New To Budgeting And Clearing my 3 credit cards debt

laura_lau

Hi all,
I've been reading on and off for a while and I finally took the courage to open my own Debt Free Diary, to help keeping myself accountable. It feels good, as I finally have a plan, but it's going to be a tough couple of years.

I purchased a flat in 2021, so I'm repaying my mortgage every month, and at the time, even if I used every penny of my savings and maxed out my (then) 1 credit card I wasn't worried, because I still had a good disposable amount from my recurrent expenses. Little did I know..... between energy prices, inflation, all bills going up stratospherically, unexpected expenses for repairs in the flat, and some naivety on my side, not only I haven't managed to put some savings aside, but I've also added 2 more credit card debts. 

This is my current breakdown:

CC1 - 5,151.92
CC2 - 4,625.87
CC3 - 4,166.15

I recently did a new credit card with balance transfer, as the 0% interest time of the first one was expiring, so now I've only got left £137 on the original credit card, which I'm paying off in the next month.

So, for now the grand total is: £14,080.94.
I've spent some time today planning my repayment and, if my circumstances remain the same for the foreseeable future, I hope to be able to clear the credit card debts by December 2025.
Luckily I fixed my mortgage rate for 5 years, so my current rate will not change until mid-2026, so my main objective is to be able to start putting aside a fair amount of savings before the end of my fixed rate, 

I know it will be quite tough, but reading through everyone's experience has made me believe I can do it, so I will keep myself accountable through this diary.

Thank you if you've read all the way until here, looking forward to some good interactions!

toby3210

I had exactly the same amount of debt when my partner was on (unpaid) maternity leave. momentum and habit is really important it took me about one year to get it down.

laura_lau

toby3210 said:

I had exactly the same amount of debt when my partner was on (unpaid) maternity leave. momentum and habit is really important it took me about one year to get it down.

Thank you, it is really good to see it is indeed feasible. Seeing other people's progress and success was indeed a very big motivator for me to start this. 

laura_lau

Here I am with my first update. I can't say it's going very well, I'm actually struggling this month. Last week I was away for a few days visiting family abroad after attending a family celebration and, although staying with family massively helped to minimize the expenses, I ended up having to use a credit card a few times, to take public transport and for buying food. 

Meanwhile, most bills for this month have been paid and also all CC, apart from CC3, have had the monthly payment paid. 

This is the new balance:
CC1 -  From 5,151.92 to 4,951.92
CC2 -  From 4,625.87 to 4,575.54
CC3 -  From 4,166.15 to 4,297.64 (this is the one I used and is also the one for which the monthly payment will go down on the 25th of the month, just before payday, which is rather unfortunate this month as I might end up going into overdraft slightly for a day, but would still be within pre-arranged overdraft so it should be fine).

The good thing is I have paid all the bills for the month, apart from the CC3 monthly payment. The bad news is that I had to use all the money that I was trying to put aside this month, to start a small savings pot, and I have very little left for the rest of the month, and it's still going to be 2 full weeks before I get paid, so I might end up having to use a credit card again for any expense until then.

And this is all for today's update, I'm going to read through other threads to get some inspiration!

laura_lau

Today I finally had the time to properly go through all the "Money Makeover" section and properly use the Budgeting tool. I tried in the past but I wasn't entirely motivated to spend all the time doing it (my bad, and very very stupid decision).
Turns out that, with current expenditure and Credit Card repayment plan I devised a few weeks ago, I'm currently overspending £573.94 a month. No wonder I always end up using the little money I was trying to put away, and more often than not end up using at least one of the credit cards. 
After reviewing all the expenses, cancelling some monthly subscriptions and writing down a monthly price cap on all monthly expenses, I managed to bring the monthly desired (surplus in) expenditure down to £305.94 a month. Now, that sounds a bit more manageable, as it includes a desired monthly saving of £50, which of course I will not be saving until after I manage to balance this ovespending problem. The remaining £255.94 means I will not be able to piggybank for eating out, hobbies (I like crafting and in particular knitting and crocheting, which is a fairly expensive hobby), holidays and birthdays, at least until February.

I have a few very strict months ahead of me, but I am finally very motivated in keeping to my budget every month as I now know for certain that it is not just a matter of not having any savings and not being able to do any house renovations in the foreseeable future, but I am at a really real risk of falling into unmanageable debt, if I don't sort it now. According to the budget and the plan I've made, it looks like, if I am very careful in managing my monthly budget in the next few months, I might be able to just about stop overspending and slowly start properly repaying my debt. 
Advise and encouragement welcome!  

So to summarize, current state of affairs:

• currently overspending £573.94 a month, which I have taken steps to reduce to £255.94 a month from October.
• No piggybanking (and no expense for eating out, hobbies and holidays at least until February
• Current debt 16,269.67 (includes the 3 credit cards + repaying a family member, which is not urgent but I want to pay asap and is already accounted in the monthly budget as above).

londoner2019

Hi! Good luck on your journey! It's good to write everything down so you know exactly where you are at. 

One thing to note - are you still *overspending* by 255? Where is this money coming from? Is this on credit?

Far more knowledgeable people than I will be able to comment and help on this. But a common theme for advice and guidance is to try to stop your usage of credit for everyday spending, slowly build up that emergency fund that you're doing right now, and then working out how to balance the books each month.

To confirm - all of your cards are on 0% currently?

An SOA might help in this situation, so you can fully analyse where you might be able to cut that 255 down to 0. 

laura_lau

londoner2019 said:

Hi! Good luck on your journey! It's good to write everything down so you know exactly where you are at. 

One thing to note - are you still *overspending* by 255? Where is this money coming from? Is this on credit?

Far more knowledgeable people than I will be able to comment and help on this. But a common theme for advice and guidance is to try to stop your usage of credit for everyday spending, slowly build up that emergency fund that you're doing right now, and then working out how to balance the books each month.

To confirm - all of your cards are on 0% currently?

An SOA might help in this situation, so you can fully analyse where you might be able to cut that 255 down to 0. 

Thank you for your input! Just a question out of total ignorance, what is a SOA? 

Up to now yes, I have been overspending through credit cards. As of now, that money does not cover anything essential, so I am hoping to be able to rein it in just by not spending anything on the above mentioned categories, until I'm able to take it from a previously saved pot. And that is definitely going to be hard, as I've been vey indulgent with myself in the past few years. 

The cards are all on 0%, apart from 1 which I was hoping to fully repay this month but haven't been able to due to having taken a little holiday to visit family abroad, but I am aiming to fully repay by December. The remaining 3 have all still a long 0% time left.

laura_lau

I feel very accomplished today. I have spent some time and found a very good broadband deal, and have already activated the switch. From October I will be paying £10 less for broadband monthly. My current contract expires in less than a month, so no early leaving fees. The new provider also gives a £90 gift card upon completion which I will be using for food shopping.
I also read this morning that a high street bank is launching a new 8% saving account, but only to existing customers, and that they just launched a £200 reward for switching, so I've requested the switch. If the 8% savings account offer is still in place after I complete the switch, I will see if I can open one and I will use it as main longer term savings. My thinking is that, even if I don't have much to put in every month, it will still return me a little bit more than with the one I currently have. 

SO, this updates the monthly overspending from £255 to £245. I've already switched energy provider in the Summer, but now I am considering that maybe I should also have a look at my mobile contract. I do not really want to switch because I'm with one of the last providers (if not the last) that still do not charge roaming in the EU, and since I am regularly there because of family, I find it quite convenient that I can use it without worrying about spending. I'll do some research..

Also, I have only spent on Tuesday this week, as it is my "in the office day", so I have to pay public transport and I often buy lunch. I have already stopped buying coffee in the Summer, but I often treat myself to lunch in the canteen or to a Pret sandwich. I will aim to bring my lunch from home most weeks, which could save me between £20 and £30 a month. I checked if I can travel through a cheaper route, avoiding taking the train, but it would extend my travelling time from barely 40 minutes to almost 2 hours each way, and I don't think it is worth it for the few pounds saved, as it's only once a week (for now, I'm sure they will add more mandatory days in the near future).

I went through all of the advice from the website again and I think I have looked into everything: I had already checked my council tax band a while ago and, sadly, it is correct, so no hope there. I have been selling loads of clothes that I do not use or do not fit me anymore, however the sales have slowed down considerably in the last 3 months. This reminds, me I finally sold a t-shirt this morning and I need to go and drop off the parcel, taking advantage that it has stopped raining for now! 

laura_lau

londoner2019 said:

Hi! Good luck on your journey! It's good to write everything down so you know exactly where you are at. 

One thing to note - are you still *overspending* by 255? Where is this money coming from? Is this on credit?

Far more knowledgeable people than I will be able to comment and help on this. But a common theme for advice and guidance is to try to stop your usage of credit for everyday spending, slowly build up that emergency fund that you're doing right now, and then working out how to balance the books each month.

To confirm - all of your cards are on 0% currently?

An SOA might help in this situation, so you can fully analyse where you might be able to cut that 255 down to 0. 

ok, now I realize what a SOA is... state of affairs, right? Apologies for my slowness, but in my defense English is not my mother tongue and always struggle with acronyms 

I think I've kind of done a SOA, I used the MSE budget planner to investigate my actual spending step by step. I think I will know better once next month kicks in, and I see how well my estimated cuts are working, plus the things I'm actively reducing (like in my post above, the broadband etc). 

Am I doing it wrong? Maybe I am missing something obvious or very important?

linz

Hi, if you copy and paste your SOA in here, people will come along and suggest savings for you. Do you do Prolific.co surveys? It's a great way of making a little bit of extra money. I'm not sure if there's a waiting list at the moment though, but you could take a look at the site. Do you use Airtime Rewards? LNER are on there. You could book your train ticket through them and you'd get 8% cashback which you can put towards your mobile phone bill. Lots of other retailers also on there too. You link your cards to the app and the cashback just mounts up.

outoftheviciouscircle

Hello, I have just read through your diary and wish you the best of luck.
Obviously until you can get that £255 overspend to £0 you are never going to become debt free. Are you paying the minimums on your credit cards or a larger amount. If you are paying above the minimum then it may be an idea to start paying less until you are not reliant on credit. Seeing the debt figure go down is motivating even if its small. Otherwise as others have said you will need to try and find additional income to cover the shortfall if the aim is to become debt free.
You still have to enjoy life while attempting to become debt free but when you buy something thats a want rather than a need you just have to really think 'what do I want more'