Learning to live within my means

astrocytic_kitten

So I’m a long term lurker who used to read the site regularly but dropped off in recent years ...which was incidentally also when my debt spiralled out of control. Funny that!

I had LBM and started seriously looking at this last month, when I had £23,167 in total debt over 4 credit cards, built up in only 6 years (which is terrifying). Over January that’s reduced down to 22,551, partly due to overpaying and partly from some online shopping returns. Due to a recent pay rise I have money to put toward repayments now instead of just paying the minimum.

I feel ridiculous being in so much debt as I have a decent job and no real reason for the spending other than trying to shop my way out of anxiety and upset over a breakup, and feeling like I need to keep up with the sharply dressed & frequently holidaying city people I work with. So I really need to change that and stop spending. I’ve done quite well the past couple of months by not putting Christmas on cards, and in not buying stuff I would have done and putting the spend to overpay cards instead, but still not perfect (see above online shopping returns!), I think the real challenge is to be consistent and long term with it which is where I’m hoping the diary will come in.

On debts, I’m spending 666 per month (honest coincidence it ended up at that figure!) of which about 2/3 goes to interest:
Card 1: £8917, 25.2% interest :eek: - paying £326/m
Card 2: £5796, 20.9% interest - paying £152/m (minimum)
Card 3: £4499. £3725 of this is on a long term 6.9% rate, the rest is on 17.7%. Paying £90/m, £20 over the minimum.
Card 4: £3339. Balance is £76 purchases at 22.2%, £1121.08 4.94% rate to mid 2020, £2142 0% which expires in April and will revert to 22.2%. Currently paying £100/m, £60 over minimum - though minimum will jump up after April.
Total 22551

astrocytic_kitten

So... I know I need to change cards 3 and 4 to minimum payments and throw the extra at card 1. I’ve locked myself out of online banking for them both so need to sort that so I can change the payment! My only balance transfer option is £2k to card 4, 4.9% over 36 months with no fee, I’m not sure how worth it that would be - I’ve been making balance transfers for partial balances and shuffling things between cards for so long now it almost seems easier to bite the bullet and just try to pay as much as possible to card 1.

I’m saving:
25 to emergency fund which needs built up
15 to longer term savings with credit union
25 to Xmas / pressies
40 to vet fund - part of this is for ongoing medication, part is to build up a bit of a cushion. Previous £300 cushion was wiped out in the past month by some expensive treatment, though at least it didn’t add to card balance.

I’m giving myself 50 spending money each month in an effort to give me a bit of breathing room and be able to deal with life / unexpected expenses without resorting to card.

I’ve cut mortgage, utility bills, etc as low as I can and the only ‘extra’ is a £9.99 monthly music sub I’ve just cancelled - no Netflix etc. However.... I’m too embarrassed to say what my monthly food spend is, and I also have an expensive gym membership (with specialised pain PT) and a cleaner - I’m aware how entitled and spoiled it sounds to say I need that, but I have chronic illnesses, chronic pain, chronic fatigue, and I really do need those things to stay in my high stress, very long hours, lots of travel job. I had a health crisis last year where it all came to a head, and my choices are to get all the help I can with food prep, housework, and physio, or to end up in hospital.

Or, of course, to change jobs - but I need the salary for now for the debts. I know it’s not sustainable long term and my plan is to pay off debt, build up a 6 months savings cushion, and then either go part time or change jobs. I’m planning to start changing my lifestyle to something simpler now in readiness for this.

I am hoping that with the help of annual bonuses (which aren’t huge but everything helps), cutting as much as I can from my food budget (I’ve set it to a baseline of what I’d need in a terrible month health-wise, where my hands won’t work in the evenings, and in good months plan to put the extra first to house repairs, then debt), and eBaying a lot of the expensive clothes I’ve bought to keep up with sharply dressed colleagues, by the end of 2019 I can

Have 1 month’s living expenses saved (from monthly savings plus bonus)
Pay for essential home repairs needed in the next couple of months rather than putting on credit (saving as much as can from food budget, plus eBay)
Not have added to debt (this will be a first)

I’m aiming to have all debt paid off plus 3 months living expenses saved by end of 2022 (this is a stretch for both debt and savings, current debt free date is June 2023).

Wish me luck...!

[Deleted User]

Good luck on your journey and Happy new diary x

astrocytic_kitten

Thanks purplemum!

So today has been a mixed day...on plus side my energy direct debit has only gone up by half of what I expected after my fixed term deal came to an end. On the downside two weeks of work travel for next month has been cancelled which is a huge relief for me personally but a pain for the budget as that’s a couple of weeks I’ll need to pay for food now. And my passport needs renewed sooner than expected - it has a few months to run and I was going to leave it till closer to the time, but there’s less than 6 months left and my work has asked me to renew it now so I can go to Europe if needed. Thinking I’ll need to put home repairs off for another month or two and pay for passport instead instead of chucking one or both on credit card.

I did pull out a couple of suits to eBay that should have a good resale value, though they might need to be listed for a while to get the best price. Will try to get them up over the weekend when I’ll be home during daylight to take pics.

tacpot12

A tip for you: when you are thinking about buying something, think "Do I need this more than I need a life that is free from worries about debt?" Many purchases should fail this test.

Good luck with your journey. I know it is hard, but when you look back and see how far you have come, you will be impressed. It's worth it.

Spendy_Spenderson

Good luck Astrocytic Kitten! [I might need to shorten that to AK in future ]


You sound organized and have a plan so I'll be following and supporting.


Spendy

Igamogam

Can you move some of your cards to 0% deals? Those cards you have with 2 amounts on with different rates will be costing you more than you think.....any payments are made to the highest interest amount first so any second amount remains the same and accrues interest at what ever rate the deal was - effectively increasing the whole time. There are lots of good deals out there ATM. Of course you might have already thought about that! Good luck with the debt busting journey.

Kitten868

Hello there,

2/3 is interest. Ouch. The good news is that that will come down and more of your money will go on actually reducing the debt rather than servicing it.

I can completely understand how someone could spend that much in so short a time. It's definitely not up to my husband's standards of blowing cash. It's challenging wanting to keep up with everyone else who seem to go to every social event and still have a large chunk sat in a savings account.

You can definitely do this. It will get easier as it goes on. And consistently paying it down will bring better balance transfer offers. I have heard something about lenders not liking you just paying the minimum so always pay the minimum plus a pound. I know it sounds stupid but it's computer logic. Xxx

astrocytic_kitten

Spendy_Spenderson wrote: »

Good luck Astrocytic Kitten! [I might need to shorten that to AK in future ]


You sound organized and have a plan so I'll be following and supporting.

Thank you! Not entirely sure what made me pick that name a decade ago...!

astrocytic_kitten

Igamogam wrote: »

Can you move some of your cards to 0% deals? Those cards you have with 2 amounts on with different rates will be costing you more than you think.....any payments are made to the highest interest amount first so any second amount remains the same and accrues interest at what ever rate the deal was - effectively increasing the whole time. There are lots of good deals out there ATM. Of course you might have already thought about that! Good luck with the debt busting journey.

Hi Igamogam, I’ve thought about it, but to be honest the thought of taking out yet another card, even if I were to immediately close the one things have transferred off, makes me feel sick because I’ve done it 3 times before and things have only got worse. I’m telling myself if I can stick to the plan and be disciplined for 6 months I’ll consider it (assuming the economy doesn’t crash in the meantime!)

astrocytic_kitten

Kitten868 wrote: »

2/3 is interest. Ouch.

I know! The lightbulb moment may have happened round about the time I realised just how little was going to principal.

Thank you for the good thoughts, I’m feeling more positive already for the support. And I’ll try the extra pound on the minimum!