Massively in Debt and Sad

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Newyorkdreams wrote: »

:)Thank you HBS for your insight and valuable input. I understand some of the figures seem high but I just averaged this out over the year. Our hols are expensive but then we work extremely hard and feel that we deserve them - I guess this needs to be part of our mindset change!

NYD

You've made a really good start - sometimes the admission is the hardest thing. :cool:

We all work hard and deserve holidays, but your mindset on "what is a holiday" has to change. To me, a holiday is a few days off work that I can afford, not a blowout - think about how much that £150 a month could eat into your debt!

Cut up your cards and cancel the accounts though - I think your light bulb may be flickering a little, make it shine!

I really do think you can do this - best of luck and we'll all support you

HBS x

foxgloves

When we were working hard at getting rid of our debts, we concentrated a lot on whether something we wanted to buy was a 'need' or a 'want'. Obviously if our boots wear through & it's our only pair, that's got to be a 'need', but some of my other needs, i.e as in 'I need a new dress for so & so's 'do', were really only 'wants'. I used to spend a lot on clothes, & my wardrobe was full to bursting of things I didn't really wear that much. Now it's been paired right down (weight loss also meant lots of stuff could be sold on ebay, bringing in around £300) and because I still spend so much less on clothes, I find I buy much more carefully, & a consequence of this is that things go together much better & everything gets worn. How quickly you pay the debt off & have a fresh start financially (which is THE most fantastic feeling when it happens, you feel like you are walking on air) comes down to how many cutbacks you are prepared to make, as quite literally, every £1 saved on some boring little bit of shopping or something you'll barely even notice is an additional £1 that can go on debt repayments. I used to keep a tally of all money saved/or extra funds made via ebay or selling the odd bit of handcrafted items, etc, & each month I'd pay it into a loan or credit card so I could see the extra amount it was coming down. The last couple of decades were a credit 'bubble'. Banks & firms were there to make their shareholders wealthy by lending us seemingly any amount we wanted to borrow, with scant regard to how we would pay it back. Because credit was so easy to obtain, many of us borrowed more than was sensible & now it's payback time. It comes to us all. It feels daunting immediately post-LBM, but as soon as you start drawing up a realistic but challenging budget & channelling what you save into debt-repayments, you really do start to think 'I'm on my way'. No-one's life prospects are enhanced by debt, so instead of thinking of it as paying 'dead' money to creditors, look at it as a means to getting yourself into a much stronger postition, which can only benefit you long term. As we are now finding, good habits learned while debt-busting are now working well at keeping us debt-free. I have also taken a redundancy since then, & had I been faced with a much reduced household income before I had got to grips with budgeting & debt-busting, I'd be in a proper mess by now. Good luck with it, it can be done!

iwannabeasaver

Hi NYD

I used to love to take holidays too and have had to change my mindset. I once took four in one year just to get away from my crappy life.

I have found now I am on this journey that I have never felt more in control of my life. Life is a little less crappy with each step I take down this road, and I feel less and less like I need to escape. I still ache to get away somewhere warm but have made it an end-goal after my debt free date. I just know that my holiday will be so much better when I'm not worrying what I'm coming home to.

My thought was about reducing the amount you put away for a holiday to say £50 a month. Take small cheap breaks from time to time, but make plans for a big holiday at the end of this process. Half the fun for me is in the planning and the anticipation. By the time you get to the end of this process there should be a lovely pot of money to spend on a guilt-free holiday.

It's a funny thing but I've seen many people post that once they really start to watch their debt come down they start to reassess what they thought was essential. Personally I am not putting anything away for a holiday as I want every penny to go towards debt reduction. The sooner I can bring that debt free date forward the sooner I can save for my mega holiday.

Good Luck!

PlutoinCapricorn

Working hard means that you deserve an expensive holiday? You certainly deserve an enjoyable break, but it need not be very expensive.

Perhaps it is best to downsize your lifestyle and change your mindset in stages, like the decompression that deep sea divers go through, but in reverse. Moving straight from luxury hotels to Travelodges might be too much!

Have you been to the Lake District and Cornwall NYD? Do you always stay in hotels or would you settle for B & B establishments? It is possible to get one day bus passes for the local buses and do some sightseeing and see some stunning scenery that way.

RAS

Newyorkdreams wrote: »

Unsecured Debts
Description....................Debt......Monthly...APR
Loan - Tesco...................6060......203.......6.8
Barclaycard x1.................4795......110.......24.9
Barclaycard x 2...............11400.....250.......6.8
Mum............................3335......0.........0
Dad............................8500......500.......0
Nationwide x 2.................1209......29........19.9
Nationwide x1..................3847......100.......19.9
Creation.......................3863......100.......18.9
Halifax x 2....................9495......93........9.95
Halifax x 1....................2843......40........15.9
Total unsecured debts..........55347.....1425......-

Hi you debts are a bit more than one year's salary, which is about the limit people can cope with most if the time.

Please think about what might happen if you OH is ill again and cannot work; you would be scuppered.

I am going to suggest that for each of the card accounts above you list the maximum and see if you can wranglethe debt to lower rate cards. This take discipline, so uit is not for everyone but even if you only shifted the money on the 24.9 account to 19.9 you would start to save money pretty fast.

For example

card 1 - £2500 at 24.9%
card 2 - £2500 at 19.9%

average cost 22.4%

With

card 1 - £500 at 24.9%
card 2 - £4,500 at 19.9%

Your average APR drops 2% ish

londonTiger

surprised you only have 50k debt to be honest after all that spending spree. I hear some people get into 20-30k debt just on buying clothes from the high street

londonTiger

RAS wrote: »

Hi you debts are a bit more than one year's salary, which is about the limit people can cope with most if the time.

Please think about what might happen if you OH is ill again and cannot work; you would be scuppered.

I am going to suggest that for each of the card accounts above you list the maximum and see if you can wranglethe debt to lower rate cards. This take discipline, so uit is not for everyone but even if you only shifted the money on the 24.9 account to 19.9 you would start to save money pretty fast.

For example

card 1 - £2500 at 24.9%
card 2 - £2500 at 19.9%

average cost 22.4%

With

card 1 - £500 at 24.9%
card 2 - £4,500 at 19.9%

Your average APR drops 2% ish

well there is a 3% balance transfer fee. so you'll get hit pretty hard on transfer. You should just aim to pay off the credit cards first, they are the most expensive forms. Pay off the ones with the highest interest first and then take out all the cc debt one by one. Obviously meet all debt obligtions by paying the minimum amount.

I think the lesson to learn here is stay away for 0% interest cards. They are clever scams to lure you into getting credit card debts. Attracting people who would never get credit into getting them.

As a matter of fact I have a 0% cc right now. I got it to pay my car insurance in instalments. The insurance company would charge me £200+ to pay in instalments in the form of interest. I didnt want to pay it in a lump sum. So I took out the 0% card. It gives you a flase sense of security of not being in debt because you're not getting railed with interest payments every month.

365days

May I offer a viewpoint, it is something that has struck me over the years on MSE and whilst it does fit your circumstances please don't take it personally.

I have debt of around £15k I earn less than that a year working part time. (Long long, story, have potential to earn triple and no doubt will at some point in future)

However whenever I do a SOA I am still in 'credit'. Therefore am I better off than you. i.e I could sell my house and pay everything back and still have some left over. I see many SOA's on here where people are negative at the end, even with high salaries.

My point is this. I consider myself poor, I cannot afford a holiday and luxuries. I have more available credit so could spend if I wanted to. But I consider myself skint. It seems sometimes that people who have 'less' than me overall, even while they are earning considerably more still consider themselves to be rich enough to maintain holidays etc.

Thoughts please

harrys_dad

365days wrote: »

My point is this. I consider myself poor, I cannot afford a holiday and luxuries. I have more available credit so could spend if I wanted to. But I consider myself skint. It seems sometimes that people who have 'less' than me overall, even while they are earning considerably more still consider themselves to be rich enough to maintain holidays etc.

Thoughts please

To me the basic simple fact is that if you are spending more than you have got coming in you are "poor" and if you are spending less than you have got coming in you are "ok".

"Available credit (future debt)" is an interesting notion, and to me basically means "I can increase the notional amount I have got coming in today so that I can be even poorer in the future". This is unless you are just using it to solve a short term cash flow problem with a guaranteed income increase around the corner.

Until we move away from "instant gratification" and realise that reducing spending rather than using credit to boost income is the way forward then insoluble debt is the only longer term outcome.

Everyone in debt has got there because at some time they have spent more money than they having coming in, especially including debt servicing charges. Some find themselves in this position through misfortune, such as an unexpected drop in income. Others find themselves in it through buying stuff they cannot afford.

I love the supportive nature of people on this board, and the constructive help that people offer to assist people to "reduce spending", and ways to "boost income" other than the short term fix of more credit.

Reduce spending, boost income, do not take out credit (better known as future debt!) is the way to go, and people on here are fabulous at finding ways to help others to do that.

Newyorkdreams

Thank you fox gloves for your post and insight which I continue to draw strength from. I love the £1 idea, that it something that would totally appeal to my sense of challenge. And in itself, £1 is only £1 but actually when you give it more worth it is better e.g. That £1 is actually worth £1.24 (or whatever the interest rate is) so for every £1 I save, I really save £1.24.

I totally agree too about the 'need' and the 'want'. Since my LBM, I've been questioning all the time 'do I really NEED this?' or 'Do I really WANT this'? Of course, it's mostly always the latter. It's early days though so I would hope this would improve. The banks certainly did dole out the money left, right and centre and I understand it's payback time. I enjoyed spending it and to be really honest, I wouldn't change it. We all make mistakes in life but it makes us who we are and I have no regrets. Sure, I wish I had done things differently but I never regret them. I have seen some fantastic places in the world, met some very special people and had some amazing experiences. But now, I have to resign myself to the fact that I need to pay all the money back. And I will, if god willing, I remain in employment and in good health. If I don't, then I will deal with it. I nearly lost my husband to cancer so although big debts are scary, it's nothing to having the risk of losing someone who you love dearly.

I'll keep chipping away and I'm already picking up some great tips from this forum!

NYD