Life before money and debt

[JW8280]

Happy New Years Eve. I am so glad to be seeing the end of this one

2024 has to be different for us. At the start of 2023 we decided to make a superhuman effort to clear as much of our debt as possible. We have a high level of unsecured debt. not going to disclose how much etc, as that's not the point of the thread however I will share that our current rate of repayment will see us clear by the end of 2025. The problem is that we are exhausted and burnt out by the extra work we have taken on. We both work full time in education. DH has been doing tuition each evening, marking exams and moderating coursework etc. He is totally burnt out and this is impacting on his physical health. I am also doing tuition but not as much as we agreed that one of us had to be available for the kids etc.

I want to us to stop, or drastically reduce the extra work in 2024, knowing that this will slow down our debt repayment. I have spent today looking over our budget and working out how much we would have spare to throw at debt if we just work out normal jobs. It's as follows -

My monthly take home - £1644
DH take home - £3913
Total- £5557

We have trimmed the fat off everything - basic mobile phone packages, no SKY TV etc. I have been through every single one of our essential outgoings ( not including food and car fuel) including minimum debt payments and in order to pay everything we need to pay out just shy of £3400.

I have been shopping and meal planning at Aldi and have found that I am averaging about £120 per week so I am going to budget £500 per month for food. We also spend about £200 per month on diesel.

This year I have put £250 per month into a monzo account to cover birthdays and christmas so I want to carry on with that. It worked really well last year as normally I'd get to December and have to use the credit card.

We had almost no fun last year and whilst I don't want to spend a loads of money on holidays etc, I do want us to be able to go for the odd drink or day out. £200 per month??

So using the figures above our total spend would be £4550 leaving just over 1K to overpay debts (don't forget I included the minimum debt payments in the essential outgoings category.

This doesn't seem too bad. It does mean that we will be paying the debt back a bit slower, but It seems doable whilst taking the pressure off us a bit. I can't bear the thought of another year of work work work. We are both grafters but we didn't get balance right a la 2023.

Do you think this is the right approach?

It's a difficult one. I'm paying off a debt that will end around the same time as yours. I'm going to stick with it because I'd rather just grit my teeth and get through it than prolong it any more than necessary. If you do it slower think about how you'll feel when the end of 2025 comes and knowing it could have all been paid off by then. But instead you'll still have a year or two to go? I don't know how long it would be.

Could you take on the extra tuition for a while and your DH be around for the DC? If you take it in turns so to speak it might not be as bad? If it were me I might do say 3 month rotas where 1 person does extra work, the other just normal hours, then switch.

It's tough I know. If I think forward the end seems so far away. But I started paying my debt autumn of 2022 and the time from then to now has actually gone really quickly so that's what I hold on to.

Otherwise I would say £200 p/m seems a generous allowance for just "fun" (given the debt situation) Thats close to 2.5k in a year. Over the 2 years you're talking 5k. I'd be inclined to lower that a bit.

Overall I think my answer is dependant on how much time you'd be adding to paying this debt off. A few months? Not such a big deal. 12-18 months plus? Then I think just try and get it paid off.

That makes no sense still.

How you pay is irrelevant. What you pay is what matters. If you pay the minimum balance on SO, you'll spend as long repaying it as if you pay it by DD!

What you are saying is that a SO achieves more flexibility for the customer - correct - but crucially, only if they choose to use it. Many people pay only the minimum balance, however they pay.

@EarringsandLipstick
Play with the spreadsheet - it will make sense

What spreadsheet?

I also think that your budget for Christmas and Birthdays is quite high, given that you are being really frugal generally and have cut down in other areas (I’ve always been a saver but we have spent too much recently on Birthdays and Christmas and I know we can really cut this back in 2024. Just did an at home birthday party for a fraction of the cost of a hall party and it was great.)

£200 is also quite a bit a month for fun stuff, you could keep this low by going swimming, going to National Trust, etc and then use some of this money towards a holiday budget (you can do a caravan holiday in May half term for £500 ish or go for other cheaper options like a few nights in a hotel In Bournemouth or try youth hostels, Travelodge/ premier inn family room / Glamping, Air bnb etc) Anything to still have a bit of fun as a family and something to look forward to

Ahhh

Yes, absolutely this. My cc has a minimum payment but any other amount you want to make can be done - that's always been the case, for the 25 years I have had the card.

(And sorry OP too, for the derail!)

I don’t think this is correct either.

every single one of my cc is on dd.

through the app I can change my dd as frequently as I wish- I can pay the full amount, the minimum amount, or set it to pay an amount of my choosing.

it’s not dd vs so as others have said, it’s setting your dd to the best option.

o/p- have you looked at interest free cc? There are a lot about at the minute. I have consolidated mine, pay the minimum balance, and put any surplus income into a 5% easy access account. I have now transferred the balance several times, and should be able to keep it rolling until it’s paid off.

OP to answer your question based on the info you've given - it seems very sensible to stretch out your repayments if DH is in danger of burnout.

If that happened, he wouldn't be able to work at all, so that would affect your repayments anyway.

@Nonamesleft1
Interesting
So since my sheet was written and after the FSCS accepted the methodology
card companies have been forced into allowing customer control
GOOD
it is a step in the right direction
BUT
how many people are still on minimum variable direct debit - thousands and thousands of them
and they do not know ....
My work to reduce bank profits goes on

I'd carry on doing the additional work and paying the debt down. If you slow the repayments down you will incur masses more interest and you never know what's around the corner. Maybe your DH could have one evening off fro. Tutoring each week with the DC and you tutor that night I stead to give him a bit of a break. I'd be worried sick if I owed that amount of debt that would take 2 more years to pay back.

I would also reduce the amount of extra work you are doing, you can’t pay anything off if you’re burning out and can’t work. Also the extra stress and tiredness might be having an impact on your husbands day job and his ability to do this well.
I would think about which of the extra jobs are the lowest stress / easiest reward and whether you could keep 1 going / do this in the holidays. Or if you cut them all completely maybe you could put more attention and energy into watching your budget closely / saving on groceries / gifts / shopping around etc and then put anything extra saved into the debt owed.

I have never had an issue with paying variable amounts on my credit card, in 25 years.

In large bold writing across each page it says clearly, 'if you only make the minimum repayment you will not pay off your balance until x date'. It always has said this - 25 years.

I'm in Ireland. Is it different in the UK?

I'm finding your posts pretty odd

Yes.
Irish law is not UK law
funny that

Agree stretch the repayments over a longer period you have to avoid burnout

🙄

I know that.

But firstly, I'd be amazed (tho will stand corrected) if UK banks were so utterly different to other European banks that they didn't allow flexible payments and did not provide guidance on their bills.

And secondly, the guidance about minimum payments was part of EU legislation / financial regulation. While the UK was never part of the EMU, it seems hard to imagine they were so out of sync with agreed practices around banking, prior to Brexit.

But if OP is paying £100 by DD and changes this to £100 SO, they’re largely in the same place (and potentially worse off if the SO is on the due date as DDs are often taken earlier so less interest).

If the OP increases the DD amount to £200 instead of the minimum, this is as good as setting up an additional £100 SO, or even a monthly manual payment.

It is however important to make the payment as soon as possible (so on payday). This might need to be via SO or manual payment rather than DD, depending on how flexible your CC provider is.

i downloaded an app yesterday - debt payoff planner

its brilliant! List your debts, the debt payment dates, interest rates and you can adjust the additional amounts you pay and it tells you how best and when you will repay - according to different strategies. It’s brilliant

but agreed with your approach - you need to live a little and be motivated to paying down your debt otherwise it will be too tough

To add I decided to work towards paying off our debt in summer 2025 rather than December 2024 - because I want our family to have some fun together too

all of our debt is now on 0% balance transfer cards though. If you have expensive interest rates you shouldn’t delay paying down

You are correct.
It's been standard practice in the UK to inform customers of the pitfalls of minimum payments for a number of years on statements and online due to responsible lending laws.
Also there was a huge push on responsible lending around 2018/19 and those with "Persistent Debt" ( 18 months of minimum payment history ) were contacted by banks to discuss and assisted to change their payment amounts so that the persistent debt was paid off.

I pay the minimum by direct debit but I have full control to make as many extra payments as I want. (As it is, I pay it off every month).

If I paid £20 by DD it is no different to paying £20 by SO.

You're comparing the minimum DD to a higher SO, the method is not the difference, the amount is. If you paid the minimum by SO and 50% of the balance by DD then is SO still superior?

I would actually argue that a SO could cost more than a DD.

some of my CC bills are produced on the 3rd Friday in the month, of 35 days from the last bill, or something equally unpredictable. Payment dates can vary up to a week.

if I set up a so for the same day every month, there is a chance I could actually miss the payment date some months. Incurring heavy fees along with the interest. A dd ensures that the bill is paid on time every month.

if someone doesn’t realise they are only paying their minimum payment and are incurring interest every month then they need to get a significantly better grasp of their finances. The banks are profiting because people aren’t paying attention.

Health is wealth, so I would reduce the extra work and find some of the money you’d both be earning from that from other areas. The birthday / Christmas fund of £250 per month or £3K a year seems a good place to find this. Maybe reduce it to £100 a month?

Can you do that on the banking app? I with TSB.

Just ignore this poster. You need to pay as much as you can afford on dd, through your cc app is best.

They appear to think noone else understands compound interest despite it being key stage 3 maths. Plus their ss was out by over a million pounds earlier if I recall correctly!