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  • FIRST POST
    • BabyStepper
    • By BabyStepper 8th Jul 18, 8:39 AM
    • 96Posts
    • 282Thanks
    BabyStepper
    Tidying up the mess
    • #1
    • 8th Jul 18, 8:39 AM
    Tidying up the mess 8th Jul 18 at 8:39 AM
    I am trying to find ways to get me and OH out of the debt mess we are in. I became self-employed a few months ago and my credit card providers wrote to me to reduce my credit limit to just above what I owe. This was worrying and I'm now thinking they might call in those debts at any moment. Me and OH then sat down for the first time to list everything we owe and figure out what to do about it. We are in it together to sort it out but this is where we stand just now.

    Hitachi loan 844 0%
    Lloyds cc 1,311.39 mostly 0 % but 403.68 @17.9%
    Overdraft 2,000 0%
    Santander cc 3,367.30 0%
    Halifax cc 3,242.65 0%
    Barclaycard cc 4,614.38 mostly 0% but 838.75 @ 16.9%
    MBNA cc 5,213.34 0%
    Student loans (1) 8,160 (currently deferred)
    Student loans (2) 27,190 (payment taken straight from wage)

    Total 55,943.06

    We spent 10k we didn't have when we bought our house, front and back doors, new windows and damp treatment. 3k is still to be paid off after our wedding 2.5 years ago. The Hitachi loan is carpets and lino. Student loans have never been on the radar as something to be paid off but they are now. Other than that we have around 6-7k that we both just maintained on cards, not to buy anything in particular, just spending and forgetting about it.

    I need a coffee after writing all that.
    Last edited by BabyStepper; 09-07-2018 at 6:37 AM.
Page 1
    • BabyStepper
    • By BabyStepper 8th Jul 18, 9:03 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    • #2
    • 8th Jul 18, 9:03 AM
    • #2
    • 8th Jul 18, 9:03 AM
    We decided to follow the Dave Ramsey plan as we both find him motivating. We have 450 in an emergency fund that we hope to fill up to 800 this month. This is the currency converted baby step 1. Then in baby step 2 we will pay off the debts from smallest to largest to try and stay motivated. The Hitachi loan has a minimum payment of 42.20 and we plan to overpay it once the emergency fund is ready. Once that is gone we will use that payment towards the Lloyds credit card, along with any other cash we can throw at it.

    From what I have worked out from this website Martin Lewis recommends highest interest debts going first. I have been thinking about that since I found this site, but motivation really is a problem for us so we are sticking with our current plan to try and pay off at least one debt quite quickly.

    Our minimum payments are 287.13 per month. OH earns 1850 per month and my wage is variable at the minute, I made 940 last month but the potential is for much more. We can cover all of our bills but the amount leftover changes depending on my wage. I won't post an soa until I am done reviewing everything. We got our life insurance reduced by 15 per month this week so that was good.

    The biggest challenge is to try and cut back spending to the absolute minimum. This has been easy some weeks, harder other weeks, but we are trying very hard.

    I guess I am really here to just try and keep motivated. This is going to be a long haul. I am also going to keep reading diaries, they are so good, to help me stay on track.
    • doingitanyway
    • By doingitanyway 8th Jul 18, 1:34 PM
    • 3,531 Posts
    • 19,549 Thanks
    doingitanyway
    • #3
    • 8th Jul 18, 1:34 PM
    • #3
    • 8th Jul 18, 1:34 PM
    Good luck on your journey. Keep on keeping on and you will get there if you want it enough
    Emergency fund 1060/1000
    NSD November 6/30
    • BabyStepper
    • By BabyStepper 9th Jul 18, 6:36 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    • #4
    • 9th Jul 18, 6:36 AM
    • #4
    • 9th Jul 18, 6:36 AM
    Thank you, doingitanyway. I'm going to need to learn some persistence to just keep on going. I'm hoping once the emergency fund is built up that'll spur me on. Small goals.

    OH is away for one night this week on a work trip. Travel and accomodation are paid for but other expenses need to be paid upfront and then claimed back. We've saved for this but that cash would look better in the emergency fund.

    I have a meeting tomorrow for a potential new client, fingers crossed that will work out. There is also someone else interested in me doing some work for them so we'll see how that goes. If only it could get moving faster.

    I transferred some cash yesterday to cover bills and the amount hasn't appeared in my account. I need to get on the phone to both banks involved and find out where my money is. I could really do without the hassle on a Monday morning.

    Otherwise it's a quiet week. Trying to live on no money can get a bit dull. I might need to get creative with things to do. Any suggestions?
    • Kitten868
    • By Kitten868 9th Jul 18, 6:45 AM
    • 1,027 Posts
    • 2,409 Thanks
    Kitten868
    • #5
    • 9th Jul 18, 6:45 AM
    • #5
    • 9th Jul 18, 6:45 AM
    Morning!
    Well done on facing it. I'm just curious about the student loans: which type are they? Do they have to be paid? I'm guessing the first one does and the second doesn't by the amounts. Martin Lewis does a page on this site about advice regarding all the different types of student loans which is worth a read.
    It's early days on the business - you're going great x
    Loan 1 5400/8000
    Loan 2 3400/5800
    Total 8800/13800 36% PAID

    And CC 1475/1900
    • enthusiasticsaver
    • By enthusiasticsaver 9th Jul 18, 7:05 AM
    • 7,284 Posts
    • 15,993 Thanks
    enthusiasticsaver
    • #6
    • 9th Jul 18, 7:05 AM
    • #6
    • 9th Jul 18, 7:05 AM
    I wouldn't worry about the student loans but generally the advice is repay the most expensive first. Overdrafts are repayable on demand too so that should be a debt tackled early. I know Dave Ramsey's advice is smallest first so if that works for you then fine.

    Repaying debt can be a slog but there are lots of free things you can do depending on where you live and what your interests are. Have you got stuff you can sell?

    Self employment and repaying debt is a challenge because income is unpredictable. Are you allowing for overheads like tax, business costs etc?
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • BabyStepper
    • By BabyStepper 10th Jul 18, 3:26 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    • #7
    • 10th Jul 18, 3:26 AM
    • #7
    • 10th Jul 18, 3:26 AM
    Hello Kitten868 and enthusiasticsaver. Thanks for posting and for your helpful comments.

    You are right that my overdraft could also be called in at any moment. This is on the account my wage goes into so they will see the reduction. I have been confused about what debts to pay off first, Hitachi are unlikely to care as long as I keep making payments, but I'm trying to just follow Dave R's instructions otherwise I don't know where to start.

    My student loans will be deferred for as long as possible and the total shown is the amount I would have to pay if I had no more deferrals and had to pay up until my 50th birthday. My husband's loans are paid out of his wage every month. That's 60 to reduce the debt by 10. This is the worst debt for interest but also if he was to lose his job then there would be no payments so we will deal with this debt last. I read Martin's thoughts about student loans but we really want the peace of mind of having them gone. Once we added everything up and had it all out in the open it seems there is no going back.

    I have my wedding dress to sell and my husband has a bike. They are both being advertised now. We are not hoarders though so not much else to sell.

    The business accounts are going well. I'm not very good at predicting my expenses yet, mostly travel as I'm selling my time and skills so not many overheads but I could be better organised with this.

    I had a small bonus today. I was overpaid in my final wage for my job. I tucked the excess away in a savings account and let them know straight away. No word from them for ages and then I received a letter today asking for 125 less than I had planned for. That's going straight to the emergency fund.

    Regarding free things to do, we are taking long walks on the beach and doing a lot of gardening. I do miss meals out and drinks with friends. We have been on baby step 1 for about 8 weeks now so not doing any of that but in the long term I need to work out cheaper ways to socialise.

    Thanks again for your comments. I really need to get to bed now before the sun comes up.
    • Savertobe
    • By Savertobe 10th Jul 18, 6:54 AM
    • 36 Posts
    • 246 Thanks
    Savertobe
    • #8
    • 10th Jul 18, 6:54 AM
    Pay off highest interest first
    • #8
    • 10th Jul 18, 6:54 AM
    Hi

    Although I do understand the Dave Ramsey thing and if you had the odd small debt 50 for a catalogue debt for example then this would be good to get out of the way. However, looking at your debts it seems the two interest bearing CCs are a must to get rid of. If it were me I would make sure something goes in the EF and something off the OD each month and then tackle those two cards - one at a time.

    I created a simple spreadsheet showing how the debt would come down - this is also motivating. My understanding is that CC providers reduce the debt on the interest free elements first so it can be difficult to pay them off. The EF whilst important can be built up slowly rather than as an absolute priority.

    Hope this helps.
    • One-step-at-a-time
    • By One-step-at-a-time 10th Jul 18, 3:19 PM
    • 203 Posts
    • 699 Thanks
    One-step-at-a-time
    • #9
    • 10th Jul 18, 3:19 PM
    • #9
    • 10th Jul 18, 3:19 PM
    Hi
    I created a simple spreadsheet showing how the debt would come down - this is also motivating. My understanding is that CC providers reduce the debt on the interest free elements first so it can be difficult to pay them off. The EF whilst important can be built up slowly rather than as an absolute priority.
    Hope this helps.
    Originally posted by Savertobe
    This isn't always the case - check the monthly statement from the individual lender.

    Taking one of mine as an example:
    "We use your payments to clear any overdue amounts before we apply them to your latest minimum payment.
    We will reduce the amount you owe in the following order:
    any overdue amounts from previous statements;then
    the remaining balance on your statement;then
    any recent transactions not yet shown on your statement.
    We use your payments to pay off balances charged at the highest interest rate first and so on down to balances with the lowest interest rates. This means the more expensive balances are always paid off first.If there is more than one type of balance at the same interest rate, they are paid off in the following order: cash transactions, purchases, balance transfers and money transfers, and then default charges (plus any interest or charges incurred as a result of those balances). For each type of balance, your payments will pay off the oldest balance (and related fees, charges or insurance) first."
    LBM: Jan 2017. Total owed: 46993.21
    Current debt: 29079.65 - 38% paid
    DFD: May 2021
    • Lydia42
    • By Lydia42 10th Jul 18, 4:54 PM
    • 111 Posts
    • 343 Thanks
    Lydia42
    Hi
    Well done facing up to the debt. I've recently done the same and started a diary. I've started following Dave Ramsey and reading the diaries and threads on here to stay motivated. It's good to know you are not alone and that it is possible to get out of this mess.

    We've managed to get most of our debts onto 0%, so we are basing the order we snowball on when the 0% offers come to an end. The first one ends 1st Nov 2018, so that is the one we are over-paying, whilst only paying minimum on the others.
    I've created my own spreadsheet to help me keep a track of our progress and also added tabs to allow us to do a zero based budget.
    Good luck, i'll be following your diary :-)
    • BabyStepper
    • By BabyStepper 10th Jul 18, 5:09 PM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    Hello savertobe and one-step-at-a-time. Thank you for taking the time to comment. My credit card statements clearly say that the debt will be paid off highest to lowest interest rate. The barclaycard has the hightest minimum payment of all our credit cards at just over 100 monthly. Within a year, even with the interest being added, the interest accruing part of this debt will be paid off. I can manage with that.

    I understand Martin's approach is about paying off the debt as fast as you can while paying as little interest as you can. I have used a technique something like this for years and it has not stopped me from accruing debt, paying some off, accruing more, paying some more off, and the cycle continued like that. I somehow felt that debt was a helpful and ordinary part of everyday life. I now believe that this is not true and me and my husband want to change our habits, our behaviour and the way we live our lives.

    Dave R's approach is about behaviour change and that suits us well. I don't want to live with any kind of debt any more. None. Me and my husband got student loans when we were 18 and have never been out of debt since. The only way to live without credit cards is to stop using them and start living within our means immediately. So we are doing that. We cut our cards up (and kept the bits for when we need to phone the banks and cancel them.) We decided never to use any kind of credit for anything ever again. The emergency fund is a priority for when those annoying things crop up that we are not ready for. If we had ever had 800 in the bank before we probably would have booked a holiday with it. But we need it to sit there and be ready because things happen.

    I understand this is not the most efficient way to clear the debt but there is more at stake here than just getting rid of the credit card balances. We are trying to change the way we think and it is really difficult. And it makes us weird in this world. My family thinks we have lost the plot. My husband's family are 100% behind us. It's nice to have the support.

    I hope that explains what we are up to.
    • BabyStepper
    • By BabyStepper 10th Jul 18, 5:20 PM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    Hello lydia42. It's good to meet another babystepper. Isn't Dave R great?

    It seems very sensible to pay off the debts in the order you mentioned. Hopefully you won't have to apply for any more cards ever again. 0% deals, balance transfers, transfer fees and juggling credit cards are all a pain in the neck. I will never forget the day we just decided not to do that anymore. We are stopping where we are and paying everything off. No more gut wrenching anxiety wondering if your application for yet another card would be accepted and what it meant about me, my credit rating and my future if I was declined, and how excited and pleased with myself I was when I got another 0% deal. It took someone like Dave to come along and say 'this is stupid' before I even recognised the madness of it.

    Also to say, I completely respect other people are doing this differently, but these are my thoughts.

    All the very best with it Lydia42. I wonder if you have a diary and if I can figure out how to find it?
    • BabyStepper
    • By BabyStepper 11th Jul 18, 6:49 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    Thought I'd do a quick post this morning to try and keep me on track today. I'm having problems with the Halifax bank who seem to have 'lost' a faster payments transfer I did at the weekend. 260 just did not show up in another account. I have phoned them 6 times in the last 2 days and will need to ring again this morning as the cash has still not appeared. They are aware of the problem and are trying to fix it but that is no help to me when I am juggling the tightest budget in the world and need my cash to be where it is supposed to be. So infuriating.

    None of my 3 invoices have been paid yet for this month and I am also due a small amount for some mystery shopping I did last month. I'm getting absessive about checking my bank accounts waiting for money to show up. I think we need a buffer in the bill paying account to cover this.

    I have also been reading some diaries and am gobsmacked by how many people almost become debt free and then within a month or 2 of debt freedom take out a 4 year car loan. It reminds me so much of myself, thinking that reducing the debt means it's alright then to take on more debt. It is so hard to change when we just want things.
    • Lydia42
    • By Lydia42 11th Jul 18, 12:47 PM
    • 111 Posts
    • 343 Thanks
    Lydia42
    Hello lydia42. It's good to meet another babystepper. Isn't Dave R great?

    It seems very sensible to pay off the debts in the order you mentioned. Hopefully you won't have to apply for any more cards ever again. 0% deals, balance transfers, transfer fees and juggling credit cards are all a pain in the neck. I will never forget the day we just decided not to do that anymore. We are stopping where we are and paying everything off. No more gut wrenching anxiety wondering if your application for yet another card would be accepted and what it meant about me, my credit rating and my future if I was declined, and how excited and pleased with myself I was when I got another 0% deal. It took someone like Dave to come along and say 'this is stupid' before I even recognised the madness of it.

    Also to say, I completely respect other people are doing this differently, but these are my thoughts.

    All the very best with it Lydia42. I wonder if you have a diary and if I can figure out how to find it?
    Originally posted by BabyStepper
    Hi BabyStepper
    I saw you found my diary. I've subscribed to yours to help motivate me.
    I agree Dave Ramsey is very good. He makes me chuckle when he tells people straight that they need to stop making excuses and get themselves sorted. I've made so many excuses myself. I'll admit that things aren't going to plan at the moment what with school trips (my son is moving up to secondary school so they had a lot of trips planned to celebrate) and car expenses. Also just found that our shower has been leaking too, so we need to sort the tiles out as water is running down the back of the bath and has damaged the plaster. However i still feel having done a zero based budget, like Dave R suggests, i am clear on exactly what i can tweak or cut back on to try and manage things. The next few months are going to be tricky and tight as we get our heads around everything, but i really feel like we can do this.

    I'm going to close accounts as we clear them, and drop the over-draft limit as we pay the last of it off so we're not tempted to use them again. Like you i don't want to live with debt anymore.

    I think if you need the motivation of seeing the smallest debt cleared first even if it isn't the highest interest then that is what you should do for now to start your journey and keep on track. There is no reason you can't change tactics as you go and focus on interest rates once you have a few successes under your belt

    Hope your missing money appears again soon. Have a good day x
    Total Debt October 2018: 23, 990
    • BabyStepper
    • By BabyStepper 12th Jul 18, 4:44 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    I have to agree Dave R is hilarious at times. Call the 'wah-mbulance' because you're not getting to go on holiday this year, so funny. We already had commitments planned when we started this process, days out and stuff we had arranged to do with friends and family. We decided to do these things anyway rather than let people down, but tried to do them more cheaply and will be planning differently in the future.

    I can't yet get the hang of zero based budgeting. There is always something I haven't thought of that needs some extra cash later in the month. I'm practicing though.

    Someone is interested in buying my dress after only 2 days of advertising it. I've sent her some more pics and hoping she gets back to me. OH has bought some paint to spray his bike then that can go on sale too.

    Small win with Halifax after lodging a complaint about my missing money. 50 paid into my account for the inconvenience. Great stuff. Still no sign of my actual money reappearing but the wait is easier.

    The mystery shopping cash has appeared. Also good news.

    I need to wait until I have my 260 back and until my big invoice is paid on Monday before I can clearly see how much can be paid off the Hitachi loan this month. I'm hoping it will be a good sized payment though and the official start of baby step 2.
    • Lydia42
    • By Lydia42 12th Jul 18, 1:35 PM
    • 111 Posts
    • 343 Thanks
    Lydia42
    Call the 'wah-mbulance' lol. He cracks me up.
    'You aren't gonna see the inside of a restaurant unless you're working there!!' lol

    Like you, we already have commitments. Luckily a lot them them have already been paid for, so things to look forward to as we cut back.

    I'm on my first month of zero based budget. Definitely a learning curve and is going to take some time to get it completely right, but i have a section for miscellaneous, and am listing the things so that i can see what we paying out for eg. my daughter has a cub trip in Sept which we have only just been told about, but they needed paying last week so they know numbers and can book it.

    It's definitely a work in progress. I see a podiatrist as and when i need to but when i went over our bank statements it didn't show as i always pay cash. So this has been added so i can see i will need to include it in the budget. Anything i know is coming up in future months will be added to the relevant month/tab on excel to remind me to budget for it as we get paid that month - eg. i already have school shoes and my brothers birthday listed on August tab so i can budget on pay day.

    Awesome news about the 50 payment for inconvenience. Fingers crossed the 260 turns up soon.
    Total Debt October 2018: 23, 990
    • BabyStepper
    • By BabyStepper 12th Jul 18, 2:07 PM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    I think I need a spreadsheet too. I'll maybe try and talk OH into making one for me. I'm in my third month and still coming up with yearly bills I hadn't thought of, got an email saying our cat needs her booster jag, but I've managed to put it off until August 1st so it can go on next month's budget. Maybe it'll take a whole year to figure it all out but I'm going to keep trying.

    I got some mail from Lloyds today, they are changing the conditions of my credit card and there are pages and pages of info and a booklet to read through. The main thing is that they will be increasing my monthly payment, no big deal because it is currently the lowest of them all, but it felt harrassing, getting a letter about how I manage my credit card and how they anticipate me struggling to pay it off. They gave me the card, they told me what the conditions are, I have stayed within the terms and conditions ever since I had it, less than a year, and for the last 4 months they have been charging me interest and so making money. It made me so worried I almost changed my plan and thought about paying them off first to get it out of the way.

    Then I remembered another Dave R quote about how to pay off debt: 'follow the damn instructions!'

    And the instructions are pay them off smallest to largest. But it will be a good day when I get Lloyds bank out of my life forever.
    • BabyStepper
    • By BabyStepper 13th Jul 18, 12:18 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    260 showed up again in my account so it's moved to the right place. Progress.

    I messaged my wedding dress buyer and she said she is waiting for her husband to decide about buying it. Doesn't sound like it is for her wedding if she already has a husband, or even like the sale is going to happen. Who knows what's going on there.

    Nothing much else to report.
    • BabyStepper
    • By BabyStepper 13th Jul 18, 6:16 AM
    • 96 Posts
    • 282 Thanks
    BabyStepper
    I keep checking and rechecking every single bank account and linked savings account, every single day, all day long. Not sure what I'm looking for but its started to feel obsessive.

    Anyone else have a similar problem?
    • Purplemumof2
    • By Purplemumof2 13th Jul 18, 10:22 AM
    • 6,559 Posts
    • 24,653 Thanks
    Purplemumof2
    Morning,

    Just wanted to wish you luck on your journey x
    Official DFW Nerd Club - Member no. 791 - Proud to be dealing with my debts
    MBNA: 5660.00 Lloyds: 9878.75 BC: GONE Cap One: GONE
    OD 0/500 LC 371.25/1500 Washer PAID
    POAMAYC 2018 #041 PD 7219.86/7000
    Savings for Christmas 385.36/400
    20p Savers 2018 2 Savers 2018 50p Savers 2018 SPC 12 2019 #003
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