I clearly remember the first time I heard from Fiona*. She was one of my very first clients, and her story really struck a chord with me. She was working fulltime, in a professional role, a mum to 3 teenagers, wife of Peter* and a great friend to so many people.
The family were in over 20k worth of debt and her husband was completely burying his head in the sand. She had been trying to cut back on spending and reduce the debts, but he was making no attempt to do the same, so she had simply given up. She had no idea how much money they had coming in or going out each month. Bank statements, bills and credit cards statements were never opened, instead they were just chucked in the fire! Her only way of “managing” her finances was when her cards were declined – then she couldn’t
That first step
When she signed up to my Your Money Sorted challenge, she was petrified.
“I am so scared, so terrified, but I know that I am more scared of doing nothing and of passing my problems onto my boys. They are the main reason that I have signed up to do this.”
The first thing Fiona was asked to do on the challenge was to keep all her receipts and record all her spending for two weeks prior to the challenge starting. This was a real eye-opener to her. On day one of the challenge she said:
“I feel like I have already saved myself money, by keeping watch on what I was spending”
In the first week of the challenge we spent some time looking at what was really important to Fiona, and at what she really wanted to get out of the challenge. Her main priority was to get rid of her debt, to start putting something aside for her children’s futures and to start sleeping! She was exhausted with full-time work and many sleepless nights beginning to take their toll. Once we had identified her main priorities, it was time to start looking at how we could achieve that.
Fiona was able to tell me that the family had been in debt previously, had paid it all off, then got in debt again……..and paid it all off and were now, for a third time, in a considerable amount of debt. This can be a common problem, if the real root of the problem is not dealt with, while paying off the debt.
By helping her to examine her attitude and values around money, I was able to help Fiona to identify something that was perhaps causing her real problems. Through completing the exercises Fiona realised that she spent a lot of money when she was with her friends. She was always first to the bar; always first to pay for coffee; loved treating her friends to lavish gifts. It wasn’t that herfriends were taking advantage of her, but rather that she insisted that she pay and they had got used to accepting her offers.
When she added up how much she had spent on treating her friends in just two weeks, it was fair to say that she was horrified! She couldn’t believe it. It was clear to me, and to Fiona, that if this was a regular pattern, then it would account for a large percentage of monthly outgoings.
The bottom line
It was now time to work out the average income and expenditure over a 3 month period, to help Fiona to understand where else the problems lay, and where changes could be made. Through using online banking and requesting copy statements we managed to gather together enough information to complete this task. (Note: don’t throw statements in the fire, because it only makes the process more difficult!)
This helped to flag up that every single month there had been a considerable overspend, which is why the family were increasing their debts month after month. By going through every expense with a fine-tooth comb we were able to easily identify where some savings could be made.
Fiona used the step-by-step process offered in the Your Money Sorted challenge to work her way through each of these expenses to reduce them or to eliminate them completely.
With this process complete, Fiona then created a monthly spending plan that she felt she could cope with and started to think about how she could ensure that she stuck to it. There are various methods suggested in the challenge and Fiona decided that the envelope system would work best for her and the family.
With one of her main priorities being to pay off the debt, we looked at various different methods of reducing the expense of the debt. Fiona had been focussing on paying the minimum payments every month, and had never missed a payment. However, she was horrified to discover that if she continued to only pay the minimum payment, it was going to take her over 40 years to pay back the debt. Yes, 40 YEARS!
Through learning about the various options on the challenge, Fiona was able to shift some debt to 0% credit cards, which immediately reduced her interest payments. With that and the extra money from cutting back on expenses, she was then able to put into place a plan to pay back her debt much more quickly. She is incredibly determined that she will pay back every penny and that she will do it within 8 years. Eighteen months down the line she is already beating her target and thinks that she will be debt free in just over 5 years.
A fun game
She has really enjoyed the “game” of paying down her debt, using a debt repayment app, so that she can see her debt reducing every month. She has been genuinely excited about paying any extra money left at the end of the month towards her debt, because she knows it is taking her one step closer to her target.
One of my favourite things about working with Fiona was her complete enthusiasm and motivation when completing the challenge. She approached every task with a great attitude and completed it to the best of her ability.
When asked what surprised her most about the challenge, she said:
“The fact that I really loved doing it. That’s been kind of bizarre. I had been putting it off for years because it felt so scary, but I actually looked forward to turning on the laptop and doing it after dinner each night.”
The home straight
At the end of the challenge Fiona was asked what had changed the most for her. She felt that her total attitude to spending had changed, she was far happier than she had been and best of all, she was sleeping at night.
“A combination of removing the stress of the money worries and the fact that I am getting sleep again means that Peter and I are getting on better than we have done in years. I quite like him again!”
Around a year after she had completed the challenge I got an excited email from Fiona – she had some great news and wanted me to be the first to know it. An unexpected promotion at work had come her way! She was so excited, because this meant quite a lot of extra money coming into the household. She wanted to thank me, because she felt that if she hadn’t got on top of her money worries, then she would never have been in the right frame of mind to apply for this promotion.
This was news to me!
For me this was a really surprising element that I hadn’t expected to happen in the coaching process – I was just starting out as a financial coach and thought I was just helping people to sort their money!
However after reflecting on it, I could totally see where Fiona was coming from. I had seen her grow in confidence, motivation and enthusiasm for life as she progressed through the challenge, so I suppose it was only natural that this should spill over into her daily life. She agreed totally, saying that:
“If it wasn’t for you encouraging and supporting me to take those stepping stones towards my goals, then I don’t think I would have had the guts to apply for the promotion. Thanks a million Eileen.”
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*names changed to protect client identity