Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Ben 184
    • By Ben 184 27th Feb 17, 10:34 PM
    • 7Posts
    • 10Thanks
    Ben 184
    Clearing 26k of debt plan
    • #1
    • 27th Feb 17, 10:34 PM
    Clearing 26k of debt plan 27th Feb 17 at 10:34 PM
    Hey everyone,

    I'm a young guy (24 years old) and I've managed to make a lot of bad life decisions which have got me to where I am now. It started at Uni when I was about 21, and took out a 10k loan (23% APR) to help with living costs in final year because I was failing exams and wanted to not have to work 30 hours a week to support myself. I also had 4k of student overdrafts which are still interest free, though not for long

    I then obtained credit cards once I started employment full time and spent about 4k on holidays and other rubbish, as well as a 7k interest free loan from my employer which disappeared fairly quickly. There's about 2500 left on this, but I'm not concerned about that at the moment as it's not on my credit file, and will be paid off through PAYE in 2 years

    I then went through a bad break up with an ex, and ended up buying a flashy car on credit for 11k.

    All in all, I'm up to about 26k of debt right now. This however is offset by the car (11k value), as well as 7500 which is a combination of my pay for February, some expenses from work which I've yet to claim, and some money I've moved around on cards through 0% balance/money transfers



    The plan for now is to use the 7500 to pay down the loan, phone and overdrafts. If any extra is needed, that will have to come out of March's pay slip. This will leave me with about 18k to pay off. Once I sell the car, this will be around 7k.

    Right now the debt is really consuming me - I can't have a nice meal out with my partner without worrying about price/going for a Tastecard deal etc. I can't justify buying myself new clothes or treating myself. Basically any spending makes me feel guilty, and I hate it.

    I want to clear the debt as soon as I can so that I can move in with my partner. Once the car is gone, commitments will be small enough to leave me with 1000 a month to live off of - 600 more than at the moment!

    So starting at the point of having sold the car and having 1,000 a month as 'disposable' - how much of this do people recommend that I use to pay down what I owe? What's a good balance of being aggressive with reducing what's owed, but also being able to enjoy myself and have good times with my partner? I'd really appreciate some advice, as well as perhaps some inspiration to keep our dating life active whilst reducing the costs!

    Here's a budget thing I've seen other people do. I've got a company car through work which is paid for through my PAYE, and is fully insured and maintained. I estimate that most of my fuel cost will be covered by the business mileage allowance. All other travel costs are expensed:

    Summary

    Monthly Budget Summary Amount()
    Total monthly income 1,390
    Monthly expenses (incl. HP & secured loans) 490
    Available for debt repayments 900
    UNsecured debt repayments 507
    Amount left after debt repayments 393
    Personal Balance Sheet Summary Amount()
    Total Assets (things you own) 17,000
    Total Secured & HP Debt -0
    Total Unsecured Debt -25,600
    Net Assets -8,600

    Income, Expense, Debt & Asset Details

    Income Amount()
    Monthly income after tax 1390
    Total monthly income 1390
    Expenses Amount()
    Mobile phone 35
    Petrol/diesel 50
    Haircuts 5
    Entertainment 200
    Total monthly expenses 490

    Unsecured Debt Description Debt() Monthly() APR(%)
    CC1 9500 225 0
    CC2 3500 35 0
    CC3 2500 25 0
    Phone 400 20 15
    Overdrafts 3500 0 0
    Loan 3500 175 23
    CC4 2700 27 0
    Unsecured Debt totals 25600 507 -

    Asset Description Value ()
    Cash 6000
    Car(s) 11000
    Total Assets 17000
Page 1
    • JoJoC
    • By JoJoC 28th Feb 17, 9:25 AM
    • 1,027 Posts
    • 3,171 Thanks
    JoJoC
    • #2
    • 28th Feb 17, 9:25 AM
    • #2
    • 28th Feb 17, 9:25 AM
    Good luck Ben - you sound like you have a plan and some goals in mind that will hopefully help to drive you towards becoming debt free. I'm sure someone will come along to offer you proper advice, but I'd suggest that you make sure that you're not going so frugal that you start to resent paying off debt and end up going off the rails. As you say, you need to have a bit of fun and spend time with your partner too.

    Work out a budget that you'd be happy with but still paying off a good chunk of your debt and see how long that will realistically take you to pay off the debt and take it from there. I'm always tweaking my budget, cutting back and adding bits here and there to fit in with my life so that it's not just years of debt paying and no fun.

    Good luck!
    CC1: 3,774.32/4,200 | CC2: 5,077/5,393 | Loan: 7,430/15,000
    Total: 16,292.57/20,032 Paid since Feb17: 3,739 or 18.66%

    Mummy of two boys - Working hard to make better financial choices!
    *My debt busting and savings diary*
    • fourthtimelucky
    • By fourthtimelucky 28th Feb 17, 11:41 AM
    • 53 Posts
    • 82 Thanks
    fourthtimelucky
    • #3
    • 28th Feb 17, 11:41 AM
    • #3
    • 28th Feb 17, 11:41 AM
    Good luck with your plan, it seems to make sense, Personally my approach is to be moderately aggressive but don't leave yourself with no fun otherwise you are more likely to not see things through.

    It is good that you've picked things up at a relatively young age. My story is similar but with less to show yet I muddled through 15 years from finishing Uni to finally getting my head together. My diary started in my late 30s but I'm finally on track.

    Good luck.
    Starting point Aug 2016 - 13,853.38
    Current total July 2017 - 9,285.20 - 32.97% paid off
    Debt free date (worst case) - December 2019
    • Bird.Heart.Mouse
    • By Bird.Heart.Mouse 3rd Mar 17, 4:02 PM
    • 41 Posts
    • 77 Thanks
    Bird.Heart.Mouse
    • #4
    • 3rd Mar 17, 4:02 PM
    • #4
    • 3rd Mar 17, 4:02 PM
    Hi Ben,

    Well done for acknowledging your debts! It's painful to begin with but clarity of mind (has or will) come with knowing exactly where you stand financially / whats left to pay etc. I have a similar origin story to your own - student life, low/now income, very poor money choices and quickly escalating debts! Using your assets will be a big help, me and many other MoneySavers have nothing to show for their spending!

    Right now the debt is really consuming me - I can't have a nice meal out with my partner without worrying about price/going for a Tastecard deal etc. I can't justify buying myself new clothes or treating myself. Basically any spending makes me feel guilty, and I hate it.
    Originally posted by Ben 184
    ^ Totally understandable, getting back to a positive position is as much a mental battle as a financial one, but remember hard work deserves reward. You absolutely need to reward yourself by taking a break (in a financially savvy way for guilt-free bonus points). I have found that putting money each month as a 'leisure fund' means that you know exactly what can be spent without a) impacting the all important budget and b) feeling guilty when it's gone!

    I see you have 'Entertainment' down as a 200 p/m expense - what does that cover?

    Bird x
    Total Debt: (LBM Jan 2017) 21,924 (Mar 2017) 18,803
    Emergency Fund #226: 150 / 1000
    Recent Win: 3-for-2 on Boots cream facewash

    We may be in debt, but if nothing else Bird Heart Mouse
    • Ben 184
    • By Ben 184 13th Mar 17, 3:23 PM
    • 7 Posts
    • 10 Thanks
    Ben 184
    • #5
    • 13th Mar 17, 3:23 PM
    • #5
    • 13th Mar 17, 3:23 PM
    Hi Ben,

    [deleted some text to keep brief]

    I see you have 'Entertainment' down as a 200 p/m expense - what does that cover?

    Bird x
    Originally posted by Bird.Heart.Mouse
    I guess it's like you suggested, a general fund for going out and things. It's a shame it's that low. I'm earning 1500 a month after tax and living at home, yet have hardly anything spare each month!

    Well, things have taken a turn for the better. The car is now sold, and for more than I anticipated! So I will get around to re-posting my position once I've decided where the funds will be allocated to.

    I'm thinking of clearing everything which has a high minimum payment to debt ratio (e.g. barclaycard is 2.25% of balance, whereas others are 1% of balance) - this will reduce the commitment, and hopefully the perceived burden!

    I'm also going to up the minumum payments on everything else - I'm going to budget 200 per month to go directly to repaying various cards. I think there's going to be 4 remaining, so will be 50 to each.

    The monthly reduction in commitment from selling the car is as follows:

    Loan: 173
    Barclaycard: 215
    Employer Loan: 142
    Phone: 20
    Total Saving: 550 a month less committed

    This will leave me sitting on a 4k cash pot, with about 8,500 outstanding on cc's. I am anticipating that after 'essential' commitments (rent, phone bill, gym etc), I should have 1,000 a month left over. So I shall aim to put half of that aside each month
    • moneyfacts
    • By moneyfacts 13th Mar 17, 9:37 PM
    • 67 Posts
    • 109 Thanks
    moneyfacts
    • #6
    • 13th Mar 17, 9:37 PM
    • #6
    • 13th Mar 17, 9:37 PM
    Ben, with your attitude you will soon be debt free and sounds like you won't be making these mistakes again.

    I took loads of loans and credit cards out during uni, think mine totalled over 25k. Like you, I hated it and certainly didn't try to justify it as a good thing.

    I now save/invest over 50% of my income. My partner and I are mortgage free by 40. I'm not bragging, just pointing out that you can change your attitude to money completely and put foolish spending habits behind you.

    Good luck
    • Purplemumof2
    • By Purplemumof2 13th Mar 17, 9:52 PM
    • 4,710 Posts
    • 15,064 Thanks
    Purplemumof2
    • #7
    • 13th Mar 17, 9:52 PM
    • #7
    • 13th Mar 17, 9:52 PM
    Good luck on your journey Ben xx
    Official DFW Nerd Club - Member no. 791 - Proud to be dealing with my debts
    MBNA: 7650.00 Cap 1: 400.00 Overdraft: 2750.00

    Lunches to work 7/20 ~ 10pw 3/4

    20p Savers 2017 2 Savers 2017 50p Savers 2017 SPC 10 2017 #003
    • Ben 184
    • By Ben 184 14th Mar 17, 12:33 PM
    • 7 Posts
    • 10 Thanks
    Ben 184
    • #8
    • 14th Mar 17, 12:33 PM
    • #8
    • 14th Mar 17, 12:33 PM
    Moneyfacts, What was your 'plan' to get on top of everything?

    I'm looking to move out and the only realistic way of doing it is via shared ownership. I can find somewhere with a commitment of about 800 a month, of which half would be going towards repaying mortgage. I'd struggle to get anywhere on the rental market below 900 which is suitable, and even then the full 900 is going into someone else's retirement fund! Which I refuse to do...

    Part of moving out, is deciding how much of the car money to allocated to debt repayment, and how much towards a deposit on a share. At the moment I'm thinking of keeping 4k aside towards the deposit - what are your thoughts on this?
    • enthusiasticsaver
    • By enthusiasticsaver 14th Mar 17, 1:41 PM
    • 3,643 Posts
    • 6,488 Thanks
    enthusiasticsaver
    • #9
    • 14th Mar 17, 1:41 PM
    • #9
    • 14th Mar 17, 1:41 PM
    Good that you managed to sell the car and the debt will stand at 8500. You seem to have a good cash buffer so I would say paying 500 off the debt every month sounds sensible and a good balance giving you 500 to live off. Ideally you want to aim to clear the debt completely so every penny you earn is either saved for the future (your own home, a new car, holiday) or spent on day to day living. Servicing debt is just depressing IMHO.
    Debt and mortgage free and saving for early retirement
    • jackieblack
    • By jackieblack 14th Mar 17, 7:00 PM
    • 6,999 Posts
    • 9,073 Thanks
    jackieblack
    Your budget/expenses doesn't include anything for rent/board (do you live with your patents? don't you pay anything?) or food (I presume you eat?)
    If you don't include absolutely all actual expenses in your budget it'll never work because there'll always be additional expenditure you haven't planned for.
    2.22kWp Solar PV system installed Oct 2010, Fronius IG20 Inverter,
    south facing (-5 deg), 30 degree pitch, no shading

    Quidquid Latine dictum sit altum videtur
    (Revera linguam latinam vix cognovi )
    • Ben 184
    • By Ben 184 20th Mar 17, 2:57 PM
    • 7 Posts
    • 10 Thanks
    Ben 184
    Your budget/expenses doesn't include anything for rent/board (do you live with your patents? don't you pay anything?) or food (I presume you eat?)
    If you don't include absolutely all actual expenses in your budget it'll never work because there'll always be additional expenditure you haven't planned for.
    Originally posted by jackieblack

    Apologies if I didn't make clear in original post; I am still living at home so have no committed expenditure for rent or food right now

    Unexpected is definitely a tricky one, so I've put the 200 entertainment in there too to try and cover some of that
    • jackieblack
    • By jackieblack 20th Mar 17, 3:15 PM
    • 6,999 Posts
    • 9,073 Thanks
    jackieblack
    Apologies if I didn't make clear in original post; I am still living at home so have no committed expenditure for rent or food right now
    Originally posted by Ben 184

    Well, each to their own (and presumably your parents are happy to keep supporting you, despite the fact you're supposedly an independent adult) , but IMO if you're earning 1400 a month after tax and not paying anything to your parents for board/bills or food, that's taking the P, quite frankly.
    Good job you're not my child!
    For my own self respect I couldn't freeload on anyone like that.
    Last edited by jackieblack; 21-03-2017 at 6:50 AM.
    2.22kWp Solar PV system installed Oct 2010, Fronius IG20 Inverter,
    south facing (-5 deg), 30 degree pitch, no shading

    Quidquid Latine dictum sit altum videtur
    (Revera linguam latinam vix cognovi )
    • copperman05
    • By copperman05 20th Mar 17, 11:38 PM
    • 75 Posts
    • 118 Thanks
    copperman05
    I am/was in a similar position to you. My advice would be to start using a decent budgeting software like YNAB (YouNeedABudget) as it stopped my frivolous spending overnight and makes me very protective of money set aside for debt repayment.

    As far as how to repay, I have a slightly different opinion to others, my opinion is that debt needs to be attacked with all youve got. You (and I) had the fun creating the debt in the first place, now is the time to tighten the belt as much as you can and pay off this debt as fast as you can. As Dave Ramsey says (I always seem to mention him, look him up) you can wonder into debt but you cant wonder out. Some shorterm sacrifices now will lead to a MUCH better situation in the future. As far as I'm concerned debt needs your attention and motivation like it is an emergency. As your are still at home and not paying for living expenses you should be able to attack this debt fairly well.

    I would use most of your 6000 savings to pay of some of your debt and keep 1 or 2k for an emergency fund. Not doing this is just going to cost you in interest over time and you'll be in a much more effective position to save for a deposit later/quicker.

    For me despite some sacrifices I actually find paying off the debt in this way very rewarding and the sense of finally being in financial control extremely satisfying.

    Good luck
    Last edited by copperman05; 20-03-2017 at 11:50 PM.
    LBM Oct'16 at 51,264
    Jan '17 25,059 (Sold car)
    May '17 19,349
    DFD Projection Dec '18 Aug '18
    Gazelle Intensity!
    • Ben 184
    • By Ben 184 11th Jul 17, 4:34 PM
    • 7 Posts
    • 10 Thanks
    Ben 184
    Hi all,

    Sorry for the delay replying. Had a busy few months, and have moved out and am now renting.

    Money is very tight at the moment, and I'm having to cut back a lot to make it all work. Current budget is roughly as follows:

    Income: 1,350 (changes to company car tax this year have reduced it a little)
    Rent: (500) (Includes all bills)
    Credit Cards: (250)
    Gym and phone: (100) (This is partly instead of 'date nights' with my partner - we train together)
    Petrol: (200) (This is a budget, and at the moment is quite a bit less than this)
    Other Expenses: (100) (This is a general allocation to take into account things like monthly bank fees etc)
    Disposable income: 200

    As you can see, things are fairly tight, but I am expecting a significant payrise in October; perhaps as much as 300 per month after tax. I am budgeting 60 per week for food and 'date nights', taken out as cash every Friday and put into a money jar (Both of us do this). At the end of each month, we will see what's left over (it's not a target) and can use this towards repaying some cards off (and her for whatever she likes). This works out on average 260 per month, so eats into my reserves a little. But I want to be able to live life as well at the moment, knowing that my net debt is still being reduced gradually, all on 0% until at least next year. I've also noticed an improvement from 'poor' to 'good' on my credit score!

    I have also begun doing 'matched betting' with my partner. I am very experienced in this, and this will be our holiday fund, or perhaps for other big splashing out events. Who knows. But essentially, I have 500 of my own money in there, and am aiming to build this up to 1,000 in the next month or so, and over time to several thousand once I get into the swing of things. I anticipate that perhaps 300 a month is a realistic and achievable target, so we will still be able to enjoy life by using matched betting, or even use this to pay off some cards



    My current budget strategy is really to give my bank card to my partner, and only withdraw the 60 every Friday. That way there's no other spending. My petrol goes on a corporate Amex card, which I can clear off every month; absolutely no personal expenditure is allowed on this card except petrol. We do all our food shops in Aldi now, so will struggle to actually spend 30 a week each on food! Date nights are 'taste card' specials, cheap thrills or freebies. So the 30 a week each should do us nicely.

    Let me know if anyone has any suggestions or tips! It's hard at the moment knowing that so much of my income goes on rent and credit card repayments... But I'm glad we have moved out together, despite the financial constraints. No moaning from us - the future is looking up!
    • Ben 184
    • By Ben 184 11th Jul 17, 4:38 PM
    • 7 Posts
    • 10 Thanks
    Ben 184
    Well, each to their own (and presumably your parents are happy to keep supporting you, despite the fact you're supposedly an independent adult) , but IMO if you're earning 1400 a month after tax and not paying anything to your parents for board/bills or food, that's taking the P, quite frankly.
    Good job you're not my child!
    For my own self respect I couldn't freeload on anyone like that.
    Originally posted by jackieblack


    I think my budget did exclude it, I was mainly concerned with 'committed' expenditure, and while that is expenditure, I guess if I'm in trouble I can always tell them and stop paying! Can't do that with a bank though...

    Totally agree with your post, even though I may have my own mess to deal with, it's not fair to have someone else subsidise that. No such thing as a magic money tree, just stealing from someone who has earned it to give to someone who hasn't
    • dionysia
    • By dionysia 11th Jul 17, 7:41 PM
    • 63 Posts
    • 117 Thanks
    dionysia
    Welcome back! It's great you and your partner have moved in and sounds like good things happening in your professional life too!

    And now the hard bit ... or good news depending how you look at it! After rent/bills and cc minimums you've got 600 over which isn't all that tight, and if the payrise comes through you'll be in a really good position. How much do you owe now?
    June 2017: owe 16,818.
    • RebeccaAnney
    • By RebeccaAnney 13th Jul 17, 12:43 PM
    • 37 Posts
    • 84 Thanks
    RebeccaAnney
    Welcome back Ben and congrats on the new place
    LBM 07/03/17 CC Debt - (7472.87) 6369.70 | Catalogue - (708.27) 0 | OD - 2350 | Car Loan - (4348.38) 3592.14
    TOTAL (14,879.52) 12,311.84
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,299Posts Today

7,969Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin