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?

I haven't read all the thread but I do have experience clearing debt and paying off several mortgages one after another.
General advice is pay off the debt charging the highest rate of interest. This has not always been my preference.
It can help psychologically to pay off the smallest debt first.
When paying down mortgages I use a 3 prong approach, keep paying by direct debit the full monthly amount the bank requires. Set up an additional affordable amount to be paid by a monthly standing order and if you happen to have a lump sum make a one off payment via bank transfer and save the details with your bank so you can easily send extra payments as and when you have spare cash.
Credit cards set up to pay the minimum amount and make additional online transfers as and when you can afford it. It is possible to set up an extra standing order but online payments work well, if your balance is 4441. 41 just paying an extra 41.41 is good to end the month on a round figure.

Wow, thanks @Boomboom22
you spotted the format error in the percentage cell in the spreadsheet

And no, most people do NOT understand interest
if they did, bankers would not be rich.

The Haves are as is common on MN are pulling up the drawbridge

for 2024 I will keep fighting for the Have Nots
as I did for many, many years

I fix my DD to the amount I need to pay every month to clear it when the 0% deal ends.

I think the SO vs DD argument is that if you set a SO at today's minimum DD payment, then continue paying off at that amount each month instead of a proportionately reduced minimum DD, you'll clear the debt faster. Mathematically, it makes sense but agree there's a lot of flexibility available these days to find a repayment option that works best for you.

@Fullofthejoysofspring
there is
for those who know
but those who need do not
hence why I resurrected my account and my spreadsheet
IT MATTERS

Your DH income means he's in the 40% tax bracket and you are not. It would make sense for it to be you doing any additional work and being taxed at 20%.

If his figure includes anything in addition to his paye wage shifting it to you may well mean you become eligible for child benefit again too.

But yes, definitely reduce the additional work if it's impacting your health, you sound like you're doing far too much.

Where are you making your overpayment? Are you spreading it or concentrating it on the highest interest rate debt first? You should do the latter and then work your way through them in order of % rate high to low.

Yet the same things are said on credit card letters in England too.

I paid off a substantial amount of debt (£30k+) in my late 20s, so 15 years ago. My main takeaway was to spend less as it's so much easier than trying to earn more.
Agree on that presents/christmas line, that's what we spend and not in debt apart from a small-ish mortgage with a high household income and savings.
This is a good article from my financial blogger of choice, albeit from 2012

www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Also have a look at the YNAB 34 day free trial to really get oversight of your budget (it won't let you forecast but has loans functionality that plots repayments)

£200 a month "fun" money is a lot

Also your earnings aren't the best? Presume you work part time or are a teaching assistant etc ?

Has anyone mentioned chucking as much debt as possible into 0% cards, then paying off the rest by highest interest rate first

Then moving debt to more 0% cards as the others expire

Yes I did.

it’s a no brainer to me, but as I suppose it may not be accessible to some- and you have to really keep on top of expiry dates etc.

apparently the way to solve debt though is by paying via SO rather than DD 🤷‍♀️

Sorry @Nonamesleft1 I missed your post

Yes it's a no brainer to me too

I think Money Saving Expert talks about how to do it

Can you improve your own earnings by changing jobs?

You earn about the same as us but £250 a month on birthdays/ Xmas is mad! You can't afford that. Tell people you can't- it's part of your therapy.

Is it worth taking a few minutes to celebrate what you actually achieved debt wise in 2023 ? How much debt did you have at the start of the year and how much have you got now ?

2023 was pretty horrendous from an inflation perspective on buying groceries, so you've done it with very tough background.

It feels like you have the right idea - keep on paying off, but it sounds unsustainable for your DH to keep working so much and allocate a small amount each month for some enjoyment.

We are in a similar position and had a not dissimilar 2023. I'm happy to cut back on certain things (clothing, birthdays, beauty etc) but one thing we are not compromising on is breaks etc. We're happy not to eat out but we found 2023 tough and are burnt out as a result.
Our debt is all 0% and we will just take an extra few months to repay it. It's not for everyone but it works for us. We save a set amount each month which is our budget

The direct debit / SO conversation is now more than half the thread, poor OP, can we move on from that now?

OP I think I would go more slowly, but in a middle ground. Eg your DH only does the marking but stops the tutoring; you try to pick up small amounts of extra work; cut the birthday pot to £100 and allocate that extra £150 straight onto the debt

like a PP I like the psychological benefit of clearing a debt so I would start with the smallest

Sounds like you will have made a massive dent in the debt over the last year!
Id look at dropping some of DH's additional work - what brings in the least over the year? Exam making or tutoring?

And diverting some of the 3k of birthdays and Christmas to other bits over the year.

Is it qualifications or reduced hours that is making your pay lower than DHs? ie can you increase your take-home fairy easily?

I think you probably need to extend out your debt free date a bit - but by reducing the been on DH rather than spending more.

The direct debit / SO conversation is now more than half the thread, poor OP, can we move on from that now?

Not quite but yes it is unfortunate - however, that poster is posting really misleading 'advice' and it's important that's corrected for anyone reading the thread who might genuinely take it on board believing it saves them money.

5k take home should be a relatively comfortable income.

even after allocating 1k a month to debt you should still have a reasonable budget.

move it to 0% cards, set a payment amount each month, and live a little.

i also agree with pp- all your dh’s o/t is taking him into the 40% tax bracket and losing child benefit. I’d set him a target of staying under 50k taxable income.

I was going to suggest, now he has built a good name for himself as a tutor, to cut down the number of pupils/number of days, and up his charges. He should have a feel who will be loath to lose him and who will happily pay more. And who he would like to lose as a pupil.
Can he work smart and put some lessons online to sell by subscription? Or is that not a done thing?

I agree with your decision to reduce the extra work and take a little longer to repay your debt. If either of you starts to suffer with stress/burnout and ends up off work and needing to go into a less stressful role or less hours the consequences would be much worse for both your finances and wellbeing.

We have debt and some hardcore debt coaches would have us working second jobs and not allow any spending on anything but essentials. I'm not prepared to do that. Our kids will only be young once - we won't get a second chance to spend time with them or for them to experience childhood activities.

Our repayments are manageable and the interest we pay is reasonable as we have a loan at 8% and credit cards on balance transfer offers. I'm comfortable being in debt for the next decade or more, and happy as long as what we owe is going in the right direction. I'm not suggesting being in debt is a good way to live but I'm not prepared to work all the hours and cut everything out and then my 14 year old goes off to uni/leaves home in 4 years having seen little of us and not been allowed to do anything that costs money, or my 5 year old with special needs can't go swimming regularly or go to the seaside which are his favorite things in the world.

Managing debt comes with risks of course - if myself or my partner loses our salary we won't manage repayments on one wage and will have to default and follow debt arrangement processes - but that's the risk we are running.

Do you have an emergency fund, so an unexpected expense doesn't add to debt?
I think between you and dh you should work some extra but maybe not as much as you do.
Would getting a cleaner work out to give you more free time whilst still doing additional tutoring?
Can you sell anything?
I'd look outside the box to make life easier while still aggressively pursuing the debt free goal.