My Lightbulb Day

cardiffmatch

Good afternoon all.

Today marks my lightbulb moment after many months ignoring / semi-tackling my debt problem.

At 9am this morning my debt total stood at £21,130 excluding my mortgage.

This breaks down as follows:

£3480 on an Egg Money card at 6.9%
£8850 on an Egg Credit Card at 0% until May '09
£6900 on an MBNA card at 0% until Feb 09
£1900 on my overdraft at about 6%
£700 on my old student overdraft at about 16%

So far I have taken my £6200 instant access savings and paid off my overdrafts and my Egg Money card.

This leaves me with:

£8850 on Egg credit
£6900 on MBNA
Total Debt £15750

I have a further £4500 savings at 8% per annum which is locked until Feb 09. I plan to use this to pay off a fair whack of the MBNA.

I have spent the last month looking at my income and outgoings using Martin's budget planner.

Income
£2587 salary
£500 rental from lodger
£~400 prof. fees etc (varies, can be nothing.)
£3087 guaranteed, plus extra

Outgoings

Household
£947 mortgage
£7 contents insurance
£100 council tax
£50 electricity
£20 garden, cleaning, maintenance
£40 landline/broadband/TV/TV licence
£10 mobile
£150 service charge
£7.5 ground rent
£1331

Insurances
£25 mortgage
£3 annual travel
£45 professional insurace
£73

Eats/drinks
£122 groceries
£110 eating out
£13.50 coffee / snacks
£20 drinks for home (this was actually this month as a response to last months enormous eating and drinking out cost)
£114 drinking out
£32 meals at work
£411

Transport
£75 petrol
£75 plus car insurance / tax etc

Repayments
£225 credit cards repayments
£225

Shopping
£210 on just stuff including £70 for boyfriend when forgot his card and cinema / theatre / museums
£140 on clothes
£350

Health / Beauty
£30 gym
£27 lotions / potions / hair cut
£57

Holidays
£200 put aside for hols / christmas etc
£200

Total out: £2772 a month.
On top of this I am paying £250/month into my savings.

The findings really did surprise me, particularly the amount I spend shopping, frittering and on drinking and eating out. However, I'm doing this for a reason - namely to cut down on debt so I stop worrying about it.

My principle reasons for wanting to be debt free are:

1) To stop me worrying that I won't be able to afford the mortgage.
2) To be able to not need a lodger.
3) To be able to reach next christmas debt free and relax.

I hope that by posting this here will help me face up to my debts and get the drive to really sort this. Advice from everyone is very welcome. Reading through the boards over the last month whilst assessing my SOA has helped me make some changes already. I've stocked up on wine for the house and as a result, this month (which started 24th October - I assessed payday to payday) I've spent just £5 eating out [with a voucher!] and £20 drinking out. I've also starting shopping around for my food and provisions (with thanks to those on the Old Style Boards) as well as having a shopping-free month.

Many thanks to all who read and comment on this.

Penny2myName

Hi Cardiffmatch and welcome to the board.
Have to admit I blanched at your eating out and drinking sums. Considering how detailed your soa is, I am guessing you have started with a Spending diary. Think you contents insurance is fantastic. Also I think before people get on any high horses about you bringing in £3k a month, we must remeber everyones circumstances are different, and your morgage alone is just under £1k. Can fully understand about wanting to be able to afford a lifestyle you are comfatable with without having to have a lodger.

Am guessing this 'I have a further £4500 savings at 8% per annum which is locked until Feb 09. I plan to use this to pay off a fair whack of the MBNA.' is the savings account that you are paying £250 into monthly.

To be honest I think its the eats/drinks and general shopping sections you really need to tackle so as to make higher debt repayments £761 is a hell of a lot to just fritter away.

cardiffmatch

Thanks for your thoughts Penny.

You're right on both counts. £761 a month is a hell of a lot and the spending diary has both shocked me a spurred me into action. I've spent £41 a week for the last fortnight including groceries. I've only been out of uni for three years and can't believe the situation and habits I've managed to get myself into.

Time to sort out a signature and set to work I think.

chunkytfg

I'm much like you cardiffmatch.

Young and got a pretty comfortable lifestyle to go with the wages but somehow it just all ends up ontop of you and before you know it you have 5 figure debts and are struggling to make mortageg/loan repayments.

My lightbulb moment wasnt long ago either and much like you i was shocked how much of my money gets frittered away each month. I took out not far shy of £800 cash and have absolutly nothing to show for it.

so far knowing where my money has gone is proving to be such a helpful experience and makes curbing my enthusiasm for over spending so easy to restrict.

good luck and keep us posted

cardiffmatch

Thanks chunky

When you put it as "five figure debts" it makes it all the more real. I'm relieved I've made the steps of totting it all up and making a plan for action before I start missing mortgage payments.

Penny - yep, the £250/month is heading into the £4500 account. It should be £5250 by February, plus interest but if I take it out before I sacrifice interest.

paybacktime2008

Hi. have you used the snowballer at www.whatsthecost.com if you ever needed the motivation to stop frivilous spending it is there! Good Luck.

Red_Fraggle_3

do you have to keep paying into the 8% savings account or could that amount be paid to something from now on ? so iff I have mis-understood you

debtfreesomeday

Yes, the snowball calculator is excellent, and highly addictive!

We found that turning the debt repayment thing into a bit of a challenge is a good way to tackle it. We've tried to pay off as much as possible by ebaying, selling books we no longer need on Amazon, old cds on music magpie etc, so that we can declutter our house a little and make a bit of money in the meantime. It's great chipping away at the credit card balances regularly with the profits made, no matter how small the amount is.

Good luck!

dancingfairy

Hi. I think it is just a question of priorities- you obviously have good earnings - congrsatulations - you must have worked hard.
The thing is you are spending about 200 extra on food a month ,350 a month on going out, 57 on health/beauty and 200 a month on holidays. This is over 800 a month. You obviously work hard and deserve some luxuries - you just can't afford all of them all at once. Decide which are the most important to you and reduce the amounts in each category. I love eating out but will only eat out when there are vouchers around - 2 for 1 at Pizza Express the other day, ASK are doing similar I believe etc. You can still enjoy a fab life but just being a bit more careful - after all it's the same food etc -so why not get it cheaper with vouchers?
I would play arounf with the snowball and see how much difference chucking an extra 200/300/400 a month off your debts makes and see how much you are willing to give up to become debtfree.
Good Luck
df
df x

cardiffmatch

Red Fraggle - the savings account is a fixed term, regular saver job for a year. I have to keep paying into it until Feb 09 or I lose a lot of the interest.

Thanks v much paybacktime et al - yep, that snowballer looks addictive! I'm going to play with it tonight as I really ought to be typing an assignment at the mo! And thanks dancingfairy - you've put things very clearly. Maybe I'll have one type of luxury each month? I've discovered vouchers this month - I paid a fiver for a meal at pizzaexpress, my token meal out this month so far.

Thanks all

CM

chunkytfg

cardiffmatch wrote: »

Red Fraggle - the savings account is a fixed term, regular saver job for a year. I have to keep paying into it until Feb 09 or I lose a lot of the interest.

Thanks v much paybacktime et al - yep, that snowballer looks addictive! I'm going to play with it tonight as I really ought to be typing an assignment at the mo! And thanks dancingfairy - you've put things very clearly. Maybe I'll have one type of luxury each month? I've discovered vouchers this month - I paid a fiver for a meal at pizzaexpress, my token meal out this month so far.

Thanks all

CM

I was going to say check the interest you'll earn by paying into the account verses the interst you save by forgoeing the interst and paying a chunk of debt but as all your cards are lower than 8% you should keep paying into it.
That is assuming the 8% is net and not gross because if you have to pay tax on that then it'll not be worth it.