Time to get serious

LoGetsSerious

Hi everyone,

I am creating this diary to keep myself accountable on my journey towards being debt free!
It's difficult to talk to anyone around me about this journey as they simply do not understand why I want to do it or what I'm worried about lol.

A little bit about me
Current debt:
MBNA Card: £3981 - 0% interest
Loan 1: £15000 - 19% interest
Loan 2: £1410 - 0%
Total = £20391 (minus interest)

I am paying £365 a month in minimum payments on loan 2 and the last payment is set for the 1st of June.
Loan 1 minimum payment is £544 but I really want to pay this off ASAP
MBNA card I am currently paying around £300-£400 a month (minimum payment is around £101) so I can get it cleared quicker, I will increase the payments to £660 in April.

For further context, I make a very decent amount of money every month (£3500 after tax) and I have been stricter with my spending since November.
I am also in the process of buying a flat (yay more debt). I have my deposit fully saved but still need to save for conveyance, broker and decorating. To aid in this I have sold a designer bag that I foolishly bought 2 years ago (seriously why did I spend 3 grand on a bag? absolutely ridiculous), I will be getting £2100 for this when it is sold and will use that for conveyance fees. I have also sold a pair of designer shoes I bought for £900 and will very likely be selling another designer bag that I own (only owned 2 but still foolish) and that sale should likely return another £1000.
I am currently saving around £500-£600 a month for all things related to the flat purchase as I absolutely do not want to put anything else on a credit card without having the cash to pay it off in full!

Once the flat purchase is completed (fingers crossed) I have worked out my expenses and I should have an extra £288 a month whilst still putting away £500 a month towards an emergency fund. The aim is to have loan 2 and MBNA cards completely cleared before flat completion. I also sometimes do overtime at my part-time job which nets an extra £300 a month after tax but it is not always consistent so I tend not to add it to my budget. The extra £288 and anything else I get from overtime will be going straight towards loan 1. The aim is to save £5000 for an emergency fund then fling everything at loan 1 until it's cleared and I can resume saving and giving myself a little more wiggle room to have fun (on cash, not credit!)

I get upset just looking at the amount of money I use to service debt every month, if I did not have debt I would have way more money to put towards my flat. 
Anyway, I will be using this platform to keep myself accountable and focused. I also welcome any advice on how to tackle my debt/saving situation. I have never made such an attempt before so I'm bound to have gotten a few things wrong.

Statement of Affairs:

Household Information[/b]

Number of adults in household........... 1

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

Number of cars owned.................... [b]

Monthly Income Details[/b]

Monthly income after tax................ 3500

Partners monthly income after tax....... 0

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

Other income............................ 0[b]

Total monthly income.................... 3500[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 600

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 35

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 0

Groceries etc. ......................... 200

Clothing................................ 50

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

Road tax................................ 0

Car Insurance........................... 0

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

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 65

Presents (birthday, christmas etc)...... 50

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

Entertainment........................... 50

Holiday................................. 112

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

Savings................................. 500

Syndicate............................... 15

Apple................................... 2.5

union................................... 9

Date night.............................. 45

Misc.................................... 50

gym..................................... 23

Household budget........................ 15[b]

Total monthly expenses.................. 1821.5[/b]

[b]

Assets[/b]

Cash.................................... 16000

House value (Gross)..................... 0

Shares and bonds........................ 800

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

Other assets............................ 0[b]

Total Assets............................ 16800[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

MBNA...........................3910......101.......0

Loan 1.........................15000.....544.......19

Loan 2.........................1410......385.......0[b]

Total unsecured debts..........20320.....1030......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,500

Expenses (including HP & secured debts). 1,821.5

Available for debt repayments........... 1,678.5

Monthly UNsecured debt repayments....... 1,030[b]

Amount left after debt repayments....... 648.5[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 16,800

Total HP & Secured debt................. -0

Total Unsecured debt.................... -20,320[b]

Net Assets.............................. -3,520[/b]

joedenise

You seem to have a lot of things missing from your SOA.  Do you not pay gas and electric, council tax etc.  Do you not have a TV?

Do you not have enough clothes that you don't need to spend another £50 a month on clothes, at least for the time being?

£200 for groceries seems quite high; that's the same amount I budget for 2 of us and we eat very well on that.  Maybe you spend a lot on ready meals and takeaways to make the total so high.

I think your SOA really needs a bit of a rethink to include everything you do spend and fill in a lot of the gaps!

LoGetsSerious

joedenise said:

You seem to have a lot of things missing from your SOA.  Do you not pay gas and electric, council tax etc.  Do you not have a TV?

Do you not have enough clothes that you don't need to spend another £50 a month on clothes, at least for the time being?

£200 for groceries seems quite high; that's the same amount I budget for 2 of us and we eat very well on that.  Maybe you spend a lot on ready meals and takeaways to make the total so high.

I think your SOA really needs a bit of a rethink to include everything you do spend and fill in a lot of the gaps!

My rent is inclusive of all those things as I live in a one room with housemates. I do have a tonne of clothes and absolutely do not need anymore, but knowing that I’ll very likely spend on clothes I decided to budget for it. 

In terms of food, since being a lot more disciplined, I have been spending less. For example, In January I only spent around £150 and that’s with getting takeaway a few times.  

allsort

Wishing you good luck, Lo, on your debt free journey.
I note you're sensibly offloading your high value handbags to put the funds towards paying down your credit card and loan debt.
I want to sell several high value bags that I own, as I no longer dress up for work and these bags just don't seem to work with leggings !
I've had no success with Ebay and would love to know where you were able to sell yours.
All the best to you as you move forward.

LoGetsSerious

allsort said:

Wishing you good luck, Lo, on your debt free journey.
I note you're sensibly offloading your high value handbags to put the funds towards paying down your credit card and loan debt.
I want to sell several high value bags that I own, as I no longer dress up for work and these bags just don't seem to work with leggings !
I've had no success with Ebay and would love to know where you were able to sell yours.
All the best to you as you move forward.

Thank you! The bags I got a quote off several websites. 

Try, bagista, designerexchange, luxecollective and handbag clinic. Bagista gave the highest quote.  

LoGetsSerious

February wrap-up/update

I debated updating once a week to keep me motivated but decided that would be boring as there might not be much to actually update on.

I completely stuck to my budget this month and still have around £120 remaining. 
I did however have an unexpected dental bill crop up to the tune of around ~£800 and my dental insurance will only cover up to £270 of that bill.
I had a refund of £500 for a flight I cancelled and with the £120 left remaining from this month I guess I can cover that bill although annoying as that was extra money I could have put towards my debt but not incurring any more debt is also a win I suppose. 
This has just motivated me to increase my insurance contribution through work so any unexpected medical bills will be covered at 100%.
I sold another luxury item for £900 but I have yet to receive that money. 

Debt levels are the same because when I wrote my first post it was the middle of the month, and I had already made my monthly payments.
Payday today. I have already moved money around and paid myself first! Should start seeing that debt drop at a faster rate as long as I stay focused!

See you guys at the end of next month!

LoGetsSerious

March wrap-up

Another successful month of pretty much sticking to my budget.
I only saved £300 this month as I needed to use £370 to pay my broker.
My mortgage has now been approved and will likely complete on my property at either end of April or the middle of May. I am a bit worried that I won't have enough savings to decorate/furnish my new home but one worry at a time.

Debt Wrap-up: 
MBNA Card: £3681 - 0% interest
Loan 1: £14858 - 19% interest
Loan 2: £1045 - 0%
Total = £19584 (minus interest), down £807 

From next month I will increase payment to MBNA as my income has now returned to normal (dipped because I had 8 weeks off from my part-time job so my take home was not 3500). 
I also increased my pension contribution by another 5% on both jobs so my take-home should decrease by ~£150-£200.

All in all, I have not taken on any new debts, and my debt has decreased by £807. If I stay on track, Loan 2 will be paid off in 3 months and MBNA paid off by August.

enthusiasticsaver

 Presumably your outgoings will increase once you are in your flat?  You will presumably have energy bills, council tax,  water and mortgage/maintenance charges to pay.  Is that £600 you pay now inclusive of bills? Good work on selling the designer bags.  

I would certainly tackle that loan 1 as quickly as possible as 19% interest is really high.  What is the rate on loan 2 and when does the MBNA deal end?  If they really are 0% it makes more sense financially to tackle the high interest loan. 

LoGetsSerious

enthusiasticsaver said:

 Presumably your outgoings will increase once you are in your flat?  You will presumably have energy bills, council tax,  water and mortgage/maintenance charges to pay.  Is that £600 you pay now inclusive of bills? Good work on selling the designer bags.  

I would certainly tackle that loan 1 as quickly as possible as 19% interest is really high.  What is the rate on loan 2 and when does the MBNA deal end?  If they really are 0% it makes more sense financially to tackle the high interest loan. 

Yes, I have estimated that my bills including mortgage will round off at around £1700 a month (minus the debt repayments). 

This is the main reason I’m pushing to get rid of MBNA and Loan 2 ASAP so I can focus on putting away an emergency fund and clearing loan 1. I do know that this will cost me more money in the long run but I think that mental effect of knowing that I only have one debt repayment to tackle will be very useful with staying on track. 

£600 includes all bills and Loan 2 rate is 0%. 

enthusiasticsaver

The interest on loan 1 is £235 a month at the moment so of the £544 you are paying almost half is interest.  I do get that the other two are easier to clear as they are smaller but financially it makes sense to address that awful loan. It would even be worth delaying building up the larger emergency fund and just sticking with the basic EF of £1000 until the loan is repaid. 

LoGetsSerious

enthusiasticsaver said:

The interest on loan 1 is £235 a month at the moment so of the £544 you are paying almost half is interest.  I do get that the other two are easier to clear as they are smaller but financially it makes sense to address that awful loan. It would even be worth delaying building up the larger emergency fund and just sticking with the basic EF of £1000 until the loan is repaid. 

When you put it that way it makes complete sense. I will restrategise. Thank you!