Considering Alternative Debt Strategy.. Your opinions?

delaney22

Hi, I have posted on here a few times, but not really outlined my situation. Basically I have just turned 23, My debts total approximately £16,000. Here is the breakdown

Lloyds TSB Loan - £11,900 Remaining
Lloyds TSB Overdraft £1,650 Remaining
MBNA Credit Card £2,200 Remaining
Capital One Credit Card £700
Smile Overdraft £450

These are approximates, but I estimate in the region of just above £16,000.. Anyway I am currently making payments through the CCCS - £226 per month. If I continue to do this my debts will be paid off around the end of 2011, or at the beginning of 2012. I have come to the decision that this is too long! and not what I want, so I have put pressure on myself to suffer for 2 years. .. Here is my plan

Currently I spend £198 p/month on my car. I have decided to sell my car for £5,000. (Realistically £4,800) But say £5,000 for now as I can make this up with savings from insurance/tax. I am going to use this £5,000 to pay off my 2 Credit cards, and 2 overdrafts. Leaving me with JUST the £11,900 Loan to manage.

If I cancel my CCCS account I will be paying £246 p/month on this loan. However I can afford to pay off £425 p/month.

According to my spreadsheet I can be debt free by January 2008, Although this sounds a long while away, Starting in January it is only 2 years, and once I pay the bulk of my debt off I am sure I would feel better, and have less worries.

Anyway this is my target which I thought I would let you know about. Feel free to add any comments or suggestions, SORRY This is a bit of a long thread isnt it. Hope I didnt bore you all. Anyway great advice from you all.. Keep it up

D

2bdebtfree_4

Excellent strategy- making the decision to do it is the hard part.
If you can do without having a car then it's the right thing to do.

delaney22

It will be a struggle I must admit, but it is for the best. I can cycle to work as it isnt far, public transport is easy these days (althou I hate it!) lol, the only thing I will miss it probably the freedom to drive anywhere whenever you want. I am lucky enough to still live with my parents, and getting insured on there car would only cost me £30 a month. . So considering the alternatives it may be worth paying out the £30.

I am going to see how I get on without my car first though. The first few months will probably be tough. But I mean I Lived 21 years without a car, it cant be that bad!

zincoxide

Sounds good to me, why not just make the extra payment through CCCS though?
If the interest on the debts has been stopped then I would sell the car, put the money into a high interest saving account (locked away for a period of time so you can't impulse buy with it) and also pay the extra you can afford each month into this account, carry on with your normal payments then in 2008 pay off your remaining balance with the money from the savings.

If the interest hasn't been stop then your original plan sounds like the best way to go!

Annie_Fanny

Well done for taking this step - two years sounds a lot better!

You are willing to sell your car - is there anything else you can sell? Even smaller items make money - many on here sell stuff on ebay and put the money towards there debts.

Also are there any other cutbacks you can make in your life? If you list your incomings and outgoings we may be able to help claw some money back!

At the top of this webpage there is a section on budgeting - have a look at this and see how you get on.

southernscouser

Now I don't know a great deal about the CCCS and the agreements they have with your lendors but these are my thoughts!

Have all the companies you owe money to stopped all interest and charges?

If not then I would try and pay these off first!


Also, I have heard alot of people talk about final settlement agreements where for example, you owe MBNA £2,200 but will offer you a final settlement figure of £1,500!

This might be worth discussing with the CCCS. Also most companies respect the CCCS and work closely with them, if you then go and cancel what you have with them they might start to charge you interest! This is only a thought, I don't know whether they can/will do this but worth checking out.

Why can't you agree to pay the CCCS more every month to reduce your debts quicker?

delaney22

Thanks for your input. as zincoxide said, I was considering doing that putting the money into a savings (which is probably for the best) cuts my interest, and also I could possibly offer them a full and final settlement in mid 2007, who knows. Anyway..

Annie, to be honest I don't own that much , that is of value anyway, and nothing that I would be happy to lose anyway! my prized possesions would be 2 guitars, a keyboard and harmonica, the rest is sentimental to me jewellry etc, which I would never sell. as for the rest of my items well they have already been flogged on Ebay,

I could list my incoming/outgiong but I am in control of that (now) I have an excellent spreadsheet which works out my incoming/outgoing. How much I have for that month, and also how much I can spend per week. IF I go over my budget it will highlight in RED. LoL.. I made this myself and have used it for the passed 7 months, wrote down every single thing I spend (0.15p drink, £2,86 in tesco, £4.75 Chinese) U name it it all adds up, and this is where u can look back and re-consider things. If anyone is interested in the spreadsheet to view, or edit and use themself i dont mind sending it. It is in excel, ( so excel is needed so view) e-mail susan.woods97@ntlworld.com

Basically my weekly budget for the next 2 years is £61.15. That is including paying off my debts,

Earnings £918

£100 Board,
£17.99 NTL
£60 Magistrates fine
£30 Littlewoods (Not included in my CCCS)
Phones bill Average £40.

I am sure I can get by on this, If not as stated earlier If I go for the saving into a savings account, I always have a back up should my circumstances change. Tho I am going to be strong on this one and commit myself to it!

Determination

Thanks very much for your advice

delaney22

sorry southern scouser you beet me to it!

tomstickland

Well done on coming up with a plan of action. Go for as long as possible without a car, but if you ever think you need one then do some reading up on internet car forums etc and go and look at £600 cars; you can buy 12 month MOT cars for silly money now.

delaney22

Just a little note about the e-mail adress, it is my mums. I am male as stated in my profile

Not that it matters, but it clears any confusion

Thanks