Day 1...

ElleCee

This week I have finally faced up to my debts and I'm in for just under 30K! Staggering given I've nothing to show for it, but not surprising given my lifelong spending habits...

I have been a typical over-spender and yoyo debtor my entire life. As a child I would burn through pocket money while my sensible siblings would save or spend it wisely.
As soon I was old enough I got store cards and catalogues then moved swiftly on to CCs and personal loans. I never read the small print or checked interest rates or anything, I just borrowed from whoever would lend to me; running up the balance like it was some sort of target to meet, some kind of achievement.

I have lived payday to payday my entire working life; spending on anything I wanted until the cash ran out and never saving for the future, not even making sure I had enough in my bank to cover basic living expenses and bills. I used my cash until it ran out then moved to credit cards.

I used to skip bills to pay other bills, always late paying something and subsequently adding loads of default fines etc to my debts. At my worst (about 20 years ago) I ignored the post, the phone, and the front door and ended up with CCJs, a ruined credit file etc etc...

10 years ago I was in a neutral place financially; I'd cleared my debts because no one lent to me for years with my dreadful credit score but nor did I have any savings or pension.
I didn't owe anything but I still spent what I earned every month frivolously. I started getting offers from my bank for CCs and of course I took them up! Why not... it's free money hey? Clearly hadn't learned my lesson!

Cue a decade of running up CCs, struggling with the payments and interest, taking out a consolidation loan but not closing CC accounts, and then starting again... ad infinitum.
Over the years I got a better job but all that did was enable my taste for finer things, I earned more so I spent more.

Last year I moved back in with my parents as I couldn't manage rent, bills, and debts all together. I'm almost 40 so it took a lot for me to pack up my life and live in my old childhood bedroom.

I was all set to sort my finances out, pay my debts and start saving for a deposit. I took out 1 final consolidation loan to clear my huge CC bills and had every intention of sticking to my budget.... hahahahaha! Of course I didn't close my accounts, they were my safety net for when I needed to fill a void inside me with 'nice things' high end beauty products, expensive clothes, holidays, nights out, jewellery, the list goes on... Champagne lifestyle, lemonade income.

The kicker is that I'm finally at a place in my life where I'm earning ok money, not in the higher tax brackets or anything but above the national average (I was always low skilled/low paid so for me it's good), and it's all going towards CC bills and loan repayments.

Yesterday I almost started the process of an IVA. I was googling how to lower CC interest payments and ended up on some website filling out my details. I know this is utterly stupid and naive but I didn't really know what an IVA was and assumed it was some sort of free or government service. They called me within minutes and it was all too 'sales' for me; I was in telesales for years so wise to the patter. I'm not saying it was a charlatan company, just that I realised it was a sales call. I ended the call and started researching IVA pros and cons and ended up here.

Since yesterday I've been reading through the Debt Free Diaries. So many of them resonate with me and seeing how amazingly you're all doing and how supportive you all are I've decided to share my story. Please be gentle with me, I'm usually much happier lurking!

Today I have:
Worked out my total debt and found out the interest rates on my CCs
Written out a bills budget - very basic but I at least know what bills are hitting and when
Opened a Emergency Funds savings account separate from my usual bank
Opened a Monzo account and transferred my own day to day spending money leaving enough in my current account to cover bills plus a little left over
Used a bonus to clear my overdraft down to the free section - I know it's still debt but at least I'm saving approx £30 per month on OD fees

I still need to complete my SOA and write a comprehensive budget at some point although to be honest I had a peek at YNAB and it scares me a little. I might focus on just cutting out the take away lunches, dinners, coffees, drinks, unnecessary spending etc and getting through my first month actually sticking to my allowance.

I also know I need to work on the emotional and psychological reasons behind my crazy overspending

Incidentally, I decided no to the IVA. I'm in a lucky position to have almost no rent/bills as my parents have very kindly offered a very low rent. I may be massively in debt but I'm not in trouble if you know what I mean? I don't have creditors hassling me, I make all my payments every month and always try to round up a little on my CCs so I'm paying over the minimum. I mean, I am totally broke and have no wiggle room but I can totally manage my debt providing I change my spending habits.

I'm on the first step of a very long road

ElleCee

Total Debt £28,852.15

Halifax MasterCard £4,692.48 @ 27.20%
Barclaycard £3,249.46 @ 26.68%
Virgin MasterCard £3,980.47 @ 19.17%
Halifax personal loan £7,927.14 - 29 payments left
Lendable personal loan £8,702.60 - 37 payments left
Overdraft £300.00

UncannyScot

Hi and welcome

You've taken the first step onto the journey of becoming debt-free and savvy with your money.

Join in the community here and visit folks diaries, read, comment, ask questions for info and advice etc.

We ARE a VERY supportive bunch here.

I also recently started with a Monzo account for my general spends budget and have found it to be absolutely brilliant.

MovingForwards

Welcome and well done for taking the first step.

ElleCee

Thank you for the lovely welcome Uncanny Scot

I'm excited and daunted at the same time! There's so much to learn and I'm an absolute beginner when it comes to money management!

ElleCee

Thank you MovingForwards

GeorgianaCavendish

Hello and welcome!
I could have written your first post! In fact, I think I also had something in my first post about racing towards credit limits like they were targets so I exactly know where you are coming from.

You have done really good work in getting all the information together about your debt and interest rates - good luck!

ElleCee

Thank you Georgiana

Yours was one of the first posts I read and I felt the same, it could've been me writing! Reading your journey has inspired me so much. I'm sorry if I plagiarised; it was unintentional, the phrase really struck when I read it.

Kitten868

So what's the goal? Are you saving to rent or buy? Are you going to tackle the rest of the overdraft first or halifax?

You can do this! X

GeorgianaCavendish

ElleCee wrote: »

Thank you Georgiana

Yours was one of the first posts I read and I felt the same, it could've been me writing! Reading your journey has inspired me so much. I'm sorry if I plagiarised; it was unintentional, the phrase really struck when I read it.

I didn't think there was any plagiarism, it is nice to 'meet' someone else who had the same feeling about credit limits

My one piece of advice - from my position of having sprinted and then back slid with debt (not quite to my original starting place but not far off!) - is to take small steps. There are loads of things that you can do that will have a big impact on your debt but won't feel like an enormous deprivation. It is really tempting to make huge sweeping changes when the initial enthusiasm for debt busting is high but they really need to be sustainable in the long term because you have to live with the changes for years.
I'm trying to wrestle with the psychological elements of my relationship with money at the moment, so I'm waffling on a lot about it on my diary. I keep having mini lightbulb moments about my money habits even now and it is really good to find other kindred spirits

ElleCee

Kitten868 wrote: »

So what's the goal? Are you saving to rent or buy? Are you going to tackle the rest of the overdraft first or halifax?

You can do this! X

Thanks Kitten

The end goal is to be debt free and have a deposit saved to buy. I need to tackle the debt before I can really start saving and the thought of paying off 29K and then saving the same sort of amount again is depressing, so I'm kind of forgetting the idea of homeownership for now.

My plan so far, and I'm open to change and welcome suggestions, is to start on the CCs.
I'll tackle the Halifax Mastercard first as it's the highest balance and highest interest.
I'll set up fixed payments for the other 2 a little above the minimum payments so as the min payment amount goes down my payments will be higher if that makes sense? Once the 1st card is cleared I'll use the extra funds to start on the 2nd and so on.

The 2 personal loans are the largest debts but fixed payments every month so was planning on tackling those once the CCs are gone. I need to check if I can make overpayments too.

The overdraft is not really a problem now; I paid off £700 today so even though I've still got a £300 OD I'm not being charged a daily fee. Mind you, it is one of those 'reward' accounts which charges £17 a month (£15 if you don't have an OD) just for the privilege of having an account. I don't think I've ever used any of the benefits.... must look into those :think:
I will clear the OD as my account fee will be £2 less per month but I'm less worried than when it was at £1000 yesterday