Are we really in debt? YES WE ARE

tolip

chevalier, thanks for reply.

I have now moved the Virgin £5140 that has just come off its 4.9% deal to the Co Op, 5.9% for 6 months and no balance transfer fee.

Now all cards are LOB apart from this Co Op one.

In the snowball chart would I be better to input the Co Op debt as 5.9% knowing that I will shift it in 6 months or use their calculator to allow repayment of this prior to the 6 months, which is what the snowball is doing? My only concern is that the Lloyds overdraft £5500 is at a higher rate (will confirm this today)

I have now decided the following, thanks to replies on the thread.

1. There will be no remortgage of the property
2. I will not be over ambious with the snowball chart.
3. I will leave the secured £28k loan as it is until I have eaten my way through 1 year of the snowball chart and then look at flicking that debt to a credti card allowing flexiable / overpayment and releasing the chrage on the property.

I have spend most of my time arranging the structure of the debt, it is a lot of money, over £100k. As I said I started off putting everything into the snowball, thinking about how I could get the secured loan onto credit cards etc, the answer is to keep it simple and as someone else said in previous post, dont have DFW burnout. We need to see progress, its like losing weight, so one step at a time.

MY wife has been keeping the spending diary and reads it to me like a novel, well shortened version ! each evening, she is very committed.

I think the hardest ting I am finding it that when I go shopping is not to just pick up everything.

Now I know the SOA is a work in progress, so I will explain how draft one was arrived at.

Monthly Outgoings:

Mortgage/Rent - £1400 - Repayment and just arranged fixed 2 year deal at 6.5%

Council Tax - £120

Gas - £35

Electric - £35

TV License - £11

Insurances (life, Crti Ill) £130 Because of my occupation my insurance is expensive. I have insurance for crit illness based on OWN occupation, if i applied today I would not get it again. I have loss of licence insurance, like income protection, but as a pilot I cannot get income protection, then we have some life polocies which are at the cheapeat rate, just redone them.


Phones - £80 - you are right we are going to look at our contracts and see if we can move to pay as you go

Food - £500 This is where my wife is working hard on. If we used our larder and emptied our freezer we would not need to buy anything for a few weeks

Car Insurance - £115 yes quite high, (see below)

Petrol - £100

Servicing Credit Cards / Loans - £2600

Total: £5,126

I will remodel this and thanks for comments, money does need to be budgeted for car bills, birthdays, etc

The car is a strange thing, you do well you buy a nice car, when people see you in a not so good one then immediatly think you are not doing so well. We have talked about changing it, the insurance would be less as well. Its an Audi S4, so hence high insurance. We dont owe anything on it.

I would love to hear for any other pilots who have found themself in a similar financial position, if you are reading this and you are one, please contact me in complete confidence, you dont even have to discuss who our employers are, beacuse aviation is a small business, and you dont even have to use your real name, if so desired.

sammy115

We were (and still are) in debt, due to me and OH losing jobs at the same time. Big big shock and a position we never thought we would be in.

We had a BMW with no finance, but we were loathe to get rid of it. My OH used to sign on in a BMW! If you don't owe any money on the car and its fairly new (no high maintenance bills) keep it - just don't renew it like you might have done once.

Good luck on the SOA and snowballing. As many people have said, take it slowly. Apart from your food bills (we now feed 5 of us on about £80 per week and that is still considered too much by many people on here) and the mobiles I can't see much to cut down on. BUT - if you don't spend on your credit cards anymore and pay the debt effectively you will pretty much see a big difference rapidly. It then becomes quite addictive and then becomes a HABIT! And that is what you are ultimately aiming for. For money saving to be addictive.

As for 'appearing' to be mean, can I recommend - if you have time - to read 'The Millionaire next door' by Thomas Stanley. Its an American book, but the principles are the same.

Good luck and keep posting - that too is important.

MUSTBEFUNNY_2

Hi again,

Sorry if my post was abit rambling...I tend to post in a hurry and things aren't always coherent:rolleyes:

I agree with Sammy the previous poster - keep the car if you can - just don't replace it-

oooo Sammy that book sounds interesting ...I'll just pop over to Amazon...

Good Luck

:money:

tolip

Thanks folks

I have now spent nearly two days at this! This is the first time we have ever confronted these debts, we both have a clear vision and look forward to the day when they are paid off.

Now I am finalising the SOA and once that is done I will know how much I have to snowball with, I know it has taken me 2 days to do things a little back to front ! but we are getting there.

Will post SOA (revised) and snowballing once complete

The car we will keep, to be honest i really do like to drive it, I love getting into it after a long day at work. There is quite some equity in it, but pride is telling me its a step too far to get rid of it. I know there are some of you will disagree, but for the moment it is staying...

skirt

My dh and I both earn very good salaries but as you have found out, that simply means that you can borrow as much as you want.

I bet (like us) you simply got caught up in the perceived lifestyle and thats a hard habit to break but once you get a grip and realise how much of your hard earned money you were simply throwing away, you will never go back to your old ways.

Whe you work in an industry where appearances do matter you just have to be wise and pick what you NEED to have rather than what you WANT to have.

My dh swapped his MG for a S reg citroen xsara and simply told his staff he had realised how stupid it was to have a flash car on the drive when we had 2 kids and half the family couldn't get in it. Noone batted an eyelid. People value money savviness much more than I ever realised.

Anyhow good luck!

moanymoany

http://www.nytimes.com/books/first/s/stanley-millionaire.html OOPS - it doesn't work properly. Type the title and author in google and open the NY Times hit. Sorry folks!

This is the first chapter, it is a review in a US newspaper. Worth a read, oh boy moneysaving US style! DH is in the US at the moment and I'm going to get him to buy it as we are both very keen. The DH works with a chap who is V. well off and so are his parents. They all fit the image that Stanley describes. Unless you knew they had millions you would never know, cheap scruffy clothes, old cars..... nuff said.


Tolip, what do you do about your landline phone? We are with 1899, with a BT connection. I am currently phoning my DH in the USA for 30 minutes a day - 1p a minute with a 3p connection charge. ALL my phone calls in this country are just the connection charge, the minutes are free. There is a link on the Martin Newsletter.

Really agree with the dealing with these heavy things one step at a time. Glad the spending diary is working out. Check out the meal planning and budgeting ideas. They are surprisingly easy to do.

Making progress.;)

moanymoany

sammy115 wrote: »

One of the things you need to think about before you even consider going down this route is what you are spending your money on, on a monthly basis. How did you end up in this much debt? It isn't the monthly payments that are making you skint, its the spending and until you address this issue there is no point whatsoever in even considering consolidating your debts.

I am sure there will be someone on here who has done exactly what you are suggesting and paid off their debts and not spent on the CC's. But they will have learnt the self control needed to live totally within their means.

It isn't easy when you have lived a comfortable life, buying what you want, when you want having to cut down. We feel like skinflints a lot of the time, but it becomes a habit and we are now begining to see the difference.

A detailed income and expenditure SOA would be useful.

I so agree Sammy. There is another thread where they have done the remortgage thing and are back in debt, now asking if they should sell their house and use the equity as they are planning a move to Australia in 18months time anyway. I suggested to them that they weren't really solving the basic problem of their spending habits and that they would probabably be better off by using suggestions for debt reduction on MMT.

I got the impression from the reply that this advice was not well received and I'm not surprised, it is much easier in the shortterm to take the remortgage/sell way out. In the longterm it is a disaster as Angela tells us in her post. Learning new habits and cutting back is not easy, but when it has been done life is so much better. Worry and the stress of debt leads to poor health and can put strain on couples and families.

All respect to Mr and Mrs Tolip and everone else who bites the bullet and gets on with it.:T

blackangeluk

tolip wrote: »

Thanks folks

I have now spent nearly two days at this! This is the first time we have ever confronted these debts, we both have a clear vision and look forward to the day when they are paid off.

Now I am finalising the SOA and once that is done I will know how much I have to snowball with, I know it has taken me 2 days to do things a little back to front ! but we are getting there.

Will post SOA (revised) and snowballing once complete

The car we will keep, to be honest i really do like to drive it, I love getting into it after a long day at work. There is quite some equity in it, but pride is telling me its a step too far to get rid of it. I know there are some of you will disagree, but for the moment it is staying...

I am in a similar position to you, in that over the last 2 days I took my head out of the sand and realised just because I can pay the minimum payment doesn't mean I'm not in debt! I have found the snowball calculator really motivating and have printed the results off and put it on the wall to remind me of what I need to do. I can see a debt free future in approximately 2 years and then we will be considerably better off. Like you we have equity in our home but I am worried that if I took the simple route of re-mortgaging I would not learn from my past mistakes. The best thing for me and my DH to do is repay all the money through hard work and savings and I think I will feel exceptionally pleased with myself afterwards, it will be far more rewarding than borrowing more.

Good Luck

Sarah :T

chunky79

Chevalier makes a comment to use online shopping, i echo this. Since online shopping and meal planning i have cut my bill form the same as yours to half that. Thats is for 2 adults 4 children and a dog. This week i spent £100 to get a £15 voucher off with the BOGOF's the bill come in at, with all the discounts i actually paid £58.96 = a £42.04 saving. I only got on BOGOF what we would use luckily there are quite a few this time that we actually eat/use.

I have also started to use a spending diary and for the first month ever we had over £300 left on pay day. This is what i would have basicaly wasted on none essential crap.if i can keep this up once i return to work in a months time from additional maternity leave that will give us £600 to £700 a month to get our bills down. Once you take account for eveything you do it makes it harder to spend and makes you think about everypenny.

nearlyrich

Welcome to DFW Tolip, you have a couple of real advantages as I see it, both you and your wife are in it together, that is a massive bonus, some of the guys on here are hiding debt from their partner which is really hard to do and so stressful. The other is that you have a good income and once you stop paying out a fortune in interest you will be able to live to a good standard of living without loans and credit cards.

Keep posting and you will get support and advice from some of the most knowledgable people in the subject of dealing with debt.