Advice on 26k Debt

skintchick

Are you sure your wife NEEDS a new car, and doesn't just WANT one??

I am flabbergasted at how much money you have each month to play with, I will NEVER earn that much, EVER. *jealous*

Use your savings to pay off whatever has the highest APR (what are the APRS by the way?).

You will then have £13,500 in debt, which on your wage you can easily pay off very quickly.

You both need to learn the value of money. You are VERY lucky - that wage isn't just good, it is EXCELLENT, and you don't seem to appreciate it.

nabowla

What are the savings for? You've got insurance to cover the loss of your job and you've already got your own house so don't need a deposit. Yes, it's nice to have some money in the bank but you can easily replace it once you've cleared your debts. How about putting your commission aside each month to replace the savings and just live off your regular salary for six months?

If your wife really, really needs a car then use the savings to buy her a nearly new car for c.6k. What's the point in buying a brand new car when it depreciates in value as soon as you drive it off the forecourt? Far better to buy something that's six months old - that way somebody else has lost out on the depreciation! Use the rest of the savings to clear the Alliance & Leicester debt in full. Then you've only got two debts to pay off. Throw all of your commission at the remaining debts each month; you should be debt-free in 10 months.

But before you buy that car, think long and hard about a)whether you really need it and b) whether you could buy a cheaper car now for 2-3k (in cash, from the savings) and then replace it with something better once all the debts are cleared.

Shenk_2

I think I've made a few postive steps today.

Firstly paid off A&L it was actually £6700.00 but I've paid it off in full straight out of the savings.

Secondly got rid of my Barclays Additions + and changed it to a normal account so saved £13.00 a month there

Thirdly ditched BTYahoo at £27.00 a month and moved to Madasafish for £10.99 for 6 months rising to £16.99. Thing is I'm actually one of their suppliers and have a very good contact there through their parent company so I've got a feeling I might be able to tap them up for a much healthier discount.

Fourthly made plans to ditch my Barclays OD protection but they've told me I have to go into the bank for this.

So all in all.

£80 a month saved from A&L
£13 a month saved from Barclays
£16 a month saved from moving from BT Internet

£109 saved a month and another £16.00 to follow when I lose the OD protection

I have 6 odd thousand left in the savings account but I'm reluctant to use it. It's just nice to have something that I can use in an emergency. I know I have the credit cards but it just doesn't feel the same.

Shenk_2

skintchick wrote:

You both need to learn the value of money. You are VERY lucky - that wage isn't just good, it is EXCELLENT, and you don't seem to appreciate it.

I do appreciate my wage. I come from a council estate in Gravesend where I managed to goto school and get no decent grades (best was an E).

I love the company I work for who I started for on 14k and back them to the hills but managing money I find tough. I want to give my kids, my wife and myself the lifestyle that I never had through my childhood and teens. Unfortunately that has made me a bit off kilt with my spending.

I really appreciate everything else you said though Ms/Mrs Chick but had to have a lil nibble at that comment

skintchick

It's Ms, but you may call me Chick...;)

And OK, I'll let you off, but when I sit here having got excellent grades at school still scrimping and saving after 11 years of working, it irks me to see so much money being wasted, that's all.

Let's get you on track.

lessonlearned

Hi Paul

Don't panic!! You've come to the best place to get help and advice so that you can put your affairs in order. This site is a goldmine of information and everyone is so helpful and supportive.

Like you we were high earners with two businesses that were doing well, then disaster struck - one business failed and my o/h took a long while to find another contract.

During this time we clocked up £22k on credit cards - simply in order to live.

My point is whilst the times were good we wasted a lot of money - by being careless, lazy and through lack of knowledge. (See my thread - A Whole New World).

My tip? Buy yourself a copy of Martin's Money Diet Book - believe me it's the best investment you will ever make - it's my bible now. You will be amazed at how much you can save just by rejigging the finances.

My second tip. Try and get your wife to on board with your budgeting etc - two heads are better than one. My husband was a bit sceptical at first but now he has seen how are finances are improving he has become as enthusiastic as me at money saving.

Best of luck Paul. You've made a great start.

CLAPTON

congratulations on the progress already

just a comment on savings versa debt

you have 6k in savings earning say 3% after tax (higher rate in your case) which brings you £180 a year

but you have credit card debts of well, what, lets say 10% so it costs you £600

or look at it this way, if you had no saving and a mate said...look Paul why dont you borrow 6k on your credit card at 10% and put it in a building society at 3%...would you?