Life After Debt

There is a forum I go on quite a lot and they were instrumental in helping me first getting cracking with my debt.

I was lurking around a different area of the forum and I found that someone who used to run a thread had started a new one. They closed the old one, which was their Debt Free Diary, when they became debt free in January this year.

Their new thread was about how after they became debt free they had suddenly started experiencing huge anxiety over money, about saving, and feeling immense guilt whenever they spent any money even though they had actual money to spend.

This has got me thinking because I wonder what will happen after I become free from my credit card and overdraft debt.

The truth is I won’t become debt free even when that is clear, as I will still have a student loan, and I still owe my boyfriend money. All it means is I will be free from the highest accruing interest debts.

But I know that I want to live on the same reduced disposable income, as I want to put what I am spending on debt clearance each month towards my savings. Because I want to learn to drive. I want a car. I want to travel. And I want a home of my own. Which means the debt tackling journey will begin all over again.

A mistake people make (I certainly made this mistake) is they say ‘Oh if only I had a pay rise, then everything would be ok!’

The trouble is people match their spending to their income. So if you get a 20% pay increase you will soon increase your spending by 20%.

So I want to make sure when I have paid off my credit card debt and overdraft that I put all that money towards my savings.

Another popular money management term is ‘Pay Yourself First’

Sounds fun doesn’t it? I like the sound of paying myself money.

But what it means is you transfer the money from your paycheck to your savings before you even get a chance to register it being there in your account.

Some companies will do this for you, they’ll split your wage between two accounts. I know that my employer does this.

So getting out of debt is one hurdle. What you do afterwards is the real challenge.

You know there is that statistic of x% of people who lose weight put it all back on PLUS MORE within a year?

I’m not sure if anyone has ever done a similar stat for debt but I don’t want to be in that group.

The sad thing is I have a long way to go before I worry about this.

Financial Review of Week 9

Another spendy week, the usual after payday.

FOOD

Lots of food!

It’s easier to say I have £52.70 left out of the £200 budget. So £147.30 spent.

WORK EXPENSE

Milk for work £2

TRAVEL (DAY TO DAY)

Bus £1.70

HEALTH

Ibuprofen due to evil pains £2.29

SOCIAL

Indian Meal £7.50

Coke £1.99

Burger, Chips, Onion Rings and Coke £17.55

Coke x 2 £5.40

San Pellegrino £2.65 

FOOTBALL DAY (BUDGET £40)

Train to Football Match £3.90

Burger, Chips and Gin and Tonic £7.75

Pepsi Max £2

Coffee £1.29

Beer and coke £6

Tuna Melt £4.60

Chocolate Shortbread £2.30

Total Discretionary spends this week = £68.92

I think I have discovered the reason why I am overweight. I did say to my boyfriend that our social life was affecting my weight loss plans but no one exactly force fed me the 2 x burger and chips and Indian Meal!

I will try hard to clock up some No Spend Days this week. I achieved 12 in February. I am aiming for 14 in March.

 

 

 

January 2017 Financial Review

Hi everybody,

It is the end of the first month of the year. I am 1/12 of the way through a No Spend Year and it is time to assess how I spent my money this month.

HOME £5/£2.50

WORK EXPENSE £5.90/£7.50

SOCIAL £161.07/£25 (ooops)

HEALTH £13.50/£5

GIFT £27.87/£25

TRAVEL (DAY TO DAY) £2/£10

So good points:

I was under budget on a couple of categories.

There were no ‘forbidden’ purchases.

Nothing was put on a credit card (not that it was going to be but still I celebrate small victories).

Some budgets will be inflated this month but will balance out in the long run.

Due to my payday being before the end of the month some of these expenses were from my December-January pay and some were covered by my most recent payday.

January will be a weird month anyway as my account balanced was increased from having Christmas present money.

Bad points

I am over budget on most categories including a very, very high balance on my Social budget.

And that is all that needs to be said.

Hmmm.

Let’s look at my January accounts:

MONEY IN

£1485.62

MONEY OUT

£1378.45

DIFFERENCE

£107.17

Which in theory is great, except I don’t know where this £107.17 profit has disappeared to.

Better than my ‘January 2017 Accounts’ spreadsheet telling me I am in debt this month, but it is confusing.

I need to reign it in this February. I don’t have Christmas money going spare, I only have what is in my account and purse. I will have to be careful.

The Truth about Debt

Let me tell you the main thing about getting into debt.

Getting into debt is super easy.

Think about it, it’s managing your money that is hard. Making all those decisions, putting things back if you can’t afford them, saving up for things, that’s the hard stuff.

But if you have had at some point a pretty ok credit rating you can destroy this very quickly.

Here’s how it happened to me.

I have worked sporadically since graduating from University. I was in no way afraid of hard work (I at one point had SIX jobs), but I have only had one full time contract with a yearly salary in my lifetime. Everything else was short term, casual contract, volunteer work, self-employed work or something inbetween.

At some point after leaving University I was offered a Barclaycard credit card. I already had one credit card, but somehow I had misread things and thought the Barclaycard was a 0% balance transfer card. Which is one of the credit cards you do want. I had a guess that my income was about 10k a year (it wasn’t) and signed up.

Initially despite being very poor due to working part time on a casual basis I was good with the credit cards. I paid them off in full each month. This did mean that I had cash in my account for about 3 days of each month, as all my money would go on paying the credit card in full (I was too afraid of paying just the minimum) and then I would use only the credit card to pay for things.

This led to a particularly low moment when I was forced to buy a 40p reduced loaf of bread on a credit card as I had zero in my current account.

Somewhere around 2013 I got sick of my deprived lifestyle. I had just left a job that was so awful it made me have to take anti-depressants. I had cleared the Barclaycard months ago and destroyed the old card. I ordered a new one and spent. And spent. And spent. I had Amazon deliveries coming about twice a week. I ordered books I wanted to read, I ordered sports gear, I bought clothes and everything else.

I then went to climb Snowden with my sisters, whilst coming back down the moment I got a call from Barclaycard to say my request to increase the balance had been approved. My sisters cheered for me, but even at the time despite the freedom to buy more things that caught my fancy I knew that this was a low point.

I started a new job, which I was fired from after 7 days because the villains at my old job put a stop to it (I will tell you more about this point in my life another day). I got another job, but it was again casual. I maxed out my credit cards at Christmas.

I survived through my pittance of a pay slip and lots of borrows off my boyfriend. It was in about 2014 when I was thinking about the book series ‘Confessions of a Shopaholic’ . I didn’t know how someone could amass a huge collection of credit cards as I thought you could only get them through a bank. It then occurred to me that there must be other ways to amass credit cards.

A quick google search later and I had an Aqua Card heading my way.

I thought I would use it to buy a laptop, or to pay back my brother, but I was a twat and used it very very quickly. I blew through 500 quid in a couple of weeks.

At this point my credit rating was still passable so I quickly ordered another card. And then another.

My monthly bills went sky high. I blew through this money (borrowed money) so quickly that I am ashamed of the way I behaved.

I was a complete and utter idiot. I was selfish. I was bad. I was awful.

Getting into debt is a stupid, stupid, thing to do.

I was depressed, and debt and depression usually go hand in hand. I was buying things because I wanted to feel better because I felt so awful on the inside. My confidence was zero. I believed I was worthless.

I was sick of not getting anywhere with my career. I was sick of working casual jobs for minimum wage. I was sick of not owning the same things my friends did.

I was wrong. I was selfish. I was a twat.

When one of my credit cards was extended in late 2015 I used it to pay off a long debt I had to my brother. Finally I was free of that, but I had caged myself into a long standing debt on that card (which was one of five).

My minimum payment for that card alone soon reached nearly £200.

I had reached rock bottom finally. In debt there is the point of no return. The point when things are too late. The point when you have screwed everything up and things are almost irreversible.

I was thankfully about 1 month away from having a financial catastrophe. I stopped myself just in time before I would have had negative income. And it coincided with a new year, so yes, it was a cheesy ‘new beginning’.

Since January I have done a complete 180 on my financial situation.

I used to almost be turned on by the things I bought. Now I get excited by what I save, even if it is just a matter of pennies.

Getting into debt is so easy. Credit card companies don’t exactly make it hard, because here’s the big secret.

They want you to get into debt with them. As long as you can make the minimum payments each month they will have you for life. They will have your money each month. They will take you for everything you’ve got.

Please do not think for one minute I am blaming the credit card companies for my mistakes. I made them wholly on my own. No one exactly forced me or tricked me into getting into debt. I knew the risks. I dived in anyway.

I will tell you more about what I’ve achieved this year. I will teach you how to save money. I will show you there is a way out.

But just remember, getting into debt is easy. Getting out of it? That’s the achievement.

A Fresh Start

It has been a while since I last posted, and I guess it’s time to come clean.

Through a combination of bad/casual/infrequent employment over the years since graduating, and also a result of ‘being a twat’ with money, I have rocked up nearly 6K of credit card and overdraft debt. This is in addition to my student loan debt of around 22k, and also a not insignificant debt I owe my boyfriend.

After nearly a year in a wonderful role in a job that was everything I had wanted I am now in that tricky stage where I’m between contracts with my employer, so I am for want of a better word, unemployed.

I decided this year would be the year I got serious about paying back my debt. 2016 started off with good intentions, but there is no denying that I began 2016 by checking my bank balance after a hefty Christmas to find I was nearly 20 quid into an UN-arranged overdraft. Which meant I was over my arranged overdraft of a thousand pounds, of which only 500 quid was interest free.

However, up until June 2016 (the first month of my technical unemployment) I had been making great strides. I had not touched the (5) credit cards at all. Considering I spent most of 2015 paying the minimum on the (5) credit cards, and only doing so so that I could then spend that available balance once the payment had cleared, you can see that not using the cards was an achievement.

I managed to survive June 2016 through self employed work, selling everything on ebay, getting refunds on bad purchases and a little bit of moxy.

July was a different kettle of fish though, and somehow I had lost my desire and ended the month borrowing the money I needed to pay my bills off my boyfriend. So more was added to that debt.

I am determined that August will be different, and because I’m a bit of a masochist and love giving myself extra work I thought ‘Hey, why not just survive the month, why not blog about it as well?’

If I can help anyone going through a similar situation I will, or at the very least I will keep you company.

I will tell you more about how I got into this mess, how I did so far this year, and how I intend to get out of it forever.