40 months until debt free... musings and meanderings along the way.

edited 27 September 2012 at 10:50AM in Debt free diaries
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laura2481laura2481 Forumite
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edited 27 September 2012 at 10:50AM in Debt free diaries
Hi! My name is Laura and this is my 6th diary and attempt at getting debt free. The difference is: this time I'm not going it alone. Just over 2 weeks ago I had my latest (and hopefully last) LBM. I had come to the realisation that I could no longer afford even my minimum payments and I just couldn't do it alone any more. I had to 'fess up to my husband. He wasn't happy. There was a lot less shouting than anticipated (so that was nice) but I do still feel like I let him down. And myself. It is especially difficult as I was unable to answer the simple question 'what have you spent it all on?!' The answer is: I don't know. I haven't got designer clothes, shoes and handbags. We haven't been on loads of tropical holidays. We don't even own a car. I think I had been plugging the gaps in the budget with a Credit Card it just built up and up, and as the minimum payments went up and up so did the gaps in the budget. And THEN I commited the cardinal sin of debt busting. I got a consolidation loan. I thought I could handle it. I thought I wouldn't fall into the trap everyone else falls into- of taking the loan and then running the credit cards up again.. but I did. So here I am: £14,440 in debt and not a lot to show for it. This time, my husband is on board.. and we have a plan..





Coming soon-
  • The breakdown of the debts, for future reference
  • A SOA, to look for any ways to cut down either now or in the future
  • The plan
:idea:New LBM 11/8/12 Total debt: £14,440 :eek: Estimated DFD: August 2015


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Replies

  • edited 27 August 2012 at 9:48AM
    laura2481laura2481 Forumite
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    edited 27 August 2012 at 9:48AM
    Just spent ages looking for my own thread because I forgot to subscribe to it! Doh!

    I also noticed that this thread has had 56 views (and it definitely wasn't me as I couldn't find it! :rotfl:) Please feel free to say hello :D

    I am currently doing this on my mobile but out it's more than a bit tricky so I an going to swap to a real laptop as this is a pain! Back soon
  • edited 27 August 2012 at 10:04AM
    laura2481laura2481 Forumite
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    edited 27 August 2012 at 10:04AM
    And I'm back.. took slightly longer than expected as I made a coffee and fed the cat :D

    So today I thought I would write down how my debts stood on the 11th of August. The day I finally confessed to my husband the situation I was in (he knew I had credit cards but just had no idea how much it all added up to!)

    The LMB actually happened a few days earlier but I put off and put off telling him as long as possible. Anyway, this particular saturday I was at work and just thought 'I have to do it. I can't do this by myself and even if I have to do a DMP with CCCs he will need to know what I happening' I had written down in a little notebook in the morning what I thought my debts were (in my head it was about £12k, when it was all written down my estimate was £15100 :eek:) I then went and looked it up exactly and came out at £14440.78 :o Better, but still :eek:

    I felt sick the whole morning and thought that I just couldn't work the whole afternoon with this on my mind knowing I was going to have to talk to him in the evening. So I rang him at lunch time and eventually blurted it all out, with a few tears along the way. And that was the start.






    Debts at 11/8/12
    • Barclays Loan £5473
    • Hsbc CC £1452
    • Virgin CC £2596.03
    • Tesco CC £2003.25
    • Santander CC £2916.50
    Total £14440.78
  • laura2481laura2481 Forumite
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    And here is the my SOA. There are some gaps in here: nothing budgeted for gifts, haircuts, emergencies or holidays. Jeez I wish there was enough in the budget for holidays... (Everything is rounded up to round numbers eg loan repayment= £155.36 rounded up to £156)

    Income:
    Salary £1130

    Outgoings:
    Joint Account £500 (this covers: mortgage, groceries and all bills. I'll do a breakdown of that in a bit)
    Loan £156
    Santander £90
    HSBC £31
    Virgin £60
    Tesco £25
    Travel (bus+train travel pass needed for work) £104
    Mobile £20

    Total out: £986
    Remainder: £144

    On paper that looks ok..I've got £144 'left over' to cover everything else. Clothes, shoes (not that I have lots or it's expensive stuff) gifts, travel to other places (eg visiting friends/family in the midlands. We're oop North in Leeds) entertainment. Anything. Equivalent of £36 per week.

    So that's how the CC debt built up. If I need a haircut one month thats £30, that's a quarter of my remainder budget gone. So it would go on the credit card. My husbad wants to visit his family? That's £29 for a return ticket on the train (can't get coach as last coach leaves before I finish work or that would be about £20 cheaper) That would go on the credit card. Someones birthday? Husband already bought present (without asking me) but wants half off me? That's maybe £30. I'll buy something else to the value of £30 as a trade but pay it on my credit card (eg I might pay his train fare and say- you bought present, I paid for train) So at the end of a month I might just add another £300 to my credit card and next month the budget is even tighter as the minimum payments have gone up! And around we go again...

    But now that has to end. Because I cannot do it anymore.
  • Hi Laura. Just thought I'd say hello and wish you luck. I soooo understand what you are saying about having to use CCs to plug the gaps in your budget and the downward spiral that that creates. At least your husband knows about the debt, mine doesn't and I'm not going to tell him unless I have to so I'm going to have to dig us out by myself. There is so much help and support on this board that I'm sure we can both get on top of this and eventually be debt free.
  • edited 27 August 2012 at 8:26PM
    laura2481laura2481 Forumite
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    edited 27 August 2012 at 8:26PM
    Hi Laura. Just thought I'd say hello and wish you luck. I soooo understand what you are saying about having to use CCs to plug the gaps in your budget and the downward spiral that that creates. At least your husband knows about the debt, mine doesn't and I'm not going to tell him unless I have to so I'm going to have to dig us out by myself. There is so much help and support on this board that I'm sure we can both get on top of this and eventually be debt free.
    Hi princess, thanks for your message. I wasn't really sure about telling DH. I thought he would be angry, then sulky and resentful. Luckily it appears he skipped angry and went straight to sulky and resentful. Well, that's a topic for another post...

    It looks like we have a similar amount of debt. Perhaps we can help each other along the way? Do you have a diary? I shall go look! :D
  • edited 27 August 2012 at 8:49PM
    laura2481laura2481 Forumite
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    edited 27 August 2012 at 8:49PM
    Here is the plan- I went through a couple of options. One was a DMP with CCCS, just for me-leaving DH out of it as all debts are in my name (as I was the one who got all the credit cards and ran them up) Going through the debt remedy plan on the CCCS website it would take about 6 years for me to clear the debt (assuming all interest is stopped which of course it is not guaranteed to be), and then of course a further 6 years for defaults to drop of my record.

    I then did the DMP for myself and my husband. It would take about 3 years to clear the debt (again assuming all interest frozen) and another 6 years after that for defaults to clear.

    It became clear that going down the DMP route would, at best, wreck my credit rating for at least 9 years. Not a major issue but should we wish to move house or need a new/different mortgage or anything then of course it could become an issue.

    My husband then suggested we ask his parent to loan us the money. They are fortunate (?!) enough to have inheritated a reasonable amount of money when DH grandfather died- but that is a lot of money to ask from someone. Not to mention humiliating.

    After spending a good chunk of time considering things I came upon a bit of a compromise. We could borrow a (relatively) small amount from DHs parents- £5k. I could then clear off my Santander card and my HSBC card, leaving a small amount left over which we could use for Christmas presents this year ensuring we (I?!) did not have to use any credit cards this year. We could then use the snowballing principle to pay off the other 2 cards and the loan. They would be gone in 2 years and 3 months if we pay a minimum of £400 per month off the debts. Then we could start paying the £5k back which at £400 p/m would take 13 months... the 40 months in total.

    It would mean being honest with DHs parents that they will not get the £5k back until Jan 2016 at the earliest, and why. And maybe even keep them abrest of the reducing amount of debt so that they know we are on track but it much less uncomfortable than asking for the full £14,440 :eek:

    So here is the plan in brief- if you couldn't be bothered with the waffle above.
    • Borrow £5k from DHs parents
    • Use £5k to pay off (and close) Santander and HSBC credit cards
    • Over the next 27 months pay at least £400 pm off of remaing debts using 'snowballing' technique
    • Once they are cleared begin repaying £5k to DHs parents, again at at least £400 p/m. This would take 13 months
    • Be debt free in 40 months!
    Of course 40 months is the longest- a few overpayments where possible, maybe swapping the Virgin CC to a 0% deal in 6 months time could shave a couple of months off... and every single month less that it would take would be such an achievement!
  • rupe34rupe34 Forumite
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    Hey Laura - glad you posted the link on the Blondie thread :)

    Sorry its all got so bad dude - but :T:T:T for telling your husband and facing it all head on.

    Have (of course) subscribed xx
    Onward and upward - with the odd step to the side

    November GC £255/£300
  • laura2481laura2481 Forumite
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    Hi Rupe!! So glad you found me! I really need to do it this time. I really can't go on this way and it has definitely been getting me down. Its definitely holding me back.... things are not great at work but I just don't have the confidence to go find somewhere else especially if it may lead to a drop in pay- I really couldn't afford it. And we will be wanting to start a family within the next few years.. and unless these debts are dealt with.. well, I just don't know how we could afford it. I know everyone says 'you just do afford it' but I really really have no idea where money would come from nappies and clothes and buggies and cots- the things babies need, and then toddlers, and so on and so on.

    I've been to the limit of my overdraft every month and if I had carried on as I was by credit cards would have been maxed out this month and then I would have had nothing...

    ...so I am hopeful things will start to look up now.
  • edited 27 August 2012 at 9:52PM
    ambyenceambyence Forumite
    189 Posts
    edited 27 August 2012 at 9:52PM
    Hi Laura!
    Just popping in to wish you well. In a similar situation atm - the numbers might be a bit different but I do know the feeling of being at the limit of everything financially and the knock-on emotional effects :o, so just wanted to offer my support along with Rupes and the other lovely poster.
    Well done for 'fessing up :T, that can't have been easy to do, and it's great that the reaction was not as bad as you had feared :). Paying it off will mean a hard few months I'm sure, but it WILL be worth it and you WILL get there.
    Other than all the financial issues, which suck I know, I hope you are enjoying married life and you are both well :)
    Ambs xx
    don't let the b*stards get you down or you might have to live in a bin - <<< this could be you! :)
  • chevalierchevalier Forumite
    7.9K Posts
    My comments are in blue.
    laura2481 wrote: »
    And here is the my SOA. There are some gaps in here: nothing budgeted for gifts, haircuts, emergencies or holidays. Jeez I wish there was enough in the budget for holidays... (Everything is rounded up to round numbers eg loan repayment= £155.36 rounded up to £156)

    Income:
    Salary £1130 Any way of getting a second job, selling stuff on ebay/gumtree/doing surveys etc?

    Outgoings:
    Joint Account £500 (this covers: mortgage, groceries and all bills. I'll do a breakdown of that in a bit) Is this done as a proportion of your salaries? Ie if OH earns twice as much as you then do you pay only a third of the amount? Maybe something to talk to him about? There is no point IF YOU ARE A TEAM for him to be sitting on a cash surplus whilst you struggle. Also do check that all your utilities are with the cheapest providers.
    Loan £156
    Santander £90
    HSBC £31
    Virgin £60
    Tesco £25
    Travel (bus+train travel pass needed for work) £104
    Mobile £20

    Total out: £986
    Remainder: £144

    Equivalent of £36 per week. Worth taking this out in cash each week, and when it is gone it is gone?

    So that's how the CC debt built up. If I need a haircut one month thats £30, that's a quarter of my remainder budget gone. I know this is only an example, but if you could make the cut last 6 weeks then you save 30 pounds every 3 months...
    So it would go on the credit card. My husbad wants to visit his family? That's £29 for a return ticket on the train (can't get coach as last coach leaves before I finish work or that would be about £20 cheaper) That would go on the credit card. And OH couldn't pay this?

    Someones birthday? Husband already bought present (without asking me) but wants half off me? That's maybe £30. I'll buy something else to the value of £30 as a trade but pay it on my credit card (eg I might pay his train fare and say- you bought present, I paid for train) So he needs to talk to you about purchases that he expects you to contribute to. Or else you need a way to source cheaper presents.


    But now that has to end. Because I cannot do it anymore.
    Good luck with sorting this out. I hope that the talk with OH's parents goes well. They may want to give you the whole amount. Don't be too proud to say yes if they offer. It would save you a fortune in interest
    chev
    I want a job that is less than an hour driving away from my house! Are you listening universe?
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