my battle plan…

So, I’ve come to the conclusion that I need to sort myself out.

I’m £20k in debt, and I’m determined to clear it all as fast as possible.  I’ve now realised that I have a problem.  Initially, I tried to deny that I had any issue, or at least hoped that the problem would just ‘go away’ as if by magic.  I refused to open my mail when it arrived for at least a year.  I paid the minimum of my debts.  I didn’t calculate exactly how much money I was in debt.  And then the obvious happened.  My partner opened up my post by mistake and freaked out that I had a credit card.  I came clean – not with all the debt, but with the majority.  I then realised that I had a problem and that I needed to change my way of thinking and handling money.  I was beginning to have sleepless nights and felt ill just thinking about it.

I read on the net recently that it’s no good thinking about ‘getting more money to clear your debt’, as you’re not really dealing with the problem – which is YOU, and you know what?  It’s true, think about it!  If your mindset is just about getting money to clear what you’ve got then you’ll get back down a spiral trap – like I have done countless times.  I thought that it was all about getting money and defusing the flames.  However, I wasn’t changing the way in which I see money and how I have to take control of this crazy roller-coaster.  I would consolidate a loan and then within a few months or years be back in debt again because I was able to ‘control’ the previous debt and had surplus money left.  I cannot afford it.  It’s not my fucking money!  Regardless if the banks and organisations was telling me that I ‘qualify’ for this piece of shit, I shouldn’t of taken the temptation.  I’ve got no-one to blame for this debt crisis but myself.  I cannot blame it on ‘society’ or ‘circumstances’ when I was the one spending a fortune on Mulberry bags, and Tiffany ear-rings and bracelets. Business class tickets to god knows where, and dancing with Mickey Mouse at Disneyland! I know it’s my fault and I’m facing and dealing with it.

Even up to 2 weeks ago, I was like ‘let’s get a personal loan from my bank and consolidate all of my debt to them, and then have 1 payment going through instead of 4 each month’.  My 2007 loan had just finished, and I wanted to just ‘hide‘ my credit cards and my other loan under the carpet, so to speak.  I got offered the loan, which was a surprise. However, due to certain circumstances I turned it down for a number of reasons:-

a) I was doing some research on the net and every major website was talking about ‘snow balling’ as the only real viable way you’ll be able to get out of debt as quickly as possible:

b) if I had a loan, I would be ‘stuck’ with a fixed amount which, to be honest, scared me.  I got offered 13.4% APR which was terrifying.  I was expecting an APR of around 7 or 8%, but because of my ‘defults’ during the last 12 months that had affected my credit rating. I knew that there maybe a situation that I might default on my ‘loan’ as it was fixed at this high amount

c) I want to start the snow balling option, yet also have the flexibility that if, just if I cannot afford one month to put snowflakes or do the snow balling, I can just pay the minimum so that it gives me time to get back into control, yet not be in a default situation

d) I can work hard at clearing my debt, and within 12 months apply for a 0% APR balance transfer credit card, once my credit rating has had time to improve

e) I’ve come into a windfall!  I applied for PPI insurance with my last large loan, and have been informed that I was mis-sold on the insurance!  That’s over £3.5k coming my way, thank you very much.  I’d rather clear 1 of my credit cards, friends loan and my overdraft with that – in which case I wouldn’t need to have the big expensive loan which the bank was going to offer me.  (btw: I re-tried for another loan this week, at the lesser amount and I was quoted an APR of 16.9% APR for the privilege AND got rejected ta boot).

f), I looked at the small print of the loan, and they never mentioned whether it was a secured or unsecured loan, yet I saw a line which said ‘if I defaulted, my house could be at risk’.  It was a no-brainer – sod the fucking loan and just deal with the shit which I have now and clear, clear, clear it!  There is no way on this planet in which I’m going to put any loan secured on my mortgage.  So, in a way, I’m kind of glad that I got refused, and that my credit rating has gone a bit Pete Tong.  It made me realise that I have to deal with this issue myself, and not ‘hide’ the problem.

At the beginning of April, I decided to get copies of my credit rating.  It’s scary to know that they know ‘everything’ about your credit history.  How many loans and credit cards you’ve taken out.  Whether you’ve ever defaulted.  How much you currently owe the companies you’re in debt to.  It’s an eye-opener, I can tell you!

When I got paid end of April, I decided that this would be the month in which I was going to tackle my debts.  I’ve paid just over the minimum for all of my debts, and have set up direct debits for all of my bills to a separate bank account.  This account will be my ‘debt’ account where I will make all my debt repayments and snowflakes/snow ball payments to 🙂 The real action will actually start with my May pay-packet.  I’m keeping my spending to the minimum, as much as I possibly can.  However, I will also be doing x2 things:-

– I’ll be getting the PPI money soon, and once I do, I will keep £1k in another separate account for any emergencies.  This, I think is important.  moneysavingexpert.com recommend this, as well as other websites and this Ramsey geezer from the States.  You never know when an emergency may pop up and the one thing you don’t want to do is to get into your ‘normal salary/debt money’ to dig you out of a hole.  I’m really going to try for the £1k target, but if it’s £500 or £750 initially, then so be it

– I’ve also got shares.  Not a lot as I’ve dipped into them 3 times in the last 6+ years, to clear debt with, and the last time was in September last year.  However, it’s something and I’m waiting for that payment of around £2k to come out too.   Hey, why have shares when you’re drowning in debt – right?   If it can help me get out of debt quicker then why not?  So, I’ll be at least £5.7k ahead of myself by the end of this month.  Money I wasn’t even thinking of 3 weeks ago!  So the £20k has now gone down to £16k+, which is not bad going!  I’ll clear my x2 overdrafts, which total £1,300+, plus a credit card which is 21.4% APR, plus pay back a loan from a friend, and finally start my ’emergency’ money put away.

I’ll keep you posted at the end of the month, and on a monthly basis on how I’m doing.  I would also love to hear your stories too.  Let’s start this. Let’s do this together.  Let’s change our lifestyle!

We need a revolution, people – we don’t need no more mickey-mouse-debt!

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