I didn’t know it at the time, but organising your finances takes a lot of time and effort. I must have spent at least a week pouring over my bank statements figuring out where all my money was going. I had at least got to grips with who I owed, and how much I owed them. I didn’t know it at the time but this is the very first step to getting out of debt: Know what you owe.
I bumbled along for a few more months. In April I went on holiday to Cyprus with a friend because “I deserved it” and “I needed the break”. Looking back it wasn’t a bad look-after-me decision, but it was a bad money decision. I didn’t spend any money I didn’t already have, but it was money that would have been better put towards my debt. About a week into the holiday I promised myself that the £2,000 I’d likely spend in total was going to be my last conscious bad money decision.
When I returned home, I went spreadsheet crazy. I created a budget based on what I was spending having had my original thought to reduce my outgoings some months before. Then I went to see where I could save even more. By tweaking down the numbers and making myself think that was all the money I had, I started to spend even less. Money freed itself up for more and more debt repayment along the way and I could start to see debt freedom approaching. New Years Day was no longer an unattainable dream but a real possibility.
By the time I’d finished tweaking I had over £1,000 a month appearing as disposable income, based on my net take-home salary. If I stuck to my “do every piece that comes” overtime strategy for the year that would increase significantly. Not bad considering in November and December 2008 I was sinking fast into my overdraft and approaching the hard limit of the bottom.
I learned a few weeks later that my wife had, under the sheer pressure of her debt mountain been declared bankrupt. I suspect at that point my credit rating took a big hit as we were financially linked, courtesy of a joint loan we had taken out when we got married. That had fortunately been settled prior to us parting ways, but I needed to find out how to get the link between us severed before I applied for credit again. In all likelihood I’d get turned down for buying a chocolate bar on credit at this point, nevermind anything bigger.
I had mixed feelings about learning this. As much as I tried to be jubilant or consider it “revenge” as my friends and family encouraged, I couldn’t bring myself to feel that way. I was upset for her and what it meant for her in the long run. Going bankrupt is akin to financial suicide for a minimum of 6 years, and for life in certain respects such as buying a house. I would not wish that on my worst enemy, and certainly not someone I had in the beginning, loved very dearly.
And so we come to ‘now’. It’s approaching the middle of September 2009 and I’m on target for paying off my debt earlier than planned, if all goes well. I have paid off my Egg card entirely and have slightly over £200 remaining on my promotional 0% balance transfer. The loan I took out to replace the others is front-loaded, so I am saving like crazy to pay that off before my big day (in a high interest account of course). My divorce continues to rumble along in the background, rearing its head occasionally, courtesy of solicitor ping-pong.
And Five Pence Piece was born.
I had not intended to start a blog, and indeed didn’t until the middle of last month. I started to really get into some American Personal Finance blogs such as The Simple Dollar, No Credit Needed and Five Cent Nickel. These guys are all dedicated, hard-working folks who not only tell us their stories, their dreams and their hurts, but also try and educate us in the murky, difficult, confusing world that is personal finance. None of them claim to be experts (and none of them are), but they’ve all “been there and done that” and are willing to share their experiences along the way.
I wanted to try and so the same, but provide an insight into a UK journey of debt to prosperity, concentrating on UK products, UK issues and UK services. I want to help fellow British people get out of debt and free themselves from the consumer society we now live in. It’s almost never too late to realise that the things we own do not define who we are; who we are inside defines our outside. I want to be rich, but I know it’s a life-long road to get there and I’m not afraid of the hard work required.
As I say at the foot of every page on this site: Live according to your means, not up to your expectations.
You’re welcome to join me on my journey.
I’ll be honest when I make a mistake, to save you from making the same one. When I find a product, service or strategy that is useful, I’ll share it. As you can probably tell from this series of posts, my first tip is contained within. Family finances should be discussed openly, honestly, and jointly. Agreement must be reached that both partners can live by.
If you’re not honest with each other then any relationship is destined to fail before it even gets going.
Did you enjoy reading this series? Did it teach you anything? I’d be pleased to engage you in the comments.