A Cup of Coffee and Two Paracetamol - Debt, Disability and Getting Organised

CoffeeSonata

Finding courage to start a diary and stay focused, and have some support and accountability with other people. 
I am at a point where I really need to focus on managing debt and organization of money. 

I am entirely embarrassed by the amount of debt I have (vs income anyway) and it's making monthly budgeting a juggle and tight, though just about doable.
 This is mostly as I've been ill and recovering from major surgery for most of this year. 

I had covid six times in the 12 months just before that, so financial organization and focusing on finances went out the window. I'm also self employed with my own business, which was a lot to manage this year, aside from the variable and still unpredictable income. I probably have mild/moderate long covid left, as well as a long term health condition (helped greatly  by surgery but not fixed) and a permanent disability.  
Everything combined has just been overwhelming, and led to some difficult situations with missed payments (mostly due to lack of organization, inability to move money to the right place when I was ill,  but also inability to speak to anyone on the phone). 


I have some long term debt, which I haven't managed to get on top of that has been split over 3 credit cards.
I attempted 0% balance transfers on the original debt which was on one barclaycard, but didn't manage to pay those off before the 0% expired. So I'm now paying interest. and it's on 3 cards.   
I also have a fairly small amount of new debt (£200). 

I'm hoping a diary can help me stay focused and think through a plan, and be less lonely talking about it and reading about other's progress in similar situations. 

As it stands debt is:

• CC1: £550 (this was a business card, for a work iPad)
• CC2: £1097
• CC3  £2488
• PRA  £4,600 (best not to ask how they got it - I defaulted entirely by accident when I was in hospital)
• Next  £206
• Business Bounce Back Loan: £1,393

Total Debt:  £10,287
Minimum Payments /Interest Rates/APR are:

• CC1: £43  (24.9%)
• CC2: £52    (25.9%)
• CC3: £65  (22.4%)
• PRA   £100 (0 % I think)  this is an agreed amount with them. I am not sure I can reduce it, it's a little fraught. 
• Next: £16  (24.90%)
• Bounce Back Loan £32.20 (2.2% - it will stay this way for another for another 3 years, when the full amount is due.)

Total monthly min repayments:  £308.20

I absolutely hate the fact I have so much debt, and my income is not high at all at the moment. It's also variable, and less than it was before surgery. I am slowly returning to work, and growing my income and business again, but realistically I can only do client work part time, and other work I'm much  slower and still can't manage full time overall,  so it's going to take a while to regain ground and improve income. 

On a SOA (this may be slightly different, I do use YNAB so will need to check figures) if I do almost no personal spending and after essential bills and debt minimum payments: 

I have about £93 left a month.

This takes into account some extra spending that is maybe not essential : 

• a monthly amount for gifts/christmas
• clothes
• entertainment (which is kindle unlimited / apple music )
•  £30 emergency savings/bills ahead savings. 

It's also calculated on my absolute base amount of my worse month, with no personal income from my business. 
Some months will be better, as income starts up again and grows and I can pay myself. 

I calculated SOA based on £1365 income.

 This is worst case scenario, but where I've been personally for the last couple of months. 

That does not include mortgage, essential utilities, council tax, bulk household cleaning stuff.  Those are covered by my partner's salary at the moment, and come out of that account. 

My income does need to cover our groceries/food, my car, petrol,  my phone (£60 monthly), health/disability costs (£81 monthly), gym/rehabilitation (£50 monthly), gifts/christmas, my clothes, all personal spending etc , my own saving, my pension, any national insurance due in Jan. 

It's tight. Or feels it, anyway. 


I am developing a plan that is sustainable that meets all minimum payments and the PRA amount. 
So far I am considering :

Plan

• debt snowballing (this is probably most motivating to me, and almost all are about the same interest rate really, minus the BBL that simply needs to be paid at £32 a month until it's done. 

I'm not sure what is a realistic amount to aim for each month for paying above the minimum, or whether ust put as much as actually possible the end of each month and not worry about a target for now. I am a person that likes a target to aim for though. 

• Reduce grocery budget as it seems high, mostly because being unwell I'm disorganized and often find I can't actually cook from scratch.  Do this by meal planning, simple meals and maybe delegating cooking at least once a week.  I have joined the grocery challenge again, and despite a slight freak out last week did make it just under budget.  Budget seems high for mostly food for 2 people, plus wet food for 2 cats  (cleaning and toilet paper mostly comes out of another budget line in bulk, but it will include any urgent picked up in supermarket along with food, cats dry food is in bulk out of another budget.) 
• Reducing non-essential expenditure as much as possible whilst also living and not being miserable
• Use YNAB to plan and stick to it
• Find a sustainable way to pick up my income/ business revenue again to pay myself more, without exhausting or burning out energy/health wise.  This may take some time. 

It feels a little overwhelming at the moment. 

Reading all your diaries has helped me feel less isolated, and less ashamed. It's also helped me see it's very possible with focus and determination. 

I'm hoping with talking about it, focus and maybe some challenges I might actually kick this debt and finally be debt free instead of only just managing to maintain it all. 

Christmas and gifts are currently causing anxiety (end of Nov and Dec is also 3 x close family birthdays, and 3 x close friends birthdays). 

But I'm trying to be creative and not panic. I have managed to save some to Christmas, and it is what it is. Am resigned to making maybe only minimum payments this month. 

I plan to post often to stay focused and motivated. Maybe join in and post on some of the challenges. 
It just feels an entire mountain at the moment. 
I know I can do this, I'm just tired to begin with so it feels like mental energy I don't have. 

Though I really need to reduce the debt and be able to move on and not have so much available money going elsehwere/on debt. I need to be able to save and cover yearly/irregular bills fully. 

So I'm hoping with focus, organization and motivation I can make good progress and sort my life out! 

peb

Welcome.  You've obviously put a lot of thought into your position.   I'm sorry you've had a cr*p time health wise.

Keedie

I've subscribed to your diary so that I can be updated and cheer you on @CoffeeSonata. Starting my diary was the fundamental changing point in allowing me to see and manage my finances differently. It really helps with accountability and to not feel so alone and overwhelmed by it all and to get feedback and bounce ideas off of others.

The Payment a Day debt free challenge has been my main motivator and it really helps me to stay focussed and get inspired by others declaring their PADs (big and small), as it all adds up.

I've been snowballing my debts, but also being mindful of how they impact me emotionally. So even if something hasn't been the smallest debt to tackle next, but I know that clearing it will make me feel better, I've prioritised that one next.

I think with the changes that you're making to your food budget and personal spends, you'll have a little contingency to be able to make the additional payments without feeling like it's a punishment. Actually enjoying your life (without going crazy and being irresponsible with spending) is actually more important than debt. We only get one life. And as you've had a rough time of it with your health, it's very important that you're kind to yourself on your journey. The debt will get paid with you slowly plodding along, but you need to be still standing at the end of it all. Small consistent amounts will slowly turn things in the direction that you want to go in. But also save some energy for yourself as you're still recovering and your business will increase in time as well. 

Best of luck with it all.x

sparks_2023

Given you already have a default perhaps consider defaulting the other credit card debts as well - once you have 1 default there is little downside to having more defaults at the same time.... and then you won't be "wasting" the 22.4%+ interest. I speak with regret that I didn't default my Capital One card with the other defaults.

StickyTheStickInsect

I saw you post on the grocery budget thread and found your diary from your signature.

I am in a similar position with a long term health condition and Long Covid. We have debt, three small children and I’m still not well enough to work and have had my application for ESA turned down. I completely understand feeling overwhelmed, it’s so hard not to be.
Like you, I’m trying to focus on some of the MSE challenges and hoping for a better year this year than last!

I haven’t been brave enough to do a diary yet, you sound really positive and motivated to sort things out and I’m hoping reading about others successes will help me on the way too.

Looking forward to reading your updates 🙂

CoffeeSonata

THanks @peb, @sparks_2023 @Keedie and @StickyTheStickInsect for reading and weloming me.  I did read at the time, but Christmas, and subsequent life chaos happened, and coming back working out what to write was a little beyond me.   I also had constant /status migraine for a while (a long while) which was spetacularly unhelpful. 

 @peb thanks for the encouragement. Sometimes I think I overthink though. 
 @Keedie  - thanks for subscribing and cheering me on! I'm glad writing makes the overwhelm and isolation less. The boards have done that for me already, I just need to crack the regularly writing.   PAD is helping. I am still intending to snowball, but have been paying minimum, surviving christmas and birthdays and decided to try to get a month ahead on bills first before more intentionally paying down.  I hear what you are saying about paying off things not going full on Dave Ramsey, and taking in account the emotional aspects too.  I don't think I have that much that is tied up emotionally. Maybe PRA, but that's 0% and so not a priority although they/it freaks me out. I'm a bit better with that now though.  I'd just like it gone! 

 As for staying standing- yes. I'm going to update plans/progress below/another post but I realised this month that although I was a month ahead on minimum payments and bills this month I might not be able to stay a full month ahead if I buy things that are needed now to make my garden functional and pretty and plant things that do need to planted or protected in spring, and a much needed hair cut. So I'm debating what to do on those fronts. 

 Thank you for the reassurance on the business front, I know it will but there's separate angst there (Access to work self-employment targets!) and it's still going very slowly due to the migraines, I'm very anaemic still and just finding clients at the moment and being consistient it very difficult.  I know it will pick up and I will get there again. Half of it I think is I need a routine, and to get out to do some work elsewhere, say our co-working space. My home office is box mountain and the house is a state, I don't have energy to work and fix house.  But I know it will pick up. This isnt my first rodeo recovering. 

 @sparks_2023 I'm sorry you had such a hard time too. I hear what you are saying about the defaults, but given how quickly PRA escalated, it's not something I want to risk or go through. I know not paying interest would be better but the stress is not worth it to me.  I can pay at the moment and the default was actually recorded I think two years ago. I am deaf and not able to use the phone or be contacted on the phone, and when you are not responsive on the phone with credit card companies, or collection ages it's a whole different word and ball game. They escalate very quickly for no contact, often insist on calling anyway and it gets very difficult very quickly, they are also all quite ridiculous with recording access needs. It's not something I want to willingly have to deal with.  If things become unmanageable I will have to, but very much hoping that won't happen.  

 @StickyTheStickInsect I am so sorry you also have long covid and a long term health condition. Both things together are just really, really hard.  I can't imagine keeping three littles alive at the same time.  I'm so sorry you had ESA turned down. Are you able to appeal or reapply? Do you claim PIP? You might be eligible if not. Thanks for the understanding, agree it's really difficult not to be sometimes. 
 I'm not always this positive! 
 I've found the challenges and the focus are helping though, yes. 

 I will be back with a long overdue update in a separate post. I just wanted to reply to all first and say thanks for taking the time to welcome me! 
 

Lonelygambler

Good luck. I’ll be following your journey. 

CoffeeSonata

Update and The Plan. 

I'm not really sure where to start with this, apologies is this is a bit haphazard. 

My general plan has been to make things more predictable, less stressed and secure by first getting a month ahead. 
Whilst this is a you-need-a-budget principle, it's something I mostly used before I discovered YNAB and the concept as a 'thing' because it always felt more secure and sensible.  
Being self employed, with a more haphazard and unpredictable income, living on last months income has always made more sense. This makes it easier to know what I do have, and being a full month ahead has usually reduced my anxiety, given me assurance and piece of mind things are covered and made it easier for me to know what I can save, and what I can put toward debt. 

I used to operate almost entirely a month ahead (bills, min payments, annual expenses broken down  monthly/true expenses througout the year. 

This has been my aim to get back to but has been pretty overwhelming. So I've broken it down into smaller goals. 

• Get regular monthly bills a month ahead
• Get credit/debt minimum payments a month ahead
• Get grocery spending a month ahead. 
• Get annual bills (monthly contribution) a month ahead 
• Get essential true expenses pot contributions a month ahead 

(true expenses being amounts for christmas, gifts, clothes, car repair etc.)

 I wanted to stabilise at least the first two, and regular savings toward annual bills reliably before considering overpaying debt. 

 Other plans:

•  reduce grocery spending to saner level
• save enough to pay car insurance annually in April 
• Road Tax yearly (50% due to disability) ASAP - as this reduces my monthly outgoings. 

PROGRESS

I have been in save mode and tightly controlling everything, in some respects. Some major fails. 
So far I am

• a month ahead on bills
• a month ahead on credit card /debt minimum payments. 

What that means practically is that at the 1st March, I have enough to cover both the above for March and April. 

 I am also:

• able to pay my car insurance in full in April
• reduced my grocery spending from £400 a month to about £320 so far. 

I got a month ahead on bills by saving up Christmas and birthday money, any extra money earned from usertesting, cashback, selling things and £5/£10 a day challenge. 
 And by reducing grocery bill, really limiting personal spending and saving as much as possible. 

 I am not yet a month ahead in groceries, and feel like I've done it a little backward as that might have been the most helpful.  I don't think I will get there until April has finished. 
 Even being 2 weeks or more ahead is helpful. 
 I mostly have weekly income, so it can be a bit annoying and tricky cashflow wise. 
 This is why a month ahead to stabilise everything, reduce anxiety and simplify budeting is very, very helpful. Also the variable income. 

 The plan is that once I am a month ahead on bills, credit card repayments and groceries, then I can start paying extra to debts.  I expect that I can start putting good amounts extra to debts at the end of April, when I should be a month ahead in groceries as well. 

NOT WORKING 

I might have been too frugal and failed to budget for a haircut this month when it was overdue, and I really need it doing I think. 

The main not working is having to support my business expenses. This is a stress. I am owed by a government agency, and cashflow is an issue.  I have had little energy, or ability to build up paying clients and no extra income yet into the business.  But I have had some software subscriptions, phone, accounting fees and two professional qualification renwal fees to pay, many of which snuck up on me.  

I had to sub these with savings and money ear-marked for getting ahead, from personal monies. Business outgoing has exceeded incomings.  Some of those bills went overdue and caught me by surprise, or just suprise and were essential (qualification renewals / CEU provider renewal fee).  This has slowed me down, and been a lot of unplanned extra expenditure.  It's really, really frustrated me to be honest. And made March really, really tight, if I want to stay a month aheaed for April bills and minimum payment wise. I've already had to give up on being grocery month ahead at the end of this monrht for even April. 
Even a haircut at the moment would mean I wouldn't be a month ahead on all bills. 

Also not working:  I have been redoing the garden for a few years and really want to have it sorted enough to grow my own veg in my raised beds this year, and finish landscaping, planting up flowers and making it a functional and pretty gardfen. Spring is the point I need some investment (seeds, bulbs, plants, veg bed protection). I didn't save enough in that category, but the thought of another year not managing it or being happy in the garden because I either don't have funds at the right time or I'm ill is really depressing me. 

I'm thinking for mental wellbeing I need to prioritise it for us within reason. I'm not sure how to make this work unless I slow down being a month ahead, or spend on nothing else for the house or personal. 


I still think that by the end of April I can start repaying debt more than minimum. I will reassess this in April. 
Complicated by really needing a new hob and oven. (We need a new kitchen it's genuinely falling apart, but a functional hob and oven will make me less murderous on a daily basis. Oven does not work. Hob 1/4 rings work, it goes out about 4 times in one attempt to cook, it burns orange. ) I do not have a plan for this really. 

My aim is to start snowballing debt from end of April once I'm all essential monthly expenses a month ahead AND saving monthly amount reliably that is for annual bills. 

Starting with the Next Account which is at about £300 after Christmas and needing a work suit that fitted. 
I think  I can pay that off by the end of May. 
Then paypal credit  (£560) , which is mainly a work related/accessibiity expense of a mini-ipad. I think I could have that paid off by the end of July. 

I'm a little worried that if business doesn't pick up this won't happen, as some essential  business expenses I need to fund, and I can't manage those and pay staff at the moment on business income. 

I also need to find ways of organising myself, motivation and working around being unwell and pain to be able to work more billable hours to increase our income.  This is a priority but a huge hurdle right now. 

I'm tired. I have more surgery in the next few months. 

I'm not entirely sure if I'm winning or not, but I do feel I've made progress even if month-aheads are hanging by a thread that might be undone by a haircut. 

Also forgot to mention I reduced bills Feb and March , and will more from April by :

• stopping delivery pass now I'm more capable going shopping (£3.99)
• reducing cloud storage bill by sorting out cloud storage, reducing and organising files and being able to reduce package (£8.99 saving)
• stopping paying for apple music for a free period Dec-April using o2 priority (£10.99 month)

(This will continue after April as I will move to a new mobile provider that has 6 months free of apple music) 

•    stopped Kindle Unlimited in Jan, after stocking up on fill your kindle day (£7.99)
•    stopped audible (£7.99)

I have also moved my 2 business mobiles to PAYG which was the most cost effective and flexible saving about £5 a month there.  I will hopefully also get £20 cashback per sim card eventually by remembering to check TCB. 

• My personal mobile and device plan is high.  £26.50 airtime, and £28.50 device. My plans become unlinked at the very end of march, meaning I can cancel my airtime contract or move to a different provider.  I have another year left @ £28.50 on the device plan.  
• I have taken advantage of the ee/bt offer of sim only mobile- £9 for 20gb, unlimited text/calls, and stay connected promise. Having spoken to someone at BT, they weren't sure when the offer could be pulled, so I signed up a little early before I could actually cancel my airtime contract without paying off the device plan, meaning there is some overlap. But paid my first ee bill with airtime cashback. So really, I haven't paid extra or lost out erring on the cautious side with an overlap  and worrying that with changes in April they could withdraw that offer. 

So from April , my mobile airtime bill will be £9, instead of £26.50 saving £17.50.

 I also have less monthy outgoings because :

• £12 a month national insurance no longer payable
• £10.50 ish prescription prepayment certificate runs out  - paid monthly for 10 months a year to cover 12 months (may.)

I reached the last payment in Feb.  I will cancel in May when it runs out, because I have co-operative health insurance that pays up to £25 in subscription costs.  I haven't been claiming  it, because it can't be used toward a pre payment certificate. Then it occured to me, I can stop the prepayment certificate when the year runs out, use the £25 until it runs out, gaining two- three months, and then restart the prepayment certificate again, making sure I use what I'm entitled to with insurance. 

 So I will be paying out for a good few months £71.55 less than I was in December in monthly bills and expenditure. 


This is definitely a win! 

Lonelygambler

Every win counts! Well done

foxandflowers

£70 odd is not to be sniffed at! Very impressive. I sometimes think we are not really aware of just how quickly little things add up. 
I would imagine that saving up for a new oven/hob might be quite high up the priority list. I know I am vile if I can't cook in a clean functional kitchen. Have you looked on eBay for ex-display models? You should be able to pick one up for £200 ish. I can also recommend the cheap plug in induction hobs, if yours is making you feel insane. I think we paid around £40 on Big River for ours and it kept me going for three months until my kitchen was installed. 

liselle

Well done on your planning.  Are air fryers the all-singing all-dancing item they’re purported to be, do you think?