My Lightbulb Moment

pete29

Hello! My name's Pete and this is my first post here, so apologies if it's in the wrong place.

I guess you could say I've just had my lightbulb moment. I've always had debts on credit cards, but always dismissed them as I've felt I'd been managing them, even as they continue to grow. However, a couple of weeks ago (18th August to be precise) I went to the bank to get some money out to buy some lunch and I had insufficient funds. I'd gone over my overdraft limit and couldn't get any cash. This was the first time this had happened to me and it was a horrible place to be. That's when I realised I had to do something about it, and I wasn't managing my debts at all, just ignoring them.

So tonight I sat and added up my debts and it doesn't make pretty reading! Currently I owe £15,712.05 across 2 overdrafts and 4 credit cards. Ouch!

So it's time to stop ignoring them and do something about it. I will do a SOA/ budget tomorrow, but in the meantime I wanted to post to make a start! And any advice people can give will be warmly received!


[threadbanner]box[/threadbanner]

topcat9

Hi pete29,

Just wanted to say welcome! You've made the first step to being debt-free by joining this forum and once you've posted your SOA you will get lots of useful advice from everyone.

Best of luck.

Hovel_lady

Hi Pete and welcome

Well done on your LBM.
Yes, post your SOA and I'm sure we'll have suggestions to help.

BKAT_9

Hi Pete - welcome!

I am sure you can crack this, will need to have some determination but it will come right in the end, I was amazed at how much money I frittered away before I started really making an effort with it, now I get more enjoyment saving than I did spending! Lets face it - most of us can stand accused of having not much to show for the money we have spent at some point in their lives!

Post your SOA and you will be access for a font of knowledge on here! I also think its just quite liberating to share! A problem shared is a problem halved!

muffins22

Good luck!!

I've recently had my lightbulb moment too, feels good to take the first step doesn't it?

pete29

Thanks all! Feels good to make the first step, but also a little overwhelming!

I have just completed my SOA and it doesn't look too good at the moment- my current shortfall is £323.17 per month. I definitely need to see where I can make some savings!

Here is my current SOA:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1875.2
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 125
Total monthly income.................... 2000.2

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 74.2
Rent.................................... 710
Management charge (leasehold property).. 0
Council tax............................. 84.43
Electricity............................. 41
Gas..................................... 0
Oil..................................... 0
Water rates............................. 29.53
Telephone (land line)................... 12.99
Mobile phone............................ 29.9
TV Licence.............................. 12.43
Satellite/Cable TV...................... 6.5
Internet Services....................... 13.5
Groceries etc. ......................... 165
Clothing................................ 20
Petrol/diesel........................... 35
Road tax................................ 13.75
Car Insurance........................... 31.58
Car maintenance (including MOT)......... 37.5
Car parking............................. 0
Other travel............................ 313.8
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 8.42
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 14
Entertainment........................... 150
Holiday................................. 50
Emergency fund.......................... 0
RBS Bank Charges........................ 12.95
A+L Overdraft........................... 10
Counselling............................. 195
Total monthly expenses.................. 2081.48


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 742.1....(74.2).....0
Total secured & HP debts...... 742.1.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Account....................1317.18...0.........17.63
Halifax Credit Card............1981.67...14.87.....15.9
A+L Account....................952.4.....0.........0
MBNA Card......................5571.19...129.4.....14.9
Barclaycard....................3699.87...75.5......0
Santander Credit Card..........2189.74...22.12.....0
Unsecured debts..............15712.05

curlytop12

hi,welcome.
first thing that jumps out-rent!could you downsize/get a lodger temporarily?thats extortionate for one person!
what is the HP for please?
any room on your 0% CC's to shift some of other balances to?

tiny_courageous

Travel costs look high - is the car actually necessary?

Well done on making a start.

deepoo

Hi Pete, your doing the right thing by facing the problem head on. Your expenses and income are almost equal, so to tackle this you have to get serious. You must reduce your expenses and, if you can, increase your income. Then you can stop getting into more debt and start paying of those cards.

Look at every thing you spend money on and see if you can reduce it in some way. Remember, never pay someone else to do something that you can do yourself cheaper, including food and drink.

Try getting part time work - this has an extra benefit that you can't spend and work at the same time.

With a little effort and care you can become debt free.

katsu

pete29 wrote: »

Thanks all! Feels good to make the first step, but also a little overwhelming!

I have just completed my SOA and it doesn't look too good at the moment- my current shortfall is £323.17 per month. I definitely need to see where I can make some savings!

Here is my current SOA:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1875.2
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 125 Is this something you can increase to help reduce the shortfall?
Total monthly income.................... 2000.2

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 74.2
Rent.................................... 710 that is lots - travel and your home are more than half your monthly income so are the best areas to look for savings. Can you reduce this by moving somewhere cheaper?
Management charge (leasehold property).. 0
Council tax............................. 84.43 getting single person discount?
Electricity............................. 41
Gas..................................... 0
Oil..................................... 0
Water rates............................. 29.53
Telephone (land line)................... 12.99
Mobile phone............................ 29.9 look at cutting this
TV Licence.............................. 12.43
Satellite/Cable TV...................... 6.5 low but get a freeview box instead
Internet Services....................... 13.5
Groceries etc. ......................... 165 look at OS board for tips on cutting this
Clothing................................ 20 can you stop for a few months?
Petrol/diesel........................... 35
Road tax................................ 13.75
Car Insurance........................... 31.58
Car maintenance (including MOT)......... 37.5 are you saving this?
Car parking............................. 0
Other travel............................ 313.8 do you need this and a car?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 8.42
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 14 look at a local FE college to get this cost down a little further
Entertainment........................... 150 afraid this may be the thing you need to cut
Holiday................................. 50 and this too
Emergency fund.......................... 0
RBS Bank Charges........................ 12.95 are you using the OD on this account? Any savings if you can get the RBS and A&L overdrafts together?
A+L Overdraft........................... 10
Counselling............................. 195 I assume this is important to you and so you'll need to make other painful changes to keep affording it.
Total monthly expenses.................. 2081.48


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 742.1....(74.2).....0
Total secured & HP debts...... 742.1.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Account....................1317.18...0.........17.63
Halifax Credit Card............1981.67...14.87.....15.9
A+L Account....................952.4.....0.........0
MBNA Card......................5571.19...129.4.....14.9
Barclaycard....................3699.87...75.5......0
Santander Credit Card..........2189.74...22.12.....0
Unsecured debts..............15712.05

Some thoughts above - good luck in making this work.

pete29

Wow! I go away for an hour or so and already a lot of responses. Thank you all for the ideas, I'm very grateful.

Firstly, I agree with the rent/ travel costs. I live in Surrey and work in London, so the combined cost of rent and travel is £1023.80, before any council tax/bills. I definitely think this combined amount can be reduced. Currently, I live by myself (1 bedroom flat), and ideally would not like to go back to flat sharing. However, I'm now on a rolling month by month contract, so this would jump out as the first potential area of savings.

@gem68 HP is for furniture I purchased last year- due to be paid off May 2012.
I will look this afternoon at my credit cards, and see if there is any possibility of moving debts to 0% CC.

@tiny_courageous I think the car is probably unnecessary now. I started a new job earlier this year and went from using the car every day, to using train/ tube (hence the £313.80 a month travelcard). I've been holding on to it for convenience, but the cold hard numbers don't add up.

@deepoo thanks for the advice. Going for a promotion at work, so hopefully if that comes off, that will increase my income.

@katsu
Hopefully my monthly income will be going up, but will find out this week.
Will look at rent and travel, and see if I can bring down the overall cost. Not sure if it will be possible to bring down just rent, but will look at the options.
Yes I'm getting the single person discount.
Mobile phone/ Line rental. Probably don't need 2 phones, so this may be an area of saving.
Cable TV. Have had issues with reception in the past and my freeview box struggled, but perhaps if I move to a new area, this can go.
Groceries/ clothes. Will look at ways to cut these down and get some advice from the board.
As mentioned above, no I don't need a car now, so that may have to go.
Yes, I'm using the OD on the RBS account, hence why I'm keeping it. Will look at combining the 2 to see if I can make any savings. I'm not sure if either will allow me an overdraft that large. But guess you don't know until you ask!
The counselling is a tricky one. I started it a couple of years ago after having a breakdown/ struggling with depression. It does help, but is one of my major financial drains. Perhaps, there may be a way to cut back without affecting too much.


Thanks again for all your suggestions, I really do appreciate it.