Clearing my debt

xzibit

Hi there. It's my first post on here. Finally decided to ask for your excellent advice. I've never been good with money, and this was shown in the fact that as soon as I turned 18, I took out loans and cards etc etc. Got into a little bit of a mess, and even though I'm now nearly on top of it, theres still a little way to go. I'm 23, and trying my hardest to save for a deposit for a house. I currently owe £7300.43. Not a huge amount compared to some, but it feels like millions to me!! I have some savings, but not much at all because I have been paying off debt instead of saving!

The money is from a loan and a card. I have done quite well to get it down to where it is now, but wondered if there's any more I can do. My loan is currently at £7077.28 at 7.5% and credit card at £223.15 unsure what %.

Here is my SOA

Monthly Incomings:

My salary - £1,222.01
Total - £1,222.01


Monthly Outgoings:

Mortgage/Rent - £100 (live at home :j )
Mobile - £30
Car Insurance - £31.30
Petrol - £80 (ish)
Bank loan - £251.50
Credit card - £100

Total: £592.80

Now, I also try and save as much as I can each month, which is between £200 - £400 a month. But usually the lower. All my money seems to go, lately I have been trying to be careful with what I spend, but it's not as easy as it seems :mad: .

As I said, it's not a huge debt, but it seems like millions to me!!

lynzpower

hi there

what is the APR on your cards and your loan, and the APR on your savings account?

Lynz
x

lynzpower

Also, you note that you spend 80pcm on petrol but there is no provision for car tax, repairs parking etc

a good way of getting to grips is by using martins budget planner at the top of the page, write down everytihng you regularly spend moeny on

Also grab a notebook and start a spending diary, writing down every penny you spend on anything, a newspaper, can of coke, parking anything.

Little_Miss_Winner

Hi and welcome.

I have had a look at your thread above and the obvious thing that sticks out to me, is why are you saving 200-400 a month, when you have a £7k bank loan at 7.5%

The wisest thing you can do is pay this off first before saving.

As you are at the mo, the bank loan outstanding, repaying back at £251.50 a month will take you 31 months to pay off completely - nearly 3 years!!!
And cost you £675 in interest!

If you upped your payments heres what you would be paying back.

Pay back £400 a month - it would take you 19 months, and you would pay £398 in interest.

Pay back £500 a month - it would take you JUST 15 months, you would pay £306 interest.

Pay back £600 a month - it would take you JUST 13 months, you would pay back £250.00 in interest.

Can you see what i am getting at? You live at home at the moment, so i would be doing everything i can to pay back as much as i could, as soon as possible. That way you will have nearly £1000.00 a month to do what you want with, wouldn't that be nice?

I worked out the above from the snowball caqlculator you can find it at;
https://www.whatsthecost.com/snowball.aspx - have a look it's great!

Hugs
pot
xx

xzibit

Hi, lynzpower thanks for your quick response.

The %'s are as follows.

Loan @ £7077.78 is 7.5%
Barclaycard @ £223.15 is 17.9% I think
ISA savings is 4.75%

I also have another savings account with a low % that I don't really use.

I pay car tax yearly, not sure how much it'll be under the new rates yet, I presume about £100. I don't have any repair costs as it's under warranty for 2 more years, though servicing is about £200 yearly.

xzibit

Wow, thanks pot. Never thought like that. You see, I was trying to save aswell, because I wanted to get out of home within the next year, kind of cos I don't have much choice! So, if I was to spend a year paying off the debt, I would have nothing behind me in a years time. Well, apart from the small amount I have now. But I need to get rid of it, because I know I will just up it again if I get stuck!

Little_Miss_Winner

Thats ok.

Can i be nosy and ask what the loan was for in the first place? i am thinking was it for your car?...... If so, can you not sell the car for a cheaper model?

lynzpower

that barclaycard can be cleared today with some of your savings, that 17.9% is a killer

xzibit

potogold wrote:

Thats ok.

Can i be nosy and ask what the loan was for in the first place? i am thinking was it for your car?...... If so, can you not sell the car for a cheaper model?

Well, for a small bit of the car. I sold my last car and needed a bit more for this one. It's not anything special! I did have some of the money for a motorbike too, which I am in the process of selling, so that will free up some money! Which I can put straight into the loan. The rest of the loan is for nothing much! I do need my car for work though, so selling it would be a last resort.

Would it be possible to find a lower rate loan? Or is it a low rate? I have no idea sorry lol.

Lynzpower, yes I have decided, I'm going to clear the card! Thanks for that, it will be 1 less thing to worry about paying.

CLAPTON

good ...pay the credit card off

you need to check the terms and conditions of the loan to see if you can make over payments... its not always beneficial to repay early.

because you are living at home this is a great opportunity to become debt free and also to build up some savings so when you move out of home you have little to fall back on.

you really do need to keep a spending diary and find out where all that money goes .... what do you spend on going out, work lunches (take food from home), coffees , what about clothes, any holidays, weekends away

if you are careful, once the Credit card is clear you should be able to over pay the loan by about 600 i.e. pay 800 at month to the loan which still leaves you over 400 to spend each month which should be doable. this would clear the loan in less than a year and then you can really start to save a real nest egg or a deposit for a house.

yummum_3

Hi there, do you have any savings that you could use against your loan, as has been stated many times on here you are better off paying off debts before you start saving.

Also, I was in your posistion when I was younger and left home with debt. At the time I couldn't see any problem with that but I wish I knew then what I know now! This is the only time in your life when you will get rent for £100 a month!!!
Once you have to start and pay for things like gas/elec/water/council tax, etc,etc... it takes you so much longer to pay off debt. Try your hardest to get rid of it before you leave home!!