My Lightbulb

Dumyat

I know I am stating the obvious here, but there is a huge mismatch from your incomings and your outgoings. You barely earn enough to service your debts never mind live. cutting back on ciggies etc is not going to solve the problem here. you need to take much more drastic action and take professional advice to restructure your debt.

louisesfreedom

Hi angchris.

That's a great idea about the college thing. Will check later and see if they do hairdressing at our local college & see how that works. Not sure I could cope with having my legs waxed though!!!!!

louisesfreedom

Hi dogrose. I think just putting this all together has made me realise quite how adrift I've got with everything here. What I'm trying to do at the moment is to look at ways of cutting back as much as possible. I know that I'm going to need (at least) a debt management plan, and a lot of support from one of the debt charities. I felt that I should make every effort to see how much I could cut back first, though - I want to demonstrate that I'm doing everything possible to turn things around before asking for their help.

Dumyat

absolutely! I didnt mean for my comments to sound negative but there are such a lot of debt repayments as it stands just now. They will want to know what your minimum budget is so you are doing the right thing...but you cant possibly keep those payments up as they stand.

tryhard_2

hi louise
lots of good tips above; if the prescription charge is monthly might workk out cheaper to get a prepayment certificate.

charl8888

Hi Again

I know what you mean about EBay - and those endless queues in the post office etc, you need vast amounts of time to dedicate. I planned to put some things on Ebay today but I keep putting it off!

Really interested to read about the lightbulb moment, and think its great that you have a new partner who is good with money. I wish my OH was! I'm working on him, but his debts are worse than mine (whoops) so its like turning a supertanker!

Have you started to drop a few hints about your finances to him yet? He must notice your change in spending habits!

Glad you feel so much better, thats what its all about...

hbl_2

Hey Louise, very encouraged to read your early progress - two thumbs up!

One thing I will say, and say quite vehemently, is you absolutely positively, must give up smoking. You know all the health reasons, but here's the money reason.

Your SOA says incomings: 2208.98 outgoings: 3376.98 - a difference of £1168. You need to be just culling non essentials left right and centre, and smoking is non-essential. You dont need it to live, so you don't need it, period.

If you spend £165 on smokes (a pack a day?), that's £1980 a year, £9900 over 5 years and £19,800 over ten years. That is ONE THIRD of your current debt on ten years, or a whopping 10% of your monthly repayments.

This is a new phase of your life, why not make a positive clean break from old habit and ditch the cigs before they mire you in debt and truly cack up your lungs.

As for stress, I've heard this excuse before and I'll ask you this: which is more stressful - poor health and bad debt, or good health and no debt?

Good luck, I'm rooting for you, and as I said, I'm stoked by your progress!

PS - giving up is really easy - anyone who tells you otherwise wants your money, or is a tobacco company stoolie.

GettingThingsDone

Hi - good work Louise, sounds like you're moving forwards.

re: smoking, my g/f said it was a lot easier giving up smoking than they make out. And she smoked loads. I think the Alan Carr book helped a lot - the NHS smoke-line was useless (seems like it's designed by people who have never smoked?)

angelavdavis

Hi Louise and welcome to the club!

Well done for completing your SOA - there are lots of people on here who will help out. I have detailed my bit below (sorry for any duplications):

louisesfreedom wrote:

Thank you for all your kind comments so far. I feel really confident that I can get through this, but I know it’s going to be difficult.

This has been quite a harrowing day, but at least I have the full picture as it stands now (which is even worse that I’d thought). I’m feeling stupid for having got to this stage, but I suppose that the thing to do now is to somehow begin to work through it.

Best way to look at it is that this is the moment it changes for the better.

Monthly Incomings:

Salary - £2208.98

For starters, grab a notebook and put it in your handbag - from now on, note down ALL your expenditure - dds, cash, etc on a daily basis. This will help you see where you are spending your pennies. Review at the end of the week and then aim to reduce next week's expenditure, and so on until you get down to removing the odds and ends that eat up the income.

Are there any possibilities of you increasing your income? Taking on a lodger for example, or doing some bar work - helps you socialise but without the spending. Worth considering.

Monthly Outgoings (not including debt):

Rent - £550.00 Any room for lodgers? If you can move, it is an easy way of reducing outgoings. If you can stand it, why not move into a shared flat to keep costs right down - even if you suffer it for a year, it will help you really throw money at the debts.
Council Tax - £65.00
Gas - £38.00 Grab your last 12 months bills and log onto Uswitch to check out which provider is cheapest. I don't know what property you live in, but this should have scope to be reduced. Join quidco and switch via there to earn some money for the transfer. Potential=£10 reduction
Electric - £30.00 As for Gas. Potential=£10 reduction
Water Rates - £55.00 Are you on a water meter? How about checking with your landlord to see if its possible to get a water meter installed - this would definitely go down (I pay £19 per month for 3 adults). Potential=£20 reduction
TV License - £11
Orange Mobile - £75.00 Are you on the best package? When you count BT and Mobile - that's over £100 per month! See if you can switch to pay as you go and be strict with yourself and limit your calls. Again, you can check out deals through quidco so you get money back for the transaction. Potential=£40 reduction
BT Phone - £28.00 This is very expensive on top of the mobile costs. Are you using your friends and family allowance, what scheme are you on. If you are not using the allowance - switch to a straightforward scheme that is cheaper. Potential = £10 reduction
BT Internet - £26.98 You should be able to switch to a more competitive package than this - shop around. You should be able to reduce this to £15. Potential = £10 reduction
Contents Insurance - £24.18 Again, shop around online and see if you can reduce this. Potential=£5 reduction
Food & Housekeeping - £160.00 If this is just you mainly, you can definitely reduce this by £60 EASILY - if its for your boyfriend, get him to contribute - check out the Old Style boards for meal ideas that you can freeze in advance to stop you buying expensive food and reduce your bills. Also try doing a stock cupboard challenge. Potential £60 reduction
Prescriptions - £6.40 Is this a regular cost, if so, it might be worth purchasing a season ticket for prescriptions. Potential £3/month reduction
Clothing - £40.00 You need to make a sacrifice and cut this out altogether. Customise your existing wardrobe or see if you can take your clothes to a dress agency to sell and use the funds to buy new. There are lots of ideas in the forums. Potential £40 reduction
Hair, Make-Up, Dry-Cleaning - £40.00 I'm afraid, this also needs to go. Set yourself the challenge of using up all products that are sitting around so you only buy cosmetics when you have run out - if you are anything like me you should keep going for a while like this without buying anything - I had stock piles of stuff! Many dry-cleanable things can be handwashed - look on Oldstyle for more info. If you have a washer/dryer, you can use dry cleaning sheets in the dryer to clean items. Potential £40 reduction
Travel - £27.00
Smoking - £165.00 You need to give up - you'll feel much better for it - at least you can down a lot! Potential £80 reduction with rest going on patches(!)
Lottery - £10.00 This can go - its money down the drain! Potential saving £10
Pocket Money - £45.00 What are you spending this on if not the above? Keep note of expenditure. This amount needs to go if you are ever going to get yourself out of the situation you are in. Potential reduction £45

Total Outgoings (without debt payments) - £1396.56

By my estimates, you could reduce these by £383 per month by using the tips above (and more if you actually managed to give up smoking).

I've done some notes on these outgoings, posted below (number 16, I think)


Debts & Repayments:

Lloyds Loan 2 - £11,983.49 - repayment is £468.56 monthly
Lloyds Loan £1,560.00 - repayment is £164.44 monthly
M&S Loan £9,086.94 - repayment is £159.42 monthly
BoS Card £8,490.00 - repayment is £540.00 monthly
Halifax Card £14,204.12 - repayment is £284.00 monthly
Barclaycard £6,763.51 - repayment is £169.00 monthly
Lloyds Card £9,727.23 - repayment is £195.00 monthly
Overdraft £1,200.00 you could easily and quickly reduce this with the savings above

What are the APR's on the debts? By looking at this, you will see what are the highest and therefore need to be paid off sooner.

Total Debt £63,015.29

Total Monthly Debt Payments £1980.42

Have you considered claiming back bank/credit card expenses - this another potential area - check out the forum about this for more info.

Getting all that together has taken some doing, and I’ve really thought about my living costs and trying to bring those down. Please add other suggestions/comments if you can think of them.

I can see that there are a few more things that I need to sort before getting into either a debt management plan or an IVA (I’m not absolutely certain, but I don’t think that bankruptcy is an option for me), and obviously I need to do things like cutting out the lottery.

And a note on my hair…
I’m an ‘un-natural’ blonde, and have it coloured every month or so (my natural colour is very dark). I want to go back to my natural colour (to save money), but reckon I’ll need to do that over a few months so that the colour takes properly. I don’t know about such things, or about whether I could just colour it myself without the risk of it turning green!!!

I understand your concern over colouring bleached hair - loads of scope for green hair! Go to your hairdresser and tell her you fancy moving back to your original colour - have a mid-shade applied as an interim so the shock isn't too much(!). When the roots start appear, look at different ways of styling your hair - such as putting it up, etc to avoid the appointment until it gets more than you can stand. Then get your almost natural colour applied and then grow out the length. It will take a while, but your hair will be thankful for the rest and the conditioning treatment the colour will give!!!

As I’ve been doing this, I’ve thought of a few questions that people might be able to help with.

* How do I stand if I start selling things on ebay? I’ve done this before, and have a few more things to sell, but am worried that I’d be expected to carry on with that, and therefore have an additional amount to add to my monthly income. Would I be better leaving the money in a paypal account and then using it to buy clothes etc from ebay when I’m really in need?

See my note above. Personally I think you should only use money that you have got from selling clothes on clothes - everything else should be used to make additional payments off credit cards/loans. Other members might not agree! eBay is a faff but you could potentially make enough to halve the small Lloyds loan which would be a great boost!

* How do I stand if something major goes wrong (TV/Washing Machine/Fridge etc)? Do people generally have an ‘emergency fund’ as part of a finance plan, or is it just a case of suffering through by playing chess/washing clothes at launderette/eating warm cheese etc according to what breaks down once I’m into a plan? I know I’m being really naïve, aren’t I?!

The reality is that you don't have the luxury of an emergency fund. Once you have cleared a low APR credit card, pop it in a container of water and into the freezer. This is for EMERGENCY ONLY. Money saving will teach you that you can save and wait for things - life isn't over if you have to use the laundrette etc! Also, join the local Freecycle club (check out freecycle.org to find your nearest) - people give away old freezers, washing machines, etc all the time and all you have to is get it from A to B.

* Does anyone have experience of being a smoker and presenting one of these financial statements to creditors? It’s pretty obvious that stopping would make a huge saving (and therefore more money for creditors), but I’m not sure I could even attempt that at present with all the stress etc.

I am not a smoker - but there are smokers here and some that have given up!

So there we are! Thanks in advance to anyone who can help.

Hope some of this helps - good luck!

x

hbl_2

a low APR credit card, pop it in a container of water and into the freezer. This is for EMERGENCY ONLY

That is a great idea.