Becoming debt neutral - a long haul!!

leftatthetrafficlights

I'm starting a diary here as I have decided that I want to start focusing properly on becoming debt neutral. I have been thinking about it for a while now and started the process a couple of months ago but feel that it's the right time to start a diary to help keep me on track as I have a horrible habit of spending unnecessarily! 🤦‍♀️

The debts we have are large but very old; they don't have any accruing interest and in all honesty I could just continue to pay what I'm currently paying on them and the proceeds of our estate could be used to pay them off once we pop our clogs - however, it bothers me that they are still hanging around and I'd like to have enough saved to get rid of them before we shuffle off the mortal coil!

Due to having no interest added now, it's not worth paying them off individually; having the money in a savings account will earn me interest and hasten their repayments so that's the best way for us to do it - I realise that this is a very fortunate position to be in....

I'm not sure how much we owe now - I think it's in the region of 45k and we've had these debts for around the past 20 years I think 🤔 I contacted all the companies and self-managed a debt repayment plan at the time (our debts were a lot higher at that point) but the two highest debts were secured on our property and these are the ones that we are still paying. I dont think full and final settlements will really be an option on these debts so I just need to get the money together eventually to pay them off. I will declare the exact figure needed once I get the next load of statements but for now I'll just work with my 'guesstimate' 😉

We ended up with the debts due to having high salaries at the time, spending stupidly as we thought it would never be an issue, then it all falling apart due to illness - at one point we were on the verge of bankruptcy as a result (I got a job 24hrs before I was going to file the paperwork with the court) so I know how awful things can really be 😔 Thankfully, we are in a much better position now and have achieved a lot in the past 20 years financially but I've never forgotten how appalling things were and don't take for granted where we've got to. 

There's no magic wand available to get to being debt neutral so this is definitely going to be a long haul -  I left paid employment in 2022 (through choice and that is not going to change - I'm much happier now) so everything that builds the debt neutral fund will be gained by getting back onto the frugal wagon and being much more careful with what I pay out for. 

We currently have an amount of savings I'm comfortable with, an emergency fund and I have lots of 'pots' for annual expenses that I put into every month. I have a bank account with a 'round-up' facility and a rewards scheme (although that isn't great at all!) which I use for groceries and petrol each month and my annual 'pots' are in interest accruing accounts.

So, my plan is to direct the money we save each month from dh's salary, the 'rewards' we get from the bank account, the interest we accrue on the 'pots' and any savings I can make from our variable expenses to our debt neutral fund. 

The first thing I'm going to do is try to reduce our grocery expenditure by meal planning according to what we have in - I've done the vegan storecupboard challenge for a number of years now but haven't ever really meal-planned from the stores for more than a couple of weeks 🙄 I will do an inventory in the next week or so, complete a meal plan and try not to go 'off-piste' every couple of weeks! 🤦‍♀️ 

I do buy ethically where possible and eat organically where I can and I'm not going to compromise on that - I know that changing this would mean substantial savings but for me it's not worth it - I'm not in a situation where I need to; years ago when I was in a dire situation I did absolutely everything possible to get myself out of it but that isn't necessary now - the debt neutral desire is a want as opposed to a need, hence the long haul! 😉 

Anyway, that's turned out to be a bit of an essay! 😳🤦‍♀️ I'm off to update my signature! 😁

ETA: Decided not to have the figure in my signature - I'll update it on here whenever I make a payment as it will help me see what I'm achieving however small! 😉

itsthelittlethings

Good luck!

leftatthetrafficlights

Thanks @itsthelittlethings 😁 

So, today I have done my ambient food inventory and rearranged my kitchen cupboards- the first step in making sure I reduce our grocery bill! 🙌 Tomorrow, I'll do the freezer inventory - would have done it today but I'm pretty tired after what I've already done so I'm having the rest of the afternoon off! 😉 

Last night I made a casserole with stuff that we had in the freezer, cupboards and greenhouse so that was a 'free' meal as such - we're having the leftovers tonight with some broccoli from the freezer 😋 

I had 42p of rewards come through so have transferred those to the fund today - I did say it would be a long haul!! 🙄😂

£1503.41/£45000

leftatthetrafficlights

£83.13 moved over to the fund today - a combination of interest on various accounts and cashback 😁 

I've decided that im going to break the debt into 1k chunks to help keep me motivated - the massive figure makes me feel like the little bits I can put in are fairly pointless (I know everything helps but its daunting! 🤦‍♀️) - a smaller target is definitely better for my brain 😉 

Freezer inventories were done yesterday so I'll be spending time this weekend doing some menu planning 😁


£586.84/£1000

leftatthetrafficlights

56p transferred today - just cashback from last week 😉

I should have a few quid left over from October's grocery budget by the end of tomorrow so I'll transfer that tomorrow night. 😁 

I've done really well with eating from the storecupboard and freezers over the past week- used up some stuff that has been in the freezer for a considerable amount of time so I'm glad I got the inventory done. Hopefully I'll have a very low spend November as I'm going to use as much as I can from the house 🤞

£587.40/£1000

leftatthetrafficlights

£10 transferred from the remains of October's grocery budget and a few 'rewards' payments totalling £1.11.

My bank also does a round up on payments which completes each year in May so once that happens, I'll be adding that amount to the fund too 😁 

Dh spent £19.49 on groceries yesterday which is more than I expected but we've got everything we need for food this week now and we're still doing really well on eating from the storecupboard & freezer 🙌 I'm reasonably confident that I can do well on the grocery front for the rest of the month - although I think it will be better if I do the shopping as dh does tend to go 'off-piste' when he does it!! 🙄😂

I've renewed my broadband today as my contract was coming to an end - I've got it reduced by £7 until March, then £4 cheaper than the current price until the following March when it returns to pretty much what I'm paying now - I did check for other options but the package suits us and the cheaper comparable package didn't state what price increases there would be and from previous experience with the provider, I know they can be quite hefty 🙄

Anyway, that's a few more quid that I won't be paying out from the bill account 🙌 I really need to decide on how I'm going to work the bill account - I like to have a buffer in there 'just in case' but I think I need to be considering how much is enough due to a non-existent interest rate 🤔 I think I'll have a look at it all over the next week and make a decision! 

£598.51/£1000

Sarahwithlove

I think unless any of your bills drastically change each month i would think a fairly small buffer would be ok. Does the account have an overdraft just in case any unexpected price increases? 

Blackcats

I keep enough to cover my monthly bills in my current account plus a small buffer "just in case" and then I have a savings account with the same bank that I keep £250 in that earns some interest and that I can quickly and easily transfer money from into my current account in the event of a big blooper when I've forgotten something major.  I haven't ever forgotten anything major but I like the security of the £250 buffer.  This system allows me to scoop up any odds and ends at the end of the month from the current account into another savings pot plus any interest on the £250 gets moved into another savings pot.  Hope that makes sense and might help with your thinking.

leftatthetrafficlights

@Sarahwithlove and @Blackcats - thank you both for your suggestions/comments, it's very helpful having other people's thoughts and experiences 😁 

@Sarahwithlove - I don't have an overdraft facility and my bills are static other than my electricity bill which I pay monthly. I have allocated an amount for that which, to date, I've never exceeded. My bank does send me notifications the day before things are due to be paid so I could move money quickly if needed 🤔 

@Blackcats - your system makes perfect sense to me! I think that I definitely need to reduce my 'buffer' somewhat so that I have more money in interest paying accounts. 

I'm thinking a £100 buffer would be sufficient- I'm going to make check the monthly amount and move everything surplus to that figure (plus the buffer) into the fund 😁

Sarahwithlove

leftatthetrafficlights said:

@Sarahwithlove and @Blackcats - thank you both for your suggestions/comments, it's very helpful having other people's thoughts and experiences 😁 

@Sarahwithlove - I don't have an overdraft facility and my bills are static other than my electricity bill which I pay monthly. I have allocated an amount for that which, to date, I've never exceeded. My bank does send me notifications the day before things are due to be paid so I could move money quickly if needed 🤔 

@Blackcats - your system makes perfect sense to me! I think that I definitely need to reduce my 'buffer' somewhat so that I have more money in interest paying accounts. 

I'm thinking a £100 buffer would be sufficient- I'm going to make check the monthly amount and move everything surplus to that figure (plus the buffer) into the fund 😁

I think blackcats suggestion is a good idea. Having a buffer of £100 and then a saver which could easily transfer is a good idea. 

leftatthetrafficlights

I've taken the advice on board and moved the surplus cash from the bill account into the fund 😁 

The buffer is slightly more than £100 as I always round up my bill amounts but it's not too far off 😉 

ETA - 79p from cashback transferred 😉

£899.30/£1000