The Light Bulb is at maximum wattage!

cocoblu

I've finally had the lightbulb moment and its not pretty. It came about when I applied for a consolidation loan with Tesco and they declined on basis i had already got to much borrowing, which I had a sneaking feeling would be the case.

My soa is as shown below:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1898
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1898

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 275
Management charge (leasehold property).. 0
Council tax............................. 44
Electricity............................. 22.5
Gas..................................... 32.5
Oil..................................... 0
Water rates............................. 7.5
Telephone (land line)................... 0
Mobile phone............................ 27
TV Licence.............................. 12
Satellite/Cable TV...................... 18
Internet Services....................... 0
Groceries etc. ......................... 160
Clothing................................ 100
Petrol/diesel........................... 30
Road tax................................ 15.12
Car Insurance........................... 61.93
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 48
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 12.5
Haircuts................................ 20
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 936.05

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1500
No Secured nor Hire Purchase Debt

Unsecured Debts
Description....................Debt......Monthly...APR
marks & spencer loan...........6987......300.......12.9
mint visa card.................735.......17.6......18.9
sainsburys visa................2858.98...64.32.....2.9
argos..........................325.......12........0
halifax .......................3914.14...40........7.9
barclaycard....................3500......75........
Total unsecured debts..........18320.12..508.92....-


Monthly Budget Summary]
Total monthly income.................... 1,898
Expenses (including HP & secured debts). 936.05
Available for debt repayments........... 961.95
Monthly UNsecured debt repayments....... 508.92
Amount left after debt repayments....... 453.03

Personal Balance Sheet Summary
Total assets (things you own)........... 1,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -18,320.12
Net Assets.............................. -16,820.12


To give you a clearer picture, I live with my partner (no kids)and earn £31500, I ve pretty much lived in debt through my 20's without a second thought and its only now that im seeking friends get married and buy houses that ive realised i really do need to get my finger out! MY partner is not aware of the extent of my debt and am not inclinded to tell him at the moment as he tends to panic at the thought of any debt. I earn approx £10k a year more than him so it is somewhat of a sensitive area anyway!

We both contribute £400 a month to our joint account which covers all the bills hence i have only included a 50% share of these in the soa. Everything else is our own. I buy the food shopping from my wages and am also treating oh to a holiday for his 40th birthday which is already paid for.

mt phone is in contract til july 2013 and I am tied into my broadband/tv package for another couple of months.

the barclaycard debt is 0% for two years to January 2014 and my sainsburys debt is 2.25% til 2013. the halifax balance is a life of balance at 7.9% -I think! The Marks & spencers loan is due to end may 2014.

Any advice would be much appreciated, ive started a spending diary and i also started taking my lunch to work which saved a fair bit but i dont know where to start with the debts. The funny thing is I was never bothered about my debts but now it hannging over me like a black cloud which i woould like to go away

Thanks in anticipation!!

cocoblu

niccatw

You are where I was 4 years ago and I remember it well. Good to hear you have started a sepnding diary - I hated doing it but I think that's because it was scary and I couldn't dispute what it was telling me!

I'd urge you to think about telling your partner - for no other reason than it can be scary and stressful tackling it on your own - and having some-one to keep you focused can be a god send. I appreciate why you might not want to do this though, and so I'd say start a diary on here, or read a few to see what others have done. I have one but it's a bit of a rant lately, so I dunno if it'd help...

In terms of where to start with your debts... according to your soa, you should have enough to get rid of the argos one in one full sweep - which can be brilliant for your motivation. If you don't have that money, then you need to scrutinise that spending diary!

In terms of how to tackle it, most folk would clear the highest APR first and when that's done, roll it's payment onto the next highest APR - which saves you most in interest.

This is great, but if you have a debt that is psychologically getting to you and you just want shot of it, then I personally think that's where to put your money. Or, if you've got lots of smaller debts, that you can pay off in one go, then it can be good to keep everything at a mininmum and pay off one small debt at a time each month... it's really down to your personal preference.

You also have to be very honest with yourself about what is important to you, so you can balance paying off debts with living your life - especially if you don't want to tell your partner yet. It can be a tough road and if you deny yourself everything, you can become very low or fall off the wagon very quickly.

I found to keep me focused, I was much better when I realised I was willing to spend money on having my hair done but I wasn't willing to keep spending the same amount of money on going out drinking for example. So have a think about what's important to you, but don't let yourself off the hook on those things where you know you spend too much money. Looking at your SOA, I'd say you need to think about just what you spend on clothes and how you can reduce this...

Joining some of the challenges on here can be invaluable for that. The Crazy Clothes challenge could be a good start - you nominate a budget for the year and then try to keep to it. The NSD challenge is also fab; you nominate how many "no spend days" you are going to have per month and then you try to keep to it. I have to say this was was brilliant for me. It's where I really learned to plan ahead for the things I needed and really ask do I need this or do I just want it. The PAD challenge can be good too - you make a small payment every day to a nominated debt.

I didn't quite do this but I do round down my bank account and put the extra to my nominated debt, so if I have 36.73 in my account, I'll transfer £6.73 to my nominated debt. I'm amazed at how much extra I've paid off my nominated debt!

The other thing is to say is to keep coming back to your SOA. People made suggestions to me which I did at first think were utter madness but three, six, twelve months down the line as I got into, some of them were a bit less scary for me.

Good luck

niccatw

Here's the link to this years list of challenges. Have a nosey and see if which ones take your fancy.

19lottie82

Right, just to confirm...

You say there are 2 adults in the household but you haven't included your partners wage in your calculations, although the figures for rent, council tax and utilities are "your half"?

Is the car "your" car? Does your partner make use of it at all? And if so is he giving you a contribution towards it? Your insurance seems quite high for someone in their 30s. Have you had to make a claim recently or is it a large / powerful model?

Also the main thing that stuck out for me is , you are up to your eyes in CC debt and you are spending £100 a month on clothes?!
I can't imagine why this would be essential and surely you would be better putting this towards your CC payments?

You really need to tell your partner about this and start making cut backs together to help clear the debt. If he loves you and wants to be with you in the long term then he will help you.

Good luck!

Standingtall

I suspect you could make a fair bit by ensuing some clothes and other luxury items? I am only guessing and also stereotyping on the fact that you do not have children and are on a decent income. If I am right though, get that surplus stock of clothes onto eBay and put towards one of the debts. Again, this would be a great motivator:T

Barbeduk

This is probably not what you want to hear, but if this is a man you are serious about and want to make a life with, you really have to tell him. It's just not right to keep him in the dark.

Totally agree with ebaying anything you are not using, cut every cost you can, know the price of everything and don't buy stuff unless you really really need it! Try the demotivator on the main site, got me to give up our daily bottle of wine!

Have you got your cards set up so you can access the balance on line? That way even if you pad you can see the balance going down and down. It's a great motivator.

Oh, and have you cut up the cards yet?

Good luck.:)

cocoblu

Thankk you all for your useful suggestions/advice. My partner is aware that I am in debt, just not the actual amount, without going into all the details he has had a lot of personal difficulties over the last 3 years and tends to panic quite a lot whereas I am quite laid back about things - hence how Ive got to the situation Im in now!
MY oh does not use my car as he has his own and mine is an automatic which he absolutely hates so he'll only tend to drive it if we are doing a long journey.

Yes my insurance is high, I had a minor fault accident in 2008 but cost is more to do with where I live than anything else as I am on the edge of one of inner city Birmingham which does not help.

I spent Saturday doing all my ironing and have to say I felt quite embarrased I have more clothes than can fit in my wardrobe I have gone through and pulled out a load of stuff that is going on ebay on Wednesday when I have the day of.

My one downfall is magazines/newspapers and beauty products so have limited myself to only spending a maximum of £5 per product and using up what I already have. Magazines/newspapers are something I think I m going to have to go cold turkey on though - any suggestions would be helpful

Niccatw, I have taken your advice, i have paid the Argos card of - even though this was 0% I feel I have achieved something. The MINT card is the next one to clear.

Once again, thanks for all your advice, I think it helps more and means more when it comes from people just looking at the bare facts of the situation - which lets face it aren't great in my case!

19lottie82

OP - £5 a product is still a lot, can you not change to supermarket brands, apart from maybe 1 or 2 regular products that you simply can't live without?

And think long and hard about this one, do you REALLY need the car? There is already one in your household and you say you only spend £30 a month on petrol, so you can't be using it that much?

If you live in an inner city, then public transport links must be good, if things aren't within walking distance.

I also think it is costing you more than you let on. You say it's only worth £1500 yet you have allocated £0 for maintenance and MOTs? This doesn't make sense.

MusicalLawyer

Your SOA says you have £400+ left over each month after paying everything - is this accurate? If not, keep doing your diary to find out where this money is going.

Martin always suggests paying off the highest interest rate first.
If you go to https://www.makesenseofcards.co.uk and go to the snowball calculator, in there you can input your debt amounts, the interest rates and how much the minimums are - then you can input how much you can afford to pay (as a whole) each month towards your debts. It will calculate the best way to pay off those debts. It's really easy to do.

- Ditch the £100 a month for clothing. It's just too much at the moment. Put this towards your debts.
- Your phone contract - you can downgrade your tariff in July 2012, so make sure you do that.
- You need to budget something in for the MOT etc.
- What is the 'Other Travel' for? If it's travelling to work - do you really need the car? Can you not sell it, then save & buy one when you're debt free?

You could EASILY have your Mint card paid off in 2 months by doing the snowball calculator on the website I gave. The Argos and Barclaycard should be the last things to go, as they're 0%. Though you could clear Argos is one month easily, if you just wanted that one gone.

cocoblu

TBH, That is pretty much what i do with beauty products, all my basics are supermarkets own (i can recommend Asda and Aldi own brand body lotion) the only things that I have spent a bit more on are facial skincare due to my somewhat schizophrenic skin.

I am not sure what to do about the car if I am entirely honest, 19lottie82, I only use it a couple of times a week for very short journeys and also on a weekend to see my parents and to do the shopping or If I am going out with friends and have only done about
2000 miles since my last insurance renewal in September 2011 )thank you insurethebox.com) If I am totally honest with myself I could probably do without my car but this would also be losing my independence and I m not sure I really want to do that. It is 2 buses to my parents house and as they are getting older I can envisage that I will have to drive them to appointments and such and wont be able to borrow their car.In addition, I would not be able to borrow my oh's car if I needed to as I can only drive automatics. I had forgot to include something for car maintenance/mot and based on last years bill it would be about £30 per month.
The other travel is my bus pass which is to get me to and from work, I probably dont get as much value from it as I could but again this is a necessary evil, I ve checked and I could get the train to work =, the train pass being only £30 per month, but I would need to drive to the station so not sure whether I d end up any better of?

19lottie82

I do see what you mean, but could your OH not drop you at the station in the morning? How far is it to the station? Or could you cycle in the not so wintery months? Or car share?

If you sold the car, that would be £1500 towards your debts.

Plus your car is costing you £137 a month. That seems a lot considering you only use it for a few trips to the shops and your parents. Having to get 2 buses to see your parents is hardly a hardship.

I know the car is convinient but I really don't think you can justify having it considering your debts, you already have a car in the household, and due to the fact that you use yours so little.

Obviously if you got rid of the car you would ahve to be totally honest with your OH about why it had to go.