How many LBM's do I have to have before I learn!!!

StressedSteph

Hi all,

Been here, done this what feels like a million times. Everytime the finances get in a terrible state I have such good intentions to get on the DFW bandwagon and get it sorted. I do manage it for about 4-6 months, I think looking back I either give up being careful when something big breaks down or the finances become a little easier and I let it slip.

I cannot tell you how angry and ashamed of myself I am .

We now owe 18k. God only knows what it is from. I think mainly from my inability to say no to husband and children and generally have zero willpower.

I really don't feel like I can get on the DFW budgeting to try to pay £1 off this bill and £1 of that bill, knowing it is going to take 2+ years of TOTAL frugalilty to get it half paid off.

You are going to shout at me now, but please be gentle.
I have a new plan.....

Consolidation loan....I know, I know, its a swear word on this website but it seems like our only option.

We in principle* have been offered an 18k loan over 12years @ 8.9%. = £230 pm. (Secured / Flexible )

This would lower our monthly outgoings by £500 + thus giving us some breathing space to budget decently and sleep at night.

The main difference being, that I think will make this plan work. Is that I am then going to hand over the household finances to my much more frugal, sensible, less impulsive husband.

We will have a small weekly personal spend budget and if we want anything over this amount then we HAVE to talk to each other to get it agreed. This should then stop my miscellaneous spending.

what are your thoughts??.
I know its less than ideal and a loan should be the last resort, but I really do feel like we are there.

Please advise not bash xxx

Lv StressedSteph xx

Tixy

Hi Steph

That is a significant reduction in your outgoings - are you certain you won't just end up spending all of the £500 that you have freed up?

Have you done a recent sensible statement of affairs - not one that is crazy frugal but something you think you can stick to? Is it showing an overspend currently of the whole £500?

I think rather than handing over finances to your husband you would be better off tackling them together and taking joint responsibility for them. You say to start about your inability to say no to him but then say he is frugal - does he ever look at any of the SoA's you have produced.

I think the idea of a small weekly personal spends budget is a good idea. Implement that whether you carry on with your debts are you are or go for a consolidation loan.

That to me looks like a high APR for a secured loan. Even if you decide a consolidation loan is the answer are you sure you cannot find cheaper and preferably over a much shorter period that will still be affordable.
At the moment you seem to be comparing extremes between 4 years of total frugality and 12 years of still being stuck in debt - perhaps you can find a workable middle ground?

StressedSteph

Tixy wrote: »

Hi Steph

That is a significant reduction in your outgoings - are you certain you won't just end up spending all of the £500 that you have freed up?

Have you done a recent sensible statement of affairs - not one that is crazy frugal but something you think you can stick to? Is it showing an overspend currently of the whole £500?

I think rather than handing over finances to your husband you would be better off tackling them together and taking joint responsibility for them. You say to start about your inability to say no to him but then say he is frugal - does he ever look at any of the SoA's you have produced.

I think the idea of a small weekly personal spends budget is a good idea. Implement that whether you carry on with your debts are you are or go for a consolidation loan.

That to me looks like a high APR for a secured loan. Even if you decide a consolidation loan is the answer are you sure you cannot find cheaper and preferably over a much shorter period that will still be affordable.
At the moment you seem to be comparing extremes between 4 years of total frugality and 12 years of still being stuck in debt - perhaps you can find a workable middle ground?

Thanks for replying Tixy,

The issue with my husband is, is that I have tried to keep most of the difficulties away from him, so if he asks me "Can we afford to buy X", In the past I have said yes, when REALLY I should have said no. I think if he had realised that the full extent of our situation then he would have done without that item. Me being foolish really.

I have just done the StepChange debt remedy and it says in principle we should be able to afford the pay our minimum payments, but that doesn't take into account of living and the daily temptations that life throws at you.

You are right about trying to find a middle ground between the two extremes I am looking at. But unfortunately due to a less than perfect Credit score, its abit of a case of "Beggars can't be choosers" with the loan situation.

Will bite the bullet and chat to my husband tonight, see which way he thinks we should go. :eek:

quantic

The consolidation option is not only bad for the obvious reason of repeating your habits and digging a bigger hole but also your repayment amount would be around £33k which seems immense considering you are only borrowing £18k... are you happy paying £15k in interest over the 12 years?

Reformed_Spender

Please do not get a consolidation loan (yet) as you will definitely be back again, in even more debt and have much bigger worries!

Before you start to solve your current debt problem you have to solve the reasons for the debt. In 12 months time once you are absolutely sure you have solved your spending habits then a shorter term consolidation loan might work but by then you will probably realize you don't need one anyway.

Do you have spare money after you have made all the minimum payments? If so then your road to becoming debt free will be easier than you think.

Do you have any savings or have you ever had any savings? The power of having some savings is immense. Paying off debt is no fun but seeing savings build up each month really is and it becomes addictive!

Although not a long term fix why not see how much money you can save over the next few months by not spending. Ok 6 weeks before Christmas is not ideal so maybe the first challenge is just to spend within your means until the new year. Nothing bought with credit at all!

Then when January comes save as much as possible for 3 months in a separate account or even a jar depending on the amount. This might start to change your spending habits and at the end of it hopefully you will start to get addicted to saving instead of spending.

Saving really can be a lot more enjoyable than spending, saving actually is sort of spending on yourself and its the one purchase you never get bored of looking at! Like I said earlier this is not a long term fix by itself as the debt will have to be tackled somehow and at some point. However by the time you are addicted to saving you will be ready to tackle the debt as you will probably realise that debt repayments are hampering how much you can save each month. Also you can start by making a big dent with those savings rather than smaller monthly payments which seem to have little effect.

What were your last 25 purchases? How many of these were an absolute necessity and what were the total cost. This is a good place to start to see how you can save money and eventually become debt free.

I realise my advice might not be the most efficient way of tackling debt but the key is to break the cycle of spending and for me this really worked. I will share my debt free story in a couple of weeks when I finally become debt free but just to let you know I have been in debt for 11 years and it was quite a significant sum!

All the best

Find_The_Real

As one who has gone down the secured loan route to try and tackle the debts and failed miserably due to one half of the partnership not having much control over their spending, as I now have wonderful hindsight over this I really would advise looking at how to reduce outgoings and throwing the surplus at the debt and not to think about the consolidation loan. At the moment it is 8.3% but as it is now doubt variable will you still be able to afford that when the rate rises, which it will.

It is a very big millstone to have around your neck and not a quick fix option and generally it doesn't solve the problem of spending more than you can afford.

In the first instance I would sit down and go through the finances and get into the idea of reducing those outgoings and learning to say no. I am not saying it is easy to break those habits but it can be done. A proper SOA and spending diary would very much help to get you on the right track.

Good luck.

*hayley*

StressedSteph wrote: »

Hi all,

Been here, done this what feels like a million times. Everytime the finances get in a terrible state I have such good intentions to get on the DFW bandwagon and get it sorted. I do manage it for about 4-6 months, I think looking back I either give up being careful when something big breaks down or the finances become a little easier and I let it slip.

I cannot tell you how angry and ashamed of myself I am .

Hi Steph.

I know very little about consolidation loans but I actually decided to post for another reason. After having several months on the bandwagon I too have fallen off it and it's the first time I've logged on here for about two months because I was a bit ashamed. So I just wanted to say I know how you are feeling about having to do it all again. I may pluck up the courage and do my own post later.

Puzzcat

From the consolidation queen I would say don't do it! It rarely works and you could end up in a 60k pickle like me. I always thought it was the answer but it isn't and now I am on a dmp, don't follow in my footsteps...

Bored

The problem with consolidation loans is that they don't force you to address the true problem of overspending. Are you sure that if you get the consolidation loan that you won't rack up the debt back on credit cards and overdraft?

sistafromanothermista

Hi Steph, great (or not) to see you again.
I think your plan *could* be good for you. However, you need to address the issues surrounding overspending (believe me i'm with you on that issue)
Good luck to you hun. xxx :j

StressedSteph

Hi all,

Sorry slow replying to all your kind posts.

I can see the route of struggling to pay off debts bit by bit is the best sure fire way of learning from your mistakes. But I have been struggling for ages now and I keep getting deeper and deeper.

I really feel that if I hand over the finances responsibility to my Dh then we won't get into another mess again. He always stresses if he has to make a large purchase whereas I would just plough in on impulse and not even think about it.

The loan on offer is flexible where we can make as many over payments as we want. So hopefully after 6-12 months of getting settled into a routine we can then start over paying and also knocking down the amount of interest we will eventually pay (which I agree, Is ALOT).

I am late making payments on bills left, right and centre at the moment and the stress is ridiculous. I am just having to pay whoever shouts loudest . I don't think I can take much more worry.

We might not be successful in getting the loan yet, they are working through our bank statements etc for proof of income and have to apply to our mortgage company for them to agree on the charge on the property.

I just feel like crying all the time, we are in such a mess.