Pete's Debt Free Diary

petepetepete

Not really sure where to start with this... I'm Pete, I'm 26, and I've been in debt since I took out a CC when I was 18 to pay for a camera I couldn't quite afford at the time.

My net worth, today, is -£50,539.84. I've got around £13,000 of outstanding tax liabilities, although these aren't payable for a little while; I've got £26,208.04 in loans on which I've already paid the interest, and £21,086.99 in a 10% APR consolidation loan very very generously made by my father. The difference in the net figure and the sum of these loans is mostly in money owed to me by clients and cash in a few accounts.

So ... there's a lot of debt! But luckily not a great deal of interest.

There's all sorts of things I can blame for getting in to debt, but at the end of the day, it's been lack of financial discipline. That said, my work situation up until a few months ago didn't help at all: I'd be in a position where I'd need to front £4-5,000 of expenses on a credit card, and then get paid a big lump sum several months later. Some months I'd make a profit of £8-9,000, and some months I'd lose a few thousand. Added to this a great deal of flying (four continents in four weeks was my record) which I found incredibly stressful, and I ended up making a lot of comfort spends while traveling for work (if anyone's curious, I was running training courses internationally).

In theory, it's been 576 days since I created my budget, and stuck to it. In reality, that only covered my 'allowance'. I didn't have a good picture of how much I was making or losing in a given month, and there was always 'slippage' - money I spent that somehow I convinced myself didn't belong on my account.

As of the 2nd of September, I've accounted for *everything*. I've started using a piece of software called Moneydance (although really it could be anything) that uses dual-entry accounting. Every day I can click on my net balance, and daily net balance over time ... and there's no getting away from it at all! Any 'slippage' shows immediately on the chart.

I've also managed to make my work situation much much more predictable by heading back to software development. I have a 6 month contract starting in January that'll pay £5,100 a month, month in month out, and has a high chance of being renewed - it's enjoyable work (and in fact, I'm just finishing a three month provisional contract with the client). It's a bit of a pay-cut, but it means no travel, and the predictability and not having to front costs should be a God-send.

I live in sunny Thailand and telecommute, and have done for the last 18 months. We're moving back to London in August for my g/f to restart her career/studies. Cost of living here is pretty cheap - some things (alcohol, Western Food) aren't significantly cheaper than the UK though, and my g/f's salary as an English teacher means she can't meaningfully contribute to the rent like she'll be able to when we move back.

My monthly outgoings:

Gym £40.00
Rent £545.00
Charity £25.00
Life Insurance £16.78
UK Phone £40
Everything else £600 (food, clothes, etc, etc)
Tax £1,040

Leaving me £2,300 a month to pay towards my debts. Minimum monthly payments on my loans are £1,660 (Natwest £479; Dad £570; Other personal loan: £611), but one of them will be paid off in August, freeing up £611 a month to put towards normalizing my tax situation, and then increasing payments on the most expensive of my debts - the consolidation loan from my father.

I realise my expenditures might seem a little high, but my experience is that if I don't choose a number that feels "manageable" to me, I'll give up. If I can stick to my plan (which I've been doing for the last 3 months, and haven't found all that difficult), then I should be debt free in just under two years.

Moving back to London will be more expensive, but I could potentially double my monthly rate as I'll no longer be telecommuting.

The last three months have made me feel how I felt when I quit smoking, and stayed off them. I don't feel I have any more excuses to hide behind for spending money I don't have.

Having 0 balances on my CCs is pretty helpful too - it's easy to hide a £100 meal for two on a CC with £10,000 in debt on it - it's utterly impossible on a zero-balance card! That said, I've cancelled one of my two cards, I'm waiting for a refund on another before cancelling it, and I've halved the limit on the third one.

So ... that's it! Thanks for paying attention, if you have been! :-)

-P

dors1

Hi Pete - good luck with your diary and your future plans. Good on you if you have managed to stick to your budget sounds like you've got your head around what is going to work for you.

petepetepete

I'm making slow but steady progress. My actual net worth has gone down, but that's at least partly due to getting more accurate figures for some items (like outstanding tax).

Most of all, I've seen a sea change in how I think about things. I'm staying over NY with my old flat mate in London, and seeing the difference now in how we think about money is bringing that home.

He came home on Boxing Day with a few bags of shopping - and was super happy to have found a nice pair of jeans for ... £60! That's three days of my budget (and he earns quite a bit less than me, and is heavily in debt too). I was, to be honest, pretty happy when I realised that that used to be me, but now, I wouldn't think about it!

Realizing that my DFD is probably two years off, and I'm having to put off important things in my life until that time (specifically: some further education) is disheartening, esp as I'm starting to feel I'm getting older (which is silly at 26, but whatever). Combine that with having had an (unavoidably) expensive last three months, and it's a matter of holding on with willpower, at least until the end of January, when I'll see a sudden (and then continuing monthly) nice big drop in how much I owe (£2,000!).

I've set goals for the next three months that I'm excited about. Getting back in shape (and I've bet more money than I can afford to lose on this, so it's pretty much a guaranteed!), reading 12 books I've been putting off, and dropping my debt by £6k.

Anyway: musn't grumble! Things are good, and in one month's time, when I'm able to actually see some of the progress I'm making, I'm hoping to be top of the world again.