Sorting out the mess 'past me' got me in to, for a happier 'future me'

FOMO_overspender

Hi everyone, 
So where to start?!  At the beginning, I suppose... OK, so problem with money and debt is down to: 1) I am a people pleaser, so I  say yes to everything 2) I struggle with the 'fear of missing out'  (hence the username) and this leads to a lot of overspending on a meals, drinks, holiday with friends etc when I can't really afford them.

I spent most of my 20s overspending on credit cards, never being out of my OD and spending above my means so regularly that I never felt the benefit of any pay rises as I was constantly repaying debt and then spending it again in the same breath. 'Future me' could always care about that!!! (Thanks past me!) 

My LBM was in Oct 2019 when I put almost £1k on a credit card to go on a holiday and realised that adding up all my CCs, OD and a personal loan totalled a very scary number that I had been burying my head in the sand about (Future me could always deal with it). In haste, I decided to take out a £20k personal loan with 5.9% interest over 60 months, which almost covered everything. I paid off most of my credit cards, repaid another personal loan early and both of my ODs. This left me with: 

• M&S loan: £20,000 @ 5.9%/ £23,058.00 total inc interest - £384.30 per month repayments
• Virgin credit card: £3,322.49 @ 0% (recently moved 2 x cc balances to a new card with 29 months @ 0%) 
• Total: £26,380.49 if I don't repay my loan early (which terrifies me)

Up until recently, I was only paying off the M&S loan repayments, nothing above, and then £50 a month on my credit card. However, due to the current situation and WFH full-time, I have managed to make some extra payments, so my current totals are: 

• M&S: £20,300 
• VirginCC: £2,400 
• Total: £22,700 (£3,680.49 paid off) 

At the moment, I can be really strict with myself and my spending, as there is literally nothing to tempt me to overspend as it's all a no go. However, this situation (hopefully) will not last and I want to make sure I don't slip back to old ways. So I thought now was a good a time as any to start a diary and have the incredible MSE army behind me to keep me going when it gets tougher to be strict with myself and make sure 'Future Me' is happier and not waking up in the middle of the night worried about debt. 

I also don't have any Emergency fund or savings, so as well as paying off debt early, I really want to get in to the regular habit of putting money aside for those. 
I am going to post up a SOA, as I have seen how many helpful suggestions, hints and tips people can help with. Just trying to make it as accurate as possible. 

In advance, thank you! I think just writing this has helped ease the fear... 

FOMO_overspender

Ok, so I already need advice on the SOA. Should I do it based on now (e.g. put 0 travel costs) where most things are lower, or put it based on pre-Covid spending/ normal life resumes spending? 

katsu

Do 2 versions. 1 normal and one now or add comments below the normal one for the current variations.

Good luck!

FOMO_overspender

@katsu Thank you! That makes a lot of sense... SOAs incoming soon

FOMO_overspender

Ok, so here is my SOA based on pre-Covid and then what it is currently.... I can already see obvious places to cut back moving forward! Also you will see that before I didn't do any pre-saving or budgeting for things like holidays, dentist etc. I would just pay for them when they came around (I know, I know), so have made that change already setting up Monzo pots. Also I think I probably need another version of this that is what a future SOA would be as I know realistically, I won't continue to save £200 on travel per month etc?  Any tips, help, advice greatly appreciated. Not 100% sure I have got this right... 

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 0

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 2540/ 2362 

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 2540 / 2362

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 790

Management charge (leasehold property).. 0

Council tax............................. 32.33 (all bills are split between three people as I live in a house share) 

Electricity............................. 28.33

Gas..................................... 0

Oil..................................... 0

Water rates............................. 8.66

Telephone (land line)................... 0

Mobile phone............................ 31 / 34.00 (gone up due to WFH) 

TV Licence.............................. 4.5

Satellite/Cable TV...................... 0

Internet Services....................... 8

Groceries etc. ......................... 150 / 200 

Clothing................................ 50 / 00 

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel (e.g. Uber) ............... 100 / 00 

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 19 / 34 (added £14 p/m to cover hygienist and dentist) 

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthdays)...... 0/ 20.00

Entertainment........................... 200 / 00

Holiday................................. 0 / 150 (I am saving for 2 x rearranged abroad hens & weddings in 2021) 

Emergency fund.......................... 0 / 50.00

Beauty (e.g. nails) .................... 50 / 50

Eating out.............................. 200 / 00

Gym membership.......................... 35/ 00

Monthly travelcard...................... 200 / 00 

Netflix................................. 5.99 / 5.99

Total monthly expenses.................. 1912.81/ 1420.81

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Virgin credit card.............2400......28........0

M&S personal loan..............20300.....384.......5.9[b]

Total unsecured debts..........22700.....412.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,540 / 2362

Expenses (including HP & secured debts). 1,912.81 / 1420.81

Available for debt repayments........... 627.19 / 941.19

Monthly UNsecured debt repayments....... 412[b]

Amount left after debt repayments....... 215.19[/b] / 529.19 

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -22,700[b]

Net Assets.............................. -22,700[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Mahsroh

Hi there!

I think this looks very manageable. I don't know how long you've got left on your interest free period on the CC (you said done recently and 29 months so lets just say that's £100/mnth consistently to get it paid off before the interest free period comes to an end, so I wouldn't pay any more than that and focus on overpayments on the loan to reduce the interest you're paying.

Why has your income reduced during lockdown? Presumably this was travel expenses etc? Have you spoken to your employer about the cost of working from home (I get paid a taxable travel allowance and my employer has simply continued to pay this to cover the costs associated with working from home). Do you need the £50 beauty costs during lockdown? You can definitely use this lockdown period to hit it hard, but I also think you need to start thinking about what your SOA will look like post lockdown.

Prior to lockdown you had the following:
Entertainment £200
Eating out £200
Beauty £50
Gym Membership £35
Travel (other) £100
That's £585.00, but shows a surplus each month of £200, so realistically I suspect you were actually spending more than this each month to accumulate the debt. Even post lockdown / COVID-19 world you want to get that debt down to a manageable level so whilst you do need to allow something for entertainment / socialising etc, clearly these are the areas you need to look at, otherwise you run the risk of falling back into your old ways once lockdown is over. 

Good luck!

FOMO_overspender

@Mahsroh thank you so much for your feedback!  I have 28 months left now on the credit card (as I recently managed to get that changed over pre-lockdown to cover old credit cards that were finishing their 0%. My original balance was £3,332 and I paid off £922.49 in total from my March and April payday, as the min payment date falls mid-month). So agree, makes sense to up to £100 p/m to make sure I cover that before the 0% finishes. 

Sadly, due to the current situation, we have had to furlough most staff and those who are working are doing  reduced hours and taking a 10% pay cut per month. That will go back up when we're able to be back up and running and working full-time (fingers crossed we get there!).  

RE: beauty during lockdown, I kept this the same as it is the only 'treat/non essential' I have spent any money on during lockdown but I will definitely appreciate that being overpaid to my loan than having more beauty products/ face masks etc! I got caught up in the Beauty Pie hype, so going to cancel that and put that £50 towards my loan. 

Yes, I agree re the spend. I would say most of the debt is built up over previous years of putting holidays, big expenses on CCs and then not paying them back when I got the money back in my account (e.g. paying for me and a friend's flights and then using the money they give me on doing things, terrible habit I know). Since October I have been a lot stricter, but yes, you're right I have probably been kinder to myself saying that I would have £200 left, as that never happened until now and most months there would be 'something' I hadn't budgeted for, so hoping the pots will help. 

Thank you for the encouragement etc. Just having to post on here I hope will keep me from my old ways! 

I have also started to look at ways to bring in little extra pots of money whilst I have more free time at home.  I joined Prolific but haven't been asked to do any surveys yet, OnePoll which I have managed to get up to £4.05 and also I-Say but again I find that the surveys have always got too many people in my demographic, so only ever get a small amount of points each time. OnePoll is proving the best so far. So any tips/advice also appreciated. 

Mahsroh

FOMO_overspender said:

e.g. paying for me and a friend's flights and then using the money they give me on doing things, terrible habit I know

Such an easy thing to do! When my finances were at their worst this was probably one of my biggest downfalls! Using a credit card to pay for tickets to a Sporting Event/Theatre/Concerts then being paid in cash by friends (usually in the pub on the day of said event!) and subsequently spending it!!

Even my friends who are generally very good with their money have admitted to doing this! So you are not alone! 

FOMO_overspender

Ok, that makes me feel a little better! I am new to using this forum - do you have a diary? I will subscribe if so!  Seeing everyone sticking to budget, finding pennies here and there that help with the pounds etc is really motivational 💪

Mahsroh

FOMO_overspender said:

Ok, that makes me feel a little better! I am new to using this forum - do you have a diary? I will subscribe if so!  Seeing everyone sticking to budget, finding pennies here and there that help with the pounds etc is really motivational 💪

I don't at the moment. I'm contemplating setting one up but I feel like I have everything under control myself, so mainly using these forums / diaries as inspiration whilst also hoping to offer help / advice where I can from my own experiences. 

Moneywhizz

Welcome to the forums and well done for getting a grip of your finances. You seem to know where you have gone wrong and also seem committed to putting it right. You have a good salary and reasonable fixed outgoings so if you can set and stick to a realistic budget going forward you should be able to make good progress in getting rid of you debt. Of course although it may seem easy just now to be putting so much extra to the debt the current situation is not going to last much longer (hopefully) and you may be tempted to spend more again. What you really need to do is make up your mind how much you think is reasonable to spend monthly on things like entertainment, eating out, extra travel, holidays, gym etc - all things that you can cut back on if you want to. Obviously you need to have a life as well while paying off your debt and only you can make the hard choices between how much to spend and how much to pay to the debt. The one thing to do, though, is to separate your spending money out either in cash, or in a separate account, then when it's gone there is no dipping into your other pots to get extra money. Putting your monthly surplus and your non essential spending money together comes to around £800. That is a reasonably large  amount of money to be spending every month, so definitely room for manoeuvre and sending some of it to debt paying instead. It might also be a good idea to boost your emergency fund up a bit while you have some extra money so that you at least have something behind you if something unexpected turns up.