Uh-Oh I'm in trouble...

monkeylugs

God I could kick myself seeing how I have been in this situation before!

In October 2004 we had £10,000 worth of debt so when we moved house we borrowed a bit more and paid off the £10k of debt. Brilliant - slate was wiped clean, didn't owe anything to anyone, no credit cards, no overdraft, no pesky bank loan... (oh actually we did have a car loan worth £7000 taken out over three years which I didn't want to borrow extra to pay as it was a low rate loan - 6.9%).

Fast Forward to the next month when the debt-free feeling had worn off and I was stuck in a house straight from the set of "when bad decorating happens to good people". Although I had settled the credit card debt, I had cancelled it so I was left with a shiny card with a balance of £8400 on it. The garden needed doing, the driveway needed tarmacking, oh and we had Christmas to pay for, oh and then we wanted a conservatory. All the time I had been doing my figures and saying "Yep, we can afford the repayments".

At the same time husband has been withdrawing more than his agreed £60 per week, £10 here extra per week, £20 extra the next, £30 extra, and over the course of a year we have maxed out our £900 overdraft due to extra dipping.

So it's finally struck me today that we are back where we started last year - nearly £10,000 in debt!

It's 2 weeks until payday and in our 'everyday' account we've got the grand sum of £27.53 (plus 2 x £10.25 child tax credits over the next two Thursdays) to last me until I get paid on 15th September.

So finally, with a Very Loud Clunk - the penny has dropped.

I was going to set up a pseudonym for myself and post under this assumed identity, but what's the point? Maybe public humiliation will teach me a lesson!

END OF PART 1

1313

Awaiting part II...........until then, are your cards intrest free? If not switch the debt to intrest free cards.

monkeylugs

Hi 1313. No, the cards are not interest free. It's a Barclaycard where the purchases are at 15.9% (going up to 17.9%!), some of it, now I remember, is balance transfers at 5.9% for the life of the balance.

I did apply for a Tesco credit card but got rejected so it's doubtful I could move it to interest free.

Also, another thing which worries me, the minimum payment is 2% of the balance whereas with most credit cards it's 3% so I worry whether I could afford the additional 1% repayment anyway - IYSWIM?

I could just go to the bank and re-mortgage tomorrow as we've got about £50k equity but that's what happened last time, I did not learn how to budget and it did not learn me a lesson.

Part II will follow but I didn't want to risk boring anyone!

meanmachine_2

I don't know what to say.

Maybe we should bring back the stocks.

Only joking...

Why did you "need" this and "need" that? All you need is a roof over your head, your health and some food on the table.

I think the problem is that you thought you'd "cleared your debts" when you remortgaged.

You should have paid these debts off - the hard way, then you mightn't have made the same mistakes.

Sorry. I haven't been much help, or particularly sympathetic, but what can I say? Good luck anyway.

And I applaud your honesty.

monkeylugs

Part Deux

Account 1

1st – Car Loan - £144.86 (6.9 % APR, last payment 1st June 2007)
1st – TV Licence - £ 10.49
1st – Water - £27.60 (pay this over 12 months so no breaks)
2nd – Telewest - £55 (average for TV, Broadband & phone)
3rd – Alliance & Leicester - £3.50 – interest on overdraft @ 7.9%
4th – House Insurance - £13.07 (buildings & Contents)
6th – Electricity – SWEB - £25.00
13th – Gas – SWEB - £35.00
15th – Council - £65.00
15th – Karate - £35.00 ***
17th – Vodafone - £60.00 (2 mobiles, contracted in for 18 months)
20th – Conservatory Loan - £134.63 (6.9% APR – last payment March 2010)
22nd – Life Insurance - £9.60 (Decreasing term for mortgage)
28th – Mortgage - £394.80 (£67900 owing, value £120,000)
Every Thursday - £5.00 – kids savings account **

Total = £ 1033.55
Total Income = £ 1236.60
Surplus = £ 203.05 pcm (of which my husband withdraws £60 every week leaving a deficit of £36.95)

However it doesn’t “really” leave a deficit because he is paid weekly and this budget is based on four weekly pay but of course every three months (next one being December) he gets five wages that month – so we have an extra £309.15 coming in every three months.

Yearly debits = £12402.60
Yearly Credit = £ 16075.80
Yearly Cash Withdrawal = £3120
Grand total = £553.20 cr (+ possibly £420 if karate is cancelled) + (possibly £260 if savings are cancelled = £1233 surplus at end of year)

** Have put £35.00 per month to my son’s karate club but he’s decided he doesn’t want to go. I’ve written and cancelled but you sign a 12-month contract each year and the get out clause is 3 x months payments plus £30 fee. The club recently moved and it’s inconvenient for me to get to. I told the manager I would try to get there but we only managed 3 out of 8 classes owing to the time of the class, and the distance to travel. Before the move he did say if we couldn’t make it he wouldn’t make us honour our contracts but I am awaiting written confirmation.

** - should I cancel the kids savings for the short-term? My plan for them is to be handed over when they are 18 (or later) for university or towards a deposit. It’s £130 per year for each child, the little one is 2.5 and the oldest is 9.

So that’s Account 1 – Account 2 to follow…

monkeylugs

PART 3

Account 2

15th – my wage - £408.00 (estimated as pay rise is due)
Every 4 weeks - £113.20 child benefit
Every week - £10.25 – child tax credit

Guaranteed monthly income = £531.45

1st – Barclaycard 2% of balance = £168.00
Weekly on a Monday - £25.00 petrol
Grocery & Nappy budget - £220.00

Total remaining = £43.45! (Yikes)

I have to say in my defence that I don’t usually use my full grocery allocation on groceries so anything else that needs buying that isn’t a lot of money I can afford to pay for, it’s unexpected and annual bills that I need to budget for. I paid this year’s car insurance on the credit card because it was the cheapest quote I could find (£604) but when they whacked on their interest for monthly payments it ended up being about 27%! So I need to be able to save up for emergencies.

I also have two other jobs as a mystery shopper and selling Avon. Unfortunately I have lost a lot of Avon business owing to the fact I moved and my territory was too far for me to carry on but I could start going around family and friends again. I also changed jobs and my new colleagues don’t seem as interested in Avon as my old colleagues do. I used to be able to rely on £100 every three weeks, but now I’m lucky if I can get £20 every three weeks. I asked my Area manager for some territory but there is nothing nearby.

The mystery shopping is very unpredictable too. I have only got one job scheduled for NOP and that isn’t until the beginning of November. At the moment I don’t feel that I have enough spare cash to go and buy a burger meal and then wait ages to be paid for it, so I am only accepting jobs where I don’t have to purchase much.

monkeylugs

Right - Gosh, is it bad form to reply so many times to one's own posts?

I have reduced my Telewest Package by £10 per month by downgrading from the supreme package to the starter package.

Have been looking at getting rid of broadband internet access too, but I think I would end up spending quite a bit more on dial up.

Xbigman

Car tax, insurance, MOT costs , emergency fund, electrical replacement fund, xmas/birthday money.

You need to allow for all these too (and I bet I've missed something).

BTW £60 a week spending money is a lot. £20 is reasonable, which is of course £40 really because you should get the same.
Regards



X

margaretclare

monkeylugs wrote:

In October 2004 we had £10,000 worth of debt so when we moved house we borrowed a bit more and paid off the £10k of debt. Brilliant - slate was wiped clean, didn't owe anything to anyone, no credit cards, no overdraft, no pesky bank loan... (oh actually we did have a car loan worth £7000 taken out over three years which I didn't want to borrow extra to pay as it was a low rate loan - 6.9%).

You've made a very common error which you describe in your very first sentence. You had £10K of debt a year ago so when you moved house you borrowed a bit more and paid off the £10K. 'Brilliant - slate was wiped clean - owed nothing to anyone...'

Only it wasn't like that, was it? You didn't 'pay off' the debt, you borrowed a bit more. So you still owe the £10K as well as the car loan and everything that you've taken on since.

You should really be clear and sincere with yourself, because this thinking you've cleared a debt by 'borrowing a bit more' is where an awful lotta people get themselves into hot water.

Oh how I do remember those phrases - 'we can just about afford the repayments'....been there I'm afraid, am speaking from bitter experience.

You're taking steps now to set it all out, and not deceiving yourself is a very important part of it all.

Aunty Margaret

monkeylugs

It's this blinking budgeting mallarkey I can't cope with. I don't know where to start or how to go about it?

Feel like I am banging my head against a wall!

nelly_2

Well a simple budget is whats coming in verses whats going out.

Theres a budget planner somewhere on this site, get that fill it in. Its quite a bit of fun after a bit, tweaking all the expenses, it becomes like a semi-obsession.