Thursday, 30 January 2014

Great British Budget - My Debt Story

When I saw the opportunity to join the bloggers panel for the Great British Budget campaign I jumped at the chance!
This was for a number of reasons.
I have lived to an extremely tight budget when I was on benefits.
I completely lost all of my budgeting rules when I returned to work and got into thousands of pounds of debt.
I, thankfully, managed to clear all of the debt with the help of my husband and now we budget week to week.
I feel that more people need to learn about budgeting to avoid bad debt.
I would like to think that someone may learn from reading my debt story about how easy it is to get into debt and take a different path to what I took!

My Debt Story

When my first son was born we lived abroad and returned to England when he was 6 months.
I was a single mum and was on benefits until I returned to work when he was nearly 3 years old.
During the time that I was on benefits our budget was extremely tight.
I remember each week, when I got my money, I would sit at the kitchen table and literally separate my money to cover the bills, electric tokens and gas credit for the pre payment meters. Each week I had £40 to spend on our weekly food. I used to walk around the supermarket with a calculator so I knew that I was not going to go over what I had to spend. They were hard times. I went without so that Joseph would not. But we got by and I was never in debt.
When I decided to go back to work I was lucky enough to find a job quite quickly.
I had to travel 20 minutes to get to my new place of work and the car that I had was quite old but it did what I needed it to do at the time. So I went to look for a new car but as I had no credit history my credit score was not good. The bank recommended that I get a credit card.
This was my down fall!
I always said that I would not have a credit card because of the temptation to spend what I didn't have.
But I got one.
I got a good credit score and I bought my car on finance.
My debt had started!
As I was working and had an income that I had worked for I found it easy to tell myself that the credit card would be cleared when I got paid.
However, I had other outgoings that I needed to cover. So I just paid the minimum payment.
Christmas came and I wanted to give Joseph presents that I knew I couldn't afford so the credit card came out!
Soon enough the credit card had reached its limit.
Instead of starting to pay off what I owed I took out another credit card that was offering 0% on balance transfers.
This cleared one credit card, but it also gave me more money that I simply did not have to spend!
I continued like this for 2 years. We had holidays abroad, designer clothes, I had nights out and did live way above what I could afford to.
Before I knew what had happened I was about £12,000 in debt, including my car debt.
When I actually dug my head out of the sand and tried to solve the problem my credit limit was so bad the banks would not help me. All I wanted was to consolidate all of my debt into one place with the one payment.
I found a company that would give me a loan but only for £3,000.
The interest rate was 30% APR which is quite a lot higher than what the banks were offering.
But in my panic to pay off a credit card I took out the loan.
This only resulted in me being in even more debt.
I honestly feel that some of the loan companies do not lend responsibly. I am just thankful that there were no pay day loans around at that time.
Each month I paid the minimum payment off the credit cards but the amount of interest that I was getting charged meant that only a small amount of the debt was chipped away.
I felt physically sick every time a letter came from the companies and I dreaded the amount that I owed. My payments were set up on direct debit and each month I went into my over draft.
The only way I can explain the way I felt at the time was as a drowning feeling.
I could see no light or help to get out of where I was.
Then I met my husband.
I kept my debt a secret for quite a while but when he moved in we had to sort out our finances.
It is then that I told him the trouble that I was in.
I broke down and told him.
I had been bottling it up for so long and had worried in silence.
I didn't want to admit that I had been so stupid with money, I worked in finance, I should have known better!
With my hubby's help we paid off some of the debt and took out a loan to pay off the rest of the debt.
The relief that I felt was immense!
I had finally told someone about my troubles and had escaped the trap of the credit cards.
It felt so good to cut the cards up and put them in the bin!
I learnt my lesson, but I learnt it the hard way.
Last year we cleared all of the loan and the only debt we now have is our mortgage and car payments.
We do still have a credit card each but mine will only come out in emergencies.
I hate using it now and I have a real fear of debt.
My hubby is great at budgeting.
He keeps a log of all of our monthly outgoings and money that we have coming in.
We now have two current accounts.
One is for all of our bills and direct debts.
The other is for the food shopping, diesel and weekly costs.
The shopping account is the account which I am responsible for.
It is with this money I have to budget for our weekly food.
I am always looking for ways to save money and make our money go further.

I have joined the Great British Budget because I want to highlight how important it is to budget.
I learnt the hard way and it is a hard way to learn!
I hope that I can help prevent someone else going through what I did.
Throughout February Your Wealth are challenging people to create a budget and to stick to it!
They have a great tool that is available to help you manage all of your outgoings which is available as an app for your mobile phone so that you are always able to control your finances.
Check out Your Wealth on twitter @yourwealthuk as they are running a photo challenge where you will be entered into a prize draw to win one of four £50 Love2Shop vouchers.
But its also a fun way to join in!
Don't forget to add #GreatBritishBudget to your tweets!

My focus during February will be to show you how to save money on your weekly shopping and I will be sharing some delicious meals which are not only taste great but are ideal for families that are on a budget.

So what are you waiting for?
Follow me and join Great British Budget this February!

Join the Great British Budget Challenge

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