25k debt to 50k in the bank in 10 months

People make New Years resolutions for fun. I’ve stuck to mine when it was clear I had no other choice. It was 6:30pm on New Years Eve 2006 and I logged onto my bank online to see how much I could spend at the New Years Eve party at the Middlesbrough working mans club, with my friends and family.

I got a shock. It told me that I was over my over-draft limit and so I had no cash available. The worrying thing was that my next pay cheque wouldn’t arrive until the end of January and I still had rent and other bills to pay well before then.

Fortunately my Shop Codes site reported excellent traffic and sales from October and so my business bank account had a few thousand sat in it. I transferred some money over as emergency cover and then set about to rebuild my finances.

On the 4th January I sent myself an email detailing the debt I was in that included one overdraft, one loan and six credit cards. I wasn’t concerned about the loan but it was the credit cards. One card alone raised its interest rate from 9% to 16% and the other banks were soon to follow.

Each month I was paying a significant amount of money just paying off the interest and so my debt wasn’t getting cleared. In fact I was spending so much meeting minimum repayments that I had to keep using the credit cards to shop for essentials.

As my business had been regularly bringing in good revenue for a few months I gambled that my bank would give me a big loan to cover all my outstanding debts, including a 9,000 debt to themselves.

So I applied for a 25,000 loan during January online rather than seeing someone at the bank face-to-face. If I failed the application I’d have to get in touch with a debt management agency. As it was, I got an instant approval and the money was soon in my account.

It would be repaid over 3 years. My repayment would be less than the minimum payments I was paying towards my credit cards. And it would cost over 2,500. So I was effectively 27,000 in debt at the start of this year.

Instantly I paid off all my credit cards and attempted to close four. That wasn’t without complication. So I still have a few unused with credit balances.

I then closed all my online accounts where I could pay for anything with a previous credit card, such as gambling, book clubs or magazine subscriptions.

I am now only 26 months away from being debt free. That sounds a lot but it would have been 260 months minimum in the previous situation.

The picture is also far more rosier. I don’t actually struggle any month now and get by on my day job monthly pay. I’ve also had three fantastic holidays this year including back-to-back holidays to Portugal and Ibiza and a two-week stay in Hong Kong.

I’ve only had to use a credit card once in the whole of this year and that was to fund my Middlesbrough season ticket at 400.

A milestone came for me in September when I realised just how far I’d turned the corner. For the first time ever my total amount of money sat in my bank accounts covered all of my debts and more. So I was above water albeit that some would be paid to the tax man at some point.

Plus, with the news that Google are sending me a cheque for 17,000 in the coming weeks, my business bank account will soon have well over 50,000 sat there until the next tax bill is due.

50,000 is a milestone that I’ll be quietly celebrating with cash up front, with my friends at the working mans club.

This weekend I did my sock drawer … again

A friend of mine once sent me the first series DVD of Black Books. As soon as I started watching the first episode, I knew why. I laughed out loud so much.

It was an episode where Bernard who runs a book shop had to do his self assessment and submit his accounts. So he visits his accountant and empties his pockets of scribbled on bus tickets and fag boxes onto his desk. Within minutes though his accountant is on the run from the police so Bernard finds himself in the position of having to do his own books.

He then proceeds to do everything possible to avoid this, from pairing up his socks to inviting a couple of Jehovah’s witnesses inside to have a chat.

I can see the similarities in me. Obviously, my mate did too. It’s me every single year. Last year (or should I say this year) I submitted and paid my tax bill on 31st January. That’s the last day possible before you get fined.

I’ve had two letters from my accountant since April asking things of me. I’m a very busy man though and I’ve had much more urgent things to deal with first.

  1. Give to charity all ill-fitting old clothes
  2. Clean under the bed
  3. Attend gym classes
  4. Organise sock drawer so socks are on the left, shorts on the right
  5. Book a holiday four hours before the flight
  6. Go on another holiday three days after returning from previous holiday
  7. Finish the mild section of a Soduku book
  8. Read cookery books
  9. Read and order from takeaway menus
  10. Add photos from several years ago to Facebook

The list goes on. I’ve got to the point now where I’ve run out of mindless things to do that I have no choice. I have to dig out those statements and get on with it.

Four months have passed since the first letter from my accountant. Four months! There’s not even been a World Cup or European football to distract me.

I’ve also not even been able to use the weather as an excuse. It’s not been hot or dry enough to be outside.

And even now, I’m writing this blog post as another means of delaying the inevitable.

I may need to go to church and start praying. Where are those Jehovah’s witnesses when you need them?

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