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Given a Second Chance. My debt-free journey begins!

Hi All,

A little back story about myself. I have been in overdraft debt for the best part of four years. Primarily it has been just down to the fact I have been irresponsible with my money and buying things I didn't need.

Last year I rented my first place with my partner. We managed to scrape together a deposit and have been so happy since we have moved in. It gave us a purpose to actually start budgeting and putting money aside. This lasted a few months and then we both fell back into old habits and unfortunately dug ourselves into a deep hole.

Two months ago, I was £5100 in my £5000 overdraft and my partner was £3500 into her £4000. We worked the expenses out, and whilst paying £60 overdraft fees each month, my necessary outgoings were more than my incomings.

I have never hit such a low point in my life. I struggled to get up each morning and felt so ill. I even started losing my hair and upon visiting the doctor it was put down to stress. We set to work on trying to sort something out and unfortunately the only option seemingly was to move house or try and and swap our expensive car we were paying for on finance.

On ringing some dealerships, I found out we were £6000 in negative equity. This made things so much worse as it seemed unlikely we would be able to swap the car. It was costing us £1500 in insurance each year and the monthly payments for the car were £450 which was just far too much. It wasn't a new car either and I was terrified something would break and I needed the car to get to work. I really didn't know how to continue.

My first break came this week when I rung a dealership and highlighted my problem as a last ditch effort. It was a bit of a sob story, but seemingly the lady took pity on me! She mentioned that moving to a new car would be the best thing for me because we could potentially get a dealership contribution to swallow the negative. She run some numbers and came back with an offer on a car that would be saving us nearly £200 a month as well as giving us a three year warranty. Seeing no other way out I jumped at the offer.

It just so happened on Monday I was approached by a local recruiter about a job opportunity. A long story short I was offered a new job yesterday which works out nearly double my current salary. I was over the moon.

We also got accepted Wednesday for a personal loan on a 3% interest rate. The monthly repayments are similar to what we were actually paying for overdraft fees, so it couldn't have worked out better. Last week I had been at rock bottom for around two months and within a week everything seems to have gotten so much better. A stroke of luck perhaps, but I really feel I have been given a second chance.


I fully intend to climb out of this debt and never be in this situation again. It was hell on earth. Currently we owe £10,000 on the personal loan and have put together a payment plan. I will keep track of our progress in this thread.

Thanks all for reading! :beer:

Comments

  • -taff
    -taff Posts: 15,072 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Cut up any of the credit cards you have. You've effectively taken a consolidation loan, and when that happens, you have to be very very strict about your use of credit in the future.
    What can, and usually does, hapen, is that you take out the consolidation loan, you pay off your debts. Instead of cutting off all further lines of credit, you start spending on cards, or go back into your overdraft because you have this feeling of relief that everything has been paid off to swap for 'one easy payment a month'. Then you get complacent because you feel you have a financial buffer. The you start getting credit again, and pretty soon, you're back in the same position , only this time you still have your 'one easy payment a month' and you also have all the new credit to pay for too.
    Don't fall into that trap.
    Non me fac calcitrare tuum culi
  • Well done on taking the first steps - not burying your head in the sand any more is huge start. You've been lucky with the job and the car o make the most of it. Have you done an SOA? Maybe post it here for advice http://www.stoozing.com/calculator/soa.php
    Good luck on your journey!
    Little One born 19/12/18
    5/5/18 I became Mrs Pie
    FTB June '17 - £144k mortgage, £134k remaining
  • Hi and welcome :D

    Looks like you've had your Light Bulb Moment (LBM).

    The main thing is to shift perspective and save on outgoings to hit the debts and build up savings (Emergency Fund or Rainy Day Fund, Holiday Fund etc.)

    Do a Statement of Affairs (SOA) to see where all your income and outgoings are at and it should highlight where you could make savings. You don't have to post it up on here but a lot of folks have found it helpful; sometimes it needs an outside pair of eyes to see what's what IYKWIM.

    So, join in the community, visit and read / comment on other folks diaries. If you need any info or advice, just post up on your diary thread and someone will pop along to help ;)

    Good luck and keep posting :D
    BUGGRITMILLENIUMHANDANDSHRIMP I TOLD EM! - Foul Ole Ron
    It is important that we know where we come from, because if you do not know where you come from, then you do not know where you are, and if you don't know where you are, then you don't know where you are going. If you don't know where you're going, you're probably going wrong.
    R.I.P. T.P.
  • -taff wrote: »
    Cut up any of the credit cards you have. You've effectively taken a consolidation loan, and when that happens, you have to be very very strict about your use of credit in the future.
    What can, and usually does, hapen, is that you take out the consolidation loan, you pay off your debts. Instead of cutting off all further lines of credit, you start spending on cards, or go back into your overdraft because you have this feeling of relief that everything has been paid off to swap for 'one easy payment a month'. Then you get complacent because you feel you have a financial buffer. The you start getting credit again, and pretty soon, you're back in the same position , only this time you still have your 'one easy payment a month' and you also have all the new credit to pay for too.
    Don't fall into that trap.

    Absolutely this!! The secured part of the figure in my signature is the result of 4 consolidations over the years coupled with the excitement of empty credit cards and thinking that it will be ok to just put a holiday on the CC because we'll be able to pay it off.......
    August 2018: Secured Debt £70,003 Unsecured Debt (DMP) £34,657 Total £104,660 DFD: March 2031
    January 2019: Secured Debt £68,269 Unsecured Debt (DMP) £34,457 Total £102,726 DFD: March 2031
  • MeenaM
    MeenaM Posts: 320 Forumite
    Debt-free and Proud!
    hi

    my advice if you havent already would be to do a budget each month and stick to it , then try and pay off this consolidated loan ASAP! with my DH OD we put it on a 0 % CC and have paid it off that way. I dont know much about car finance but i always feel like i get ripped off , i have so far had the same car now for 10 years , fingers crossed it lasts at least another few years, but it is a blessing not to have a car payment that;s for sure!
    so budget , budget , budget , account for each £ you spend EACH month or when ever you get paid. clear the debt asap and save up an emergency fund so that you dont ever go back into debt ,

    good luck and keep smiling
    paid off £27,527.47 debt free journey began Nov 2017 DEBT FREE 13.09.2019!! EF £3500/£5000
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