Debt Free Journey

What are Cash Envelopes?

November 5, 2018

You have heard me speak about budgeting many times before on My Debt Diary. Today I want to talk about one specific method. Whilst many people choose to set up and manage their budget digitally, myself included, cash envelopes are also a popular choice. But what are cash envelopes?

What are cash envelopes?

Put very simply they are envelopes with cash in. They are a physical form of a budget with each envelope holding a designated category. Most importantly they each hold a set amount of money. You may choose to use them for items such as shopping/groceries, petrol and takeaways for example. Everyone has their own priorities and their own expenses of course.

Each month you decide how much money you will allocate to each category. You withdraw the total amount you need from the bank and place the right amount in each envelope. You might choose to hold on to enough money for just a week or the whole month. Just choose the one that feels comfortable for you. To help keep things in order it’s important to mark the category on each envelope, so they don’t get mixed up.

There are two great benefits to using cash envelopes as your budgeting method. Firstly, handing over physical money makes you think more about your spending. You watch a certain amount leave your envelope and your remaining budget diminish. It forces you to consider whether a purchase is required or if you would rather save that money for something else.

Secondly, once the money is gone it is gone. Unlike using your bank account where everything is held together there is no chipping into other areas of the budget without actually taking money from another envelope. This highlights how quickly you use up certain areas of your budget. It can also help you to budget more accurately in the coming weeks and months as you gain a better grasp on your spending habits.

What’s better, if you have money left in your envelope at the end of the month it will feel incredible. Now you can make a choice. Do you spend more on your shopping that month? Do you put it in savings? If you have debt that is the obvious choice! Even if it is only £1.50 that is left, put it somewhere. If you follow me on Instagram you’ll know how much I believe in throwing even the smallest amounts at your debt total. The point is, taking control of your money like this will give you more choices.

The cash envelope system is a great method to use if you are new to budgeting or really struggle with limiting your spending online or with a bank card. Sometimes, in order to come to terms with a completely new way of handling your finances, a new way of spending can be the perfect approach.

Debt Payment Progress Report 9 – 2/11/18

November 2, 2018

Every two weeks I will be sharing my debt payment progress report with you. I’ll share my new debt total and some of the things I have done to make this happen. It will help me record my journey and it will also help me to stay motivated!

Debt payment progress report – my new total!

As of November 2nd 2018 my new debt total is £14,870.56 (My starting debt total was £16,814.29)

That means that in the last two weeks I have paid off £149.62. My new total debt payment to date is now £1943.73, which I have calculated to equate to 11.5% of my debt total. (I should note that I have paid in more than this, however some money has gone straight to interest). The following debts now remain:

Loan One £6723.67
Loan Two £5869.48
Credit Card One £0
Credit Card Two £2277.41

Another milestone hit as I clear the £15,000 mark!! This is has been quite a slow two weeks as both interest payments (on my loans) have been taken in this time, but none the less I have smashed through £15k and I’m so excited!

The next two months are set to be slow ones as work often dies down over the Christmas period for me and so I am prepared for slower progress. My priority, as always, is ensuring that all minimum payments are covered along with my other bills. I’m also ensuring that I budget well for Christmas and avoid borrowing money to cover it. Thankfully secret santa is going to help out a great deal there, and the fact that we aren’t hosting this year.

My plan for November and December is to spend any down time on trying to earn some extra income on the side. If you read my goals post yesterday you will know that that means a lot of ebay selling and surveys on Prolific. Any day that is quiet on the work front will be productive in some other way and my debt total will continue to go down no matter what!

You can find my previous reports here.

My goals for November 2018

November 1, 2018

We are now in November and it is time to set some goals for the new month. This is the bit I get excited about. I love making plans and writing lists. It always gets me motivated to get a move on and take action. Here are my goals for November 2018.

Charlotte from CharlotteMusha and myself will be hosting a monthly linky for you to share your goals. You can find all of the information at the bottom of this post. We’d love to have you join in through your blog or via Instagram!

You can read my goals for October 2018 here.

My goals for November 2018:

Boost my side income.

In the past I have been able to make a good amount of money on the side of my usual freelance income, however as work has become busier my side hustle efforts have been slacking. You’ve heard me talk many times before about Prolific Academic surveys, which I still do occasionally but could definitely be earning more from. I also have a pile of Ebay ready items sitting in the spare room that I could have listed very quickly if I could only get round to it. They’ll be going on this month too.

I want to be quite specific with this goal, so I’ve decided to set the bar at £200. This is the minimum amount of “extra” money I want to earn in November and it will all be going straight towards debt.

Begin a sinking fund for next year.

My wedding isn’t something I’ve spoken about too much on the blog but it is coming round quickly and I need to pay attention to it. In May next year we are getting married. The month before I have my hen do and the month after is my honeymoon. A close friend is also getting married the month before us. On top of this it’s my better half’s 30th birthday. That is a lot of potentially expensive events.

The wedding itself is covered and we have saved (almost) in full for our honeymoon, so neither of those are a concern. Everything else however, could potentially cost a small fortune. In order to prepare for all of the expenses and ensure I don’t end up going backwards with my debt payments I’m going to make a plan, set up a budget and start a sinking fund for all of it.

Clear another £500 of my second credit card.

This goal is a repetitive one but it’s also really important to me. I’m working on paying off my last credit card at the moment and I would looooove to clear it by Christmas. This might be a stretch for me, but putting £500 towards it in November will help to clear a large chunk of it.

As I’m trying to make more money this month from side hustles this should ideally come together quite quickly. As the year is disappearing I am feeling more motivated to push harder towards becoming debt free. Hitting another £500 milestone will only help this. Anything else on top is a huge bonus!

Finish saving my tax payment.

Last month I set myself the goal to save half of my tax payment in preparation for the deadline at the end of January 2019. Well I smashed it and want to do the same again this month. Having the full amount ready to go will allow me to complete my tax return long before Christmas and it means I can relax knowing that it is sorted for another year. It also means that if there are any discrepancies or I’ve miss calculated anything I have a further two months to sort it out!

Monthly Goals (and updates) Linky

Do you have any goals for the month? Join in with our monthly linky and share your goals for this month!

An InLinkz Link-up

Did I achieve my goals for October 2018

October 29, 2018

We have reach the end of another month and it is time for me to look back at the goals I set and reflect on how I have done. I’m beginning to sound like a broken record, but once again the month has disappeared! Thankfully I can report that it has been a productive one. So did I achieve my goals in October 2018?

My goals for October 2018 were as follows:

Buy all of my Christmas presents
Continue with “no spend days”
Clear £500 of my second credit card
Save half of my tax payment

Buy all my Christmas gifts.

So I have definitely not achieved this goal. There’s no other way to put it. I have plans for most of the gifts I want to buy and some are ready to click purchase, but I haven’t got round to buying anything yet. Thankfully a couple of invoices will be getting sent tomorrow which means my bank account will be looking healthier and reviewing my goals today has given me the kick I needed to just get on with it. Christmas shopping should be done in a week or so!

Continue with “no spend days”.

Having smashed through my goal of 20 no spend days last month I really wanted to try this again. Despite a week away in Yorkshire, a wedding, lunch with friends and several other things I have managed to do this again. As of now I think I will make tracking no spend days the norm. It really helps to make me more conscious of my spending and has stopped me making unnecessary purchases on several occasions. If you haven’t tried no spend days before I highly recommend giving them a go!

Clear £500 of my second credit card.

I got off to a great start with this goal at the beginning of the month, paying £200 towards my credit card on the 1st. When I did my goal catch up on the 17th I had added a further £100 to that. As of today I haven’t been able to contribute any more money to my goal, however as I mentions earlier I am sending out several invoices this week and so I should be able to reach my target of £500 by the 31st. That will leave me with just over £2000 to pay on my second and final credit card. It might be a bit of a push but I would be absolutely delighted to clear this completely by New Year’s Eve. Let’s see what happens!

Save half of my tax payment.

With just three full months until my tax payment for the year is due, I really wanted to focus on preparing for it in October. I am so glad I did. As of today I have managed to save £450 towards my payment and as invoices are paid over the coming days and weeks I will be able to set aside a lot more.

This time last year, this would not have been possible. My finances were out of control and I found it impossible to find focus with regards to making payments and saving money. I would have been in a state of panic. Now I’m calm. I know I will be able to afford the payment and I will also begin to prepare for next year as soon as it is paid, ensuring I am more organised for the 2019 deadline. What a difference!

While the month of October started out really well for me, I definitely feel like the last week or so has vanished. If you read my five frugal things post you will know that I was away on a trip with my family for five days and in my relaxed, enjoying slow life and time with the kids haze I sort of forgot about real life for a bit. All this considered, I’m not disappointed with my progress and I’m really excited to attack some new goals in November.

I’ll be setting my goals for November on the first of the month so keep an eye out for that post!

Your Debt Diary – The Money Freak

October 24, 2018

When I first began following the Debt Free Community on Instagram I was drawn in by the stories everyone would share about their debt free journeys. I find it fascinating to read about the progress others are making and also reassuring to know that I am not the only one in my position.

Your Debt Diary is a guest blog series by money bloggers and members of the debt free community for My Debt Diary. Each week someone new will share their debt story. This week Claire from The Money Freak shares the ups and down of her debt free journey as she nears the end.

What stage are you at in your debt free journey right now?

I’m currently paying off my debt. So far it’s taken me 2 years!

What is your debt total?

My debt total is now £2k. At the beginning it was £12k.

What is your why?

My 18 year old son has Autism and mental health issues. So I need to be able to support him financially, possibly for the rest of his life. I also want us all to be able to afford to enjoy life, not just survive it. As a child, I grew up in poverty and it really affected me. I do not want to continue that.

Are you following a specific plan or method?

Yes, I follow the Dave Ramsey method. I adjust it slightly to fit the U.K., as it’s a USA based plan.
Things like student loans work differently, so I don’t include them in my debt snowball. And fortunately we have much lower health care bills due to having the NHS.

What challenges have you faced along the way?

The biggest challenge has been keeping myself motivated. That’s primarily why I started my blog and Instagram account, to find like minded people. I don’t know anyone in real life who considers paying off their debt a priority. So my online support is really important to me.

What are you doing to speed up the progress of your debt free journey?

At the moment, I am concentrating on reducing food bills and keep my costs over Christmas as low as possible. I spend way too much on food, so that is my main priority.

When do you plan to become debt free?

Hopefully, all going well, I will be debt free in April 2019!

I’d like to thank Claire for today’s post. Please make sure to visit her blog at www.themoneyfreak.co.uk
and on Instagram at www.instagram.com/the_money_freak

You can read last week’s post here. If you would like to share your story with Your Debt Diary please leave a comment below with your email address or Instagram and I will get in touch. You can find me on Instagram here.

Saving money in a piggy bank isn’t just for kids

October 22, 2018

In a previous post I spoke about a method of saving called skimming. This is the process of checking your bank balance each day and moving the small change from your current account over to your savings account. Each day only a small amount is saved but over time this can really add up. Of course, this method doesn’t work for everyone. For those who prefer to use cash, a more tactile method can be much more effective. Saving money in a piggy bank isn’t just for kids after all.

Saving money in a piggy bank isn’t just for kids

Many people who choose to take control of their finances like to use cash envelopes to pay for things. This is for a couple of reasons. Firstly it helps with sticking to a budget. The money attributed to each expense is physically placed in a named envelope making it difficult to go over budget.

Secondly it makes spending money more intentional as you are physically handing over the cash and therefore become more aware of how much is being spent at any one time. If you are left with an empty envelope before the end of the month you are required to physically withdraw more cash in order to over spend.

All going well however, you will have money left in your cash envelopes at the end of the week or month. We often end up with loose change in our pockets when paying with cash too. Whether it’s a little or a lot, having money to spare is always a good feeling! But where does it all go?!

If you are not strict with your spending, it disappears. Honestly, if I didn’t know better I would swear it was magic and I know many of you will relate to this. You have £10 in your purse or wallet. You spend £5.20 on a few things at the shops. That should leave you with £4.80. Of course, you pick up something small here and another thing there and suddenly it’s gone. All of it.

Now £4.80 is not a lot of money. It won’t cover any of your bills. It probably wouldn’t even get you a full lunch nowadays. So why worry about it? Well, if £4.80 of your spare change is disappearing once a month, that comes to £57.60. If that amount disappears each week? That means that a whopping £249.60 is vanishing from your pockets.

As the old adage goes that I’m sure all of your grandparents have repeated to you many times before, look after the pennies and the pounds will look after themselves. Keeping track of your money makes such a huge difference to your financial health. Even the tiny amounts.

Keeping something as simple as a piggy bank in your house could be the difference between watching your spare change disappear on unnecessary “things” or becoming a holiday for your family. It could mean having a worry free Christmas, or of course it could mean becoming debt free sooner!

Of course, you don’t need to use a novelty pig shaped bank. Use an old coffee jar, a vase or anything else that comes to hand. Place it next to the spot where you’d usually put your handbag or empty out your pockets. Then get into the habit of throwing any spare change in each day. You may choose to add small coins only or go as far as to adding everything other than notes. Figure out what works for you.

As with any habit, this can take a while to become the norm but be persistent and make it a normal daily practice. Importantly, try to avoid dipping into it throughout the week when you’re short for change. Remember, if you’re using cash everything should already be budgeted for. If you need to, put a lid on your jar which is hard to get off to discourage any spending.

When we were kids, being handed a pound coin was the most exciting thing. Heck, 10p was amazing. Yes as adults we need a little bit more to survive now, but I think that it’s so important that we revive our excitement in those small amounts of money. Throw all of those pennies in your piggy bank and watch how fast they grow!

Debt Payment Progress Report 8 – 19/10/18

October 19, 2018

Debt payment progress report – my new total!

As of October 19th 2018 my new debt total is £15,020.18 (My starting debt total was £16,814.29)

That means that in the last two weeks I have paid off £208.72. My new total debt payment to date is now £1794.11, which I have calculated to equate to 10.6% of my debt total. (I should note that I have paid in more than this, however some money has gone straight to interest). The following debts now remain:

Loan One £6883.18
Loan Two £5759.59
Credit Card One £0 (still makes me so happy!)
Credit Card Two £2377.41

As the weeks go by I can really feel my debt payments picking up speed. Not only have I been busier with work but as my debt total goes down my interest payments go down with it, making it easier to battle each month. It feels like yesterday that I was crossing the £16k mark and paying off my first £1000 so to be inches away from reaching £15k feels incredible.

I’ve noticed a change in myself as well as I’ve been making this progress. Firstly, mood has lifted a great deal. Being able to cover all of my payments without stress (thanks to my budget) has removed all money related stress. Of course my emergency fund helps a great deal too!

My spending habits have improved too. Whilst in the past I wouldn’t have thought twice about picking something up in the shops that was “just a tenner”, I question every purchase now and as a result I am spending a lot less. No spend days are helping this a lot too of course. You can read about these in my goals for the month if you’re not sure what they are.

When I first started my debt free journey I wasn’t too sure where to find this momentum that everyone was talking about. I didn’t get the “excitement” of paying off debt that everyone in the debt free community kept talking about. It’s debt for goodness sake, how can you be excited?!

I get it now. I’m driven with momentum and the excitement of becoming debt free and it feels wonderful!

You can find my previous reports here.

My goals update for October 2018

October 17, 2018

We are already half way (and a bit) through October so I thought this would be a good time to check up on my progress with the goals I set for myself at the beginning of the month. I often find that if I don’t remind myself of them regularly I can lose my focus. I’m going to be checking in with you around mid month from now to help me stay on track. Here is my goals update for October 2018.

Buy all my Christmas gifts:

As of yet I have not purchased anything. What I have done however, is choose several of the gifts I’m planning to buy. Not only this, but I think I have found a couple of affordable options too! I have four people to buy for this year thanks to Secret Santa plans. Better not share any details in case nosey eyes find them of course.

To keep things organised I’ve set up a new folder in my bookmarks. I’m saving all relevant links to gifts in there. I think I’ll be buying everything online, for ease and because I am more likely to find a good deal that way. It also means that if I am unable to afford all of the gifts this month for whatever reason, they are easy to find as soon as I have the funds to buy them.

Continue with “no spend days”:

We are now on day seventeen of the month and I have so far managed 12 no spend days. Considering we have had several evenings of drinking, eating out, a few trips to the shops and so on, I’m really pleased with that. We are going away with family for five days shortly. We are staying in a cottage in the country and plan to cook several meals ourselves. Thankfully I’m not too worried about spending a lot of money and ruining my good streak.

Clear £500 of my second credit card:

On the very first day of the month I put £200 straight over to my credit card. It felt so good to clear such a big chunk in one go! Since then my income has been focused directly at my loan payments. Now that they are made I am able to return my attention to the card and should be able to hit my goal within the next week. As long as plenty of invoices make it out the door of course.

It’s so exciting to be making such good progress. If you read my post about paying off my first credit card you will know how happy I am to be heading towards clearing my second and final card. You can read that post here.

Save half of my tax payment:

Whilst this is the last goal in my list, it is an important one. My tax payment is due at the end of January and so I only have a couple of months left to prepare this. If you read my goals post you will know that I have been so focused on my debt payments over the last few months I forgot to prepare for the end of the financial year.

Knowing that November and December are often quiet months for my income, most of the saving needed to be done in October. As of today I have managed to save £350, so I’m getting on really well. Ideally I’d like to put £500 away in preparation. If work continues steadily I will manage this no problem. I’ve spoken before about the impact stress around debt can have on my mental health. This will really put my mind at ease!

I’m actually really chuffed with my progress so far. A few focused days of work and time spent on careful gift planning this week and I’ll be well on my to hitting my goals before the 31st. How are you getting on with your goals? Let me know in the comments and be sure to join in with the linky myself and Charlotte host!

An InLinkz Link-up

Your Debt Diary – Laura from @ljsdebtfreejourney

October 10, 2018

Your Debt Diary is a guest blog series by money bloggers and members of the debt free community for My Debt Diary. Each week someone new will share their debt story. This week Laura from @ljsdebtfreejourney shares the ups and down of her debt free journey so far.

What stage are you at in your debt free journey right now?

I started my debt free journey in June 2018, so still relatively new. But I have learnt so much in that small amount of time

What is your debt total?

I started at £14,003 exactly, currently at around £13,800. It pains me to put it down on paper, such a massive amount of money and not much to show for it in my life!

What is your “why”?

I am a cliché, I guess I was never taught the right from wrong. My parents always had debt as long as I can remember, I never thought anything bad of it – that is until I found myself there. It all started at 18 with a store card, unlimited clothes, it felt amazing. Then came credit cards, nice car, nice holidays etc. I moved into my first rented house at 18, bought lots of house things and lived the free-spirited teenage life.

Then 3 years ago I met my partner, and for the first time in my life I didn’t want nice things anymore. I wanted to be able to see a future with my partner, our own house, a dog, children, see parts of the world. And I couldn’t see the future. All I could see was the sheer amount of money I owed and no way out. Having to spend more on cards each month, just to be able to get through the month because of how much interest I paid. Something had to change!

Are you following a specific plan or method?

I hadn’t up to now. My main focus was learning the ways, how other people were dealing with their journey. I switched most of my credit cards to 0% and took out a personal loan with the rest at a much lower rate. I seem to have adopted the Dave Ramsey plan without even realising it. I’ve already started sinking funds for things, de-cluttered the house and used earnings from surveys to start my emergency fund. This seems to be working this far so most likely the method I’ll carry on with.

What challenges have you faced along the way?

My biggest challenge has been getting my partner on board. He’s very black and white in the way he thinks, he’s never had debt, he works hard for his money but never lives beyond his means. Sometimes he doesn’t understand how I got to where I am and whilst I’m not after any sympathy, some support is needed. Over time, as I’ve learnt my ways and started to make progress he’s come on board a little more. Now I feel much more comfortable to discuss it with him and he’s been quite encouraging at times. My only other challenges are myself. Allowing that inner spender to come out and trying my best to keep her down!

What are you doing to speed up the progress of your debt free journey?

I put a lot of time and effort into the little things to help now (cashback apps, survey sites). In doing this and putting that money away, I find my salary doesn’t get dipped into anymore. This means there is more money left for snowballing on top of my minimum payments or planned spends instead of using the credit card. It really is amazing how clearer things become after a bit of organisation!

When do you plan to become debt free?

I originally said 5 years, but as the days go by I can hear that biological clock ticking away in the back of my mind – This is my motivation for doing my upmost to make this much sooner. Fingers and toes crossed, but we all know this will only go away from hard work, not luck!

I’d like to thank Laura for today’s post. Please make sure to visit her on Instagram at @ljsdebtfreejourney.

How I paid off my first credit card

October 8, 2018

A couple of weeks ago I finished paying off my first credit card! It had been a goal of mine for over two months and I cannot describe to you how good it felt to phone my bank and close that account. As soon as I hung up the phone I did a happy dance around the kitchen. I’m not joking. Be thankful you didn’t witness those moves. For many people starting out on their debt free journey, getting rid of that first debt total might seem like an impossible mission. To help motivate and guide you, here is how I paid off my first credit card.

Figured out my debt total

Of course, this is the dreaded first step. Before I could begin paying anything off I had to face my debt total. It wasn’t fun, it wasn’t pretty and my anxiety rocketed as I checked each number and added it to the calculator. It had to be done though. In order to understand how you are going to become debt free you have to know what it is you are dealing with.

My total came to £16,814.49. You can read my Starting Point post here. My smallest debt, my first credit card, was at £586.02. If you follow Dave Ramsey’s baby steps and the debt snowball method you will know that this would be the first debt I would focus on paying off. But before I did that, I had a few other things to put in place first.

Created a budget

The next step was to figure out where all of my money was going. I did this by coming up with a budget. Once I knew where my money was going, I would be able to tell it where I wanted it to go. I feel like that is the major difference between getting into debt and getting out of debt for most people. Setting up a budget gave me control over my outgoings for the first time in a long time.

As my income is irregular I had to do things a little bit differently. My total monthly earnings change constantly, so I had to come up with a budgeting method that worked for me. You can read about it here.

Set aside an emergency fund

Next came the emergency fund. This is such an important step and one that should not be skipped. I understand that for most people, by the time you reach this stage you just want to get started on your debt payments. You have to be patient and wait a little bit longer while you save your emergency fund.

It took me around three months to save my emergency fund, which felt like forever at the time. Thankfully I haven’t had to use it yet, but it gives me such piece of mind knowing that I’m covered if anything goes wrong or my income drops drastically in the coming months.

If you have no idea what I’m talking about you can read my post on emergency funds here. In very simple terms it is a pot of money for emergencies, just as it sounds. It’s greatest benefit is that if somewhere along you debt free journey something unexpected happens, such as a car breakdown, you remove your risk of going backwards with your debt progress. No credit cards are needed to make the payments, you have an emergency fund instead.

Focused my over payments

Now we get to the fun stage! For those who follow the Dave Ramsey method, this is where the debt snowball kicks in. Whilst making minimum payments to all of my debts I threw every spare penny I had at my smallest debt, my credit card. This change in the way I handle my finances has made the biggest difference for me. Before I started to focus on becoming debt free I used to pay a little bit of a card off, then a little bit of a loan and so on. Now, I concentrate all of my over payments on my smallest debt.

Some of these over payments came from money “leftover” once I had completed my budget for the month. A lot of it came from things like selling unwanted clothes on ebay and completing surveys on Prolific Academic (my favourite side hustle) too. Everyone will find something different that works for them.

The beauty of using this focused method is that you see much quicker progress with each debt that you have and your momentum really begins to build!

What’s next?

If you have read my goals post for October you will know that I am now putting all of my focus into my second and final credit card. Using the same method as I did for my first I will put everything I have into clearing this total. Even better, I now have the money available that was going into my first credit card (a minimum payment of around £60) which means I will be able to pay this card off even faster.

Whichever method you find best suited to you during your debt free journey, having focus and understanding of your money are both key. You have to know where your money is going and you have to tell it what to do. Take control of your finances and you will make progress towards financial freedom!