My Debt Free Journey

abaka

Thanks Keeponknitting, I am very much aware that my focus of ensuring no more debt goes onto my credit cards each month and staying within my overdraft has been a game changer for me.

This leads me to my next point and a major decision and a major milestone in my debt free journey.

Back when I had my LBM I looked at a consolidation loan from Halifax to pay off all my credit cards and considering it was 24k worth of extra borrowing and my credit report wasnt ia great place.  I was unsurprisingly turned down!!

However, today I was looking at things and thought I might look at it again today.  If I wanted to borrow the amount I’d need to clear my cards which is close to £15k, across 72 months it would be a monthly repayment of £259 (12.1% APR) on top of the £130 I pay currently.  And I got accepted. 

I feel this will be affordable even if I dropped down to my former job and even if my mortgage went up by 2-300 a month next October.

It means I’ll pay interest, and it means I’ll be extending my aim to be debt free but it also means all my debts will be in one place and I can also now say that 100% I’ll be debt free at the end of this loan and I would also aim to overpay the loan as well so might shave lengths of the loan.

I get what people say about consolidation being easy but I wouldn’t say paying £380 a month for 5 years and then 259 for another 2 years after that would be easy….As soon as I pay off the cards I’ll be cancelling all but one of them so I don’t think this will be a gateway to getting into more debt.

abaka

Another point in my thinking of doing this is pre emoting scenarios for next year.  If the mortgage was to go up anymore than 2-300 we might struggle to pay and I might have to look into a DMP.  At least this means I would be only having to deal with one creditor and might make it easier to manage rather than waiting on defaults etc.

Plus the money I’d be saving by paying off this loan rather than my current payments.  I could put that money into the bank as savings…

Big Decision to make.

abaka

PAD of £95 made to MBNA

abaka

Ok.  I’ve reached the decision on my personal loan.  I think it’s positive that I have been accepted for the loan for that amount and shows my credit is moving in the right direction.  However, I don’t think I need it.  If I’m happy to just pay £260 a month towards my debts and extending my debt free diary, what is stopping me from doing that right now and saving myself a whopping 6k in interest!!  

So I’m continuing on the path I’ve been on.  I will pay the maximum I can between now and January when I predict my first MBNA will be cleared and then when that happens I will switch to paying minimum on my cards and then try and overpay on my loan…and put money aside.  

I just hope that by having this loan offered and then rejected will cause a temp downfall in my credit score which could see me struggle to get balance transfers when I need them I’m the next 12 months.  It shouldn’t though!

I know I change my plans every other day (my wife’s words!!) as I’ve swapped from overpaying my smallest, paying equal amounts to all debts, overpaying my largest debt and looking at consolidation loans but I think this is the best plan I’ve had.

I had said I wanted to be debt free by the time I’m 40, this plan might mean I will carry a few grands debt with me into my 40th year but small and manageable debt is ok!!  If I can have my debt reduced to less than 3k (currently 20k)  by time I’m 40, I’ll call it a success! 

So target is clearing just under 4k debt a year between now and March 27!!

Im also basing this on my pay dropping in April if I don’t get my job permanent and from October my mortgage doesn’t increase any more than 400 a month (currently 430 so I think doubling is worst worst case scenario) so if both of these factors have positive outcomes, I can achieve this in even quicker times!!!

KeepOnKnitting

I think refusing the loan is a wise move. It could make you less motivated, pay more overall, and drag it all out for far longer. Well done!

LittleMissDetermined

I agree on the loan decision. And just think of that interest saving! 
LMD x

abaka

Thanks all.  I 100% think I’ve made the right decision with the loan.  It would be stupid to take right now and add a ton of interest, especially when most of my debts are interest free right now.

I do worry that next year when mortgage rates go through the roof that I might have to look at a formal debt management plan but that is next year and a) it might not be as bad as it seems next year and b) I could have my job permanent by then.  So rushing Into any stupid decisions to preempt a future that might not happen would be extremely foolish.

That brings me to my next point.  I’ve noticed my mood being low a lot lately, I’m so worried and anxious about everything.  So this morning, I have spoke to my Dr and decided to restart taking medication for depression/anxiety.  I had previously been on them before for about 18 months and came off them in March 21…but feeling like my mood is getting worse and obviously debt/work is a stressor…so hopefully this will allow me to see the wood for the trees!!!

Previously when I’ve had low moods I’ve went on a spending/shopping spree but I know that is not an option right now!

LittleMissDetermined

You were wise to speak to your doctor and well done for recognising the signs. My spending is linked to low moods and it can be a nightmare once I’m in the spree-zone. 

Hopefully the meds will do the trick and you’ll be feeling lifted soon x

abaka

Thanks LMD.  I’m hoping to start the medication tomorrow.  I remember last time the first few weeks were rough but after that I remember feeling happier than I’ve ever felt in a long time.  I know I have a lot of be thankful and happy for.  Even with the debt, I could be in a lot worse position and struggling to make ends meet or meet my repayments so hopefully by doing this it will help me be more balanced and enjoy my life and stop letting fears about my financial security cripple me!!

Sorry my debt free journey has transformed into my emotional well-being journey! 

abaka

Just made my PAD of £5 to MBNA