September Update

September has been a great month for me!

I have achieved some of my goals and will work towards completed them all in October.

Short Term Goals

• End September under £9k (Done)
• Start Freedom Account for rate payments (Will get onto this in October)
• Clear all loans by 31/10/08 (Done on the 30/09/08)
• Clear Credit Card No. 3 by end of year (Well under way!)
• End year under £7k (Well under way also - could even do better!)

I have now payed £11,587.70 (that's US$20,596.21 or NZ$30,821.20) off my debts. That is pretty amazing! I just can't wait till all my debts are gone and when I get paid I get to keep it!

Standing in line at the bank today I was looking at all the posters for the different products the bank had to offer. And I had to laugh at the credit card poster. It read "Buy now, pay later". Well I am "paying and paying and still paying - later". I have really learnt the lesson of selling my future. There was a song way back in the 80's that I loved and the lyrics of one verse went like this:

Well, I see something and I want it

Bam! Right now! No questions asked

Don't worry how much it costs me now or later

I want it and I want it fast

I'll go to any length

Sacrifice all that I already have

And all that I might get

Just to get something more that I don't need

And Lord, please don't ask me what for

Loved the song but didn't listen to the lyrics. But no more and with the exception of my trip to Turkey in May/June, I have kept to my budget and am very please with the results. Living below your means is no so bad. In the times we are now in, well we all need to live frugally.

So what's the plans for October - okay, I will not be able to clear as much debt as I have in September, as I need to replace the money borrowed from my tax account to clear my Flexiloan account.

Goals for October

• End the month under £8k
• Start Freedom Account for rate payments
• As of the 01/10/09 have only 8 spend days (that is 23 no spend days)
• Sort Credit Card No. 3 as the 0 % interest rate is ending in October

Well that's the basic plan for October - we shall have to see how well I can do.

How well are you doing?

After the loans are gone

Unlike credit card payments, loan payments are much larger and can really be a strain on your budget. I have been paying both my loans at about the same time, so it has been a challenge to get the full payment in my account on time each month for the direct debit payments. Often I have had to use my saving to cover any short fall, replacing it the next time I was paid.
By paying off my loans I will be able to pay all my minimum credit card payments with one weeks pay. No more worrying if I have enough money to cover all the payments. Now I will be able to make weekly payments on my credit cards which will save me more money in interest.
The news might be bad on the telly but my debt balance is the best it has been in two years. Financially speaking things haven't looked this good for me in years.

UNDER 9K ALERT UNDER 9K ALERT

Yaaaahoooooo!!
Another grand has been wipe off my debt total and I am pretty damn happy about it. For the whole of last year my debts totalled over ten thousand and at it's worst it was at twenty thousand, it is pretty scary when you debt equals your annual income.
So I am thrilled for each and every thousand I can reduce my debt by. And I am hoping to clear all my loans by the end of this month instead of next month. I will use some of the monies I have set aside for my tax to do this. The few pennies I lose in not keeping it in my high interest account will be more than paid back in what I will save in interest that I will not have to pay on my loan.
Either way my loan is going down and I am now in positive net worth also for the first time ever.
September is turning out to be a very good month - not famous last words I hope!

Questions Answered By The Finance Guru Alvin Hall

(Taken from The Sunday Times 21/09/08 - by Ali Hussain)

Are you a saver or a spender?

A combination of both. I'm pretty diligent about saving. However, if I really want something I will get it - although I'll spend a long time deciding.
I like to set aside around 20% of everything I have into savings. I also put away money towards a pension and earmark another portion for Christmas.

How has the credit crunch affected you?

I'm definitely more cautious. The first thing I did when the credit crunch started was to work out exactly what all my monthly expenses were and how much money I needed every month to cover that.

What is your financial priority?

To reduce my spending more and to save more.

What is the most important lesson you have learnt about money?

Always, always, always save.

I WAS A SERIAL CONSOLIDATER

On Monday the final payment on my fifth consolidation loan will be credited to my account and will clear it and I will also receive a credit payment of a percentage on my interest payments.

This for me will be quite an achievement - a final payment on a consolidation loan!

Until 1999 I had taken out the odd hire-purchase and more often than not would paid it off before the required time. But in October of 1999 I took out the first, of what would be five consecutive consolidation loans, with those really nice people at the Midlands Bank (now known as HSBC). The loan was for £3,500.00 and was to consolidate some credit card debt I had built up - how simple it all started off as, now just shy of a decade later I will be making my final payment on my final consolidation loan.
My history looks like this:

1999 Oct. £3,500 @ 14.9% £4,304.52 (£119.57 x36)

2001 Oct. £7,000 @ 11.9% £8,285.62 (£230.16 x36)

2003 Nov. £4,750 @ 14.9% £5,292.57 (£294.04 x18)

2005 Apr. £7,000 @ 11.9% £8,067.50 (£268.92 x30)

2006 Oct. £8,600 @ 6.9% £9,211.85 (£383.83 x24)

I feel sick when I look at the amounts of money I have wasted. Here is the down payment on a house or a nice new car plus a holiday. The "what if" possibilities are endless but you get the drift.

All the loans were financed by those wonderful people at the HSBC Bank, who must really love me and yet they don't even send me a Christmas card! As you can imagine they are always ready to offer me more credit in the form of another loan, as I have never missed a loan payment (ever). Even the Halifax had a loan offer of £5,000 on my file last time I was visiting a branch making a payment on a card. That's a guaranteed loan offer and just a few weeks ago too. If this is a Credit Crunch why is there still so much credit being offered? But I digress.

Unless you are strong and really bloody minded about clearing your debts, don't take out a consolidation loan. If you have already done so - then you really should cut up your credit cards and get rid of any overdrafts you have. Then set up a direct debt payment for your consolidation loan, only buy with cash, learn the craft of frugal living and save, save, save. You will thank yourself in the long run!!

A plan turns a dream into a goal - Mary Hunt

I have been re-reading Mary Hunts book Debt-Proof Living. One of my failing I feel, is my goal planning and Mary has a very good chapter on that subject. Keeping focus on short term goals is a real help for people like myself. Having a DFD is all well and good but the distance between here and there can be the stumbling block to ever reaching the goal. "It is going to take forever", "can I really do it" and all the "what if...." questions fill you mind and it can be really disheartening.

Okay Mary doesn't really write much about short term goals but her chapter on goals go me thinking anyway. Currently my only short term goals are to clear my loans by the end of October and to end the year with a total debt balance below £7655 (which is the lowest my debt has been since 2006). The first goal is well underway and should be completed before the 31st of October and I still feel the second goal as almost a done deal too. So I really could do with a few more short term goals.

My zero interest rate is ending on one of my cards and another card's low interest rate is also ending, so I will need to see what is on offer to deal with those. The first I could add to my No. 2 card as the interest rate is a life time rate and it will be about half the normal interest rate that will be now changed. There is a balance transfer charge of 3% which will be an extra £30 - so will have to think about that one.

So with lots to do to keep my interest rates as low as possible, I also want to set a goal to end the month of September under £9k.

SHORT TERM GOALS

• End September under £9k
• Start a Freedom account for rates payments
• Clear all loans by the 31/10/08
• Clear Credit Card No. 3 by the end of the year
• End the year under £7k (new goal for this one)

Attacking debt with little bites!! After about 14 months blogging about getting out of debt I really can see the the balance creeping downwards and that is the way I want it to continue. Have you set some short term goals yet too??