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How exactly did we get here?

Hi all

Well I've decided that keeping a debt diary on here might help me to deal with our situation, because I'm starting to feel more in control but unfortunately in the past we have tried to get out of debt and slipped again thinking we were doing better! So perhaps pushing myself to keep a diary of how we got here and what we are doing to get out of debt will help me see the progress we are making and also help to fend off "why bother" syndrome!

So how exactly DID we get here? Well a series of not necessarily bad, but foolish decisions has led us into two credit cards and a rather large overdraft! I hadn't ever planned on getting a credit card, but we applied before we got married when i found that the only way to hire a car for our honeymoon was with a credit card (crazy!!! and a BIG mistake as it was the first step on a bad road!). Anyway we didn't use it much at first, and paid back the little we did use, then once the wedding and honeymoon were over we decided that it was going to be quite some time before we saved the money to move out of the flat we were renting and so we should 'make the best' of where we were by buying new furniture!! £600 later into our credit card and we were on a slippery slope.

Just a month or so after buying all this new stuff two things happened almost simultaniously, I fell pregnant and an opportunity came up for us to buy a flat (with a little help from my parents on the deposit - just FYI the money that they gave they had intended to give as a present and my brother and sister recieved the same amounts for other purposes). So of course we jumped at the chance because we now needed the extra space for Baby :D. And although we didn't need to pay any extra money for the deposit, this did lead to spending sprees for 'things for baby' and 'things for new flat' most of which were probably overpriced or unnecessary. The final straw of the big pile up of the debt was when the solicitors bill came - £1300! so of course this was put onto the remainder of the credit card, and we had already used up our overdraft of £1200 putting us now into around £3000 of debt!! :eek:

BUT it didn't stop there - so once we had moved in and of course had the baby we decided that the SMART (:rotfl:) thing to do was to take out a SECOND credit card with 0% interest to allow us to transfer the balance and stop being charged! This would actually have been a good plan, had we stuck to it! Instead the transfer was put off because the limit of the new card was too low to transfer all of the balance from the first card, and though we could have at LEAST transferred some that got put off, and instead we bought.... a new computer! great plan and we REALLY NEEDED IT :rotfl:. So then that card racked up as we attempted to spend a little more on the credit card to get us out of the overdraft, and a couple of months where we had no money left at the end of the month led to paying for the groceries on cc2 with the promise 'we'll pay it off when we get paid' which of course NEVER happened! All of this compounded by my income lowering when i went on Mat leave, and then having to pay travel expenses and childcare costs when i returned to work without having any money saved to account for it!

So there we were, £4900 into debt and with now that i think about it a pretty clear idea HOW we got here, just a list of mistakes behind us that we saw no way of fixing. But of course instead of trying to fix them we went on as we were not really checking the account, justifying our spending and making matters worse even as we made our small payments 'to fix things'. After twice in the last year being in the position DAYS before payday where we had literally NO funds available to us (despite the overdraft!) we finally had our lightbulb moment just a few weeks after our daughters first birthday, on Sept 21st this year that we couldn't continue like this, we were going to end up loosing everything or having to beg my parents for help and loose all self respect! So it finally hit us, we got ourselves into this mess, we HAVE to get ourselves out - for the sake of our daughter if nothing else!

So how have things changed since then? Probably not enough but we have definately started down the right road. Instead of working extra and trying to make more money (something we were doing before with limited sucess, especially since we would then justify going out as we had 'saved' or 'made some extra' to cover it!) we have curbed our spending as much as we have found possible. I joined this site and have started taking part in the GC, limited our food spends and meal planning to stick to a budget instead of aimlessly buying the same items plus extras every month out of habit and keeping no track of our spending. We picked the wrong time of year to start because we obviously had christmas coming up - but have managed to keep our spending as low as possible for that and have done all of our christmas presents for under £250 - bearing in mind that we have big families, and that includes presents for our daughter too. We are not buying anything for each other (last year between what we spent on one another, and our daughter that was probably close to £250 by itself so this is a HUGE achievement for us).
Some of the small things we have been trying is not spending on ANYTHING unnecessary, of course we don't always suceed but most of the time we are sticking to it. Also we don't go out for dinner, have cut out takeaways completely and have downgraded to buying at least one brand down from usual, and i was pleasantly surprised that the cheapest supermarket brands are really quite good! Also we have sold off the computer that piled cost onto our debt - didn't get anywhere near as much as i paid for it but it was sitting there unused to anything is better than nothing. Now obviously we have been hurt by the necessity of christmas, and i realise that i probably could have limited that cost even more but we are only just starting out at this so be kind! But so far we have managed to get CC2 down to just £1000 AND reduced the amount we go into the overdraft by each month to just £900 in just two months!

Our credit rating is SOOOO bad by now that there is NO WAY we could get another 0% credit card to transfer, but fortunatly (sp?) for us we have a very kind brother in law who has recently come into some money and he has offered to lend us £2000 in order to get us MOST of the way out of our CC1 - and this will be helped by the fact that this credit card also offered us an opportunity to transfer a balance from another card by Dec 21st and it will be 0% interest for 9 months!!:)

I felt a little uncomfortable borrowing the money from family - but beggers really can't be choosers and this will mean our repayments will acutally be making a dent in our debt rather than simply paying back the interest and tiny chips in the debt. So in all by Christmas we hope to be in this situation!

CC1 £1460 with interest to pay only on the £460 reducing it to around £10p/m as apposed the the £80 we have been paying across both CC's for 9 months - which gives us a deadline we NEED to pay it back by!!!

CC2 - PAID - and will be cancelled as SOON as we can!!

BIL - £2000 interest free which he is happy for us to pay back once CC1 is cleared!

Overdraft - Currently at £900 - BUT as we have bought all our xmas presents and will also be getting a little extra money in this month due to OH doing a freelance job as long as we stick to our guns and don't spend unnecessarily we hope to get this down to £500 this month!!

So in all our total debt will be £3960 with much lower interest amounts!! It might not seem like much, but as we regularly pay £120 across the two CC's £80 interest payments means usually we will be paying off only £40 of our debt, but from this month it will be £110 p/m and once we get out of the overdraft we will be able to make bigger payments every month! Obviously we will have to live very frugally for the next year in order to leave what should be our 'free income' (i.e. the money not allocated for bills and necessities every month that would be excess if we didn't have debt!!) in our account in order to pay back the debt! But I have done a LOT of number crunching and i think that we can get there by the end of next year!! without any more credit cards, without working more than usual and missing our daughters life, and without buying fancy expensive gifts for people or ourselves but feeling like we are FINALLY getting somewhere :T. I'm sure that we will suffer set backs, and unexpected situations that cause us worry and it will probably take us longer than we hope it will but the point is we are trying our hardest, and as long as we are actually doing that then maybe we will get to a place that we can stop feeling guilty for buying something because we will actually be able to afford it, and stop feeling so guilty for making those bad choices because at least we are doing something to rectify them!

Sorry to go on for soooooo long, please feel free to offer any advice that is well meant and support will be greatly appreciated, but i am keeping this diary now for me, to remind myself of how bad we made it and make sure that a) we stay on track and b) when we finally get ourselves out of this mess, we don't end up right back where we started!!

Thanks to those who read :beer: I'll be updated my signature when the debt is officially moved around and some of the payments take effect!

Bunny112
Debt Amount: £12,000 = Loan
DFD: Unplanned

Replies

  • brizzledfwbrizzledfw Forumite
    7.3K Posts
    Debt-free and Proud!
    Forumite
    Hello Bunny

    Well done for posting and you sound like you're absolutely on the right track. I have never joined the GC but probably should as food is always a downfall of mine. Not takeaways particularly but lots of meat, cheese, fruit, fancy yoghurt etc seems to find its way into my kitchen!

    Well done also for not being too proud/worried about accepting help from family. 0% makes such a difference to debt repayments.. you really feel you get traction fast.

    Keep on posting and I will pop in from time to time to cheer you on your way!

    Brizzle
    MFiT-T4 Member No. 96 - 2022 is my MF goal :D
    Winter 17/18 Savings Rate Goal: 25% [October 30%] :T
    Declutter 60 items before 31.03.18 9/60 ** LSDs Target 10 for March 03/10 **AFDs 10/15 ** Sales/TCB Target 2018 £25/£500 NSDs Target 10 for March 02/10 Trying to be a Frugalista:rotfl::T
  • beanieloubeanielou Forumite
    82.1K Posts
    Part of the Furniture 10,000 Posts Mortgage-free Glee! Name Dropper
    Forumite
    Sounds like a great start :grin:
    Keep going &b keep posting!
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~**
    MFW. Finally mortgage free February 2021****
    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    It starts with you, it starts from now. *** It is ok to be me.***
    ***Keep plodding***
    Out of debt, out of danger. ***Be the difference.***
  • great start there good luck :)
    Facing up to things - nov 2012 total 9334.95
    back to work after baby -Jan 2014 - total [STRIKE]6905.28 [/STRIKE](1 credit card) £3535

    Debt Free Date March 8th 2017 (31st birthday)
  • [Deleted User][Deleted User] Forumite
    0 Posts
    Newbie
    Good luck on your journey. :)
  • Congratulations on your lightbulb moment. Your original debt amount is fairly similar to mine was and it's great that you've decided to tackle things before it gets any bigger.

    I've managed to pay off just over half of my debt since January through bill switching, being more econimical with gas/electric etc, budgeting, shopping around for the best deals, a bit of selling and general cutbacks. Small changes really do stack up to make a big difference, for example making my lunch each day instead of buying it saves me around £500 per year! So keep at it and I'm sure you'll do just fine :)
  • Hi all

    Thank you so much for your supportive messages, it will help to be able to come here whenever i feel like it's becoming impossible to stick to this!

    PollyOnAMission- Thanks for your input we are hoping to do similar and bring down our debt as soon as possible so that we don't end up in a worse position. I already take lunch to work with me as does my OH, and we are trying our best to be economical about using things we are billed for - but we do need to actually switch our energy company over to try to save money that way.

    However the reason I popped on today is because after saying about probable set-backs yesterday and then I find out that because my OH was in a small car crash last week (he was fine and so was everyone else but our car was a little dented) we will have to pay for that to be fixed and it's going to cost £125:eek:!!!! so of course that will set us back this month - we should have a little extra income so that should cover it, just means that the extra wont help out with our debt - always seems that no matter how hard we try something goes wrong that costs money.

    In the last few months we have had our television die, my telephone screen break twice! our playstation (which is our main dvd player as well) stop working, and the microwave expire as well all of which had to be fixed or replaced as we use them, and now the car :mad:! This is just ONE of the reasons i'm so desperate to pay this debt off, we need to be in a position where if something breaks we can afford to replace/fix it without breaking the bank!

    Oh well - I guess we will just have to muddle through and hope that things stop breaking soon!
    Debt Amount: £12,000 = Loan
    DFD: Unplanned
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