A support thread for people paying off debt #2

[moneyworries9]

Hi all... hope you manage to find the thread?

The last one seemed to be such a success 😃 I will be honest and say that I haven't cleared as much as I would have liked but I know if I hadn't been on here, the debts would most likely have increased rather than decreased. I currently owe

£3,355 - loan
£1,600 - credit card

We do have some cash in our bank accounts. I'm in the process of paying for driving lessons so have about £1,000 in our current account, most of which is to cover that.

On the plus side, when I started the other thread, I had around £2,500 on my credit card and £3900 loan so I'm taking baby steps in the right direction.

The other thread was a huge source of support and motivation for me and I hope that this one will be for many others.

Feel free to give a quick summary to introduce yourself

Thanks for the tip about the “snowball” method. This is what I wrote upthread:

CC1 = 1,773.68 (min payment this month 43.34)
CC2 = 2,573.43 (min payment this month 56.58)

I usually try to pay the interest amount plus 100

I’ve now decided I’m going to “snowball” CC1 by paying the min amount + €200. This should see the debt cleared by Christmas instead of next summer. 🙂

In the meantime I’ll round up the minimum payment on CC2 to the nearest 10 and when CC1 is clear in December, I’ll transfer the snowball payments to CC2.

Back from my hols and SO SO pleased to see these treads active
PLEASE check out the Standing order trick
even the FSCS admit it works now

Annonymiss123

Are either of those cards in 0%? That would add up a bit as well

Yes @Annonymiss123 could you transfer either of the cards (or poss both) to a 0% deal?

Place marking for later if that’s okay?
My night shift head isn’t properly awake yet!

Okay, I've been hitting a bit of a brick wall lately so looking to change up my methods a bit and see if this helps. I just wondered if you guys think this is a good idea or not.

Up until now, I've been throwing every spare penny at our credit card. Problem is, then something comes up and I'm having to spend on the credit card again which feels really demoralising.

I'm thinking about setting up a standing order for £250 per month which would see the credit card gone before in 6 or 7 months. If I can be extra cautious with money, this will give is a little extra each month which can be kept in our current accounts so that when things go wrong, we can spend from there, rather than on our credit card.

Would this be a good idea moving forward or am I best to stick with how we have been doing it?

Sorry for the typos there.

My plan would also be to overpay our loan by £250 a month once we clear the credit card.

Does your loan have any early repayment penalties ?

I've had a quick look into it and I think you just have to pay the full amount back, including the full interest you'd pay if you paid it back according to the original terms.

I would put if you’re able to £200 per month into the credit card and £50 per month in a savings account which has easy access. Therefore if you need some money you have a little cushion without having to use the card again.

About 2400 here. Down from 6500.

Checking in: I think I'm now at £1,750.

CC1 £540
CC2 £1,200

I agree with the savings plan - move £50 into a separate account and anything else spare

You this for emergencies or at the end of 6 months use it to pay the loan in full

It’s positive to see savings grow a little

Had to spend some savings today and I’m gutted!!

I have found moving to Monzo a huge benefit in terms of planning. You can set up pots of money that is ringfenced unless you choose to withdraw it.

So for instance, I have a pot for a wedding later this year. I'm putting £5 pm into it so I can get the couple the gift I would like to buy for them and have enough for drinks. Another pot for car/home maintenance, another for a specialist appt for my daughter.

But the one I love the most is my regular savings pot which the bank rounds up every transaction to the nearest pound and puts it in. I've been using it since Oct and have £200!

I'm a little evangelical about Monzo (other similar cards available!) as it had changed my day to day banking. I'm budgeting better and have much better visibility of where my money goes. I just need to get the same grasp on my debts now...

I’m now at £2300. Down from about £7000 this time last year! A lot was last summer when I did some huge chunks of overtime, but it was £3660 in August so have got it down by £1300 since then despite legal costs (issues with my ex ) and paying for much needed therapy for my son (due to those issues with ex...).

I am paying off £135/ month which will see it gone by September 2020. (It’s 0% interest). However I think I will finally pay off my govt student loan around about next December (waiting for P60 to check my calculations!). So then I should possibly be able to chuck up to another £150 / month at the cc!

moneyworries I think I am debating the same thing as you. When I get that “extra” salary (from student loan going) do I chuck all of it at credit card or start putting some towards a savings cushion...
there’s no easy answer... maybe put it in savings if cc is 0%, but make sure the savings are somewhere they will only be accessed if strictly needed (not frittered away...).

moneyworries I would say that a separate savings account is a good idea, even just psychologically. It means that you have a bit extra that you can put to the cc of you don't need it. And if you do then you're not adding more debt on top of what you have. Even though that money is not reducing the debt you do have. Then when you get to a certain amount of buffer money you can go back to throwing everything at the cc

Thanks all :)

I've taken your advice and set up the standing order for the credit card and I've set up a £50 standing order into a savings account.

Thanks for keeping me on track :)

Well done - I hoe it breaks theCC cycle even if it’s just psychologically

Well done @worries, I found whilst building up savings and paying off cards the savings made me change from do I need or want something and was there an alternative cheaper option. I had about £8k debts now all gone and £12 k savings. I put my monthly savings into premium bonds because interest rates are so low, sometimes I only put £25 in for the month but it all adds up.

How's everyone getting on? I hope the next month is a good one for you all.

We are buying a new car. Well a second hand car but new to us. Loan approved today but Tesco has to incorporate our other loan into it (you can't have 2 separate loans with them). We currently pay £115 per month towards our loan and £230 for our car lease. We will now be paying £319 per month for 4 years 9 months. This covers over £3,000 that was left on our old loan and £14,000 for our car. Pretty good rate of interest so I'm pleased with that as the rates for car finance were extortionate. It does now give us the scary prospect of owing almost £18,000 to Tesco but we have paid £200 - £250 a month since we got married for the cars that we have had and at least we'll own this one at the end.

I hope you're all getting on well ☺️

@moneyworries9 that's a really good interest rate ! Well done on getting it all sorted !
This post gave me such a huge drive to make big changes and I'm month number two into it and feeling pretty hopefully ! 2 years and 10 months to go!!

The standing order trick is the most valuable tip to my life!!! I've had a rocky last few months as my car has had lots of repairs and still not drivable. I'm going through legal channels of complaint at the moment but it's just disheartening that I'm paying finance on a car I essentially can't use. Why do these things occur just when I'm about to do good Arghhhhhhhh

New to this...

CC- £600
Loans- £6475

I don’t exactly have a plan in place for paying back credit cards... one is interest free and have had it over a year, I pay the 200 back into it monthly. One is a 118 card that only charges £3pm no interest, I haven’t touched this yet and is there for desperate times.

Loans are paid off monthly and as long as I keep them up and don’t get any more, I should be free of them by Dec 2020 🤞🏻

My issue is that DP is absolutely shocking with money and literally any little cushion I have at the end of the month, he needs to borrow 😩

illy603
THen you need to stop lending to him sadly
OR
amend your household to be inclusive finances

Can someone explain the standing order trick? I've heard it mentioned before but don't really understand how it works.

Hi there @pinkdinosaurs
Have a look at the opening post here
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc
and try the spreadsheet out
then you will see

Standing order

You have a £2000 dept paying £100 a month
Second month £50 debt - £45 interest
Third month £49 dept £40 interest

Etc

So effectively the debt stay high

Using SO you pay £100 a month and over pay £5 then £6 then £7 etc so you cut into the debt quicker

*figures for illustration!!