Budgeting to clear big debt

[QforCucumber]

We've worked out that other than the mortgage we have just under 25k of debt in total (car, loan, couple of credit cards) currently servicing at approx £500 a month. No missed payments or anything like that, but we'd like to try and get it paid down sooner.

Does anyone have any advice on sites or budgeting ideas to help? Joint income is 45k per year. Nursery fees of £500 a month but will get the 30 hours in April. We'd like another child in the next couple of years so aiming to have the debt under 10k by then if not even lower if possible.

Also, I forgot to add once you've saved up to a certain point say £1000 if you want put it straight to one debt preferably the one with the highest interest rate so you can get that paid down quicker. Always pay the debt with the highest interest off first and then start paying the rest down.

We've discussed similar at lunchtime - as we are clearly spending £800 a month now we have set up a transfer from next payday onto the lowest CC (£4500) of £200 a month plus the payment we already make. this will clear it in 6 months, the reason we spend it is typical - we know it's there. This will reduce our monthly 'spend' by £200, see how we get on and reduce/increase as required

If I was you I'd be putting more to that payment, you know you've got the money there so over-pay as much as you can if you only overpay it by £200 a month it's still going to take 1.8 years to pay off. If you pay £400 a month it can be cleared within 11 months. Having £400 left over is still good but have some savings as well. Look back over the past 6 months and see what you've been spending that other £800 on. That sort of money doesn't just poof into thin air.

Q I'm in the same boat as you. Worked out our finances and we should have so much more left at the end of the month. It's just falling through my fingers !
I've never been good with money. What I have I spend .
I'm hoping to clear out considerable debts and start saving over then next few years.
We no emergency fund , which seems criminal when we should well be able to afford to.have one.
My DH doesn't spend much, so I'm the culprit. Owning up to that is hard but necessary for us to move forward .
Best of luck Q, I hope we can both do this !

Tbh I’m beginning to think using Uber is cheaper than car ownership, the initial cost of the car and then fuel, insurance & car tax must be adding up to around £350 per month? Then if you have a car each it’s double payments.

Seriously look at snowballing debts, set up a second standing order in the largest debt to be paid on payday, even £100 month will reduce the debt considerably faster. Then you have to reduce your spending through the month by that amount

Look at all your outgoings and consider whether there are bills you can despise if altogether - tv packages?

Have started looking at the bills and the sky tv is costing a small fortune , must look at downgrading. I'm in a contract for a mobile phone, which is costly also, contract up in Nov, so stuck til then but will definitely downgrade after that.
Was thinking of clearing smaller loans first and then tackling larger ones but you suggest tackling bigger ones first .... would that be better in the long run ? Thank you

Tackle the debts with the highest interest first - not large or small

Thanks Ivykate ... that makes sense !

Look up snowballing debt & it will explain

Can you move any debt to 0% interest ? Then cut up the credit cards?

Thank you Ivy, will look that up and look at 0% for balance of credit card also. Thank you

We pay our debts monthly but save £300 per month then every January we pay a lump sum off one debt to get rid of it. I guess you could do this every 6 months. Save £300 then pay £1500 off a debt to get rid of it. It’s better than scrimping every month just save what you can & pay what you can but still go out & have fun

Lou, that's actually not a bad idea at all. It would feel great to even take large chunks off that car loan and then move on to the home improvement loan. Thanks for the tip.

No problem. Good luck with it. Just don’t break yourself every month save what you can. You don’t want to stop having fun just to clear debts. Pay them off in large amounts also if anything serious comes up you have 1k aside to use for emergency rather than getting another loan etc. So easy done. Good luck x

Thanks @Lou0219 and @Designerenvy those are great ideas. We're doing quite well, down from £25k to £22k in the 3 months since I started the thread (granted some of that was Xmas money which we decided to throw at a card) We are putting into a separate savings account now £100 a month to cover car repairs, bday parties etc as this is where some of the CC spending was coming from without even thinking about it - each year we will see whats left and pay a chunk off the debts. We are heading in the right direction, hope the rest of you are too.

Regarding UBER - our town doesn't have it!