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Finances in a mess

Discussion in 'Personal' started by pinkflipflop, Aug 12, 2010.

  1. Would post on finance, but so little traffic over there have decided to post here.
    Basically my finances are in a mess. Having been so anti overdraft etc for years I have now found myself in a complete mess due to shopping as a coping mechanism.
    I am overdrawn to the tune of about £4000. I am working incredibly hard to stick to budgets no and make way to clear this but it still fills me with panic every day. Am absolutely disgusted with myself.
    Anyhoo, all that aside, my question is....would it be better to take out a small loan with repayments that I can afford to get out of the overdraft? At the moment I am looking at about £40-£50 interest each month.
     
  2. PPF, it's a problem lots of people find themselves in at some point, don't be so hard on yourself.
    Have you spoken to the bank? It might be worth them helping you to figure out how much it will cost you to bring the overdraft down and what would be a reasonable timeframe. Even with a £4000 loan, you'll be looking at quite a long period of time. That's hard when you are already on a budget.
    How are you coping on the budget you've set yourself?
     
  3. PFF - I think you need to talk to someone who can give you advice on managing debt, and can give you the right advice. You could very easily jump out of the frying pan and into the fire, so you need to be careful.
    I do also think it is worthwhile speaking to someone who can help you deal with your shopping conpulsion. It is very easy to use shopping as a from of therapy, and it can be buying things for yourself, or for your home. In many ways it is more difficult to see the problem, if you are not spending on yourself.
    You know you need to do something about it, which is positive, so don't be too hard on yourself. I am sure there is a way to sort this out, and with help you will be able to do it.
     
  4. Finding it really hard, especially with some really sh*t things happening at the moment sending my emotions off the chart again. To be honest, it isn't a really strict tight budget, it could probably be so so much better.
    Thankfully I have now got tax money back so that will go some way towards car insurance, although I am going to get stung massively due to the fact my claim is still not resolved. When I got my car payout I put in the £500 to make up the loss of excess so that I could get my new car, thinking that that would be repaid to me quite quickly as I am 100% not at fault.....but I was wrong!
     
  5. Oh balls. This thread was enough to spark my urge to go shopping. I am now the proud owner of 2 more pairs of shoes, 2 more cardis, 2 more pencil skirts and a new dress plus some costume jewellery pinkflipflop 10.08.10
    I'm not posting that to be mean, pff. Have you considered getting rid of your credit cards?
     
  6. No, I don't think you are mean at all. I know I have a problem.
    Thankfully, I do not own any credit cards.
     
  7. Or just not having them in your purse. Spending only cash helps. It's easy to hand over a piece of plastic, harder to hand over cash.
     
  8. PFF,
    I was in same situation a few years ago, had 2 credit cards and a 1000 overdraft and consolidated them into a loan over 5years (what WAS i thinking!??!) and have 2 years (yay!) left to pay.....and have an overdraft again :( (this was because I didnt get paid over summer in transition from Trainee to NQT).
    So my advice would be to:
    1. Draw up a rigourous excel spreadsheet with all your incomings and outgoings (you can make fancy formulae which do the calculations for you!) and adjust what you can reasonably afford to pay off each month on overdraft and credit cards.
    2. Speak to the bank and arrange a repayment method to get your overdraft down. Even if its just £100 a month you're paying off, at least you know you WILL pay it off eventually!
    3. Avoid consolidation loans at all costs...as I have learned it's just "borrowing from Peter to pay Paul".... [​IMG]
    4. Cut up the credit cards! Nasty things! If you must keep one for emergencies, don't keep it in your purse but in a box under your bed or something, that way if you MUST make a purchase on it you know it won't be an impulse as you'll have to physically get the thing out of the box!
    5. Make your monthly payments and keep a record of them on your spreadsheet. It is a great feeling to see the balances decrease. I was only paying the minimum on my CC til I did a spreadsheet and knew I could actually pay more so I've adjusted it to £100 a month and watching it decrease has been a relief...it'll be gone in 9months!!!
    You can tell I'm speaking from experience! This worked (is working!) for me so I hope it does for you too! Just imagine the feeling of having no CC debt or loans or overdrafts...think of all the cash every month which could be 100% YOURS if you have no debts to pay each month.....thats what I'm looking forward to....I should be in a great position in 2 years!!

    Good luck!!
    xx
     
  9. I have been doing that for some time now, trying really hard with it.
    Yesterday I snapped after more bad news and off to the shops I went. I am not proud of it. Some of it will be going back tomorrow.
     
  10. I did try to move one of my overdrafts to a new bank with interest free for a year so that I could try and blitz the other one while keeping charges down.
    Sent all the paperwork as they requested and have heard nothing since! Surely if they won't let me open it they would tell me?
     
  11. See if Martin Lewis on Moneysavingexpert has any good advice.
     
  12. The last bit of advice I read on there about clearing overdrafts was to open a long interest free credit card and use that for spending while keepin overdraft lower and lower charges and reducing spending to go towards paying overdraft.

    quite frankly, that idea scares me!
     
  13. harsh-but-fair

    harsh-but-fair Lead commenter

    I suspect PFF is conversant with the theory, it's the practical application she's in need of help with, which is very difficult for any of us 'at arm's length' to help her with.
     
  14. Forgot to add, I kept naively spending knowing my O/Ds were interest free (graduate) and swearing I would be out of them when they became normal accounts. How wrong I was!
     
  15. YOu say that some of your recent shopping is going back. Can't it all go back? You have loads and loads of clothes (you have said so on here!). You probably don't go out as much as you used to, because of your lovely new house. I don't know much about debt, but I know loads about saving money!! Can you put some of your stuff on Ebay? HOw can you cut down? Are you wasteful with food? Lots of take-aways? Sit down and be really strict with your budget. You can be very strict with yourself in other ways - exercise, for example - can you apply that discipline here?
     
  16. I tried selling stuff on ebay. Found the whole thing really frustrating. Put my best stuff on and only made £10 on 6 items.
    I will be keeping the skirt, as I bought it for a funeral on Thursday. The shoes will also be kept for work, as I threw away my old work ones (had worn them down to holes in them everywhere). I have made a real effort with not shopping, having gone from buying stuff every week to this being my first shopping trip in over 2 months.
    We aren't wasteful with food and rarely eat takeaways. We have a fixed budget each week and try to get really below it. The money left then goes into our rainy day pot.
    I try to be really strict with it all but there is just something that I just can't seem to control. I have avoided shops as much as possible and try to steer well clear of any online shopping.
     
  17. Professor Dumbledore

    Professor Dumbledore New commenter

    Really? For someone who's worrying about her shopping habits, this doesn't seem too bad...
     
  18. Are there other things which cut into your money? My young friends often go on hen weekends and seem to spend an abolute fortune. There was a thread on here recently about how much to spend on wedding gifts - the suggested amounts seemed obscene to me (think I didn't say so at the time for fear of sounding tight!). Are you locked into anything like that? You usually sound very sensible,and I am sure you will get this sorted.
    Talking about fixed budget weekly - does that mean you don't buy large sizes/in bulk? I buy huge amounts, always get plenty when things are on offer. Might doing that help you to make a hole on the debt?
     
  19. PFF my advice would be to see a financial adviser, one where you pay them rather than a "free" one as they get commission from the people whom they sell products for so don't really offer you all the options.
    Your situation isn't unusual and isn't the end of the world but I know what it feels like when there are money worries.
    Firstly though I would stop spending - this means only using cash as one poster has already suggested and stay away from the internet. Secondly if you have saved your card number ot any web sites delete it and then put your cards in a separate purse and hidden under the stairs or somewhere equally "odd" so you don't grab them. Lastly don't sweat it - debt isn't pretty or clever but it really isn't the worst and you can get over this.
    Good luck JRT xxx

     
  20. I have been trying to reply for about ten minutes, so please accept my apologies if I am repeating some things that others have already said - I really, really cannot face trying to reload the thread again!
    PFF - as you will know, I recently got my last debts paid off. It took me 5 years and I know that awful knot-tying feeling in the pit of the stomach.
    My debts were not due to overspending - they were all tied up with the divorce etc. but the feeling is the same.
    You have already done some great things - got rid of the credit cards, you have "killed" your shopaholicness [​IMG], you work to a monthly budget, as you recently posted.
    So...take a deep breath. Because all that is great.
    As to the outstanding debts - no, I would really advise you NOT to go for a consolidation loan. That is just biting yourself again in the bottom.
    The way I did it (with an IFA - but you could contact one) was:
    1) Contact every single person who claimed I owed money. Haggle. Offer a payment plan. By doing this I got most payments reduced and some even written off.
    2) If you agree on a payment plan - YOU MUST STICK TO IT. But you can even offer silly amounts - a fiver a month! They just want to see you are willing to pay and once you are in agreement, you are not incurring interest (check this and make it clear when you are negotiating!)
    3) If you are flush one month, pay off more than agreed.
    4) You can also negotiate that your debts are "put on ice" - if you agree on a date when you will start to pay them off. This does not mean you get off paying them, but again you can negotiate that the interest does not mount as of the date of agreement AS LONG AS YOU START PAYING ON THE AGREED DATE.
    5) If you are in any position to borrow some money off your parents or anyone else (I doubt it, you just got some help with the mortgage?) but bear with me...
    ...if you have a debt with one creditor of say...500 quid, and offer to pay that in two monthly installments, as of date x, you can then request that no other financial costs, such as interest, are incrued.
    You can also then, as this one debt is paid, request in writing that your debt is deleted from the "whatever you call it in the UK" where debts are registered, which effects your credit rating.
    If you only get rid of ONE debt in this way, and get the entry in the list deleted, then you have much more leeway to negotiate with other creditors.



     

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