I wish I knew what I know now....

dfwz

So it turns out I'm in debt! bet you didn't see that coming. Well I didn't I had my head in the sand.....

Here's our story for those that are nosey and like a bit of background....
I met a girl and wemoved in to her pokey little flat we lived on a combined wage of less than £150 a week and times were good. We had a great time and we didn't have any debt.

We got closer and started making plans for a lifetime together, so we decided in order to live the dream we need a house, kids and a car. So we got them, but we forgot about something else - cash.... However, things had moved on we were both emplyed and we earned a livable wage so how hard could it be ?

I'm from a fairly poor background and have never had any cash, it was always easy come easy go for me and I never budgeted at all. This was our first mistake, but we didn't notice.

So I needed a car, I'm a business man - I wear a suit and everything so I need something cool don't I ? So we splash out a few grand, get something nice - sure we can afford the repayments what's £200 a month ? Mistake number two.

Renting is dead money! we should get one of those them thar mortgage thingies and own a house, (I wear a suit remember - this is what I'm supposed to do). Sure we can afford the repayments it's not much more than rent!. Mistake number three. (home ownership is about more than mortgages - apparently)

All three mistakes have one core issue, We didn't budget. So it turns out for the past 8 years or so we have been living on more than we earn and as earnings have went up so has spending, without a care!

Our lightbulb moment came at the beginning of last year, but it has taken until now to get us to some sort of stability.

What we did to solve it:
1. We made a budget
2. We reduced spending on our wants drastically and tried to keep a control on the kids without making them feel the pinch (it was our mistake not theirs). So we're at a position of covering our needs with the occasional "wants" to!
3. We got better deals on our "needs".
4. We sold the car, turns out I don't need a car - my wife does though, she'll be getting one shortly when she passes her test, but it will be cheap and cheerful and we'll love it, I've loved every car I had, my favorite only cost me £15! I might get one later as a major luxury when all debts (including mortgage) are paid off.

I thought I had a stressful job, turns out I love my job but I was thinking about debts all day and stressing about that. My wife no longer works since she's raising the kids and my salary should be more than enough to provide for us. I sure wish I'd known about this site back then could have helped me immensely when I had to learn how to budget.

Our issues stem from not budgeting properly and trying to keep up the act of looking successful. I think this has taught us that success is not about the shinyness of your car or the value of your mortgage, it's about being happy by covering your needs first and your wants with what is left.

So from last year until now we had a rocky time with our finances going all over the place until we finally figured it all out. Turns out that without our debts we can more than double our monthly pot of spare cash. So we're going the DFW route and trying to pour as much into debts as possible. Last year we were 30,000 in debt and rising, we are down to 15,000 now and will be debt free in the next year or two, maybe sooner.

The trouble is, if I was to go back and do this all again, it would probably all go exactly the same way and there is a very good reason for that. No one ever told me that money had to be managed, my parents lived on a very low income and I had no idea how they did it, I earned much more than they did so they thought I'd have plenty and I'd get by better than they did - so did I.

So now I can see a very bright future, where we will actually have plenty and things are going well. Basically we budget only on my salary, yet do have income that comes in sporadically - in the past this has had to go to overdue bills and other arrears. We've gone from the position of "oh no an unexpected bill" to "wow I didn't realise it was time for that cheque to come".

I hope that structured education changes so that schools teach kids things like this that can save lives and relationships and I also hope that anyone that has learned similar lessons passes them on to their kids. I know for sure that money management skills are going to be high on my list of wisdom to pass on!

I've read a few posts from people who are in similar or worse positions who have likely had very unhappy christmas times worrying about debt. My advice to you is - sort it out.

Don't worry about it too much and figure out your plan, there is always something you can do. Don't worry about losing the house, if you can't afford it sell it and do what you can afford to do. Don't hide from the debt it's probably easier to clear it or at least manage it than you think.

I'm happier now than I have ever been in the past few years and when I'm debt free and working on nailing the mortgage monster out things will just get better! I am a relatively optimistic person I've been poor, to above average, debt saddled and in the future hopefully debt free. The best time so far though is now, I'm in control and it rocks. My one major problem is I can't stop fiddling with my budget spreadsheet, it's my new addiction.

Best of luck to all of you in this new year, make it the one where you got "chuffed".

lynzpower

it's about being happy by covering your needs first and your wants with what is left.

I just could not agree more with this & big congrats on getting debt free :beer:

Toomuchdebt

Excellent post!!

WISHIWASRICH_2

Hi

Looking forward to seeing you (and Me) on the debt free roll of honour:money:

artic_fox_2

dfwz wrote:

I hope that structured education changes so that schools teach kids things like this that can save lives and relationships and I also hope that anyone that has learned similar lessons passes them on to their kids. I know for sure that money management skills are going to be high on my list of wisdom to pass on!

i so agree with all you post but mostly with re to the education in school i wish id been taught to budget

raq

Well done, enjoyed reading that post. I think am one of these people but also I have DEFINATELY learned my lesson

Good luck

dfwz

I don't know about home economics in your school but in mine the focus was sewing and baking. I can bake a mean cake and sew a pair of jeans. These aren't skills that have served me well.

Surely there should be some economics lessons in home economics. I'm a decade out of school and my kids are just about to get there, I really hope they are taught things that are more useful to them when they get there.

In a developed country where consumerism is both the income and the ougoings of much of the population, being good at this should be taught at schools.

"Aww dad I don't want to go to school today - double stoozing sucks" ;-p

ktb

dfwz wrote:

I hope that structured education changes so that schools teach kids things like this that can save lives and relationships and I also hope that anyone that has learned similar lessons passes them on to their kids. I know for sure that money management skills are going to be high on my list of wisdom to pass on!

Great post... couldnt agree with you more on the point about education. Whilst history & chemisrty are subjects that we may all need to know a little about at some point in our lives we all know that only a tiny % of the population will ever go on to use these on a daily basis. People need to be educated with proper day-to-day life skills like how to feed themselves properly and manage money.

GettingThingsDone

Excellent post! So true, so true...

now, back to fiddling with that spreadsheet

(also addicted to MSE!)

WISHIWASRICH_2

Not sure education helps....I have degree in Accountancy....bet there's quite a few accountants who post on this web site!:rolleyes: People end up in debt for all sorts of reasons, don't u think

dfwz

WISHIWASRICH wrote:

Not sure education helps....I have degree in Accountancy....bet there's quite a few accountants who post on this web site!:rolleyes: People end up in debt for all sorts of reasons, don't u think

I did accountancy too it didn't help one bit. All I learned was how to count money not how to plan and use it effectively. Managing money and accounting for it are quite different things, your accountant will tell you how much tax to pay but not how to make sure you have the cash to pay it. This also doesn't help people that didn't study accounts. Accountancy focuses more on balance sheets and business related money - which is a different problem.

For home budget management schools could do a lot to help provide the basic skills, in my opinion.