It’s fair to say this whole getting out of debt malarkey has become somewhat of an obsession. Ever since I pulled my head out of the sand and admitted I needed to sort out my finances, it has been a constant thought. Not in a bad way, rather in a ‘I’m regaining control and happy about it’ kind of way.
However, the one thing that has been really niggling since I’ve been talking about paying off all my debts by the end of this year is the knowledge that even though I’ll have kicked all the credit card debt into touch, I still don’t own my car. A (not-so-) little back story. In July 2015 my 7-year-old car had a bit of a coolant leak, which became apparent as I was driving along the motorway and a huge red ‘STOP NOW!” engine warning light came on. Cue pulling over to the side of the road, getting out of the car and feeling a scorching heat coming from the bonnet. Diagnosis: complete coolant leak, engine overheating, and £1600 repair bill to get to the point that the engine ‘might’ work. Hmmmm. I didn’t have £1600, and that’s too much for a ‘might’, so I sold it for scrap for £1000, and put that grand down as a deposit on a 0% finance personal purchase plan on a new car. Now I am well aware that new cars are not worth the money, and you lose a few thousand as you drive it out the lot. However, at that point in time I had probably about £14K debt, and couldn’t get a loan for anything less than about 7% interest to buy a second-hand car. I wasn’t prepapred to add that on to the debt pile. However, I could afford about £200 per month for a car on 0% interest. So I did that. Last year, I returned the car early and upgraded to the new version of the same car. I’m paying £24 per month more than I was previously, but I’ve got a car with a bigger engine, again on 0% interest. So I know it’s not ideal, but it suits my life and budget.
I got the car on a 42 month repayment schedule, and on the 42nd month I can either hand the car back and walk away, or I can pay a one-off final payment and own the car outright. The latter is my plan. So this afternoon I’ve just planned out my entire budget for 2019 to enable me to save up for that final payment of £4905. Not only that, with my credit card debt gone, i’ve also budgeted for the following:
- Payment on the final two courses (Jan. & May 2019) of my current PgCert
- Payment for the first course (Sept. 2019) on my third and last PgCert (all three add up to one MSc)
- The cost of flights, hotels and spending money for two planned holidays next year
- Saving £3000.
By the end of next year I’ll be credit-card debt free, I’ll have the final car payment sorted, and with the extra savings, it means that I could pay the car off in early 2020 if I wanted. I’ll decide on that later. Anyway, I now feel as though I have a plan in place to not only pay ahead for all the other things I want to do next year, but also to build up a little savings buffer and that final car payment. If I do choose to pay the car off in Jan or Feb of 2021, i’ll be completely & utterly debt free. If not, I’ll have a little savings pot to build on, and i’ll keep up with the monthly payments until the final bill is due. I can live with this and feel much more relaxed & happy now that I have a robust plan.
I realise this is a looooong post, but hopefully it might be of help to see that you can get yourself out of a financial hole with a bit of planning and lot of patience. For me, building in allowances for what I want to do (studying and holidays) makes it more manageable, and therefore I’m more likely to stick to it. I have to admit that I never plan this far ahead in life (even just a year!), so i’m still getting used to this; I prefer things to happen instantly upon deciding to do something! Also, I’m always interested to hear how other people manage their money, so comment below if you want to share your experiences 🙂