A Long Journey
Gosh its been a long journey. A journey that I have been writing about on this blog now for 21 months. Two years in April.
Its been such a tough journey and I cannot wait until the end. Which is very much in sight as this week I paid off £4,000 from the £8,600 balance that stood as of 28th January.
There have been points where I thought it would never end, just recently in August/September of 2018 there was a big setback. My savings disappeared, spent on business investments. My business expenses escalated significantly with expansion and I was spending more than I was earning for a few months. A net debt that I had worked hard to get down to £5k (£8k in debt plus £3k in savings) suddenly turned into 10k debt. Plus, I had overdrafts to repay as well.
Spend Less than I am Earning
But these past few months have been good for Mrs Mummypenny. I have agreed lots of work with brands and on-going work for the year ahead. I was able to flip the financial position putting money aside and being careful on a month by month basis. The spending has been far less than I have been earning.
I wrote a post a couple of months ago about me thinking of my debt repayments in a different way. Rather than losing money into the abyss of my debt they were to be thought of as building my wealth.
It took me a few months to get used to this concept and I have been holding onto money for a while. Holding onto it in my business accounts through fear of a rainy day. Fear of not having enough money to pay the mortgage or fear of having a month where I don’t earn any money.
But come on Lynn, let’s be realistic. I am in full charge of my cash flow and know what money I have coming in over the next few months that is certain. I know what I am owed and how much I have in my savings, investments and what I have in my emergency fund.
A big chunk of debt has been repaid
So today I have paid off a huge chunk of the credit card debt. I took the money from my savings and cleared £4k from the debt. And I feel happy! I feel so proud that I have earned enough to feel comfortable and pay off 4k from the debt balance.
How did I get this money?
I have been working hard over the past few months and have increased my earnings. Anything extra that I have earned has been separated from the money I need to pay the bill and put into savings pots. Those pots are debt fund, emergency fund, pension, investments, fun money and holiday. I am finding this method is really helping me. The money is physically moved from my account balance so that I can’t even see it to be spent.
I must send some love and inspirational gratitude over to Charlotte Musha who very recently cleared her debt. We met at an event last year and I have been following her blog and business with admiration and interviewed her on my radio show. She has recently just cleared her debt. All through sheer hard work and a successful business Bang On Blanks, listen to the interview here.
I saw her paying off a big chunk at the end of her debt and it inspired me to do the same. Thanks Charlotte.
My Goal for this year
Now I am left with £4,600 to repay. £3,300 on an MBNA card that is 0% interest until July this year and a further £1,300 on a Virgin credit card that is 0% until Nov this year. This feels manageable, maybe because I got the balance beneath £5k. I do like my numbers and targets to get beneath this feels good.
I do have savings set aside where I could repay this debt in full, but I have an emergency fund that I refuse to use. It keeps me mentally happy to know I have this safety net set aside. I have also put money aside for two holidays this year. One holiday for my best friend and I that is booked and happening in April and then another holiday for the family in the summer.
I intend to repay £1000 each month of the debt, provided my income continues at the level of recent months. As I constantly mention, this doesn’t always happen, so I state my intention to repay £1000 each month. This will mean that I should be able to celebrate being debt free in June. Perfect timing as I know the summer months are always lower for income.