Diary of a Debt Desperado...

debtdesperado

Hi

I thought I would add my diary to the others, as I'm thinking of ways to keep myself on track over what looks like it's going to be a long, long journey...

How on earth did I get myself into this mess? I bought a flat last year (at what I can see now was the peak of the market...on a crazy multiple of my salary...sigh) which needed lots of renovation, hadn't quite cleared my student debts, and have a job that pays a really good wage. Things were ticking along and I was living my life as usual, paying the minimum payment on my four credit cards (I like to refer to them affectionately as the albatross, the millstone, the ball and the chain), but then paying a big chunk of the balance of whichever one was largest... generally this left me a bit short at the end of the month, so I merrily flicked open my wallet and used another one to meet that gap between running out of money and payday. Not a problem - I could meet the repayments, and even swap the balances over so they were always running at a low/zero APR...

Somewhere along the line, my money gap began to spread from a few days at the end of the month, to beginning about a week after payday. At the same time, the chunk of cash straight after payday that I used to pay off an extra chunk of debt started to get smaller. I had renovations to pay for, and started buying things for the flat... sometimes on my credit card. Looking back (and I have to say it was a gradual process), I stopped properly checking things like interest rates, and each card started to reach its limit.

No problem, I earnt a good wage, surely they would just give me more credit? No. Each card was maxed out and there was no more credit. I had a poor month, bought a load stuff for the flat and simply had no cash at all. No problem, I would use my credit cards. But the minimum payments bounced, so the cards were blocked. I lived like a student until payday - I had to. I decided that this was ridiculous and checked the balance of one of the cards which I'd been paying the minimum off each month. But it seemed bigger than I remembered it. When I actually looked properly, I realised that the minimum payment was less than the interest occurring each month. Then with the credit crunch it occurred to me that if I lost my job I would be absolutely stuck and I panicked :eek: (because of what I do, bankruptcy is not an option or I would lose my job).

A few weeks of psyching myself up to really look at my finances (still trying to avoid facing the problem), I sat down and opened all the bills, requested the logins to actually access the accounts online (can you believe I didn't even know in some instances how to check the balances???? Crazy...) and worked out what I owed. And what did I have to show for it? A wardrobe full of clothes and shoes. I'd had some fantastic holidays, and eaten at great restaurants but that leaves you with nothing. I didn't even own a car, and I hadn't even got halfway through renovating my flat, let alone buying furniture.

How stupid can you get? :mad: I suddenly had all the obligations of owning a flat and all the expenditure and bills, but hadn't changed my lifestyle and had carried on merrily spending. After about a week of feeling sick, not sleeping and generally beating myself up about being so stupid, the initial panic of the situation wore off. Finding this site and reading about everyone's struggle here really helped and made me feel a lot better. Thanks guys!

So (deep breath)... this is where I start from:

Credit cards = £17,455.78
Overdraft = £2,100
Student loan = £3,000 (roughly)
Parents bank = £2,000

Total = £24,555.78:eek:

I feel a bit sick typing that - I try not to think of it as it's just so discouraging.

I also have a loan with around £9,000 (fixed) left to pay, plus my mortgage. But I'm not going to concentrate on those at the moment (or the student loan) - they can keep ticking over until I have got rid of the higher interest debts. The overdraft I am lucky to the extent that I had it from when I was a student.... and they have never taken me off the interest free deal. (Shhh!) I'd like to start paying my parents back, but I think it's the credit cards which I need to focus on at the moment as these are my nemesis... since college I have never not owed any money on them and I just can't seem to get them down to zero. :mad:

I am playing around with the snowballs at the moment... my instinct is to go to the mattresses and live ultra-frugally to try and clear my credit cards in the shortest time possible (around 15 months)... but I know logically that if I give myself a bit more leeway, I'll be more likely to stick to it (I think paying off debt is like diets...extreme ones lead only to binges). So am currently hovering around the 20-25 month mark. But that it itself is depressing.

The problem is that the cards are all maxed, and I tried to ask for increases on each of them, all of which were rejected. So I think that I won't be able to get any more credit for now (probably the best thing in the circumstances...). The best I can hope for is a zero balance transfer deal, but to get that I need to create a bit of space...

So I am going to have a clear out of all those clothes (I have strangely gone off them since I worked out my debt) and put a load of things on ebay this week. Hopefully that will generate a bit of cash to pay off a bit of the biggest credit card (the albatross), as this is a card which often has good balance transfer offers.

I'm also going to work out a realistic SOA (have been keeping tabs of what I normally spend over the last month) this week and will report back on that next week.

Sorry for the long post... I guess I've been bottling it all up.

Verbatim

Hi there and welcome to the board.

Well done on facing up to the situation. If you stick around you'll get plenty of ideas and support.

Be aware that many ccs may let you do a balance transfer but if you have other debt already on the card they'll pay off the low rate transfer first leaving your high interest rate debt to continue racking up the amount owed. I think the Nationwide card might be an exception to this if you have that one. But check it out first.

It would probably be hard to get a new card if you've been refused increases in your credit limit. Do you know if they credit checked you when you asked? If so it would not be good to continue asking for more cards/deals as the searches will show up on your credit files and make you look desperate and not a likely candidate for more credit. The usual advice has been to leave it for a few months before making any more applications. In these strange times it's presumably harder so who knows though?

Anyway well done for posting, look forward to seeing your SOA and good luck.

CAFCGirl

Just wanted to say welcome and echo Verbatim above, you'll get tonnes of great advice and you'll be able to pick up tips etc from others peoples post as well those put on your thread, so read around and make some friends

Looking forward to your SOA, once thats up lots of people will come along and offer you suggestions on where you can cut back and whats the next best step.

Goud luck and look forward to seeing your next post

debtdesperado

Thanks guys!

ps good point re the interest on the cards... but I guess to even be let off a little bit of it for a couple of months is better than nothing. I haven't applied for other cards as I realise having read stuff on the board that 'spamming' your credit record doesn't help it...

debtdesperado

Oh. My. God. In an attempt to save the £200 odd quid I normally spend every few months getting highlights, I bought some home colourant. I applied it carefully, did exactly what it said on the box and smugly thought of the cash I'd saved. I washed it off at the correct time... hmm... It looked a bit, well, orange when it was wet, but I tried not to panic and told myself it would look different when it dried. I blow dried it, holding my breath.

I now have orange hair.:eek:

Am trying not to cry...

My normal hairdresser is open at 8.30am tomorrow, and I will be there then, completely at their mercy of whatever price they decide to charge me to try and get it sorted out... plus I am looking at a sleepless night in case they can't sort it, and trying to explain why I'm going to be late for work tomorrow (on the day that I have my annual appraisal... does it get any better?).

Highlights are now an essential bill on my SOA.

poorandindenial

OOps on the hair disaster :eek:

One hint is to cover it with semi permanent dye, you will need to redo it every couple of weeks but it does work.

Good luck and don't lose heart. I have never paid to have my hair professionally dyed and I dye lots of people's hair, I have never had this happen, the most likely cause if you were lightening it was that you left it on a bit long or not long enough or it was just slightly the wrong tone.

If your hair is still wet you will find it will be a different colour when it dries but personally I would slap on a hat and get to the chemist for a semi-permanent dye.

As for the £2400 a year on highlights, pop it into the snowball calculator and see what it will do to your debt (www.whatsthecost.com/snowball.aspx)

debtdesperado

Phew... am back to normal light brown now. And it didn't cost as much as I thought to get a semi-permanent (thanks for the tip poorandindenial!)... although apparently it was a good thing that I didn't try it myself as it could have gone green...:eek:

I daren't put the cost of highlights into the demotivator... but to be honest, there are some bills which I think you just have to accept and pay, depending on your situation. So for me as a single professional gal, paying to get my hair sorted is as necessary as a car is for someone else (I don't have a car). Thinking about it sensibly, it's worth paying for my hair as I 'wear' it everyday (unlike clothes). I think though that I'm going to allocate some cash each month so that I pay for my highlights in cash with money saved, rather than on credit card. Plus as I'm not spending on clothes, what I have feels a bit scruffy so having my hair smart I think will balance things out a bit. That's my excuse and I'm sticking with it!

ps when I mentioned I was trying to save cash, to my amazement my hairdresser came up with some good ways to save money on highlights and suggested once every 4 months, which gives me plenty of time to save up and has basically halved the bill, so I think that counts as money saving!;)

Hobsch

Hi and welcome and well done for posting and facing up to the debts.

I know exactly where you are coming from and didnt have a clue at the time leading up to my moment of realism of what balances I owed, interest rates etc and like you had nothing to show for it.

The total debt figure is horrible to look at - I used to feel that but now I have it on my signature alongside current debt and its great to see how much is paid off. Its a great motivator.

Good luck.