Newbies - spending more than we earn

Rache_2

I'm joining this forum to help my husband and me get a handle on our debts. We sat down last night and worked our way through the budget in "The Money Diet" and got the shock of our lives. Not only are we £20k-ish in debt in addition to our large mortgage (we knew this, but it seemed solveable), but more importantly we are spending a huge amount more than we earn. We are both utterly ashamed of ourselves (me the most, because I've had credit card debts forever; and I blame myself for being a spender not a saver). Both of us had rather a sleepless night.

We are both in well paid professional jobs, live in the South East of England, and we have both succumbed, I think, to the "must have" mentality... It got worse last year when I took maternity leave and just kept spending. That, combined with a lean year for my husband (he is self employed) means that we have got into some very bad and expensive habits.

Essentially our outgoings (based on last year's spending) are over £800 a month(!) more than our income.

We did the budget to try and decide where to start with our credit card debts, but neither of us were expecting to find ourselves in a position where, if we carry on, we will be £10k further in debt this time next year.

I will edit/add to this post tonight or tomorrow to show myself and the rest of the forum where exactly we're going wrong. In the meantime, we're looking into a bit of debt shuffling on existing credit cards, to minimise the fees. I can't do it now because I sent my husband to work with The Book to read on his commute - instead of a newspaper (no more of that - 60p every working day for a year = a saving of £150;)).

It's a bit indulgent, this post, but I hope that in posting I can keep track of how we do it.

Oh, and this is what we've done so far:

moved £10k to the lowest interest cc that we have at present

applied for the Platinum Amex to get 4.9% for the life of the balance while we attack the spending - if we get this we'll transfer as much as we can onto that (so far, credit rating ok we think - we have always set up dd's for the minimum payment)

Cancelled unnecessary or perceived unnecessary dd's (mobile insurance, poor value for money income protection insurance, card protection insurance)

Moved some savings (a few £100s) into our current account - our overdraft with HSBC (I know I know...) is by far our most expensive debt. We will move the rest ASAP.

Thanks for "listening". Would be grateful to hear from anyone else who has changed their lifestyle of spend spend spend, and lived to tell the tale.

VenuS

Well done Titch. Your obviously now on a mission to get your debts sorted and I applaud you for that.

First step as always is to admit you have a problem, which is clearly what you and your husband have done.

I wish you all the best for 2006.

ms_london

Well done!! Keep reading these boards, and check out the "Old Style" board for advice on grocery shopping/menu planning & ways to cut costs around the home.

Perhaps you could post your SOA (statement of affairs) on here? There might be ways you can save money without realising it?

It can be done, as you say it is just a case of "retraining" yourselves, and breaking a habit of spending for the sake of it. You'll soon come to find that smaller things will make you happy & not necessarily spending money!!

Rache_2

Thanks for the welcome.

I hope to post my SOA on here tonight or tomorrow when I get a chance (it's written in The Book which my husband is reading and digesting today). There are a few really obvious overspends - broadband fees spring to mind - I will attack them all one by one. There are also a few obvious areas where we are massively indulging ourselves - clothes and things for the house, and posh clothes for the baby (he doesn't care after all whether he's in Monsoon or Primark....).

I know that money does not bring happiness - but not having any most certainly brings unhappiness - this is what we're trying to avoid. My parents lost their house in the early 90s after my dad's business went bust - and I know how awful that was. For our son, if no-one else, we need to stop this situation from getting any worse.

I will have a look on the Old Style board now.

Thanks again.

JAMIEDODGER

welcome rache, youve come to the best place hun!!! and well done you for being so brave x

Tondella

Well done! Some tough decisions ahead but you soon adapt to having to learn to budget for food and clothing spending and the ease of mind in knowing what you can spend and sticking to it is euphoric. We've just made it through our first debt free wannabe christmas and its the first time i have felt no guilt for overspending (because i haven't overspent, not because i just didn't feel guilty ). it really is a positive change and you'll never look back. Hope I can be of some help once you post your SOA
Best wishes Tondella

kathfisch

Rache,
to echo what's already been said, you've come to the right place. The support offered by everyone here is very valuable. You can always post for advice or support, no matter what the problem, or even just get inspiration from other's posts. I've not been posting long but have lurked for months and I hope to hear some positive news from you over the next few months x

citygal

Welcome to the site rache!

Hang on in there- in my experience, the first month or two is the real test, when it comes to budgeting and so forth- after that it gets easier.

Hope 2006 will be the start of better things to come :j

tomstickland

Well you've done the hardest bit - facing up to the problem, analysing it and it sounds like you're both set to tackle it in a positive manner now.

Can you get some 0% credit card balance transfers?

crisis_management

Well done Rache; it isn't easy, but you've started to face the problem. I started 2/12 ago and it is really hard; like you I spent years trying to keep up appearances, ending in a debt well into 6 figures, excluding the mortgage, but it is possible (if painfull) to start to turn it around.
Regards
Crisis

southernscouser

Hi Rache and well done for posting!

Rache wrote:

Both of us had rather a sleepless night.

By the way, you don't have to tell us EVERYTHING personal! :rotfl:

Only kidding. Seriously though have a look at this thread and post your SOA back here and everyone will no doubt do there best to help you cut back and make savings!