Debt Busting by Christmas

Discussion in 'Budget & Bargains' started by Skippy1707, Aug 16, 2017.

  1. Skippy1707

    Skippy1707 Member

    I seem to have accumulated a lot of little debts this year and last

    My biggest is a bank overdraft of about £300 but I do have about 3 other smaller debts that are knocking at the door (not literally yet) that I need to start sorting out and trying to tackle.

    I had a few letters saying I was offered reductions but because my head wasn't in the right space I ignored them and feel a bit like I've shot myself in the foot with those offers now.
    I've set up payment plans to have my gas, electric, council tax and water paid after I fell behind with all of these and the rent is marginally ahead of itself now thankfully so house wise Im fine.

    The other debts I have are as follows
    Door Step Lender - £120
    Avon - £165
    Bank Card - £300
    Bank Card 2 - £200

    I'm hoping to try and get some of these taken care of by Christmas.

    My wages are a bit hit and miss but they pay the bulk of my bills. I get about £300 a month from them and £238 in benefits but this will go up next month to £345 so I'm hoping I can use that extra little bit of income to start tackling them.

    I am aiming to be debt free by Xmas - even if I just have one of the overdrafts left - but with two kids and soon to be three dogs - it will be a personal challenge. I'm hoping I have a few bits upstairs to sell as well that I can put the money towards.

    Fingers crossed but any advice, help, suggestions - much appreciated!
     
  2. AuntJamelle

    AuntJamelle Well-Known Member

    You are on the right track by getting all your numbers in place so you know where you stand!

    I am a firm believer in the "snowball" method - we've used it successfully! Pay the minimum on everything but the smallest bill - not the smallest interest rate but smallest bill. Then pay the minimum plus everything extra you can on that smallest bill until it is paid off. Then you take what you would have been paying to keep up with the minimum on that first bill, plus the minimum on the next smallest bill you owe plus everything extra you can find and you pay that way each month until that one is paid off. And you just keep going. Each bill paid off frees up that "minimum" payment amount as a weapon to be used against the next debt, things start to snowball as you go along - giving you more $ to pay towards debt each time you pay something off.

    We used to try to pay a little extra on each bill and it did NOT work for us.

    If you are really on the ball - which we are not mostly - you can sell things online - ebay, Craigslist, Facebook, etc. to make extra $ to pay down debt faster.
     
  3. Skippy1707

    Skippy1707 Member

    Thank you AuntJamelle
    That sounds like a plan

    I am hoping to sit and write a letter this week making offers to the companies I owe with minimum payments for the outstanding debts.

    I think the snowball method will work fairly well with the ones I have. I'm hoping if I make minimum payments this month then with the extra money I receive next month I should be able to get one almost paid off
     
  4. FrostyShimmer

    FrostyShimmer Well-Known Member

    First of all, congrats on your decision to be debt-free by Christmas. It used to be my job to assess people's financial situations and help them figure out how to pay off their debts, help them find help, contact creditors, etc. I've been out of it for a while.
    Make a plan and stick to it. Debt tends to snowball, even little ones, so the sooner you are able to get yourself out of it the better. Think of all the extra you'll have to spend once you aren't paying anything in interest payments. :) Call your creditors and see what you can do. They wouldn't have made the offer in the first place if they weren't hoping to get it settled as well.
    I'm not sure how old your kids are, but it can be fun to get kids involved in trying to make a little extra money or doing a "no spend challenge." I'll often ask my kids if they have anything they no longer want or use that they'd like to sell for some extra money. They enjoy having that control over their things. They learn how much they really need to have, and then they get some money of their own. They often spend it on things you would have had to buy for them anyways, so it helps you out as well. Also helps prevent clutter in their rooms :)

    AuntJamelle - I've never heard of the "snowball" method. It's an interesting approach.
     
  5. Skippy1707

    Skippy1707 Member

    Thank you Frosty Shimmer
    I have been sat this afternoon finding letters, details etc for the companies I know I owe to. Im not sure where the bank overdrafts are with but I'm sure if I contact my bank they will be able to tell me.
    I'm hoping if I sit down, write out my personal circumstances money wise and have myself armed and ready with it that it will help me be able to make an offer which will be happy for them.
    I did find a debt company that will help me with the details I need as far as making the offers goes and they will help me deal with the outstanding payments I have after being ill for so long and getting in debt in the first place.

    My children are 7 and 13 now. I have spoken to my son and we are going to have a clear out of his bedroom and I have a few bits and pieces of my daughters that I am going to try and sell on - its mainly costumes and things that she has outgrown or I brought for her for Christmas etc and she has never worn - for example I brought her a Gruffalo costume for World Book Day and she never wore it but decided to go as Matilda instead so it hasnt been worn

    I did find today a few cheques that we were given as birthday presents that I haven't cashed in yet so I will have to do that ASAP because I have about £80 there that can help with a bill being almost paid off.
     
  6. luludou

    luludou Well-Known Member

    AJ - never heard of that method but I like the way of thinking! Good luck Skippy 1707.
     
  7. AuntJamelle

    AuntJamelle Well-Known Member

    The snowball method is part of the Dave Ramsey system. His overall plan is more detailed, of course, but that is the one major thing we've taken from it and used with great success.

    The first step, officially, is to pay minimums on everything while you save up an emergency fund of $1000 in savings. THEN you start the snowball method on your debt. The idea being that when the something breaks, some unexpected expense comes up, instead of putting it on a credit card, you use $ from savings. If that happens, you revert to putting money in savings until you are back at $1000 again and then go back to paying down debt.

    His whole system does have a lot of good information and ideas - we were lucky enough to borrow a set of CDs from family to listen to. But if anyone ever has a chance to read his books (library maybe?) or watch/listen to his programs I would recommend it. Maybe you don't follow every little piece of it, but I know it has helped us.

    We're still in STEP 2 - paying off all debt. We just have one vehicle and our camper left. Credit cards are done and we paid off my car last year. After this we progress to STEP 3 which is adding to savings until you have 3-6 months worth of living expenses saved up in case of job loss, health problem, etc. Then you start paying down the mortgage I think. Then dumping funds into retirement and college savings come after that and so on...
     
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  8. Skippy1707

    Skippy1707 Member

    Hat sounds like a good play AuntJamelle.

    At present we have no savings at all so would be properly stuck if something as to go wrong. My husband has credit cards but they are pretty much maxed out
     
  9. Miss JoDee

    Miss JoDee Well-Known Member

    Skippy- here is a link that for Dave Ramsey https://www.daveramsey.com/budgeting/how-to-budget/
    I have been using his budget tool too. Keeping track of every dollar for a month or so will show you where you overspend in some categories and where you can cut out non-necessities like eating out.
    It can be done many have done it. I was able to payoff student loans using the snowball method.
     
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  10. Skippy1707

    Skippy1707 Member

    JoDee - thank you - will have a look now. I am awful for buying things on a whim in our local shop (usually treats fro the kids and meals when I cant be bothered or dont have the strength to cook) I am due my pay and benefits next week so I am trying to be prepared for them coming in although I know I have to do school stuff from these wages so that will take a good portion of any extra money I have this month but I still want to try and offer something to them all.
     
  11. jollykelly

    jollykelly Active Member

    I love Dave Ramsey! I took his Financial Peace University course one year at our church. I was able to get out of debt and use his envelope system ever since. Good Luck Sammy! It is not easy, but you CAN do it!
     
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  12. Skippy1707

    Skippy1707 Member

    Jolly Kelly - what is the envelope system please?
     
  13. jollykelly

    jollykelly Active Member

    I copied this directly from Dave Ramsey's website.....hope this helps Sammy.....

    So What Is the Envelope System?
    The envelope system is when you use cash for different categories of your budget, and you keep that cash in envelopes. It allows you to see exactly how much money you have left in a given category by taking a quick peek in your envelope.

    How the Envelope System Works
    Use the envelope system for items that tend to bust your budget. Common examples include groceries, restaurants, entertainment, gasoline, and clothing.

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    You don’t have to save up any money to start using the envelope system. It works like this: Let’s say you’ve budgeted $500 a month for groceries. When you receive your first paycheck of the month, withdraw $250 from the bank and put the cash in an envelope. On that envelope, write “Groceries.” When you receive your second paycheck, do the same thing again, and put that $250 in the envelope. That’s your $500 for the month for food.

    No money—and we mean no money—comes out of the Groceries envelope except to pay for food at the store. If you go food shopping and leave the envelope at home by mistake, turn the car around. Make sure you take enough money to cover your groceries for that trip. If you take $150 and your total comes to $160, take some things out of the cart. Put any change back in the envelope.

    When your money is gone, it’s gone! If you want to go to the store but don’t have enough money, then raid the fridge for leftovers. This is a great way to keep yourself accountable for your spending.
     
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  14. Holiday_Mom

    Holiday_Mom Well-Known Member

    There's some great advice here. I'm a big Dave Ramsey fan too. I'm going to put in a plug for "tithing" also while paying down debt. It sounds counter intuitive- giving away money while trying to save money. I lived paycheck to paycheck and said no to a lot of things in order to get debt free and having a savings plan. During that time, I didn't have much money to give to charity but I stopped buying a weekly cup of coffee and used that towards charity. I also donated my time when I could.

    What I found is that by giving away my time, I became a better steward of using my free time doing something productive and meaningful. When I gave away my money, little as it was, I felt better about myself and situation. I wanted to give more money away. I felt like I was making a difference. I started to wonder, "Do I want it or do I need it." Surprisingly the desire to buy unnecessary but cute things slowly disappeared and I had more money in the bank and more money to give to charity. Do I still buy cute but unnecessary things? Yes, but not as often and only if I can actually see it being usable in the home.
     
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  15. Ahorsesoul

    Ahorsesoul Santa's Elves

    Great advice Mary! I do not tithe to the church but I give to others in need as they cross my path. I agree it makes you think more about where you spend your money.
     
  16. missjane

    missjane Well-Known Member

    I love that, Mary! And you're so right about thinking before buying.
     
  17. FrostyShimmer

    FrostyShimmer Well-Known Member

    The "envelope system" is what I always knew as the "jar method" lol. The only difference....yep, using jars instead of envelopes. That's a great way to learn to stick to a budget.

    Whenever I want to buy a new knick knack now I ask myself. "Where am I going to put it?" That question alone squashes a lot of my purchases. Especially for toys for my kids. I used to hit clearances all the time and buy tons of toys because they were such a good deal. I realized I was cluttering up my home and adding extra stress for me and my kids having to clean them up all the time. Plus, with so many things my kids learned not to take care of their things or appreciate them. DD4 used to sit there and snap toys in half for fun. We have probably 10% of what we used to have now, and the kids are happier and actually play with their things more. It forces them to be more creative as well. Still, my weakness is a good clearance. Now I just email all my friends about the deals so at least someone can get the benefit :)
     
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  18. Miss JoDee

    Miss JoDee Well-Known Member

    FS Lol better the chaos in their home and not ours! I see all that dgds have and their lack of respect for them and now try to give them experiences rather than things. I even attempted last Christmas to coordinate with ddil on what "we" could give since they were living with me and still to much. I look stingy but I am trying to give them space. Ddil and dgd6 both have a love language of gifts so this seems to be the model they follow. Dgd4 loves for you to do with her and DS needs affirmation. Dgd1 is unknown for me at this time.
     
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  19. FrostyShimmer

    FrostyShimmer Well-Known Member

    Is A Love Language of Gifts a book or do you mean they base their gifts off of their love languages? That is an interesting idea. I'd like to get them experience type gifts, but in a town our size there isn't a whole lot for them to experience, lol. Leading up to Christmas I do nights with each of them individually where we watch a Christmas movie, eat Christmas treats, paint nails, etc.

    I don't think reducing gifts will make you look stingy. I think it is so good for kids, and they don't even realize it at the time. Three Christmases ago the kids had about 30 gifts each! The next year it was 15. Last year it was about 8. This year I'm aiming for 5 each....but about 3 each will be Lego. One of the reasons I love Lego is that it really is a different toy every day. They feel like they're getting something new, build it and play with it for a while, and then it gets mixed in with our general collection of pieces. I find my kids play with it at least 2 hours every single day....and I've gradually been gathering up and donating all the other little toys that have been collecting dust. Sometimes when they're sleeping I build things for them to surprise them in the morning.
     
  20. HouseElf

    HouseElf Well-Known Member

    I am working through the snowball system too!
    Step 2
     

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