Becoming debt free in 2018

[iammeegan]

I've decided to make a plan to become debt free in 2018.
Money and debt give me terrible anxiety which means I bury my head in the sand and it's become out of control!
So starting in the new year and I'm going to stop spending and start paying everything off.
I would love some support and people to help motivate me.
I have already worked out that I can be debt free in 14 months with some serious cut backs and forward planning.
I'm currently on mat leave but will be returning to work in March which will allow me to pay off more each month

So would anyone like to join me?

Hi, single parent with 2 teenage kids with high demands and a lot of outgoings.Was bying a house couple of years back,before that everything was in order financially ,only a bit of debt on CC.Always had good/excellent credit rating but was ill prepared for house move( basically moving expenses ,solicitors fees and things needed for the house(flooring,new fridge,new beds) were double of what I budgeted). Before I knew it ,within 6 months I was 10K in debt on CC,also overdraft debt of 1.5K,my credit rating became bad,going to very bad every months by downward spiral. I realised I was paying over £200 a month in interest just servicing debts. Scenario was : Id get paid, leave money for the bills in current account and remaining over 1K a month pay towards CC,then charge living expenses on CC again.
I wanted to consolidate loan-realised its bad idea ,tried to get new CC for balance transfer-there were some on offer for 30months interest free.I was refused because my rating was shit any I applied for the limit of 10K,then tried 6K,5K still refused.
Finally tried one for 2K with no interest for 28 months and was accepted! Transferred balance to full limit straight away. I seen the light at the end of the tunnel.
Next month I tried to get 3K CCfor balance transfer with the bank I have current account with,they refused based on that I'm £500 overdrown(used my total overdraft) .I had to wait until next salary payment,paid off £500 overdraft and applied again for CC.Got accepted for 30months interest free,transfered balance again .Meantime my credit rating was rising slowly but surely. I managed to pay off 1,5 K overdraft and small store card. Was also paying off main CC with interest still charging but more manageable. My credit rating was quite good after a while and I managed to get 0% interest on purchases for 30 months credit card,started using that and paid off with money saved my main card(remains of 10K). Currently I pay zero interest on my debts remaining(around 5K total ) and I also called banks,enquired about exact dates when my interest free deals runs out and asked to calculate how much do I need to pay a month in order to completely clear balances before the D date. They adjusted direct debit amounts for new figures and the amounts in total quite manageable, around £250 a months and life is so much better now! I should pay off the money before interest start charging again.
Hope my example helps someone ,don't give up don't get stressed,its possible to sort it!

Wow teensandfuture that's an amazing achievement in such a short time. You do show that bad credit can make it worse but have given some great tips on how to change that. Thank you, will look into balance transfer on the cc that have smaller amounts

Thanks iammeegan also to mention we did not live completely frugal lifestyle meantime either,managed to go on holiday, each summer so if we did stay put Id probably be debt free by now,but life is for living too!

Well done teens on grasping the interest bull by the horns
and especially for contacting lenders to work with them.

Ta1kinPeace can I ask is the standing order trick the same as having a DD at a set amount each month so say £100 each month even if the minimum payment is £96, because this is how I have one of my cc payments so wanted to check if I'm best to change to SO or leave as it is?

Myway
If the direct debit IS for a fixed amount then the effect is the same
but its a rare thing that the card company will let you do other than
(a) in full
(b) minimum - which will be the reducing amount

the joy of the standing order is that YOU are in control, not them

Ta1kinPeace yes definitely a fixed amount every month so I'll leave it as it is then. Thanks

I’ve looked into the debt snowball method and can see how it would be motivating, but what I’ve been doing is paying off highest interest first not looking at amounts of debts. I got that from Martin Lewis. Which is the best way to do it?

Dizzy
Yup, definitely highest interest rate first - so that you minimise the bank profit
BUT
if you can standing order all of the others at the same time

• paying no more than you already managed to pay last month

the snowball will work even faster.

Hi folks, just a little "opposite of a success story" to motivate you. I was on Talks drowning in debt threads years ago when they started. I read all the good advice and tried to apply it - set my Standing Order up, paid off the highest rate card first etc. I fell down on two key points though - I consolidated loans and transferred rates to a 0% credit card every time it was offered by the bank (thinking that they were doing me a big favour ) , and I DIDN'T STOP SPENDING ON THE CARDS. Seriously, if you only take one action as a result of this thread, please, please find a way to stop spending on the cards. None of the other stuff will work without it.
I was made bankrupt at the start of the month.
Listen to Talk - she knows her stuff Good luck!

Thanks for posting littledoritt that was my biggest issue.

I pay about £10 more each month than the minimum amount but it means nothing if your spending it again.

I have three credit cards. I have cut up two and have kept the one with the lowest interest in case of emergency but it isn't in my purse it's left at home

((Dorrit))
I'm sorry you ended up with the bankruptcy, but at least under UK law are clear in a few years
and your lesson is worth lots.

And YYYY
If you do not cut the cards up, it will get worse.

There is a way to spend lightly and clear down
which is to work out 5% of the total credit limit and set the standing order for that amount
then you can still put a few essentials on the card while drilling down on the balance

BUT
If you do not spend less, you will stay in debt
it really is that boring
similar to what I say on the weight loss threads

Ta1kinPeace can I ask do you know much about store cards and the best way to get them down please. I have one that I haven't used in roughly 6/7 months, I actually put a stop on it so that I can't use it. I pay the monthly payment by DD but the monthly amount is higher some months even though I've spent nothing more on it.

myway
Storecards are just like credit cards
but they often come with regular fees for non usage.
Switch it to a standing order for a start - so that you pay it off quicker
and then check the maths on the statement using the spreadsheet.
If you are being hit with fees for non usage, see if you can pay it off using another card and then take it into the shop and make them close the account.

store cards are nasty smelly things, best avoided IMHO

Ok thanks, I'll check the things you mentioned Ta1inPeace but not sure if I can set up a SO think the payment has to be done via their website/app which is why I set up the DD so I don't forget a payment, I know in the past I've also tried paying it off with a credit card with a lower interest rate but again it wouldn't take payment from a credit card only a debit card.

Ooh they are cheeky trying to stop you clearing down the debt fast.
There is nothing they can do to stop you paying a standing order as well
even if its for £5 a month it will start biting into the capital.

Leaving my credit card at home really helped me cut down on using it. So obvious once you get into the right habit, I can't think why it took me so long to work that out.

How is a standing order different from a direct debit?

Ta1kinPeace

Your standing order thing is a revelation to me. I read it while away for Christmas and am reading Dave Ramsey at the moment in a bid to sort our lives out financially in 2018 and I haven't been able to get what you've written out of my mind.
Can I ask would the SO thing also work for a business loan or just personal?
I ask because my DH bought his DF out of the family business 2 years ago and took out a business loan of £60k to do so. Every month a DD payment is made by DD and I can see the loan acc when I do the business payments etc and it's still on £48k and barely shifts.
If I changed the payments to SO would the bank go nuts at us? Could it possibly be somewhere in the terms of the loan that we pay DD?

Quora
A standing order stays the same amount so more capital is cleared every month
A direct debit drops so less capital is paid every month ...

play with the spreadsheets to see it work.

shitmy
Most business loans are on equal amounts every month as B2B credit agreements are different.
So there is less benefit
BUT
overpaying is always worth it.
You are best to talk to your accountant as they will have the overview

Happy new year everyone!! Wishing us all luck in our debt free endeavours.

Today I've started transferring the spare change in my account to a savings account, so for example

If i have £246.34 in my account, I've transferred £1.34 to my savings. I will check the account daily and do this, I have read good things about doing this and over time it's can create a nice little pot.

Also going to start saving £5 notes. So if I get one I will tell myself it can't be used and put it in a pot

Hi All, Can I join?! I've £14k worth of credit card debt, a loan on a hot tub, very account and a loan....all in all i'm paying out £634 a month of debt :(
The majority of the credit card is due to moving house and trying to do a lot of work, but i've got a huge tax bill due in January and I'm £600 short unless a few customers hurry up and pay.

I really hope when January is done I can live off my basic salary and use commission to pay off debt but my biggest problem is working from home, no-one 'supervising' my time so I spend far too much with online shopping. Even today whilst knowing I have a huge hurdle to get through i'm looking at bloody curtains. I have a spreadsheet, I track everything to the penny and STILL spend lots of my day doing online shopping :(

Hi AmIAWeed of course you can join. Do you have a dp or a family member that could change your passwords on your accounts so you can't access them also taking away cards that you shouldn't be spending on and leaving you with enough cash?

Cash tends to be harder to spend as you can see what your spending.

There are some great posts on here on how to pay off debts but your problem seems to be spending. I sympathise, I usually find something to spend money on but I'm trying to change that mentality this year

Iammeegan my husband could take my cards, but hes very black and white with finance and if I asked for help would cut off EVERYTHING to the point that a while back I moaned I was short, but bought my son new trainers because he needed them, husbands attitude was no trainers as short on pennies....of course I cant tell his growing feet that!
He is terrible with spending - for months and months wittered about the washing and needing a tumbledrier until I bought one to shut him up...he moans the carpet is filthy (he chose a V light grey with 5 cats and a dog) and needs cleaning so I got a cleaner in, then he moaned about the cost and refused to pay half so said he'd buy a home shampooer....still waiting on that one! yet if its for him he wont think twice - its beyond frustrating and the reason we have separate money as its the one subject guaranteed to cause an argument.

I was thinking about freezing my credit card, in tuppaware so if I wanted it I really had to think about it first...you are right though, my spending is my issue and the thing I really need to get under control, looking at my budget I know I could clear it all in 1 year if I can get in the right mindset - I think that's why I need a few buddies to keep me on track and tell me when i'm being ridiculous with my spending and what can actually be justified as necessary

I'm sorry you oh has an attitude like that, it's probably because he's so extreme that you are the way you are with money. I was brought up in a very tight household where there were never treats, cinema nights, takeaways, etc so when I moved out as you can imagine I went wild.

But unfortunately it's not healthy to be extreme either way.
Can you open a very very basic bank account with no overdraft features and transfer yourself an allowance every month? The rest of the cards then can either be put up the attic or somewhere really hard to get to.

And you oh is is cruel to deny your ds shoes. They are not a luxury but a necessity

Another good trick I've read on mn is put an item you want to buy in you online shopping basket if you still need it after 1/2 weeks then buy it. This should cut down on the impulsive buying