Breaking the cycle of debt

savingholmes

We have battled with debt throughout our married lives. We do well for a while and then a tragedy hits like someone dying (3 different people) and depression and then we spend, spend, spend.

We have got ourselves almost out of debt several times over - through selling our house and restarting, voluntary redundancy, job pay offs, gifts and then got in trouble all over again.

A few years ago we upsized our house, paid off most of our debt (other than the mortgage) and yet earlier this year we were approx £30K in debt again. I got a lucky break at work and got a payout which let us reduce our debt to about £20K. Our fixed rate came to an end (with GMAC) and Barclays have agreed to give us a new one - still an increased cost of £100 per month compared to our previous rate.

We are trying to budget. We moved all our cards to interest free credit - other than 3% balance transfer fees. This has already saved us approximately £500 per month in fees. We have also done things like moved our mortgage which will save about £1200 this year. We have done the home insurance challenge and halved our cost from £650 to £320. We've moved our gas and electricity - although with the price rises - seeing very little effect. We've reduced our phone bill by about £60 per year. Cancelled our RAC cover costing £200 per year as it was covered in our bank account charge anyway. Our biggest single area that we have not challenged is probably our life insurances, critical illness and redundancy insurance. Unfortunately however as I have had time off work with depression, we may not be able to get cheaper insurance on me. We are paying about £100 per month on this however - for about £250K insurance. We are already on an interest only mortgage. We use childcare vouchers at work.

We still have access to cheap credit as we have never ever defaulted - however we really struggle with will power to stick to budgets for the long term it would take to pay off the £20K and switch to a repayment mortgage.

Any constructive suggestions gratefully received.

Thanks

savingholmes

superjaggybunnet

Why does someone dying make you spend, spend, spend?

notenoughcash

It's all about little changes that last forever. I know all too well how when things get tough going out and spending makes you feel better, like smoking a cigarette, or drinking alcocol, or eating chocolate. But once you get used to making little changes they will stay with you forever.

You need to stop with the 'big' circles you are in

through selling our house and restarting, voluntary redundancy, job pay offs

and make lifelong changes.

My biggest help was to open a 'spending account' where I have a standing order for so much per week which is my only spending money. My main account is now building up a credit amount whilst there is more than enough to pay my DDs and I have taught myself to live to this limit

Naomim

superjaggybunnet wrote: »

Why does someone dying make you spend, spend, spend?

Because you get depressed and so spending can give some people the feel good factor and cheer you up.

Naomi x

savingholmes

We've got 2 accounts currently 1 pays the main direct debits, standing orders, and the 2nd pays any direct debits left, money towards credit card repayment and living expenses. We could look at a third account to spend from by splitting out the remaining regular payments into another account. That might be helpful. It may however just give us access to a third overdraft facility!!! In applying for our new mortgage (just to improve rates not increase debts) Barclays have opened a third account for us - so this might be a good use to put it to.

I know Martin's book recommends multiple accounts to try and regulate spending with certain pots.

savingholmes

Naomim wrote: »

Because you get depressed and so spending can give some people the feel good factor and cheer you up.

Naomi x

Spending gives me a buzz. I can go from having no energy whatsoever to feeling (all too briefly) high just by going to the shops. It also provides social contact and some of the very slight exercise I get - working full time, having kids and being a couch potato! I've never quite managed to sustain getting the same buzz from not spending.

ikkle87

savingholmes wrote: »

We've got 2 accounts currently 1 pays the main direct debits, standing orders, and the 2nd pays any direct debits left, money towards credit card repayment and living expenses. We could look at a third account to spend from by splitting out the remaining regular payments into another account. That might be helpful. It may however just give us access to a third overdraft facility!!! In applying for our new mortgage (just to improve rates not increase debts) Barclays have opened a third account for us - so this might be a good use to put it to.

I know Martin's book recommends multiple accounts to try and regulate spending with certain pots.

Why not look at an account with no borrowing facilities like Natwest Step account, no borrowing facilities and a solo card.

ANY_CHANCE

I have also had three very close family deaths from the age of 18. It is such a difficult time with little help avail in my experience.

Re. over spending I was unequipped for unsupported financial life, trying to live the life i knew before. Trying to keep a constant in my life, and no budgeting skills

Having no idea of how to budget realistically and to be honest not caring because i was just trying to get through each day without the people i loved. whilst having to care for my own family

Now many years later i am financially paying the price but now i am taking control of finance and working towards goals of increasing income.

I hope you are getting the help you need but also realise that you need to stop overspending now, budget, do not get any more credit.

Do you have a surplus amount of income each month if not you need to get advice from someone ie CCCS

Good luck stay strong

AC xx

savingholmes

In theory we should be able to live within our means and pay off at least £500 per month off our debts (excluding mortgage). Unfortunately, recently we have been standing still rather than improving (but that is better than nothing) - the standing still has been due to approx £500-750 in unexpected car bills, £800 on 2 holidays - and according to the demotivator - the £2850 I spend a year on things I could easily do without.

ANY_CHANCE

So its not too bad ??

At least yo can see that just tightening your belt for a while will reduce your debt - not too bad then huh?? xx

You can do it see it as a challenge the people youve lost would be proud of you taking Positive action, yes??

mum2one

If you go through Quidco, (cash back site), and use their link, they have Alliance and Leicester current account,you get £50.00 cash back. I opened minemid June, and only put £1.00 in to show willing, and the£50.00 is in Quidco andis scheduled for July payment. I've also done the same for my parents via Quidco, at mo they only have 1 joint account so they have open ed seperate accounts. Also Alliance do a savings account £20.00 cashback
Its another £70.00 to throw at debts.