based upon whatever your income is, so if you make changes and then your income itself changes again, then it kind of changes twice. I think. 

Great work on the payments though, you'll definitely be in a strong position with clearing your next 0% rate by February if you're able to sustain such payments. And I wouldn't worry too much about age. I was supposed to be debt free and a homeowner by 40. I turn 41 next week, just under £19k in debt, still living in my council flat with no hope for a deposit when I can't even pay someone to repaint my living room. Your journey will change, as will your milestones and goal posts, but that's okay. As long as your overall goal (being debt free, creating family memories etc) remains on track, it will all be okay.

You should join us on the Payment a Day thread, as that really helps me to get on top of things and you don't need to make a payment every day (despite the title), it just follows the principle of little and often makes a big change/difference. Some people PAD debts, savings, sinking funds, bills etc. It's just a way of cataloguing your progress and everyone's really nice and supportive. Here's the link in case you're interested https://forums.moneysavingexpert.com/discussion/5590353/payment-a-day-chapter-18#latest. 

abaka

I’ve considered the payment a day discipline but I worry it’s not for me…I’m very set in my ways and I know paying the minimum amount and then dumping everything into my chose. Debt at month end is what’s working for me now and what’s giving me results.

I will look into it.

I am torn with the pension.  I get about the risk, but the fact I will still retire with 37 years worth of contributions means I’ll still have a decent pot….plus my existing budget pressures are mortgage, childcare and debts.  None of which will be affecting me in retirement (I really hope I’m debt free by retirement)….and if I thought that closer to retirement I was likely to be at risk.  I would mate just work another year or two to make up for it.

i think surviving today is a lot better than surviving a future….heck I might croak it before I get the pension!! 

fern44

Personally I would do every thing I could to pay off the debts and mortgage  now
 presumably you can increase your pension payments at a later date . 
being debt free is the best because the constant worry has gone .

abaka

Yes, I would only switch to 50% model for a maximum of 3 years.  I can’t ever increase my contributions but I can go back to full contributions at a later stage if I wish.  And if I felt I needed more contributions, I would just have to work for another year or two to make up for the shortfall.

Gonna mull it over.

Some debt related updates.  I had an investment for a project with a guy in the states, and he had kindly offered my investment back a few months back with my debt situation.  I initially declined as I didn’t think it was worth it at that stage especially after my inheritance came through.  However with the fall in Stirling.  It came back into my head.  So the other guy kindly sent me back the $700 I sent him in November of last year which was worth around £540 IIRC and I got £620 back this week.  The plan is I will buy back into the project once my situation is under control, but this gives me more flexibility.  I’ve paid off my half of stuff I put on my PayPal credit for Daughters Xmas stuff and then also helped pay for a baby gift for our new niece/nephew due in the coming weeks.

I still have approx £430 to put back into my debt also.

I also started to switch from my main bank to Nationwide.  They’re offering £125 for switching so may as well.  I had wanted a Nationwide account anyway.  I might switch back to Halifax after a few months if I don’t settle for my day to day banking.

 And then final update which has no bearing on my personal finances but helps with the day to day house running costs.   I’ve just switched to Sky from Virgin.  Virgin was £73 a month and will have a new package with Sky for £43.  It’s a lesser internet package but we had the maximum package on Virgin as I used to be big into online gaming, and haven’t really done that in months.  If I can’t game, I’m not fussed as it helps protect the financial integrity of our household.  As we also switched from a referral form my mother in law.  Both of us will get a £75 pre paid Mastercard.  Very handy coming up to Xmas.

I’ve also set money aside from my wage to take my wife to dinner on her birthday next week and also to pay for hotel for our upcoming trip to Dublin at end of the month.  It’s small steps like this which are making the difference, previously I wouldn’t have set aside or budgeted for things like this and then allowed the overdraft to pick it up.

With my budget and my planned debt repayments this month.  I’m showing a £70 serplus.  However I’m going out tonight for dinner and I’m not sure if I’ll drink or not.  But I’m budgeting £50 for my night out!!

As tomorrow will be the first of the month.  I’ll be back with a full debt update.  Hasn’t fallen by as much as I’d like though as I originally said due to balance transfers…but slowly but surely I’m getting somewhere!!

LittleMissDetermined

This is a really good update!  Very savvy of you to withdraw the investment and make a profit on the exchange rates.  I'm with Nationwide and they have been decent so I've never really wanted to switch my main account... but lots of people make plenty of cash switching every other month. £125 isn't to be sniffed it either!

Regarding your pension, I think it's worth reducing for a few years until you're back on your feet.  Especially as you're still relatively young. In mine, I can increase the contributions or add lump sums at any point so that's my plan, but you could look to add to an ISA or NS&I scheme instead once you're debt free. 
LMD x