kirstle99's Motivation To Be Debt Free Diary

kirstle99

Hi All

So, I guess a bit about myself is customary to start things off. I'm married with 2 boys aged 5yrs and 1yr. Me & my husband have been together for 9 years. In 2005, before kids, we were young and silly, had loads of credit available to us, and basically went a bit mad & lived beyond our means.

In 2006 we started to struggle to pay monthly bills and we had our lightbulb moment. Me discovering I was pregnant in February 2007 with our first baby gave us the push we needed to sort it, so in June 2007 we signed up to Payplan with £16,000 of debt. This was mainly in my name as hubby's credit rating at the time was awful. So I ended up with 6 defaults on my credit report (!).

We made payments to Payplan right through from June 2007 right through until July 2012. In July, hubby's dad had a windfall, he got a PPI refund of £21,000. He offered to help us settle the debts off so we could repair our credit scores and we would pay him back the same amount we paid Payplan until the debt was settled.

We managed to get some partial settlements, but had to make some payments in full. So as it stands, we now owe hubby's dad £6,900. This will be repaid at £300 a month until June 2014.

I'm starting this diary because I don't want to get out of the good spending habits i've picked up from this site, and go backwards instead of forwards.

Me & hubby want to buy the house we currently rent from my mum so it's so important we stay in good habits. We will have a £20k gifted deposit (think the house will sell for around £125k) so we would obviously like to save an addition to this deposit ourselves. We want to be in a position when we apply for a mortgage where we have no debts to pay but have credit available that is well managed (like a credit card used occasionally & paid off in full or something). We're hoping to be able to look at mortgages in about 2 years time although I think we're being a bit optimistic & it might be 3-4 years. Luckily we're living in the house we want to buy, my mum keeps the rent at the mortgage payment she pays and we do all the maintenance etc so we can get it how we want.

So I have a few aims for our finances (I manage all money in the house as hubby is admittedly rubbish at it)

1) Set up single accounts for me & hubby. Allow £50 each for 'fun money' each month (we haven't had this since about 2005) and account for it in the budget.

2) All bills accounted for from the joint account. (all income is paid into here)

3) Set up a joint savings account. Any money from overtime, council tax free months etc is transferred here. After Christmas try to save a small amount every month to build up an emergency fund (we've never had one of these)

4) Account for annual expenses in the monthly budget. I have never done this and it's time I should. So from now on, I am allocating £10 to MOT fund, £10 to car tax (£125 annually), £40 for XMAS/Birthdays, and £15 for clothes. I am going to keep a spreadsheet of all this so I know how much we have for everything.

5) Make an inventory. I have listed everything in the kitchen & bathroom cupboards so I can keep track of it when ordering my shopping online every week (saves going to the cupboards all the time & also stops me buying unnecessarily).

6) Stick to shopping budget. At the moment this is £70 per week for 2 adults 2 children. It has to include all food, baby essentials like nappies, cleaning products and alcohol etc. It is perhaps a little generous and I am planning on cutting it after Christmas to £60 per week, and then after 6 more months to £50 per week.

Anyway enough of my waffling for now! I'm going to be using this diary mainly as motivation for myself but everyone is welcome to advise etc along the way! The more the merrier!

Aurora_

Hi Kirstle,

Congrats on the new diary- I started mine a few weeks ago and it's really a help at keeping me focussed!

The shopping budget is a great idea, and it's good that you've allowed it to be generous. The OH and I have a budget, but have also some contingency funds so we can bulk buy things when we find good offers- definitely helps to keep the costs down in the long run! This might be particularly helpful for nappies and baby bits- there are a few good threads on the grabbit forum about good deals on these!

Anyway- great work so far, and good luck with the house-saving mission!

Ax

kirstle99

Hi Aurora

Thanks for the encouragement, glad i'm not the only one who allows a generous shopping budget, yes I have found it does help to take advantage of the bulk special offers! I just need to stay in this habit now.

Something I have never done but will start doing is a spending diary - even though we only ever spend the 'extra' money it might show us a thing or 2 if we see how we spend it - takeaways nights out etc. It might make us think about it a bit more!

Aurora_

A spending diary is a great idea! When I was working full time I had no idea where all my money went, and my debt was increasing. Now I'm a student again and earning much less, I'm paying off my debt. Heaven knows where all my money went before!

Hope it's all going ok!

Ax

kirstle99

Well August is going to be a high-spend month for us as a family. My brother is getting married (i'm bridesmaid) so we have to pay;

£89 for the hotel B&B for me, hubby & 5yr old (baby isn't going)
Thinking £70-£80 for drinks etc (this is an all-day & night thing) for the 3 of us

It's also our son's birthday on the same day as this wedding (grr, but that's another story!) so we're planning on taking him somewhere for the day the day after. So will need about £50 for that. Hubby built him his own PC from parts we had in the house (only bought childs keyboard & mouse) so his present is sorted.

Then we need £10 for 2 P.E. tops for eldest DS for school in September.

My car tax is also due but I have budgeted for this.

Hopefully that will be the only expenses!

kirstle99

Ok so I used Noddle today to check my credit report. I knew it was going to be rubbish (have known for years) but I just wanted to check things are starting to show as settled from when FIL paid debts off for us in June. They are starting to, but damn, aren't some of the companies slow to update?!

I've got 5 defaults altogether, but all are now partially or fully settled. 3 will be off by the end of 2013, then 1 in 2014, and 1 in 2015. It might look bad to some, but to me this is brilliant.

Hubby also applied for a credit card this week (obviously a bad credit one) to see what would happen (he has got 1 default on his record) and he's been accepted, which mean at least his rating isn't as bad as mine! So we're going to use the card to make one-off purchases every couple of months and fully clear the balance. We've definitely learned our lesson, and hubby is going to give me the card so he's not tempted to spend on it.

kirstle99

I've been thinking about this credit card hubby has got. I'm actually quite scared about it. After us not having any credit for 6+ years and me dealing with all the money i'm scared he might get a bit 'happy' on it. He says its just for doing the shopping on every now & again and then pay off when the bill comes, so it gives him a bit of a history of good payments. I just hope he's right

kirstle99

Well I have spoken with hubby about my feelings towards him getting this credit card. The limit is £200. I know it's not massive but asfter going without credit since 2006, this is a huge step for us.

I also applied for a credit card this week, with Vanquis. I totally didn't expect to get accepted, because although these are now settled and most recent default is 2008, I have 5 defaults on my credit report, all closed accounts but still showing up.

Well, I got accepted! Shocked is an understatement. I got a terrible rate (39.9%) but, it's a start. These cards are going to be locked up and only used once in a blue moon for small purchses. AND PAID OFF IN FULL AS SOON AS POSSIBLE.

This is a step in the right direction. But it is so scary when you've lived without credit for years. We will not get into the hole we were in before. We still have until June 2014 to pay off the debt and I am focusing on this.

Next steps for us are firstly not to apply for anything else. Second step is, when my phone contract runs out in June 2013 (in hubby's name at the moment) I will apply to get my own phone contract then. I believe this does involve a credit check so it's a good 10 months away, so I should have a good repayment history with the credit card account by then to help things along.

Scary stuff this! What am I gonna be like in a few years when we get a mortgage! Lol!

kirstle99

Feeling good - just paid another £300 and are now down to £6k of debt, and worked out that in 20 months it is my youngest's 3rd birthday the month we are debt free. Can't wait :-)

beanielou

Good news on debt repayments
Do be careful with those credit cards though!

kirstle99

Thanks, I will be don't worry! Spending ANYTHING on them makes my blood run cold, even if it's just £10 (I always make sure the money is there to pay full balance straight away from the savings before I even spend anything).

Guess the 'fear' of spending on credit is only a good thing! I have learnt so much and am not about to go back to anything resembling what happened to get us in debt.

:T