Wednesday, 9 July 2008

Re-evaluating My Financial Situation

I’ve decided to put the idea of building up a ‘rainy day fund’ on the back burner for a while. I hate not having any back up funds now that I’ve resolved to not to buy on credit again but what with the kitchen savings, trying to get rid of as much debt as possible, and the price of food sky rocketing, there just isn’t anything left over and saving what you don't have isn't as easy as spending what you don't have is.

Some would no doubt say that having an emergency fund is more important than a new kitchen and in some cases I’d agree, but I’m being totally honest when I say that my kitchen redesign isn’t just something I want but something I really need.

It isn’t based on a flight of fancy because interior fashions have changed or even just a desire to put my own stamp on it – although I will, of course. I need a new kitchen because the one I have just isn’t in the least bit practical for my needs. I can’t keep moving the table and chairs to get to the food shelves and I can’t keep moving the vacuum cleaner, clothes horse and sewing machine every time I need something from a particular set of drawers – I just don’t have that kind of energy or muscle power. There are other problems too, including a floor that’s unbelievably difficult to clean, things stored in boxes that are stacked here, there and everywhere making it difficult to get to things, and then there's the fact that it’s depressingly dingy and absolutely not the kind of place that inspires me in the cookery department. So you see, I really must save up for the kitchen. It’s about quality of life.

As for the debt, it isn’t going down as quickly as I’d originally hoped but there are reasons for that. I originally organised my finances on a Google spreadsheet and knew exactly what I had and where every penny (or thereabouts, anyway) was going. I knew when every bill would be drawn or needed to be paid and how much would come into my account and when, what I'd saved and for what, how much I owed and the rest. Alas, I became very ill and just didn’t have it in me to follow up. I'm sure most would have been the same in my situation. Then my laptop went to electronic heaven so for a couple of weeks after I was finally well again, I had no Internet access. By the time everything was back to normal, catching up just seemed too daunting a task.

Then creditors started hassling me for money and it all became depressing again. I knew I had to get back on track so I grabbed the bull by the horns and made a start. I’ve got most of the figures together again (waiting for a final few bills to arrive so that I can get the figures for them) and with any luck I’ll have the long awaited new kitchen by the end of the year and some of more of my debt will have been paid down.

This is how things stand at the moment:

Kitchen Fund Target = £1,800 (by March 2009)
Have £785

Debt Target = £0 (by Dec 2010)
Paid £1,665

Emergency Fund Target = £2000 (by June 2011)
Have £0

The debt figure scares me because I can honestly say that apart from the washing machine and a bed I bought as a housewarming present for my 'almost' daughter, I have nothing to show for any of it. Until about 5-6 years ago I didn't even own a credit card and then suddenly I had three, all maxed out. Still, the sum of my debts was over £9,000 at the beginning of the year so I haven't done too badly, I suppose. It's not as if I'm on a high income or anything and there are only so many notches on the belt. What I do know is that if I hadn't been willing to tighten it up as far as I could, I wouldn't have stood a chance of paying down anywhere near as much. I realise it's still only a little over £200 a month but on top of all my other bills, that's a lot of money to find when you don't have much. And the money for the kitchen's been saved in six months too, some of it just by saving coins in a jar.

The annoying this is that I should never have gotten into this situation in the first place because it's not as if I didn't know better. I managed perfectly well for over twenty years without buying stuff on credit and although some of it was almost forced on me when our income dropped drastically (after I became seriously ill and couldn't work at all while Richard stayed home caring for me), that isn't the reason behind all of it. Some of it I brought upon myself through sheer stupidity.

The fact that I’m saving up to go to Norway in September isn’t helping but it’s something I have to do. LM’s moving out there and needs mine and Richard’s help to get her stuff over, get her work permit sorted, register herself as a permanent resident and what have you. I'm really looking forward to it though - it always feels like going home to me - but right now it'd be nice if Norway wasn’t such an expensive country to visit. At least LM's going halves with me on the hire car (no, that's not a luxury - it's a necessity).

I’ll start the rainy day fund once the kitchen’s finished but it’ll still be more important to keep snowballing my debts because they're costing me a whole lot more than I could ever earn in interest through saving. But then there's the peace of mind involved in having an emergency fund so I shall have to try to strike a decent balance.

Boy, am I gonna celebrate when that last pound's paid off my debts!

Sharon J

Financial Calculators including savings, credit card interest and mortgages


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Elizabeth said...

Flippin' 'eck, I'm mightily impressed by the amount of money you've saved towards your new kitchen and paid off your credit cards this year - and all with the cost of food, fuel and utilities rising at a frightening rate. Bloomin' well done you.

Sharon J said...

Thank you, Elizabeth. I'm actually quite surprised at how easy it's been to cut back on all the unnecessary spending and I'm so much happier for it. Seeing those debts go down gives me far more than buying more 'stuff' ever could.

Anonymous said...

as you know i'm an expert at paying off debt ;), (I was an expert at running it up too ;) so I feel qualified to say you are doing really well, keep it up :)

Sharon J said...

Thanks, NMS. If the expert says I'm doing good then I'm happy ;)

Bealers said...


I really liked your post.

A kitchen is the heart of any home and with my pragmatic hat fully on I feel that if it's driving you mad then do what you need to do. You've managed to clear (approx) 20% of your debt burden whilst saving almost 50% for your kitchen, a huge achievement in a short period of time.

I'm really worried about what's going to happen to lots of people becuase of debt in the coming years. This article today in the Times puts it much more eloquently than I could:

Anyway, good luck

Sharon J said...

I'm not sure which article you're referring to, Bealers, but that the credit crunch is going to effect a LOT of people is one thing we can be certain of. But to look on the bright side, maybe we'll learn something from all this. We really must stop lending and go back to good old fashioned saving.