The 6 year plan!

Evenstar20

I've had diaries before that have for various reasons lost their purpose.

Last few years have had big changes in my life, I now have 2 children, I've completed my academic studies and now have a more driven passion for career progression. With this it feels like we have come to the top of our debts and now want to bring them down. 

The cost of living crisis was tough, we had huge increase in expenditure and an even bigger drop in earnings during the year of maternity leave. We knew that we had to use credit cards and loans to survive this.

I don't want to do an SOA, I do my own monitoring of these things and content on the way we manage our budgetting. Reality is through maternity leave we lost £25000 in income and with mortgage and other costs 2023 added about £35000 on to our debts.

Total debts currently are £65000

Me and my partner earn £80000 between us and are due a pay increase shortly. Since gaining new qualifications I am now actively search for a job that has a starting salary  £10000 above what I'm on now, my current company are willing to offer me this but is pending other tender processes out of our hands. I love where I work so this is worth holding out for for now. 

Some of these diaries including mine previously are pessimistic. This one is full of hope, despite the large debt we are optimistic of what can be done. We have changed our lives a lot since becoming parents which I will continue to celebrate as part of this diary, things such as weightloss and fitness, academic growth and of course our kids and what they bring. Previous hobbies and lifestyle shave been changed to give us a solid base for success. I will give a brief post on what makes up the £65000 debt and what the first steps are to clearing it in my next post. 

Evenstar20

Our debts simplified are

Credit Cards - £31050

Loans - £26437

Retail - £3752

Family - £5780

Aside from the family debt, the rest is split evenly between 0% interest and quite high 25%-35%

So the priority is to hit the high percent stuff and the minimum payment elsewhere. This give us a next in line target as the following.

Vanquis and Fluid £3230 - Paying approximately £250 a month, aiming for more from next month to take it to £400. This will then snowball onto the next debt.

Loans - These are for our cars and student loan. The student loan will take about 18 months, the car loans will likely be our last to clear.

Retail - This mainly comes from furniture purchases and we pay about £200 a month off. We have £110 on Klarna, which will be paid off next month. That will be the first success of the diary and again frees up funds to be spent elsewhere. 

Family - There is no pressure on this and was given too us but I want to be able to pay it back. When it was given we weren't in such a good position but I wouldn't feel comfortable to not repay it.

Sarahwithlove

Ref student loan, do you overpay it or just what's deducted from wages? For now I'd focus on other debts over student loan if you are making overpayments. 

I know you said you don't want to do a SOA and that's up to you but we may be able to offer some help. 

Do you have an emergency fund or any savings for one off yearly expenses? 

Evenstar20

Sarahwithlove said:

Ref student loan, do you overpay it or just what's deducted from wages? For now I'd focus on other debts over student loan if you are making overpayments. 

I know you said you don't want to do a SOA and that's up to you but we may be able to offer some help. 

Do you have an emergency fund or any savings for one off yearly expenses? 

Yeah student loan just deducts from wages, just aware that the money that goes towards that will be a boost to snowballing the other debts towrads the start of 2026.

We do have access to an emergency fund and we have a cleared credit card that has £9000 limit on it so not too concerened with that. Both of those are just for emerencies though, for actual savings we have about £500 but I don't want to add much more to that, any spare funds I want to put towards credit cards.

Evenstar20

The last few years have had lots of change of mindset, lifestyle and purpose. I'll mention these as each one comes up in my own dealings each day. Just finished a book today, I love buying new books, going in book stores and having my bookcase looking great. Problem is between me and my partner we had over 200 books that at least one of us hadn't read, probably half haven't been read by either of us. One of the changes we made was to stop buying these instead we have commited to reading what we have or if we want to read a new release we borrow this from the library. Over the last few years we have managed to read over 30 books off our pile of shame! Some of these are given away which helps to create space in our loft! Others such as Folio books we have sold and used the money to help us with increased expenses. Doing this gives us an enjoyment from getting value from our purchases rather than keep buying for the sake of it but it also feels like a physical showing of how we have changed our ways towards a debt free lifestyle.

londoner2019

Great shout re: books. I'm exactly the same. My advice? Pick up one from your shelf that you are really invested in starting. If a book is slow... or you're not enjoying it, don't force yourself to finish it. Find something else to begin.

Sounds like you have a solid plan in place for the debts. My only point would be to leave the student loan, unless it is very close to being paid off. 

Sarahwithlove

Evenstar20 said:

Sarahwithlove said:

Ref student loan, do you overpay it or just what's deducted from wages? For now I'd focus on other debts over student loan if you are making overpayments. 

I know you said you don't want to do a SOA and that's up to you but we may be able to offer some help. 

Do you have an emergency fund or any savings for one off yearly expenses? 

Yeah student loan just deducts from wages, just aware that the money that goes towards that will be a boost to snowballing the other debts towrads the start of 2026.

We do have access to an emergency fund and we have a cleared credit card that has £9000 limit on it so not too concerened with that. Both of those are just for emerencies though, for actual savings we have about £500 but I don't want to add much more to that, any spare funds I want to put towards credit cards.

As long as you have an EF that's what matters. Do you have a sinking fund that you save for one off yearly costs? Or do you just pay when it comes round? 

Scott_Weiland79

re your student loan are you making additional payments to it ontop of what they deduct from your salary?

I am just thinking I know with my student loan they take a fair bit from my salary but the interest rate charged is minimal. Do you know what interest rate your student loan is? The only reason I ask is I see you have a fluid/vanquis  credit card both are adverse lenders and aprs are 34.9-39.9 you would be better putting more towards those and worry about your student loan when they/other debts are clear.

re books download an app called Ziffit and have a clear out ££$$$$£££

Evenstar20

londoner2019 said:

Sounds like you have a solid plan in place for the debts. My only point would be to leave the student loan, unless it is very close to being paid off. 

Yeah student loan is just ticking over, I don't do anything with it. Would just like the £110 a month that goes towards it.Sarahwithlove said:

As long as you have an EF that's what matters. Do you have a sinking fund that you save for one off yearly costs? Or do you just pay when it comes round? 

We just pay when it comes around but have started to change payments such as insurances to pay in one go and spread through the year rather than multiple services under direct debits. This has freed up money and when months fall that don't need a payment we can move that to wherever seems appropriate at the time.Scott_Weiland79 said:

Scott_Weiland79 said:

I am just thinking I know with my student loan they take a fair bit from my salary but the interest rate charged is minimal. Do you know what interest rate your student loan is? 

The rate is 4.6% so yeah it's not a high priority like the other cards. I've had it over 15 years now and just getting excited I can see the when it's going to end!

Evenstar20

 As a way of increasing money coming into the house I do a lot of surveys and put a lot of effort into listing items on ebay and Vinted.

This morning I have hit a trigger to withdraw £50 from YouGov, earned £5 from prolific and sold one of our books for £13 (minus postage). Brilliant start to the morning. 

I've got an important assesment later today, few errands and then want to get a workout of some sort in too!

Evenstar20

Well the workout didn't happen but that tends to happen sometimes, got a quiet weekend so will make up for it then.

Had £32 in eBay sales today, fixed our energy prices for the year which should save us approx £100. We were on a price tracker that paid 3% lower than the price cap. This fix came in lower than we have been paying and will avoid the price increase. Energy Prices are going to have to drop over the 10% for us to not be making a saving, which I can't see happening.

Next on the list is the mortgage. This is a bit harder to predict and the early renewal charges would takeaway any saving made in future renewal offers up until the end of the fix. Fixing for 5 years at 3.8% will save us £480 a year on what we currently pay, if in that 5 years mortgages go below 3% we will have to just suck it up! I'd like that to happen eventually though, would love to go back to when we were offered a ten year at 2%! The longer the rate stays around 3.8% the better our decision will have been.

Either way with those decisions made, it gives us an extra £50 a month to put towards our credit cards.

Workout unlikely to happen today too!