Tintingirl's "become debt free" adventure!

Giraffeseeker

Hi everyone,

I've lurked and posted on here for years but somehow have never quite managed to get my finances under control, and 2012 is the year that is going to happen! I'll drive my bf mental with talking about it, I'm sure, so I'm thought I'd start my own diary to confide in along the way!

So, I'll start with my backstory....

I've struggled with debt most of my adult life, I was married to someone who was self-employed and so budgeting was hard and we simply didn't bother. We'd have "millionnaire months" where a big contract was paid for, and then months where we just lived off credit cards. The problem was we never paid off the cards when the money came in, just ended up remortaging until it got to a point where the equity ran out and we sold up and moved somewhere a bit smaller and cheaper. We still had debts though. My (now ex-) husband got a FT job but we were not in the habit of budgeting and so didn't bother, the debts ran up again and we got divorced about 5 years ago. The house sale paid everything off and I moved into rented.

I rented for a couple of years, was debt free and loved it! I was able to put a couple of hundred away each month (some months I transferred some or all of it back at the end of the month, but alot of months I didn't). I paid with cash for a lovely weeks holiday in the sun with my new bf AND a week away with all our children (we have 5 between us) was HAPPY! :j

BUT, then my car was playing up big time and I decided to go for a new one, especially as I was fed up with going in 2 cars everywhere when my bf and I had all the children. So I got a 0% Virgin CC and bought a 7 seater, which I reasoned I could pay off within the 0% period. And I could have done. Except around that time my bf and I realised that living together in the near future was not going to be practical (we live 12 miles apart and our 5 children are currently at 5 different schools!) and I panicked about not being able to ever buy my own home again (no deposit after divorce). I applied, and was accepted for, the ownhome scheme (where the government loans you a percentage of your house in leiu of a deposit) and bought myself a lovely 3 bed semi.

All perfectly affordable in theory and would have been in I had BUDGETED! But I didn't. I saved the legal fees up and bought under the stamp duty limit, but didn't pay off the car as planned and so the Virgin CC interest rate kicked in. I got a small bank loan to pay it off and all should have been good....:o

Then I had car trouble I had to find over £1K just after I had moved in and so I got a low interest Barclaycard to pay for it. They gave me a nice big fat limit and I said "thanks very much". Over the next year or so I also got an increase on the Virgin credit limit (yes, stupidly I hadn't closed the account when I paid it off) and started to build them up. After a time I got another CC with a 0% limit, balance transferred but kept the old cards. And in time all 3 were maxed out.

SO, I applied for another loan, but was rejected so I went for a higher interest one with HSPF about 18 months ago. It only covered about half the cards though. And, you guessed it, I used the cards again. At least I know that one of the cards went on paying for a (very cheap) new kitchen and on a nice holiday last summer with the kids, but generally, apart from my car, I have no real idea where the money has gone. I do know that the "debt spiral" is so true, each month the date that I had no cash left and had to use my credit card got earlier and earlier in the month, to the point where I was running out of money after about 10 days.

I started panicking at Christmas and somehow got through the month (mainly by missing a payment on my largest loan), but resolved to sort it out in January. A careful and very hard look at my finances showed that I was £43K in debt and was paying not far off half my monthly wage to meet the minimum repayments. :eek:

So, I completed debt remedy on the CCCS website and was recommended a DMP. I know I will trash my credit file but I think it's the only way I will ever sort this out. I really want to be out of debt by the time my eldest son goes to Uni so that I can help him out financially, that will be just under 6 years (my DFD according to CCCS is just after this IF interest is stopped). So it's now or never!

Wish me luck!

Giraffeseeker

OK, so I'm a really organised person at work but terrible with my own home-management, so I decided that really should be the first thing I change.

SO, my first steps after signing up with CCCS on Jan 2nd was to sort out a MOUNTAIN of paperwork, unopened bills, etc - partly because I needed to find the right bits and pieces for the CCCS.

And what a nice couple of surprises I found!

Firstly, I dug out the paperwork for a debt for overpayment of tax credits, about which I had called in September to be told there was £2.5K outstanding, is clear! It seems when I asked for a balance they included my ex-husband's liability too (we are repaying half each but he pays less per month). My last DD payment came out on December 1st. So my £43K debt quickly dropped to £41K :j

Secondly, I found an overpayment on my water meter of £500, £450 of which they are sending back to me - yay! I figured with this, and the fact I have cancelled my DD's to all my creditors this month, I can pay off my £900 OD with my bank AND put a little fallback money into my savings account. The added bonus of course, is that I can keep my co-op bank account, and as my mortgage is with them I really wanted to be able to do that.

Good start :T

Giraffeseeker

I realised when looking at my online banking that I have NO IDEA what I spend on ANYTHING!

So, I turned to my iPhone and spent hours looking at Apps to help me budget, eventually settling on one called "Spend Log". So far it's been great, I have put all my monthly DD's in as recurring expenses (for the 1st of the month even if they come out later on), and have started recording every expense so that I have an accurate updated balance. You can allocate your income to different categories as well, and it gives you a % of the "pot" spent. I haven't done that this month but I might do it next month. It might take a bit of time to be 100% accurate (lots of cross-checking with my online statements I think) but for the first time in YEARS I know what I've spent and what I have left :j

Giraffeseeker

So, 4th January and I went shopping

But I haven't fallen off the DFW waggon that quickly! I bought my youngest son a new winter coat after the December payday and in late December the zip collapsed. He's been wearing it like that ever since and I can't find the receipt. But, buoyed up with my DFW journey I took it back, and refused to settle for the £12 credit note they offered me for it (I paid £25 and it was faulty!). I was very polite and so the assistant got a manager who agreed to give me £25 discount on another winter coat of my choice - they only had one in stock in his size which was £30, so it cost me £5 but I thought it was a good result! :T

I then took advantage of the sales to buy presents for my BF's daughter and my Mum, both of whom have late January birthdays. I got some LOVELY gifts at half price in Boots, and crucially I SPENT half of what I would normally spend, instead of thinking "it's half price so I can buy them more". £26 for birthday presents for two major people in my life - not too bad (would normally spend £20-£25 on each).

Finally, I spent £20 Argos vouchers I was given for Christmas (from a friend who is also broke but got the vouchers as a gift from her credit card!). After alot of deliberation, I purchased a breadmaker for £40, so paid £20 myself. My bf has the same one and I use it all the time when I am at his, usually for pizza dough as my boys say that pizzas made from this dough are even nicer than pizza hut, but also for bread when I can. The problem is when I haven't done this, and buy shop bread or pizza base mix from the supermarket my boys complain bitterly as it is not as nice. So I figured, before my DMP starts off properly next month, this was a really good investment for us. We always get pizza hut on payday (either delivery or go to the restaurant) and I think the boys will be happy to lose this "treat" if I'm making them yummy pizza at home (and Asda basics mozerella is really cheap).

So, not a cheap day by anyone's standards , but I got a winter coat, 2 major birthday presents and a breadmaker for £51 so I don't feel too bad about it.

Giraffeseeker

And now onto today. Lots of posts for one afternoon but I want to diarise my progress and was catching up since Jan 1st!

I decided to check my readings on the Gas and Electricity as I have been "estimated" for about 18 months and was too scared to look in case they put my payments up! Anyhow, I've checked and the Gas is about right, but the estimated reading on the electricity was WAY over. So I submitted the new readings and also signed up for their "energy smart" programme, where you submit a monthly reading and pay for what you use. I've downloaded their iPhone app and it's pretty cool, it reminds you to submit readings and you can submit them "in app" and it then tells you your bill each month. Again, across the 2 accounts I was over £500 in credit, so a quick call to them and the money is winging its way back to my account. In THEORY, with the water bill money as well, this means that this month I could pay all my creditors in full. BUT, I know that next month I won't be able to and the cycle will start again, so I'm doing to press on with the DMP but with a nice little nest egg for my forthcoming MOT, son's birthday, etc, and without an overdraft which will be nice :-)

While I was on the phone to British Gas I was offered free insulation - I know my insulation is rubbish and it makes my bedroom in particular REALLY cold, so I've booked in a survey for next week. I checked with them several times and it really is FREE - yay!

NOW, I really need to bite the bullet and get my DMP letters off to my creditors, and fill in the CCCS paperwork. For some reason I'm a bit scared to take that step and admit to my creditors that I'm in trouble. Noone has notices any missed payments yet and the post and phone have been silent. Am worried about it all kicking off when I send those letters.....

Giraffeseeker

So, I've written the letters and completed the paperwork for the CCCS for my DMP. Just awaiting my return to work on Monday so I can use the photocopier for my statements etc to send to CCCS before I post that. Letters to my creditors going in the post tomorrow with token payment of £10 to each - eeek!

Have just created myself a budget spreadsheet with the same categories as my iPhone budget app. Have got a "budget" column for each month, an "actual", and then a "difference" column. The "difference" will go into savings each month (or come out of savings I guess, if it's a month where I pay road tax or MOT or it's one of the kids birthdays or whatever). I'll be updating it at least once a week to see where I am.

This month, if I HAD paid my CCCS payment (I haven't as it's not set up yet) then it would be VERY tight - overspent in fact - if I spent my budget each month. So I need to shave some things off. I don't REALLY know what I spend each month though, so I'm guessing at alot of categories. When I have got my head around it all and have a better understanding of my spending I'll post an SOA.

What it HAS made me realise though, is that I was definately not coping with my finances and have been overspending for the last 2 years, so it's no wonder I got into the "debt spiral" and wound up with so much debt.

I need a drink now! Off to open the last bottle of Christmas wine... :beer:

Anyone else just starting out on this journey? Please say "hi"! :wave:

Giraffeseeker

OK, last day of my holiday so need to make today count! My list today is:
- Find paperwork for life/income protection policies and see if they are worth what I am paying - DONE
- Ditto for a small private pension I have (probably stop payments on this one) - DONE - payments stopped
- Post letters to creditors - DONE
- Find a pot so I can join the Sealed Pot Challenge to save for next Christmas - DONE
- Take down Christmas Tree!! - DONE
- Clean my house :A - HMMMM, Not done

I have already done my first job - and made an appointment for Monday with the stop smoking nurse..... :j

sashybo

Hi tintingirl :hello: You've done really well with all the things you've sorted out so far. I think going on a DMP with the CCCS is a good decision and will be a big help to you.

Myself and my OH have been on a DMP with the CCCS for 5 years now and will be finishing it in June this year. It definitely was a life saver and the best decision we could have made, although we did get quite a few defaults and our credit file won't recover for a while yet.

We won't be debt free in June as one creditor (Northern Rock) kept demanding more than we were giving them on the DMP and ended up taking us to court. However, we provided our budget to the court and the judge agreed that we couldn't afford what the creditor was asking from us. The court did increase our payment to the creditor slightly but they also ruled that it be 0% so in the end the creditor has lost out - they will get their money back slightly quicker but without interest. This debt was then removed from the DMP and kept separate. All of our other creditors were a lot more reasonable and accepted the DMP payments though so try not to worry too much.

I can relate to the debt spiral and the terrible panic. We were paying bills with credit cards and getting loans to pay them off, then having to use the credit cards again. :eek: We were going over limit on overdrafts and credit cards and getting charges from every direction. :eek: Our lightbulb moment only came when we couldn't get any more credit and couldn't afford to pay what we owed as well as live.

Even on the DMP it has taken us a long time to get our heads around budgeting and putting money aside for things like MOT's etc each month instead of panicking and using the credit card or overdraft when we need to pay for it. We're still not perfect but we're getting there - so don't worry when you struggle - it's normal and you will get there as long as you keep trying.

Giraffeseeker

Thanks Sashybo! It's nice to hear that other people have been through this and are coming out the other side - well done to you and your OH

My REAL motivation this time is to be debt free by the time DS1 goes to University so I can help him out. If I don't do something now then that just won't happen. I just hope he can avoid this and manage his money better. Maybe I'll show him this diary in years to come, once I am debt free, that is....

Giraffeseeker

Well, just going through some old paperwork and found a Natwest pension which I always thought had been transferred into my Aviva one (which has a balance of around £4K). Called them up and it hasn't, it's just sat there and has a balance of £4639 and an old address for me. So they are sending me the forms to transfer it into Aviva.

Called Aviva and they suggested there was no need for me to keep paying in the £21 per monththat I have been as I have had a teachers pension for 10 years now, so I've cancelled the DD to them. And then I'll let the £8.5K just sit there until retirement I think. Another nice surprise! and £21 off the budget each month :T

MusicalLawyer

I am doing one of these diaries, they help me keep on track of what i am doing with my debts and where i am paying them. i am not in as much debt as you - I'm down to £1150 ish now, but I am still young! (24). I decided i NEEDED to clear my debts as I am studying at University to become a Solicitor, and I want to get married some day and get a mortgage - so I will need money and good credit rating!

Good luck on your journey! I hope it is painless and smooth!