Having done the same thing about a year ago (after spending alot of time trawling MSE website) its definately something you should do.. its a real bugger at first, but a few months down the line, you will see the benifits..
Previously, as i wasnt so much "over my head" although keeping everything paid and happy was cutting it pretty close to the line, and not really leaving any breathing room for the unexpected, i did a full overhaul of my finances, started by moving current accounts from cahoot to Alliance and Leciecster, which offered a 12 month interest free overdraft (at the time i was falling into my overdraft a few days after payday) then i consolidated three "generic" credit cards onto one Virgin money card.. 12 months interest free on balance transfers. and concentrated my funds on paying the bits and bobs left off. i worked out at the time that the re-shuffle would save me at least 500 in various interest charges etc etc.. the only spanner to my plan came back in feb when cahoot (whom i still had a flexible loan with, 7500) dropped the bomb of basically doubling the interest rate to 15% which would cause major major headaches for me.
Thankfully my parents agreed to lend me the money to pay that off, interest free which was a massive weight off my shoulders.
Fastforward to today, and ive "learnt" how to be very economical with money.. and now with my new job giving me around 6k more a year, plus the payoff from the last job (compromise agreement) im making big tracks into paying stuff off.
I think the key to it all is to making the gains visible... i spent along time creating a nice spreadsheet, showing all my "regular" outgoings on one side eg direct debits, expected outgoings, petrol, haircut etc and then money remaining... under that was "extra" payments.. eg payments to credit cards over and above the normal payments.. and then the very bottom line was £per week to spend.
And on another sheet, i had all the credit cards and loan payments "mapped out" taking the interest into account.. which helped me work out what to concentrate on paying, and gives a real visible account of the snowball effect once you start getting some headroom... My spreadsheet actually maps all my payments to the middle of 2010.. although it will now be cleared probably by the middle of next year with the job change etc
Thanks CoIG, It was more or less the same bonus as last year and I found the bank statement where I was still doing massive payoffs but even after paying off my holiday last November, I still let the debts build up again which isn't happening this year.
Felt perfectly good cancelling the final magazine direct debit though I'll have to notify them in writing, I've been reading that mag since I was 21 and if I'm no longer in that industry full time anymore (computers/games) then really, forget it. Time to grow after 10+ years and ditch magazines and keep that cash back.
I've gone one further and decided that if there are any more than another two rate rises before next March, then the TV Licence is going. Instalments be damned, at some point you look at something you don't really make use of for whatever reason that costs money and just decide to cut it off, only coming back to it if it can be afforded - maybe I'll sell enough on Ebay etc to carry on affording it as an incentive but nothing is sacred unless it's properly essential. Instead I'll have to make enquiries as to whether TV Licensing does a radio licence only and if they don't will have to make alternative arrangements for favourite shows or simply go without.
The bank who hacked me off last winter, compensated me with half the amount of the delayed pay-in - £15, better than a poke in the eye and that means that the copy of More Brain Training that I'm gearing up to flog on eBay, was free. Might just send £15 to my non-direct debit account and actually save it but that depends on circumstances.
Instead I'll have to make enquiries as to whether TV Licensing does a radio licence only and if they don't will have to make alternative arrangements for favourite shows or simply go without.
You don't need a licence for the radio - TV only.
I could happily live without TV, but the rest of the family couldn't - I know there are a few Mansizers who do without one. TV licence is still only about 30p a day!
Having been through the financial mire myself , I have kind of improved my money management as I have got older.
My current situation, I have £632 per month paying off my debt. This will be 0 in 29 months. Look forward to that day :)
At the moment I work on a cash basis, its much easier that way.
My wife and I sat down on made a spreadsheet of every last essential expense we have. This is everything from food to contact lenses, child care, holiday find, MOT, Servicing, Car Tax , petrol, Travelling, Clothes, birthdays, Christmas etc. I suspect in most cases this is more than you can possibly imagine! Our essential expenses come to around £2100 a month (1 4 year old child, £500 mortgage). Everything you can possibly think of you need on a monthly basis. Which is a lot more that I ever imagined!! . I have a few direct debits, mortgage, sky (not really essential) contact lenses etc.
I take out cash when I get paid for my contribution to the essential expenses. Then if we need clothes, food etc it comes out of the relevant pot. No getting messed up with debit cards, bank balances etc. We leave ourselves £250 per month each as disposable income. We can do with what we please. If this gets spent then at least everything else is paid for. The pots grow and shrink month to month, as and when we need clothes, car serviced etc.
Seems to work ok for me, havent been overdrawn in ages, and I cant spend money for myself which will effect any of the household expenses/debt payments.
Good to read that you're getting on well Nethlyn... I have all my essentials paid for on Direct Debit and have arranged that all these DDs come out of my account a couple of days after I get paid. I then plan credit card payments and the like (always pay the full amount each month and only have one card) around any other incidental expenses that turn up.
Spreadsheets are great for planning that sort of thing and I find my online banking service invaluable for keeping track of exactly what payments have actually gone out of my account.
I find that by keeping strictly to an "if I can't afford it, I don't have it" mentality I can remain solvent... just about... I'm really not looking forward to next April though when my fixed rate mortgage term comes to an end...
More balance...ended up spending £80 on my property, which was a begrudging necessity, however the money that a mate will end up paying me back will be...£80. It's nice to get it back but I've got to find a way of staying ahead.
Now we're 11 days from the end of the month I'd better pay the council tax, I think I've strung them out for as long as I could get away with before the standard legal letter arrives. Not great but that's life.
and from last summer to practically December - the biggest transferred bills were paid. Now, my spending on two big items (a shotgun payment to my ISP who messed up my bill, and a DVD Recorder) gets paid off today but out of savings and the magic tax rebate.
I drew the line with the energy bills and the new halogen heater, I've got to be able to heat and eat using cash or I'm really screwed. Xmas shopping was already finished to accommodate these necessities. It's just that any other last minute extras I see which would make nice alternative gifts if I think of other things the recipient may like nearer to Christmas, this year I'm sticking to first choices from the end of October.
20 days into the new year and history repeated itself from 4 years back, I nearly forgot a payment to the most recent credit card I took out - sent both an online and postal payment to try to meet the deadline today. I'll find out next month whether I got away with that by the skin of my teeth and it'll be interesting to see which payment gets there first as the online payment is direct to the credit card company and not through my online bank.
If I incur a late fee then I'll cut it up rather than keep it and risk damaging my record. Otherwise I knew my electric bill would be high as that's how I heat the place (£145), but I could afford it. Gas bill in 10 days' time at the end of the month and if that stays under £50 despite the increases (as I have a bath and heat my washing-up water and only have one small gas heater), I'll be happy.
Aside from the energy bill spike, it's insurance renewal and TV Licence time again next month. Effectively the TV Licence has been halved by my final mobile phone cashback coming in and this year I can consider paying the lot off, but with the insurance it's instalments all the way.
In the end, both payments got there on the same day but it's never good to gamble. Posted in good time this month!
Got rid of another credit card, this time the one that I did the £800 balance transfer on last summer. Cut it up rather than let myself get tempted with a second set of balance transfer cheques even if they were 0%.
I'm going to keep the one where I had the late pay scare cos I dunno how much tougher it will get to swap cards with the same provider (eg different charity cards) or taking out new ones after this credit crunch issue is putting the squeeze on banks.
At least interest rates aren't going back up again, that's something to be positive about.
