Help us get tight!

LandyAndy

A_fiend_for_life wrote: »

Have a go at reducing your energy bill. There are threads on the Old Style board and the Green and Ethical board. Most people can easily cut their consumption by 30% and in many cases more.

There are a lot of folk posting their energy use on here:

www.imeasure.org.uk

there is also a club on imeasure called the MoneySaving Carbon Club.

No disrespect to 'fiend' but I don't believe your problems can be solved by tinkering at the edges such as refining necessary payments like energy.

I suspect you need to address your 'lifestyle' expectations and bring them in line with your income, very much as DVShadow has indicated.

I use a detailed cash flow forecast spreadsheet that shows my cash position up to two years hence. This can be a very powerful tool in showing the effect of current spending many months down the line. It shows you why you can't afford 'x' now even though you have the cash now.

A_fiend_for_life

There certainly may be other priorities but definatly worth looking at.

oh and a price comparison if that hasn't been done for a while.

LeeSouthEast

'tinkinering at the edges' can add up every month.

Pay £40 for Sky a month instead of £20 and you'll spend an extra £240 every year. Opt to get rid of it and go free to air/free view, you'll save £480 every year.

Do lots of tinkering with lots of edges, it's amazing how much money you really do waste. Starbucks a few times a week? At £3 a go, 3 times a week, that's £468/year as well. We've nearly 'saved' a grand and all we've done is get rid of Sky and stop buying coffee..

gardis

Oh sparkley girl, please don't do it.

We were in your position, similar salary, similar debt. Similar thought pattern. This was about 6 years ago. We got the consolidation loan and with in 6 months our debt had increased by 10k - a series of 'essential credit card spends' no doubt. Of course, I've since learnt that extravagant presents, meals out when I'm glum and so forth aren't essential. Neither are new boots when teh season changes etc...you get the idea. Anyway, another consolidation loan - this time with our mortgage (which was the together mortgage from northern rock, put us at 125% ltv and now a big noose around our neck waiting to drop us in it...). So by this point we're at £30k but satisfied that we have one monthly payment.

The children arrived, our washing machine broke. Our car needed major repair. We need a few bits done on the new house. Soon enough we're at £40k and struggling to see the wood for the trees. we know its got to change but we haven't quite worked it through properly. one more balance transfer should do it....

So 2 years ago we had £56k of debt. We tried for an IVA, it Northern rock refused to comply. So I embarked on a self sorted DMP. We've now lived with out credit cards and over drafts for 18 months and FINALLY our changing habits have changed. We've actually paid off £8k since then, just by living with in our means and not kidding ourselves that frivilous things were necessary.

We're happier too, incidentally. I don't think we're tight, I think we're normal now. Normal is good.

For the sake of your sanity, don't do it. Pay off that £20k this year because lets face it, a salary of £60k should enable you to do that if you cut out the sky etc. And start 2011 with a satisfied glow about your body.

DVardysShadow

sparklygirl1 wrote: »

Oh no, not sure what to do now. I said loan as we always run cc up so fast. I want to keep one and have just a limit of £1k for exterme emerg, I don't even want that but hubby wants it.

You have a savings account for extreme emergencies. It runs slightly counter to the normal line of argument here, that it is pointless paying interest on debt to have savings. But if you can put the savings aside and really only use them for emergencies, this could help you to live from now on without the card. Or keeping an emergency card in a block of ice amused me. Besides my savings, I do have a card, and it is paid off in full each month - but to do that, you need to get a card clear first.

sparklygirl1 wrote: »

... I just think if we clear the cards we know we are paying one every month min and its being paid off. Rather than keep x-fering balances at 3% every 6-9 months. Also we will pick a loan that means we can over pay without getting charges as well.

That is your plan to do things differently

sparklygirl1 wrote: »

For the past 6 years its been a constant circle of clearing and raising more debt. As at mo we just aren't making a dent in it!

But is your plan not just another round of clearing and raising more debt? Moving debt around might make you feel better for the moment, but you need to make it stand still somewhere if you are going to nail it. So do you want to feel better for the moment or nail the debt?

I seriously advise you to start nailing the debt right now, exactly where it is. You are only playing games with your own mind if you are planning to clear your debt over 5 years with a loan, when you could clear it in 2 without. That is putting it harshly, but to soften it might mean you miss the point.

I would advise that you post the SoA and start paying down the debt right now, where it is. Then look at the loan in 6 months. If you are still looking at it as the convenience of a single payment, you will have wasted the 6 months. There MIGHT BE a case for a consolidation loan after 6 months, but the convenience issue is not it. Only after 6 months will you see how much you can knock off your debt - and you should find that the loan which would be required is smaller and shorter. If it is still the same, then a loan will not help you - you can expect to finish the loan in just as much debt. If after 6 months the loan you would require is smaller and shorter, you won't need a loan because you will be on top of it.

katsu

When you have reached the place psychologically where the reason for a loan (or a balance transfer) is to reduce the interest rate so more of your money pays off the debt (i.e. keeping your repayments higher over a shorter period not dropping repayments and increasing the term), then I think you should consider it.

If you are not at that point, the risk of spending extra on credit cards etc is too great.

We're nearly debt free, and the last year has been transformational because we did some CC 0%BT deals but we made huge overpayments constantly. At that point, moving debt around just helps you clear it faster. Clearing it at a "cheaper" rate for longer doesn't get you free as safely and can cost you over the 5yrs

Good luck.

DVardysShadow

katsu wrote: »

When you have reached the place psychologically where the reason for a loan (or a balance transfer) is to reduce the interest rate so more of your money pays off the debt (i.e. keeping your repayments higher over a shorter period not dropping repayments and increasing the term), then I think you should consider it.

If you are not at that point, the risk of spending extra on credit cards etc is too great.

You are dead right with this, although I think it is too early for sparklygirl to go down this route - she needs to get her budget working, so she knows how much she can put to paying down debt. Even then, I would think it would be best to leave some debt outside of a loan, rather than trim the budget to the bone for fixed monthly repayments and end up having to get the cards going again to keep up the loan.

Burlesque_Babe

sparklygirl1 wrote: »

I said loan as we always run cc up so fast.

unless you can stop running up the cards so fast, you'll never get out of the CC- consolidate - CC - consolidate cycle.

The best thing to do is take a deep breath, be committed to a lifestyle change, post your statement of affairs and start putting together a battle plan to clear the debt without a loan.

It can be done - read the roll of honour for lots of inspiring examples and whilst it can be a bit painful at times, the end outcome is worth the work.

Lois_and_CK

No no no no no, don't do it. Only by snowballing your credit cards will you become debt free for life. You just HAVE to go through this experience in order to become one of us obsessive debt-free-wannabes, otherwise it will never work. Ever. Please don't consolidate - it's far too easy and it almost never ever works. You need the lesson in life that snowballing and managing your credit cards debts teaches you.

• Put all your debts in a snowball calculator. This is more fun than you think ;-)
• make spreadsheets to carefully track every single payment you make. This is known as 'spreadsheet-joy'. It's fun (honest).
• earn extra money by ebaying, car-booting, etc to over-pay your highest-interest card. This is known as 'in-your-face-capital-one (insert your own credit card name here)'. I like to make several extra payments a month because I like seeing a long list of payments on my credit card statement. Sometimes I even over-pay by just a penny, because I like it so much. I like to think lots of little overpayments get on the credit card company's nerves. They probably don't give a toss, but it makes me happy to think that way.
• put every little extra bonus or pay rise towards your debt. I got a £10 voucher from work a couple of weeks ago and I swapped it with my mum for £10 cash - that went towards my highest interest card too.
• cut down on your gas and electric and use the money you save, even if it's only £2 a month to overpaying your cards, it all adds up. Again, it helps to think 'in-your-face-edf-energy' as you're lighting the candles and putting on an extra jumper.

Seriously, until you get that thrill of excitement when you enter a zero balance in your spreadsheet for one of your cards and you joyfully close the account, only then can you say you will definitely never run up debt again. I've consolidated more times than I can remember and ended up with £30k of debt. Only by going through this process of managing my debts and carefully monitoring my balances slowly coming down can I truly say that I will never be in debt ever again after this.

Please post a statement of affairs. No one will judge you, it's all anonymous, and you will get the best advice from a bunch of people who've all been there and done that.

edinburgher

I believe you're looking for the expression 'thrifty', as opposed to 'tight'. Thriftiness indicates patience, common sense, planning and good ideas; whereas tightness is something you feel when you get a sore throat

Please pay attention to the folk who are advising that you avoid consolidating your loans. It may seem the easy option, but it doesn't deal with the root cause of your problem, which is your unbalanced relationship with spending. Using snowball calculators, paying down the debts and coming to realise what you do and don't need in life will prove far more rewarding than a 'quick fix' that may end up fixing little at all...