Debt update- March

Another month has flown by and it’s payday again (yay!). This meant we had our final budget meeting of the month last night. We learned a couple of lessons from the month as there were some unexpected monies that we had to pay out and silly things we hadn’t considered.

The first of which was because our hoover packed in. Not ideal when you’re decorating and have an extremely fluffy dog who sheds everywhere! So we had to buy a new one. Now we do put aside money for the house each month as we’re still in the middle of decorating it. However we have that currently earmarked for finishing the downstairs. So we decided to use our ‘spare’ council tax money for the month instead and buy a new hoover. This took away some of the over-payment we’d been intending to make to the debt.

The second lesson we learned (which realistically we should have thought off before) is to take into account the number of weeks in a month. As husband gets paid on the last day of the month, it does make a difference to our monthly budgeting. March was a 5 week month for us and this means that we should have increased our food and petrol allowance. We didn’t so that of course meant we overspent. It was a good lesson to learn and will help us going forward.

We’ve also spent a bit of time organising all our paperwork that just seems to pile up… I was horrified to realise that off the 5K a year we pay to our mortgage, only 1.5K off that actually gets removed from the capital amount. That’s a depressingly small amount! We’ve discussed it and the aim is for us to be debt free by the time we’re both 30 and mortgage free by the time we’re 40. That means that we need to make a massive change or we’ll never achieve it. So… In order to do that and also to help with the debt we’ve cancelled our last sharesave. That gave us a couple of grand back in cash to pay to debt and also frees up £110 per month. That £110 is now going to be an overpayment to the mortgage each month. That’ll start from the beginning of April. One of the reasons for that is we’ll have a lower LTV ratio when it comes time to re-mortgage next year at the end of our fixed rate term. In order to achieve being mortgage free by 40 we will need to start paying 1K a month to our mortgage so we are even more desperate to get rid of this debt so we can do that!

Ok now debt figures… We started the month at £9918, our standard payment of £300 has come off so now to figure out the over-payment! It turns out that we were slightly over enthusiastic last month when it came to paying extra money, we actually put our holiday money to the debt as we’d forgotten it was holiday money… Nevermind! It does mean that we can’t pay as much as we’d thought we could this month though. Our extra payment this month will be £1600. This will take us to £8018. We’ve also managed to sell my old car and I have a couple of makeup jobs which will bring in an extra £400 that can go straight to debt. Also in April my pay rise starts so we will have another £100 per month that can again go to debt each month.

The last thing we have in favour of our debt is that 1K of it isn’t actually our debt. When we were consolidating our debt into a loan we included £1500 to give to one of our friends. (There was a very good reason for doing it). This is paid off at £50 per month and will continue to be. So if we don’t include it then we are down to £6618 that we have left to pay. That works out at just £735 per month for the rest of this year and we’d be done! It is an amazing thought that we could finally be rid of this by 2018. I am desperate for it to become a reality…

Love, Kimmy x

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