In a hole - Can't see a way out - Help!

kevinabland

Hi all, Newbie here,

Here's my problem.

I have three main debts that are playing on my mind:
1) Cahoot loan ~ £153 per month ~ roughly £5,500 left on it (paid off in Sept 2009)
2) Virgin loan ~ £49 per month ~ roughly £1,600 left on it (paid off Sept 09)
3) Virgin CC ~ £60 per month (min payment) ~ balance £6,000

In total, I have just over £13k of debt. My net take home pay every month is £1,600. Out of the £1,600, I pay out £1,300 on things such as mortgage, mobile phone, broadband and general living expenses. If I add to that, the £262 I pay for my 3 debts, I pay out a total of £1,562 per month. As you can see I don’t have much money left over!

I am now at the stage where I am losing sleep over this. With a bit of careful planning and using some of the tips on this site I could reduce my monthly outgoings by approx £60. I know there must be a way out of this but I am not starting to worry about it. Any help would be appreciated.

Many thanks.

fairylights_2

Welcome to MSE!

As you say, there is a way out, it's just a case of finding it. Your outgoings seem particularly high (in my humble opinion), and I think the first step in finding the money to pay off your debts is to go through the budget planner to work out what your pennies are doing each month. The budget planner is downloadable from here (under dealing with problem debts). Once you've filled that in, go through the tips on the left hand side of the page to save you spending on things you don't need to. If you're comfortable with constructive criticism, post your outgoings on here and people will offer advice as to where and how to save.

Can you overpay either of your loans? If you can, then you want to start doing so as quick as possible. Do you know the APRs on all these debts?

Have a look at https://www.whatsthecost.co.uk/snowball.aspx - it's a calculator that will tell you how to pay off your debts and what it will cost you. It's a fab tool to have at this stage to work out where to focus your energies.

Most of all, good luck!

kevinabland

I have spend some time going through my figures. My actual take home pay per onth is £1668.33. My total outgoings are £1613.48.

OK, here goes, the following list shows my monthly outgoings:

Joint Account Contribution - £900.00
Savings Account SO - £50.00
Cancer Charity Contribution - £2.00
ISA Account - £25.00
Virgin Credit Card - £70.00
Virgin Loan - £49.13
British Gas Service Agreement - £25.08
AOL Broadband - £24.99
Mobile Phone (contract) - £40.00
Car Insurance - £35.92
Cahoot Loan - £153.03
Sub Total - £1375.15

Other Expenses (Monthly)
Petrol - £100.00
Odds and Sods - £60.00
IMechE Subs - £18.33
Golf Subs - £60.00
Sub Total - £238.33
Grand Total - £1613.48
Total Income - £1668.33

The £900 joint accoutn contribution covers the following for me and my partner: mortgage, house insurance, council tax, landline phone, gas, electric, water, income protection insurance and food.

Let the constructive criticism begin!

skintchick

CAn you break down where the £900 joint money goes?

What are your odds and sods? That's massive!!!

You are saving when yu have debts, which we usually say is a no-no.

Your internet is expensive.

Do you need the gas service agreement?

Mobile is v high.

What is IMechE?

Can you afford to play golf right now?

And don't you eat???!?!?!!!!

bank_of_slate

Hi Kevin and welcome to MSE!

You've made a great start by properly listing your SOA,
Firstly, have you checked (using the tips on this site) that you have the cheapest utility bills, insurance etc?

Could you freeze the ISA payments for the time being until at least the credit card is payed off? Or even use some of the savings to pay off a chunk?
...Linda xx

kevinabland

Between me and my partner we put 1700 into our joint account. At the end of the month, there is usually around £50 left in it for any emergencies. The joint account covers the following: mortgage, house insurance, income protection, food shopping, utilities.

I will look into changing internet providers - this could save me around £10 per month

I will look into cancelling the gas agreement - we have only ever used this twice in 3 years!

It makes sense for me to change my mobile contract - I will more than liekly go to Pay as you Go.

IMechE stands for Institue of Mechanical Engineers - I need to pay this to retain my professional status. Having said that, I know that some companies pay this for their employees - will ask the question.

As for the golf - it is the only thing keeping me sane at the moment.

Do you think the following is a good idea (partly recommended by Linda):

1) transfer the balance of my CC to a 0% card
2) use my savings of £600 to reduce balance to £5400 and stop paying into the ISA. Can you take money out of an ISA at short notice?
3) stop saving money whilst I'm in debt (although I want to put some money aside for Xmas so I don't put it all on the CC)
4) I play the guitar and have a 'spare' one worth around £300. I could sell this and reduce my CC to £5100
5) Do some CC 'tarting' to reduce my debt

What do you think?

PS: This site is proving to be a life saver. I appreciate all your comments.

KatrinaC_2

1 - get rid of the savings. Use them to pay off the loans / card. The amount of interest you are earning on the savings is being eaten up by the amount of interest you are paying out on your debts. Once you have paid off the debts you can fling all of the money you were using for repayments into your savings accounts. That way you will have an extra £75 per month, plus anything you take out of your savings accounts to make a lump-sum repayment. Saving - at least £75 per month

2 - I know it seems harsh, but get rid of the charity payments. Again you can pledge to pay double this once you are in the clear. Saving - £2 per month.

3 - Ditch AOL as your broadband provider. I'm not too good on the different providers outside my area, but you can save about £10 a month just be choosing a different provider. Alternatively you could go back to narrow band (hard, but possible!) and pick up a package for about £10 a month. Saving -£10-15 per month.

4 - What is the APR credit card? If the credit card rate is high, try to move it to a lower APR card (look on the credit card board for that) or if your credit rating is as rubbish as mine and you can't move, try threatening Virgin with moving and see if they will drop the APR for you. This won't free up any more money right now, but will save you in the long run.

5 - What are the APRs on the loans? Use the snowball calculator mentioned before to see which order you should be paying things off at. You'll need to work out how much money you can afford to overpay with and then put the numbers in. Again this is not a short term saving but could potentially clear your debts in a far shorter time and save you a fortune in interest.

6 - Can you change your contract to a lower tarriff? Even dropping down one rung could shave £10 a month off.

7 - Are your gas appliances prone to breaking down? Unless you have a really creaky old boiler you might want to consider stopping the contract for a while, particularly over the summer when if your boiler breaks down you are not quite so likely to suffer as a result. Saving - £25 per month

8 - Have you looked to see that you have the best utilities providers? With the price rises that British Gas and Powergen have announced there is a good chance that you can save £100 a year by spending 15 minutes online on USwitch or similar. Saving - £8 per month.

9 - What else does the joint account contribution cover? Presumably that's where your food bills are paid from. If so, look at the amount you actually spend on food - including coffee on the way to work, sandwiches at lunchtime, eating out etc. By taking a packed lunch or left overs from the dinner the night before instead of buying a subsidised meal form the canteen I save about £3 a day, £60 per month. Saving - potentially £100 per month, depending on your outgoings

10 - Get rid of the golf subs. Apart from anything else it's March and it's blizzarding over most of the UK - you'd lose your balls until June Saving - £60 per month

11 - Work out exactly where your money goes - post on the daily "What have you spend today" threads on here, run an excel spreadsheet and enter your receipts at the end of each day... whatever - you need to work out what you are spending your cash on before you can work out how to save money. You might find that everything you spend on is absolutely necessary, or you might find that you fritter it away on junk.

That's freed up at least £265 per month, possibly as much as £400, but you have to think carefully about what to do with the money. At the minute you're making ends meet so it would be tempting to use the money for luxuries, but really you would be better off tightening your belts and flinging a lot of that money (at least £150-200 I'd say) at repaying your debts. Once you have cleared some of the debt you will feel better, and you will save a lot of money in the long term by overpaying.

Good luck!

Kat

KatrinaC_2

kevinabland wrote:

Do you think the following is a good idea (partly recommended by Linda):

1) transfer the balance of my CC to a 0% card

Yes - as long as you will remember to change cards at the end of the 0% period

kevinabland wrote:

2) use my savings of £600 to reduce balance to £5400 and stop paying into the ISA. Can you take money out of an ISA at short notice?

If you can - then do it. It might be worth a call to the bank to confirm the fine details to see what you lose by withdrawing the money.

kevinabland wrote:

3) stop saving money whilst I'm in debt (although I want to put some money aside for Xmas so I don't put it all on the CC)

Yes.

kevinabland wrote:

4) I play the guitar and have a 'spare' one worth around £300. I could sell this and reduce my CC to £5100

Yes. And any other junk you have around the house - old CD's, books, DVDs, videos, old mobile phone handsets...

kevinabland wrote:

5) Do some CC 'tarting' to reduce my debt

Yes, but you have to remember that tarting about has to be accompanied by a changeof mindset so that you don't just add more debt to the problem.

Kat

kevinabland

Thanks for your advice Kat. Will need some time to work on the numbers and figure out a way forward.

I feel better for sharing this information. Thanks to you all.

skintchick

Hiya - sorry if my previous post was a bit sharp; I was about to take the cat to the vet and it's always a bit stressful!

anyway - broadband. Get yourself onto Madasafish as recommended by Martin, got an offer of £11.99 a month for forst six then £17.99 (i think) the next six, works out cheap overall. Offer ends this month I believe. I am on it and it is very good. I only get 2meg (or whatever they are called) but it does go higher for that price just I live in a slower area. Or something. Not v good at all that!

Ref your £900 - what I meant was you can probably make savings on the things that is spent on like utilities as has been said, and if you list it all we can advise. Many eyes are better than two and all that.

You seem to have your head screwed on so it's just a matter of working out the best way to do things.

Car insurance - NEVER PAY MONTHLY!! They chrage you interest you see. Try to pay annually - save it up each month so it is there for when you need it. And yours seems high? I'm 31, female and pay around £200 a year - can you get it cheaper? You are allowed to swap part way through but may have to pay an admin chrage for the refund from your current supplier.

I'm very concerned about your odds and sods. I think you should try keeping a spending diary. Get a (cheap) notebook and write down EVERYTHING you spend, from 30p on a paper to £1.50 for a latte. Then you will know where this goes and can see if you really want to be spending it! Just writing it down makes you think twice.

Hope that helps a bit now I've had time to read everything properly.


Internet link for you:

http://www.madasafish.com/services/broadband/broadband_max.asp

kevinabland

Thanks for the advice skintchick - you weren't been sharp, your advice is appreicated. Hope the cat is ok?

I will transfer my broadband asap (hopefully this afternoon if I get time).

The 60 quid for my odds and sods pays for my entertainment for the month - few drinks, dvd's, cinema etc.

Having been introduced to this site a few days ago I now write down everything (and I mean everything) I spend my hard earned cash on. It truly is amazing how easy it is to save cash using this simple technique.

I went home at dinner time and collected my paperwork from my ISA. I have just cancelled the ISA and a cheque for £671 is winging its way across the internet into my bank account as we speak. I will apply for a new CC later today (probably HSBC 0% for 6mths) and then transfer my balance across.

I also got the 'spare' guitar out of the loft and am preparing to put it on eBay - a imilar one sold last month for over £300!

I am also looking into cheaper home insurance and switiching my car insurance (thanks for the tip!).

Will keep you all updated!

Thanks,

Kev