Starting to budget after years of wishful thinking

LegoHead

Hi so I came here for advice. Have about £29k debt over two loans and one currently interest free credit card.
I kniw if I don't clear thia debt ASAP then I will fall back into bad habits and it will spiral out if control. 

I am currently considering selling everything I have of value which could clear at least half. This includes a couple of cars. Has anyone ever done something this drastic? I am looking for inspiration to give me a kick up the backside to get this done. 

curlytop12

Hi , would you feel comfortable posting up your SOA? 
use this tool and format for mse
 https://www.lemonfool.co.uk/financecalculators/soa.php
Have a read of some of the diaries too
good luck

CatherineL

It would really depend. Firstly, I have known of people who have suggested they sell stuff that actually they need. Getting a cheaper version is often a false economy. An older, more unreliable car won't necessarily be cheaper in the long run.

If it were me, this is what I would do. A couple of cars is a luxury, choose one and sell the rest. Clear what you can. Sell anything that you won't make a ridiculous loss on and/or have to replace anyway.
Go through your expenses, be brutal, cut what you don't really need. If you earn a decent wage but are spending it all and it isn't going on debts, then my best guess is it is going on eating out (I suspect this because this was me), total this and set a budget for it. If possible, cut it out entirely. For me, it wasn't but we were once at 2 to 3 times a week and we brought it down to twice a month (I really hate to cook).

If you are really desperate to clear it, take on extra work. Be it overtime or a second job. It was a second job that really helped me (no overtime in my job), only done on a temporary basis. Although, I recognise that is near impossible at the moment, although Christmas is usually a good time for such things.

Finally, make a clear plan. Planning out what I was going to pay and when helped me. I have found myself back managing debt now through no fault of my own, and it is only my plan that is keeping me sane. 26k owed 3 months ago, 24k now but by March it will be less than 18k, by August I'm aiming for 12k or less. Should be debt-free again by May 2022. Could be sooner if I was willing to be brutal. I'm not at the moment.

[Deleted User]

LegoHead said:

Hi so I came here for advice. Have about £29k debt over two loans and one currently interest free credit card.
I kniw if I don't clear thia debt ASAP then I will fall back into bad habits and it will spiral out if control. 

I am currently considering selling everything I have of value which could clear at least half. This includes a couple of cars. Has anyone ever done something this drastic? I am looking for inspiration to give me a kick up the backside to get this done. 

Selling fripperies that you don't want or need is a good start.  Ultimately though you need to understand exactly where your money is disappearing to each month or you'll just end up back in square one again.  Common culprits are food, mobile phones and tv packages.  If you put together a statement of affairs as suggested by @curlytop12 and keep a spending diary you should be able to work out where your money is going and what you can cut back on to bring balance to your finances.

madaboutspots

Hi LegoHead

So if you sold everything and paid 1/2 your debt down - how might you feel? Would you feel free of 1/2 the debt or utterly bereft of the possessions that so many hanker after whilst still owing a lot of money? Why did you buy these things in the first place? Do you need them or just want them - or worse... Bought them hoping to impress others?

It could be a bit of a lottery with your self worth either way you look at it. You might find it an incredibly liberating experience and start to really put your life into perspective with what's important - or you might find you start replacing many items and racking up the debt again, finding you've achieved very little.

It's an incredibly interesting approach. Are you punishing yourself for buying things that you couldn't afford or do you genuinely want to rid yourself of pressure to buy/own "stuff"? 

I would try to look forward brutally honestly at yourself with both options - keep trudging away at the debt ... or free yourself of consumerism and sell it all and have a full rethink of your values. How will your future self feel with each choice. Maybe then you can decide for yourself the right path and not need our permission, advice or approval either way?

If you were in the middle of nowhere with nothing, what would you miss? How would you feel? You could be somewhere hot and miss your freezer or cold and miss your favourite jacket. You might decide you'd only miss the people in your life.

Absolutely fascinating approach. Definitely needs some careful thought before making a decision so it doesn't backfire on you.

madaboutspots

Oh and your headline is incorrect - you might have a good income but you spend a lot more than you earn... Not just all your earnings. An important distinction to accept and acknowledge. 

LegoHead

madaboutspots said:

Hi LegoHead

So if you sold everything and paid 1/2 your debt down - how might you feel? Would you feel free of 1/2 the debt or utterly bereft of the possessions that so many hanker after whilst still owing a lot of money? Why did you buy these things in the first place? Do you need them or just want them - or worse... Bought them hoping to impress others?

It could be a bit of a lottery with your self worth either way you look at it. You might find it an incredibly liberating experience and start to really put your life into perspective with what's important - or you might find you start replacing many items and racking up the debt again, finding you've achieved very little.

It's an incredibly interesting approach. Are you punishing yourself for buying things that you couldn't afford or do you genuinely want to rid yourself of pressure to buy/own "stuff"? 

I would try to look forward brutally honestly at yourself with both options - keep trudging away at the debt ... or free yourself of consumerism and sell it all and have a full rethink of your values. How will your future self feel with each choice. Maybe then you can decide for yourself the right path and not need our permission, advice or approval either way?

If you were in the middle of nowhere with nothing, what would you miss? How would you feel? You could be somewhere hot and miss your freezer or cold and miss your favourite jacket. You might decide you'd only miss the people in your life.

Absolutely fascinating approach. Definitely needs some careful thought before making a decision so it doesn't backfire on you.

madaboutspots said:

Oh and your headline is incorrect - you might have a good income but you spend a lot more than you earn... Not just all your earnings. An important distinction to accept and acknowledge. 

Thankyou. You have given me alot to think about. A quick answer I have for wanting to get rid of things apart from clearing debt is that i find alot of the items as reminders of failures. A guitar i bought about 8 years ago that i rarely use and lots of gadgets that sit around doing nothing much. I have identified about £10k of stuff i can sell on ebay easily so this is my first action to work on. I want to give myself 6 months to clear all debt as i dont work well unless under pressure. 

My workshop and my tools i built are the only things i genuinely love owning as i get to fix things, help people and be creative. These things i will miss. Gadgets and the like i will not miss. 

RobM99

Sell a guitar ... Noooo!   

madaboutspots

So you have somewhere to start. Excellent! 

Start and then reassess as you go - not constantly - life is too short to keep worrying every waking moment about what to do. Make a decision and put it into action and allow your mind to move on to more important things in the here and now.

Try and enjoy the experience - you've learnt something so it's worthwhile. 

NeverendingDMP

Sell the things you wont miss. Aim to clear the c card before its 0% is up maybe and then reassess and work on the rest. Unless the interest on the loans is dire!
If you dont love the guitar but someone else will then list it. xx
you wont get what you paid but someone else may get something they couldnt otherwise afford! Good luck and stick with it. 

LegoHead

curlytop12 said:

Hi , would you feel comfortable posting up your SOA? 
use this tool and format for mse
 https://www.lemonfool.co.uk/financecalculators/soa.php
Have a read of some of the diaries too
good luck

So I came back. Been trying hard to clear debts. I did start saving, but I like shiny new tools so every time I saw new tools I wanted for my workshop I would dip into savings. Not a bad idea to save up for stuff some would say, but I wanted the savings to pay off the debt. I made a drastic decision one month to clear over £3000 of credit card and completely skint myself out for a couple of months. I have now got down to only one credit card and two loans remaining

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

Household Information[/b]

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

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

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2855

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

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

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

Total monthly income.................... 2855[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 576

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

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 111

Electricity............................. 50

Gas..................................... 46.39

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

Water rates............................. 20

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

Mobile phone............................ 8

TV Licence.............................. 0

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

Internet Services....................... 37

Groceries etc. ......................... 150

Clothing................................ 0

Petrol/diesel........................... 100

Road tax................................ 15

Car Insurance........................... 20

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

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

Other travel............................ 0

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

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

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 43.6

Buildings insurance..................... 15

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

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

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 1191.99[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 225000

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

Car(s).................................. 10000

Other assets............................ 5000[b]

Total Assets............................ 240000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 136831...(576)......2.49[b]

Total secured & HP debts...... 136831....-.........-   [/b]

[b]Unsecured Debts[/b]

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

hsbc loan......................12845.....262.......3.2

sains CC.......................2976......75........0

sains loan.....................6360......155.......9.2[b]

Total unsecured debts..........22181.....492.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,855

Expenses (including HP & secured debts). 1,191.99

Available for debt repayments........... 1,663.01

Monthly UNsecured debt repayments....... 492[b]

Amount left after debt repayments....... 1,171.01[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 240,000

Total HP & Secured debt................. -136,831

Total Unsecured debt.................... -22,181[b]

Net Assets.............................. 80,988[/b]

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

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