Gran helping me get out of debt.

partickz

I am 24 years old. I earn about 20k a year. I am nearly 17k in debt (and growing) at MASSIVE interest rates. There, I said it!:j

My Gran started a Credit Union account for me when I was 16. She has paid £5 a week into the account as well as some extra when she had a bingo win.

She has taken out some small loans through my credit union account and bought shares in the credit union (or something???????- am not really sure how it works), then paid the loans down for me. She said she did this to improve my standing with the credit union.

Anyway, my Gran found out about my debts and the stress I have been under with them and she says the credit union is the answer. She says with my shares, I can borrow £6000 to clear my highest interest debts. She will continue to pay her £5 a week and says I should match it. This would only be about £40 a month to a massive debt????

My Gran has been in the credit union for 20years and seems to know all about it, but I am worried at paying so little to the £6000 loan. Her plan is that I pay my highest interest debts then use the extra money this frees up to attack the other debts with overpayments. Then I can sort the credit union when am back on my feet as it is "cheap credit" (her words).

MY WORRIES

1. I waste the extra money I free up by clearing £6k worth of debt.
2. I spend some of the £6K before I pay off the debts with it.
3. I embarass my Gran as she is well regarded in the credit union and is a proud lady.

RAS

The cost of debt from credit unions is not massively low, but it is probably a third of what you are paying for the other debts. Mind you the £40 sounds a bit too low for me, more like £55.

Certainly I recommend them regularly to people who are paying provident and paypay or log-book loans.

You can reduce some of your concerns by

1. cutting up the cards that you have been using to acquire this debt before you take out the credit union loan.

2. taking full responsibilit for your own creidt union account now, rahter than having gran doing it for you.

3. The credit union may pay the other creditor s directly, so that you do not have the opportunity to spend it on anything else.

4. Once you have paid off those debts, close the accounts immediately.

5. Do a budget that you can stick to and fnd out when you debt free date is.

We know on here how easy it is for people to just keep one in case and end up back on board wih their tail between their legs.

The question is have you had your light bulb moment, it is gran trying to have it for you?

For inspiration, have a look at the snowball on here www.whatsthecost.com. Get all your account details, enter them and find out how long and how much interest you will have to pay off your debts under the current arrangments.

Then rearrange the debt with the credit union loan ans see how many thousands you save in interest payments.

partickz

THANKS RAS!!!!! Some of my debts are 30%+ interest and just do not seem to be falling.

I have been really struggling the past few months as my overtime has dried up completely. I eventually told my Mum who told my Gran. I really want to sort my debts as it feels like carrying a giant weight around wherever I go. I am worried that as soon as I get some breathing space I will start spending money on clothes, magazines and trainers!! ( I am really bad with spending £30 pound here and £20 there etc)

My Gran pays £5 a week to all her Grandchildrens accounts. She likes to do this.

I WILL cut up my cards though. I have not spent on them for nearly six weeks now. I have been taking packed lunches to work. Worse still...... No New clothes in 6weeks!!!!!!!!!!!!!!!!!!!

RAS

Hi

You need to make an SOA, so you can find out how to sort out your debts most easily. See here http://www.makesenseofcards.com/soacalc.html

i would also suggest that you read http://www.moneysavingexpert.com/protect/make-money as there are loads of ways of getting things for little or no cost which might satisfy the shopping bug.

And sign up for www.freecycle.org and get stuff for free as well.

partickz

Salary- 1156 a month

I still live with my parents so my set outgoings are as follows.......

Rent- 150
Car Insurance- 68
Contribution to groceries- 100
Mobile- 35
Broadband- 19.95
Contribution to Sky- 20
Other Insurance- 8.50

Total- 401.45

This should leave more than 750 a month, which either goes to the debt or gets spent on rubbish. I don't really know the interest rates on my individual debts or the exact amounts I owe to each CC as I am too scared to even think about that at the minute. The figure in my signature is basically my credit limits on the cards added together (17000 pounds of credit) minus a payment I made on the 12/11/08.

stapeley

Could you not go bankrupt ?

partickz

stapeley wrote: »

Could you not go bankrupt ?

Do you think I am in that bad a mess? Am real worried now. A would rather try and pay it off as I lived beyond my means. My mum would kill me as well.:o

paybacktime2008

This may sound harsh but it is said with the best intentions. You have £750 a month spare. Plenty to pay off your debts. You have to make some tough choices now. Carry on living beyond your means and get further in debt, or sort it out.

That is really the only choice you need to make.

Good luck.

Crap_with_money.com

There's absolutely no way you need to go bankrupt just yet - in my humble opinion anyway!!

I'm 25, and a year and a half ago had more than £18k worth of debt (I don't know exactly how much as I never really had a clear "lightbulb" moment) - I now only have a £5k bank loan remaining (I say only, it's still a lot of money, but it's a lot less than it was!). I wasn't lucky enough to stumble across this site until recently, or maybe the journey to where I am now would've been a lot easier!

I have nothing to show for my debt, except from an impressive shoe collection, lots of make-up/jewellery/clothes a few cracking holidays and a helluva lot of good nights out. I used to just spend on whatever card came out of my purse first, and didn't really worry much about the debt I was buidling up or where/when/how I was likely to start paying it back.

You're earning exactly the same salary as me, and have not too much more debt than I did, if I can get it under control - then you can too!!

As for never buying new things - by the sounds of your posts you probably don't need anything new, but why don't you try just drastically reducing how often you shop, and then try selling off the things you never use now - and use only the money from that to buy new stuff as or when you need it - or even recycle some of your old stuff? A nice chunky belt will make a 3/4 yo dress look totally different!

Anyway - my ramble is over - you'll get yourself sorted out - it probably seems at the moment as though you have a lifetime's worth of paying debt back ahead of you, but if you get a grip on it now, and follow the advice of your gran and the lovely wise people on here - you'll be amazed how quickly it'll come down.

xx

Ames

I think the biggest problem, as has already been stated, is that you'll decide to keep a card for 'emergencies' but then end up spending on it anyway. It's what I did. You have to make sure you close any accounts as you pay them off, it never even crossed my mind to do that. Only you know if deep down you're ready to make the changes and keep your spending under control. If you're not ready then it seems pointless to waste all your grans hard work.

partickz

Crap_with_money.com wrote: »

I have nothing to show for my debt, except from an impressive shoe collection, lots of make-up/jewellery/clothes a few cracking holidays and a helluva lot of good nights out. I used to just spend on whatever card came out of my purse first, and didn't really worry much about the debt I was buidling up or where/when/how I was likely to start paying it back.

xx

Thanks. I am just sitting opening some of the credit card bills that I have ignored so I can do the snowball calculator RAS suggested. Was looking at consolidation loans but I am unsure after spending much of the night researching them on here.

I am just looking at all the trainers I own lined up along the floor. Makes me feel kind of sick thinking how much I have spent. I wish I could work out how much I have spent on magazines over the past six months- must be nearly a grand if not more.

However, had it not been for my overtime drying up I would not be in this mess, so it is not really my fault that I am about to sink.:o