Let's call this one Hope For The Future (because the present doesn't look too good)
Friday was fun. That was the day that I discovered that once again I messed up my tax payments. HM Revenue & Customs sent me a lovely little document explaining how I need to give them £800 now and another £1,000 in January and another £700 in July, bless them.
It’s not their fault. It’s mine. It’s also my fault that we have debt to pay off and that we have a £600 monthly deficit that we are trying to overcome. It’s my fault that my family is facing some very difficult months as we tighten everything to try and get back on track.
Probably the worst thing about this situation is how slow I am to change. I have been actively working on clearing up my financial mess for a year and only now have I started planning and budgeting! (Insert pejorative exclamation here.)
Probably the best thing is that I know it’s all my fault. That fact really gives me hope. I’m not at the mercy of weather or spiteful little deities or a Curse of Finance (Lay your hand on the television and say the name of Cheee-susss and send your biggest cheque to me and you will be fuh-REE-ah, my brother!) I’m just an idiot with money. And I can do something about that.
Here is one of the things I am going to change: in the past, when our income has increased, our lifestyle has always ‘improved’ to use up that increase. I think it is like that for a lot of people. I have known for years that my lifestyle should be beneath my income, but when it comes to what I have actually done my reasoning went like this:
- Hooray! More money!
- Now I can finally buy ____
- Ooh, shouldn’t I start saving?
- Yes, but I’ve been so poor for so long. I can’t be expected to keep living like this. I deserve a reward.
- Of course I do! I’ll start saving and investing soon.
- Yeah, right.
- Repeat.
Not this time, buddy. I don’t care how cheap and tight and stingy I feel like I am being, our lifestyle is going to improve more slowly than our income increases.
28 September 2008 Jeff Gill
tags: cost-cutting,
debt,
depression,
failure,
money
The ongoing journey to freedom
Are you reading Paul and Sonya Armstrong’s blog posts about how they are getting out of debt yet? Start now!
We tried numerous times to curb our spending; sell things we didn’t need, look at our budget (bought books on budgets and management of money, software and programs). And it came in spurts. When the bills piled up and we felt like we were breaking, we got “real serious” about our spending. But we’d go right back to our pattern. I’d get something at McDonald’s or Chick-Fil-A or Wendy’s for lunch, I’d buy a CD, something for my camera, get office supplies; Sonya would buy inexpensive shoes for the kids, clothes at Target, we’d eat out every now and then (to be with friends, etc). Little things. None of them wrong, but it gave us a small excuse to avoid real change. Change that went beyond numbers. We resisted a first step in a real direction toward change.
At the heart our problems was fear…
27 August 2008 Jeff Gill
tags: blogging,
cost-cutting,
debt,
failure,
money,
quotes
Stupid, evil credit cards 3
The credit card has to be sorted and not with little minimum payments that are half interest, so I took advantage of Barclays kind offer of a year of no interest on balance transfers. We now have three credit cards – imagine the trouble we could get ourselves into! But we won’t. We haven’t made a single credit card purchase since I posted this, and in 11 months (not twelve) we will be free of credit card debt.
14 June 2008 Jeff Gill
tags: debt,
money
Money inspiration
If you are struggling with debt and money and all that, please read this post by Paul Armstrong and this post by Sonya Armstrong. You are not alone, and there is a way out, even if it isn’t quick or easy.
29 May 2008 Jeff Gill
tags: debt,
money
Stupid, evil credit cards 2
I wrote before that our two iMacs were on a 12 MONTHS INTEREST-FREE ON BALANCE TRANSFERS credit card from MBNA. Those twelve months ended near the beginning of March. Because I am working hard on managing our money, I set a date two weeks before the 12 months ended, and I paid off the card on that date.
I was obviously not pleased then when I opened my latest statement to find that I have been charged enough interest to wipe out half the interest I earned by the smart thing I did.
When I called MBNA to ask them to clear up the obvious mistake they had made, I was informed that ‘12 months’ doesn’t actually mean 12 months. In my case it turns out that ‘12 months’ meant 11 months and two days.
I said to the call centre person, Doesn’t it seem little dishonest to offer me 12 months with no interest but only give me 11 months and two days? And they said, and I quote: Blah blah blah blah policy blah blah clearly stated blah blah blah nothing I can do blah blah get off of our free phone line, you worthless piece of lichen.
The moral of this story is that credit card companies (and, even more so, insurance companies but you knew that already) are Evil.
Always assume the headline is a lie.
Always read the fine print.
21 March 2008 Jeff Gill
tags: debt,
money,
stories
Stupid, evil credit cards 1
It starts with a little bit of overspending on Christmas. Not much. Not nearly as much as last year. Then it doesn’t all get paid off in January. Then you buy a couple things online and ‘we’ll pay off the card straight away.’ but you don’t and then the car needs fixed and we didn’t plan for that and a couple times you need petrol but you aren’t sure how much is in the current account because your record keeping hasn’t been so great so it goes on the card too and before you know it there’s your credit card with £700 on it. Dang.
It’s not a crisis. It will get paid off, but it didn’t have to happen. The thing is, you know it will happen again. WELL, NOT TO US. Our credit cards have now been put in a Very Inconvenient Place – we do have some self-control – and that is where they are staying.
21 March 2008 Jeff Gill
tags: accounting,
debt,
money
A smart thing I did
Some of the debts that we are repaying with the £8,000 loan that we took out are on interest-free terms until March (iMacs) and July (Christine’s camera).
Instead of paying them off in September when we got the loan, I put the money in a tax-free cash ISA (individual savings account) and a high-ish interest savings account. The interest won’t amount to a whole lot – less than two hundred pounds – but it will either give us a little more to spend or give us a seed for further savings.
(Yes, I know what the smart option is.)
6 February 2008 Jeff Gill
tags: debt,
money
How we started climbing out of the mess
If you are new to our ongoing money story, you can catch the first two episodes here. Enjoy!
In April 2007 our pastor (and successful business owner) Steve Houghton did a finance workshop for our church (short Sunday morning version here.) It was very good. In three hours Steve clearly laid out the exact steps that I needed to take to get things back on track.
Being the highly motivated and disciplined person I am, I almost completed the first step – tracking our finances for a month to find out exactly how much we were spending and on what.
Then I didn’t do anything until August and HMRC started getting tetchy. When they demanded that I give them a definite date (preferably yesterday) when I would pay the entire amount that I owed them or they would come and take away my car and my shiny iMacs, I found renewed motivation.
The only workable answer was a loan. I learned that from Steve.
In September about the cheapest you could buy money for was 6.1% – not bad. I couldn’t get that rate. I’m still technically an American, so I’m not on the electoral register. Also, my credit history, though good, is rather short. I didn’t do too bad though. I borrowed £8,000 at just over 9%, repaid over five years.
I paid back HMRC. I paid back the rest of the Tax Credit overpayment. And I reduced my monthly repayments on stuff to about £168, over £100 less per month than before. Hooray!
The most important thing that taking a five year loan did for was to help me finally discard the idea that there is a quick-fix to my money problems. I am now committed to a long-term, no-shortcuts journey to financial health and happiness.
That’s the backstory. From now on you are on the journey with me in nearly real time.
5 February 2008 Jeff Gill
tags: debt,
money
How we got into the mess
This is part two in our money story. Part one is here. Feel free to add your own stories if you like.
In January 2007 through some marvellously big and unknown error in my design studio accounting I only set aside enough money to pay my VAT*, not my VAT and my income tax. Also in that month Christine and I went to work full time for our church. The financial transition went badly.
By spring I managed to get the VAT side of Her Majesty’s Revenue and Customs off my back, but the Income Tax side were getting a bit twitchy and generously adding interest to my bill. I owed them about four-and-a-half thousand pounds. I was dealing with it using my trusty method of Ignoring It And Hoping Something Would Come Along To Save Me. That method worked when I was self-employed. The next big job would always show up just in time. It’s not so good when one is on a fixed salary.
Tax wasn’t the only thing we owed HMRC. The Tax Credit people overpaid us by a lot, about three grand, thanks again to my accounting (lack of) skills. So we were giving that back at a rate of nearly £300 every month.
In September and December 2006 we acquired two shiny iMacs (20 and 24 inch versions. Mmmm!) They were meant to be paid for in cash, but the tax miscalculation in paragraph one prevented that. I put them onto a 0% interest credit card in January 2007.
The finishing touch came in June 2007 when the flawed shutter in Christine’s out-of-warranty camera stopped shuttering for good. In July we acquired a Nikon D200 in a buy-now-and-we’ll-take-your-children-in-a-year arrangement.
All together we had £7,700 of debt, no assets of any real value and a nearly-enough salary.
Then in August we the family grew. We were blessed with our wonderful 15 year-old daughter, and we discovered that teenagers are not cheap. About this time the kind folks at HMRC started becoming much less kind. Their letters were hinting strongly about The End Of The World As I Knew It.
*For those outside the EU, VAT is Value Added Tax. In the UK it is 17.5% on most things. Business owners are unpaid tax collectors for the government.
Don’t stop here! It’s too depressing. How we started climbing out of our mess is the next installment.
9 January 2008 Jeff Gill
tags: debt,
money