Breaking through the £37k of debt

Sarahwithlove

Hopefully the change in mindset becomes easier for you. I'm going to disagree with everyone and say actually if you needed a new sofa putting it on 0% finance seems sensible to me. You can afford the repayments and this way the savings can clear debts that are going to become interest bearing. Once your other debts are cleared you can always look to overpay the sofa loan. However if you didn't really need it and more a want then yes it's not the best decision but it sounds like this was a need you had been putting off. 

The key now is to avoid any further credit card or interest charging loans and focus on spending within your budget. Interest rates aren't great so I would move away from focusing on savings as you have a very good emergency fund in your ISA and pay off debts. If you have to dip into your isa then I'd suggest looking at topping it back up then

rumpetroll

Restarting

As mentioned in my recent posts, I've updated my spreadsheet and how I track everything, I have some new debt in the form of finance for a new sofa, this was desperately needed and had been put off for some time, I've also had to take on a bit more debt due to paying off a tax bill, this was done with a 0%, no fee balance transfer. It wasn't unexpected but I had hoped to be able to pay it off with savings rather than debt, but it was a 1 off so won't have the same bill next year.

I have decided to not keep any savings aside from my cash ISA and instead put it all towards paying off the credit cards. I have a budget of £1600 to put towards the debts every month with the minimum payments currently around £850. 

My spreadsheet shows that we should clear the credit cards by December 2026. Our focus really has to be sticking to this as my wife is looking to start university in September 2026.

So here is where we are now:

MBNA - £6992 (Target = 5/25)
Natwest - £9490 (Target = 12/25)
Barclaycard - £3911 (Target = 3/26)
Halifax - £8888 (Target = 5/26)
Lloyds - £9117 (Target = 12/26)
Creation Finance - £2774
Total - £41,174

Emergency Fund (Cash ISA) - £6955

I have around £3000 to put towards the MBNA card next month, just waiting for the statement from our daily use credit card (which is always paid off every month) to know exactly how much I can throw at it.

I actually hadn't realised how much of a step backwards we'd taken until comparing this to my previous update, makes me sick to think that we've gone so far in the wrong direction. Maybe it's the giant kick up the !!!!!! that I need

rumpetroll

@LadyWithAPlan Yes I use YNAB, our actual budget is pretty tight and not much to cut out, the problem lies with the ad-hoc spends, I know this is where I have to fix things.

@Sarahwithlove You're right, although there is some interest to lose from not keeping money in the savings accounts in the end it's not a significant amount and it puts me in a position where I feel like I have more money than I really do so spend more than I should. I don't really want to dip in to the ISA but I might consider using it to pay things off quicker when we're a bit further down the line. Everything is at 0% so if we stick to the plan then we shouldn't need to take any out of it.

rumpetroll

I hope everyone has had a good Christmas and New Year! I've been ill since the 23rd and only just starting to feel better the past couple of days, I still have an annoying cough but generally feeling ok. Lost about 7lbs since Christmas as just haven't had an appetite, it's coming back a bit now but still not like it was.

Anyway, December mostly went to plan from a finance view with £3526 paid off the debts.

MBNA - £4000 / £6992 (Target = 5/25)
Natwest - £9446 / £9490 (Target = 12/25)
Barclaycard - £3872 / £3911 (Target = 3/26)
Halifax - £8666 / £8888 (Target = 5/26)
Lloyds - £8889 / £9117 (Target = 12/26)
Creation Finance - £2774 / £2774 (I guess this won't start until the Sofa is delivered)
Total - £37,647 / £41,174 [-£3526]

Emergency Fund (Cash ISA) - £6984 [+£32]

It's unlikely we'll pay off such a big chunk in 1 month again, but my target is £1600 a month reduction

rumpetroll

I'm currently in the middle of renovating what will be our lounge when the new sofa arrives, which should be in a week or 2. This room was used as a kids/games/dumping room but we've decided to move our lounge in to here and then put the desks etc for the kids in what is our current lounge. So a busy weekend ahead planned with tidying up the walls and painting.

We've had to deal with one of my step daughters "outbursts" this week, she's normally fine albeit very difficult to get to actually do things despite the routines and plans we put in place for her. But when she has an outburst which can seemingly be triggered by anything she is horrendous, she becomes violent, abusive, does everything she can to upset everyone in the house and sometimes trashes the house and there's nothing we can do to placate her until she eventually calms herself down (which can sometimes take hours). We've had numerous different people/services "work" with her but as she always tells them there's nothing wrong and acts normally when she's with them it always just gets closed done after a few sessions.

Anyway, it's just frustrating and difficult to deal with.

Financially, I've just put another £1000 towards the MBNA card and moved my cash ISA (emergency fund) and my S&S ISA to a new provider, cash for a better interest rate and the S&S due to Vanguard hiking their fees up. I've just had my annual pay rise so an extra £200ish a month after tax, only a relatively small rise this year but the targets for the business are much higher over the next couple of years so I'm expecting a much larger rise next year if we can hit those targets.

Sarahwithlove

Good job on paying off so much off your debt. It all helps. Sofa Finance doesn't start until the first payment date after sofa has been delivered. So hopefully you get some bit of a breather with that one. 

rumpetroll

The new sofa arrived and looks great in the freshly decorated room, unfortunately there's a slight mark/stain on one of the arms, so I'll need to contact the store to see what resolution they offer.

My wife is out tonight so it's a quiet one by myself tonight, I think I'll probably spend most of it searching for birthday gifts for her, I really struggle with gift buying though so could be a long evening.

This month I've paid off £1571 from the credit cards:

MBNA - £3000 / £6992 (Target = 5/25)
Natwest - £9351 / £9490 (Target = 12/25)
Barclaycard - £3833 / £3911 (Target = 3/26)
Halifax - £8449 / £8888 (Target = 5/26)
Lloyds - £8666 / £9117 (Target = 12/26)
Creation Finance - £2774 / £2774
Total - £36,076 / £41,174

Emergency Fund (Cash ISA) - £6758

Mumoffourkids

Morning, I’ve just read your diary from the start and wanted to say well done so far.

However, I don’t believe that you have been fully committed to paying off your debts until maybe just recently. Yes you do have a large income coming in each month, but your expenses also seem to have increased in line with your income. 

I wanted to give you a slightly different outlook on debt that I use. Currently the only debt myself and my husband have is two car loans. One of which I am currently over paying and will be cleared in five months. I could probably clear it now but I have other plans for the extra money. I do use debt when it is interest free rather than using savings but I don’t leave that debt to hang around and then move it when the interest free period runs out. For example, we currently still have six kids at home so really need two washing machines. I bought a new washing machine on a buy now pay later deal. I could have bought it outright but the deal was there. However, I then paid this debt off way before the end of the interest free period. I did this by using any money left each week out of my budget to send across to the buy now pay later balance. This way it felt like I wasn’t using any of my savings as the money had already been budgeted for say the weekly shopping, but I was under budget so the excess went to paying off my debt. Now that this debt is cleared any excess from each week is moved to a savings balance.

We still have holidays each year, last year we went as a family all inclusive to Majorca, but I also got married in a small ceremony and myself and other half went on honeymoon for a week. We also had a couple of weekends away just us. This year myself and other half have already been away for five days, we have a short trip booked in the summer which is already half paid for with the two youngest kids and will go away with the whole family at some point as well. The kids don’t miss out on anything and we still manage to put money into savings each month in case anything crops up. 

I suppose I’m just tying to say, yes you can still afford to go away and do nice things and can still use interest free debt but sometimes you need to concentrate on the little amounts and not just thinking oh well I’ve got £50 left I may as well spend that. Maybe it’s because in the past I’ve been a single mum on a tight income and I’ve had to concentrate on the small amounts and that mindset has stayed with me. When I was single I managed to pay off £12000 of debt in 8 months and also then save for a house deposit and associated moving fees in the following 12 months. At both of these times I was focused on the end goal and after I had reached my goal I could relax a little, but after a little relaxing I then worked out my next goal. 

I will follow your journey and hopefully you can get those debts paid off soon.

rumpetroll

Thank you @Mumoffourkids for reading and commenting. I completely get what you're saying and agree with most of it, I don't think our expenses have particularly gone up by much aside from the EV car we have but that doesn't actually cost us much with the savings we make in fuel. The biggest hit was definitely the wedding and I think we'd have pretty much cleared everything by now without it.

I know I struggle with spending sometimes and have fallen off the wagon on occassion, and I've just looked back to the start of my diary and seeing that we have more debt now than we did then really hits home. We really need to get the debts down and paid off and I'm 100% committed to it. Maybe I need to rethink my bank accounts, I use YNAB which shows me having money in various pots for annual bills but in reality that money is just mixed in with everything else and I think is where some of the trouble stems from. I used to have pots in Monzo but didn't like having all that money sat there not earning any interest so I just stuck it all in to a savings account, but I'm probably better off going back to having pots in my accounts so that the money is actually set aside.

In terms of holidays, I still try and put aside £400 a month towards this, this year we won't be spending anywhere near that much and we have all our holidays booked, an all inclusive abroad in April, we're going with my wifes family and was paid for us so aside from airport parking it's a free holiday. We've also got a couple of UK glamping holidays booked, so there should be no more spending on holidays this year.

I've got to ask, how do you find all inclusive holidays with so many children? I find that even when we just take 3 of them it can be difficult to find hotels with rooms big enough, when we take all 5 it's almost impossible.

rumpetroll

Looks like I've forgotten to update this for a while. It's been a decent few weeks, we've just got back from a couple of days away "glamping", just the 2 of us and the dogs.

My sciatica has flared up again, it's so frustrating, it'd been fine for a couple of months and then just woke up a couple of weeks ago in agony again. I feel like I'm doing all I can with gentle exercise and mobility work, think I need to look in to changing up my desk so that I can alternate between sitting and standing, I've tried a standing desk before and didn't really get on with it, but I'm just going to have to make the change as I'm pretty sure it's the sitting that's the problem. I have a very high pain tollerance but the first couple of hours in the morning are absolute agony.

I opened a Zopa savings account to be used for all my sinking fund pots, this seems like the best option for having an account that actually pays interest while also letting you have multiple pots. I'm keeping these pots filled to match the numbers in YNAB.

I've paid off £635 from the credit cards in February:

MBNA - £2925 / £6992 (Target = 5/25)
Natwest - £9258 / £9490 (Target = 12/25)
Barclaycard - £3795 / £3911 (Target = 3/26)
Halifax - £8238 / £8888 (Target = 5/26)
Lloyds - £8450 / £9117 (Target = 12/26)
Creation Finance - £2774 / £2774
Total - £35,440 / £41,174

Emergency Fund (Cash ISA) - £7198