I am well known for my honesty in the blogging world. I have written about my financial mistakes, my mental health struggles and my weight issues. I have talked about the truth of being a parent, the reality of being a business owner and the death of my parents. No holds barred.
Until it came to my debt.
I do talk about my debt to my friends. They know why I have had to say no to a 40th birthday New York holiday or why I had to turn down an invitation to a christening in Devon.
I have never admitted on Mrs Mummypenny, my personal finance blog, that I have debt. My blog is where I write about all the money saving ways I live my life. Until two years ago, I was in the corporate world earning a very good salary. I have lived my life in the moment, wanting things now (potentially linked to death of parents, I'm no psychologist but I can marry it up). I've always paid for things upfront then repaid over time because I could afford it.
I do have some savings. Only two years ago, I had £40,000 in my bank account and just £8,000 on interest-free credit cards, an overhang from our house extension. I had just taken redundancy from my corporate job so was used to having money to spend.
That £40,000 burnt a hole in my pocket. The first thing I did was splurge. It was hubby's 40th birthday, so we went on holiday to America, then had a family summer holiday in Spain. In just a few months £12,000 was gone.
The remaining money went on our living expenses while I was growing my business and making little income. By June 2016 the money was gone. I swapped the £8,000 credit card debt over to a new card with a longer interest-free period, adding a bit of monthly spending. It became £10,000.
Then Mrs Mummypenny started earning money, decent money. I drew money out of the business and to pay the monthly bills. But additional non-budgeted things happen. The car breaks, children's birthdays happen. Another month's worth of expenses went onto the credit card.
My 40th birthday arrived in March 2017. Vegas and a birthday party were both booked on the credit card. Here we are now in April 2017, just back from my birthday Vegas trip. My first job was to work out my net debt position.
The debt comes to £15,500.
There you go, the cold hard number. Scary, hey?
First things first, the debt needs to be restructured. Meaning I needed to organise a new 0% card while my credit rating (who knows how?) was still high. I was able to transfer £7,500 (with a hefty 3% fee) over to MBNA which is 0% interest-free for 42 months.
This leaves me with £2,500 on credit cards with interest charges that need to be paid as quickly as possible.
I then have £5,500 on a Virgin credit card which is interest-free until November 2018. I have 18 months to pay that one off.
We fortunately do have savings and money owed. We have a stocks and shares individual savings account (Isa), money owed to my business and some savings. This comes to around £9,000. We have 3 months' worth of household essentials covered and in the bank.
Cutting back
I have re-done our budget again and worked out we spend £3,000 each month on our mortgage, food, petrol, and bills. I know there are more cutbacks to be made. I just need to know say no to more: childcare, school dinners, sky sports. The mortgage has just been swapped to a better rate, saving us £100 per month from July.
Do I have any regrets? I used my redundancy money in a positive way to build up a business that will provide great income for our family. Maybe I should have paid off the £8,000 debt and not taken the two holidays in 2015? But holidays are to be enjoyed and to make people happy and relaxed.
I am feeling positive about the future and what it holds. Both husband and I are now running our own businesses, in control of our own destiny. I surround myself with positive people that help me to improve and grow and I know the debt will be repaid and we will get back to financial stability. I look forward to sharing the story with you.
If anyone reading this needs a copy of my budget spreadsheet, then please contact me lynn@mrsmummypenny.co.uk. You can read my blog Mrs Mummypenny and follow me on Instagram, Twitter and Facebook.