Tuesday, May 05, 2015

Overspending and debt - update posts

A little over a year and a half after first posting my attempt at explaining how overspending by a small amount on a regular basis spiralled into a large amount of debt on askaboutmoney I went back to give an update. Not two weeks later, life was turned upside down when my sister died. I'm including those posts here now for the sake of completeness. Long-time readers will already be familiar with a lot of this, I suppose.

Posted on 6 September 2013
And here's another update just in case anyone is interested. In February last year I was all set to be debt free by about May. I also gave in to my sister's prompting/complaining (that none of her family bothered to visit when her husband's family had done so multiple times) to organise a trip to Australia to see her. I booked a ticket because with debt gone by summer I'd have plenty of time, not to mention an expected bonus at the end of November, to save and pay for my December holiday, wouldn't I? With the way the bank holidays fell last year, it was the optimal time to do it as just over three weeks holidays would get me just over four weeks off (bank holidays in Germany don't automatically transfer to Mondays, so on years where christmas falls on a weekend, you don't get any time off). 

Then, at the beginning of April my uncle (and godfather) died unexpectedly. Two aunts had died the year before and although I had contemplated going home for the funerals I knew it was just too expensive, difficult to arrange time off work and didn't do it. This uncle was, however, a different case and I didn't care how much it was going to cost, I just wanted to be there. So between flights, a hotel for one night (stayed with friends the other), buses and taxis as well as meals etc., I was close to 700 down. Somewhat upset about the loss as well as the financial setback but determined that a couple more months wasn't going to throw me off stride.

Four days later I got a text that my brother-in-law, who I was very close to, had died unexpectedly. This death hit me very hard. And again, I had short-notice flights, hotels, meals, transport - another 700 or so down. 

If I had had an emergency fund in place, most of that cost could have been covered - Dave Ramsey recommends that the first thing to do when trying to get out of debt is to save 1,000 in an emergency fund. I never quite got the logic behind saving that much when you have debt to pay off but it certainly would have made a difference to me last year.

I had already had a long weekend home booked for the end of April, so a couple of weeks later I was back in Ireland but my planned very limited budget was blown out of the water. There was far more meeting up with family groups, eating out and just general spending than had originally been planned. I just didn't care and it took me a month or so to get back on track with properly managing my money and getting back to focusing on paying off my debt. I went through a very bad period of depression during 2009 and 2010 and had only really started to come out of it properly when all this happened so I was struggling with that as well.

I spent a lot of time thinking that I should just cancel my trip to Australia but in the end decided not to. It was the first time in sixteen years that I was going to have longer than two weeks off work and getting some sun in winter also seemed like it would be more advantageous than being in debt a while longer would be disadvantageous. To a certain extent, I just didn't care anymore either. I think that is a very real danger when you're in debt: it seems neverending and so you cease to care whether your actions are contributing to the neverending or not. I know that has definitely set me back more than once.

So, debt repayment slowed to crawl (more than minimum payments but not much more) while I prioritised paying for my ticket to Australia. My spending money was mostly provided for by virtue of the bonus I was paid in November, just before I left although I did find Australia far more expensive than expected and used my credit card a few times also. I also managed to catch the worst cold I've had for a long time so although I had a good holiday and it was great to have a bit of sun (especially given how long and miserable our winter was this year), spending the last week snuffling and then another couple of weeks missing work did put a bit of a damper on things. My depression was finally properly lifting though and although this seems to be my year for being sick (that cold, 2 serious bouts of bronchitis, 1 episode of contact dermatitis and 1 not very pleasant week of stomach bug so far), I am feeling positive and focused and have kept going with paying down my debt. 

My hopefully final setback came in March when a close family member asked for help in clearing ESB arrears as they were about to be cut off. Arrears turned out to be over 1,000 and although many would say I'm a fool for doing it, I paid. I don't expect to get the money back, certainly not any time soon, but at least I was able to make sure appointments with MABS were set up and proper budgets put in place etc. It's not the first time I have helped this person and probably won't be the last but I'm hoping this time was a serious enough wake-up call that they'll get their act together and what I have seen since has done nothing to diminish that hope. I'm not by any means advocating that people use credit to help their families out - everyone should really be responsible for their own financial issues - but in this case, I know I will always do anything I can to help. There are a myriad of reasons and a complicated background so although in general I would be among the first to advise people to be extremely careful in helping family out, and especially would always advise against going into debt to do so, it's one of those situations where I'll never take my own advice and more fool me for it.

So, as things stand, more than a year after I expected to be debt-free, I'm still not. For reasons that many will consider ridiculous and unnecessary but mostly I'm writing this not for those who will think that, but for those who do equally ridiculous and unnecessary things. If even one person, seeing it all laid out in black and white, can relate any of this back to their own behaviour and see where they're going wrong, then laying out my own folly for the world to see is worth it. And I think one of the most important things to remember is that life happens, everyone has their own "damage", their own issues to deal with - doing so, even if it means not always doing what you know is the sensible thing, is fine so long as you don't lose sight of the goal and make sure to get back on track as soon as possible.

In the meantime, I have gotten much better at trying to build up savings so that this year, I fairly consistently managed to maintain a small balance at all times. This was wiped out in August when all of my normal annual bills fell due and what has surprised me and shown me how far I have come, is how uncomfortable I felt for the month of August until I was able to make another deposit into my savings account at the end of the month. Although those expenses were expected and the money had been saved to pay for them, not having that 500 euro always sitting there really, really disturbed me. I'm going to hold on to that feeling and remember it every time in the future that it seems like a good idea to dip into savings for something I don't really need (as has happened too often in the past). 

Hopefully, I will be back in another couple of months with a "debt-free, yippee" post rather than another catalogue of misery!

Posted on 14 September 2013 (the day after my sister died)
I'm over the initial shock and just concentrating on the practicalities now. Am doing my best to keep the costs to what I can pay back immediately when I get paid at the end of the month (and since Avant are raising their interest rates I have absolutely no desire to let this become debt that drags on - I am deliberately putting stuff on that card and will clear it in full straightaway while just making minimum payments on the already existing debt for next month). So far I've booked a one-way flight (don't actually know when funeral will be so it was just easier to get one-way and I'll book the return when I know, probably for Saturday) at a cost of 213, car hire for 155, hotel for the night I arrive 49. A very generous friend has offered to let me stay with her in Inchicore so I'll need the car for getting over to Killiney and ferrying who/whatever needs ferrying while I'm there. Assuming another 200 or so for the return flight and petrol and eating costs if I'm careful it shouldn't go too much above 800. I think I'm kind of hoping that saying that out loud, so to speak, will help me to stick to it.

Posted on 24 September 2013
Hahahahaha. Do we have a "you're so funny" emoticon? Obviously not having had a car for the last few years has distorted my memory of how bloody expensive the things are! Just my return flight was nearly 200 and I spent what felt like a fortune on petrol (when on earth did things get to the stage that a Corsa needs 70 quid to fill it up even when it wasn't even three-quarters empty?), not to mention M50 tolls. Okay, I could have driven other ways but the convenience far outweighed every other consideration given the circumstances. 
Final tally on my credit card was a bit more than 750 but I also ended up spending nearly 400 in cash (perhaps half of which could have been avoided, I suppose) and mobile phone top-ups (from my already overdrawn BoI account). However, I decided that clearing my "new" debt immediately would leave me feeling more like I have stood still than anything else and so have changed my mind on how to tackle this.

I got paid early this month, i.e. yesterday so what I've done is to clear my Mastercard (which was what I used to help someone out with their ESB bill earlier this year). I made a slightly more than minimum payment to my visa and the same to the overdrawn BoI account - firstly to just have paid something but mostly also to round the numbers off. Am I the only person who does that? ;)

Next month I will clear the visa so that I am left with just one debt. And then we'll see. I had been toying with the idea of a week's holiday somewhere cheap but sunny at christmas and am still torn about that. There's no doubt that I really can't afford it, which should be the end of that thinking. And yet I have a feeling that anything that will help me get through this winter would be a good thing (timing of christmas is because of mandatory two-week holiday from work). At the moment, I'm leaning towards debt-free being a better feeling than Malta in December but am not making any decisions. If I end up clearing my debt in November/December/January it would be great. I might decide that waiting until January/February/March doesn't make that much difference though. A lot might even depend on what kind of winter we start having - snowy and bright or grey and drizzly, big difference between the two. And if the dentist's appointment I have in two weeks brings expensive news then all bets will be off anyway. [In case anyone is wondering, I didn't go away for a sun holiday that christmas]

Sorry to be boring on about this now but it's helping me work things out and keep my focus so I'm just going to go with boring ye all for now. :)

And let's focus on the positive - the visa card has gone back in the drawer and won't be coming out again unless there's another emergency. A few years ago I would have kept spending for another few months before coming back to my senses!

Posted on 25 September 2013

I should know better than to express a thought like that. After all, some people do call their emergency fund their "Murphy" fund. I had just logged on to check that the payment had gone through on the Mastercard and to enjoy the sight of a zero balance and my glasses fell off. Perfect. Is that ironic? Never sure ever since that Alannis Morrisette song.

It's not a very serious break and might be reparable and/or I can search out my old glasses and use them for a while but I was actually at the eye doctor less than two weeks ago and found out that my prescription, after about 20 years, has changed. I was going to wait until the new year to get them (if I've been wearing the wrong ones for a while now another couple of months won't matter) but maybe this is just a sign from the universe to get it sorted now. Le big sigh.

And finally, posted on 25 October 2013
Right then, another payday, another few fleeting seconds of feeling "rich" before all the money gets sent off somewhere else again. 

Have just put through the payment to clear my visa. I also made a payment to my mastercard, which will leave it in credit to the tune of 100 euro. I may travel to Frankfurt at the end of the month (costs around 80) so that money is there if I do and if not, will sit there earning me interest. It's a German mastercard and they work slightly differently here and on my particular card interest is charged from the day of spending, regardless of whether you clear the full balance or not at the end of the month. However, since I can earn interest (at ECB less 0.5% I think it is), even if it's just a small amount, it makes more sense to put the money straight onto the card rather than leaving it in my current account where it earns nothing. [This has changed in the meantime so no more interest earned for maintaining a positive balance]

So, that just leaves me with the overdraft on my BoI account, which currently stands at just about 2,500. 

I did get glasses and managed to keep the cost of that to 95 euro so not too bad. I'm definitely not going away anywhere sunny at christmas but have arranged to house-sit for a friend in Frankfurt over New Year's so will get a bit of a quiet break anyway.

At the moment I plan to clear an small amount of the overdraft in December and otherwise try and enjoy the festive season. I already have a long weekend in Dublin booked for the beginning of the month (around my birthday) but almost everything has already been paid for months ago (flights, hotel, 2 x NCH concerts and a friend is treating me to a flotation session) so I'm going to go ahead with that. Main object is actually to go to the Arts and Crafts fair in the RDS - I've been saving change in a sealed pot all year and am taking whatever is in that to buy myself something nice. The bulk of the overdraft would normally then be cleared by the end of January. 

Unfortunately when I went to the dentist a couple of weeks ago for a check-up I found out that I had a huge cavity underneath an already large filling. So was back to the dentist a couple of days ago and he drilled it all out and tidied it up and put in a disinfectant type temporary filling. He wants to leave it now for a month or so and then he will check if the roots are still alive (they certainly hurt like the devil the last couple of days! Never had electric shock-type toothache before). He thought there was a very good chance that I wouldn't need a root canal but it depends on how it reacts/heals over the next few weeks. At the very least, I'll need a partial crown. Worst case scenario will be a root canal and full crown, I think. I do have a supplementary dental insurance but am only in the third year of it so only get a limited amount paid out. Will have to wait and see what happens in December, how much the estimate is, how much the health insurance will pay, how much the supplementary insurance will pay and then how much I'll have to fork over myself. A few hundred at least, I assume. So it may be the end of February (barring any other emergencies) before I actually clear the overdraft. [I'm too lazy to go back and look now but I didn't need a root canal and ended up getting a partial crown. A couple of months ago I had to get yet another partial crown and also an inlay. So very happy to have had the supplementary dental insurance to cover some, most actually, of these costs. Having to just cover a couple of hundred instead of in the thousands is a huge help. Once I get to the beginning of 2016, I'll have been paying that insurance for five years and the full amount of coverage will kick in (which is between 85% and 95% of most things) so just need to try and make it to the end of this year without needing any more major work as I have used up every allowance available already. One day I'll sit down and work out exactly how much I've gotten out compared to how much I've paid in and how much I've had to pay in costs myself]

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