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

FOMO_overspender

IrishSean said:

Sry, I skim read a lot of this; apologies if not all over the detail.

Keep an eye on when 0% runs out on virgin cc so its not the biggest apr. Credit is tightening a bit across the board; overpaying on loan is a 👍.

Other advice is all good.

Only thing i'd add is its totally doable and ur taking control of it while debt is a fair size but still manageable. WD

GL😀💪

Thank you Sean! Yes, definitely, thankfully I managed to get the CC approved just before lockdown at 29 months but you never know what might happen with the current situation! 

I set up a YNAB account and I think I have most of it down but I can't work out why overpayments for credit card/ loan make it seem negative/ in the red as I hadn't budgeted for the overpayment (e.g. plan to pay off £100 and pay £150 it says -£50 and that I have gone over budget)? Anyone else get this too... I feel like over payments to credit/loans should be good, especially if you aren't blowing your overall budget?! 

GL on your journey too Sean! Will subscribe. 

FOMO_overspender

So today wasn't a NSD - donated £10 to a friend's fundraiser! So don' feel too bad for spending that but made me realise I probably need to budget £10 a month for charitable giving? Although I don't do it that often... so might reduce to £2 per month and then have a little pot built up for the next time I sponsor someone.  

Started a free trial with YNAB, but finding it quite confusing to use. Sure watching more tutorials etc will make it more simple. 

Completed a Prolific study, which is £2 to the potential debt busting pot, and also won £2 worth of M&S vouchers from another survey (GFK) so that's all helpful towards making small dents in what feels like a massive debt amount! 

I also batched cooked some thai green curry and have put some in the freezer, so hopefully eek out this weeks groceries shop a little bit longer. 

Hope everyone else is doing ok and keep positive! 💪

FootyFanDan

Hey FOMO

 

I just wanted to pop in and wish you the best of luck on your journey. I like you did the whole overspending stuff and I wouldn’t have minded if it was on experiences where I could look back and go well at least I got to enjoy things but it was mainly on stuff just for the sake of it. Luckily I have now got my head into gear, it has been nearly a year since I started becoming more conscious of my finances and now I feel like a different person so it is possible, there may be bumps on the way the road but don’t let that unsettle you.

 

I see YNAB has been mentioned a few times and I swear by it, although I do see why it can be seen as complicated, I had used it on trial then stopped as I didn’t put my time into trying to understand it I then went back and for me its worth it but it isn’t for everyone. If you can find some way to track the things and keep in budget its about finding a way for you then that will be a benefit to you.

Here is to an happier future you 😊  

FOMO_overspender

Hi @FootyFanDan, thanks so much for the encouragement and for taking the time to read my diary. 

Yes, I think I have got to grips with it, but let's see how it goes. It feels almost counterproductive to pay for something new when I am ploughing as much as possible in to debt, but I have seen so many people say it helped them out so much, so 🤷‍♀️

Thank you! So far, looking much brighter for Future Me! 

IrishSean

29 months is great

I read a great article by Duncan Bannatyne years ago, he formerly of Dragon's Den fame. He said run household finances like a small business; cut waste, invest in training, be tax efficient, increase revenue (e.g. via promotion, 2nd jobs etc.), reduce supply costs, what MSE called downshift in supermarket, keep debts as low as (easier said than done, lol), but good advice.

You're on the right tracks; you'll smash it💪💪

FOMO_overspender

Thanks so much @IrishSean and that's a good way to look at household finances too. 

Today has been been another NSD which is great 💪 really hope this sticks when we're a little bit closer to normality. It sounds like I might also be able to continue WFH on a part time basis too when we're all back up and running, so that should help with both NSDs and also travel costs. 
I also made an overpayment of £60 to my loan today, taking me to £20,200. I still have £55 in my monzo for food and £100 in my main account, just in case, before payday. Hoping to be able to also chuck the £100 to the loan as well.

Managed to take part in a Prolific study today too, so once all the studies approved I will have met the £5 threshold. I am thinking I will probably let that build up a little bit more before withdrawing and can then use for loan OP too. I also got my phone bill through for next month, which I managed to get them to knock off £15 due to some rubbish customer service, so that's £15 saving to put towards next month's payments too. Every little helps! 

Hope everyone is having a good day. 

Mahsroh

Hi Fomo, great news on the loan overpayment. I reckon that's saved you roughly £15 in interest too from that one payment alone! 

Also excellent news on the WFH arrangement. I think we'll be seeing a lot of employers agreeing to this going forward. Hopefully one positive to come out of this pandemic! 

enthusiasticsaver

FOMO_overspender said:

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]

It is good that you are now starting to get to grips with your overspending and I would caution you that normally consolidating debt ( as you did with getting the loan) often makes people complacent as they then think they have the debt sorted (one manageable payment each month rather than juggling credit card payments).  Of course it is not sorted unless you have addressed the overspending as many people continue to use credit cards and before long the balances are out of control plus of course they also have the debt consolidation loan which is usually over a fairly lengthy period.  You have the advantage of lockdown to get to grips with budgeting and I am glad you are starting to see the sense of different pots for things like holidays and food etc.  You have a fairly high surplus so I think you can sort this if you remain disciplined and take a balanced approach to spending and saving going forward.  

One thing I would do is set the direct debit on the Virgin credit card so it is repaid within the 29 months deal period as  the interest rate will ramp up quite quickly once you are out of that deal period.  Use any additional surplus to save or overpay the loan as you are paying interest on that.  Saving for emergencies should be  a priority. 

My tips are keep a spending diary so you monitor how much of each months budget for things like grocery, travel, clothing, beauty and entertainment is actually left and get used to saying no you cannot afford something.  There will always be more opportunities but the opportunity to sort your finances out is much easier when the debt is £22700 than if you continue to ramp the debt up and it approaches £40k+ and more and more of your income is going on debt repayments and less offers are available to you  in the form of cheap credit.  You are also extremely vulnerable if you lose your job. 

You don't have any assets as such, like a house, car or savings so I would address that immediately. You have a reasonable salary so it should be possible for you to address that.  What are your financial goals? Do you  want to buy a house or car at some point?  Do you have a pension?  In particular emergency savings should be top of your list.  I like holidays  as much as anyone and they are great experiences to look back on but in terms of building net worth they can affect finances badly unless you save for them as they often tend to be impulse buys.  I understand you have hen dos already arranged but going forward I would definitely get used to saving each month for holidays so when you go on them you know they are already budgeted for and you don't spend the next five years paying for them. 

I do a monthly budget on the day we get paid (pension for us as we are early retired but we have always done this even when working). I put money aside into savings ( holidays, car, house, gifts and general/emergency savings pots), I work out the bills for the month and leave that in the current account with a buffer and DH and I each get personal spending money for things like clothes, hobbies, entertainment etc. Food and fuel is paid for using a credit card which is paid for in full each month. Every one sorts their finances out differently and hopefully you  will get lots of tips from this site. 

FOMO_overspender

Thanks so much for all your advice @enthusiasticsaver - it's really helpful. Totally agree re: the debt consolidation loan. This is actually my second one, as I fell in the trap years ago with a £10k DC loan which I then used to pay off everything and then still used my credit cards (I know!). So this time I have been super strict, cut up all my cards, closed all credit card accounts paid off and frozen the one I have currently on 0% for transactions, so all I can do is pay it off. So far, this has worked well. I also have a £100 direct debit to ensure that the CC is paid off before the 0% finishes - so I can concentrate on OP on the loan to save interest. 

Spending diary already up and running I find whilst Monzo etc all do this for you as well, having to literally write it down in a book at the end of the day makes me question so much more whether I should spend. I am more excited about marking off NSDs in the diary section, so that spurs me on to really evaluate everything I am spending. 

Thankfully the one financial responsible thing I have done is have a pension set up. I pay in 5% of my wages pre-tax a month and my employer pays in 6%, so a total of 11% each month is going in. I am hoping to up this to 10% at some point.

Assets - I totally agree. My ideal is to save a deposit to buy a flat. I live in London, so that is quite a large amount of ££ but I have a Help to Buy ISA which currently has £2.50 (I opened it before the deadline) and have decided to put £50pm in whilst I am trying to get rid of debt. 

FOMO_overspender

Mahsroh said:

Hi Fomo, great news on the loan overpayment. I reckon that's saved you roughly £15 in interest too from that one payment alone! 

Also excellent news on the WFH arrangement. I think we'll be seeing a lot of employers agreeing to this going forward. Hopefully one positive to come out of this pandemic! 

Thank you for the encouragement! I can't believe I wasn't doing this already - even just paying off an extra few £ here and there will make a difference. It's been a real eye opener learning tips from everyone else's diaries. 

Yes, I think it'll definitely be a way of life for most people who can moving forward.