How do you deal with debt as a family with a business, mortgage, car loan and credit cards living off one wage?
Debt is a big issue for many Australians. We have shared 6 ways to easily reduce debt, a reader story on how one couple cleared $90,000 in 12 months (starting off unemployed!) plus tips on how to deal with debt here. Today we have a guest post from Terri Watson, sharing her story and tips.
“On becoming a mum of two, I decided I had done enough of sitting on the fence it was time to break through my own barriers. I am passionate about inspiring other mums to reach their dreams. I want to help as many mums as I can and I am hoping my story will connect with others going through similar situations. I am constantly trying to learn and grow as an individual to then help other mums do the same. I want to help mums build confidence and become in control of their finances.”
The past 12 months have been a roller coaster of emotions. 12 months ago we were struggling for cash, we had way more going out than what was coming in. We were at breaking point.
We were owed in our business ($17,000) and they weren’t paying up, we had a business loan ($20,000), we were on one wage ($78,000), we had a mortgage, we had a car loan and we had credit cards.
We sat down with a budget and worked out every cent that was leaving our accounts including the credit cards and it was scary. That night wasn’t pretty we were both down in the dumps and I felt terrible that I wasn’t contributing to our income needs.
We came up with a plan:
– I was to find a full-time job and my mum was going to look after the kids
– We would sell our beautiful car that we loved but couldn’t make the payments on
– We would set a strict budget with no unnecessary spending and cut any payments we can live without
– Have debts coming out from one account and
– Chop up our credit cards
I tell you what, the next 6 months were ugly! Selling my car took a little while but we got a good price for it and with selling it no more rego, services, unexpected mechanical costs or petrol costs.
I started a full-time job which was taxing and I missed the kids terribly but they were having lots of fun with grandma and the extra income was helping.
Every pay I transferred the money to the allocated accounts so we couldn’t spend it.
It took 12 months, and we are finally able to afford our payments while also paying down our debt and we also have extra cash every week which we put straight into our savings (an account we haven’t had in a long time)
I still don’t have a car and I think I will put off getting one until I need it for work. My hubby’s car he uses for work is wearing thin on the inside and out but the important bit is the mechanics still work great and it gets us around on the weekend. Funny story with how my life has changed, I used to try to keep up with the Joneses but when I look at cars to buy now I just see money flying out of them, registrations, services, fixing costs and petrol and my heart just beats faster. Yes, I may need a car next year for work but for now, we will make do.
I am working in a full-time job from 8 am to 4 pm so I am home by 4.30pm in an industry that I want to learn and grow in. (It is a different company than I started in at the beginning of the year if you need to work make sure the business is going to work for you.)
We are still on a budget and have a plan by this time next year the credit cards will be gone, we have two family holidays planned, and more study but we can afford it now and it’s not stressing me out.
Looking back the biggest things we did that changed the course of our financial woes were:
– Look at our friends network who were negatively affecting our well being (we will call these friends the Joneses) and move away from them. We were no longer hanging out with people that stressed us out made us feel like we had to have the latest thing, biggest fridge or fanciest couch.
– Selling our car. We may never have a fancy car again but you know what that is ok – new cars mean more money. If you are looking for a car Research, Research, Research! Find a car that ages well, mechanics can easily order in parts (European cars have a few issues and parts are harder to get quickly) and good on petrol (cars that take unleaded or diesel, not premium and economic instead of V6’s which burn petrol. Although, they are good long distance if you have to do a lot of driving, not so great just driving locally).
– Having separate accounts for everyday spending, paying bills and savings helped we broke down our monthly expenses into weekly payments and that went into the pay bills account so when monthly bills came up we weren’t scraping pennies together. The first few months were hard as we were doubling up but now it’s easy.
– Cutting up our credit cards well that just stops any spending and it gives you no option if you don’t have any money to make the purchase you can’t have it.
If you find this story relates to your situation like many young families here in Australia, please know that it is possible, it isn’t going to happen overnight but it will happen. There are lots of tips to find ways to save money, The Thrifty Issue has many great ideas have a browse through. Learning from my experience, and working in the finance industry where a lot of our clients are families just like you and me has flamed my passion to learn how I can help families like us become more confident and in control of our finances. They say it takes a village to raise a family, that village can be anything you need it to be, a group of mums supporting each other, your extended family, mentors etc. Your village can be whoever you want it to be as long as they are there to support you.
If you ever want to chat please drop me an email or message my door is always open to chat through ideas you may have. Sometimes just simply having someone that will listen with no judgement can help you realise somethings on your own.
If you’re having financial difficulties I suggest you talk to someone, parents or a professional they are both there to help.
A little bit about me is that I am a mum of two on a mission to help mums build their families future, I am currently studying bookkeeping and Financial Planning (I work full time in Financial Planning) and I would like to use these to help families get in control of their finances and be more confident and reach their goals.