Reality Check

Jond

Morning everyone!


This is the first entry of my first debt diary, which has come about after my wife and I suffered a shocking reality check last week! I should say that I have been involved in the forum for a few weeks, but I've activated a new username this morning as my previous one was too recognisable, and I'm not ready for the whole world to know quite how bad things have got recently. I'm desperately hoping that this diary will help to keep me on the straight and narrow, along with the wonderful, supportive folk who spend so much time in these forums offering their insight and common sense!

Common sense seems to have been a trait sadly lacking from our financial approach in the last few years. Our predicament stems primarily from both of us (but mostly me) sticking our heads in the sand and believing that everything will be ok, but also from various changes in circumstance.


Six years ago we were on a fairly even keel financially. We didn't have massive debts - perhaps £2000 between us on credit cards. I had been daft with money in the past, and had a couple of defaults for very small amounts registered against me in my late teens, but my credit rating had picked back up.


Then we decided that it would be good for me to change careers. This was a brilliant idea - definitely a good decision. How we handled it was not brilliant however. We pretty much continued on as we had before, despite the fact that my wage had dropped by £20k! Then we had a year where my wage dropped even further, and we still continued on.


After three years my wage steadily began rising again, which was great because we had accumulated so much debt on credit cards that our minimum payments were becoming ridiculous. We knew that there was a problem, but we were both earning good money and managing to meet our commitments.


In 2013 we were delighted to welcome our first child into the family! I gave up my season ticket and thought that this was a good step towards paying for the extra cost of having a daughter! My wife's maternity pay was ok, but not great. We borrowed a bit more.


My wife decided to go back to work part-time (3 days a week) and so our daughter started at nursery (£550 a month roughly). We paid for the majority of this out of childcare vouchers. Things were getting desperate - we were starting to put monthly food shopping on credit cards and I even used pay day loans three or four times to help us out of a whole - although I always paid them back on payday and managed to get out of that cycle quickly.


Thankfully in May this year I got a great promotion at work and added £15k to our annual household income - about the same as my wife lost by going part time. Phew. Things continued on as normal. The promotion had come at just the right time - we were reaching breaking point! But surely now everything would be ok.


It was ok really. We left our heads buried in the sand and only put the odd extra expense on credit cards. An MOT maybe, or a brother's birthday present.


We've been thinking of moving house for a while - considering schools for our daughter in the future and some extra space so that she could have a brother or sister to play with. So two weeks ago I started looking at mortgage options - which required looking at what we could afford each month in addition to our current commitments.


This was the reality check that I mentioned right at the start. To my horror I discovered that we owe nearly £35k in unsecured credit (on top of £103k outstanding on our mortgage). Argh!

I came straight here for advice, and got it from some amazing people. Thank you! I did an initial SOA, which turned out not to be accurate in the end, and learnt about snowballing our debts (which was the glimmer of hope I needed!). I heard about YNAB and looked into that. Last night my wife and I sat and set up our budget. I cancelled lots and lots of little monthly costs there and then, negotiated a reduction on our internet and phone package, and STILL only managed to end up with £60 free from next month's budget to spend on debts. This will improve in a couple of months, but it was a little deflating (and scary) nevertheless.


So, this is the beginning of our journey to freedom from debt! We're determined to go the distance, for ourselves and for our daughter. We're lucky in lots of ways, and now we've had our LBM we can move on and deal with the situation!


Thanks again to some truly inspirational people on this site - without you we'd still be groping around in the dark. And apologies for a long and boring initial post - I promise to try and make future updates more entertaining!

twiggy86

Good luck Jond!

PinkPoppies

Happy New Diary!

We have a similar level of debt and started our journey a few months ago- will subscribe and follow you!

Very best of luck! :j

Jond

Thanks guys! Pinkpoppies, I've subscribed to you too!

mum2one

Good luck with it all sounds like a lot of productive ideas there xx

Jond

As I mentioned above, last night was taken up with setting up a budget using YNAB. It also involved me cancelling lots of small Paypal recurring payments for things like Evernote and Hootsuite. I've been using them for my photography business, but figure I can get by without them. It's amazing how these small (£4 - £5 a month) recurring costs can add up. I found a couple of iTunes subscriptions were going out that I'd forgotten about too.
Another cancellation did hurt though. My premium Spotify account had to go. I LOVE music, and I really love the freedom and ease of Spotify. I definitely got my money's worth with it. But at £10 a month it just had to go. I'm hoping that when this is over it will become something I can budget for again




Free lunch at work again today! And with little E eating three meals at nursery, that means that we've only paid out £2.65 for Mrs D to eat a main meal at her work and then the two of us can just have a sandwich or toast when titch is in bed
Payday on Friday - looking forward to paying some more off! Must sort out a signature for here too...

PinkPoppies

Cancelled my Spotify too Still treat myself to the odd song or two on itunes occasionally though.

Definitely get your signature sorted... it's very sad but I get huge satisfaction out of updating mine whenever I pay a few more £s off! :rotfl:

Jond

Thanks Poppies - just done it! Seems a long way to go, but looking forward to next week when I can update it!

Jond

Why do I feel the need to try and save money by spending it?!
We were looking at our energy bills last night, and delving a little deeper I found that we were actually £203 in credit with our gas - the only account that we have in credit! Ha!
Anyway, it's a long story but part of the problem with our gas usage is to do with the placement of our fixed-to-the-wall thermostat. It's in the coldest part of the house which never gets any warmer, and therefore it can be toasty hot in the lounge or bedrooms, but the boiler is still chugging away thinking that we're a few degrees from hypothermia.
Anyway, I've used part of that £200 credit to purchase the Hive system (as a BG customer it's on offer at the moment for £150). I'm hoping we can save that amount in gas over a couple of years following this 'investment'. The other £50 I've left in the gas account to contribute towards any shortfall over the winter.

Jond

Wahey! It's Friday! Happy weekend to my diary and all who may read her.

Today was not a NSD, but it was a tasty day First of all at work the kids had a cake sale, and so it would have been rude of me not to donate 90p to charity. Then I was left with three small cakes, and it would have been churlish not to eat those! :rotfl:
When we started this debt-free journey we decided that payday would involve paying off the credit cards, and then treat ourselves to a once monthly take-away. Tonight's offering was a meaty Papa John's pizza - with lots of different meats and a healthy discount: £9 delivered! :cool:
We always find Papa John's to be much less greasy than some of the other branded pizza places. Tasty too.
I've spent much of the evening trying to get my head around YNAB. It seems to require a real mindset change, and I'm struggling! Instead of forecasting your income and spending you budget for it instead. This sounds simple, but when you're trying to budget for November with the money that you get paid in October, and then realise that some of that money actually gets spent in October, but that you'll get paid again in November... Urgh. It got complicated. I think I may have solved it, but time will tell.
Absolutely shattered tonight, and very much glad that it's half-term! Bit more spending planned for tomorrow - our daughter needs some new clothes and pyjamas. It's budgeted though, so that's ok!