So this is it. I have had to take a cold hard look at a problem I have been pushing to the back of my mind for months. I have reached a point where I do not know how I am going to pay next month's rent for the flat I share with a friend. I know the figures won't add up, but now at least I am going to face them.
Here they are:
Current account overdraft limit: £1,500.
Current account balance: Minus £1,386. Credit available: £114.
Credit card limit: £3,750.
Credit card balance: Minus £3,646. Credit available: £104.
Bank loan: £1,799. Possibility of extending the loan: Nil.
Student loan: I have no idea! Huge, probably.
Savings account: 43p (In credit. Hurrah!).
Oyster card balance for travel to work: Zero.
Fridge: Empty.
What a mess! It looks blatantly alarming when you write it down like this, but this is the first time I really have.
For the past few months I have had to pay my rent on a credit card and I have been getting whacked with interest payments and charges on my current account.
It is embarrassing to admit this, but I have got myself into this situation where I pay for everything through loans and credit cards, and it has now reached a breaking point.
I cannot pay next month's rent on my credit card again as I am almost at the limit. I have already taken out a loan and the bank will not let me extend it. And they won't let me extend my overdraft, which I am permanently living in, either.
How have I got myself into this mess? My financial situation hasn't suddenly changed ... other than that I have reached the point where the bank says 'no'. Thankfully, I still have a job.
I don't think I have an extravagant lifestyle, but I admit I have been sleepwalking into a spiral of ever-increasing debt. I didn't think I was a reckless person. My bank statement says otherwise.
It is not as if I have been out buying expensive clothes and shoes. I haven't been out drinking until the early hours (ok, I have a little bit). I don't run a car.
The problem is I never got out of living in my £2,000 interest-free overdraft after I finished university. And as that interest-free overdraft limit shrank when the bank gradually withdrew it, my outgoings stayed the same. The high cost of living and renting in London has kept me overdrawn. (London did it, it wasn't me!).
Now I have a £1,500 overdraft (thanks to the bank agreeing not to remove it), but it is no longer interest free. I pay about £20 a month interest on the current account and charges on top of that. For example my current account charges, due out later this month, are £92.87 (£50 informal overdraft fees, £25 fee for a rent payment which bounced and £17.87 interest). I pay about £65 per month to pay off my bank loan and £70 per month credit card payments (£50 of which is interest). Paying fees like these over the past year has gradually tipped me further and further into the red.
Yes, I know. It is my fault. And I am going to do something about it.
Now I am on a mission to get out of debt within a year and I will share the journey through this blog. It is all very embarrassing. But if I learn anything from this, then you can learn with me...
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