How I’m going to pay off £25,000 of debt in 30 months

Okay, first post! I just want to say that I started this blog anonymously so that I could be absolutely transparent with my personal finances and therefore reach my financial goals more quickly. I feel like having some sort of accountability will help me reach these goals faster and also enable me to (hopefully) get some support from other readers/bloggers out there.

WHERE MY FINANCES ARE NOW

I am a 26 year old girl with roughly £25,740 of debt. I live and work in London as a financial analyst and I am currently qualifying for the ACA. I make £28,500 (update Dec. 2017: I now make £30,500!) a year before tax and want to pay all of this debt off in 30 months.

My debt is broken down as follows:

  • £1,583 of interest free loans from my employer (£41 taken out each month of my paycheck)
  • £24,157 of student loans at 2.47% interest – this is actually a loan from the US so in dollars is currently $31,451. I pay down $250 (190.84 GBP) a month although my official payment is $217. (I got my masters! It was worth it, because now I’m doing the job I wanted, but it was expensive.)

MY FIXED INCOME

I make £28,500 before tax, which is due to increase in October to £30,500 and then the following October (2018) to £35,000 (only a little over a year away!). These two increases will lead to increases of  £113 and £255 in my monthly take home pay, respectively. This is an additional £4,416 over the course of the next two years. Beyond that, I should be receiving bonuses of £950 per year for the next three Decembers (17, 18, 19) which adds another £2,850. Added to the £3,435 I have in cash in the US already (payout from car insurance in the United States[oops!] + savings) is £10,701. Which MEANS the amount of debt I have left to pay off after pay increases, bonuses and current cash is £15,039!!!! Wow that number feels a hell of a lot better.

Okay so those are the facts! I draw most of my personal finance inspiration from Dave Ramsey, Mr Money Mustache, Budgetsaresexy and a few others (take a look at these if you haven’t they’re all brilliant!). I want to be rid of all of this by the January of 2020, which gives me roughly 30 months to do it from today.

MY FAVOURITE BUDGET APPS AND MY PERSONAL BUDGET

I’ve been tracking my expenses the last 10 months using OnTrees and Mint (a US based budget app, but works with most UK cards/accounts) and then keeping my own spreadsheets, so I am relatively aware of where my money is going, however I’ve recently overhauled this budget, but here’s what it looks like for the month of August:

August 2017
August 2017 Budget

A few important notes about my budget:

  • I’ve got a dog. I love her so much and I am so lucky to have her! But if I’d known I’d be living in London I probably wouldn’t have committed to adopting her since it is pretty difficult and I’ve got to pay for a dog walker several times a week which is £10 a day. Luckily, my boyfriend adopted her with me so we share all of her expenses!
  • I’ve got a boyfriend. He comes over every night for dinner and is 100% on board with all of this crazy finance stuff. We basically end up splitting groceries because of dinners and weekends, which is an enormous help, and he pays for our Netflix subscription (a really good reason to have a significant other). He’s also got student loans that we are also planning on tackling (~£8000).
  • My employer pays for my phone – I’m waiting for that EE contract to run out in March of 2018 – if anyone has any tips for getting out of phone contracts for free, please share!!
  • As you can see, I’ve budgeted to put £450 towards my loans – this is SEPARATE from the $250 and the £41 I’ve mentioned, this is because I’ve been throwing cash into my American bank account for months to get ahead. So I’m set there for a while and can squirrel away cash in GBP and send it over in larger chunks. So altogether (in £) it’s about £633 which is 35% of my take home pay.

PLAN OF ACTION FOR REPAYING MY DEBT

My plan of action is to tackle the smaller loan first. I know that it’s interest free so it doesn’t necessarily make perfect financial sense, but I need the momentum and to know I’m truly getting somewhere! I truly believe that the psychology of debt and repayment plays a huge part in getting ahead financially. After that’s paid off I am going to be throwing every dime at my student loans. I want to be completely free of all of this debt in 30 months, and it will take a lot of focus!

Okay so, that’s a lot to take in and if you’ve read even half of that and you’re still with me, thank you! I will be sharing my monthly budget at the start of the month, my actual spending at the end of the month, any good tricks or tips I pick up from other bloggers, friends, family, etc!

Again, I am writing this to be completely transparent, so any help I get or any set-backs caused from lack of self-control (millennials and their dang avocado toast) will be told here.

Please comment with anything you’re interested in hearing about or if you’ve got any advice!

X

MB

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