On the road back from the brink

BadwithMoneyGuy

Hi everyone. Seeing this forum, and all of the wonderful work that everyone has done to make themselves debt free, has been incredibly inspiring. So much so, it has inspired me to start my own debt-free diary. Thank you everyone for being such an inspiration.

How did I get here? I will be honest, I have always been bad with money. Its not that I have expensive tastes, its just that I have been really bad at budgeting. And also, I have let money issues slide far too often. I have been in debt since I left University 16 years ago, having foolishly taken out a hire purchase arrangement on a laptop that sadlled me with a lot of debt that I didn't need. I paid off my student loan easily, but other loans snowballed over time. They were still managable, but the amount was not going down.

Then last year happened. I started out with my own business, and it was a financial disaster. I had 6 months of money set aside for bills. I blew that all within 6 months, though thankfully a few random jobs from some old colleagues saved me from going under. Then, I foolishly hired another person full time. It was a train wreck. We never got on, she blew through the businesses remaining money whilst getting in no sales, and I screwed up firing her which meant I had to provide her with 3 months redundancy tax free. All whilst no work was coming in for 6 months.

At home, things were not much better. We got landed with a £2500 tax bill, and a £1500 vet bill that our insurance didn't pay because the vet made one comment that our dogs symptoms should have been present from when we got him - 1 day before we got him insured. I plunged into debt and made more mistakes, taking out payday loans and emergency funds for stupid amounts based on a hope that I would start earning soon.

Things really came to a head when I got so down about it all that I was seriously close to ending it all. One morning I kissed goodbye to my wife, and balled my eyes out as I was going to end it that day. I had spent the last week getting everything in order so she wouldn't have to worry about my debts. I was at the end of the train platform ready to jump. It was then announced that there had been a power failure, and all trains had been cancelled.

At that point, a thought triggered. If I had gone through with it, I would have left my wife with my problems. And that was the moment that I decided to take action.

I called Stepchange, and we have been working on putting together a DMP. Incredibly, my business has picked up in the last couple of months. I now have income that will pay for at least 6 months worth of bills, which considering I had nothing for 6 months is amazing. But I have been applying for full time jobs as well. Whilst I would love to have my own business, it is too risky, and so i need full time work. I have been to four interviews for jobs, and sadly have not got one yet. But every interviewer has given me rave reviews on my skills and how I sold myself. I just need one to go my way. I am not giving up!!

Also, I found out our next door neighbour was an accountant. I passed him our tax returns for the last 3 years, and he discovered that we have overpaid tax by £1900. Result!! HMRC have just recently approved this correction, and we should have the money in our account in the next couple of weeks.

My plan is to build up a £5000 emergency fund over the next year, and to be debt free inside 3 years.

Here is my SOA:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 2000
Partners monthly income after tax....... 250
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 2250[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 960
Management charge (leasehold property).. 0
Council tax............................. 150
Electricity............................. 22
Gas..................................... 50
Oil..................................... 0
Water rates............................. 48
Telephone (land line)................... 20
Mobile phone............................ 30
TV Licence.............................. 12.88
Satellite/Cable TV...................... 60
Internet Services....................... 30
Groceries etc. ......................... 220
Clothing................................ 10
Petrol/diesel........................... 150
Road tax................................ 15
Car Insurance........................... 22
Car maintenance (including MOT)......... 59
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 18
Pet insurance/vet bills................. 39
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 26
Other insurance......................... 0
Presents (birthday, christmas etc)...... 42
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 2073.88[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0[b]
Total Assets............................ 3500[/b]
[b]
No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Tesco Credit Card..............11000.....250.......19
Virgin Credit Card.............11000.....250.......19
Fluid Credit Card..............3000......80........24
Sainsbury Loan.................5500......365.......8
Overdraft......................2000......17........26
Drafty.........................2200......200.......80
Cashplus Credit Card...........1500......40........29[b]
Total unsecured debts..........36200.....1202......-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 2,250
Expenses (including HP & secured debts). 2,073.88
Available for debt repayments........... 176.12
Monthly UNsecured debt repayments....... 1,202[b]
Amount short for making debt repayments. -1,025.88[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -36,200[b]
Net Assets.............................. -32,700[/b]

[i]Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.[/i][/font]

One thing to explain about my wife's income. She too runs her own business (art and craft club for kids), that she is looking to expand. Money being tight hasn't helped with this. But we are seeing how she could go for sessions that are more profitable. There is not much money made in looking after people's kids!

Sarahwithlove

I'm so sorry that you felt that you had to consider ending your life. One thing I noticed is that you pay quite big repayment to every card. Have you looked at the snowballing effect. This is where you pay the minimum on all but the highest interest debt. All spare funds go towards the highest interest card and then Once you cleared that you move onto the next highest, then you should be able to reduce the amount of interest that will pay over all. 

Bizzywizard

I own a business with my husband and completely understand how hard it is!  I would say when my husband started our business, I went back to working full time in a local letting agents (I hated it) but we needed the money, it was for £15k a year. My husband had been made redundant so set up on his own with £1500  in the bank, he then went and did night shifts in Morrison's for 8 months, while working in the daytime (he had 5 hours sleep a night)!
So, what I am saying is it might be worth really considering your wife going back to work full time. This will reduce your stress and you will be able to pay your debit off quicker and lessen your burden. This is not meant to sound harsh at all. I just know how hard it is. Good luck in the job hunting, no idea what you do, however, my family were in the local council with a 'job for life' and were well paid with flexi time. So might be worth looking at the public sector?

BadwithMoneyGuy

Thank you Sarah and Bizzy. Both really appreciated.

For snowballing, yep I have looked at that. The challenge is always getting a regular income at a level that exceeds even the minimum repayments. I would need to earn an additional £1k every month over what we do now just to make the minimum repayments. Which will be really hard to do. Unless I want to only sleep for a few hours a night! Part time work may be good though, even if it just brings in a basic amount each month.

Partly also what I need is a bit of peace of mind. I love the work that I do (transport planning) but it is very variable in the work that is available. Nothing for months, then everything at once. I never appreciated the value of a stable income before I set up on my own. Now its all I want. Funny really!