Debt Number 3 : For those who feel they are drowning and want a way out

[TalkinPeace]

This thread follows on from Nerf's incredibly useful
FIRST www.mumsnet.com/Talk/legal_money_matters/1969188-Can-we-have-a-support-thread-for-people-who-are-massively-in-debt
and then
SECOND
www.mumsnet.com/Talk/legal_money_matters/2011878-Debt-support-thread-2?
threads about realising you are in and supporting each other out of debt.

I am not in debt, any more.
Here is a link to some spreadsheets that might help
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

and lots of people use this
YouNeedABudget

The important thing to remember is

• yesterday is as past as the Crimean War

( we will not judge how you got into debt, but we will support you on the way out )

• this is an anonymous forum

( we will not tell your employer, family or friends of the reality of your numbers )

• this thread is about supporting people through the huge mindset changes needed to come out of debt

( feel free to offload all of the feelings that drive you to want to spend, that make it hard to save and that generally make life crap at times )

Join in, bare your soul and come out the other end.
Its worth it.
You are worth it.

Debt update: 11/6/14

CC1: £4692 £4595 £4532 £4467

CC2: £3781 £3675 £3659 £2,859 £1,774 £1,395.17

Car hire purchase: £3764 £3108 £2,780

DH Old Student Overdraft: £1940 £500 £0GONE & closed

CC3: £1692 £0 GONE & Closed

CC4: £1405.49 £0 GONE

Total: 17,274.95 £13,944.54 £11,799 £10,335 £9,021 £8,642.17

Finally got that bloody refund Scottish Power still haven't paid the £75 compensation they have been ordered to pay, I'm going to ring the ombudsman this week.

Hi, may I join? I saw this thread pop up on active conversations and thought it would be really nice to have some company on this subject.

DH and I have a lot of debt. $85,000 (American) in student loans, credit card debt, and a car payment, which I think is about 110,000 pounds? I cannot believe we owe that much money. I don't worry about it every day, but I don't want to be so financially vulnerable forever. It feels incredibly unsafe.

I think we live frugally but I can't say we're making much progress. It tends to feel like one step forward, one step back, and I feel a bit down that we're at this point in our late 30s. It's embarrassing. I also often feel sort of confused that other people we know seem to be managing so much better on similar incomes. I think I might need to make a spreadsheet of the debt or go back to the envelope system or something. In a way it feels like there's no point to doing any of that since I already roughly know the numbers. But b/c every time we make a little progress, we have a setback, I feel discouraged. I think I need to find some way to feel more like we are in control and/or tighten the budget.

Last year was hard I was unemployed in the summer, then DH's company reduced work hours in the fall, and we used up savings and had to use credit cards at the end of the year. We did manage to keep paying down the credit cards aggressively every month, the whole time we have a policy that no matter what, we do not reduce the payments to the cards -- but since we also used up our savings and then had to use the damn cards in December I'm not sure how much good that policy did But we have kept on making the same high payments so that must be doing some good. And we do now have $1000 back in savings for emergencies, which was my first goal for 2014. I will get a raise in August which will be wonderful. I am a little torn about what to do with the extra money: focus on paying down debt faster, or increase savings? I'd feel so much safer if we had 3-6 months of living expenses saved, in case anything happened, but it will take years to save that much up.

I'm sorry this was such an essay and now I have to go to bed. Will go back and read thread more slowly tomorrow.

Hi KeatsiePie

Welcome. I'm fairly new here and have found it a fantastic thing to be a part of. I've been doing the envelopes this month and every time I've taken money from them I've tracked the balance on the front of the envelope and written what each expense was for, it really does focus the mind. The support here is wonderful too, keeps me on the straight and narrow and reminds we why I'm doing this even though it's been a really tough few weeks.

I think the default advice would be to focus your efforts on paying down your debts as you're liekly to incur more in interest on your debts than you will earn on your savings, focus on the one with the highest interest rate first and pay slightly more than the minimum payment on the others. However, I understand your position of feeling vulnerable with no rainy day fund.

I will leave it to the old guard to provide you with some actual helpful advice but I didn't want your message to go unwelcomed whilst they're busy in the real world.

Have stayed up too late reading debt blogs. calculatorsatdawn I love your nn. Thank you for the nice welcome.

It's true, the interest rate on our savings account is basically nothing. I think you are right that the focus should be on the debt. I just would feel better if I could look at the balance and see it rising. But maybe it would help if we did the debt snowball rather than spreading the overpayments across cards, so that the debt would go down more dramatically.

I was also thinking about a split plan: for 6 months of the year, put extra money in savings, and for the other 6 months, put it toward the debt. Could alternate months so that interest doesn't build for 6 months. But maybe it's no good to divide one's efforts like that.

I'm sorry you've had a hard few weeks. I think reinforcements are so vital to this process, since it can feel so slow and so painstaking -- glad the thread has helped, and the envelopes too. I should start my grocery envelope back up at least. You're right that it's focusing; nothing like the prospect of getting up to the register and not having enough money in hand!

Another one bites the dust! Share sales proceeds in ac today so have repaid OD in full, 2 months ahead of target - woohoo! Budget and envelopes on track until pay day (20th). Having a treat next month and using debt repayment for long overdue bedroom carpet and then it's time to start hitting my car loan. Current balance is 6907 - with my planned overpayments, I would be on track to repay it in full by December - knocking a whole 17 MONTHS off the original term ... and that's NOT including the interest reduction (don't know how to calculate that lol) - I think I might actually be starting to see light at the end of the tunnel!

Right - we're going to do done car downsizing. Yippee...

Now (this might be a bit shocking but bear with me)

Dh has a prestige car. It has £20k owing as a settlement figure. Car likely to be worth £22k

We don't need it so have decided to get rid (hooray)

Now.... I think we're planning to get a loan, pay off car finance then sell the car and pay back the loan. (We don't think we can sell it whilst on finance)

Any other tips great fully received x

Hi all. Have name changed (used to be badvoc)
God, what a nightmare couple of months!!
I started ynab but dh not on board...he doesn't see the point. (?) he reconciles his accounts at the end of each month - but as I have said to him, how does that help us actually budget!?
Just had car tax due and I did the year option so it doesn't fall in December again...
So that's £130
Had to get clothes for hols (I have lost weight since my op) and even e bay bargains add up don't they?
Ds1s b day this week, Dhs last week and Father's Day - first one without my dear dad :(
So...I am £100 overdrawn this month already.
Debt...loan of £9.5k which we have 3 years left - £298 per month (house issues...)
That's it, but it feels huge ATM.
We have no savings...well, £200 in a isa!
I don't know where to start or how to begin saving and cutting back.

Hi Keats Welcome aboard.
Your exchange rate is pessimistic : $85,000 is around £60,000.
I was born in NY so am comparatively clued up about the differences in your credit laws
BUT the principles of locking down interest apply everywhere.
THe student loans in the US are different than the various UK ones.

(((( Christwaddle/Badvoc )))))
How much do you actually need to cut back versus rein in.
In that if the loan is a secured on, the interest rate will be bearable and the payments are already locked.
Can you set aside £10 a week for panics?
Or 5?
Just that if you succeed at something manageable it helps

DH reconciles his bank account, but does he add in all the uncleared payments and things he'll have to buy next week?
Download my budget sheet again.
Fill it in for him but deliberately riddle it with errors - that way he might put it right

Hello everyone here's some good news before I properly catch up. Thanks to you lot and your positive attitudes I hid some money away in a six month bond - a sort of attempt to save up. Well, I just found it, and on July 775 is coming my way.
Thank you sooooo much, because it is very timely although 500 will go on my loan.

Now, miss annersley your updates are brill and a reminder that slowly but surely works well.
Mum - amazing as always
Keatsie pie hello! Listen to TiP.
CalculatorsatDawn, hello again - car sale is a plan.
Christwaddle - I kept envisaging Jesus in a nappy, but it's football isn't it!

lookrightnow
I thought you can sell it with the finance and get part of the sale proceeds paid directly to settle the finance (avoiding arrangement fees)

are you selling privately or through a dealer?
just that it would be nice to put that £2000 towards better uses than arrangement and penalty fees for bank parasites

Nerf
Well done. Look after the pennies and the pounds will look after themselves.

Yes TiP I think you might be right about the car, and taking a loan involves early penalties etx quite often.

I have googled and seen that some people do sell the car this way... Get buyer on the phone with credit card to settle finance and the seller either makes up the shortfall or the buyer pays the seller anything left owing.

DP is going to ask around. He knows some people in the trade. I can't really imagine a private buyer knocking at our door with that kind of money tbh.. I'll just be pleased to see the back of it. It just represents a past life that isn't "real". It's an illusion of grandeur and wealth. Urgh.

Take a picture of it before it goes to keep reminding yourselves that no object is worth going into debt for
(says she looking at spending over £35k on cars in the next year!!!)

marking place as I keep falling off!

Ooooh what car TiP? Bit of vicarious shopping please

Nerf...it's a typo of mine that seems to have stuck :) I also sadly had a mullet just like his circa 1984 :)
I went through my receipts last night and was horrified! Ok, it was a 5 week month but we spent £700 on food!!
It can't go on.
But I have no idea how to cut back.
We eat a lot of fresh fruit and veg, meat/fish most nights.
Dh takes pack up, as does ds2 and ds1 stays hot lunches - which is £40 per month.
Managed to get most of their new uniform for next term already at the sainsbos 25% off sale - £1.50 each for a red sweater! :)
Just need trousers I think, and shoes.

We're in the same position with our car, lookrightnow, although we owe much less on it so our plan is to wipe out the remaining CCs, then aggressively save the settlement fee (probably about 3-4 months of saving) and then pay it off. We actually haven't decided what we'll do with it once we own it outright, but I'm leaning towards keeping it and saving up over 5ish years for an electric car. Hoping they will come down in cost soon - their running costs are less than a 10th of a normal car!

Nerf replacement 4 seater convertible and replacement magic carpet estate car.

Chris
THat is a LOT of food. You need to look at how much you are buying as bare ingredients and how much as processed and packaged.
Do you internet shop or real shop?

I do a bit of both TIP.
It's insane.
Dh and ds1 have very big appetites, granted, but still...
Next week I am starting to go to farmfoods and aldi.
Will see if works out cheaper (I seem to spend a fortune in aldi???I don't know what I do wrong :()

I've just come home from Waitrose.

Pre grated mild cheddar was the same price per kilo as the vintage gorgonzola.
Folks have to get out of the habit of buying ready made stuff.

I'd avoid FarmFoods like the plague as you have NO idea what is in their stuff.
The meat may be cheap but it will largely be testicles and innards.

I spent £200 including refilling the Wine rack, the fridge, the freezer and the detergents cupboard.
That will feed us till late next week (apart from £30 to the butcher on Saturday).
Broccoli with a wrapper on was twice the price of loose broccoli.
Broccoli florets were twice that price.

A lot of people fall for the "convenience" of pre prepared food, without factoring in that they are paying the manufacturer around £20 an hour to cut stuff up for them.

Time costs money. To save money, make time.

PS : spending a fortune in Aldi is easy : look at what is on your receipt. I bet it includes booze, crisps, snacks and deli treats.

Oh god no, I wouldn't buy meat from there! :)
I tend to buy meat from The co op (no butcher where I live sadly)
I like it for cheap cleaning stuff etc
I find aldi odd. Their stuff is good, but such a small choice, and I always end up having to top up/buy stuff I couldn't get there.

Well bugger me - just received a cpp rebate of £250. DH had it...

Have allocated it all in the budget (and donated some to charity)

I've read that back and I sound very smug, but it's all true

yay, look!! that's so great and you don't sound smug at all.

atm we're spending about £40 on fruit, veg, salad and fresh stuff for about 10 days worth of eating. Tips to get this down??