Late to the game – midway through my DFW journey

Martico

Hi all,

I only recently delved into and registered for the forums, having long mined the main site for tips.

Long story short: My lightbulb moment that debt needed tackling was right at the start of the first lockdown in March 2020. At the time I was earning little (around £11,000 freelance WFH, having devoted my time to doing up a new house) and suddenly normal earning options were scarce. Although the house is thankfully mortgage-free, I did overspend on the build, and racked up around £25,000 on CC debt and £10,000 on a family loan. A good credit history meant that I managed to transfer some of the debt onto 0% deals, but low earnings were a major problem, as well as interest payments on some of the debt, and looming deadlines of the end of the 0% deals. And a decent new job seemed an impossibility given lockdown.

Income: I took on delivery work for a few months before I found full-time contract work in summer 2020. Those contracts have kept rolling over, thankfully. As someone without secure work (freelance and now contract) I needed to build an emergency fund as well as tackle the debts.

Debts: By October 2020 I had all of the CCs on 0% terms and had cut the total to £17,849. Family loan was still outstanding. I hadn’t started an EF.

I pulled together a daily spreadsheet covering every expense, income and goal and have stuck to it since. I love a spreadsheet. Set a daily expenditure target, with the rest being thrown at the CCs and later savings.

In July 2021 I managed to pay off the family debt in full (by using a 12 month 0% cash deal with a CC that I had cleared). I realise that was taking on extra debt, but family first, right? And I’d already secured 0% on all the remaining debt, so it seemed the right thing to do. In August 2021 CC debt = £13,531 on two cards. Savings pot = £5,027.

Payday is tomorrow or Friday, which is a bit of a landmark as the savings pot will finally exceed the debt. As things stand today, debt across 4 CCs is £7,883; savings pot is £6,495.

CC1 (0% til Aug 1 2022) £700. I will clear that on pay this week.
CC2 (0% til Aug 6 2023) £3,630.
CC3 (0% til Dec 2023) £2,193.
CC4 (0% til Jan 2024) £1,360.

So that’s where I am.

Lessons:
Keeping on top of a spreadsheet daily has been a great discipline. It’s developed organically over time to include targets, graphs and loads of interlinking tabs to make it something of a hobby.
It’s been so good for me to set a personal budget. On payday, I leave a float for all monthly fixed costs, minimum payments on the CCs and spending money. The CC I’m targeting at the time I overpay. The daily spending money float is purposefully excessive (£40). Anything under the £40 daily limit I chuck at savings, which have built up quickly, as my average daily spend is way less than £40. It means I have some flexibility to do spur of the moment stuff (I’m still buying some bits for the house, for example) but also see my savings balances improve. Savings are split between instant access, PBs (almost instant access) and a S&S ISA (not to be touched).
I’m also unbelievably lucky to be mortgage-free and to have secured decent regular work. But racking up what might have been unsustainable debt was very easy, even for someone that likes to think they're savvy and on top of things.
It's actually been good to leave cards that I’ve paid off dormant rather than cancelling them, as all of those ones are offering new 0% deals. I’ve not taken a new deal for a year or so now, but it’s good to know that they’re there in case my contract isn’t renewed and the existing debt is coming towards the end of term. It's not in my plan to use any again, but they can be a cheap source of finance if used properly.

So that’s me. I’ve been quite inspired reading some of your diaries, and also want to give myself an extra incentive now that I’m almost in the black in terms of finances. I don’t want to slip back.

Thanks for reading  

Squirrelz92

Welcome and congrats on starting your very own DF diary! Your love for a good spreadsheet has clearly paid off as you have already done remarkably well!

Shall be bookmarking you and cheering you on! x

Martico

Thanks Squirrel! Yes, the spreadsheet is king. The graphs charting 30 day average discretionary spend and lifetime discretionary spend are particularly good for pushing me to think about where my money's going. Both have been going firmly down since a spendy April  

Martico

The other complication I should add is that I'm still technically self-employed, so the savings is partly (well, largely at the moment) tax contingency, so I take hits on that in Jan and July

Sarahwithlove

As you have quite good amount of time left on your cards could you start putting aside the tax each month when you get paid into an account not to be touched. Almost as if you haven't recieved it? Well done on your progress so far though. Hopefully you'll keep getting the work 

Martico

Thanks Sarah!

Yes, I'm pondering what balance to make now. First up is killing off the Barclaycard that has only until Aug this year. I should be able to do that once I'm paid this week. After that I'm going to need to mix saving for the tax fund, an emergency fund and keep concentrating on reducing the credit cards as I'd rather not take on another 0% offer (as they always come at a small cost - best offer atm is 2.9% with BC).

So:
June pay = pay off Barclaycard, remainder to savings
July pay = pay mid-year tax bill, minimum payments to remaining cards
Aug pay and onwards = decision to be made to balance paying down debts and storing up credit for tax and emergencies.
As things stand, if my daily discretionary spend (for me, everything aside from monthly DDs and annual insurance etc) is £31.15 then I'm set for the Jan tax payment without dipping into Premium Bonds. They're a good just-in-case as they're pretty much on-call, but a big personal call for me to sell as that would suggest to me that I'm not doing well.  

I know that putting the tax aside into a separate account is probably the most sensible way to do things, but I really want to rid myself of the CCs, so I need to find the balance that's best for me. I'm trusting the spreadsheet calculations to balance the competing demands.

My easy access interest rate (a dedicated account of which would be sensible for tax) is only 1.5%, so I don't mind sacrificing a bit of that. Plus, the more I pay down the debt, the more I have spare the next month as the minimum payments reduce. Once the Barclaycard is paid off, the minimum payments will total £122 a month, which is way below the (checks spreadsheet) £976 a month I was paying on cards and a loan in August 2020. But it's still sizeable. It'd be so good to get rid of that millstone.

I hope that all makes sense, it does in my head. 

But mainly: thanks! It's definitely a sensible approach. I could theoretically work out my Jan tax-due now, which would make things a bit more clear, that would probably be a good weekend task.

Martico

I should add: I'm not in distress right now (though I did feel stress two years ago). I'm very fortunate not to have a mortgage, to have fixed my energy bill for two years in April (?) 2021, and (at the moment given the weakness of the GBP) to be paid in USD. My nominal USD pay hasn't gone up in two years, but last month's pay was 10% higher than my pay was a year ago. I really feel for those that are really struggling at the moment, that could so easily have been me had I not woken up in time or got the new work when I did. 

savingholmes

Good luck with the rest of your journey. You sound like you've really worked hard to pull things round. Congratulations.

Martico

Thanks, SH - I've got my head down to tackle things, but luck in new work and not going out because of lockdown life have played a massive part. Without lockdown I doubt I'd have been so disciplined, and without new work I certainly doubt I'd have been able to break the back of it all

savingholmes

Lockdown speeded our journey too - and helped us see what was essential and what wasn't more clearly

Martico

Hello!

Payday today, which is always good. Especially this month as I work for an American company, and you can tell how sickly the £ is by the fact that, despite no payrise, my pay today is 14% higher than it was in June 2021. I appear to be one of the few Brits beating inflation, at least for now.

The Barclaycard with 0% ending in Aug 2022 is now completely paid off, which is massive. At its peak it was very close to the £17,000 credit limit. I’ve cut it over the years via 0% transfers from new cards I’ve taken on, as well as overpaying on paydays. And I also increased it last year with a £10,000 12 month 0% cash advance to pay off the family debt.

No more card paydowns today. I’ve chucked some into instant access savings, another £100 to premium bonds, £100 to S&S ISA, and £50 to individual shares.

Current account #1 (bills and CC DDs) is at £494.40 (will leave a float of £20 at the end of July)

Current account #2 (the Chase 1% cashback that I use for everyday spends) is at £1,160. Budget of £40 per day til next payday – any day that the end month float is over £40, the excess will go to savings. I may pay a card down a bit as well if the savings plan looks to be well ahead of schedule.

Cards:
Virgin 0% balance transfer til Aug 2023: £3,630
Sainsbury’s 0% balance transfer til Dec 2023: £2,193
M&S 0% spend til Jan 2024: £1,470 (up slightly from last month after filling my car). I aim to keep this card below £1,500 this year, it’s 0% spend so can be there for an emergency or if I fancy a holiday.
Barclaycard, MBNA, Capital One, Halifax, Amex, MBNA: all at zero.

Total card debt: £7,293
Total card payments due this month: £122
Savings account: £1,624
Premium Bonds: £4,900 (fingers very much crossed for this month’s draw)

I’m in the black overall now, which is great. I really should have started this log in 2020 when I was in all sorts of bother, but I’m here now, on what will probably be a fairly long final straight as the immediate pressure is off. But I do still want to clear those remaining cards. I doubt I'll login here everyday, but will update periodically.