Learn to control money but do not allow it to control you

Firewalker

This is what my mum told me when I went to university and I wish I did comprehend what she was really saying. If I did, we might not be in debt 25 years later. But let me start from the begining...

Before last September my friends thought that I am joking when I said that I roughly know how much I earn but have absolutely no idea how much I/we spend. I was serious. In September my OH told me that we have build a bit of debt - and the numbers grew steadily from about £60,000 to £96,000 at last count. That was that - I had let money control me. In an instant I knew what my mum meant.

This is how the hard journey of learning to control money began. But now I need a run.

To be continued...

Firewalker

BEAT_THE_DEBT

Hi looking forward to hearing more.x

Choc-addict

Hey....look forward to hearing more of your plans! I love your Mum's advice, something perhaps we could all take on board ....well at least from now on I guess

Happytogetdebtfree

Hi and welcome hope you are not lost on the run

Firewalker

Well, no. Not lost on the run but after running went to the ballet to see 'Sleeping Beauty'. Wonderful. And I managed to spend all my weekly spend for the week on a book in the War Museum. But anyway...

So, I'll pick up where left off...Finally, about three weeks ago we finalised the number - £96,900 debt. This is the bad news. The good news is that between December 2009 and today we have already paid about £16,103 off and have further £3,444 put aside. So currently our debt is roughly £80,797.

Initially this was all on CC - not mine, my OH's. To pay the cards off we took out a £80,000 loan. At the moment there is only £1,850 on one CC left (at very low interest) and £78,947 of the loan.

Sorry about the numbers but they were necessary. We owe all this money because we did not know the numbers. At the same time, to be able to cope and start getting out of trouble, I believe, it is important to realise that it is not the numbers that matters. But the fact that it is money and that money does not matter as money but as your home, your children's education, your nice nursing home etc.

You have probably guessed that to pay all that off in three months or so we earn well and have opportunities to earn even more. We are both educated and not really lacking in intelligence. But we never had a budget. I had just realised that if one does not know what one spends it does not really matter how much one earns when a friend told me about this site.

And this is how I started learning about all matters financial...

To be continued...now it is time for sleep.

Firewalker

JoKay_2

Hi Firewalker, good luck, and look forward to hearing more..!

Firewalker

Happy Easter! I am culturally Christian Orthodox, which means that I am not practicing but Easter is still very, very important to me. Much more than Christmas. Easter is the one occasion when most of my compatriots go to church - just in case.

Today, I would write about my feelings when faced with the debt - this is hard because I don't do feelings very well. You have probably already gathered that I did not have any idea about the financial trouble we are in. My OH kept mentioning 'reserves' and because he works for himself I assumed that he has build reserves - though I knew that he didn't have much work on in 2008 and 2009. And I never thought that my highly intelligent OH would call 'reserves' credit cards debt.

I had a premonition, I think: for a time I kept asking how are we doing, do we need to sell the house; and that is given that I did my bit and worked as hard as I could and earned as much as I could. In October 2009, after an argument OH finally mentioned debt - £60,000. Feeling - dumbfounded. Lord, this was a large number. And in my mind a large debt was £10,000 or even £8,000.

Interestingly enough, immediately after panic set in. My imagination run ahead and a vision of us as characters from a Dickens book emerged. How am I going to feed my third son (he is the little one)? How am I going to survive? Sleepless nights followed. Meanwhile the revalations continued.

The way my OH told me about all the debt - you could not have missed the difference between the first and the final number - reminds me of an old joke. It is about a maths teacher in Rissia who used to teach the children that 2 and 2 is 8. One day he died and the other teachers could not decide whether it would be better to tell the children that 2 and 2 is four or tell them gradually. So they ended telling them that 2 and 2 is 7; 2 and 2 is 6...This is how it went with OH telling me about the debt - the downside was that the emotions occured everytime he told me about more. Rather therapeutic though - re-enactment...

After panic, was anger. I was furious with him. To begin with he allowed this debt to escalate - I suppose for probably a year we were getting in debt to pay the interest on the CCs. And, lets face it, this was not simly irresponsible, it was dumb. More importantly - he did not tell me - and this one was the biggy, really. My OH is my best friend, he is what kept me in the UK, he is a centre of my social and emotional universe. And he betrayed me - he did not have the courage to tell me about that two, three years ago. Because this level of debt does not build over night, or even over the nights of two years.

And than I decided that I would leave him - I was that furious. I hated him and worse - I told him that. But, of course, I could not afford to leave him and our son would have suffered...Thank God, this gave me time to think - and start feeling differently...

When I managed to exhale and think about it I had to aportion some of the blame for the situation to myself. Being proud of not knowing how much I earn? Refusing to know what we/I spend? Asking OH to look after finances? Telling my frieds that I am likely to wind up as a very lonly and poor old woman...But never thinking, never taking control...Behaving like a little girl who refuses to take the responsibilities of a grown up...With this came acceptance...Acceptance of the debt, of my poor OH who carried the burden of almost knowing for a long time...

When acceptance comes, one of two things could happen. First, nothing changes and things get even worse and there is a lot of tolk and complaining. Or one sits down, takes a hard look and changes things. The former is certainly not my style, it is not OH's style either...

Time to make hand made Easter bread...

Firewalker

Firewalker

Found a mistake - £78,997 is our total debt at this very moment. Wonderful. Who is getting obsessed? Now let me get on...

As I mentioned before, for me, with acceptance came action and the impatient desire to change things. And I have always believed that there is nothing more practical than knowledge. Some think practice is practical...but sticking with practice only makes you repeat your mistakes. When in trouble one needs new knowledge which - hopefully - develops into new practice and routines.

I knew that first and foremost I have to learn how to control money - in other words to learn to budget. This learning came from two main sources - this website and advice from friends. I had some experience of budgets from work - unfortunately all of it totally pointless. I spend three years in my previous job looking at budgets and from the begining realised that budgets can, and indeed do, become reality on their own. What does this mean? Many budgets don't relate much to reality, whether this be number of people, some product, sales etc. Balancing budgets is often a number exercise where numbers are tweaked and than reality inevitably surprises you. Many people do this with their personal budgets as well and continue living in a state of self delusion. I knew this is to be avoided at all costs if we are to get out of trouble.

The knowledge I amassed, pointed to three major elements of budgets: how much one earns, how much one spends, how does one spend. All these elements have to do with much more than numbers. Also, to get out of financial trouble it seems best to apply a combination between two strategies: increase earnings and reduce spending.

This diary, I hope, will help me with the answers to the questions and with finding, and keeping to, the path of financial stability.

Firewalker

renovation.girl

Hello Firewalker, i am following your diary with interest. you write beautifully. keep us up to date with your soon to be successes x

Firewalker

Thank you guys for the encouraging words. And thank you Renovation Girl - means a lot to me. But lets continue...

Back from a very long and relaxing run and now is time to continue with the diary...In my previous post I mentioned that one ought to answer three questions if one is to budget usefully. These are: ‘How much we earn? How much is our income?’; ‘How much do we spend?’; and ‘How do we spend?’.

Answering the first question, I thought, was easy – just look at the pay slips. Wrong. The first thing I noticed is that my pay varied from month to month – not by much, but enough to make budgeting an art-form rather than science. Next, my OH’s income is not easy to pin-point – there is a part that comes every month and there is a part that varies depending on how much work he has on. The variable part can be anything between zero, which it had been for about eighteen months, and a lot, which it was before the dry period began. Then there is the child benefit which I didn’t even realise we are getting...Include some drips and drabs that come now and then from my side, the occasional small payment from eldest son who lives at home...And that is that with ‘Oh, knowing thy income is easy.’ Assumptions had to be made and the important thing was that these are on the conservative side. So for budgeting purposes I assumed that our monthly income is my salary, OH’s pension, child benefit and £40 from eldest. Nice, clean baseline...But how are we going to manage on this? Even without paying over £900 per month on the loan, OH told me he was transferring £2,000 most months.

Despair, gloom and sleepless nights. And repeated attacks on OH – I felt like he has ruined my life, and my child’s life. Am I ever going to be able to forgive him?

Firewalker

mum2one

i wish u luck on ur debt free journey, u write from the heart, and although your on a long and winding journey, there is light at the end of the tunnel. xx