Help needed - student debt

inimitable

I am currently trying to clear the last of my remaining debt and am in need of some help.

My situation is this –

I graduated 2 years ago and a currently undertaking a (low) paid internship to try and get the experience I need to progress in my chosen career path. I took this after a period of 8 months unemployed, bar 3 months where I did a fully unpaid internship.

I currently earn ~£640 after tax pcm, and will be in my current job until December. Subsequent jobs I will be looking at a wage of ~£20k+

I have recently paid off 2 credit cards – 1 x £2000, 1 x £1500

My current outstanding debts are as follows

£500 Natwest cred card (£15 min)
£600 Capital One cred card (£17 min)
£2000 student overdraft (£500 interest free)
£1200 personal debt to a friend

My laptop is currently broken and it is an essential for looking for work towards the end of the year, when I will be changing jobs (no other computer in the house). This needs replacing/repairing(£200)

I am currently living with my Dad, so gladly no housing/food costs.

Outgoings

£200 pcm for my bills (mobile, broadband, contacts, interest on overdraft, 2 cred cards)
£120 transport

To try and get out of this mess, I recently applied for the Natwest grad loan. I asked for £3300 to cover the cost of paying the 2 remaining cards off (£1100), debt to a friend (£1200) and the cost of a laptop (£1000). I would be paying ~£200 pcm back over 18 months. Entirely affordable in my circumstances, given that I would then be without 3 large debts, including 2 credit cards with unfavourable interest.

I got declined for the loan unfortunately, and am now back at square one.

I would appreciate help as to best way to move out of this rut.

Thanks!

Tixy

Hi and welcome

What are you currently doing with the other £440 of what you earn?

Why do you need such an expensive laptop? I was under the impression that these could be got for less than £500 but if your can be repaired for £200 then better still to go for that option.

If you could use say £340 or more of the remaining £440 to put towards your debts you could soon make a serious dent in that level of debt.

Have a look at the snowball calculator to see how quickly you could be debt free without needing a consolidation loan - I bet its less than 18months. http://www.whatsthecost.com/snowball.aspx

inimitable

Hello,

I don't need an expensive laptop per se. However I would prefer to invest in quality which will last. Gladly willing to repair my current laptop at a cost of £200, but if I was to get a loan I would see this as a waste of money for something that is on its last legs anyway. Besides the point now i guess, repair job it is.

My other outgoings include £120 pcm tube fare. The rest goes on misc living costs (remnants of a social life) and paying extra on debts. i.e. an extra £200 last month for the personal debt i owe a friend.

I find it difficult to allocate all the money as I feel helpeless with nothing (or less than £100) in my bank account for a whole month.

I presume it is best to prioritise debts that accrue large amounts of interest i.e. credit cards? Focus on paying one off or pay both in equal amounts?

Thank you for the snowball link, it seems very useful.

RAS

Until all your actual expenditure including transport and loans to friends are included in yourt SOA, it will be hard to give you decent advice. Post that up and things will be clearer.

Also, can you use a larger font size - just hit the edit button on your first post, adjust it and save.

inimitable

Edited original post to show outgoings.

Help much appreciated

podperson

Hi,

From what I can see you have £640 incoming and £320 outgoings which leaves you £320 a month spare. I appreciate that you want some kind of social life so set yourself an amount aside a month for that (say £100) and throw the rest at the debt with the highest interest rate (would assume it would be one of the credit cards). If for example you put an extra £200 a month on the credit cards they would be cleared in 6 months and can focus on the overdraft and the friend debt (you don't say what you're paying on this per month, is it as and when you have spare money or is there an arrangement in place for £x per month? If they are needing it back fairly urgently might be worth sorting something like this out.) By this time you might also be in a higher paid job and then can look at putting more aside towards them.

Tixy

inimitable wrote: »

Outgoings

£200 pcm for my bills (mobile, broadband, contacts, interest on overdraft, 2 cred cards)
£120 transport

How much is your mobile bill? Are you in contract? If so have you asked if you can drop to a lower tariff? if not shop around to see if you can get a cheaper deal.
How much is broadband? Again can you find a cheaper deal?
How much are contacts - see if you are getting a good deal - http://www.moneysavingexpert.com/family/Cheap-Contact-Lenses (eg I used to pay D&A £30 per month, now pay Asda £14 for the exact same daily lens)

What is the APR on the overdraft and typically how much interest do you pay?
I think it said previously that you were paying £50 to the credit cards? What are the APRs on each of these and how much are you paying to each? (you should pay the minimum to the cheapest debt and the rest to the most expensive of your debts).

You haven't budgeted for any of these that you might need
Clothes, Haircuts, Presents, Entertainment, Dentist/medical

You say you have no housing/food costs? Do you buy any food for yourself? lunches at work for example - if so you need to budget for that as well.

Until you know what your monthly amount of expenses (excluding debt repayments) is then you won't know how much surplus you have to put towards debt repayments.

inimitable

Yes indeed the 'friend' debt is as and what I have spare.

Unfortunately this debt (which has no interest) is often the one with the most pressure to pay back. I guess it is a case of balancing between paying the 3 most urgent debts - 2 cred cards and personal debt to friend

Thank you for the response

podperson

Maybe have a word with your friend about the debt and look at setting up a regular payment to them each month, even if only £15-20 or something, could even arrange a standing order into their bank account. They could then see that you are taking the debt to them seriously and making an effort with it.
I would suggest maybe sitting down with them, explain that you would like to pay the credit cards off urgently as the interest rate is very high but that you don't want to leave them in the lurch or for them to feel their debt isn't a priority and see what they would suggest. If they aren't desperate for the money they will probably say that's fine, if they do need it back fairly urgently then can sort something out with them.
Debts from friends are a little tricky as you do feel pressurised to get them sorted asap