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    • m_c
    • By m_c 21st Apr 17, 7:59 PM
    • 64Posts
    • 48Thanks
    Facing upto the debt mountain
    • #1
    • 21st Apr 17, 7:59 PM
    Facing upto the debt mountain 21st Apr 17 at 7:59 PM
    I've ummed and ahhed about starting a thread on here for a while, but having read through a few of the threads, I've decided to go for it.

    So, after far too many years not really paying attention to spending, just paying a bit above minimum payments, and if I'm being brutally honest, being too scared to add up my total debts, after Christmas I finally sat down, went through all my statements, and made a spreadsheet.

    It was good, in that after making some effort to be a bit more frugal last year, and despite making a couple major purchases, my debts as of the end of 2016 totalled at just over 20,000.
    It was seeing the figures laid bare that really made me think. In December alone I paid 314.60 interest.

    As of the end of 2016, the debts were as follows-
    -1200 in current account overdraft
    -790 GM card (had been closed since Beneficial/HSBC stopped the GM card)
    -1850 Barclay Card
    -3900 Capital One Card
    -6500 Tesco Card
    -6000 Bank Loan

    I'm employed on a reasonable wage (take home around 2k a month, with about half of that available after essential expenses), and also self-employed doing a few things on the side (mostly ebay sales, and some event work).

    My first goal was to wipe out the GM Card, as I wanted that account fully closed. At the time I wasn't sure how having it would affect my credit score, so I didn't want to start applying for any new cards until it was paid in full. Thankfully Decembers pay check was a bit higher than normal, and business sales had been pretty good, so the first thing I done was pay the GM card of in full. It actually took an extra month, as I had to pay the final interest of 11.92, but such is life.

    My next goal was reducing interest, but as I already mentioned, I wanted to wait until the GM card was fully closed, to get my credit history as good as possible, so was going to wait another month before applying for some 0% offers.
    However I had signed up to the MSE Credit Club when it was launched, but I never got any valid results due to my account not being able to get matched to Experian. To my surprise, at the start of January, I got an email saying my Credit Score had been updated. Logging in, and having a nose around as you do with new things, it listed a Virgin Money card, with 0% balance transfer for 24month with no transfer fee, and I was 95% guaranteed to be accepted.

    Roll forward a couple weeks, and I had 7300 transferred with 0% interest for the next 2 years. My Capital One and Barclaycard were cleared, and the Tesco Card dropped to 3800.
    During January I also made the most of some eBay offers so I only paid 1 on auctions, and had a good cull of stuff that was lying around which gave a good boost to the finances.
    At the end of January, my total debt was -18800. A change of nearly 1400.

    February also turned out a good month. A few more big items were soldI got a 0% offer through on the Barclaycard, so the remaining Tesco balance got transferred, so the only debt I was then paying interest on was the bank loan. As I'd like to buy somewhere soon, I made the decision to up my overdraft and get as much as possible into a Help to Buy ISA via the maximum 1200 opening month deposit. I do pay for a premium bank account mostly for mobile insurance and breakdown cover, but it also means I get a cheap overdraft. Having a 2000 overdraft, and getting to around -1800 costs me about 15 extra for the month. Business sales also gave a welcome boost, along with selling a few more items.
    At the end of February, my cash net worth was -16700 (i.e. -17900 of debt plus the 1200 ISA), a change of over 2000, but the big bonus for me, was I'd over halved what I was paying in interest, to 145.

    March started of with good intentions. I had a couple weeks of leave to use up, and had planned to put some much needed extra effort into the business to get some new product lines on the go, but sod's law struck. A new machine I only bought last year died with some rumbling, and funny smells. Some head scratching, doodling, and the eventual decision that if I was going to modify it, I may as well do it how I want it rather than as cheaply as possible, around 1500 was spent on the required bits. I also decided to modify another machine to make making the bits for the dead machine far easier, so all in all, in March the business cost me over 2500. The silver lining is it means I won't be paying any tax on the business for the 16/17 tax year, but it also means it won't of made a profit.
    Despite all that, my end of month figure rose by over 200 to 16450. Interest cost dropped to about 50, but was offset by the BT fee of 115 from last months Barclaycard/Tesco transfer.

    At the end of March, things stood roughly as follows-
    -1000 Current Account
    -4100 Barclaycard
    -850 Capitalone (I still use this for my main spending, as it gives the best cashback)
    -4000 Bank loan
    1400 HtB ISA

    Which means since the end of last year, my finances have improved by over 3800, and I'm on track to pay less than 50 interest per month.
    The main reason being due to finally sitting down, adding things up, and facing the stark reality of my debts.
    However, if it wasn't for the MSE Credit Club, I would very likely still be paying far more interest.
    Last edited by m_c; 21-04-2017 at 8:51 PM.
Page 1
    • m_c
    • By m_c 21st Apr 17, 8:08 PM
    • 64 Posts
    • 48 Thanks
    • #2
    • 21st Apr 17, 8:08 PM
    • #2
    • 21st Apr 17, 8:08 PM
    And just to add a bit history, I recently sat and went back as far as I could get a complete set of statements, which was May last year (my Capital One card got stopped for fraud twice last year, and they only show the previous account number statements online, so any statements before that I have to manually request).

    As of the end of May 2016, I owed -24,100, and paid 316 interest.

    I happened to be looking at a reasonably expensive holiday after a colleague mentioned a certain location that I'd quite like to visit. With the interest alone I paid in those last 8 months of last year, which was over 2600, I could of had that holiday. That thought alone drives home the true cost of my debt, and how I could of visited far more places had I been more sensible several years ago.
    • m_c
    • By m_c 3rd May 17, 9:19 PM
    • 64 Posts
    • 48 Thanks
    • #3
    • 3rd May 17, 9:19 PM
    • #3
    • 3rd May 17, 9:19 PM
    As of the end of April, figures were as follows-
    Overdraft - 1299.70
    Barlaycard - 4047.68
    Capital One - 1389.32
    Tesco - 0
    Loan - 4024.95
    Virgin - 7154.73
    And the HtB ISA is upto 1600, leaving my overall balance at -16316.38, which is a 117.10 improvement over last month.

    I'm happy with that, considering things were looking as though they were going to go the wrong way.
    I had a relatively good month business wise, with one outstanding invoice being paid, and online sales having a very good couple weeks, so I was able to transfer 500 into the current account and reduce the overdraft.

    Total interest cost for the month was 37.87, which I'm really pleased with. It's about 12% of what I had been paying in interest at the start of the year.

    I've got a money transfer offer from Barclaycard this month, so I could transfer 1500 for 3.9% (58) on a 18month 0% deal, and clear the overdraft, but I'm hoping to be out the overdraft completely within the next couple months. As it stands, the overdraft only cost me 13.37 this month, and it was well used this month, so the transfer fee is roughly 4 months worth of overdraft fees, which makes doing a money transfer not really worth it, provided I don't need any unexpected lumps of cash.

    I have been considering changing credit cards. I'm using the Capital One for day to day spending as I get cashback on it, and I aim to pay it of every month so I'm not paying any interest (I've managed that for 3 months now!).
    The Barclaycard and Virgin cards, I'm not using for spending as they've currently got 0% transfer deals on them, and I'd like to keep them separate for now. I could get cashback with the Barclaycard though.
    And I've stopped using the Tesco Card, as I rarely used the clubcard vouchers. The only reason I'm keeping it for now, is for emergencies.

    I'm torn between keeping the status quo until I get a couple thousand saved in the current account (best interest option), then closing the Tesco card, waiting a couple months then opening a new card with a 0% purchase offer. This would mean it'll be over 6 months since I got the Virgin card, and available credit will of dropped, so my chances of getting a new card should hopefully be boosted.

    Or just trying to get a 0% purchase card now, and hope I get it, so I can close the Tesco card, and get a head start in boosting cash levels.

    My concern is with my current debt levels, at the end of April I'm at 51% credit usage. Taking the Tesco card out the mix, that jumps to 69%.
    I'm going to wait and hope my Credit Club report starts working again this month, as I'd like to see what it suggests.
    • Bobarella
    • By Bobarella 3rd May 17, 10:53 PM
    • 10,472 Posts
    • 69,775 Thanks
    • #4
    • 3rd May 17, 10:53 PM
    • #4
    • 3rd May 17, 10:53 PM
    Good luck with your repayments, you sound organised.
    " Your vibe attracts your tribe"

    Debt neutral 27/03/17 from 40k in the hole 2012.
    Roadkill 17 56.58 2016-62.28 2015- 84.20)
    RYSAW17 1900 2016 2,535.16 2015 1027.20
    • m_c
    • By m_c 5th May 17, 5:09 PM
    • 64 Posts
    • 48 Thanks
    • #5
    • 5th May 17, 5:09 PM
    • #5
    • 5th May 17, 5:09 PM
    Thanks Bobarella.
    Organisation is key, but if truth be told, I'm finding things a bit mundane and demotivating just now. The first few months it was very motivating to see a big change in things, but now it's just a case of waiting between paydays to make any real difference.
    I know the extra expense for the business was the big culprit over the past couple months, but it's caused a far bigger knock to my motivation than I expected :-/

    There are a few things I'd really like to buy, but I'm determined not to until I'm comfortably out the overdraft, and the van is mot'd (must check the date, but I think it's got another couple months..). I'd like to change it, but if I can nurse another year out of it, I should have cash to buy something newer and not have to resort to more debt.
    • Tahlullah
    • By Tahlullah 6th May 17, 4:40 PM
    • 871 Posts
    • 4,876 Thanks
    • #6
    • 6th May 17, 4:40 PM
    • #6
    • 6th May 17, 4:40 PM
    Keeping up the enthusiasm is a job in itself. We all go through periods where we wax and wane and start living from one pay day to the next, waiting for an injection of money to pay towards a debt.

    Something positive will happen so you can get your mojo back!

    Keep going. Sending you happy vibes.

    Striving to be mortgage free.
    2018 MFW #135

    600 of 2000
    • rjwr
    • By rjwr 6th May 17, 6:48 PM
    • 340 Posts
    • 208 Thanks
    • #7
    • 6th May 17, 6:48 PM
    • #7
    • 6th May 17, 6:48 PM
    I will agree with the organised comment above. Good work.
    But never spend money you don't have to buy things you don't want to impress people you don't like.
    Originally posted by kidmugsy
    • m_c
    • By m_c 6th May 17, 8:10 PM
    • 64 Posts
    • 48 Thanks
    • #8
    • 6th May 17, 8:10 PM
    • #8
    • 6th May 17, 8:10 PM
    It's surprising how making a big dent in the debt improves mojo, but I need to wait until next pay day for that to happen again.

    On the plus side, it's getting into the busy period of year for my side business, so once all that work is done and the invoices paid, it should give a good boost, but it'll be the end of June into July before that'll show up.

    In the shorter term, short of any disasters, total debt should drop below 15k this month.
    • m_c
    • By m_c 2nd Jun 17, 6:54 PM
    • 64 Posts
    • 48 Thanks
    • #9
    • 2nd Jun 17, 6:54 PM
    • #9
    • 2nd Jun 17, 6:54 PM
    May figures are in.

    OD - 1484.57
    BC - 3966.74
    CO - 719.78
    TB - 0
    Loan - 3537.91
    HtB ISA - 1800
    Virgin - 7083.18

    Giving an overall balance of -14992.18, which is an improvement of 1324.20.

    I'm happy I got under 15k, as it was touch and go as to whether I'd get enough additional income in to hit that figure, however a rush of ebay sales over the last few days of the month meant I made it :-)
    I am a bit annoyed the cost of using the overdraft was pretty high this month, as the fee came to 21.72. I knew it was going to be a bit higher, but wasn't expecting quite that high, which meant my total interest cost for the month was 42.44.

    One thing I am finding really beneficial, is using only the Capital One card for spending, as it means I know how much I'm spending each month. This months statement is going to be a bit higher, due to a couple additional unplanned expenses. I've set a goal of 1100, but am hoping to keep it under 1000. Just means I need to spend less than 40 before next week.

    This month, the goal is to minimise the overdraft. I'll hopefully also get paid for some event work this month, which would give a good boost to the figures and eliminate the overdraft.

    And to add to my options this month, I received a letter from Barclaycard today with balance and money transfer offers. Both have a fee of 2.4% with 0% until June 2019 and December 2018 respectively.
    If I took 1500 as a MT (that's roughly the max I could get with my current credit limit), that would cost me 36. Keeping 1000 in the current account would mean I should finish this month around a zero balance, however I'll be in the overdraft in a few days anyway, so I'll be paying some overdraft fees this month regardless.
    I have crunched the figures in the loan repayment calc, and moving 500 to there would save me 16 in interest over the life of the loan.

    The MT offer is very tempting, as I'm pretty sure it would save me money, plus give me a good kick to get out the overdraft. At last months 3.9% offer it didn't make sense, but this month it probably does.

    My current medium term plan is get out of the overdraft, and aim to finish every month with the current account in credit, with any positive balance going towards the loan. Pay the loan off, then use the current account to build up savings to the point at which the interest rate drops (my current account is interest bearing, but I can't remember the rate or limit!). 1500 extra would certainly help reduce interest cost, but I'll need to run some figures to work out if it'll be enough to make the fee worth it.
    • m_c
    • By m_c 20th Jun 17, 12:16 AM
    • 64 Posts
    • 48 Thanks
    Just a quick mid month update, now the dust is settling on a few weeks of work chaos.
    I've definitely missed my CO spending target. A couple last minute business purchases pushed it over my planned 1100 limit, but only by 40.

    That did prompt me to sit down and go through all my spending, and it turned out I spent 477 on business, so personal spending was under 700.
    Only using the one credit card is certainly help me keep track of spending far better than before. My aim is to get regular spending under 500 a month, and save for anything extra, but I need to get the overdraft cleared for that plan to work.

    Anyway, I'm off to finish making up some invoices, to try and get some money in and get a big dent made in the overdraft (or even cleared if everybody pays quickly!)
    • m_c
    • By m_c 29th Jun 17, 8:48 PM
    • 64 Posts
    • 48 Thanks
    Minor near end of month update. The overdraft is no more

    Had an absolute hectic week, with little sleep, but enough people have paid their bills that the current account is going to finish the month with a positive balance. Might even be enough to justify a little additional loan repayment.
    • m_c
    • By m_c 6th Jul 17, 11:40 AM
    • 64 Posts
    • 48 Thanks
    The monthly figures are in.

    Current Account - 7.55 in credit!
    BC - 3876.74
    CO - 1140.64
    TB - 0
    Loan - 3049.06
    HtB ISA - 2000
    Virgin - 7012.35

    Giving an overall balance of -13071.24, which is a reduction of over 1900 this month.
    Overdraft cost was quite a bit higher than I'd hope at 24.00, but most of the month was spent in it, so I can't really complain.
    Only other interest charge was the loan at 18.90.

    This months Capital One is looking to be around 1000. I'd still like to get my monthly personal spend under 500 on it, but I know this month includes around 300 of business expenses, and some vehicle repair costs.
    I have had a quick look at YNAB as I think it'll help me budget better, but have not really had the time to look at it properly, and I'm currently limping along on mobile broadband so can't really watch any online videos just now :-/

    I'm going to hold of with too many budget predictions for this month anyway. I'm of on holiday in a couple weeks, which may prove a little bit costly, but we'll wait and see. I'd really like to get below 12000 (or 11000 if my final bills get paid), but that's entirely dependant on the holiday cost.

    The main thing on my mind just now, is the bank loan. It'll be the last thing I'll be paying interest on, and the last payment is due in November. I'd really like to get the last payment made at the start of October, however that will depend on no surprise expenses over the next few months.
    Since the current account finished in credit, I did make an additional payment this week of 49.06, just so it's now sat at a nice round 3000.00.
    • m_c
    • By m_c 5th Aug 17, 9:44 PM
    • 64 Posts
    • 48 Thanks
    Time for the monthly check in.

    I'll get the figures out the way first.

    Current Account - 209.92 in credit!
    BC - 3786.74
    CO - 1464.92
    TB - 795.99
    Loan - 2507.88
    HtB ISA - 2200
    Virgin - 6932.35

    Giving a monthly net worth of -13077.96, which is 6.72 worse than last month. I had hoped to not pay any overdraft interest this month as I stayed within the 300 free overdraft all month, however I got charged 12.91. I still need to contact the bank to check, but I suspect it may be to do with account cycle dates.
    Interest on the loan was 15.63, making my total interest costs for the month were 28.54, meaning I finally dropped below 10% of the interest I had been paying at the beginning of the year. In January my interest cost was 309.77!

    I'm not going to complain about increasing my debt this month too much, as I was away on holiday for 10 days, which wasn't as expensive as I thought it would be.
    However on the way home I stopped at a guitar shop, and seen something I liked very much. I had only intended to pop in and do some browsing, but they had something I'd been thinking about for a good few months, with the kind of finish I really like, and well, it's now currently sat next to me.
    My plan had been to buy one once I'd repaid the loan, but I might of struggled to find another one with this finish.

    Since I finished the month with the current account in credit, I made an additional payment of 307.88 to the loan, so it currently sits at 2200.
    Paying so much may of been a mistake, as by the time I factor in paying of the two credit cards to avoid interest (I do still have over 1000 in my business account as everybody finally paid their bills!), I may be back in the interest charging part of my overdraft before the end of the month :-/
    • m_c
    • By m_c 15th Aug 17, 11:03 AM
    • 64 Posts
    • 48 Thanks
    Time for a mid-month update of sorts :-/

    Had to buy a new laptop, as my old one finally died, so I know straightaway this months figures are going to be bad. I had been hoping the laptop would of limped it's way into next year, but it wasn't meant to be.
    I did spec the new laptop a bit higher than what I could of managed with, but it should mean it'll last me a good few years before needing upgraded (I use it for CAD/3D designing, so needs to pretty powerful to not endlessly frustrate me!). Only plus point is I got it on a 48 month finance offer, that provided I pay it off within 12 months, will be interest free. It does however mean I've now added 1400 to the debt (it's not all laptop, as I added a few extras to help re-arrange my office).

    I am a bit annoyed that it'll mean my total debt will of increased for two months in a row, but I knew the laptop would need replaced at some point, and things should get back on track next month.
    It's also highlighted how I really need to get an emergency fund that isn't my overdraft in place.
    • m_c
    • By m_c 10th Sep 17, 8:35 PM
    • 64 Posts
    • 48 Thanks
    So I'm a bit late with the end of month update, but better late than never.

    Current Account - -195.13 (managed to keep in the zero interest zone!)
    BC - 3696.74
    CO - 2280.325
    TB - 71.82
    Loan - 1705.21
    HtB ISA - 2400
    Virgin - 6852.35
    Laptop - 1450.35

    Bringing the total to 13851.85, which is 773.89 worse off than last month, but if I exclude the laptop, it's a ~675 improvement. And the only interest I paid last month was on the loan, which totalled 12.96.
    So things were still moving in the correct direction.

    I say were, because my current runaround van is now officially dead. After a few days of considering options, I pick up a brand new Transit next week, as their current scrappage deal made the most sense.
    I had been hoping my current van would of got through another MOT, and look at getting a replacement next year, but it just wasn't going to be practical.
    I wanted another van, but not one I was going to have to spend lots of time fixing, which after doing searches for what was available locally, left a few options. Either some base spec vans in the 10-12k price range, reasonable spec vans around 12-14k that I don't really like driving, or just bite the bullet and get a new transit.
    Given I do about 20k annually, I opted for new. Not the most sound financial option, but I get what I like, I'll know the full history of it, and I shouldn't need to replace it for a good few years.

    I opted for a 5'000 cash deposit, which has come via a money transfer offer on the Tesco card (0% until April 19 with 2.9% fee). I actually transferred 6'000, so I can clear the bank loan.
    The rest is via ford finance, with an APR of 5.9% (this was a persuading factor in the decision, as the other vans were over 10% APR)
    Monthly repayments are 408, the loan was 507, so that saving will pay for the additional Tesco payments, so I shouldn't notice much difference in outgoings.

    Plus the new van means I'll save some business rental costs (I used to rent a van a few times a year).

    And the best bit is, the new van is 5 cheaper a month to insure!

    I'm not really looking forward to the end of this months financial summary :-/
    • Marktheshark
    • By Marktheshark 10th Sep 17, 8:38 PM
    • 5,692 Posts
    • 7,184 Thanks
    I dont think you can be helped.
    Brexit will become whatever they invent it to be.
    • m_c
    • By m_c 10th Sep 17, 8:58 PM
    • 64 Posts
    • 48 Thanks
    I dont think you can be helped.
    Originally posted by Marktheshark
    Because I've just increased my debt, or because I opted not to go the fashionista VW option?
    • Pianist
    • By Pianist 16th Sep 17, 9:14 AM
    • 6 Posts
    • 1 Thanks
    It's a bit unkind to say that this guy can't be helped. I've read through his entire thread and he's making a really positive effort. He'll succeed in time, and he's got the good sense to know when spending a bit more on good-quality replacements (computer, van, etc.) is a better long-term financial investment than trying to make do with second best. He's on the right track.

    True, the guitar wasn't essential, but I can't lecture him on that luxury without being hypocritical considering the large sum that I paid (on credit) for a pair of top-of-the-range loudspeakers many years ago. It was a similar situation with me; I went into the shop to browse but ended up buying. I didn't like having that four-figure debt hanging over me.

    Maybe the holiday wasn't essential either (personally it's the first thing I'd cut back on if I was striving to be debt free) but if he returned from his holiday refreshed and therefore more productive in his work then you can even claim that the holiday was an 'investment'. And he went for a cheaper holiday anyway.

    I've been completely out of debt for years now, and even now I remain grateful for the peace of mind and sense of security that it brings. There is NO WAY that I am taking on debt ever again. My credit cards get paid off in full every month.

    Good luck with what you're doing, mate! Being totally free of debt is like having a heavy burden taken away. You'll get there in the end.
    • m_c
    • By m_c 18th Sep 17, 11:02 PM
    • 64 Posts
    • 48 Thanks
    Thanks Pianist.

    I'm quite happy to admit the guitar was a luxury, as it was my reward for the amount of extra work I do over the summer. Given recent expenses, I do wish I had the money instead, but what's done is done, and I enjoy playing it.

    As you've highlighted, I look at the long term value of things I buy. Yes, it's a high spec laptop, but having used it at it's first major event, it was a major improvement over the old laptop. Plus I can do all my CAD/CAM work wherever I want, without being hindered by lack of processing power.

    I would of much rather not had to buy a new van, and it took a few days of chewing figures to make a decision. I knew I would have to replace it within the next year anyway, and it would probably involve finance to get something good. At least now, I've got something that should not cost me anything apart from routine servicing for a few years, eliminates the need to hire vans for my business, and I'll enjoy driving.

    I won't deny it has put a major dent in my debt free plan, but having adjusted my figures, provided I don't get any more surprise big expenses, I should still clear my credit card balances before the 0% deals expire.
    Although I think I'll have to make use of the overdraft for a bit longer than planned. My current short term goal, is clear the overdraft, and get at least a 1000 buffer in place.

    Now that my busy period is mostly over, and I'm getting the energy levels back up (had a few weeks of doing the bare minimum, while catching up with some books and binge watching), I've started on designing some new products.
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