Third-Life Crisis

Goingroundincircles · 23 July 2017 at 6:21PM

Hi Lucylocks,

Sounds as though we cook similar things and we also don't tend to do ready meals. I did have to get dishwasher tablets and laundry detergent this week though - which I include as part of my food budget. Must try harder next week!

Car insurance is high as it's actually for two cars, I put 1 under 'owned' as technically the other is a hire purchase one. It's also high because the other half seems to enjoy having an accident or two every year and is pretty much uninsurable. :mad:

Just had a quick flick through your last diary, sounded like I was reading about myself (minus the kids) :rotfl: Congrats on paying so much off already!

Goingroundincircles · 24 July 2017 at 7:15PM

As the month is coming to an end and we're already over budget for food and petrol, I thought I'd think of some positives to cheer myself up.

1. Haven't done any shopping for the first time in forever
2. Haven't spent anything on a credit card
3. Haven't yet spent all of my spending money budget

I'll take that as a mini win.

enthusiasticsaver · 24 July 2017 at 7:33PM

One thing hits me straight away. £450 entertainment when you have a £26 shortfall is extremely high.

enthusiasticsaver · 24 July 2017 at 7:41PM

I have just read your comment about spending more than £1000 on entertainment in a month. Seriously that is huge for just 2 people. It looks like that budget is the one you need to tackle, not the groceries which is ok.

Can you move the credit cards charging interest to 0% or have those deals dried up now the debt is so high?

Goingroundincircles · 24 July 2017 at 7:51PM

I completely understand why you'd say that, enthusiasticsaver, but if I tried to reduce our out of control spending any further straight away we would just end up miserable and spending on credit cards. We've been there many times before. I know it all sounds ridiculous but we just hate missing out on life experiences. I'm hoping that eventually we can bring it down.

And yes, we've done all the 0% shifting we can at the moment. Hopefully once we've started clearing some debt we'll be able to get some more 0% cards.

enthusiasticsaver · 24 July 2017 at 8:11PM

Goingroundincircles wrote: »

I completely understand why you'd say that, enthusiasticsaver, but if I tried to reduce our out of control spending any further straight away we would just end up miserable and spending on credit cards. We've been there many times before. I know it all sounds ridiculous but we just hate missing out on life experiences. I'm hoping that eventually we can bring it down.

.

This is something you need to get to grips with though or the sheer level of debt and monthly repayments will make you miserable. Your whole salary is going on debt repayments not including your mortgage or car hp. What sort of life experiences are they and can you look for cheaper options?

The way to stop spending on credit is to cut them up so you are not tempted. I would strongly urge you to save an emergency fund too though as you seem to be on a debt precipice and one bad thing happening could tip you over the edge into defaults.

Goingroundincircles · 24 July 2017 at 8:53PM

I've wondered about that. Should you be saving if you're in debt? And how much would you put aside each month?

We've got lots of commitments over the next couple of months in terms of days out and mini breaks but I'll be looking for the cheapest possible way to do them plus setting a budget for each - something we never would have done in the past.
We've invited friends round this month instead of going out for dinner which was great, so we'll be doing more things like that.

Thank you for your advice, I really do appreciate it. A whole salary on debt - how depressing

enthusiasticsaver · 24 July 2017 at 10:46PM

Goingroundincircles wrote: »

I've wondered about that. Should you be saving if you're in debt? And how much would you put aside each month?

We've got lots of commitments over the next couple of months in terms of days out and mini breaks but I'll be looking for the cheapest possible way to do them plus setting a budget for each - something we never would have done in the past.
We've invited friends round this month instead of going out for dinner which was great, so we'll be doing more things like that.

Thank you for your advice, I really do appreciate it. A whole salary on debt - how depressing

An emergency fund is an essential if you have debt to stop you putting more debt on the cards should something happen. You own a house and a car so if some essential repair was needed on either this would be classed as an emergency. Given that you have a shortfall each month there is no leeway to pay for said emergency hence you need an emergency fund.

Some people class an empty credit card as an emergency fund but I would advise against that. Other debt advisors suggest saving an emergency fund before tackling debt reduction. I personally think £1000 is a decent emergency fund but given your budget is so tight maybe £50 per month savings would be a good start and if you have spare money at the end of the month use that to top it up. Once it reaches £1k channel the £50 towards the debt instead. As I said earlier at your level of debt you should be stopping all use of credit cards and overdrafts right now.

You have done the snowball calculator showing you will take 5 years to repay the debt assuming it rises no further. If you manage to get some 0% cards or pay more than £1500 each month this may take a shorter time but if you stick at that 5 years then you will be repaying £18k per year or £90k over the 5 years. That is a scary level of debt to repay so both of you will need to get on board with cutting back. Is your OH committed to living within a budget?

I wish you every success.

Treadingonplaymobil · 25 July 2017 at 5:30AM

It sounds like you're at the beginning of a long and somewhat tiresome road. As someone who started out with a similarly insane entertainment/clothes/frivolous stuff spend, I sympathise. It takes a hell of a lot of work to get it all under control when you've been used to 'deserving' a certain level of spending. I don't know whether the solution is slow and steady or hard hitting, but I think the first step is to find a way to make your budget balance and get rid of that £26 shortfall. I personally found that as long as I was short of making my budget balance, there was no incentive to try harder, as I was always going to be short, so what difference did one more coffee/bit of shopping/meal out/takeaway/cafe trip etc make?

We're almost six months into the process and progress is slow and boring when the debt is this big, but for us it's a case of working out a balance between living our lives and repaying the debt, as we're going to be repaying it for a lonnnng time - one or two years of very frugal living isn't actually going to make it go away, so we need to work out what level of frugality we can live with in the medium term.

Goingroundincircles · 26 July 2017 at 1:30PM

You have done the snowball calculator showing you will take 5 years to repay the debt assuming it rises no further. If you manage to get some 0% cards or pay more than £1500 each month this may take a shorter time but if you stick at that 5 years then you will be repaying £18k per year or £90k over the 5 years. That is a scary level of debt to repay so both of you will need to get on board with cutting back. Is your OH committed to living within a budget?

£90,000 :eek: I haven't been able to get that figure out of head. That is such a ridiculous amount of money I can't even comprehend it. Thanks for putting this is black and white, its really shifted something in my head.

I personally found that as long as I was short of making my budget balance, there was no incentive to try harder, as I was always going to be short, so what difference did one more coffee/bit of shopping/meal out/takeaway/cafe trip etc make?

This has been us for so long, thinking we're already in huge debt so what difference will some more make. Well no more. I've been reading your diary TOPM and it's what inspired me to sort myself out and start my own diary - so thank you!!

I have finally cancelled the spa which means my budget balances now. And I have moved £50 from entertainment to an emergency fund (thank you enthusiasticsaver).

I have also had two bits of good news; I do have contents insurance - I actually paid for something upfront for once :T and I've just been accepted for a 0% card after closing a Tesco one which I had paid off. So I will do a bit of shuffling once the credit limit is confirmed.

I have two expensive months coming up of things I have already committed to, so for the first time ever have written down a budget for each thing and will try to earn the money through extra earnings. After this all extra earnings will go towards debt and I will try to get that entertainment budget down even more.

Question, do I throw extra money at 0% offers first or high interest rates?

Third-Life Crisis

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