A Payment A Day Part 5

macgirl

Paulgonnabedebtfree wrote: »

Although Martin's advice is correct for somebody who can be certain of never needing short notice, emergency credit, for everyone else, I think his advice is out of date.
It was correct at the time he first gave that advice. It is not necessarily correct now. This is because many of the lenders withdraw facilities completely or drastically reduce credit limits without warning. This happens to people who do not misuse their accounts too.
A fictitious example to try to clarify (one which could happen to me if credit was all suddenly withdrawn):-
I use money earned to pay down my debts in the belief that I have £5,000 credit for an unexpected emergency. I could have put that money into a savings account but didn't because I knew I had access to £5,000 if I really needed it. Then a disaster - the gearbox needs replacing on my van. Cost £3,000. I put the vehicle in for a replacement gearbox. When I go to pay (using a credit card as I have no savings), I find that the credit limit has been slashed, without warning, to just £200 above my current outstanding balance. I am now in a catch 22 situation. I have no savings to get the van out of the garage. I have no access to credit either. Therefore, no van, no income, totally stuffed.

I think Martin should re-jig that bit of advice to saying that if you are in debt, you should not have savings of any more than you might need to meet unexpected emergencies. Of course, for some people that might mean just having enough put aside for bus fares and sandwiches for work for a month. For others that could mean having enough for a major vehicle repair and to carry a few weeks sickness from work.

If Martin is referring purely to just the numbers then of course he is correct. However, it doesn't take account of potential cashflow problems - particularly for people who are totally dependent on running a vehicle in order to earn a living. Even someone who normally drives to work might get away with using public transport for a while. However, I don't think an 800 litre water tank, a load of window cleaning poles, and a stepladder would be very well received by a bus driver. Maybe I could put the water tank on wheels and have it towed behind the bus.

I consider myself well and truly ticked off!
However, Matt doesn't have such a large amount to pay off to clear his card, so it seemed like the best option for him.

Flower08

Difficult one the whole savings and debt debate.

I think i have to agree it all depends on personal circumstances. As you can see i do have savings whilst having debt but that is simply because it was only ever our intention to stay with OHs parents until christmas - and we will need money to move out then. But we still ensure that we pay a healthy chunk off our debts each month (ie not just the minimum payments).

dirtyepic

Hi!

I am paying £8 towards my overdraft today then when my money being transferred from my Paypal goes in IT WILL BE CLEARED!!!!!

Then I have to crack on with the biggies!!

See you tomorrow then?

T

mswan

dirtyepic wrote: »

Hi!

I am paying £8 towards my overdraft today then when my money being transferred from my Paypal goes in IT WILL BE CLEARED!!!!!

Then I have to crack on with the biggies!!

See you tomorrow then?

T

That is fantastic well done :beer:

Paulgonnabedebtfree

Double_Trouble wrote: »

I agree Paul I didn't suggest Matt paid it off because of Martin's advice but just in his situation what is a fairly small amount he could replace quickly with PADs and avoid a BT fee.

I know I should have savings which I don't so in that respect I am sticking my head in the sand but I feel fairly secure in the fact that if necessary I could extend my mortgage (not something I would want to do) but it would have to be something major ie the need to repay Mom's loan quickly or my car goes kaput which having done 140K is a distinct possibility. I understand however your situation is more serious as a potential problem as you say wrecks your earning capacity. I think Martin should amend his advice if that is what it still says(I haven't read it) in this economic climate most people need a what if fund

DTxx

Although I quoted your post, the comments that I made regarding Martin's advice was meant more generally rather than about a specific situation that anyone might be in. His advice is spot on for an era when credit limits aren't slashed at the drop of a hat.
Indeed,

PLEASE NOTE. I SOMEHOW MANAGED TO POST THIS PREMATURELY. SEE POST BELOW FOR FULL VERSION.

I thought I was a bit old to suffer from premature postulation

Paulgonnabedebtfree

Double_Trouble wrote: »

I agree Paul I didn't suggest Matt paid it off because of Martin's advice but just in his situation what is a fairly small amount he could replace quickly with PADs and avoid a BT fee.

I know I should have savings which I don't so in that respect I am sticking my head in the sand but I feel fairly secure in the fact that if necessary I could extend my mortgage (not something I would want to do) but it would have to be something major ie the need to repay Mom's loan quickly or my car goes kaput which having done 140K is a distinct possibility. I understand however your situation is more serious as a potential problem as you say wrecks your earning capacity. I think Martin should amend his advice if that is what it still says(I haven't read it) in this economic climate most people need a what if fund

DTxx

Although I quoted your post, the comments that I made regarding Martin's advice was meant more generally rather than about a specific situation that anyone might be in. His advice is spot on for an era when credit limits aren't slashed at the drop of a hat.
Indeed, I need to take my own advice here because I have no backup funds myself but tend to rely on spare credit for emergencies. When my clutch needed replacing recently, I had no problem resorting to an MBNA card to fund the work. Ironically, the biggish cheque that I could have used to fund this was waiting for me on my doormat a few minutes ago when I got in from work.
Not to worry. I'll just have to go out partying instead (no-not really )

Paulgonnabedebtfree

angelicmary85 wrote: »

Hi Paul,

A few weeks ago alot of padders jumped on the 'help BrokeInWales wagon' (Basically a user posted that they had £3 or something to keep them going 3weeks and loads of people offered to send them stuff) so maybe if you're needing a little something (store cupboard style things or whatever) we could maybe do the same for you?

It's just a thought so won't be offended if you say no!

I really do appreciate such a wonderful offer thank you. It's not actually necessary though. As far as food goes, I have plenty of long shelf life products and there is no way I would go hungry. I stocked up well on such items when they were at reduced prices. I've enough pasta, porridge, baked beans, frozen bread, frozen veg to last me for a good few weeks. In fact, if I was really pushed, so long as I got some fresh fruit in, I could manage on my freezer and cupboard contents for quite a while. Indeed, I think I will start dipping into them some more now things have tightened up recently.
My problem is purely and simply hard cash. I'm just keeping in front of the outgoings by barely a whisker. Ironically I have the DD that goes out on the 10th covered but the stuff going out over the next few days is very tight. I have the money in the bank to cover them but, as usual with me, it's about cheque clearance times.
If I can't get enough cash into the bank tomorrow to cover everything, I will draw some out on a card. I dislike doing that but the option is there if it becomes too difficult.
I wish I had noticed "BrokeinWales's" thread. I would have made up a food parcel myself to send out.
I found your post very heartwarming and I thank you for it.
My problem is no longer about not earning enough to pay the outgoings as I have now slashed my spending and increased my income suficiently to manage this (just). Even cashflow is reasonably manageable week to week. It just gets a bit difficult when there are unexpected outlays.
It may eventually end up with me having to throw myself upon the mercy of the Official Receiver. I reckon that I can avoid that though. However, if it does come to that, I'll be going down fighting because I'm a very proud person who has old school values about repaying debt.

angelicmary85

Paulgonnabedebtfree wrote: »

My problem is purely and simply hard cash. I'm just keeping in front of the outgoings by barely a whisker.

Maybe we could all send you £2.00 instead then...just the same as a food parcel but we promise not to send a cheque!! :rotfl:

You seem very set on clearing your debts and I admire that as so many people take the 'easy' way out.

*Jellie*

PAD for yesterday and today is £20

Flower08

angelicmary85 wrote: »

Maybe we could all send you £2.00 instead then...

Im sending my bank details as we speak......


oh did you not mean me? :rotfl: