baby steps

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 September 21st 2018 my new debt total is £15,700.20 (My starting debt total was £16,814.29)

That means that in the last three weeks (I missed last weeks post and pushed it up seven days) I have paid off £122.25. It also means that the first £1000 is officially gone. I’ll celebrate it with a glass of wine and a boogy in the living room this evening!

My new total debt payment to date is now £1114.09, which I have calculated to equate to 6.6% of my debt total.

(I should note that I have paid in more than this, however some money has gone straight to interest)

My progress has been slow with my debt free journey since I last checked in. If you read my post about debt failures on Monday you will know I have slipped up over the last couple of weeks! In my haste to pay off as much debt as quickly as possible I forgot about the fact that I am due to pay my tax bill in January. You could say, I had my debt blinkers on.

Focus is of course good when you’re on a mission to become debt free. It is your greatest priority in life and you push to clear your total as soon as possible. This does however make it very easy to forget about irregular payments. Of course, this is why a budget is so important. Sinking funds are also a great way to combat any potential surprises and I’m starting one for next year’s tax bill so I’m not caught out again.

Thankfully I have realised my mistake in plenty of time and I now have three and a bit months to set my tax money aside, although it will slow down my debt payment and that’s frustrating. The important thing, as always, is that I keep moving in the right direction with my debt total, no matter how small the payments are.

You can find my previous reports here.

No matter where you look nowadays goals are everywhere. Body goals, money goals, life goals. Everyone is ambitious and wants you to know what they plan to achieve in life. Now I’m not knocking that, I appreciate a big burst of motivation on a Monday morning. The truth is however, that when it comes to my debt free journey I find that small goals are helping me to pay off my debt.

Big goals are great, but not for everything

When I first faced my debt all I could see was the total. That one big number. It was like a huge barrier staring me in the face and I really struggled to understand how I was going to tackle it. £16,814.49. That’s a lot. That’s more than I made working self-employed from home last year.

Ambition and goal setting is everywhere now, and while I do find that motivational, it’s not always realistic. Many highly paid Americans share stories of fighting their debt total with over-payments of thousands of dollars a month on social media. I would love to be able to pay off so much each month, but it’s just not possible.

What’s important to remember here of course is that salaries in America are proportionally higher than in the UK and many Americans are paying off huge sums of student debt, which doesn’t translate here.

As I began to follow the #debtfreecommunity I realised that firstly I was not the only one in my position and secondly the was entirely possible for me to tackle, even on my low income. When I began to document my journey through My Debt Diary it was a challenge to be so open. Admitting the reality to myself was difficult enough, but now I was planning to share it with strangers?!

Over the last couple of months I have slowly become more comfortable with my debt total. Not because I’m happy to have it, but because I can see beyond that one big number now. My total can be broken down into two loans and two credit cards. Beyond that, it can be broken down into monthly minimum payments. The progress I make with it is also personal to me and my budget. No one else’s.

Small goals are helping me to pay off my debt

Once I got my head around these things it made it so much easier to figure out how I would handle my debt. I made a plan to save my emergency fund, figured out a budget and began tracking my progress every two weeks. Each of these steps has been taken one at a time and gradually.

Personally I have found the Total Money Makeover to be the best guide and it really helped me to get started in understanding what I needed to do. Dave Ramsey’s use of the term Baby Steps for each stage of his financial plan resonates very well for me. It confirms that the process takes time and should be handled in small amounts.

“What’s the best way to eat an elephant? One bite at a time.” – Dave Ramsey

Now that my emergency fund is in place and I have a budget that works for me, I keep things simple. Every two weeks I write my debt payment progress report. I check my numbers and make a note of where I am now in my debt free journey and how far I’ve come. The percentage of “paid-off” debt slowly increases and that in itself is motivation enough for me!

To help my debt journey along I am also taking a note of my spending on a daily basis. This makes me more conscious of where my money goes and more accountable for when I choose to spend it. I’ve found that “extra” money for over-payments doesn’t just come from making more money but from saving more too.

And that is it. That is all I am doing.

Of course, working hard is a priority. I want to ensure that my income is strong so that I am able to cover all my debts and more, but this is covered in my budget. There are no big goals set in flashing lights on my journey. No huge milestones are outlined. I will definitely celebrate my progress along the way but for now the steady progress is what I need. My focus is always on the next two weeks.

At the beginning of the month I set my goals for September. My priority now is to pay off my first credit card. The total balance due is just under £350. That’s a tiny portion of my £16k+ starting total, but it will feel like a big achievement to me and that is what matters. That is what keeps me going.

My Third Culture Kid have written a fantastic post about SMART goal setting with some brilliant advice and techniques. Click here and go and have a read!