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Day 4 of August and I seem to be at it again - spending money before we've even made it through a whole week! What's with that?
I had the car in for its minor repair on Friday and had anticipated about £100 for it. The final cost was £130.80, so a bit more than I'd have liked, but there we are. I had a little bit more done than was originally needed so overall, not bad. I DO have the money (in other accounts) but before I start moving funds from already-funded accounts, I'm collecting my coins and hoping to bring down the amount I need to transfer a bit. I'd like to at least cover the £30.08. As I already have £15 worth of coins, I'm well on track for that. I just need to ensure the money is there for rent on the 22nd!
Plus I have the MOT next month. I have £55 in the car fund so far, and hopefully, it won't be too much outside of that, although I still have August's paycheque to look forward to and that will up it £20-£30, which really should be sufficient. An MOT shouldn't cost much more than £40-£50 - I'm confident this car will pass first time without any issues.
And, I know, why not just use the £55 currently in there to cover part of last week's cost? I'm considering it but still would feel better paying for the MOT in full with that.
I've had two shifts at the Spar. I went in on Tuesday evening last week for a couple of hours and spent it all at the till - amazing how long it took the time to pass! Ha ha! The ladies I worked with were lovely, though, and yesterday after my writing group, I had a 'full' 6-hour shift. I did hop on the till several times but spent most of my time facing and tidying the shelves - a surprisingly satisfying job. It appeals to my love of straight lines - ha ha! I put my name down for a 3-hour shift on a Friday night in a couple of weeks, so it's nice to see there are opportunities for me to pick up a few more hours here and there. It may not be the most intellectually stimulating job, but it's close to home, gives me much-needed extra cash and the staff all seem very nice (that's what they're all telling me, at least!), so it could be a whole lot worse.
This brings me to my request for help. I'm going to lay out what my debt is and what I'm currently planning for it but would welcome further suggestions. I know the preference of pay down is different for everyone, but I THINK I have a reasonable plan in place.
Visa #1: £2,414.05 (int 29.9%). Paying £135 p/m.
Visa #2: £1,135 (0% APR). Paying £35 p/m.
Loan: £5,346.85 (15.4% APR). Paying £164.28 p/m.
LOC: $9,075.92 (11%-ish APR - this seems to fluctuate so I'm putting it at the high end). This is approximately £5,600 (rounded up a smidge). Set aside £50 p/m for this, but it's not enough to cover monthly CDN payments so needs to go up. I've currently got 3 months worth of payments left in the bank for this, so am saving up to throw another three months' worth at it at the moment.
Total: £14,495.90
This is actually lower now than when I did it at the beginning of the year, fortunately, but still unsustainable as it stands, in my view, seeing as it's more than my take-home pay. O.o
The order of payment is what's frustrating me. Highest interest rate first, for obvious reasons? Or lowest balance, to clear it and continue the motivation to continue?
I'm leaning towards the highest interest at the moment because it's the payment that will help me get ahead the most as a snowball payment. £35 a month is neither here nor there as a snowball at this point, and ultimately IS making headway on that card, as it's £10 above the minimum.
I know I can't ask if this is the 'right' decision because it's my decision, ultimately, but it seems the most sensible and what will save me the most money in the long run, and I think that's what it boils down to in the end.
I'm just frustrated that I'm STILL in this situation, that's all. I have no one to blame but myself, obviously, but am trying not to be too hard on myself about it all. It is what it is. I am also considering, once I reach January or £2500, whichever comes first, applying for the loan offer through the bank, paying off the CCs and snowballing from there. I'd have a second loan payment, but it would be £120 a month less than I'm currently paying out. That's a decent snowball. But I'm not going to do anything until I get to January and see where I stand after the holidays. It would be silly to do anything before that. I'm going to play with my budgets again and see what I can manage for any extra payments until then too. This is also why I'm hoping for some extra shifts at the second job. A colleague yesterday was taking what he could as well, as he has a son in med school to pay for. And he works f/t for a local council!
Anyway, please weigh in with any thoughts, suggestions, options, etc. More than happy to hear from you!
10 comments:
I'm a long time reader, but a first time commenter. In my opinion (for the little that it's worth), I think you should eliminate that first credit card with the 30% interest rate. That's practically robbery the amount you're being charged. I would make just the minimum payments required on the other debts, and throw everything you can against #1 until that one is gone. Then I would start on the credit card with 15% interest. The 0% interest one can wait as it's not costing you any extra for the time being. With the other ones you're paying a lot of extra REAL money to carry those debts. If you use a credit card interest calculator (just google for one), you'll find well over half of your monthly payment on a 30% CC is going to service interest charges and not the principal. Again, that's just my opinion. I'm sure you'll get all sorts of different opinions about what is the best. Good luck!
Hi Anon! Firstly, thank you for being a long-time reader and for taking the time to comment. I really appreciate it. Your advice makes a lot of sense - technically, I could lower my minimum on the 0% a little bit, but don't really want to and think it's a reasonable amount to continue with, especially as it's not hindering me overall. The reason the first CC is so high is because I'm a 'new' credit risk in the UK (my MC was 35%!!). I'm thinking that paying off the highest CC is the best route - as you say, it's a lot of extra REAL money I'm wasting, so it makes the most sense. Thank you for your thoughts and suggestions - it's good to get something to roll around in my head before making a decision. xx
Tackle the one with the highest interest! And go from there :)!!
It was so good to find your blog again recently! A shock that you now live in England; how time flies! Congrats on the second job!
I'm not an expert by any means, but I think I would:
1) Try to get a transfer for the higher interest cards to a 0% card (apologies if you've addressed this and can't). I think that will give you a huge step towards clearing your debt. Otherwise go with highest interest for sure, and divert every penny there except minimum payments on the other cards.
2) Go to a pretty extreme frugal living for a defined period of time. No holidays, weekends away, eating out. It's hard for sure, but if you could (and you may already be doing this) budget so that you have something like only 5 pounds a week for free spending, and cut everything for say 16 months - August 2019 to December 2020, I bet you could make huge headway with the second job too. If you calculate just how much you could pay off over 16 months, or even maybe 21 months (bringing you to spring 2021), or even 2 years, I bet you'd be hugely encouraged. I think that 20/25 a month for you will be needed as it's a long slog, but my impression of you is you are strong and steadfast and I think you could do it.
3) Build up a small emergency fund so that no incidentals increase your debt. Maybe you put August and September's extra income into an account, or maybe you do it the snails way and put 50 pounds a month into an account. But everything else towards debt. Maybe you have an emergency so this is a moot point! But I think having even a few hundred pounds (250-500) will make a huge difference if you have a car or other emergency.
4) When you feel ready look for better paid full time work. I know easier said than done, but look into the charity sector, I am guessing you do admin related work? I've seen many super people get better paid more leadership admin roles in the charity sector with better pay. Or look at the NHS. I encouraged my best friend in England to do this and she was able to move to the NHS and is very happy - learned new skills, was able to upgrade qualifications, move up a band, has pension contributions and just loves what she does now.
Good luck! So pleased to have found your blog again. I'm catching up slowly!
That is a horrendous interest rate isn't it!!!! I was living in the States when I was offered my job back in Switzerland so I KNEW I had to get all those bloody credit cards paid off (8!!! Can you believe it)! But what worked for me (and this is what Dave Ramsey advocates) was paying off the smaller cards first - more motivation if you like. Oh, and that and sneaking into my husband's wallet and cutting up the damn credit cards. And well done on working at Spar. As a teenager I worked at my aunt's café in Conwy during the summer and while it was bloody awful getting up at 5 a.m.(to get the trawlermen out on their boats) I didn't mind it. With a "mindless" job you can just go home and forget about it!
Hi JiCaLu - thank you. I'm pretty sure that's where I'm going to focus. It really does make the most sense at this point! xx
Hi FT! - So lovely to hear from you. You've been a bit quiet, too, but how lovely that you're still around and about. Yes, in England - your old stomping grounds ;) And thank you for such thorough and careful advice. Brexit has spurred me to action (something had to!) so the second job is very welcome, particularly as the situation is even more uncertain now.
I've already transferred my even-higher interest rate card to a zero balance card (it was 35%), so that's taken care of that. But now you've got me wondering if I can search for zero per cent balance transfer offers and move the other one too! Hm.
I plan to take as many hours at the second job as I can (within reason) and just use it all as 'extra' income to put towards my debt. I think you're right, however, in that I do need an emergency fund. I was literally thinking about that a couple of days ago and how I don't have anything to fall back on. It would be very wise to set this up alongside debt payments.
I am aiming for next year to look for a different job. The timing isn't QUITE right at the moment, but the NHS is a great suggestion. I think this needs to become a focus once I feel I've got my debt at much more manageable levels. Then I won't panic so much about making such a big change.
Thank you for taking the time to comment - hugely appreciated and has given me some really good stuff to consider. Hoping you are all well & happy! xx
Hi Treaders - I know, it's awful. It's the 'new creditor' rate (the MC was 35%, now zero). Min payment has just dropped £20, so I'm pleased, but it's still too much and this really does make the most sense to get rid of first, although I have done it in the past the way Dave Ramsey suggests, the smallest debt first as a motivator. It did work, but I think it makes more sense - particularly with such high interest rates at the moment - to pay those down first. The zero balance card is taking care of itself every month and I'm not 'losing' money with it.
I think the Spar is absolutely perfect for my needs, and am hoping that extra hours will be a bit more plentiful once the students have gone back to school in a couple of weeks. Hooray! I'm getting too old and tired for this kind of worry. Thank you for taking the time to comment, though! I'm still playing with the numbers, but everything is helpful. xx
Hi Northern Living Allowance, have you thought about contacting citizens advice, stepchange or national debtline for advice? They give free advice and negotiate with creditors - so may be able to come up with a payment plan that works for you (and possibly reduce the amount to be payed back as well). Just a thought. BTW I work for a UK charity and am on a relatively low salary (18K) and short term contract ... it can be difficult to get stable work in this sector and I am actually looking to find something in the NHS for more stability and better pay! I'm in my 50's and don't like the uncertainty (and I rent as well). Anyway good luck whatever you choose to do.
Awe, glad it helped. Honestly, there's also merit in paying off smallest debt first. Yes, it doesn't make financial sense, BUT if it gets you motivated that's huge.
And yes, definitely see if you can get another 0% interest transfer. Would make a huge difference in terms of how long it will take to pay off the debt.
I'm sure we will all be cheering you on!
Reader but never commented. Just a thought. I would divide SPAR money into 2 ways - 1 - emerg fund, 2 - fun money. If you don't have fun money you will definitely go into debt again. Also, you will be encouraged to take even more shifts (even if they are not exciting as you would want) on your side job so that you can have more fun money and as a result you build your Emerg fund. As for your debt I would pay minimums on the 2 debts with lowest interest and throw absolutely everything you have at that debt with the highest interest rate. Love the idea of trying to find another cc that you could transfer the balance with a lower interest rate. Because you have already set up an emerg fund and fun money you can put more of your regular paychecks toward it. Just a thought. So many options with tough choices.
Hi Anon - thank you for your comment and suggestions! Yes, I've already spoken to Citizens Advice, actually, and had some good suggestions. I was reluctant to follow through until I'd moved, however, as I wasn't sure how that would look in respect of renting, etc. Now that I have, it's something I may reconsider...Your salary is higher than mine, though, so that helps my motivation to change although, as I say, I'm not QUITE ready yet. I need to focus on what it is I want to do, and my debt currently isn't allowing me to do much of anything. Which is the problem. Good luck with the NHS job hunt. My fingers are crossed for you! xx
Hi FT - thoughtful advice is always welcome. I'm actually online RIGHT NOW searching out zero-interest balance transfer cards (I don't know why I didn't think of this ages ago!) and actually have a couple of options. Brilliant. Thank you!! xx
Hi Cheapchick - thank you so much for your comment! It made me sit up and re-think everything, but is a really great suggestion. The minimum on the loan IS £164.28 (ouch), so that's already taken into consideration, unfortunately. I'm mostly worried about the high-interest CC and the Canadian debt at this point, the other two are more or less taking care of themselves. I think you're right, though, and I do need to siphon at least some of the pay from the second job into an emergency fund. It's silly not to - like you say, that's the surest way to more debt and that's the last thing I need when I'm trying to get out. Lots of food for thought from this post, it's been absolutely fantastic. Thank you! xx
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