£163? On Milky Bars? Oh, alright then….
Friday 16th May, 2008 - £9,443.29 in debt…..
Imagine you’re having a quiet drink with Paris Hilton, discussing the usual things: make-up, pedicures and handbag-sized hounds. Suddenly, you throw in a question about particle physics: imagine the expression on her face.
Multiply all that confusion, panic, sadness and resentment by one million. That is exactly the expression I was wearing fifteen minutes ago, when I completed the budget planner from Martin Lewis’s website.
It’s not that the planner is hard to use – quite the opposite. The problem was that, when I got to the end, it told me that I was in a positive financial situation. In fact, at the end of an average month, I apparently have £163 left to spend on Milkybars or throw out of the window or whatever.
This is clearly not the case, so I went over it again with a couple of bank statements sitting next to me. And here’s where I realised why I am in so much debt: I just don’t notice the money going out of my account.
The edited highlights:
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I spend at least £20 a month more than I think I do in Boots.
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I think that my boyfriend and I spend £100 on food in a month, but the actual figure is closer to £200.
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And since when did anyone pay £150 a year to maintain an eight-year-old car? My last MOT bill was easily double that.
The fact that I don’t know what I’m doing with my money isn’t entirely unexpected. But the fact that I spend £235.15 more than I earn, EVERY SINGLE MONTH, was a very forceful punch in the face.
The moral of the story is: If you’re thinking about getting out of debt, given the current climate and what-have-you, download the budget planner from www.moneysavingexpert.com and prepare to be brutally honest.
It’s the first time I’ve ever taken a serious look at what I spend, and it’s been a huge eye-opener. Which is why, when the cheques for two of my Ebay sales cleared today, I transferred the £42.25 straight onto my NatWest card within seconds. And it’s also why I’m hyperventilating with panic.
Olivia Buck Needs Debt Help - Day 15
Get your accounts all online - this way you can see the balances of your cards and other accounts daily. The added benefit is that if anything untoward is happening on your accounts you will notice it immediately. Fraud happens, and this way you spot it quickly.
Having said that I’ve never had a problem on any of my online accounts - touch wood.
I’ve opened a simple savings account for each of my creditcards and whenever I use a card I immediately transfer the balance spent to the savings account. At the end of the month the savings account balance can be used to pay off the card, plus you get some extra interest. This way you are not tempted to spend the money twice !
Good luck
Hi Olivia, as someone who is just escaping the hell hole of debt I have just read your blog and wanted to both summerise my story and wish you luck on your journey back to credit freedom.
I also live in Devon with my hubby of 20 yrs and 3 kids, two teens and an 8 year old. I’m not going into the hows and where’s of how we managed to accrue 34 grands worth of credit card debt but we did, and when I fully discovered the extent I spent an excruitingly stressful 6 plus months trying to sort it out.
Long story short, we got a financial advisor to help us out of our hole, best thing we ever did as we could see no way foward other than baliffs and loosing our home. He helped us to arrange a re-mortgage in our case and now instead of paying out £400 odd a month on the mortgage, plus approx £600 on debt (damn that interest), we are now paying £624 a month on the mortgage and have paid off all but one card, that ones being cleared this month soon as hubbys wages hit the bank. We then have just a couple of small bills owing to a local garage and the kwik fit guys (who also stitched us up with a ppi for a set of tyres back in the year dot), to pay off. That will hopefully be gone within the following 3 months.
I also downloaded Martin’s budget planner and that has been, as you said, a real eye opener. I’ve saved a copy for every month up until next Feb and will be using it religiously from here on in. We are now for the first time in 22 years together able to put back savings every month to cover the yearly holiday and xmas, both of which before we’ve used the cards for. So that in itself is a huge relief. Once we’re completely debt free I aim to also save for emergencies and fun stuff with the money which Martin tells me should be left at the end of each month, yes we will have some left instead of being nigh on £300 into the overdraft every single month.
This has been probably my biggest life lesson so far and one I wont be forgetting in a hurry. I think the biggest eye opener to me is how these ‘evil’ credit cards bleed you dry for every penny. We made huge payments that we believed had cleared the accounts when our money came through, only to find that estimated interest for that month had then been stuck on top. Boy was the air blue. But after this month I can merrily shut each account.
Finally we can see the light at the end of the tunnel and the black at the end of each month instead of the red.
I wish you luck with shifting your debt, but please cut up those cards and quit using them, get them blocked also otherwise its just a vicious circle. I will be reading your blog to see you emerge victorious. Go Olivia!!!
Hi Olivea
I myself dug myself out of the following after university:
Overfdraft (20% APR) = £2200
Barclaycard (16% APR) = £2000
HSBC Card (16% APR) = £600
Egg Loan (9.9% APR) = £1000
Postgraduate Loan (9.9% APR) = £6000
Student Loan (3.3% i think) = £4500
One thing that helped me was to calculate the amount I paid in interest each month (it was over £200 without touching the debt). Each month I would then calculate the new interest bill as I ploughed through the debt. This also meant that as the interest fell, I had more money to spend on paying off the debts.
One other suggestion, and I don’t want to seem all Carole Vorderman, but what about taking out a loan (not secured)? Even if its 10% APR this must be cheaper than paying on a credit card?
By the way, do you have any PPI cover for your loans. If so cancel it, its a waste of money. I had PPI cover on my postgrad loan from HSBC, can you believe that also charge interest on the cost of the cover (which is not cheap).
Food for though and good luck
Thanks to everyone for their comments - it’s good to know I’ve got a bit of support from fellow debtors!
It’s great to hear from people who’ve been there and emerged debt-free - having some incredibly level-headed and finance-savvy friends, I often feel like I’m the only one.
As far as taking out a loan goes, the last time I tried that my credit rating was so bad I couldn’t save any money on a lower APR. This was a few months ago - I’ll try again when it’s been a year.
I don’t have PPI on anything - I always thought I’d ake the risk as I couldn’t afford it, so it’s good to know that I was being sensible.
Spanish Peacock: That’s some really good advice about online accounts. My current account and Barclaycard account are both online, but my other cards aren’t. One of the things I’ve really got to start doing is keeping track of what I spend, so I will definitely be sorting that out.
Hey Olivea
I have realised that you are running a car too.
There are loads of ways on cutting back on motoring costs…