Debt free diary - time to sort things out

Bex296

Hi everyone!

I've been lurking on MSE for ages, but never really got round to the DFW area. I think I was in denial. This is very rambly, sorry.

I graduated, and got on top of my overdraft and paid my Mum back for buying me a car in a year, as at the time my job provided a house with no bills (I didn't realise just how cushy that was!!). So apart from a residual personal loan from my student days and about £1000 on a credit card, I was pretty good at that point. I had saved enough to cover a bit more than minimum payments for a while, so I then spend 6 months overseas volunteering for a charity. Whilst on many levels it was the best thing I ever did, it didn't do my finances any favours. I received 'pocket money' from the charity to cover food and had free accommodation. As living costs were so low, I had spare cash for day trips to historical sites and the odd meal out. However, extras like a trip around the country when I was done went on my credit card, as my (perhaps unwise) thought process was 'Screw it, I'm only going to be living here and able to do this once'.

So I got back with a big chunk of credit card debt, which in itself should have been ok if I had stopped there. I came back thinking I had got over the weird materialism we have here, as I'd been working in communities with nothing and had been living out of a suitcase- I'd come round to thinking that 'stuff' is unnecessary. I had a paid PhD to come back to, and should have been able to clear the credit cards.

The first couple of months were ok, though until my first pay packet I did put a lot on my credit card as I had no cash.

But then I got used to having regular decent wages (unusual for a PhD, I know), I got a student overdraft to pay off a chunk of my credit cards.... But then I got sucked into the credit card spiral. 'I can't really afford this this month, but I'll put it on the card pay it back next month' - only I never did.

I went back to visit the charity I'd worked for twice, which cost a fair bit but I was desperate to go back and see everyone and try and recapture what it was like. My car needed some work as I was driving 90 miles a day, and it was drinking petrol like no tomorrow. My credit card companies upped my credit limit and I just followed it. I bought stuff. Some was needed, lots wasn't. I went for meals out with my finance, we went to a festival, I went to visit a friend I hadn't seen in three years in Canada. I just went a bit mad and spent all my money and a LOT more really. Eventually my car blew up, and luckily I got finance for HP for a new one.

I'm also attempting to try to save for a wedding, and though our parents have said they can give us some money, we'd rather pay for the wedding ourselves and have the money they've offered us towards a deposit for a house, as a wedding seems a little frivolous, really. And we feel bad 'wasting' the money our parents have offered on what is really just a big party.

So, a few months ago my debts looked like this:

CC1 - £5,700
CC2 - £1,400
CC3 - £1,400
Personal loan- not 100% sure, it's regular payments and is now £988.
Overdraft - £1700

Total (terrifying) debt: £11188

Excluding my existing debt of £1000 or so, and the loan, that means I built up a debt of £9200 in two years. I'm not sure that can be right, there must be some other debt from previously... But maybe not, I might have lost control to that extent.

I've managed to pay things down a bit now- current status and plan in next post.

Bex296

My current situation is this:

Overdraft: £1700, 0% until April 2016
Credit card1: £879.47, 24.9%
Credit card2: £5609.08, 24.9%
Credit card3: £935.18, 30.34%
Personal loan: £944, 6.84% (this will finish in October next year)

Total: £10,067.73 :eek:

But at least it's getting a little smaller....

In my budget, I had a deficit of over £2000 per year. Having scrutinised it, I was overspending on holidays/going out, and hadn't budgeted for annual things like professional body fees, insurance and car repairs. They just appeared and I put them on a credit card!

My income is £2155 per month take-home, so I should have plenty to live comfortably on and get on top of debt if I'm a lot stricter with myself and don't go on holiday for a bit... Or at least save more for it instead of putting it all on plastic!

My new budget (in summary), will be:

Rent, bills, food etc (to joint account): £625
Phone: £25
Diesel: £216
Car insurance, tax and repairs (put to one side): £60.75
Travel and pet insurance: £14.62
Pet food: £20 (they're rabbits and don't eat a lot, bedding I buy horse bales as they last for months!)
Car HP: £138.51 (this will end in April 2015)
Personal loan: £70.51
Wedding savings: £400
Christmas and birthdays (put to one side): £46.67
Professional membership stuff: £48.42 (put to one side)
Savings for a rainy day: £50
Spending money (going out, clothes etc): £100

Credit card 1: £40
Credit card 2: £170
Credit card 3: £100

This is over the minimum payment for all of them, but the biggest overpayment is on the one with 30% interest.

Total out: £2126.20
Left over (in theory): £28.80

Does this seem sensible to other moneysavers? Can you spot any areas that I can cut back on? Diesel is an obvious one, but I can't really as I have to drive a lot for work. I appreciate that saving isn't the best with so much debt, but the wedding is booked for next August so we need to get it paid for as we've signed contracts etc:eek:. I also feel like putting £50 a month away for a rainy day is probably sensible given that historically I'm terrible at that...

Any thoughts would be gratefully received, I feel like just putting this on paper where other people can see it will help!

ElphabaThropp

The plan looks pretty sensible. How are you keeping track of what your spend? I'm lethal and if it's not deducted from the right pot immediately it gets forgotten about.

Wedding savings does seem high, are you both putting this amount away? What is the total figure you need? Can you save any money by making things yourself? Some of the best weddings I've been to have been the low budget, handmade ones?

Can you cut down on Christmas and Birthdays, you are a poor student after all! We only really buy proper presents for the children and it is token presents for adults. With money being tight for so many people you could find lots are relieved at the suggestion of cutting back what you spend.

Good luck with the plan!

happinessismygoal

Hi Bex, thought I would pop by. That looks like a good budget, it is quite a shock when you add everything up as too how much you spent isn't it! I couldn't believe mine as all I had to show for £2500 on a CC was a bed and washing machine that came to £700!

Is there anything you can cut back in your home budget, e.g. sky package?

Good luck!

Bex296

Hm, I'm not sure how I'm keeping track, which may be part of the problem! Direct debits and standing orders go from one account, and spending money (so diesel and 'spends') are in another, but I seem to burn through it really quickly and then it's *so* easy to just transfer some more.... Damn internet banking and smart phones! I might try a spreadsheet on my phone and try to stick to it!

Re: the wedding, unfortunately as it's next summer we've a pretty tight saving schedule. Things were going well but then we both dipped in to the fund for stuff as it was a matter of seconds to transfer a few pounds here and there into another account, so now I've moved it to a 90 day access account to stop that! I can probably shave some things off that budget by making stuff but a massive chunk is on food/drink, which has to be from our venue sadly- we got all over excited and booked it then a few months down the line realised perhaps it hadn't been the most sensible move. A friend is having a dry wedding (or at least providing no booze), which is another option but would be vastly unpopular with my bf...

Re: sky, we do pay a LOT for sky/broadband, it's £54 a month and I'm not quite sure why. Will see if I we can cut back on a few channels as I seem to remember we added something recently that maybe we can get rid of. I might also be able to cut back on food budget, as I probably do spend too much on food. Hopefully the purchase of draft excluders/a rug (we have holes between our floorboards!) and a couple of hot water bottles will help with the heating bills too.

Bex296

Ooh, and Christmas/birthdays... I've been making some damson vodka and sloe gin so tat could be some yummy and cheap presents for friends. Can probably cut back a bit, my bf and I usually do big presents for each other but cutting back jointly would probably be a very good thing!!

Bex296

I've made a few more steps... I've budgeted hard for the next couple of months (Christmas presents, how much my pre-booked social things are going to cost, including stuff I always leave out like trains!). Extra social things will just have to come out of what is left.

I've also been on a phone-flogging site to get rid of some truly ancient handsets, and signed up for some undergrad exam invigilating. It'll be a dull few hours but it's well paid! While doing this, I realised that all the money I earn extra here and there- selling an old desk, odd extra bits of work- tends to evaporate. I think that's because it just goes into my current account and I spend it without noticing.

So my new policy is that every extra bit that goes into my account, however small, will be split as follows:

Extra spending money: 25% (need an incentive/reward)
Credit cards (highest interest first, obviously): 25%
Savings for a rainy day: 25%
Wedding savings: 25% (because although not as important as debt, they need a boost, and the quicker we reach our target the sooner I can stop worrying about suddenly not being able to pay for our lovely hog roast/the photographer etc...).

Larger amounts will be split differently, with probably 50% to credit cards, 25% to wedding savings and 12.5% to spending and rainy day funds.... I guess it depends how much these mythical larger amounts are if they appear!

I've also been scouting about for cheap ways to add a bit of extra decoration to the wedding venue. It has a lovely garden with lots of flowers so in the daytime it's not an issue, but something extra at night might be nice. Now, I love lamps/lanterns and will have some cheap ones I picked up in Egypt as table centres, and thought it would be lovely to have extras around the grounds- if expensive. The solution? DIY ones made from hole-punched, painted tin cans hung up with a nice bit of ribbon. Very cheap, environmentally friendly and making them will avoid nights out and therefore save more money!

Bex296

Hm, it seems I should also have a DFD target so...

Paying back at the rate above, my DFD would be February 2016. But where's the challenge in that? I can make a bit more cash here and there, and I can spend it a lot more smartly than I am now. So, the challenge:

I'm aiming for DEBT FREE BY APRIL 2015

This is when my PhD finishes, so I will have no fixed income after this date (unless I have a job to go straight into). So it makes sense to get rid of the debt by then....

Bex296

One of the things I decided to do to try and become debt free was to track my spending (and our joint account spending) to see where the money goes. Because looking at my bank balance on about the 5th and going 'OMG where has it all gone??' is never encouraging. So there is now a spreadsheet on my phone.


It's been a bit of a surprise.... For a start, the reason my food budget doesn't work because I'm constantly 'topping up' the weekly shop, mostly on a whim rather than because it's needed. I didn't realise this until I started recording everything. I also need to buy less random stuff- for example, the other day I went into a shop to buy a cheap lamp (perhaps not necessary, but affordable, I thought) and some food colouring as I was going to bake a cake for a friend's birthday. I came out with a cake tin, a cushion and a battery for the smoke alarm too! That last one is essential/life saving, but we didn't really need an extra cushion, and as it turned out, the cake tin I already owned would have been big enough. Doh! I also got some wine as we were having friends over (hence the birthday cake), which was unnecessary as I'd already suggested people bring drinks, and now we have a ton of wine which we won't drink for ages as we're both on a diet, plus all the left over alcohol others brought!! Perhaps some of the wine will be gifted at Christmas!

Still, it's proving enlightening, and with all the bills paid and money spent last weekend there is now £100 left for food. The cupboards and freezer are full (overflowing? ) so it's perfectly doable- I'll have to meal plan, and perhaps try out a few veggie recipes I've been meaning to inflict on my OH for a bit!

My own spending is actually less bad. I did buy a couple of jumpers that aren't strictly necessary, but given the temperature of my office probably justifiable. I also realised before I went rather than after that I can't afford to go to the cinema today if I want cash left for the rest of the month, so I'm going on Orange Wednesday next week. Much more sensible.

I've also sold my bike (£25), an old set-top box (£7.50 into the wedding pot!) and a set of scales (£5, re-spent on a second hand shredder...). Must put the phones into the jiffy bag and post them tonight, and re-claim some travel expenses tomorrow!

Perhaps this will work after all!

Bex296

Another step taken... This time I sorted my phone contract, via the handy MSE code for T mobile! The £70 Amazon voucher will be very handy (hoping it arrives before Christmas...) and overall a saving- including my cancellation fee, it will cost me the same as my old contract until March (when my contract ended anyway) and then £11 a month after that. Which is really £5 a month due to the £70 voucher. Hurrah!

I have thus far neglected to get my train ticket claim for £85 in at work though, which I must do soon so it makes it into my next pay packet...

Fae

Hi Bex
Looks like you have made a great start, and you are really finding out where your money goes. Love your idea for the lamps for your wedding, they will look so great. There are some great crafty threads one here so you will probably be able to find lots more ideas.
I'm of to subscribe now so that I can keep popping back on to follow your journey.
Fae