Taking a loan for our dream holiday? - 2 years later, follow up

Dvekavo

Original post from Dec 2018:
Taking a loan for our dream holiday?
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Current Situation
I came back to MSE today to get advice on car finance, and remembered my first post here, from two years ago.  I came and asked if it was a good idea to take a 7k loan over 5 years to pay off debt, and book a dream holiday.  

I still have the same job, earning 1.7k per month which hasn't changed.  My wife lost her job last year due to covid, but managed to get a new job last month paying £150 a week just a month ago (though her hours are being increased starting next week so should be up to around £300 per week).    Furthermore, I started a shop on Etsy in Janurary which is now pulling in around £300 profit per month (Yes, I've registered as a sole trader and keeping track of my accounts!).  We have paid off our credit card debt (2.5k)!  We have £300ish left on the sofa (interest free), and finally, I'm not sure why I didn't include this in my post from years ago, but I still have the same car paying £121 per month on PCP (but I have another active post about trading in my car).  Every month, I now write down my outgoings and work out how much money I have left for the month
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Finance Update
I followed the advice of the majority on getting a loan, and agree in hindsight that it was an awful idea.  My job has been in danger numerous times over the last year due to covid and as I said above, my wife lost her job and hadnt worked for about a year...  We were, until recently, living from paycheque to paycheque, and I was tempted at some points to get that big consolidation loan, since my wife's visa is due for renewal at the end of the year and will cost another ~2k, but after clearing the credit card and my wife getting a job again, we're managing to save her entire wage in preparation for the visa renewal.  After we save enough for the visa renewal, we're going to focus on gathering a house deposit.  A holiday to Japan does sound amazing, but I'm fed up of paying for a house that's not mine, so I'm really really glad I didn't go for that loan.  I'd still be paying for it for years to come if I had taken out that loan.  I know on the original thread a lot of people were saying if you know you can afford the loan repayments, then live in the moment, but I feel I've changed a lot in the last few years.  My wife and I got a National Trust Scotland membership and have been having the best time exploring Scotland.  There's so much to see here and do before spending thousands on a holiday.  Last week we bought a tent and camping equipment (using etsy profits), and plan to go a lot of short staycations.  We just got back from camping today and I just have to say, sitting by a lake with a campfire, has got to be one of the most relaxing experiences i've had. 

I know for sure if we tighten our belt a bit more we could also save some of my wage.  I think I can admit to a bit of a spending problem which I'm trying to get under control.  Covid helped since we couldn't go out to spend but honestly whenever I feel down, I just want to buy things and it makes me sad when I dont buy things.  I recognise I have a slight problem and I need to address it.  The stupid thing is that when it comes to my birthday and people ask what I want, I have no answer.  There's nothing I want or need, its just impulse buying and laziness. 

It's funny, I turned 30 this year but I feel I've changed so much since I made that post a few years ago.   So, 2 and a half years on, I'm so glad I took your advice and didn't get that loan.  I'd be in a much, much worse situation if I had.  Sorry I didn't follow up sooner! 

MovingForwards

Japan would be a lovely holiday, combined with a few other places while over that side. If you're going to do it, then see a couple of countries.

What you could do is open a bank account and start paying in a couple of pound each month, maybe for a big birthday or occasion eg 40, 50, 60 or retirement, it really would be one to remember, but without getting into debt for.

Scotland is gorgeous, there's so many places to see and go, it feels like a lifetime will never be enough to do it all. With the right equipment you can even do autumn and spring camping; winter might be a bit hardcore for you at the moment but is good to do once.

Four tips I will give you about spending:-
1. Calculate how many minutes, hours or days you have to work to pay for something.
2. If you've a habit of buying lunches while at work, coffee from a shop, things from a vending maching, calculate how much that costs you each week, month and year. It soon adds up.
3. Learn the difference between 'need' and 'want'; the former is because something broke or wore out.
4. Stop and think before buying. Walk away and if you still want it in a month and have a good reason to buy it, then do so.

If you want your own place, get saving. Look at your budget and see where you can cut back a bit here and there. Open up an account with a different bank, each payday send a bit of money over to the new account and think of the savings as being another bill to pay; it's out of bounds unless being used for your property purchase or absolute emergency eg need to move rental or cover outgoings due to job loss.

Look up the 1p a day and 52 week savings challenges, teach yourself to save and have a bit of fun doing it. Start being accountable to yourself and it gets easier as time goes on.

[Deleted User]

Dvekavo said:

Original post from Dec 2018:
Taking a loan for our dream holiday?
---
Current Situation
I came back to MSE today to get advice on car finance, and remembered my first post here, from two years ago.  I came and asked if it was a good idea to take a 7k loan over 5 years to pay off debt, and book a dream holiday.  

I still have the same job, earning 1.7k per month which hasn't changed.  My wife lost her job last year due to covid, but managed to get a new job last month paying £150 a week just a month ago (though her hours are being increased starting next week so should be up to around £300 per week).    Furthermore, I started a shop on Etsy in Janurary which is now pulling in around £300 profit per month (Yes, I've registered as a sole trader and keeping track of my accounts!).  We have paid off our credit card debt (2.5k)!  We have £300ish left on the sofa (interest free), and finally, I'm not sure why I didn't include this in my post from years ago, but I still have the same car paying £121 per month on PCP (but I have another active post about trading in my car).  Every month, I now write down my outgoings and work out how much money I have left for the month
---
Finance Update
I followed the advice of the majority on getting a loan, and agree in hindsight that it was an awful idea.  My job has been in danger numerous times over the last year due to covid and as I said above, my wife lost her job and hadnt worked for about a year...  We were, until recently, living from paycheque to paycheque, and I was tempted at some points to get that big consolidation loan, since my wife's visa is due for renewal at the end of the year and will cost another ~2k, but after clearing the credit card and my wife getting a job again, we're managing to save her entire wage in preparation for the visa renewal.  After we save enough for the visa renewal, we're going to focus on gathering a house deposit.  A holiday to Japan does sound amazing, but I'm fed up of paying for a house that's not mine, so I'm really really glad I didn't go for that loan.  I'd still be paying for it for years to come if I had taken out that loan.  I know on the original thread a lot of people were saying if you know you can afford the loan repayments, then live in the moment, but I feel I've changed a lot in the last few years.  My wife and I got a National Trust Scotland membership and have been having the best time exploring Scotland.  There's so much to see here and do before spending thousands on a holiday.  Last week we bought a tent and camping equipment (using etsy profits), and plan to go a lot of short staycations.  We just got back from camping today and I just have to say, sitting by a lake with a campfire, has got to be one of the most relaxing experiences i've had. 

I know for sure if we tighten our belt a bit more we could also save some of my wage.  I think I can admit to a bit of a spending problem which I'm trying to get under control.  Covid helped since we couldn't go out to spend but honestly whenever I feel down, I just want to buy things and it makes me sad when I dont buy things.  I recognise I have a slight problem and I need to address it.  The stupid thing is that when it comes to my birthday and people ask what I want, I have no answer.  There's nothing I want or need, its just impulse buying and laziness. 

It's funny, I turned 30 this year but I feel I've changed so much since I made that post a few years ago.   So, 2 and a half years on, I'm so glad I took your advice and didn't get that loan.  I'd be in a much, much worse situation if I had.  Sorry I didn't follow up sooner! 

Thanks for the update and I’m glad you’re exploring Scotland. 

Your current system of looking at your outgoings every month and seeing what’s left is a good start. As not all bills are monthly it is good to consider the whole year when budgeting. For example, I pay my insurances annually so I know I need to set aside money each month to pay those. I also set money aside for Christmas, holidays, any other saving goal I have and maintenance. Those car tyres aren’t going to last forever and will have to be replaced at some point. 

Good luck with your journey to financial freedom. 

Jami74

Dvekavo said:

Original post from Dec 2018:
Taking a loan for our dream holiday?
---
I followed the advice of the majority on getting a loan, and agree in hindsight that it was an awful idea.  

I know for sure if we tighten our belt a bit more we could also save some of my wage.  

I nearly borrowed £10k for a nice car. Instead a family member very kindly lent me £900 for a car which I paid back over the next few months. 

I then started what I called a 'reverse loan'. Used a loan calculator to work out what I could afford to pay monthly for a loan and set up a savings account with a standing order for that amount. It isn't just putting what I have left over at the end of the month into savings, it is a budgeted outgoing that gets paid at the beginning of the month. There was a couple of months where work was sparse and I halved the amount of the standing order for that period, but have since added extra so am still on course for the £10k after 5 years (plus the interest I am not paying a loan company, plus the interest it is earning). 

It is essentially savings by a different name, but for some reason for me the psychology behind 'paying for my car' is different to 'saving for I don't know what'. Interestingly, while I was more than comfortable with the idea of borrowing £10k to buy a car, now I am not sure if I'll want to spend my £10k on a car. My £900 car is still serving me well after 3 years, yeah it's a bit quirky but I don't lose any sleep over the little dents and scratches that seem to appear out of nowhere.

enthusiasticsaver

What a great update and as one of the people who advised against a loan for a holiday etc more than 2 years ago I am glad you went with the majority of us who said it was a bad idea.  None of us could then have predicted Covid but this was one of the unforseen events which have crippled many financially.  Good you have managed to get on top of your debt and learned to save for things.  This will make a big difference to your finances going forward.  Well done.