I made my budget spreadsheet

One of the very first things that The Money Diet advises is to prepare a full budget of income and outgoings each month. There are companion spreadsheets online to help with this, particularly with annual expenses broken down into monthly instalments. But really, it’s just as easy as dividing the annual figure by 12 (months) or 52 (weeks) and using that.

Everything went onto my budget sheet – first of all, all of the fixed expenses: mortgage, electricity, gas, telephone, mobile phone, satellite television, television licence, home insurance, road tax, internet, water rates, council tax, car insurance, loans, bank charges/interest, credit card bills, etc.

Then I looked at trying to work out expenses that were fixed, such as shopping – some break this down into food, cleaning products, pets, etc, but I prefer to lump it all together.

And then I berated myself what I considered to be “luxury” expenses – pets, hair (grooming), dental fees, prescriptions, books/games. Anything I couldn’t work out accurately, I tried to come up with a ballpark figure for. On joining the Money Saving Expert forums, other users soon suggested I build in these “luxury” items into the budget

On the income side I included wages, birthday money I knew I’d get, any interest on what little savings I had. And once I was sure I’d included absolutely everything, I was horrified to see that I was regularly spending around £400 more than what I was earning. No wonder I was in the shit.

Having this information helped me to budget downwards, cutting out a lot of the “luxury” items. But one of my big mistakes – at the time – was reducing all of my credit card repayments to “minimum payment”. I knew it was the wrong thing to do, but I didn’t know where else to make cuts.

The other big mistake, and probably the worst one, was robbing Peter to pay Paul – withdrawing cash on my credit cards (I had 4 or 5, mostly almost maxed out) to pay the others …

But what else could I do? Especially with a husband who didn’t think it was his place to help. He thought if I needed money I should ask my dad. As I’ve said before, he didn’t last much longer.

The spreadsheet gave me something tangible to work with. It wasn’t brilliant and it didn’t find me more money, but at least I knew where everything was going and maybe where I could make savings.

The first “expense” to go was “pocket money”. And everything else was stripped down to the bare minimum. The shopping was another area, but more on that next time.

I bought a book

money dietSo, bearing in mind I’m quite heavily in debt, the first thing I do is impulse-buy a book strategically displayed at the checkout at W H Smiths. Crazy, and probably part of the reason I was in debt in the first place. But this book, THE MONEY DIET by Martin Lewis, was like an epiphany to me.

Everything in it is so logical, so obvious, but sometimes you just need the obvious pointing out to you, especially if you’re wearing blinkers.

I devoured this book in a matter of days, taking it all in, wanting to apply all the tricks and suggestions immediately. And I started with the budget planner – the document that lists all of your monthly or weekly income and all of your monthly or weekly outgoings. This instantly shows you where you’re overspending.

I couldn’t get the downloadable spreadsheet to work at the time, so I came up with my own version, created on Excel, which listed monthly income (including total income), monthly expenditure (including total expenditure), the balance brought forward from the previous month (very much a minus figure), and the balance carried forward to the next month (still a minus figure, but eventually one that was going down).

If you are in debt and don’t know where to turn first, I suggest you at least try to get hold of this book. (This page shows the current cheapest edition available online.) And, if you really, really can’t afford it, or justify the expense, buy it second-hand or log on to the companion website where much of the book content and more is duplicated.

And let me know how you get on by using the feedback form. Good luck!

I got a “proper job”

I’ve never advocated “proper jobs” over “jobs people like doing” but I did need a regular income if I was to (a) get out of debt, and (b) find a place of my own to live. So I made a half-hearted attempt to look for work – half-hearted because I actually enjoyed my work as a freelance writer and tutor. I just couldn’t guarantee the regular income required or afford the interest on a mortgage for the self-employed.

I was surfing the net one day when a job jumped out at me. It was for an editor on an in-house magazine and they required applicants to have a degree. I didn’t have a degree but I wanted the experience of looking for jobs and, hopefully, attending interviews. So I fired my CV off and forgot about it. A few weeks later I had the phone call asking me to go in for an interview.

My interview went really well, and it lasted about an hour over the half-hour allocated time. So I suppose I knew I’d done ok. When the phone call came offering me the job, I did query the degree part and they assured me that they valued my experience far more than they did any qualifications I may or may not have. And I started work about a month later.

In the past I have taken various jobs to help make ends meet. I’ve worked in a chip shop, behind a bar, in a café. I’ve cleaned toilets, walked the streets collecting money, and I’ve worked as a telephone fundraiser for the RNIB. These are aside from the admin roles I had before giving up the rat race in 1996 to become a freelance writer – and quite successfully too, as it happened. I just couldn’t cope with bad debtors or late payers.

But my first step to getting out of the mire on this occasion was to at least get a job I enjoy. I’d say I was lucky, but I also make it a habit not to apply for jobs I’m extremely unlikely to get. I did think not having a degree would exclude me from this particular job, but it didn’t, and I stayed there for 6 years in the end.

The job was a massive help and it gave me the independence and the confidence to finally leave my husband, which I did the following year. More on that soon.

How did I get into debt?

So, how did I manage to ramp up £35,000-worth of debt? Sadly, it’s very simple. I spent more than I earned. I was a spendaholic.

Actually, it’s twofold. The main reason was I spent more than I earned. It was my fault, I don’t blame anyone else.

However, I was married. I was also in a good job – a job that paid a decent salary every month and with benefits. But when that job affected my eyesight, in 1996, and I decided to give up that work and go freelance, my husband at the time told me good luck and refused to help or support me. He said the woman he met and married was in regular, full-time employment bringing home £16,000 a year. He said if I gave up work, it was my choice. Clearly, he would have preferred a blind wife.

Of course, when his ex-wife came calling via the catastrophe that was the Child Protection Agency, I was expected to support him. When he was made redundant – twice – I was supposed to support him. His daughter got married during one of these redundancy periods and it was me who gave her their wedding money. All of his kids had kids – we had 9 grandkids by the time I left him, and there have been more since I’ve been gone too – and it was me who paid for the presents and gifts for those grandkids. Because none of that was his doing.

But when it came to him supporting me, oh no. Going freelance was my choice, not his. That wasn’t the woman he married.

And with irregular wages now, and poor payers, I was still expected to pay for the shopping, the telephone, the television subscription service, clothes, gifts, going out, and my business without any financial input from him at all.

I had about half a dozen credit cards. Each time one maxed out, they increased my credit limit. My income was too irregular for me to make regular payments, but instead of ceasing using the bloody things, I carried on piling it on. And if I struggled to pay the minimum repayment one month, I’d draw cash on one of the others and pay it that way.

Not only was I robbing Peter to pay Paul, I was also ramping up my interest and late payment charges. Until eventually I ended up £35,000 in debt.

When I had no idea how to get out of this mess, I told my husband, thinking he might cave in now and help. He said it was my own fault and he wasn’t responsible for any of it.

And that’s when I realised he was right. It was my fault. Only I got myself into the mess. Only I could get myself out of it.

So I left him. We put the house up for sale, and my journey to get out of debt began. That was in 2006.

Come back next time to see how I did it.

Welcome

penguin_type_laptop_lg_nwm_26825Hi there. My name’s Spendaholic and I’m, well, a spendaholic. Or I used to be.

I used to have 35-grand’s worth of debt (in UK sterling). I’ve survived on less than £10 a week. I’ve almost had my house repossessed twice. I’ve done “proper jobs”, I’ve signed on and I’ve been self-employed. Today I’m still self-employed, but my debt is down to £11,000. I earn regular money and I pay my bills.

I’ve come a long way, but I still have some way to go. Join me on my journey to find out how I did it and how I continue to do it.

And don’t be afraid to say hi, to let us know how you’re getting along, and how this blog has helped you. Use the feedback form.