Am I on the right track?

[Cailin]

Hello everyone, I'm just after a bit of advice to see whether I'm on the right track to get rid of my debt.

Currently, between my boyfriend and myself, we have ~$AUD15,900 owing. $2700 on my credit card, $3200 on his credit card and ~$10,000 on a personal loan of mine. I've unfortunately brought most of that debt with me from my previous relationship where my husband thought money grew on trees and that it was essential to have the latest and greatest of everything.

What's done is done though, and we're now working towards 3 goals - to buy a new-to-us car, pay off the debt, and start saving for a house. The car has to come first for the moment, we need to replace ours by March (rego is up). After the car, would the logical order of paying these debts off be credit card, credit card, loan? One credit card is on a reasonably low interest rate, the other is a bit horrendous but I'm not sure it's worth transferring the balance seeing as I'm hoping to have it paid off by the middle of next year and we're not particularly struggling to keep up with payments.

We've sat down and nutted out a budget together, and we've estimated we can pay $550 a week towards the debt after food/bills/essentials etc. We earn around $1050 per week (boyfriends wage is variable, but this amount reflects the minimum he would earn). We were very honest with this budget, cutting out all non-essentials for the time being. I'm not sure how easy it would be to spend less though, I'll have to let you know in a few weeks We already have a couple of thousand in a savings account to put towards the car.

Are we headed in the right direction? Have I got the order of things right? Any advice is much appreciated, I hate having to claw our way out of this, and we were hoping to buy our own place within the next few years.

Sorry for the wall of text!

[disneysteve]

Wecome to the site.

Honestly, if you are able to put $550/week toward debt, I think the order is relatively insignificant. At that rate, it will take just 29 weeks to repay the $15,900. By paying from highest interest rate to lowest rate, you'll save a few dollars and that is the standard advice, but it probably won't be a huge amount in this case since your debt is fairly small and you'll have it repaid pretty quickly.

I'd say you are certainly on the right track. The key will be not to upgrade your spending habits once the debt is gone. If you can afford to put $550/wk toward debt, you can afford to put $550/wk (or at least most of that) toward savings once the debt is repaid. Save 30-40% of income for the future and you'll be retired on a beach somewhere sipping tropical drinks at a nice young age.

[maat55]

I agree, all your plan needs is execution. Your best days will be, if you begin to save this money after the debt is gone and suggested by Steve.

[fruitbowlk]

You might want to set aside a little money for a small EF Then start to pay off your debt and then get the car when needed.

[Cailin]

Thank you for the replies!

fruitbowlk - I'd love to have an emergency fund, I think we'll have some left over after the car and I'll hold that aside in savings as a makeshift emergency fund. It won't be a proper amount, but it will be better than nothing. We need the car by March

Thanks disneysteve, I was planning on attacking the smaller credit card first, just so I have some sense of satisfaction to encourage me to keep going. There's only a weeks difference in paying them off (if I can stick to it!)

Today is the first day of the our new financial plan (payday!) so wish me luck

[david10111]

Cailin ,why don't you consider to open a online business like ebay to make extra money for the debt?

[sydneysky84]

whats an ef?

[LivingAlmostLarge]

You are here, so yes?

[Hot dog]

EF stands for emergency fund.

[Tree0164]

I would focus on paying off your debt first vs the boyfriends debt. I wouldn't start comingling any funds at this point either.

[Cailin]

Tree0164, my partner and my funds have been co-mingled for the best part of a year, and we're working towards paying off all the debt, regardless of what name they're under.

We've been doing the new budget for about three weeks now, and I'm pleased to say things are going reasonably to plan. We're halfway saved up for the car, so should hopefully reach that goal a bit earlier than March like we expected.

We saved $500 this week instead of $550, but the weeks not over and I'm hoping I'll have some left to transfer to savings. We also managed to save $600 for the two weeks before, so I'm trying not to be too concerned about it.

We're struggling a bit with "incidental" costs... my grandfather is ill and he lives on the other side of Australia, so I need to find about $800 to fly over to see him for his birthday at the end of Feb. We've managed to find half of that without affecting the budget, but I need to buy the tickets soon, fingers crossed I can find the rest.

I'm also stressing a lot about money. I realise that this plan WILL work, I just wish it could all be done already, I hate being in so much debt. It's to the point where I'm starting to lose sleep with all the numbers and worries and possibilities whirling in my head

Thanks everyone for the help and suggestions!

[Cailin]

Actually, reading over a few other posts [and disneysteve's ebay challenge thingy] I'm wondering if there's merit in going on a cleaning spree and ebaying unwanted things? Problem is I'm not much of a horder and not into clutter, so I don't think I have much to sell!

[snafu]

Is there any possibility of short term, part-time work for you or your partner to garner the sum still needed to pay for the cost of the flight to see your grandfather?

[Cailin]

We both currently work [he does ~50 hours a week at the moment, I do 38] but I've managed to pick up an extra shift for the next three weeks... that should hopefully be enough with what we've already got to buy the tickets