My Intentional Journey to Debt Freedom

Less_Talk_and_More_Action

Hello everyone
I have been following along for several years but only started posting recently.  I have followed some inspiring journeys on this board and been amazed at the progress people have made - yet somehow never applied it to my own situation or considered that the lessons might be relevant to me. 

A little about me - I am 57 and live with my OH and dog in the north midlands.   I am looking to retire in 5-7 years from now.  However, we still have a mortgage which is due to finish in 5 years if we do nothing but pay it every month.  It is quite high in terms of payments (we reduced the term) but the good part of that is it is reducing quickly.  We are hoping to get to a position of overpaying to maybe reduce that further but happy with the progress of that at the moment.

Our main debt is x 2 credit cards and a home improvement loan - more of them in the next post.

As you can see from the title, the word intentional is important to me in this process. In life, as in money management, I can be a bit impulsive and self-indulgent - if I want something, then I have never attempted to make myself wait or consider the decision.  And I didn't really think of whether the money was actually real money in the bank account or "money" on a credit card - all the same to me over the years.

I do feel I have hit my light bulb moment.  I want to retire in a good position with no mortgage and good savings.  I know we won't be able to do that if we carry on the way we are and don't take this opportunity to change our behaviour to deal with the remaining debt.   In the past I have been very all or nothing - throw money at something, pay it back in a short period of time but then spend it all again.  This time, I am approaching it differently - intentional steps to reduce the debt consistently over a reasonable time period at the same time as learning the lessons and setting up a structure that works for managing our finances generally.

I hope people will join me and share their wisdom and I intend to post regularly if only to keep myself on track.

My user name is a reminder to myself that it doesn't matter how many diaries or challenges I read, my own situation won't improve just by doing that - action is required.

Apologies for the long ramble!

Happy New Year to everyone.

L

Brie

Best of luck with your Intentional Journey!!  It is the light bulb moment that is the essential first step for so many of us.

Less_Talk_and_More_Action

It's not my intention to post an SOA.  I am pretty on top of all outgoings and we have made all savings we can on those.   My OH is completely on board and we have shared finances  - ie no separate accounts.  Our income is my salary (monthly) and OH's occupational pensions paid  x 3 monthly from different companies but adding up to a good overall pension.  

Current debt:

CC1 (me) - £9000 at 15.9%.  I will review looking for a 0% transfer but my initial enquires indicate I am unlikely to get one for the full amount so I am going to plod on with this and review in 3 months. 
Min payment is around £250 and I have just put up the regular payment to £600 per month.   I previously had a credit limit of £18000 on this card and reduced it myself about 18 months ago to £10,000 basically to restrict my ability to be impulsive.  Whilst I think this was the right thing to do, it does mean that I am at 90% of available credit currently rather than under 50% which will limit other deals.

CC2 (OH) - £2100 at 0% to run out at the end of 2024.  This will be paid off by the time the 0% expires.

Home Improvement loan - £412 a month with 24 months to run - 1.9%.  This is ticking along and not intending to do anything with this until the cards are paid and then overpay to reduce the term.  

One of the issues I have always had is trying to pay so much off things very quickly (in the style of Dave Ramsey) and then having to pay on the credit card because something happens and we don't have the money.  I recognise that the habit of using the credit card is something that needs to be broken so a different approach is needed.  

So having read lots about it on here, we are going to go down the route of having various pots and an emergency fund so that we have saved in advance for things that always come up - like Christmas, insurances, the car, the dog etc etc.   I have set this up to start in January, using another bank account we have and various savings accounts available through that account.  I would be really interested to hear what "pots" people have in case I have missed anything.  Quite an individual thing but might prompt me to think of something that I havn't yet thought of.

Having had some great information from @foxgloves, we are also allocating personal spends for the first time ever.  Again, this is to develop the habit of choosing what we spend our money on and to reduce acting impulsively.  In discussion with my OH we are going to do this as cash initially.

So I feel we have a plan - we (OH and I) are going to have a budget discussion weekly to review and also plan ahead. We have a mixture of paydays through the month so need to keep on top of transferring to pots and tracking regular payments.  Any spare money each month will be transferred to CC1.

Is it weird to say I feel quite excited at all of this - I have been successful at paying off debt many times over the years, but never in not running it up again (bit like the weight loss!!!).  And that is the holy grail I guess - I don't want to be in this position again so I want to learn the lessons and take each step intentionally so that we can get the benefit of being debt-free and mortgage free so that other choices are then available to us.  And so that we have an intentional focus on living more sustainably, not over-buying on stuff that is really irrelevant to the life we want to lead.

Well done if you have got this far - I'll try and make my posts a bit shorter on a regular basis!!!

L x 

Less_Talk_and_More_Action

Thank you @Brie. As you say, the LBM is an essential step.  I think previously when I paid off debt, I just saw it as something I was able to do.  I didn't really think that actually, there was something to learn!!!  

Brie

One of the things that has helped my mindset is to separate some of our finances.  All by accident of course. 

OH & his mom had some joint accounts so that he could buy stuff she needed and when she died a year back the accounts went just into his name.  I agreed that he should keep it that way, i.e. not joint with me, so that it's his money to spend as he likes.  Given that I've been the breadwinner for a number of years this is giving him financial freedom and that's fine as it's money I'd never counted on us/him having.  His response has to buy us treats from this (holidays etc) and to also ask more about our financial set up which he's always avoided in the past.  And that is a load off my mind as it opens us up to having other necessary discussions like wills and LOA etc that we need.  I still run the household accounts (as did his mom!) but it means that I can relax knowing that he'd know what to look for if I wasn't able to handle things for a while.  (hopefully not be needed but you know what I mean, no doubt)

Brie

So part of that comment above makes me wonder - could your OH successfully apply for a 0% card?  Maybe that way you could transfer some of the big debt and make the payments more efficient.  Just as thought.

Less_Talk_and_More_Action

Thanks @Brie.  I really appreciate the response. I’m happy with us having shared finances - we are 26 years married so pretty entrenched in that process.  OH is completely on board.  However we are going down the route of personal spends in the new structure from next week and I think this will develop over time to be a larger amount once debt is paid off. We think that will be a good way to reduce impulse spending (for example, we like a coffee shop trip and if we have to pay out of personal spends we will probably think a bit harder about it).  I have a service station habit based on work traveling and have agreed that this will be personal spends.  I imagine that this will cure me.   Over November and 2 weeks in December I spent about £100 in service stations 😱.  Not hard to do when a coffee is £5 but using my own cash will remind me a bit more - more intentional actions I hope.  Not like I can’t take a coffee with me. 

Re the 0%. We are going to look at this again but you are right. .  My husband could do a cash transfer in a couple of months but would need to see the fee.  We could then pay off mine and have it all on one card which would be easier.   Or I may have offers in 2-3 months when the balance will be below 8,000. 

Thanks for taking the trouble to comment. 

L x 

Less_Talk_and_More_Action

Today I have been pondering the food budget which is an obvious area of opportunity in terms of reducing cost.  

I follow the grocery challenge and am in awe of the amounts that people are able to stick to.  I will put my thoughts on here rather than joining that challenge but I get inspiration from there. Currently my thoughts are: 

- We have agreed a monthly budget (calendar month) of £300 as a starting point.  I’m hoping we will reduce this but want to start realistically.  

-That’s for 2 vegetarian adults. We are trying to veer to the more plant based/vegan end of this but aren’t there yet. 

- We already do a meal plan on a weekly basis.  Don’t always stick to it so that’s something to improve.  I can be a bit prone to changing my mind about stuff planned and then eating from the chippy or some other option not budgeted for. 

- We shop (or aim to) on one day a week. We want to consolidate that as the popping into shops during the week is never for anything healthy or cheap!!!

So my intentional actions in this area are:
- Better meal plans with more variety to reduce likelihood of changing mind. 

- Agree (both of us) that if we’ve planned it we will eat it.  This also reduces food waste.  This is a bit about discipline for me so I need to practice.  

- Review spending at the weekend and review what’s in/leftover before meal planning.  

- Aim to reduce this budget over time.  Any savings to be transferred to CC1.  

That’s probably enough 😁. If we do all those things throughout January, I will be very pleased. 

Well done if you’ve read this far.  One of my reasons for starting this diary was to enable me to keep an honest record of actions, successes and failures as part of being intentional rather than knee-jerk and impulsive.  It’s really helpful to me to get my thoughts down in words although possibly boring for everyone else!!!!

Lx

Brie

You might want to check out this thread for the food.  There's some interesting people who share a lot about what they are cooking and how as it's almost completely from scratch. Obviously they are likely to start a new thread for 2024 so one to look out for.

2023 Vegan Storecupboard Challenge - Page 33 — MoneySavingExpert Forum 

fyi - I am definitely not vegan and not even vegetarian but the ideas interest me and help me shift some meals away from being too meat based.  

Less_Talk_and_More_Action

I read the whole of this the other day  .  I found it totally inspiring.  We are vegetarian but lean towards vegan (or try to) on the whole food plant based end.  I have a lot of weight to lose so obviously I am not totally successful in my endeavour but would like to improve that in small stages in 2024 -starting with Veganuary.  OH also on-board with this.  We're not evangelical in our non meat-eating - just didn't eat much meat and decided to stop but I am interested in the whole food plant based end.  
As you say, the stuff they cook from scratch has given me lots of ideas of combinations I would never have put together - I need to just chuck veg in a pan and add some spices but I'm a bit wedded to recipes and tend to overthink things!!!
There isn't going to be a new thread from the original poster I don't think - they have started another thread about slow living which I have commented on as it aligns to some of the stuff that I want to achieve.  I guess someone else may take it on so I will watch out.
Thanks so much for posting and commenting - whilst I am happy to just put down my own musings it's nice when someone else pops in and you've been incredibly helpful with your suggestions.

Lx

jwil

Happy new diary!  I look forward to following your progress.

I can totally relate to the impulsiveness hence my plan to track my spending much more next year.

Good luck with the plans