Teen In Debt

hetic

Hello DFW!

Been a long time reader, first time poster. Had my light bulb moment last month when I realised my overdraft growing, up to £1000 now! Alot of you on this site have helped me understand money more and I am grateful! I just need a little more personal advice to help me reach my goal.

Ok, im 19, live at home with parents and I work as an IT Technician. £15k salary, smudge over £1000/month take home after taxes.

When I first got my job I went a little mad, having all this extra cash coming in was incredible and like most, I felt I needed to spend it! Long story short I now have a loan, CC and overdraft due to my new found spending habits.

Current Debt:

Loan: £3000
CC: £450
Overdraft: £1000

My current outgoings are as follows:[FONT=&quot][/FONT]
O2[FONT=&quot][/FONT]
[FONT=&quot][/FONT]

£30.84[FONT=&quot][/FONT]

Car Insurance[FONT=&quot][/FONT]
[FONT=&quot][/FONT]

£77.67[FONT=&quot][/FONT]

SKY[FONT=&quot][/FONT]
[FONT=&quot][/FONT]

£20.00[FONT=&quot][/FONT]

RENT[FONT=&quot][/FONT]
[FONT=&quot][/FONT]

£190.00[FONT=&quot][/FONT]

LOAN[FONT=&quot][/FONT]
[FONT=&quot][/FONT]

£275.37[FONT=&quot][/FONT]

[FONT=&quot] [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot][/FONT]
Total:[FONT=&quot][/FONT]
[FONT=&quot] [/FONT]

£593.88[FONT=&quot][/FONT]

All figures are on a monthly basis. Added to these figures are:

Petrol: £120/month

Monthly Income: £1003
Monthly Outgoings: £710

Now this leaves me only £390 for the month. Credit card costs me £10 each month in interest, payment protection etc. Overdraft charges around £4.

This depresses me as im only 19, yet I live a life of debt already. I don’t want this trend to last all my life and I want to do something about it NOW! Can anyone advise on what I need to do become debt free? Any help would be greatly appreciated!

incesticde

hetic wrote: »

Hello DFW!

Been a long time reader, first time poster. Had my light bulb moment last month when I realised my overdraft growing, up to £1000 now! Alot of you on this site have helped me understand money more and I am grateful! I just need a little more personal advice to help me reach my goal.

Ok, im 19, live at home with parents and I work as an IT Technician. £15k salary, smudge over £1000/month take home after taxes.

When I first got my job I went a little mad, having all this extra cash coming in was incredible and like most, I felt I needed to spend it! Long story short I now have a loan, CC and overdraft due to my new found spending habits.

Current Debt:

Loan: £3000
CC: £450
Overdraft: £1000

My current outgoings are as follows:
O2

£30.84

Car Insurance

£77.67

SKY

£20.00

RENT

£190.00

LOAN

£275.37

Total:

£593.88

All figures are on a monthly basis. Added to these figures are:

Petrol: £120/month

Monthly Income: £1003
Monthly Outgoings: £710

Now this leaves me only £390 for the month. Credit card costs me £10 each month in interest, payment protection etc. Overdraft charges around £4.

This depresses me as im only 19, yet I live a life of debt already. I don’t want this trend to last all my life and I want to do something about it NOW! Can anyone advise on what I need to do become debt free? Any help would be greatly appreciated!

Righty-ho

Ditch Sky (or if you have been with them for over 12 months blag a better deal!)

Ditch the Payment Protection, it is a complete and utter waste of time

That's the obvious, no doubt there will be more advice coming soon!

hetic

Cant ditch sky i dont think, that £20 is £10 for multiroom (So i can get sky in my room) and £10 for HD Subscription which i dont think i can pull out of because its a 12 month contract. I dont know how to get rid of the Payment Protection, im sure i said i didnt want it and i wasnt being charged it up until a few months ago.

Horace

Move the credit card debt to a 0% balance transfer card - see Martin's main board for the best deals.

As said elsewhere ditch the PPI - in fact make a claim to get it all back - see elsewhere on the forum on how to do that. Martin has a whole bit on the front of his webpage dedicated to PPI and how to reclaim, he even provides template letters.

You haven't included any money for entertainment: eg. going to the pub, the cinema, lunches, newspapers and the odd cups of coffee here and there.

Keep a spending diary to see how much you are frittering away on newspapers, entertainment etc.

redsquirrel80

Welcome! £390 left a month isn't bad really. I guess what you really need to do is to stop getting into more debt, i.e. not spending any more of overdraft, not putting anything else on the CC, and pay off what you've got already. How much do you tend to pay towards the CC each month? Can you increase monthly payments to the loan without being penalised?

I would have a look at http://www.whatsthecost.com/snowball.aspx - which shows you how long it'll take to pay off what you owe at the rate you're paying, and how long it would take if you paid more per month.. it might help to motivate you if you have a target date such as a birthday or the end of a year to work towards.

Good luck!

RAS

Hiya

Well done for seeing the light now rahter then in three years time, when the problem would be a lot bigger.

What we need to know is what the APRs on the loan, Cc aand overdraft are?

Once you knwo that, work out if you can overpay the Loan and have a look at the snowball on www.whatsthecost.com. Bascially uyou pay off the most expensive debt first.

And with regard to the PPI, read the terms and conditions and unless it really, really will pay out if you lose your job, ditch it.

if you do need it, you can almost certsinly get a better deal by going somewhere otehr then your CC company.

hetic

I did try doing a spending diary, but it flopped. I dont spend any money on food, but i manage to spend at least £75 a week! This does include petrol which is around £30/week, with the rest going on (insert somthing moneys well spent on here). To be honest i couldnt tell you where the rest goes, might have to start a spending diary, even if its just for a week!

Idiophreak

Doing the spending diary really will show you where your cash is going, so well worth it...Other things to think about are taking an amount(say £100) out at the begining of the month and living on it...if it's gone, it's gone...

Also, depending on your arrangements with your folks, could you ask them to give you a break on the rent for a couple of months until you get it sorted...even if you missed two months you could knock the cc on the head and save yourself the tenner in interest...

hetic

Wow, thanks everyone for the rapid responses!!

Right, I have started trying to pay off £50/month on my CC as i feel this is taking the most money from me. Minimum monthly payment is £10. Im afraid i dont know the APR on the loan or CC but what i do know is that the loan is not flexable, and it will be paid off exactually a year from now.

The loan im not really that fussed about because it comes out of my account. The overdraft and the CC are a seperate matter. Because its up to me to transfer money over online banking to the CC, in the past i have just met the monthly balance and thought ahhhh i will pay it off when i earn more money. Now i realise that wont be happening for a while, i need to learn to cut back on my spending and focus my energy on getting rid of this debt!

redsquirrel80

hetic wrote: »

Wow, thanks everyone for the rapid responses!!

Right, I have started trying to pay off £50/month on my CC as i feel this is taking the most money from me. Minimum monthly payment is £10. Im afraid i dont know the APR on the loan or CC but what i do know is that the loan is not flexable, and it will be paid off exactually a year from now.

The loan im not really that fussed about because it comes out of my account. The overdraft and the CC are a seperate matter. Because its up to me to transfer money over online banking to the CC, in the past i have just met the monthly balance and thought ahhhh i will pay it off when i earn more money. Now i realise that wont be happening for a while, i need to learn to cut back on my spending and focus my energy on getting rid of this debt!

In that case it might be a good idea to set up a direct debit/ standing order for the credit card - say the £50 a month to start with, and then you can also make extra payments to it via online banking.

Do you pay interest on your overdraft? It might be worth asking your bank if they can reduce it - perhaps by a certain amount per month.. either that or put so much per month into savings so you can pay it off at a certain point, and then ask for a smaller one so you can't get into that much debt with it again?

JimmyTheWig

You are living with your parents, which is basically the cheapest thing to do.
Does that rent money also cover food?

How much of the £120 petrol bill is essential (e.g. work) and how much of it is "luxury" (e.g. socialising)? I'll assume the majority of it is to get to work and back, and you have no cheaper options, such as lift-sharing.
I'll also assume that you are on the best value car insurance, and that you need the car.

Rent + Petrol + Car Insurance = £388.
You haven't got any choice about that.

That leaves £615.
NEARLY HALF of this is going on a loan repayment! That is where all your money is going.
But the good news is that you have had your light bulb moment, and have had it so early on (both early on in your life and early on in your debt). I presume from the figures that this is a 12 month loan. How far through it are you? Just concentrate on how much better off you will be when you have paid off the loan.

Yes, there are things you can cut down on. Yes, you should cut them down. But it's not going to change your life.
I agree the payment protection is probably not worth it (unless you think your job is not safe).
You could save money by stopping your Sky subscription, but do you want to? As long as you see it as a luxury (and as long as you are on the best deal for you) then you can afford it.
Your O2 bill sounds terribly high. Can you change tarrifs? Or use your phone more efficiently / less?
The more you can pay off your credit card and overdraft, the more money you will save on interest and charges.

But I can't see you saving more than, say, a tenner a week. Would £10 a week really make your life much better?

Just remember. Don't overspend in the future!


Edit: When I wrote the above there had only been one reply. Some of it now seems a little out of date. Teach me for being slow!