Stupid spending and debt situation

shteca

Working_Mum wrote: »

Hello shteca,
I am self employed and was in your position when my husband left me 10 years ago!!

I wrote a big list of everything that I owed, the interest rate, balance, minimum payment and date the payment due.

I wrote a list of all of my direct debits, what they were for, amount, expiry and when they were due to be paid out. I cancelled the ones which were not necessary and made a note of renewal dates for insurances/utilities etc and got better rates shopping around at renewal time (this is my habit now!!).

I took a long hard look at all of my income (self employed/maintenance from ex/ family allowance etc) and in particular the DATE I was generally paid. I changed my direct debits payment dates to be able to coincide with when I had payments coming in from my business. I made minimum payments on credit cards etc before due dates and when I got pennies in from my various sources.

I set myself a weekly CASH budget for food/fuel/socialising and withdrew that each Thursday morning - I paid everything in cash!!!!!! If there was not enough money in my purse I learned to say no and do without.

I read Dave Ramsey and I snowballed my debts. You can buy his books online quite cheaply, he has a YouTube channel or you can read his learnings for free!!

I learned what my triggers for spending were by keeping a spending diary (still do and find it a mindful experience) - I checked my bank accounts every morning (so no hasty surprises) and I slowly wrestled control.

I did an inventory of everything I owned from food to toiletries - I realise that I hoard food when I feel stressed! I didn't buy anything I already had. I shopped with a list after meal planning and unearthed the delights of A1di/L1dl shopping - tracking all spends in my lovely book!!

By doing this I had a proper look at what the current landscape is - used my self employed skillset to get a smart plan together and then cracked on!!

Personally I would do my absolute utmost to keep my home and that is a good motivation to stick to my budgets etc.

Writing a diary will help you keep the faith!


Good luck

((hugs))

WM x

Hi WM
Sorry it has been a while since I was last on. Reading that makes my eyes well up. Knowing I am not alone and have support from other people mean so much.
I actually started watching Dave Ramsey a couple of weeks back on YouTube and it has given me the biggest boost! Just hearing him in my head when I am stood in a queue shouting "idiot" stops me dead in my tracks. I am going to be trying to do the debt snowball and really make a dent in this.
I have actually over the weekend signed up to UberEATS. I plan on just making up some hours with them over the weekend and evenings etc. With my job it is not retained, just recruitment so sometimes work for nothing so having this part time will help. I am very much of the mind set now "live like no one else so you can live like no one else"
The paying in cash tip and keeping a STRICT accountability is a huge one for me. It hurts sooo bad spending even just £4 in cash, spending it on my card is so easy. I do my own accounting in work so just started doing the same in my personal life now. Each month I go through my bank and account for every penny.
Again thank you so so much! I am putting what you say into practise.

shteca

enthusiasticsaver wrote: »

If you have an income of £55k then you should be able to deal with that debt without going down the route of IVA or DMP. What is your credit history like? Do you have any defaults?

If you can move the credit card to a 0% deal that will help. Tackling the overdraft should be your priority.

You need to firstly start tracking every penny you spend and start building an emergency savings account so you are not tempted to use credit if you have an unexpected bill. Budgeting is the key to you getting out of this mess. Selling your flat is a bad idea as is remortgaging.

With my income, it can be so sporadic! Sometimes I can earn £10,000 in a month then nothing for 4 months. I just signed up to UberEATS to get a more reliable income. Its not much money but should help with a couple bills when I have down time.

My credit history is okay, I dont have any defaults just this boat load of debt.
I have started budgeting every single penny and paying in cash. The temptation to use credit is so bad and I am just hearing Dave Ramsey in my head every time I spend any money. At the moment unless it is a necessity I am not spending.

shteca

ramblehan wrote: »

If you remortgage, as well as the risk to your home, you will be paying interest on that debt over the term of your mortgage so what you could potentially sort in 3-4 years, will e dragging behind you for possibly decades, and costing you a fortune in interest.

Thank you. I have heard this from everyone on the MSE site. It ends up costing more and is a stupid idea. I have moved down the route of budgeting every penny and using the debt snowball.

enthusiasticsaver

If you are self employed the ideal way of sorting out the peaks and troughs is to budget for a monthly salary ideally on your minimum monthly income. Remember to put money aside monthly for tax, national insurance and other self employed costs and leave a buffer for late payments etc. Transfer a monthly salary out to your personal account. Don't be tempted to overpay on debt payments until you have sorted out a budget and emergency savings.

shteca

I spent £30 on a round of drinks last night! I felt horrible all night and all day today. I worked for 3 hours on UberEATS just to recoup the cost. Made me really kick myself.
I also went to Aldi today and bought all my food for the week and cooked 3 meals. All for £30!!!

Fireflyaway

You have achieved the most important part of knowing how much debt you have and wanting to do something about it. So many people have no clue what they owe.
Start by writing a budget. List all the expenses you have so you can see how much is left to throw at the debt. A budget doesn't mean living a tight miserable life. You can have a category for spending. Then you won't feel guilty. Having a budget will give you sight of how long this will take and you will see the progress which will keep you motivated.
Once payments are set up it's a case of sticking to the plan and everything will take care of itself.
If I were in your situation I wouldn't sell the house. You might find it quite hard to get back to owning again. I wouldn't consolidate either, that's just moving money about and probably dragging out the debt even more.

tempus_fugit

ramblehan wrote: »

Have you taken a look at YNAB yet (You need a budget.com) - it does cost money (there's a free trial and training) but this might really help getting your head around what you can / can't spend.

I second this. YNAB may cost a wee bit but in our case it changed our lives, and has repaid itself many times over. It is deal for a situation like yours, OP, where you have a decent income but some debts to cover and a change of thinking as regards spending to consider. It works on the basis of allocating a job to every penny of your income, and focuses your mind on keeping funds for irregular expenses, and you can allow for some "fun" money whilst making sure that your other liabilities are covered. I'd look into it, because it completely changed our spending habits (and our lives as you can see from my signature ).

Gemsy81

Another vote for YNAB, it's transformed the way I think about money! I am also self employed and find that the problem with peaks and troughs is that the peaks lull you into thinking all is fine in your financial world! Paying yourself a set (and achievable) salary every month is a good idea. That's what I am doing and hopefully that will then allow the business to build up a cushion.

shteca

Got the the end of another week.
Took £50 out my bank on Wednesday to cover all additional spending. Have managed not to put any spending on my card which I am very happy about.
Think I have done well this week

Working_Mum

That's a great start shteca!

How are you feeling juggling everything?

Hope you've got a lovely weekend planned!