Yesterday, I had my first annual review of my Debt management Plan.

So, what´s it been like my first year on a DMP? Was it easy? Has it been a struggle? Have I learnt anything useful that I can pass on to others in my predicament?

Well, the answers are, interesting, no, yes and yes!

I put off phoning the CCCS for over a month. To do the review, you need to accumulate lots of bits of financial information and frankly it takes some doing to get all those details together. Also, having struggled for 12 months to make ends meet on what they allowed me the first time I did my budget, I was a bit reluctant to call in case I came off even worse than I have for the last year.

This was my first mistake. The annual review sorts all your expenditure into different categories and money is then allocated to these categories on one of two bases (that´s base eeze, hopefully the plural of basis – let me know if I´m wrong!)

If, for instance,  it´s your mortgage, then it´s however much it is, but if it´s how much you spend on food, then there are preset limits over which you´re not really allowed to go, or the credit companies start to question why you´re spending so much.

Over the month I prevaricated, my mortgage reduced by 30 quid a month and the price of petrol came down by around 20 pence a litre. If I´d set the amounts at that point I could´ve been quite a few quid a month better off.

On the other hand, I did find out something very, very important which I didn´t know and which, in a way, negates what I just said in the previous paragraph.

That very, very important thing is that if you have a big, one-off unavoidable expense looming, (for instance my car needs a new clutch and they quoted me 400 quid, or I need a new central heating boiler and that´s going to cost the best part of 1000 pounds), then you can phone the CCCS up and cut your payment to your creditors for that month by how much your big expense is going to cost.

The amount of stress not knowing that has caused me over the past 12 months is, well, it´s bigger than a big thing.

In fact, it would have saved me getting myself into a bit of trouble with the CCCS and possibly with my creditors.

The house we live in is a sort of half-timbered construction and we have wooden windows. This means that every few years, you have to paint the exterior of the house or, basically, it falls to bits as the weather gets to it. Well we haven´t painted it for quite a while and the weather has got to it and, to cut a long story short, it was now or never, or we would have been looking at a couple of thousand pounds for new windows all round the house, not to mention a possible damp problem on the white bits in between the half-timbered bits.

So, we had to get it painted and the bill for that came to 500 quid. Unfortunately, they only budgeted 17 quid a month for repairs which comes to a total of 204 quid for the whole year and I hadn´t saved that anyway as I´d had to do other jobs on the house over that year.

So I ended up getting an overdraft I wasn´t supposed to have to pay for it. To be honest, I also added more debt by borrowing another 500 quid off my dad and another 400 quid of overdraft just to cover car repairs, house repairs and the fact that petrol, electricity, gas and food prices all went through the roof last year.

That´s why the very, very important fact is so important. There´s really no need to get an overdraft, or get further in a mess – you just phone them back and tell them you´re going to be in a mess if they don´t do something – I thought my budget was set for the year and that if my mortgage went up by 50 quid a month, I just had to find the money from somewhere, somehow – but you don´t!

How much more stress free is that? We waited all through the summer thinking we couldn´t afford to paint the house and wondering, worrying how we could pay for it and in the end time beat us and we had to make a very difficult decision to go further into debt. The sad thing is, we had no need to worry, or to wait – it just needed a phonecall.

Now instead, I have to open yet another bank account and add my overdraft to my list of creditors – proper embarrassing and a right pain in the bum swapping all the direct debits over too.

So, how am I set up for next year? Well, I´ve managed to negotiate to pay 50 quid a month less than last year so hopefully, although it´ll still  be a struggle and we´ll still be eating beans on our toast rather than caviar, knowing what I now know about big one-off expenses, it hopefully won´t be too painful.

………….So then, a fortnight in the Maldives for 2 adults and 1 child, should come in at ooh, I dunno, 4 grand………….? I don´t really think I´d get away with that one, but you have to have a dream, don´t you?

I just read an email newsletter from the Motley Fool entitled ´Five Steps to Debt Free Heaven´, which says that 47 is the magic age when the number of people who have beaten their credit card debts exceeds the number who haven´t.

That means I have just 214 days left to clear my debts!

That means I need to raise £403.56 per day, or £16.81 per hour, or 28 pence a minute, every minute of the next 214 days!

If you´d like to help me, why not trundle over to my other website www.psychobanana.co.uk and give me a helping hand?

Well, today, I was going to carry on where I left off yesterday, but unfortunately, lack of available time has got the better of me again. I´ve spent so much time doing other stuff that I haven´t left time to put much here.

Anyway, I´ve been reading up on time management as well and along with all the guff I´ve read, one useful piece of advice is to just start whatever it is you´re trying to put off, which is good advice if you´re a bit of a prevaricator like I am. But I think you can extend this little tip a bit further to include things you actually like doing, but can´t seem to find time for. So, today, even though I´ve not really got time, I´ve made 5 minutes to write this.

The effect of this is that now, even though I haven´t written on the topic I wanted to, or found the amount of time I really needed to, I have written something and so far, although it´s early days and this is only the second day, I have written something every day. And do you know what, that feels good – I may not have achieved exactly what I wanted, but I have made progress, and if you can make just a tiny amount of progress every day, just think where you´ll be in a year´s time.

By way of a personal example, I´ve paid a little, (well it´s quite a sizeable amount really, but it doesn´t seem to make much of an impression), off my debts by doing a Debt Management Plan every month for the last eight months and hey presto, I´ve paid off 6% of my debt. Now there´s a long way still to go, but 6% is 6% – it´s progress, and that can only be a good thing.

Well, I´ve left it rather a long time again since my last post. I´ve been prevaricating, you see! Or rather you don´t because I haven´t produced any content.

I´ve been spending my time considering all aspects of my life and really, I´ve come to the conclusion that it´s far too complicated – I have far too many things going on and not enough time to fit everything in. I´m sure this is a fairly common problem for most people these days, but let me quantify things a little – here, in no particular order, are some of the things I´m trying to cope with:

• My job
• reading my personal emails and getting rid of the spam, so I can actually find the couple of real emails I´ve received!
• trying to find ways to make money online
• reading other peoples websites, supposedly educating myself with the knowledge I need to improve my own websites in terms of both writing quality and earnings potential
• updating this site
• updating my other site, http://www.psychobanana.co.uk
• learning java
• learning how to use, Komposer/NVU, html, css, dreamweaver
• writer´s bureau course
• keeping track of spending and trying to produce some data for my next debt management plan review
• keeping track of my debt management plan progress
• trying to find paid writing opportunities (so far none!)
• trying to find ways of monetising my website
• trying to learn french and spanish
• life in general, looking after my daughter and the missus, and finding the time to actually having a life

All of which is quite a formidable list. The main drains on my time seem to be reading other peoples information on how to make money out of your blog. There seems to be a massive amount of material out there on this subject. That said, you do tend to find yourself going round in circles and back up your own back passage on this subject. Basically, what I´m trying to say is that most of the schemes for making money on the internet seem to revolve around selling courses about how to make money on the internet – it all seems a bit like pyramid selling. I found the same thing when trying to find advice about how to get paid writing opportunities – all the websites about writing seem to be a sales vehicle for the person to tell you how to make money from writing – there doesn´t actually seem to be anyone out there making money from writing by writing about something other than how to make money from writing.

Anyway, as a result of some of my invested time, I do seem to have found a couple of sources of useful information, which I´m going to try and work my way through over the next few days, spare time permitting, and hopefully work through the process here online, so you can see what I´m up to and hopefully it may be of some benefit to someone else. But for now, I´m fresh out of free time again!

1. Get a credit card

2. Spend on the credit card up to your limit

3. Wait for the credit card company to increase your limit

4. Spend up to that limit

5. Repeat steps 3 and 4.

6. Get a new credit card with a balance transfer offer

7. Transfer the balance from the card above onto your new card

8. Watch in amazement as the previous credit card company increase your limit again when they notice you’ve just paid it off

9. Spend on the previous credit card up to your limit

10. Spend any space made on your newer card that you might have made while you’ve been paying that off

11. Having made sure you’ve maxed out your existing cards, repeat steps 6 to 10

12. Repeat step 11 until you discover one day that after you’ve paid all your minimum payments, you’ve no money left for food, utility bills etc.

13. Have a lightbulb moment – no, you’re not going to cut up your cards and start paying this lot off – you figure out that you can make the minimum payment on one card and then do a balance transfer with the space made on that card to pay off a fair bit of the minimum payment on the next card, then use the space made on that card to pay off some of the minimum payment on the next etc., till you’ve paid off all your minimum payments. You now have enough money to eat and pay your utility bills and you can kid yourself that you’re handling it – It will be years yet before you have your proper lightbulb moment and discover that all the time you thought you were handling it, you weren’t, you were just paying a fortune in interest and getting deeper and deeper into the brown and smelly stuff

OK, so I lied – there were 13 of them, so kill me! Just so you know, I know the above method works as I have extensively field-tested it. It takes a few years to get it up and running successfully and make sure that you really are conning yourself properly, but if you persevere, I know you’ll be able to have as much success with this as I have.

Please feel free to leave any comments below, especially if you feel there are some tips I have missed!

So, on the 25th October 2007, after sitting around most of the day finding first one excuse and then another to put off the awful moment, and more time spent sat there frozen like a rabbit in the headlights, my brain refusing to let me pick up the phone or even to process any thoughts whatsoever, at 4:30pm when I couldn’t put it off any longer, I finally phoned the CCCS and spoke to someone called Rosie.

Rosie was very kind to me, understanding of both my embarrassment at being such an abject failure financially and of my, well for want of a better word, depression caused by the stress of worrying on a daily basis about what might happen if things took a turn for the worse and I wasn’t able to earn my current salary for whatever reason and the daily worry that I might well find myself and my family without a roof over our heads or any food to eat.

After having a bit of a chat about just what sort of a mess I’d got myself into, she gave me a Client Number and made me an appointment to have a telephone meeting with one of their counsellors.

She then told me all the information I’d need to collect ready for the meeting, which was a list of all my debts and the amounts owed, details of household bills, (gas, electricity, water, mortgage etc.), and payslips to show how much I earned. She also told me to list how much I spent on just about anything, so I had enough details to work out a budget.

She also told me I’d need to open a new bank account and get my wages paid into that as soon as possible, as I had an overdraft on my main account which would form part of my debt. She did say that it was OK to spend all the wages still left in the bank right up to my overdraft limit, which although I found a little surprising, did come as a huge relief as I, and my family, would basically have starved otherwise. She also said to cancel all the direct debit and standing orders off this account and transfer any that were for priority creditors over to the new account so that I wouldn’t fall into arrears with utility bills and the like.

The other thing she suggested I do was to phone each of my creditors in turn and tell them I was in financial difficulty and couldn’t afford to pay them, to tell them I was doing a Debt Management Plan with the CCCS and give them my Client Number and also to send them a token payment, which could be as little as £1, to tide them over until the Debt Management Plan started. She told me not to be pressured by my creditors into paying any more than I could afford as this would just get me in more difficulty.

She then told me not to worry and that if I had any problems of any sort, that I should contact them immediately, as I also should if I had any emergencies such as bailiffs calling at my house, or court papers being served.

And that was it, done. Not half as embarrassing as you’d expect, but also so liberating that I had to fight back the tears, unsuccessfully as it happens. It’s not until someone takes some of the burden off you that you realise just how much stress you’ve been putting yourself under trying to keep your head above water financially while trying not to let anyone else know what a complete mess you’re in.

There was much more stress to come, as I’d later find out, but for now, at least I’d taken the first step.

Well, it’s been ages since I’ve posted anything on here. The reason is that things got so bad with my debts that I was spending hours every day trying to figure out how to, well,  rob Peter to pay Paul, I suppose.

What initially pushed me over the edge was the holiday my other half booked for us at Christmas last year as a ‘nice’ surprise. Well, it was a surprise alright! She paid for the holiday which was great. It was when we came to the spending money that the problems started.

The other half had a couple of hundred pounds and had figured that, since we spent money on food and petrol and whatever while we were at home, and that since we weren’t at home for that week we wouldn’t be spending it, then we could spend that money while we were on holiday instead.

It would have worked ok if we had gone on holiday on our own, as we would have known how much money we had and could’ve budgeted, but we went, instead, with some friends and that made it much more difficult as we hadn’t told them about our financial situation. What also made it worse was that the other couple weren’t exactly throwing their money around, they were just spending quite reasonable sums for a normal holiday, so it was very difficult to say, “oh we can’t afford to do that cos we’re skint”, without looking like some total really sad party poopers.

So instead I ended up drawing out money on my credit cards and pushing them all to their absolute limits. Don’t get me wrong we’re not talking massive amounts here, just 300 quid spread across 4 credit cards. Now that might not seem like a lot, but it pushed me right to my card limit BEFORE they added on the month’s interest. So when they did add the interest on, I was over my credit limit, which meant that when I made the minimum payment, it only just cleared the interest, meaning I could hardly spend anything on the card without going over my credit limit again. Basically I had spent that month’s money the month before.

And what was worse was not only was I totally destitute the month after the holiday, but I couldn’t afford to make any headway into the amounts I had spent on holiday – I paid as much as I could, was short of money as I hadn’t cleared  any room to respend on the card and I was still up to my credit limit before the interest payment went on -  I was now totally screwed and there was no way back.

What is so scary is how little money made that much difference between just getting by and being totally over the brink. Don’t get me wrong, I wasn’t living the high life and there was no way I could have ever got myself out of debt carrying on the way I was going, but I was keeping up the payments and successfully servicing my debt every month – £90,000 worth! And it only took £300 to push me over the edge – that’s one third of a percent of the total debt that pushed me forever over the edge with no way back!

So, that was pretty much that. I struggled on for another few months, but every month, a week after I’d been paid, I’d have no money left as I’d paid it all out on credit card bills and was waiting for that money to clear on those cards so that then I could do balance transfers to other cards, then wait again while that cleared and then finally I had a little money to spend, but not enough to make ends meet.

By October, things were so bad that I was having to borrow a couple of hundred pounds a month off my Dad, but I couldn’t afford to give it him back and it was at this moment that I finally cracked and just couldn’t cope any more. I’d had a sort of ‘light bulb’ moment a while before this and inadvertently contacted one of those get you out of debt companies that charge you, thinking it was free, but they gave it a real hard sell and when I asked how much of a cut they took they were really reluctant to tell me, but I stuck to my guns and eventually they told me.

I sat and prevaricated a while longer and in the end I was glad I did, because in the meantime, I was constantly badgered by that same debt management company, phoning me every couple of days badgering me to start the debt management plan with them. I’ve been a lifelong hater of the hard sell approach, so that was really all it took to convince me that they were not the right company for me. Eventually, I did answer one of their calls and told them  I was thinking of going with the Consumer Credit Counselling Service instead as I wanted all my money to go towards paying off my debts. They were very rude about the CCCS, saying they didn’t do a very good job because they were a charity and didn’t have the same strong relationships to negotiate with creditors that they did and that was pretty much the final nail in their coffin as far as me doing a DMP with them. So I prevaricated a little longer……………..

………….and finally, when I worked out one month that after I’d paid everything off and paid the mortgage etc., that I’d have £70 to pay for food and petrol for the rest of the month, I decided enough was enough -  I really wasn’t ‘handling it’ any more – and contacted the CCCS.

I haven’t managed to post anything on this site for weeks now. I do have an excuse though. I’ve been considering doing a Debt Management Plan to try and pay off my debts. I am desperate – ever since I came back off the holiday I didn’t want to go on in May, that my other half booked as a ‘nice’ surprise last Christmas, I’ve been really struggling financially. The reason for this is that the 300 quid extra expenditure incurred during my holiday has pushed me right to the limit with all my credit cards.

You see what I normally do is pay two credit cards off and then with the balance I’ve cleared on these two cards, I do a balance transfer to pay off two of my other cards. I then pay the minimum payment on all my other cards and then re-spend on these cards to take me back up to my credit limit. In this way, I can just about find enough money to have a comfortable, though quite frugal, life. The trouble is, I usually spend up to my credit limit less next month’s estimated interest. Thus, when they bung the interest on at the statement date, I’m still within my credit limit and the minimum payment is just the usual percentage of the outstanding balance. Unfortunately, to release enough cash to cover our expenses on holiday, I spent right up to the credit limits on the cards, which means that now, when they add on the interest at the statement date, I go over my credit limit by the amount of the interest. This makes the next month’s minimum payment a sum equal to the usual percentage of the balance, plus the amount over my credit limit. This not only makes the minimum payment extra large, which leaves me short of money, but it also means that the space I clear after the payment isn’t that great, so I can’t re-spend on the card to anywhere near the amount of the minimum payment and if I’m really skint, I end up spending right back up to my credit limit again, meaning I have the same situation re-occurring the next month – it’s one of those vicious circle things and I’ve been stuck in it since May.

Unfortunately, my car isn’t very well at the moment and needs a visit to the garage to sort it out and a bill of probably 300 quid at a guess, so I really am struggling. Add to that that it’s my niece’s 18th birthday in October, our friends 40th in October and Christmas is only 3 months away and you can see how a Debt management plan is looking all the more appealing.

But despite all that, I’ve been prevaricating, unable to decide if I should take the plunge or not. In essence it all seems so straight forward – just phone up some company who cut your payments and sort everything out for you – how could it possibly go wrong?

The trouble is that once you start, it really isn’t quite as simple as it first looks. First of all, you have to select a company to help you and here, I did the right thing – well, almost! You see, I’d considered a DMP a year or so ago, read the ‘Money Saving Expert’ website, absorbed all the advice and made a few bookmarks to relevant sites. The trouble was that I’d somehow bookmarked one of the companies that it’s not a good idea to use!

The reason they’re not a good company to use is that, although they contact your creditors on your behalf and negotiate a reduced payment and try to get your creditors to freeze the interest on your debt, they want to charge you a 15% fee for their trouble. Since this is actually higher than the interest rate I’m paying on some of my credit cards, this makes using a company like this somewhat less than sensible, not to mention a little unfair to the credit card companies who have provided you with a relatively low interest rate, (it’s good for the one’s who haven’t, mind!)

But that’s not the half of it – these people are high pressure sales people, who phone you back within half an hour of you filling in the calculator on their website and discuss getting your payment down, but seem quite reluctant to discuss their fee until you pin them down to telling you. They then send you some forms to fill in whether you really want them to or not and then hassle you constantly by phone till you let them know that you’re not going to use them.

The other option are the charity organisations, who do the same as the company mentioned above, but don’t take 15% for themselves – they do it for free! There’s a couple of them – The Consumer Credit Counselling Service (CCCS) and Payplan, (you can also contact the Citizen’s Advice Bureau)

I filled in the calculators on both sites and Payplan have phoned me several times to discuss my problems, but I’ve managed to avoid them so far, which is a little rude of me, but I just don’t feel ready to commit myself at the moment. CCCS have been brilliant for me as they have a calculator on their website which actually tells you exactly how much you would have to pay under the DMP and they don’t contact you at all – it’s up to you to contact them, which suits me as nothing puts me off more than the hard sell approach.

The downside is that I’m worried that the amount of money they allow you is unbelievably miniscule in some categories e.g. lunches while at work. They rightly point out that it’s much cheaper to take sandwiches to work rather than buying your lunch, but the amount they allow you is ridiculous as it works out at something like just over a pound a day each for you and the missus, which doesn’t buy much when you consider the price of food in supermarkets. And don’t forget you’re doing this long-term for several years – just how many fish paste sarnies can one person eat?

And that’s really what’s putting me off. Even though at the moment, I’m paying virtually nothing off my debts, whereas under a DMP I could be paying off quite a sizeable chunk each month, it seems much harder to go for it if it’s going to leave you even more strapped for cash than you already are. I’ve been on the forums at Money Saving Expert asking for advice and people have been really supportive and encouraging – to be honest, I feel like I’m letting them down by prevaricating, but for now I really can’t seem to make the jump – I’ll let you know what I decide………………………

We recently swapped over our phone from BT to Talk Talk. To say it didn’t go smoothly is something of an understatement!

You can read the full story here, but it is quite a story!

Just been looking back through my diary to see what I’ve been doing while I haven’t been posting anything on here.

The first thing I noticed was how much time I spent trying to cobble together some spending money for our week’s holiday in Kos.

Just in case you didn’t know, I’m rather heavily in debt, as you can see from my other website, www.psychobanana.co.uk!

My finances are so tight, that finding just a couple of hundred quid spare turned into a real nightmare of shuffling money from one bank account, or credit card, to the next. Anyway, in the end I managed it and we went on our holidays and we didn’t have enough cash, so my partner ended up eating in to her overdraft to supply us with enough spending money.

I know what you’re thinking – if you’re that skint, you shouldn’t be going on holiday at all, cos you can’t afford it – and you’re right, I wouldn’t have, but what happened was that my partner, (encouraged by her friend, who accompanied us on holiday with her family), put down the deposit on a package deal as part of my Christmas present. When I received my Christmas present, I really was genuinely lost for words! My partner expected me to be really pleased and I tried my best to look pleased, but really, deep down inside, I was thinking, “What a stupid thing to do – why didn’t she ask me first before committing such a large chunk of our finances?

I was also not that impressed as her choice of destination didn’t seem too well thought out either, but in the end it turned out to be a pretty good holiday as you’ll be able to see from my post here as soon as I write something for that link to link too! (Hopefully tomorrow))

After that, I returned home to find that my finances were in a terrible mess as I couldn’t really afford to spend the spending money and I hadn’t been in the UK to shuffle money round accounts and pay credit card bills for the week I was away! So I spend the remainder of the month pushing every single credit card I own right to the very edge of its credit limit , and in some cases, beyond it. The result is that this month, I’ve been even worse off and I also had my road tax to pay, plus a large gas bill, plus a large phone bill – but more of that tomorrow!