It's really hard

Hayley33 · 11 October 2016 at 9:37PM

EssexHebridean wrote: »

That's a great idea on the present cupboard for kids parties Mrs Tinks - Poundland can be great for goodies like that too - you need to be selective about what you buy but there are some bargains to be found.

Hayley - Mrs T is right about the OD - if you're serious about not wanting to go back into it then the easiest way to do this is to cancel it altogether. It can be done with one quick phone call to your bank. You know you have the money spare - you just need to learn to budget with it. Until you both accept that, and commit to the learning process though, things aren't going to get any "easier"

For me - and for others on here - it does appear "easy" - but "easy" usually relates directly back to a lot of hard work and making sacrifices to get to that point. In our case our "debt" at it's highest was around £110k I think - with £103k of that being the mortgage. How many people do you know who, if they were asked "how much debt do you have?" would include their mortgage in there? It's like Mrs T said though - we chose to think of it that way, and we chose to get it paid off as soon as we could. Paying it off 12 years early has saved us around £35k in interest, and we're now living without owing a penny to anyone at all. That wasn't "luck" though - that was hard work.

Only you can make the decision as to what you really want - to remove yourself from a 5 year-plus cycle of debt and consolidation? Or to SAY that you want to remove yourself from it but then decide it's too hard and walk away again. Sorry to be blunt, but you need to think hard about what you want, and how you can get there. It doesn't just fix itself - there are no easy answers. This is why I suggested you look back over your old threads as this will show you how your pattern is repeating itself.

Also I want to say how amazing mortgage free!!!! :T. Maybe it'll help if I explain about my posts, I have had a lot of the repeat circumstances (loans etc) over a few years as in that time I moved, paid for a wedding and honeymoon, had a baby, then cut my hours down to part time working therefore losing £400 per month and tried to get used to living off that wage, oh plus in the last year had to buy a new sofa and new car again. So there's been no break from big expenses

. Hopefully now I've got nothing on like that for a while and hope to be on my feet in three years. No consolidation loans again. This is our last. I am thinking about what I want to do I know it's going to be tough. 3 years will fly though right?

. Partner will also do overtime as and when it comes up to save.

YouAsked · 12 October 2016 at 11:44AM

OP I don't usually post on these threads as there are people with so much more knowledge than me but a lot of your cirucmstances have really chimed with me - I think I have been pretty much where you are and I'm over the other side now.

Just a few things which may help you (but feel free to ignore too - we're not all the same!).

- Do a fresh budget each month. Include everything - birthday presents, petrol, parking, lunch money, school trips etc. Don't just roll forward last month's budget.
- Spend on debit cards so you have an electronic record. Then when you are setting your budget for the current month, use the ACTUAL figures for the previous 2-3 months, not just what you HOPE to spend - for instance, I export my online statement to Excel then tally up all the spending in Sainsburys/Tesco (and I am a frugal shopper but it is always more than I thought!). Sometimes I'll include a note such as "spend included X's birthday present", but as you know birthdays happen eveery month so I wouldn't necessarily adjust the spend.
- Reconcile your planned budget with your banking at least every three days and then you can see any divergence early and realise when you have to rein in spending.

On a wider point, as some other posters noted, children do become more expnsive - I had this idea that when I finally stopped paying nursery fees I would suddenly have HUNDREDS extra each month, but it didn't happen like that - breakfast/after school club fees, school trips get progressively more expensive as they go through the school system (I will not tell you what my eldest's son's upcoming trip cost - eeek), uniforms for secondary school are expensive, hobbies are expensive.

Similarly, I note you said £200 per month will be freed up when a car is paid off - but you shouldn't count on it! What I have found is by the end of the loan term, the car usually starts to need work doing - oh that joyous period when I needed gearbox, clutch and suspension sorting in consecutive months!

I'm in the minority on this board as I had a consolidation loan and it worked wonders for me (consolidated expensive overdraft which was costing £30 per month, credit card at 17% APR and exisiting loan when I needed a loan to pay for an urgent home repair). Having a loan for a larger amount meant I qualified for a better interest rate than if I'd just taken a loan for the urgent repair and my repayments are £100 per month less than I was paying out with the added bonus I have cleared my credit card, previous loan and overdraft. However, I would urge caution as I can see just how easy it would be to rack up those debts again. I'm in a different position to when I originally racked those debts up (back at work full time, better paid job). I genuinely found that no matter how frugal I was, no matter how good my budget was, the absolute crux of the matter was I didn't have enough money coming in for the way i wanted to live. Doubtless many people would have been able to use the increased income I have to absolutely hammer those debts, but I knew I did not have that level of self control and I would carry on coasting so for me, rolling them into one and starting with a clean slate was a good move - but I am absolutely vigilant about not racking up credit card or overdrafts again. Howeverm if I'd still been in the same position of workign p/t on a lower wage, I'm not sure I'd have had the same resolve.

Sorry, all about me, but your post did resonate with me.

The TL:DR version is - be realistic about what you spend versus what you budget and use your past spending to inform your budget. Don't make assumptions about reduced outgoings either.

EssexHebridean · 12 October 2016 at 11:55AM

YouAsked wrote: »

<snip>

Similarly, I note you said £200 per month will be freed up when a car is paid off (1) - but you shouldn't count on it! What I have found is by the end of the loan term, the car usually starts to need work doing - oh that joyous period when I needed gearbox, clutch and suspension sorting in consecutive months!

I'm in the minority on this board as I had a consolidation loan and it worked wonders for me (consolidated expensive overdraft which was costing £30 per month, credit card at 17% APR and exisiting loan when I needed a loan to pay for an urgent home repair). Having a loan for a larger amount meant I qualified for a better interest rate than if I'd just taken a loan for the urgent repair and my repayments are £100 per month less than I was paying out with the added bonus I have cleared my credit card, previous loan and overdraft. However, I would urge caution as I can see just how easy it would be to rack up those debts again. I'm in a different position to when I originally racked those debts up (back at work full time, better paid job). I genuinely found that no matter how frugal I was, no matter how good my budget was, the absolute crux of the matter was I didn't have enough money coming in for the way i wanted to live. Doubtless many people would have been able to use the increased income I have to absolutely hammer those debts, but I knew I did not have that level of self control and I would carry on coasting so for me, rolling them into one and starting with a clean slate was a good move - but I am absolutely vigilant about not racking up credit card or overdrafts again. (2) Howeverm if I'd still been in the same position of workign p/t on a lower wage, I'm not sure I'd have had the same resolve.

Great post YouAsked! :T well done for taking control of your situation in a way that worked for you, too.

As for my noted points above:

(1) Hayley - once your car loans come to an end I would strongly suggest continuing to set that money aside in a savings account - that way, next time a new car is required, you will already have a sizeable chunk of money to put against it - just two years of saving at that level gives you nearly £5k to add to the Part-Ex value of your old car! Learning to plan ahead for big expenses which you can expect to be upcoming is part of the learning curve - and will help prevent you cycling back to this same point in 3 years time.

(2) The bit I've highlighted is critical to why consolidation worked for YouAsked - a lesson was learned and taken forwards.

Ilona · 12 October 2016 at 12:39PM

YouAsked wrote: »

for the way i wanted to live.

Hi. Thanks for that post, excellent advice. This is the bit that resonated with me. I have held off from commenting but have been following by reading. I think Hayley has a long way to go before she finally 'gets it'. There has been no Statement of Affairs so that makes it doubly difficult for anyone to offer any solutions which might work.

I read so many similar threads and it seems to me that there are still a lot of people who are trying to reduce their debt, but unwilling to change their lifestyle. They don't see the difference between what they need and what they want. A sense of entitlement hold back so many in their journey to debt freedom. They don't want to let go of things that cost money and give them pleasure, and change them for things that cost very little money but still give them pleasure. 'The way I wanted to live', says it all.

Ok Hayley. Don't want to preach but you must try and change your mindset before you will make any headway. As EH said, you will not have any spare money when your car is paid off. That money will be needed somewhere and it's up to you to budget the best possible use for it. Put it away towards a new car. Every time I change my car, best second hand one I can afford to pay cash for, I start saving for the next one. I like to change every 3 or 4 years to keep on top of it. So that means I keep money aside, it is sitting there, it is not spare, I will need it to buy a newer car. I have car tax and insurance to pay for, I save for that.

I had very little money when I retired because I cut down my working hours, I wasn't enjoying my job. I watched my bank balance shrink to almost nothing. But hey, I found I could shave my outgoings to the minimum. I decided that if I didn't spend any money, I didn't have to earn it. So all spending except the bare essentials, bills, food, stopped dead. And do you know I felt better for making that decision, it meant I was in control.

Hayley, you need to take control, instead of feeding us dribs and drabs post up a full Statement of Affairs, we need to see the whole picture. It's up to you Hayley, you can ignore me if you like, the ball is in your court. I wish you well, I would like to help, but without all the info it's pretty difficult.
Ilona

Hayley33 · 12 October 2016 at 1:06PM

I had very little money when I retired because I cut down my working hours, I wasn't enjoying my job. I watched my bank balance shrink to almost nothing. But hey, I found I could shave my outgoings to the minimum. I decided that if I didn't spend any money, I didn't have to earn it. So all spending except the bare essentials, bills, food, stopped dead. And do you know I felt better for making that decision, it meant I was in control.

Hayley, you need to take control, instead of feeding us dribs and drabs post up a full Statement of Affairs, we need to see the whole picture. It's up to you Hayley, you can ignore me if you like, the ball is in your court. I wish you well, I would like to help, but without all the info it's pretty difficult.
Ilona

Hi. I don't wish to post the full SOA as I'm not looking for advice on my whole household bills etc, just basically my account and staying out of my overdraft and saving a bit whilst clearing my debts over the next three years. Also I am prepared to make changes, but I don't want to cut back to the bare minimum, as you said you did. That was your choice. I have a 7 year old and I want us to enjoy life along the way, holidays, days out treats etc because you know life is very short and you don't know what's around the corner. So thanks for the advice, I haven't said that I am not going to take anything on board, I have stated I'm going to to my best to pay things off/ try to save a bit and enjoy along the way. Believe me I do get 'it'.

[Deleted User] · 12 October 2016 at 1:13PM

Hayley33 wrote: »

I don't wish to post the full SOA as I'm not looking for advice on my whole household bills etc, just basically my account and staying out of my overdraft and saving a bit whilst clearing my debts over the next three years.

But don't you see, the two are interlinked.

The best way to stay out of your overdraft, is to spend less, and the best way to spend less, is to reduce household expenses.

That's where the SOA comes in.

EssexHebridean · 12 October 2016 at 1:32PM

You don't HAVE to cut everything down to the breadline - nobody is saying that at all. It's the way Ilona chooses to do it, but her levels would not be right for many people here. She likes the life she's chosen, and do you know, it's an incredibly full life - and one that makes her happy. Unlike "some" frugal bloggers, she doesn't lecture, preach, or tell others that they "must" live in a certain way, but like a lot of others on here, she does have a lot of experience of where savings can be made painlessly.

We still continued to have holidays, days out, the occasional takeaway, drinks with friends, plenty of "fun" stuff while we were paying down - it's about making savings and cutting costs where you can to fund that though. Example: We wanted an extra trip to our favourite holiday destination for a week a few years ago - we planned it well in advance and I worked my backside off to make it "cost neutral" - I did it, too!

At the beginning of 2011 there was £80,000 left on our mortgage.
In October 2016 - now - there should be £40,000 left on our mortgage.
In fact, as you know, there is nothing. We've paid the lot.

We did it all while STILL HAVING A LIFE. By doing this, we've safeguarded our future, to an extent - you owe it to your 7 year old to give this the absolute best shot you can, by paying off your outstanding debts (yes, even that loan) earlier, you free up your capital and allow it to work for you - rather than you working to fund the bank manager, the loan company chief executive, of the Credit Card company directors expensive cars. The thing, the point, you're still not quite getting though, is that this is not just about YOU - it's about your family as a whole. You, your OH, your child. If you work as a team, you can give your child a better life. if you continue to try to work solo, you're putting that better life off.

Ilona · 12 October 2016 at 1:33PM

Oh the frustration, I want to go and bash my head against a brick wall. Hayley, you are not setting a very good example to your 7 year old, you keep saying, I want, I want, I want. There has to come a time when you say, sorry, we don't have the money to do that.

I suggest you carry on as you have been doing, then come back in three years and tell us that your overdraft is gone, you have no debts on cards or loans, and you don't owe anyone anything. I would love it if you did that.

Ilona

YouAsked · 12 October 2016 at 1:36PM

Hayley33 wrote: »

Ilona

Hi. I don't wish to post the full SOA as I'm not looking for advice on my whole household bills etc, just basically my account and staying out of my overdraft and saving a bit whilst clearing my debts over the next three years. Also I am prepared to make changes, but I don't want to cut back to the bare minimum, as you said you did. That was your choice. I have a 7 year old and I want us to enjoy life along the way, holidays, days out treats etc because you know life is very short and you don't know what's around the corner. So thanks for the advice, I haven't said that I am not going to take anything on board, I have stated I'm going to to my best to pay things off/ try to save a bit and enjoy along the way. Believe me I do get 'it'.

Hi Hayley, I completely get where you're coming from - in amongst my mammoth post I did say that doubtless other people would have made different choices to me to deal with debt. I don't want to be all preachy-oh-look-at-me now but I do think you are where I was a while back.

I very firmly had the viewpoint (and still do!) why work so hard to have a grey existence which is all about penny pinching BUT I also know that quite simply, in retrospect, I couldn't afford the life I wanted - no matter how much my "budget" told me I could, it wasn't true - because if it WAS true, why was I racking up debts? The stark reality is, if you want to decrease debt/increase savings but you don't want to cut back to the bare minimum to do this then you're going to have to find a way of increasing your income. If you can do that, fine (it's what I did), but don't take comfort from things like "oh in two years I'll have paid off this and that" because if you don't have savings then you will always need to take out loans when you need to make big purchases.

It isn't always necessary to go "sack cloth and ashes" while trying to improve your financial situation, but the absolute basic requirement is a realistic budget based on your actual spends, and if each month you are relying on credit cards or falling short, then this tells you your budget isn't realistic. An optimistic budget is pointless (actually, it's not useless for many people, but I think for people like you and me it is!) because it tells you you can afford a lifestyle that you simply can't.

Sorry, as I said, I don't usually post on these types of threads but I can see me a few years ago.

EssexHebridean · 12 October 2016 at 1:38PM

Ilona wrote: »

Oh the frustration, I want to go and bash my head against a brick wall. Hayley, you are not setting a very good example to your 7 year old, you keep saying, I want, I want, I want. There has to come a time when you say, sorry, we don't have the money to do that.

I suggest you carry on as you have been doing, then come back in three years and tell us that your overdraft is gone, you have no debts on cards or loans, and you don't owe anyone anything. I would love it if you did that.

Ilona

Heartbreaking, isn't it. But people don't realise that we've seen this pattern before - seen it end in bankruptcy, lost homes, broken marriages. They don't realise that when numerous experienced forumites repeatedly give the same advice, it's based on experience. I wonder if the assumption is that actually we're all lying, that somehow we paid off debts or fund an extravagant lifestyle on inheritances from rich relatives, or something. If only, eh?! :rotfl:

It's really hard

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