Reducing Debt, Saving for that Rainy Day

SarahSaves

Facing up to the facts that unfortunately all my overspending here and there for a few years now has got me to the point where my debt has accumulated to 20k !! I am horrified, I didn't even think I had spent that much and particularly because I don't really have anything to show for it either!

I have definitely had my head in the sand with it all a bit, I've been able to make my minimum payments but with the credit card portion of the debt, as i'm sure everyone knows, this doesn't really get you anywhere quickly.  And my loan has been repaid monthly so I just carried on.  I'm quickly approaching a milestone birthday and I just don't want this debt hanging around any longer.  I really need to change my spending habits and make some overpayments to get this down.  

I've put it all in my spreadsheet, giving myself a monthly spending budget to control my spending, as well as overpayments to my debt and plotting any known commitments.  I have a debt free date currently of 25.11.2024 and I'm hoping this debt free diary will keep me motivated and on the straight and narrow - and accountable for my spending.

This debt is entirely mine and I have been lucky enough to secure a good job, but I don't have any savings behind me to show for this - so while I will be throwing money at my debts I also will be building up a small savings buffer (just in case) and then once the debt has gone i'd love to really put my all into my savings and potentially an investment portfolio.

A big downfall of mine is takeaways and eating out - life is busy, and I'm juggling a fulltime job and studying as well (which finishes soon, thank god) and if I don't take the time to plan it just all goes to pot.  So I know this is an area where I can really claw back some cash for debt repayments straight away.  My husband and I transfer a lump sum each per month into our joint account which covers groceries including stuff for breakfasts and lunches but if i'm not organised I end up having to buy these on my office working days particularly and I end up essentially paying for lunch twice!

My current debt as it stands:

Lloyds Loan £9395.26
MBNA CC £1301.37
Barclays CC £3479.41
Virgin Money CC £5525.31 - 0% ends Feb 2024

Included in these numbers I made a payment to MBNA of £580 and Barclaycard of £500 this month and I still have the minimum DD payments to come out so another £625 still to go on debt this pay month will will start me off as paying off 8% of my debt value.  I was owed some money from the joint account for items I had purchased on a credit card which was why I have been able to send so much to the cards already this month.  

We have so many plans over the summer I really do need to have some days of not spending to counter this out.  As I mentioned further up I am taking a couple of exams also so I could use them as good excuses for turning down invitations.  Why can't the weather be more rubbish, there's always less plans when its cold and raining haha

Hopefully being more sensible with money will flush through to our house expenses also, because we burn through money there as well and despite wanting to, we don't have any joint savings. I'm very impulsive with purchasing, and I spend alot of time working or studying that I probably over compensate by buying gifts or tickets to things for my husband and kids or suggesting meals out for us to spend time together...  while I think its nice and what we need we actually need alot more financial security and to teach the children good habits, and how to save up for something they want.  

Anyway... I know what I need to do now and I will keep checking in here to keep myself in check!  

Off to check out some other diaries and boards for inspiration...  😊

londoner2019

Good luck! Subscribing to your diary to follow your journey

Do you have an emergency fund set up? Many on here would advise putting away 500-1000 for unexpected expenses (boiler breaking down, etc). 

It sounds like you have a clear plan, and a spreadsheet to obsess over like I do It helps! You feel super organised inputting everything into it.

SarahSaves

Thanks for stopping by londoner - I'm embarrassed to say I'm an accountant (one who clearly can't manager her own funds!) so I have a lovely formulated spreadsheet all set up ready to go... it's sticking to it that I struggle with! 

I have included some spending money I read a diary on here years ago where the owner allocated themselves £10 a day, I know for some this may seem like a lot to have as spending money but I thought i'd try it out as a way to control and put a cap on my spending.  I had to pay for a ticket this week and a birthday present, plus any thing I have done like my hair or nails will come out of this pot also.  I have £113 left for the month with 29 days until payday haha... so I won't be spending because I can't!  My budget for this month is £51.96 surplus so I have that earmarked to make an additional payment to a credit card.  My MBNA and Barclaycard have interest, I need to find the rates especially now interest rates have gone up I definitely need to work to get these gone!

Jointly my husband and I currently have £500 in our 'savings' account, which we obviously need to build on and separately I have £840 currently in my own savings account.  We do have a holiday booked and £100 of that £840 is earmarked for the accommodation, which I will accumulate as £100 a month...My husband booked and paid for the flights so I committed to the accommodation, we don't go until February

 We are incredibly lucky that we don't have a mortgage on our home, but as you've pointed out we don't really have an emergency fund.  Typical as well as our bathroom shower has leaked over the weekend and it's all come through the kitchen roof.  We think its the seal around the bath and thankfully we have a friend who re-sealed it for us before so he is coming out to look at it hopefully it won't cost alot maybe even just a crate of beer 🤞

Working from home today which I enjoy its quieter and I can get bits of housework done in between working, I will make sure I prep everything later on as I'm working in the office tomorrow to avoid any spends.  

[Deleted User]

Interesting read . Do you have a pension in place? Very fortunate to have a paid for house.

londoner2019

SarahSaves said:

Jointly my husband and I currently have £500 in our 'savings' account, which we obviously need to build on and separately I have £840 currently in my own savings account.  We do have a holiday booked and £100 of that £840 is earmarked for the accommodation, which I will accumulate as £100 a month...My husband booked and paid for the flights so I committed to the accommodation, we don't go until February

 We are incredibly lucky that we don't have a mortgage on our home, but as you've pointed out we don't really have an emergency fund.  Typical as well as our bathroom shower has leaked over the weekend and it's all come through the kitchen roof.  We think its the seal around the bath and thankfully we have a friend who re-sealed it for us before so he is coming out to look at it hopefully it won't cost alot maybe even just a crate of beer 🤞

You’re doing great. Getting your head out of the sand is genuinely the hardest, but most important thing you can do - and you’ve already ticked that off 😊

Glad that you have some savings - I would previously have all my funds for the month allocated, think I’m organised and in control, and then something like a leak happens. This way you can stay on track with plans for the cards.

I’m a WFHer too - I sometimes struggle with doing other things or feeling I haven’t been productive enough, but then I see how much time gets wasted in an office and don’t beat myself up too much.

SarahSaves

Hi BaronDale.  Yes I have a pension in place with my employer, I contribute 8% (this is the max we can contribute) and the employer contributes just over 25% which is incredible and makes me less inclined to ever move on!  Been with them 8.5years now.

I have a small pension from a previous employer also but I can't transfer into my current scheme, I think this is about £8k

Which is why i'd like to eventually, once my debt has gone, start investing because I can't increase my current pension contributions.

MatyMoo

Well done on starting to resolve your debt problem and planning a way out. 

I’m not an Accountant but have worked in Credit Management for years, it’s hard to get enthusiastic about your finances when they are relatively small and insignificant in comparison to the numbers you deal with on a daily basis 🤷‍♀️

It took redundancy and an inheritance to get me out the mire but I am now debt and mortgage free with savings 😃

enthusiasticsaver

That is a great employers contribution to your pension and no mortgage is great.  You are in a great position to save and invest once the debt is gone. 

What interest rates are you paying on the debts other than the 0% Virgin deal? 

SarahSaves

Wow this has been an eye opener… I hadn’t actually checked the interest rates on the credit cards ….

MBNA is 26.28% 
Barclaycard is 30.58% !!!!

I had NO idea they were so high. In my mind I thought I’d clear the MBNA balance first because it was the smallest, but really I should focus on the Barclaycard!  I don’t know if I could balance transfer them especially with my current debt/credit rating… I will just have to use it as incentive to clear them quicker. The virgin 0% finishes in Feb. 

Made some overnight oats and a salad for tomorrows office working day. Haven’t spent a single penny today which feels good! 

outoftheviciouscircle

Do you qualify for any balance transfers as that is a lot of interest?

Good luck as well. Becoming debt free really does become addictive.

Spinayarn

Hi! Definitely subscribing to your diary as I feel like I’m in a very similar position to you with similar spending habits. I’m currently working on trying to build an emergency fund of £1000 whilst also trying to overpay on my debts. I transferred my 2 largest CCs to a 0% card and I’m using an app to help me prioritise which debts to pay first. It also helps me keep track.
Looking forward to following your journey.