Note to self: Stop Spending Money You Fool!

MrDebtWarrior

Well, hello I suppose. I’m starting a thread here in the hope it will allow me to record my journey towards a debt free life.

Debt has been a part of my life for 10 years now, when I was 21 I stupidly (stupid, stupid boy) wanted a brand new fast car. I took out a loan that I could barely afford (shocking now to think the bank gave me a loan that was 120% of my annual salary) and I bought the damn thing. For a year or so I was the man, I had the shiny new fast car. The negative impact of this was I was using credit cards to top up my salary in order to afford both the car and a social life. A few years later, realising how stupid I was, I sold the car. By then, I was in the debt spiral (get loan to pay off cards, pay off cards, re-spend on cards, get top up loan to pay off cards etc etc)….

Thankfully, I never missed a payment on my cards and loans but the debt was causing me issues with my health. I never told anyone, my parents thought that when I sold the car it cleared my outstanding debt. The worry, keeping secrets, covering my tracks, it grinded me down till the thought of debt made me feel physically sick.

I’ve had a number of LBM, each time I’ve faced up to my debt and figured out a plan to get rid, over time though old habits returned and I end up back to where I was. This has been going on ever since.

A positive in my journey has been meeting my OH, I was able to come clean to her and tell her about my debt, what a relief that was. We were able to get a mortgage together and have now been on the property ladder for 18 months.

My current situation is;

Credit Card: £5000 – MBNA (Interest free till 2018)
Loan: £8750 – Nationwide
Bank of Mum&Dad - £10,600 (was £14,000 but paying back steadily)

Total Unsecured: £24,450


We are okay (just okay, not great) financially, we are both in full time employment and earn slightly above average wages. Once all household bills/debts are paid, we both have a leftover chunk of money.

How am I going to tackle this debt?

1: Proper budgeting, I am going to give YNAB another go
2: Overpay Loan, even if it's only £25, this will reduce both the time remaining and will save on interest.
3: Selling unwanted items, I’ve already made some money on house clutter so will go searching for more.

This was a bit of a brain dump so apologies if it's a ramble.

Thank you if you have read my post, I will update my sig with my numbers. Appreciate any support, advice, constructive criticism. Phew!

[Deleted User]

Hi,

Welcome to the boards.

Good luck on your journey x

Bobarella

Good luck Kevvlar.

EssexHebridean

Well done on the LBM but more importantly on acknowledging where you've gone wrong both in the first place and since. You're far from the first to have done something daft with money when you were younger - and you'll be far from the last as well, I suspect. The key thing is that you're tackling it. One thing - remember that feeling of how sick being in debt above your head was? Hold that thought - and when you note any habits starting to slide, revisit it and remind yourself why you never, EVER want to go back there.

Is there any repayment penalty for paying off the loan early? More to the point do you get back any interest on it if you do so? That may make a difference to whether you're better to let that run its course and tackle the MBNA card first. Assume Bank of Mum & Dad is at 0%?

Budgeting is vital so big well done on that step too. Before you start paying for YNAB can I suggest that you put together a proper Statement of Affairs (SOA) and also perhaps work through the MSE Budget Brain tool - both are great ways of getting all your spending down in black and white in one place - and will also let you see what you *should* have spare each month.

We find that what works for us is money arriving centrally in one place - our spending money then diverts off to our own accounts and everything else is dealt with from the central one. We also use lots of savings accounts which run off our current account to budget for the less routine stuff like car costs, holiday, household expenses (insurance/replacement of small appliances), and that sort of thing. It means that the "splurge" money is kept totally separately to that which is required to meet bills, and also that when things like car insurance renewals etc come up, the money is there waiting for them.

Good luck with getting sorted on this - it sounds like your head is in the right place to tackle it properly and see it through this time!

MrDebtWarrior

I was going to start a new DFD but realised Ive done this before, so I found this one I created in 2016.
My mood currently is low, Ive started a couple of DFD over the years, I was reading back at them and Im disappointed that I have not progressed after years of knowing I had to control my spending and debt. I didnt learn my lesson and its had to get to (almost but thankfully not) breaking point before its really hit home.

Im not a young, single guy with no commitments anymore. I have a fiancee, house, car and all the things that come with being a responsible adult.

My realisation/epiphany/LBM has come due to saving for our wedding. The cold hard truth of looking at our finances and realising that currently we have no chance of saving enough and paying our bills.



Debt as it stands;

Loan: £3,753.75
Credit Cards: £5,732.54
Car Finance: £10,000
Bank of Mum/Dad: £7,028.76
Mortgage: £114,000


So from my post in 2016, we have made progress in some places but not others, plus an added car payment (this was required, our old car died, we did our research, shopped around and got a 1.5 yr old car that fitted our budget, we will have the option of paying off or handing back next year).

We are both committed to smashing this and have already took action and began our debt free journey.

We have adopted zero based budgeting and an envelope system. For ZBB every payment, Direct Debit, Bill, future Bill, future car maintenance, future insurance, presents, clothes, !everything! was written down and given a monthly figure. These were split into bank payment or cash payment, for cash we created an envelope for each.
Every penny we spend at the supermarket will now be cash and a pre-shop will be done online to identify the best deal, we will then go to the supermarket and actually shop our online shop in person and stick to the list.

Ive created spreadsheets to keep track of our sink funds, or spending and our savings.

My debt peaked around 3 months ago when I had around £9,000 on Credit Cards and a £1,500 overdraft. Ive been fortunate in that a share save scheme in work matured and I also received a healthy work bonus, I was able to pay off the overdraft and around £3,000 to the credit card.

I want to post regularly here to keep me on the straight and narrow so that's all for now, cheers.

MrDebtWarrior

Another no spend day today which is great. Taking my own lunch to work instead of dropping a minimum of £5 in the work canteen will save me a lot of non accounted for money. That was another blind spot where money would fall into a black hole and Id wonder where it went.


I was thinking today of what my debt free date will be. Im going to break it down into loan free date, then credit car free date, Bank of Mum/Dad free date etc, this will give us an extra push towards whacking down this debt. This is a task I'll do at work tomorrow during lunch.


Not a lot else to update on but another day gone and another day closer to freedom.

MrDebtWarrior

Busy day today but was able to add the car finance to my budget/debt spreadsheet, we now have a clear picture of every debt on the one page.


Another NSD apart from groceries which came out of the Grocery envelope. I did a preshop on the supermarket app, found the best deals/value for what we needed then I went to the supermarket and shopped my list. One weakness we had was ordering takeaway, especially if hangovers were involved. As we have an all day wedding on Sunday I have pre planned the hangover by getting in some oven pizzas and munchies, this cost a fraction of ordering in and will give us our junk food hit!

Scott-Weiland

Good luck on your journey

Don't miss things out the out take away wont hurt you as long as your staying within budget. We still have the odd take but we do things wisely ie use topcashback when buying the takeaway and we limit ourselves to one on my payday and say one occasionally on my partners.