Finance

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debt repayments

Wiping Debt

June 2013 – The house move, The job search, The holiday and The car crash…

You don’t need to be an accountant to guess that this was a real expensive month. Upon finishing university we decided June was the best chance we’d get of booking a holiday before being tied to the routine of work. In hindsight, we could have been wiser with our money but even the most accurate of forecasts wouldn’t have saved me from a roundabout collision!

So How Much Did June 2013 Actually Cost?

By then end of June I had piled up £3400 worth of debt. £1800 borrowed from family to cover my losses plus I’d maxed out my overdraft at £1600. On the bright side I don’t consider myself to be ‘in the red‘, just a dark shade of orange. I’m in a very lucky position in that all of my debt is interest free! This gives me a great deal of flexibility in how I wish to pay it all off.

The Strategy and an October Update

I am looking to pay my family debt back in full before tackling the overdraft. It’s not great to look at a negative balance in my account, but I’m certain my family will need the money more than the bank does! Seeing such a negative bank balance is also a great driving force in trying to pay my debt off as quickly as possible. At current I am paying one third of my paycheck to debt (I can’t wait to be putting that much into savings instead!).

Just over three months have passed since expensive June so here are my debt repayments and current progress towards owning my own money! One of these repayments was thanks to an insurance payout for the crash but the majority has been earned from standard work and small side hustles:

Debt to Family Repayment Month
£1,800.00 £400.00 July
£1,400.00 £300.00 July
£1,100.00 £300.00 July
£800.00 £200.00 Aug
£600.00 £400.00 Sept
£200.00

Current Debt to Family: £200

Current Overdraft depth: £850

Total Debt as of today: £1050
If all goes well my family debt will be cleared by my next paycheck and the overdraft should be left in the dust by November. I am setting my expected date to be debt free as November 30th!

After paying off the debt I’d like to start some small scale investments in the stock market. I know I could have split my money investing some and paying back the debt with but I’d like to start my financial experiments only when I have a clean slate.

What do you think? Would you invest if you had a small amount of interest free debt to pay off?

Update: July 2015

Hi all! I’m checking back into thus post as it’s been almost two years since I cleared this debt for good! I now have multiple streams of income and Miss Breakaway and I are buying our first house! To find out more about how I got out of the rut, here’s my guide to getting out of debt.

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Crash

…the Beetle crashing into me at 40mph or swallowing a dose of pride and borrowing money.

Fi and I had just returned from a luxurious (but rather expensive) holiday in Tenerife, all was well and I was eager to begin the first day of my career in digital marketing. However, little did I know that before my first paycheck, I’d be standing in the rain next to a smoking, crumpled Clio – how to lose £1000 in five seconds.

Since then we’ve realised that if we want to finance our many travelling plans and purchase our first home we need to buck up our ideas and create a plan to stack up our savings!

First thoughts: Our Goals and Dreams:

In the short term our goals are about becoming financially secure and assuming a comfortable position to take on some risk. We also love to travel and look to go on some sort of adventure each year.

Short Term Goals – by June 2014 (8months) we would like:

  • To be Debt Free – Current debt stands at £3400 
  • An emergency fund – £3900 (3 months living costs each)
  • We are looking to go interrailing across Europe for two weeks next Summer – Estimated cost of £1500

So in total we have 8 months to save £5400 (£450per month) and eliminate £3400 worth of debt.

Longer Term Dreams – we would like…

  • …to own our own house!
  • …to create multiple streams of revenue and eventually become financially independent
  • …to travel the world and spend some time living in another country
  • …a range rover (and a puppy)!

These are just are initial ideas, but first let’s get debt free! Time to get this plan in motion…

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