Maintaining Motivation

CC_Trouble

So, having come clean to my OH about my credit cards in advance of our desire to remortgage in August, we have consolidated the worst into a loan with a fixed payment, used some savings to clear the rest and set up a clear budget that assigns both expenses, savings and debt payments clearly.

I have set up a Monzo account so I can use the money management tools and notifications they offer and I have asked if there are any extra hours at work to get a boost to my income prior to maternity leave in November.

I have form with bad money management, not only is this not the first time I have got in trouble, it’s also not the first time I have hidden it. I have got some commitment from the OH (who is amazing with money) to do weekly spending reviews for the foreseeable and to help me with my budget - we have grouped our joint expenses in a way we never have before and as soon as the remortgage goes through I will close all my current lines of credit (overdraft, credit cards x 3 and a store card) I am only keeping these open as it will look better for my mortgage application if I am under utilising my credit, I have never missed any payments so and have no defaults or CCJs so am hopeful my bad money management won’t prevent us getting a good deal on the mortgage (we can hopefully maintain the payments at the current level and reduce the term).

So, I am after advice on how to maintain this motivation, my mini goals are:
- stick to my budget

- weekly reviews & tweaks to the budget as needed.
- no use of credit at all
- build savings and minimise debt
- be honest

Any top tips from other debt free wannabes? Anything you think I am missing from this plan?

TIA x

tlc678910

Hi,
I think you should make yourself a nice chart/colouring sheet or a spreadsheet to track your money each month. 

 You need to track net money after debt is deducted from any savings as if you look at them separately you can kid yourself that you are saving - while getting more debt or kid yourself that you are getting out of debt while also spending savings. 
If you intend to pay your loan back monthly and not pay it off early your debt will be more now (again although it's horrid avoid kidding yourself otherwise) e.g. you may have took a loan for 5k yesterday but have to pay back 6k.

In the above example you could aim for and track:
-6k, - 5.5k,  - 5k, etc until you get to 0 then +500, +1000.... (adjust the targets to whatever is realistic for you.

The benefit to this approach is there is no hiding when you are getting more in debt - you will know and have to face up to it/tackle it.

Good luck

tlc678910

When you say "remortgage" do you mean borrow more? If you only want a new deal but don't want to borrow more then you might be able to stay with your lender and choose a new deal without facing credit or affordability checks. You don't need to reduce the term to pay the mortgage more quickly just over pay.  You are usually allowed to over pay 10% each year without penalty but check.

If you are increasing your mortgage why? What is it for? 

CC_Trouble

I think you should make yourself a nice chart/colouring sheet or a spreadsheet to track your money each month. 

Thanks, I have set up a spreadsheet that details all the debt (including the loan plus interest) and the savings amount as really that’s effectively debt - I just owe it to myself and it’s interest free but until it’s paid back I am still effectively paying off my debts. 

Will have a think about how to track the monthly totals in a good way though.

ryanm8655

First things first, cut up the cards.

Personally, I wouldn’t risk having an overdraft in your shoes, having read your other thread. So I’d close that down immediately. I’d be surprised if having it open but not in use made any difference at all to your mortgage application. Likewise, on credit cards, they could equally be perceived as a debt you could easily build up again and reduce affordability. Plus presumably your income to available credit ratio is now higher as a result of keeping the cards.

What’s your new monthly income vs outgoings? Presumably the loan repayments are now coming out of solely your income, rather than a joint expense? The most important thing is getting a handle on all of this and working out a budget that works. You say joint expenses are now shared but what does this mean? If your kids need clothes where do you get the money from? Is your husband giving you an allowance for things like that? Things really need to have changed if you’re going to avoid being in the same boat again except with a loan to clear on top. Also, just because your husband isn’t in debt it doesn’t mean he’s good with money. The way your finances have been split and the complete lack of awareness of your financial struggles suggest otherwise. He just has a high income where he hasn’t had to budget for things, which isn’t the same thing. I’m sure he’d have ended up in debt too had the finances been the other way around, so don’t beat yourself up.

You could easily fall off the wagon and build that debt back up again, so personally I’d just get rid of the temptation, especially as you’ve consolidated. No credit cards.

I’d recommend a debt free diary to help with accountability.

Well done for committing and looking for extra hours. But why do you need to get some extra hours at work when your joint income is so high and you’re pregnant? 

CC_Trouble

tlc678910 said:

When you say "remortgage" do you mean borrow more? 

Nope our fixed term has ended and we know we can get a better rates with someone else. This means we can pay the same monthly but reduce the term. We are only with the current provider as I used to work for them and got a preferential rate originally.

CC_Trouble

@ryanm8655, the extra hours will be handy because I can put the money aside so when I drop to statutory maternity pay I have a buffer.

Also useful to point out here that I love my job so this is a win win for me

We did a statement of earnings and put all the joint expenses together with a proportional split based on our income to cover the costs, plus a weekly review, thanks for the suggestion re: the debt diary. Going to have a look through some of them.

ChrisLV

For me, the biggest thing that has given me motivation is changing my mindset and learning to see spending in a totally different way. In fact, that's not quite right. It's more like changing my mindset has made it so that I don't really need that much motivation any more to follow good spending habits. This book was more important than any other single source in helping me to change my mindset.

CC_Trouble

Thanks @ChrisLV, I have the Dave Ramsey book (from recommendations on the MSE forum) but will also have a look at this. 

ryanm8655

CC_Trouble said:

@ryanm8655, the extra hours will be handy because I can put the money aside so when I drop to statutory maternity pay I have a buffer.

Also useful to point out here that I love my job so this is a win win for me

We did a statement of earnings and put all the joint expenses together with a proportional split based on our income to cover the costs, plus a weekly review, thanks for the suggestion re: the debt diary. Going to have a look through some of them.

I ask about the loan as you could use overpaying that as a motivation. Anything you have spare from your budget can go on beating the terms. Depends how your paying it between you though.

Another option is to set yourself goals in terms of savings and use that to motivate you.

With my debts my initial goal
was to get them all to 0% by focussing on clearing the highest interest cards first. Once they were all interest free my goal was to beat the 0% end dates. Now I’m well ahead of them I’ve got into the routine of clearing a couple of grand a month and now considering longer term goals like savings.

All of this has helped to change my mindset where by, I’d feel like a failure if I didn’t clear £2k/month. While I still make the odd luxury purchase, I really do consider every £ I spend these days. I’ve also got into the habit of checking my bank account daily, where as I used to avoid it deliberately at the height of my debts and had done for many years.

The main issue is that by consolidating you haven’t had to make the financial sacrifices to achieve that change of mindset (it’s difficult) and while your splitting of finances sounds a little fairer there’s still plenty of potential for you to be spending on things for the kids that should be joint expenses. That’s your big risk. I’ve consolidated and even reduced my debt in the past, only to end up back here with double the debt a couple of years later because I hadn’t changed that mentality. This time I have made huge sacrifices that will hopefully have a lifelong impact. 

Likewise if your husband is still living the 6 figure lifestyle you’ve still got that pressure, while your potential salary is massively reduced due to taking the time off to look after your children, which doesn’t seem fair and could put you under more financial pressure than you realise. You’ve got a very small disposable income even with reduced debt repayments and a fairer split of joint expenses.

CC_Trouble

@ryanm8655, yes you make some really good points. Especially around sacrifices and mindset change. Lots of food for thought - thanks for sharing your experiences.