Hints and tips from an ex-debtor! (Debt Help in General)

Member Name: chocaholic110

Product:	Debt Help in General
Date:	24/02/09 (210 review reads)
Rating:

Advantages: None except the camaraderie from others!

Disadvantages: No money, impacting on your life, health, relationships, mental state

Credit crunch is probably a phrase that's being woefully overused at the moment. Nevertheless there are probably a lot of people being watchful of what they spend at the moment and trying to make every penny count. Five years ago, or maybe even less, the current economic climate would have been almost devastating for our family. Today, despite my husband losing his job in November, it hasn't been as difficult a time as it might have been. No, we haven't won the lottery and we're not independently wealthy. The difference? Until very recently we were seriously in debt and today while we don't have lot of money, we don't owe anything either. So over the last few years we have learned to live within our means and save money wherever possible.

In July 2006 it began to dawn on me that we owed a lot on credit cards and loans. Shockingly, and unbelievably to me now, I didn't even know how much that was. Through a combination of going to university, lending money to family members in trouble, going on holiday and doing up our house we had managed to accumulate debts on a variety of credit cards and a loan or two. Up until then I hadn't considered it a problem; we could meet the repayments easily and everyone borrows money to go on holiday or buy new kitchens... don't they?

I probably wouldn't have done anything about it even then if I hadn't stumbled across a forum called "Debt Free Wannabe" on the Money Saving Expert website. I had glanced at the site a couple of times but it didn't really apply to me. I didn't have as much debt as some of the people on that site, I wasn't having trouble meeting repayments and I had a good credit history. I didn't need any advice from that website. But just out of interest, I decided to add up exactly how much we did owe.

To say it was a shock was an understatement. Somehow, without realising, although looking back I don't know how it was possible, we owed a huge, overwhelming, staggering amount. I won't post how much here (although I have posted freely on MSE so if you're really curious you could find out!) but it was a LOT! I still had all my statements for the past few months, so I went back and worked out how much I had owed over the last few months and was appalled to realise that although we were paying several hundred pounds a month to credit companies, the debt was hardly reducing at all. The rate we were going we would never, ever be debt free.

Suddenly, I realised that I was one of those people from the forum after all. Often this is referred to as a lightbulb moment - similar to a cartoon when a lightbulb pings into action above a character's head to show they've realised something and mine was burning brightly! I realised that we were never going to be in a position to move from our poky little house as we would never be able to get a new mortgage with our level of debt and I suddenly grasped the fact that if we didn't do something soon our whole lives would be spent lining the pockets of the bank. Something had to be done!

I went back to MSE and I must have spent several hours reading through people's stories. It was heartening to read personal accounts of others in similar situations, not that I like to revel in other folks' misery but it was nice to know I wasn't the only one who had got into this mess. And really it was my mess; I was the one who lent money to family; I was the one who had reassured my husband that we could afford things; I was in charge of the family finances.

Slowly but surely, I began to take in some of the advice on the website. I hate the modern phenomenon of calling every experience a "journey" but this truly felt like the beginning of a journey. I tentatively registered on the website and began my first posts. The regular posters on the site were welcoming and the overwhelming advice was to complete a SOA or Statement of Affairs - basically a complete list of all the incomings and outgoings into our account, but remembering to include less regular bills, such as car insurance or tax, haircuts, Christmas, dental bills and more, alongside the monthly direct debits. It took a while to compile a SOA, but the website very helpfully provided a format so nothing was forgotten, and a while later I posted my SOA and stood back and waited for the criticism, I mean, advice from others who knew better than I did.

Now, we're not extravagant people. We don't smoke, rarely drink or go out, don't buy designer outfits, handbags or shoes. But we still did get several suggestions to save money. One piece of advice was to cancel Sky TV and maybe we should have, but all of the family do watch various channels and many of the channels the children watch are the type that can't be found on Freeview. My husband did however phone and explain that we couldn't afford it anymore and we did get six months half price rental, effectively saving £21 a month. At the end of this time we did end up cancelling Sky Sports and Movies, and guess what, we've never missed it!

Another problem was that I'm a bit of a magazine junkie and had several subscriptions including a couple for magazines for my profession, which while interesting, I rarely used the ideas from them. They also had to go and again I've never missed them. I do still buy magazines but I've scaled down the quantity - a lot!

Next thing to go was gym membership - £23 a month for one or two visits! I hated the gym anyway. Cancelling the membership was a good excuse not to have to go. I much prefer long walks with my family anyway and I don't have to witness lots of sweaty men while I'm doing it.

I couldn't bear to completely cancel my charity donations, despite the number of people who advised charity begins at home, but a couple of the monthly donations had crept up to £5 or £10 a month. You know how you get those letters or calls saying "just add a pound or two more"? I'm a soft touch for those. I steeled myself and reduced all the monthly donations to £2 each.

Next was food. No I didn't cancel eating. But I did do something completely alien to me. I began to meal plan and shopped according to what we needed rather than just throwing everything I fancied in the trolley, reducing the food bill by around £30 a week. Looking back I don't even know what we were buying - I certainly don't feel like we're missing out now and we eat a lot more home-cooked foods, home made bread and desserts. A happy side effect of poverty is I've learned to cook!

Then I cancelled a number of savings plans we had. I realised it was pointless saving at a lower interest rate than we were paying in interest. The savings plans paid out a few thousand pounds, enough to reduce our debt to a slightly less scary, but still massive level.

The number of helpful websites that I discovered was amazing too. It was recommended that I kept a spending diary to write down everything we spent over a month. I found this difficult to do with pen and paper but could manage no problem using www.spendingdiary.com where I could write down everything I spent and print a report at the end of the month to show where the money had gone. It was very worrying to see exactly how much I spent on chocolate!

Another excellent website was www.whatsthecost.com, a snowballing website. Snowballing is the process of paying off your debts in order of highest interest. Rather than just paying minimum payments, decide how much you can afford to pay each month. Pay the minimum payments on all but the debt with the highest loan and throw all the remaining money at that. When that is paid off, transfer all that remaining payment to the next highest interest rate. Whatsthecost.com estimated that I could knock 18 months off my payments by snowballing and showed exactly which debts to pay first. I must admit, over the months I became a little bit obsessed by this website. If ever I got any extra money I would add it to the snowball calculator to see how much I would affect my debt free day and it was amazing how little bits of extra payments knocked months off how long it would take to get debt free.

I began doing surveys on a variety of websites. They didn't pay a lot but they all added up to extra shopping vouchers to use for birthdays or Christmas, or sometimes I would receive cheques which I was very strict about paying straight off a credit card. If I received a cheque for £30, I would pay £30 off a card that same day. It became almost like a challenge!

Another new website to me was Quidco, a cashback website that pays commission on purchases. Not that I was making any purchases but they also paid out on free trials and utility switches. In that first couple of weeks I switched bank accounts, credit cards (to a 0% interest card), gas and electricity suppliers and took out car insurance which was due anyway. Overall, I made about £300 and everything was changed to a better deal so I was winning in every way. Once I received the cashback it went straight off the debts.

Once all the major changes were in place it was really a case of keeping chipping away. Luckily my debt-busting fire was shining brightly and if ever I flagged there was plenty of moral support from the other Debt Free Wannabes. Over the following months, into years I discovered ebay and sold almost anything that wasn't nailed down, clothes, books, CDs, toys, whatever I could lay my hands on really. Sometimes I didn't make much, sometimes I was surprised by how much an item sold for but I was really strict and used it for extra repayments. It was while ebaying that I realised how much of the stuff we owned was unnecessary, bought because we wanted it, then relegated to a corner or attic and never used, or even glanced at. It helped a lot as whenever I was out shopping I would look at something to buy and immediately imagine ebaying it in a couple of months. I kept up with the cashback and survey sites and kept a close eye on MSE for other money making ideas.

It was a fine line between paying off debts and still having a life but we became more inventive! At one time I would have been too embarrassed to use a voucher but they became my friend in the supermarket. Plus I made full use of vouchers for free or reduced entry to theme parks. We visited museums and parks that were free to enter. If we visited the cinema in school holidays it was on a Wednesday to take advantage of Orange Wednesdays, and smuggling in a bag of snacks and drinks. We didn't go on holiday abroad as we normally would and took advantage of The Sun newspaper's £9.50 weekends instead. My husband and I dined out regularly as mystery shoppers - free meals and a small payment for doing it! Christmas presents and birthday presents were bought in the sales or using survey vouchers. We bought cheap hampers and made sweetie hampers, or pamper hampers for gifts using free samples or travel sized mini bottles. They were surprisingly well received; my Mum even hinted for another one this year.

Slowly but surely, the debt whittled down. The passing of each thousand mark was a cause for celebration and by the time I fell pregnant in May 2007 I was confident of surviving maternity leave on a much reduced pay. Even our baby was provided for on a budget. I got a baby sling, baby bath and bouncy chair from Freecycle and my friend who had a baby a few months old passed on a moses basket and many, many clothes. Most of my maternity clothes came from eBay and I wore my old stretchy tracksuit bottoms almost until they fell to bits. I breastfed my baby exclusively until he was six months (and I'm still feeding now at 12 months old), which was actually a lifestyle choice but had the handy bonus of being free.

Luckily for us, by the time baby was born in January 2008, our debts were no more. I won't even begin to pretend it was easy At times it was embarrassing, frustrating, annoying and depressing but we kept going with the support of the MSErs, many of who are also Dooyoo-ers, and the vision of life without having to pay creditors each month. I'm not sure what I expected from my debt-free-day, a lightning clap, heavenly music, a big medal, perhaps, but in the end it was a bit of an anti-climax but a huge relief. I think I thought we would be rich afterwards with all the extra money we would have. Well, life doesn't work like that, does it? After nine months maternity leave, we decided I would only go back to work three days a week, then two months later my husband was made redundant. He has found some work, but only on an ad hoc basis, usually three days a week, which has really worked for the best as we may have reduced our income by half but we have a lot more family time together and as we've learned to be more frugal we don't miss spending on anything. Luckily our children are fairly content with what they have and they don't nag for expensive clothes or toys. Despite only earning one salary between us we're still managing at the moment to pay the bills and save a little amount each month and I'm still doing the surveys, and now Dooyoo, to pay for the little extras.

I realise that we have been lucky to have come to our lightbulb moment just at the right time and there may be people reading who are in just as bad or possibly worse situations than we were. If you're having serious problems and are unable to pay bills, don't hide from your problems as they won't go away. There are many sites that promise to help with your debts but many are just out to make money for themselves. I would recommend speaking to www.cccs.co.uk or www.payplan.com if you're struggling to pay. I don't have any personal experience of these companies but I understand they give help and advice for free. Additionally, the Citizen's Advice Bureau can also provide debt advice. It wouldn't hurt to take a peek at the Debt Free Wannabe board either, even if you don't have the confidence to post to begin with, it's heartening to know that you're not alone and I can practically guarantee no-one will judge you, no matter what the level of debt. Even now, I still post there and count several of the regular posters as friends.


It can be a long walk, but every journey starts with that first step!

Summary: I hope this helps someone!