I am going to be completely honest with you. We didn’t just wake up one day and decide to sort our finances out, manage to get out of the payday loan trap and never look back. Not long ago we were plodding along in a standard everyday life, doing our damnedest to try and pay more than the minimum on our many debts and a gentleman come to repossess one of our cars. WHAT?!?! The finance on our cars was what we thought of as a “necessary debt” and we had been plodding along with the payments every month quite happily or so I thought. Although they cost a small monthly fortune, they were relatively new and very economical cars that we expect to realistically own for a good decade if not longer.
As the other half and I have separate bank accounts, we split the bills so that they are financially equal and we each pay for our own cars. A few months before this I started a new job and was explicitly told that I had to get a different car as the new company would only provide diesel fuel cards and my current car was petrol. With my existing car stuck in a PCP deal (we’ll cover car finance in a future post), I couldn’t exchange it as I held no equity, so I had to buy a 3rd car.
It was all planned though. As soon as I had paid 50% of the balance of my current car (only 6 months or so away) then I could return it, no questions asked, and the vehicle allowance from my new job would cover the monthly cost of the new car (not new new, but new for me).
A week after I collected my new car I was let go from my new job, along with other new employees too. Panic! The garage that sold the car wouldn’t let me return it and the finance company said I had 30 days to pay back the original finance amount or I would be locked into the contract, all whilst having no income. This was unbelievably stressful situation that I wouldn’t wish on anyone and thankfully I was headhunted for a new position within a few weeks, but I still did not manage to sell the new car and return the loan amount within the 30 days. Needless to say, we ended up being a 2 adult/3 car household.
As chance would have it, one of the cars was about to be listed for sale as having 2 cars per household is bad enough but 3..! (Sorry mrmoneymustache – Big Fan!!) We were lucky to have an understanding bailiff, at the end of the day one of the cars had to go and the financial and credit damage had already been done. The hardest part was learning that my other half had been struggling to pay the finance but hadn’t discussed it with me.
I often come across people asking whether their family should have joint or separate finances and it all depends on you. Some people prefer to have a joint account for all income and bills, and then have a set allowance that they give themselves for the month into a separate account. Others, like us, have separate accounts and each pay their fair share. You have to see what works best for you.
After the ‘incident’ I took control of the family budget, debt management and financial planning. The other half still covers their share of the bills etc. but I have access to all of our online accounts to keep track of balances and payment or saving schedules. Most importantly we now have a family meeting every 2 weeks where we go through all of our budget, debts and savings plan so we both know where we stand and how we are making the most of our money.
It is hard to bounce back from this kind of experience and I know I am not alone, as I have heard from others who have had similar ‘surprises’ from their partners, husbands or wives. It is one thing dreading a knock on the door when you are struggling with debt like we were a few years ago. It is quite another when you didn’t know that you were in trouble in the first place.
This is one of the pivotal points in our financial journey. The catalyst for educating myself about personal finance, debt management, investing. The start of my planning and managing our debts and finances to get to where we are today. We still have car finance that is being cleared, a payment plan in place for our other outstanding debts and we don’t own our own home, but we are working our way towards financial independence. Care to join us on our journey?