New Year, New budget.... Learn from my mistakes!!!

midlander81

Hi Everyone,


I imagine that next week lots of new DFW's will be posting on here in an attempt to sort out their finance in the New Year. This site has been a lifeline for me over the last 6 months so I though I would use my own experiences to help any new DFW's make better choices than I did!


I am sure that some of you reading this will have just had your Light bulb moment ( LBM). That horrible moment when you realise how much you owe. I have had several LBM's over the last 8 years so I know how it feels! I would urge anyone who is just facing up to their debt to act now, hopefully whilst it is still manageable. I certainly wish that I had. Here is a timeline of my debt... please use this as a guide of WHAT NOT TO DO....


2006 - owed approx. 5K on an unsecured loan and a few hundred quid on a credit card. I also owe a family member £7K, Poor budgeting and essential house repairs meant that I started to use Credit cards to pay for repairs etc. Partner ( now wife) also started to use credit cards at this point.


2008 - Both of us have consolidation loans plus at least 5k each on 0% cards. neither of us see it as a big problem as it's 0% and we can afford the payment. Total debt at this stage approx. £20K


2010 - Took out a big loan (£15K ) to consolidate. Still have about 5K on cards plus a £1500 OD and other bits on store cards. wife has loan and store cards too!! No savings. Convince myself that it's all ok as I have consolidated for the last time. Total debt approx 30K


2012 - One child at this point so should be acting more financially responsible..... Wedding plans totally destroy the budget and the 0% card offers are still coming through the door. If it's o% it's ok isn't it??? We take full advantage of the card offers and all of the money I have repaid on the loan is re-borrowed on the cards.... plus more.


2014 - MAJOR LBM... Finally realised that debt was making out life stand still. Time to take action and get it repaid. I found myself sitting up at 12.30am with a a calculator and a load of online statements before the horrible reality kicked in.... £40K+ of unsecured debt. BUT for the first time I wasn't thinking about a quick fix such as balance transfer or a consolidation loan. This time It suddenly dawned on me that I needed to spend less, borrow none and repay more!!!


Despite my 'story' I actually consider us to be the luck ones. We may have owed over 40K at its highest but we are lucky to have a good income of 75Kish so we can repay our debts over a couple of years however that would not have been the case had we waited any longer when our debts could have been 70k, 80k... who knows where it would have ended. This site has given me the tools to make better choices and for the first time I actually feel in total control of my finances.


So, if you are reading this and you owe anything on unsecured debts, please take my advice and deal with it now before it spirals. I am certainly not in a position to give financial advice but what I would say is that consolidation was a part in our spiralling debt. It didn't work for us as we never addressed the overspending. In fact, the consolidation loans simply cleared up the credit cards for more spending!!! 0% cards were also too tempting and made it feel like it wasn't really debt. I am not saying that 0% cards are a bad thing, afterall, why pay interest when you don't need to BUT please see them as a way to repay debt more quickly and cheaply as opposed to a way or simply borrowing more.


Our debt spiralled and increased without me realising just how much we owe. It has only been recently that I have taken responsibility and accepted what I have to do.


I wish you all the best of luck in your Debt Free challenges!!

Puzzcat

I second everything said above!!

Time_to_face_the_music

I honestly believe you have one light bulb moment (LBM), some may have several flickers but a true LBM shakes your world and leaves you in no doubt whatsoever that something has to done and NOW!


Good luck with your continued debt busting in 2015.


TTFTM x

blisteringblue

Very similar here Midlander. We've paid off 10K since April. Still a long way to go but still plenty of life to live afterwards.

DD265

Also somebody who consolidated and lived to regret it!

in_need_of_direction

Me three. It was only when I saw the prospect of interest rate increases that I drew a line in the sand and stopped spending. Consolidation never worked for me as I ended up with a loan and credit card debt.

Stereochild

When it comes to consolidation loans only the banks win!
The only way I got out of debt the first time was by cutting up my credit cards. I got back into debt because I kept a credit account open and also took out a loan.
This time I am going cold turkey and am getting rid of all my credit.

Ellieseleven

I agree with everything above - for us, we had CC's for the best part of 25 years but kept them well below the credit limits and could comfortably pay them on our salaries.

OH was made redundant and went self-employed, great at first but then recession hit and business struggled and we turned more and more to CC's for everyday living until one day we owed just short of 46k and that was our LBM!

We now have a little over 2 years before we are debt free and have paid back almost 30k on a DMP - never again will we have credit - a very harsh lesson learnt!

Ellie x