This is part 4 of the Meltdown Monday series. You can catch up on part 3 here or start at the beginning with part 1.

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.

• 6 Mistakes That Doubled The Price of My Car
• Cash ISAs vs. Regular Savings Accounts
• Dig Yourself Out of Debt: Cleaning Up
• Dig Yourself Out of Debt: Know What You Owe
• Could You Live on Half Your Income?

You may have heard the hype about reclaiming bank charges on the news, in the papers, or online over the last year or so. If you’re in debt, have been in debt, and are either currently struggling to repay what you owe, or simply afford to live in general, now is the perfect time to reclaim every penny. Those suffering financial hardship are exempt from the current legal wrangling hold, and can reclaim immediately.

Financial Hardship covers a multitude of things from not being able to repay your debts, not being able to get out of your bank charge spiral, or simply not having enough money for reasonable living expenses. Whatever your financial situation, if you’re struggling in any way, it’s worth putting the effort in. You could get thousands of pounds in return.

It might seem (it certainly feels) like a bit of a cop out, but rather than reinvent the wheel on this subject, let me simply point you to Martin Lewis’ Bank Charges Reclaim Guide. He’s done the painstaking research and initial legwork, and even has template letters you can send to your banks to get you going. The BBC also has a step-by-step guide with template letters you can use. As a last resort, a web search for ‘reclaim bank charges‘ (Google) will reveal a slew of companies that’ll do all the work for you, in return for a percentage of your payout.

You can do this for Credit Cards too. How many times have you been stung for paying late, or going over your credit limit over the years? If your answer is ‘too many’, then get reclaiming these fees. Reclaiming won’t affect your credit score, but don’t be surprised if the card company decides they no longer want your business afterwards. You need to weigh up the positives of getting cash back versus the possible negative of having a credit line closed on you.

Still want to give it a go? It applies equally to open and closed accounts, so tackle your closed account charges first if you know of any. That way you get all the positives, without the possibility of closure. There is a ready-to-go guide on this matter as well from Martin Lewis, which you can access here.

Have you had your charges back? Share your experience in the comments below.

• The SCRAM Plan
• Free PF Blog Hosting Competition
• My Financial Meltdown: Part 4
• Frugal Friday! 20 Ways to Cut Your Annual Vehicle Costs
• Credit Card Analysis: From Hell to Heaven

A downturn in the economy isn’t always bad news; there are the obvious negatives such a job losses, less easy access to credit and that uneasy feeling of general insecurity. But a lot of people are using all those as a catalyst to better themselves financially. Some statistics have recently been released by FDS Social Research that a newfound financial learner like me finds comforting and interesting and worrying, all at the same time.

34% of households are paying off debt or reducing mortgages – Over a third of the country are making concerted efforts to reduce what they owe. I’m a proud member of this statistic! This will have short-term consequences to their perceived standard of living, but the long-term benefits will be well worth the effort. Interest rates are currently at an historical low, with many ‘height of the boom’ 2 year fixed rate deals coming to an end if they haven’t already, resulting in dropping onto a providers Standard Variable Rate which tracks a few points above the Bank of England base rate. For those in this fortunate position, they would find their monthly repayments dropping by hundreds of pounds. Use this time effectively to be paying off masses amounts of the principle sum borrowed without any extra effort.This is further backed by news yesterday that mortgage repayments are outstripping new lending by £418 million and that personal debt has dipped for the first time since records began in 1993.

What are the other two-thirds doing? I will assume half of the remainder do not have debt or a mortgage, which leaves 33% of the country still spending more than they earn and doing nothing about it.

28% have stopped using credit cards altogether – This depends ultimately on the context, and sadly, FDS didn’t elaborate further. We could conclude that 28% of households, having paid off their balances, have returned to the old-style way of saving for what they want instead of returning to the ‘buy now, pay (much more for it) later’ culture of the last decade. Alternatively we could conclude 28% of households have simply maxed out their cards, can’t get new ones, pay the minimum balances and so have been stopped from using credit cards altogether. I suspect the truth is somewhere between the two.

There are negatives to this though if they have stopped using credit cards out of their own choice: MBNA currently have some good reward card offers, and both Egg and American Express have good cashback cards for those who know they’ll be spending more than £4,000 a year on plastic. The important thing though is to ensure the balance is always paid in full every single month, otherwise the interest charged will dwarf any cashback deal.

23% of households who don’t currently save plan to start within the next 12 months – This is a pretty good statistic from my point of view. Everyone should be saving something out of their take-home, even if it is just a few pounds. The very first step to getting out of debt is spending less than you earn, paying off your highest interest borrowing first (I was shocked to see someone paying 53.95% on a credit card yesterday!), and then keeping going until you are debt free. At that point, you can begin saving in earnest. This statistic could therefore be viewed that 23% of all households in the UK who are currently in debt, with good planning and willpower on their part, will be out of debt inside the next year. I’m included in this statistic.

34% of households are saving more than they did a year ago – Perhaps even though you may be in debt, you had it drummed into you as a child to ‘always put a little by for a rainy day’. It’s good to know that again, over a third of all households in the country will be putting a little more by each month than they did last year.

Of course there are economic knock-on effects to this. Money saved is money not spent. When the economy is generally in good shape, that’s a good thing. Interest rates are stable and worthwhile and other peoples’ spending keeps things ticking along. When there is a downturn, sometimes the only way to get the fires stoked is to spend. If more families are saving, then the recession could be prolonged.

Despite the different ways these statistics can be interpreted, in general I believe they’re a good thing. It shows our country is waking up and smelling the coffee. I just hope that when things begin to improve, access to credit eases and people start getting raises or find employment again, that as a nation we don’t gravitate back towards our old ways.

Are you a statistic? Share your views in the comments!

• Dig Yourself Out of Debt: Spend Less Than You Earn
• The Importance of Redundancy Planning
• 10 Economic Predictions for 2010
• Say Hello to Kublax
• Dig Yourself Out of Debt: Avalanches and Snowflakes