Limping Along - Debt Free Diary

greensalad

Well I had slightly hoped I would never be back here, but here we are. 2 years after my last diary I am back again! With debt!

I've actually had a total of THREE diaries prior on here. All feel very much different part of my life. My first was when I had just graduated, earning a pittance and struggling to pay off an overpayment of student loan I'd been saddled with just as I graduated. I had around £8k of debt in those days, the student debt and the student overdraft. Salary was around £18k.

My second was when I started working in London - spending a lot but having a great time too. In some way I regret spending as much as I did but it's hard as I also had a great time during those days. The worst thing about that debt was that I hid it from my partner. I was trying to play catch-up with him and struggling. Debt was around £26k and salary was around £50k

My third diary was on the run-up to buying a house. Desperately wanted to kick the debt and purchase a property together. It was only about £3k in debt that needed to go and then a large part of my diary was co-saving £35k with my partner to buy our house, which we succeeded in purchasing last March! Diary is here: https://forums.moneysavingexpert.com/discussion/6157951/the-last-leg-6-years-later-debt-free-in-2021#latest

And now here I am. Today we have some debt, and I don't feel too bad about it. I'll lay it all out in the next post but it's a combination of purchasing home furnishings/items plus a bit of "new home owner surprise". And also just having expensive taste, as always! Since we achieved home ownership we really wanted to ENJOY it and enjoy it we did. All the gadgets. All the lovely furniture I've always dreamed of. But not necessarily paying out of our cash as we should...

And the next stage for us... we are hoping to start trying for a baby in 2024/2025 maybe. So we need to get this debt cleared now and get a nest egg together, whilst still trying to finish up all the house projects that are currently lingering. 

Here's to this year!

greensalad

Thought I'd start my diary with a good old SOA: 

Household Information

Number of adults in household........... 2

Number of children in household......... 0

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 3659.9

Partners monthly income after tax....... 4350.8

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 8010.7

Monthly Expense Details

Mortgage................................ 1655

Secured/HP loan repayments.............. 529.1999999999998

Council tax............................. 173

Electricity............................. 132.42

Gas..................................... 156.41

Water rates............................. 26

Mobile phone (inc internet) ............................ 163.21

TV Licence.............................. 13.67

Satellite/Cable TV...................... 72.75

Groceries etc. ......................... 0

Clothing................................ 0

Petrol/diesel........................... 0

Road tax................................ 14.43

Car Insurance........................... 39.67

Car maintenance (including MOT)......... 0

Other travel............................ 16

Pet insurance/vet bills................. 71.16

Buildings insurance..................... 39.67

Life assurance ......................... 38.38

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Critical Illness Insurance.............. 2.50

Dental insurance........................ 24

Window Cleaner.......................... 18.6

Gardener................................ 115.5

Cleaner................................. 90

Total monthly expenses.................. 3545.17

Assets

Cash.................................... 1250

House value (Gross)..................... 495000

Shares and bonds........................ 0

Car(s).................................. 0

Total Assets............................ 496250

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 442805...(1655).....2.69

Hire Purchase (HP) debt ...... 40746.5..(529.2)....9.9

Total secured & HP debts...... 483551.5..-.........-

Unsecured Debts

Description....................Debt......Monthly...APR

MBNA 0%........................4680.41...46.8......0

PayPal Credit..................1496.26...41.1......0

M&S Bank.......................5096.97...127.4.....0

Monzo Flex 3...................700.81....79........9.9

Monzo Flex 2...................305.......62........0

Monzo Flex 1...................207.......42........0

Total unsecured debts..........12486.45..398.3.....-

Monthly Budget Summary

Total monthly income.................... 8,010.7

Expenses (including HP & secured debts). 3,545.17

Available for debt repayments........... 4,465.53

Monthly UNsecured debt repayments....... 398.3

Amount left after debt repayments....... 4,067.23

Personal Balance Sheet Summary

Total assets (things you own)........... 496,250

Total HP & Secured debt................. -483,551.5

Total Unsecured debt.................... -12,486.45

Net Assets.............................. 212.05

enthusiasticsaver

greensalad said:

Thought I'd start my diary with a good old SOA:
[font=courier new][b]
Statement of Affairs and Personal Balance Sheet[/b]
[b] Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1[b]

 Monthly Income Details[/b]
Monthly income after tax................ 3659.9
Partners monthly income after tax....... 4350.8
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 8010.7[/b]

[b] Monthly Expense Details[/b]
Mortgage................................ 1655
Secured/HP loan repayments.............. 529.1999999999998
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 173
Electricity............................. 132.42
Gas..................................... 156.41
Oil..................................... 0
Water rates............................. 26
Telephone (land line)................... 0
Mobile phone............................ 163.21
TV Licence.............................. 13.67
Satellite/Cable TV...................... 72.75
Internet Services....................... 0
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 14.43
Car Insurance........................... 39.67
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 169.6
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 71.16
Buildings insurance..................... 39.67
Contents insurance...................... 0
Life assurance ......................... 38.38
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Critical Illness Insurance.............. 2.5
Dental insurance........................ 24
Window Cleaner.......................... 18.6
Gardener................................ 115.5
Cleaner................................. 90[b]
Total monthly expenses.................. 3545.17[/b]

[b] Assets[/b]
Cash.................................... 1250
House value (Gross)..................... 495000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
[b] Total Assets............................ 496250[/b]

[b] Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 442805...(1655).....2.69
Hire Purchase (HP) debt ...... 40746.5..(529.2)....9.9[b]
Total secured & HP debts...... 483551.5..-.........- [/b]

 [b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
MBNA 0%........................4680.41...46.8......0
PayPal Credit..................1496.26...41.1......0
M&S Bank.......................5096.97...127.4.....0
Monzo Flex 3...................700.81....79........9.9
Monzo Flex 2...................305.......62........0
Monzo Flex 1...................207.......42........0
[b] Total unsecured debts..........12486.45..398.3.....- [/b]

 [b] Monthly Budget Summary[/b]
Total monthly income.................... 8,010.7
Expenses (including HP & secured debts). 3,545.17
Available for debt repayments........... 4,465.53
 Monthly UNsecured debt repayments....... 398.3[b]
Amount left after debt repayments....... 4,067.23[/b]

 [b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 496,250
Total HP & Secured debt................. -483,551.5
Total Unsecured debt.................... -12,486.45[b]
Net Assets.............................. 212.05[/b]
 [i]Created using the SOA calculator at www.stoozing.com. Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

I have tidied that up a bit for you.  Not sure what happened there. 

The soa is incomplete in that there is nothing there for groceries, clothing, fuel, entertainment, gifts, haircuts, holidays etc.  However you have a very big surplus and plenty of wiggle room for cutting back in terms of  cleaner, gardener, mobile phone.  If you intend having children I strongly recommend you do cut back as presumably maternity pay will be much lower than your salary and once you return to work childcare costs are expensive until you get some free hours but as you are high earners you probably will not get that anyway. Is the critical illness really only £2.50 or is that a misprint? 

Are those Monzo flex accounts overdrafts?  I would knock those straight on the head immediately. Are the credit cards really all at 0% and if so when do the deals finish? 

With some financial discipline you can soon get rid of that debt within a year and build up some savings for your maternity leave. 

enthusiasticsaver

When does your mortgage deal finish?  As interest rates have risen you are vulnerable as you have a high mortgage.  You also have what I assume is an extortionate car loan assuming that is the HP. Is the car leased or will you own it at the end of the deal?   Again servicing those debts on a much reduced income will be painful so I would suggest you check out maternity leave pay. 

greensalad

enthusiasticsaver said:

greensalad said:

Thought I'd start my diary with a good old SOA:
[font=courier new][b]
Statement of Affairs and Personal Balance Sheet[/b]
[b] Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1[b]

 Monthly Income Details[/b]
Monthly income after tax................ 3659.9
Partners monthly income after tax....... 4350.8
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 8010.7[/b]

[b] Monthly Expense Details[/b]
Mortgage................................ 1655
Secured/HP loan repayments.............. 529.1999999999998
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 173
Electricity............................. 132.42
Gas..................................... 156.41
Oil..................................... 0
Water rates............................. 26
Telephone (land line)................... 0
Mobile phone............................ 163.21
TV Licence.............................. 13.67
Satellite/Cable TV...................... 72.75
Internet Services....................... 0
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 14.43
Car Insurance........................... 39.67
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 169.6
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 71.16
Buildings insurance..................... 39.67
Contents insurance...................... 0
Life assurance ......................... 38.38
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Critical Illness Insurance.............. 2.5
Dental insurance........................ 24
Window Cleaner.......................... 18.6
Gardener................................ 115.5
Cleaner................................. 90[b]
Total monthly expenses.................. 3545.17[/b]

[b] Assets[/b]
Cash.................................... 1250
House value (Gross)..................... 495000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
[b] Total Assets............................ 496250[/b]

[b] Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 442805...(1655).....2.69
Hire Purchase (HP) debt ...... 40746.5..(529.2)....9.9[b]
Total secured & HP debts...... 483551.5..-.........- [/b]

 [b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
MBNA 0%........................4680.41...46.8......0
PayPal Credit..................1496.26...41.1......0
M&S Bank.......................5096.97...127.4.....0
Monzo Flex 3...................700.81....79........9.9
Monzo Flex 2...................305.......62........0
Monzo Flex 1...................207.......42........0
[b] Total unsecured debts..........12486.45..398.3.....- [/b]

 [b] Monthly Budget Summary[/b]
Total monthly income.................... 8,010.7
Expenses (including HP & secured debts). 3,545.17
Available for debt repayments........... 4,465.53
 Monthly UNsecured debt repayments....... 398.3[b]
Amount left after debt repayments....... 4,067.23[/b]

 [b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 496,250
Total HP & Secured debt................. -483,551.5
Total Unsecured debt.................... -12,486.45[b]
Net Assets.............................. 212.05[/b]
 [i]Created using the SOA calculator at www.stoozing.com. Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

I have tidied that up a bit for you.  Not sure what happened there. 

The soa is incomplete in that there is nothing there for groceries, clothing, fuel, entertainment, gifts, haircuts, holidays etc.  However you have a very big surplus and plenty of wiggle room for cutting back in terms of  cleaner, gardener, mobile phone.  If you intend having children I strongly recommend you do cut back as presumably maternity pay will be much lower than your salary and once you return to work childcare costs are expensive until you get some free hours but as you are high earners you probably will not get that anyway. Is the critical illness really only £2.50 or is that a misprint? 

Are those Monzo flex accounts overdrafts?  I would knock those straight on the head immediately. Are the credit cards really all at 0% and if so when do the deals finish? 

With some financial discipline you can soon get rid of that debt within a year and build up some savings for your maternity leave. 

Ugh thank you. I was trying to format it and then got dragged to a meeting so couldn't get back to it! Managed to get it sort of better but yours looks good.

I planned to post an SOA without groceries etc as I wanted to see the raw "bills" so to speak - this is because I really need to define a better budget for things that are variable like food, entertainment, petrol etc. I have no clue what we're actually spending right now really... so I want to get a better handle on that but I wanted to see what the true SOA in/out value was so I can compare with actual spends on our variable expenses.

We definitely have places we can trim back like you say (cleaner, gardener etc) but I would like to try my best to kibosh the debt without impacting lifestyle choices first and foremost. I'm lucky that both of our parental leave policies are strong and we work for decent large companies. Looking at our parental policies we have worked out that we would only have a 10% forfeit on income for me for a handful of months, with the rest being paid in full. So we are really lucky in that regard. I still want to get a nice nest egg built up though. 

It is indeed £2.50 but it's a top-up on what my work provides me rather than a full payment for critical illness insurance. Our life assurance is a decreasing-term mortgage payout. 

The Monzo Flex are not overdrafts technically they are a sort of "buy now pay later" thing. Two of them are interest free and conclude fairly soon. One is longer, the 9.9% one. I agree that one needs to go ASAP as I could knock it on the head very quickly.

I also have a few items not listed here as it wasn't asked like gym payment (definitely something I want to keep going, as it's only £40 for the pair of us and we both definitely want to lose weight, myself especially, before I consider at getting pregnant!) 

My next post is going to be a bit about YNAB which is how I plan to fill those incomplete gaps on the SOA.

Also, how do SOA's usually consider cars? We only got a HP car recently - I've never had one before. Always owned outright but our lovely 7 year old car broke down on the motorway with catastrophic engine failure last year. Ended up selling it off to a local garage for parts, and got ourselves a nice car on finance. The SOA said I should add it as an "asset" but I don't really understand that. We put down I think only £100 as a deposit and we don't intend to keep it (aim is to go electric when the 4 year term is up and get another car, probably on finance again, that's electric then). As far as I consider it, it's a rental car that I pay for monthly!

greensalad

enthusiasticsaver said:

When does your mortgage deal finish?  As interest rates have risen you are vulnerable as you have a high mortgage.  You also have what I assume is an extortionate car loan assuming that is the HP. Is the car leased or will you own it at the end of the deal?   Again servicing those debts on a much reduced income will be painful so I would suggest you check out maternity leave pay. 

Next March, 2024. Current rate 2.69% and it doesn't look like we'll get anything close to that. I'm very happy that we went for a lower property purchase than we were offered tbh - we could've been in a £750k house but we thought that was madness.

We expect it to go up obviously,  and we have the wiggle room to accommodate it. My partner is pushing for a promotion this Spring and is likely to get it (he just achieved a performance rating at work above the average plus a glowing review which ticks several of the boxes, and there is a need for someone in the next level up). We're hoping that his promotion will put him at over £100k salary and essentially keep us in the same sort of take-home income per month even with a chunky increase in mortgage payment.

greensalad

Right, on with a fresh start today!

Task for today is to do a Fresh Start in YNAB. I have used YNAB successfully for years now but I fell off the wagon in around November and it's just too much now for me to go back and redo the transactions! I'm sad to lose a fair chunk of data but I can still save the data to come back to later, but for now I need to Fresh Start the budget! 

My plan today is to get a budget set up for all the things I'm not quite sure on, and then I can monitor spending over the next month until payday and get a gist of how much we're actually spending on groceries, entertainment, haircuts, birthday presents etc. I also want to get back on the horse of saving for the MOT and servicing of the car again, plus I want to try and save to pay the car insurance annually instead of monthly which was something we succeeded on before.

I also want to get a grip on how much we actually need to put away each month to be debt free by the time our remortgage occurs in March next year. I suspect we can still get an OK deal with a little bit of debt, maybe a £1000 or 2 on a credit card. But nothing more than that.

Our current debt is around £12k and that seems reasonable with our salaries to get through without completely cutting back. We have decided not to go on a big holiday this year and instead are going to spend some time with family up North at the end of the year and go on a short weekend away in the summer. We went on a 3 week holiday last year so we're done for the next few years in that regard!

Hoping with a fresh YNAB set up I can get back onto budgeting every month like I used to.

greensalad

Did a Fresh Start on YNAB and prompted myself to get a few money chores done that were quick wins.

1) I cancelled my pet insurance with one provider and switched. I have contents and car insurance with Admiral now so they gave me a healthy 25% discount on pet insurance and that along with the slight reduction in the price compared to my previous insurer means I've more than halved the bill from £70 to £32 a month!

2) I got my OH to give me all the details for any financial interests we have so I can better monitor. 

3) I've changed the car payment over to our joint account

4) Changed some other bills over to our joint account

5) Moved my salary to our joint account so I can finally make use of the "salary sorter" thing. I believe my salary alone covers our bills at present but not our discretionary spends or variable spends like groceries, but we get paid on the same day. It'll be nice to just have everything moved to pots automatically. 

Now I am going to spend the evening inputting everything in bit by bit into YNAB to get a better picture of where we are.

greensalad

Yesterday I got everything into YNAB and was able to meet some really good goals already. 

I realised I missed some stuff off my SOA so I don't think it's particularly accurate. But these are my basics:

Main commitments
Mortgage £1,655.50
Bills & Utilities £1,596.91
Car HP & maintenance £747.16
Annual Payments & Subscriptions £160.95
Instalment Payments £611.23
Credit Card Minimums £216.33
Commute £169.60
My paycheque deductions (dental, critical illness etc) [Excludes OH] £80.54

Savings & Debt Overpayments
Credit Card Overpayments £737.28
Football season ticket savings £233.34
Christmas 2023 £109.10
Holidays & Trips £531.25

Discretionary Spending
OH's pocket money £200
My pocket money £200
Cats pocket money £60
Groceries & Snacks £375
Household expenses £50
Fun (Eating out, takeaways, entertainment) £200
Gifts £25

Income
OH salary £3,908
My salary £4,100.23

Surplus
£49.04

It's a pretty tight surplus! However this includes overpaying all our credit cards and debts to have them paid off by February next year (but most paid off by the end of 2023). 

My student loan only has 3 payments left and then I will have an extra £332 to put towards saving an emergency fund.

Hoping we will hear about pay rises each as they are due this month. OH's will likely be handsome, as he works for an international company who are less affected by UK recessions and have had a very good year. Mine, not so much. UK business and we've had a rough year. It'll be something but probably not above inflation I would imagine. Or only just. 

Many of our instalment plans conclude within the next few months too. I calculate that by summer we'll have a surplus of around £850 which will be a nice amount to start putting into an emergency fund. And then hopefully when 2024 starts we will have no debt and a little cash saved. (I know some people say it's not sensible to save whilst there is debt, but nearly all of ours is interest free. I will see how it goes and pay off our 1 interest-accruing debt early if I feel comfortable we've managed to set aside maybe £1,000 as emergency fund).

greensalad

Trying to get back into the flow of diarying every day as it definitely helps me stay on track!

Yesterday
Had a bit of a spendy day but don't feel too bad as it was all accounted for. We've started having little Sunday "dates" in our city (we live in the countryside) as we moved here specifically to spend time in the city and then never go out! So we went and had a lunch in our favourite burger place in the city, plus I bought some cookies from an up and coming bakery. Total came to £52, quite expensive, but it was in the budget. Also popped to Boots and bought some shower cream and some face stuff (I've legitimately run out, so it wasn't a speculative purchase) which came to £23.

Today
I didn't realise that OH's Flex payments which are due on the 28th can actually be paid early. So he paid them off with the money I'd set aside and now we have paid off £308 of debt this morning. I'm also going to pay off another 2 of our credit cards as overpayments, and leave some in the pot for paying the minimums which come out later in the month.

The future
I am hoping in the next few days that the direct debits I have set up for our credit cards have filtered through to Monzo so I can specify them to come from a specific pot, which is helpful for organisation as then I can just "set and forget". 

Gousto arrives today for the week. £55 for 5 meals which is expensive but delicious food and less than we managed to spend at the supermarket weekly! We have milk, bread and all that so shouldn't need to buy anything this week. 

greensalad

Oop and another post. I realised I actually over budgeted this month! I budgeted for my own Flex payments this month but they don't come out until the 1st March, and the 1st Feb ones have already been paid (due to me starting a fresh YNAB budget after they'd gone out). 

So I actually don't need that cash assigned and instead I'm going to move it to my emergency fund.

My whole aim of goals for the next few months (and beyond!) is this:

£1,000 in emergency fund
Pay off my 9% debt (Flex payment) as it's the only interest accruing debt I have
£3,500 in emergency fund
Pay off all debts
£10,000 in emergency fund

So with that said, I've now shuffled those payments and have £328.99 in my emergency fund, basically a third of the way there already!