early 40s and not fabulous at all

enthusiasticsaver · 20 September 2017 at 4:14PM

plush wrote: »

Thank you! I did consider moving outside of the M25 but after a lot of soul searching I decided we'd stay put for now, and try to tackle this debt problem instead. Also, I'm fearing social isolation - moving to a place where we don't know anyone is not something that appeals at the moment. I've discussed it with my child as well and was met with strong resistance. Apart from reducing the mortgage and paying off debt we have no reason to move, the area and the schools are great here. (Oh, and any move will have to be discussed with my ex as well - I don't think it would be fair to him to move very far away).

Moving costs money anyway so it may be counter productive. You know the reason for the debt as you have said it yourself.

So I live well above my means even though my income is not that bad. Although I have been able to cut some bills, I'm lacking willpower when it comes to everyday spending. I tried to put my credit cards away but I failed. I go on too many holidays. I spend too much money on everything: clothes, shoes, haircuts, household things, concerts, theatre, etc. And I definitely spend too much money on food, on both groceries and eating out.

That would indicate to me that if you get your budget under control then this is fixable and you can start to deal with getting your finances under control.

Move any credit cards not on 0% deals to the longest deals you can if your credit rating is still good and the deals are available to you. You may struggle on affordability depending on your income so do a soft check first to see which cards you might get approved for.

I would start an emergency fund (crucial as an alternative to a credit card for when emergencies happen). This is important as you have a flat and also if you have a car.

My personal preferences for managing money is to have two savings accounts - one for emergency only and one for annual expenses like insurances, Christmas, birthdays, holidays and annual costs for house or car like car tax/service or boiler servicing or even school uniform replacement. When your pot builds up you can also allocate money to white good replacement if your washing machine breaks or new sofas although some people like to split into more than one account for all those things.

You can also have two current accounts, one for salary and bills/direct debits and one for disposable income for food, fuel, travel and personal expenditure. Sort out how much goes in each pot. Pay slightly more than minimums on the credit cards at the beginning of the month and maybe top up later on if you find you have spare income. A useful tip is to set the credit card payment at just over minimum and not reduce it as the balance reduces so if the minimum is £38 per month pay £40. Target the most expensive debts first.

plush_2 · 20 September 2017 at 4:34PM

@entusiasticsaver: it feels like you know me!

thanks for all the suggestions, I'm really grateful.

enthusiasticsaver wrote: »

Move any credit cards not on 0% deals to the longest deals you can if your credit rating is still good and the deals are available to you. You may struggle on affordability depending on your income so do a soft check first to see which cards you might get approved for.
I've already done that. Apart from £300 overdraft - which happens without fail every month, right now all CC debt is on £0 for at least 20 months. I moved it recently. No more credit card applications!

I would start an emergency fund (crucial as an alternative to a credit card for when emergencies happen). This is important as you have a flat and also if you have a car.

I don't have a car and yes I do need a fund like this... the only savings we have are in a child account that I forced myself to open about 6 months ago, it pays 4% interest. Cannot make withdrawals and don't want to, so that's not an emergency fund.

My personal preferences for managing money is to have two savings accounts - one for emergency only and one for annual expenses like insurances, Christmas, birthdays, holidays and annual costs for house or car like car tax/service or boiler servicing or even school uniform replacement. When your pot builds up you can also allocate money to white good replacement if your washing machine breaks or new sofas although some people like to split into more than one account for all those things.

I don't have ANY savings accounts - I mean I do have one, with £0 in it. I thought - why open them since I need to pay off debt first.

You can also have two current accounts, one for salary and bills/direct debits and one for disposable income for food, fuel, travel and personal expenditure. Sort out how much goes in each pot. Pay slightly more than minimums on the credit cards at the beginning of the month and maybe top up later on if you find you have spare income. A useful tip is to set the credit card payment at just over minimum and not reduce it as the balance reduces so if the minimum is £38 per month pay £40. Target the most expensive debts first.

I do have 2 bank accounts,. Barclays for income and bills. Halifax for spending. It's the Halifax one that is bleeding all the time. It comes with a £300 fee free overdraft and I'm in it right now.The suggestion you make in blue might help.... when I get paid, I always optimistically make credit card payments that are much more than minimum. But, I use a credit card (Barclaycard) to spend, and by the end of the month I'm back in my Halifax overdraft AND with new credit card debt. I need to stop using Barclaycard. That's the one I need to cut.

plush_2 · 20 September 2017 at 4:47PM

OK so the SOA calculator isn't working so here's my bill list - for now. On paper, it's not that bad. The reality is that I spend much more than that £730 each month, after all bills are paid. This is how I racked up £14000. And I have not even included the annual bonus in my income figure.

TOTAL CC DEBT: £14200 (£9K Barclaycard 1, £4.9K Sainsburys, and almost £300 Halifax overdraft). All at 0%.

INCOME (salary, child ben, chd support) £3,043

BILLS:
mortgage repayments £980
mortgage insurance £37
other insurances £15
service charge £75
council tax (12x) £103
gas, electricity £26
water £17
TV license £12
line rental/Internet £19
Netflix £8
mobile £42
Oyster £126
childcare £290
extracurricular clubs & school fund £110
school lunches £37
child account savings £100
minimum credit card payments £313

TOTAL BILLS £2,310

LEFT AFTER BILLS EACH MONTH £734 (this is for food and all non-bills spending)

EssexHebridean · 20 September 2017 at 4:54PM

Two words for you - Spending Diary!

That is the honest first step, if you know you *should* have a surplus but somewhere along the way it's being eaten...or drunk, or just frittered...! Get all your routine spending "ducks in a line" as well - so work out roughly what you've spent on food shopping for example, on average, each of the last 3 months. Find out where you stand on utilities - are you in credit on electric or in debit on gas? That sort of thing can be helpful, particularly running into the winter.

Hopefully the SOA calculator will sort itself out - if not perhaps the MSE "budget brain" tool might be up and running again now and you can use that to at least get all the figures together.

plush_2 · 20 September 2017 at 4:59PM

EssexHebridean wrote: »

Two words for you - Spending Diary!

That is the honest first step, if you know you *should* have a surplus but somewhere along the way it's being eaten...or drunk, or just frittered...! Get all your routine spending "ducks in a line" as well - so work out roughly what you've spent on food shopping for example, on average, each of the last 3 months. Find out where you stand on utilities - are you in credit on electric or in debit on gas? That sort of thing can be helpful, particularly running into the winter.
.

Thank you Essex. I've installed the Spending Tracker app (read on another diary about it) so my plan is to sit down tonight and enter all my bills then track all spending, going forward, and evaluate monthly.

Regarding the utilities, funny you should mention that. I'm with e.on and they sent me an email last week to reduce the direct debit from £59 to £26, apparently I was in credit.

Fireflyaway · 20 September 2017 at 5:05PM

How about allocating yourself ' pocket money' each week out of your left over money and then putting it in 4 envelopes ( I got some nice colourful plastic ones off Amazon). Then take one each Sunday / Monday or whatever and that has to last the week. Don't even take your cards with you. What's left put towards your debt.
You can definitely get over this with your income. Start on the smallest first.

plush_2 · 20 September 2017 at 5:13PM

Fireflyaway wrote: »

How about allocating yourself ' pocket money' each week out of your left over money and then putting it in 4 envelopes ( I got some nice colourful plastic ones off Amazon). Then take one each Sunday / Monday or whatever and that has to last the week. Don't even take your cards with you. What's left put towards your debt.
You can definitely get over this with your income. Start on the smallest first.

That's a great idea! Thanks.

How about the online spending though? I know I should cut up my 2nd Barclaycard (I have 2 Barclaycards - one is the balance transfer one that has £9K on it, and the 2nd one is a regular one). I'm scared to do it though. "What if something happens" - that's always been my excuse. That's also the card listed on my amazon account. On the groceries account (Ocado). On the Oyster card as a top up card (for travel outside of the zones I pay a monthly card for).

Right now, I cannot cut it. No cash in my pocket and the fee-free overdraft is maxed out (almost £300). Pay day is on Monday the 25th and we need food. That's how bad it is...

plush_2 · 20 September 2017 at 5:18PM

PS. Oh yes - and Barclaycard 2 has £65 on it, which I neglected to include in the debt figure. So this month I overspent £365 (the overdraft plus the £65). It will be £400 by Monday when I get paid...

Scott_Weiland_2 · 20 September 2017 at 5:56PM

Hi Plush the first thing i would do before anything is two things

1) go see your gp
2) restart yoga

If your having any concerns re your mental health packing in exercise is the worst thing you can do. I won't go into the details here in depth but i have had mental health problems, the best advice i can give is above.

Going to one yoga class pw week will release endorphins and serotonin that will help with your mood. Early on in the year i slipped a disc in my back and jaysus not being able to exercise for me was a nightmare.

Think of it this way if your mood severely crashes what will it impact your family/work/finances etc etc you need to be well if you want to tackle the debt issues.

UncannyScot · 20 September 2017 at 6:38PM

Hi and welcome

As you can see, we are a considerate, non-judging and very helpful bunch here...

I cannot add much else to all the good advice given here TBH

I have also battled with depression and other demons in my life...
For me two things have helped me to combat and defeat them;
regular exercise and a focused, positive attitude.

To manage my finances I now use a combination of excel spreadsheets and a OneNote Journal.
These help me to both track spends and maintain my budgets.
To make a little spare cash and build savings I do a few online surveys.

You can do this, we will help you
We are all in the same boat here

early 40s and not fabulous at all

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