Bills account

I have a bills account that I pay a set sum into each fortnight when I get paid.

This fortnightly amount is slightly more than all of the upper limits of my known expenses (PO Box, water, electricity, wood, gas, healthcare, grooming, clothing, insurances etc) annually, divided by 26. So I always have enough to pay my bills with some to spare. 

I paid my PO Box last fortnight but with my credit card, because that's the only payment method they take. The PO Box renewal is $129 annually.

What I forgot to do was transfer the money from my bills account to my credit card! I have the money for this expense saved in my bills account, so I'm robbing myself if I don't transfer it immediately - and risking being charged interest! 

As you know, I've paid my credit card down so that there is only a $100 balance remaining in total so I've transferred $100 this morning. It will take a day or two to come across but will mean that my credit card will be completely paid off. Woo!! It also means that there is an extra $29 sitting in my bills account... which is fine. I like having a bit of a buffer there in case of an emergency.

The bills account has a built in buffer thanks to my over-estimating, so it also acts as my emergency fund. It has a floating balance usually of around $1000 - $1500, but is currently a little depleted due to some unexpected bills thanks to some personal issues that I'll go into later.

I'll update balances and net worth when the transfer is completed :)

Everything has changed

So big changes around here.

My husband and I separated.

That was... hard and expensive.

He had signed my daughter up for a phone plan, and with the separation that bill now comes to me. I'm annoyed about that, but there's not much I can do about it.

We'd also purchased a large TV together, and because its staying in my home, that bill is also now mine.

I basically got nowhere for a few months. So frustrating.

Then my parents agreed to go guarantor on a house loan for me, so I could get my own place.

And then they changed their minds. Which is fine.

Dad instead suggested that they could pay out my existing loans, and I could repay them at 0% interest and so get ahead a bit quicker and into my own place without help.

That was very, very kind of him, and I took him up on that offer.

So, as it stands today:

I owe my Dad $32,178.

I owe $100 on my credit card (which has been put away and will not be used unless I can immediately transfer cash to pay off whatever purchase I'm making - therefore making it a cash purchase).

I owe $2335 to the TV debt. (also at 0% interest)

My Dad has asked that I pay him back in lump sums. So I'm saving the payments to him in a separate bank account and tracking my payments using NetWorthIQ.com

My net worth, when I started it last week was -$35,513

My current net worth is -$34,113

Its annoying that I'm higher again than when I started, but I've gone back to basics again and I've also done some tweaking to my budget to free up some extra cash.

I have been really distracted with the ending of my marriage and some family crises but I am absolutely determined to get out from under this debt as soon as humanly possible.

I think I'll try and say something every day about debt and debt reduction... to keep me accountable and motivated.

Getting somewhere

Update for the end of October:

Credit card: $2,190.33

Personal Loan: $28,975.55

Total Debt: $31,165.88


Starting to see some improvement. This is the right direction at last!!

Smarter and harder

One of the things I think I can do to help myself out of this self-dug hole is to work both harder and smarter.

Smarter:

I've recently received a $20 per fortnight (which is my pay cycle) boost in pay, thanks to our enterprise agreement annual increase. That has been added directly to my credit card payment since that is the most pressing of my debts and the one I'm most keen to kill off first.

I've also decided to stop transferring $50 into a savings account each fortnight. If its sitting in the savings account, I tend to spend it. I'm not good at saving at this point in time, and I think that is a symptom of my focus being on debt reduction. Putting it into one account just to transfer it out and spend it is just a stupid waste of time and its not getting me anywhere. So instead of not-saving it, I'm just going to put it to debt. I won't spend it if I've paid it off debt. If it isn't there, I won't miss it.

That boosts the credit card payment to a whopping $520 a fortnight.

I'm also in line for a potential raise at work, which would equate to about $140 a fortnight before tax. I'm not sure how much tax will hit it, but I expect that about $100 of that would come home to me. So that will be added to the credit card too if it comes through. The bonus with that one is that if it does come through, it should be backdated to early August, meaning a good solid lump sum to go straight off the debt - five pay fortnights worth it should work out to.


Harder:

My second job has managed to hold on through the season, despite my fears that I was going to lose it completely. It looks now that the manager there will keep me on, and my shifts are secure for as long as I want them. Through the winter, for various reasons, I'm only able to do one shift a fortnight, which equates to about $55 after tax in my account.

As spring has now hit, I'm able to do three shifts most fortnights and that means that my pay for a fortnight is around the $150 mark, depending on hours.

So far, I've worked a mix of one shift fortnights and three shift fortnights over this financial year, but haven't been paid yet. I'm expecting a lump sum payment of those shifts that I've worked to come in this week, and all of that will go to the credit card. I expect this will be north of $500 in a lump sum, which will go directly to the credit card.

As fortnightly payments for this second job come in, they'll go straight to the credit card too.


I'm hoping that this smarter / harder tactic will help me make a sprint towards zero on the credit card before the end of the year.

Back to basics

I'm still feeling frustrated.

Despite putting $450 a fortnight against my credit card debt, each fortnight I've had some reason to use it and my net debt has barely moved.

Total credit card: $2926.81

Yes, you read that correctly. In the two months since I last wrote, I've paid less than $50 off the balance. I'm livid at myself.

My personal loan isn't faring that much better.

$29,515.13.

Total debt: $32,441.94

In January, my debt was $32,195. So I'm actually further in debt now than when I refinanced my loan, before the house move.

Its the interest that is killing me on the personal loan - I'm paying $300 a fortnight (over the minimum payment), and each month copping an interest hit of over $300. I know that this will get better when I'm whacking $750 against it each fortnight, but at the moment it just feels like treading water.

I am taking my credit card out of my purse. It needs to stay in the drawer, and not be used.

I need to tighten back up on my expenditure. Things got out of control during the house move, and then from there I made a very expensive purchase on my credit card ($2000 odd). I bought a Thermomix, and to be honest, I don't regret it at all. Other than wishing that I'd saved up for it rather than putting it on credit card. I purchased it straight away as there was a special on, and I do think that I got good value from doing it that way - or at least I would have if I'd been able to pay the credit card off in a timely fashion.

I ate out a lot during a period where we were clearing out my Nan and Pops house - and not only ate out paying for myself, but shouted other people lunch on a number of occasions. At $50 - $70 a pop, that was taking valuable money out of my weekly budget, and I was then putting other things on the credit card - like groceries.

I think perhaps I've been putting the wrong amount away into my bills account too - I raised that amount up, but I think I'm putting too much in there and not leaving myself enough in the weekly account to do what needs to be done. For example, I'm saving for medical things into the bills account, but paying for them out of the weekly account because the bills account isn't readily accessible. So I'm saving into the bills account, spending out of the weekly account, then paying for things that should be coming out of my weekly account with my credit card. Its a stupid, pointless cycle.

I've also had additional medical bills, with my daughter requiring a new medication and visit to a specialist. That set me back $500 in one single day!!

So. Back to basics for me. I WILL get myself back on track, I WILL have a $0 credit card by the end of this year, and I WILL get this debt cleared.

Frustrated

I'm sure that the universe is trying to tell me something. 

No closer to getting my credit card cleared. 

Think I need to revisit my budget. 

Gifts have blown me out of the water these last weeks. Gifts and takeout - which couldn't be avoided as I was away from home helping my parents. 

Credit card: $2997.60

Personal loan: $30,250.67

Medical debt is zero. 

Big changes

I've been a bit absent, but with good reasons.

I've moved house - which was a very long, painful and expensive exercise.

But the house that I'm not in is lovely and there has been discussions with the owners about us potentially buying it when the time comes. So that is a positive.

The new house has solar panels, so I'm expecting that with a little careful management that I'll have no net increase in my expenses here, with the electricity windfall making up for the slight increase in rent.

I am behind the point that I last left you though, having had to redraw on some of the funds I was ahead in my loan in order to make the move happen. I've also put a bit back onto my credit card.

In response, last night I sat down and redid my budget. We're down to brass tacks here for the foreseeable future until I can right the damage that I've done to my progress.

First step is to put the credit card back to zero.

I've allocated $450 per fortnight to that.

Second is to knock my loan back down. So as soon as I've moved that credit card to zero (I cringe to say that it will be 4 fortnights until the magic $0 appears)... the loan repayments will be going from the current $300 to $750.

My medical debt is fully cleared now, so that is a massive help.

I've also gone through how I manage all my annual payments and allocated them all to my "bills" account, which is separate to my daily account. By transferring out all of the payments and future allocations the day that my pay goes in, I will only be left with a very small amount in my account which is to cover groceries, date night and $50 discretionary spending each fortnight. That discretionary spending is to cover any small incidentals - school excursions that come in last minute and so on.

All payments for this fortnight have now gone out, so I'm starting May with this renewed approach to getting my house back in order.

I suspect that anyone who is like me, not terribly great with money, has these setbacks when they start off on a debt journey. It certainly seems to be the case for most of the debt reduction blogs that I've read - even though most of them are American. I know that it is far from ideal to be having big expenditures like a move when I'm trying to pay down my debt, and worse that I've actually gone backwards as a result of it. BUT, I'm determined to pick myself up and get back to that lovely feeling of $0 on the credit card and thousands in front on my loan. It felt so good the first time and I know that I can do it quickly if I am careful with my money.

So, onwards and upwards as I keep chasing zero.