I can do it: £41,000 debt in October 2023. Debt-free in March 2025?

annetheman

Updated Debt-Free Plan October 2023

I updated my debt free plan to including paying off secured debt (including student loan). Now buying house in Autumn/Winter 2024, pushing back my DFD by 1 year to 2026 (was 2025).

Starting debt in October 2023
Total debt: £41,265.45
-Credit cards: £12,532.70
-Loans: £11,248.18
-Student Loan (Plan 1): £17,484.57
-Debt-free day: 21 March 2026

Live links
1) Debt reduction and repayments plan [includes amounts paid]
2) Monthly spending budget [includes SoA]

Original post: 

I thought I'd start a debt-free diary since I have spoken to my mortgage advisor, who has said I could staircase to 100%!

The problem I would have is my high amount of unsecured debt, standing at £19,609 in July 2022 ('the awakening'). So, I've calculated it'll take 1.5 years to clear with the snowballing method. I am hoping that sharing my journey will keep me motivated to shorten that!


The story:
I got here through absolutely shockingly poor financial decision-making, where I was definitely living beyond my means for years - I was earning £39,200 this time last year (now £65,000).

There's no sad story, hardships, excuses or justifications.

I know exactly how I got here.

This diary is 100% about finding the solution and working towards it.

I have no dependents and live alone so don't split my bills, though I do have a little leftover each month and live comfortably. If I am really prudent, I can do this. The key thing is that my spending behaviour has got to change*, drastically. I have had a wake up call, now it is time for vigorous action.

So here we go - to debt-free!

*I'm keeping this diary to keep myself accountable and prove, to no one but myself, that my behaviour really has changed. It's all well and good acknowledging the problem, but no one will be affected by it more than me.

Truth, personal accountability, prudence.

[Deleted User]

Welcome. I'm looking for to seeing how you get on x

joedenise

This doesn't show what you spend on discretionary stuff like going out, hairdresser, shopping, takeaways etc etc.  You also seem to just pay annual bills like the RAC when they are due rather than saving towards them monthly.  It would be easier to get some help if you used the SOA and formatted for MSE:

https://www.lemonfool.co.uk/financecalculators/soa.php

annetheman

joedenise said:

This doesn't show what you spend on discretionary stuff like going out, hairdresser, shopping, takeaways etc etc.  You also seem to just pay annual bills like the RAC when they are due rather than saving towards them monthly.  It would be easier to get some help if you used the SOA and formatted for MSE:

https://www.lemonfool.co.uk/financecalculators/soa.php

I've got my own little spreadsheet just to tackle this debt here.

But the Lemonfool tool is handy too!:

annetheman

Day 0 - I've put a mirror up for sale for £60. Every little helps! 

I've been advised to stop overpaying the mortgage but I am very reluctant to; I'm overpaying £75 a month and it is still another interest-incurring debt that I would like to pay off... 

I'm going to try not to buy any more food in August, besides fresh fruit and veg at £10 per week max. Will see how it goes - could be another £200 by end of the month to send to by 15.9% CC!

joedenise

I'd definitely stop OPing the mortgage whilst you still have CC debt and loans.  These will have a much higher interest rate that the mortgage.

Can you get any of the CCs onto 0% cards to reduce the time it takes to pay them off?

Have a look at snowballing where you pay minimum on all CCs expect the one with the highest interest until it is paid off; you then use that to move onto the next and so until.  This will reduce the length of time it takes to get rid of them all.

The only exception to this is perhaps if you get any on to 0% then you need to pay that off by the time the 0% ends.

janb5

I don`t understand how you`re paying rent and a mortgage?  Do you have a water meter as the water bill seems high - I pay £15 for a 4 bedroomed house. Also no buildings insurance?

annetheman

It would probably help to put the percentages! 

NatWest CC 1 is 15.9% and first to clear December 2022
Natwest CC 2 is 0% to May 2022
Virgin CC is 0% to July 2022

I live in a shared ownership hence rent and mortgage and want to staircase to 100% so I just have mortgage. 

It’s a flat hence buildings insurance is in service charge

annetheman

I've created a payment tracker - I'm using my Option 2 plan!

I'd really appreciate any thoughts/feedback!

MatyMoo

It looks like you have missed off a lot of things from your SOA, do you really not buy clothes, have your hair cut, eat out or have takeaways (entertainment), watch tv or go away at all?

Until you put everything in there correctly it is difficult for people to advise where you could cut down.

Floss

janb5 said:

I don`t understand how you`re paying rent and a mortgage?  Do you have a water meter as the water bill seems high - I pay £15 for a 4 bedroomed house. Also no buildings insurance?

It is shared ownership - %age on mortgage & %age rented, and buildings insurance is part of that rent.