Debt free by 40...

kfletch88

Hi guys, I'm new here! After a post on UKPF Reddit this morning, someone recommended a diary on here..I didn't know that this was a thing, but I'm so glad I've found it and I'm hoping this is going to get and keep me on track!

Background, I'm 35 and my husband is 34. We have a son who will be 2 next month. Mistakes have been made in the past and we have just under £9972.01 on a 0% credit card, £1,143.58 left to pay on our sofa and £974.57 on PayPal credit as well as a car on finance which ends in 2 years (£350p/m). Over the last 6 months or so I've been doing a lot of research into personal finance and wish I'd done this so much sooner. I want to get to a point of being debt free, but I just can't see it ever happening and it's really getting me down, I wake up every day stressed about money.

We have a household income of £84k (me £57k, husband £28k). This works out to £4843 per pay day take home (4 weekly). Our bills total £2498 (mortgage, water, energy, council tax etc), £566 goes into sinking funds (car insurance, home insurance, boiler service etc), £978 goes to expenses (groceries, fuel, sons activities etc) and lastly £477 to debt pay off. I'll break these down properly in another post!

We have £800 in a S&S isa currently and £2758 sitting in a savings account for emergencies. I can't help but feel that I should put this money towards paying debts off, but that would leave us nothing to fall back on.

Our house is in desperate need of a new roof (several leaks) which we've been quoted £6000 for, we also need a new bathroom. We've not had a holiday in 5 years. I just don't see how we will ever be able to afford to do anything. I see all my friends doing lovely things like house renovations and holidays and I can't help but feel down that I don't see how I can ever provide a good life like that for my family!

Please be kind, I'm already feeling very fragile over the situation. Has anyone been similar and manage to claw out of it and get everything back on track? Any advice for sorting everything out please?

kfletch88

The breakdown as of this morning!

Sarahwithlove

Pet insurance seems high. Also do you need a health plan? Same with Virgin, Netflix, prime and Spotify. What is £88 on exercise? You have a gym membership. How is SW going? Is it something you need to continue or could you do it at home or online? Also hello fresh is not a cheap way to buy your meals. You have a lot of extras which maybe need reviewing until you have got rid of some of the debt. 

 Is there any way for your husband to get a better paid job? Do either of you have option for overtime? Do you have anything you could sell?
 
Once debts and car finance are paid off you will have a good amount spare each month for all the extras you need to get done. What size house are you in as your mortgage seems very high. 

elsien

Hello and welcome. 

I have little to offer on the budget front but just wanted to say you will find lots of people here who’ve been in a similar situation so get where you’re coming from.

kfletch88

Sarahwithlove said:

Pet insurance seems high. Also do you need a health plan? Same with Virgin, Netflix, prime and Spotify. What is £88 on exercise? You have a gym membership. How is SW going? Is it something you need to continue or could you do it at home or online? Also hello fresh is not a cheap way to buy your meals. You have a lot of extras which maybe need reviewing until you have got rid of some of the debt. 

 Is there any way for your husband to get a better paid job? Do either of you have option for overtime? Do you have anything you could sell?
 
Once debts and car finance are paid off you will have a good amount spare each month for all the extras you need to get done. What size house are you in as your mortgage seems very high. 

Thank you for your comments! Yeah, unfortunately the pet insurance is high, but we are kinda stuck with it as the cats have heart murmurs so we can't shop around as insurers don't cover pre-existing conditions.

The health plan up until recently has been cost effective as we can claim back dental/optical/prescription costs on it, however as of last month the price has gone from £42pm to £55pm so i need to run the numbers as to whether its cost effective now. 

£88 is a circuits class we do once a week and we play for a rounders team, so that pays for that. 

I have lots of things waiting to go on fb marketplace/vinted/ebay to sell, just need to get round to listing it all. 

We're in a 4 bed semi-detached in Birmingham.

In terms of work..we are salaried and no option for over time. For my husband..he left school with very little qualifications. He's worked in retail his whole life up until a couple of years ago where he managed to get a job on the railway. He's doing lots of courses through work to make himself able to move up, but unfortunately it's not an overnight thing . He's one of the hardest working people I've ever met who just didn't have the best start or guidance in life, he's worked full time since he was 16. He even redid his gcse's at night school a few years ago whilst working 60+ hours a week in retail. Hopefully in the future there will be scope for promotions for him though!

WinterWarrior

Once you learn the slimming world principles it’s very easy to carry on without the classes. That would save £40 per month. Personally I prefer calorie counting, which feels less restrictive to me. Do you need the gym as well as the £88 for exercise classes and rounders? Do you have time for both? 

Have you looked at the Dave Ramsey method of debt repayment? He swears by a £1000 emergency fund and firing everything else into debt repayment until it’s cleared. That might help with the savings versus debt question. 

Good luck ⭐️

kfletch88

In all honesty no, we don't have time for both, I also play football too. I can't actually remember the last time we used the gym memberships. It's one of them things I've been clinging on to that I'm going to start going..and then never do! 

I'd not heard of Dave Ramsey until yesterday, a few people have mentioned him to me. I'm definitely going to check him out! Thank you.

mumtoomany

Hi, @kfletch88, and welcome to the site. A couple of things I've noticed from your posts. 

Firstly you say you are both paid four weekly, but list your bills as monthly. If this is so, then every year you should have an extra pay cheque for you both. A huge lump to clear some credit with. 
Secondly, if you add up the bills, sinking funds, expenses and debts, you are still loosing around £300 per month. Any idea where it's going?
Thirdly, when I read through the money for your sons activities, football, swimming, and expenses, I thought they were a little high for a couple struggling with debt. I then realised that he is not yet two years old! Try cutting these out for a while, take him to the park, kick a ball around the garden, feed some ducks or pigeons, pick blackberries, trudge through fallen leaves. All free, and at least as much fun for such a small child. 

My suggestion is to make a spending diary. Both log EVERY penny that you spend, for the next month, find where the money is going. Stop buying hello fresh. Have you got the recipe sheets that come with them? You can make the same meals, but much cheaper. If not look online for them. Borrow recipe books from the library, or find recipes on line. Shop with a list, having meal planned first. Read the grocery challenge on the "old style" section of the forum, lots of recipes and good ideas to cut spends. Batch cook and freeze meals for days when you are both working. 

You can do this. You need to do this. What happens if the s*** hits the fan? How would you manage then? Twice in our married lives, our income has plummeted almost overnight. It can happen to anyone, and does happen to a lot of people. 

Keep the diary going, you will get lots of support. Read other diaries, lots of ideas. Join some challenges. Good luck with this, I'll be reading along, hugs, mumtoomany.xxx

kfletch88

Hi @mumtoomany. Thank you for taking the time to reply to me

Yeah, we do have a pay check where we don't have to pay the mortgage, it's December, so that will be going towards the debt payoff! We're also due a bonus at work, they've confirmed we will be getting them, just not when or how much, so that will help too!

Yeah, the costs on our son are a little high. I've just wanted to give him the best start in life experiencing things. Especially as there are no children in our family other than him, I wanted him to meet other kids and be socialised. By taking him to things i've met some really great friends, which has really helped with the first time Mum journey, but i totally get that it is an expense we could do without. 

The spare £300 you refer to..I have to admit just gets wasted. Food, drinks, bits while were out etc. As of this week I have started a log of everything we spend which I input every evening after our son goes to bed. 

Thank you for all the advice, really appreciate it! xxx

kfletch88

Today has been a good day! I reviewed all our money, and cancelled a few things.

Firstly our gym memberships as tbh, between working full time, playing 2 sports, being a parent, we just don't get time to go to the gym. We had a chat this morning and just decided to cancel them as we have a treadmill and a bike at home, play sport, we can go to parkrun, go for a walk. So that £44 will be going towards debt instead!

I also cancelled our mobile phone insurance, as tbh, we've only claimed once in about 7 years...we could have bought new phones many times over in the amount we've paid in insurance costs..so that will be another £21 towards debt!

I'm going to cancel the washing machine cover, again, in the 7 years i've been paying it..i could have bought about 5 washing machines i think! But I have to ring them up to do that, a job for tomorrow hopefully if I can fit it in around work meetings!

Lastly, Hello Fresh has been cancelled. We've decided to do a meal plan and a weekly shop, do some batch cooking, make meals for two nights etc so hopefully cut back on grocery expenditure!

Overall, I think we've definitely made some positive steps today towards sorting our life out!

How's everyone else doing today? xxx

Time2count

Could you postpone the swimming lessons for your son? I totally get it's an important life skill but as he's not yet 2 you could cancel the lessons for a couple of years while you sort the debt out. 
You could still take him for a swim every couple of weeks which would be a lot cheaper. Similarly the football club for him?
What comes under the son's expenses £100? Is that just for clothes/ nappies? Could that be reduced at all?
I'd also consider scrapping slimming world, with the exercise/ sports you do I'm sure just healthy eating/ cutting back would do the same for you.
Well done for cancelling the insurance and hello fresh, that will help lots.

With the missing £300, well done for logging it. How about removing it though? Once you've been paid make sure bills money is in the account then the grocery/ fun money etc transfer to another account and when it's gone it's gone. I'd keep the 'spare' money in the original account for the first couple of months while you're tweaking your budget and then give it a category and use it for that.

With the Amazon S&S is that really a flat £100 every month?

You have a Christmas gifts fund, is that also for birthdays/ anniversary/ colleague's leaving/mat collections etc or could that be where some of the £300 goes?
Nothing for clothes/ hair for the adults?
Nothing for holidays/ days out/ entertainment?

I'd look to reduce Virgin when you can, they are usually amenable to a phone call a few weeks before contract ends and asking for a reduction, if not, look for a different provider. 

You have approx £12k of debt and allocate nearly £500 a pay day to it so without additional interest you'd clear it in just under 2 years. A year of making changes to your budget and throwing everything you can at it would clear it. Can you tweak any more to get to £1k per payday to it? You've already found £267 for it. Can you find another £250? Swimming? Football? At least 1 of you is in a union, do they offer any cheaper life/ health insurance? 1 I used to belong to did. Plus you have the 13th pay which will help, you can totally do this in a year if you put your mind to it, best thing is your son is still young enough to enjoy completely free days out. Do you need £220 a month fun money, could you reduce this even a bit maybe have £90 each?
Cancel Amazon for a year, bulk buy stuff in £land/ b&m/ savers etc. With cancelling hello fresh you might find your food shop increases a bit. But you can look for cheaper supermarkets and as you've identified bulk cook, make your freezer your best friend.

With your wages I'd be looking to get my budget to a place where your wages will pay for all the necessaries and your husband's can be used solely for the house work that needs doing/ holidays/ days out/ fun stuff etc. Maybe as a mental exercise only for now, work out a budget based just on your income and see what would have to go to make it work. You might find it's not possible but you might surprise yourself with how much you can tweak things to make it possible. Whenever I get a pay rise I don't change my budget, the extra is allocated to savings. I've been in a position to basically double my wages over the past few years (admittedly I've lost UC in that time too) and as much as possible I have kept my budget the same. In fact it was only last year that I increased some areas purely due to the cost of living, some of those monthly amounts had been unchanged for the past 20 years! I realise bills etc you're mostly stuck with, but the discretionary spends are mostly about changing your mindset and accepting that you can't have something when you want it.
I truly think if you make a few more changes you'll be able to clear this in a year. A year later you'd have the £12k that you've spent on debts in a savings account ready to help with the work you need to do in your home.
And with the 13th payday you could even give yourselves a treat as a reward for tightening the belt for a year.

If you really wanted to go nuclear on it you could consider taking in a lodger. Totally understand if that doesn't appeal but with a 4 bed house it is an option to explore.