Conslidation. Did I do right? Help!

j19842

In a nutshell, I ran up £10,600 of debt.

Comprising of overdraft and credit cards.

My salary is £25,400 and I am 26, living at home, with next to no expenditure apart from running my car and food for me, and social stuff with my girlfriend.

I have taken out a Santander loan, for the £10,600, at an APR of 9.3% over 24 months, which was the best deal I could get.

I have paid off, and cancelled ALL of my cards with the funds, as soon as I got them. So I no longer own a credit card.

This repayment is £483 a month. This is going on until August 2012.

I earn £1625 a month after tax, so I am left with £1,142 after my loan payment, which I can just about live on.

(Bad, I know, I spend SO much, on little things like coffees, drinks out, lunches)

I am SCARED STUPID about my debt... I am going on a holiday (already paid on the cards some time ago) in September with my girlfriend, for which I will use money from my salary as spending money, but other than that, I plan to be more careful and start saving. I started by putting £50 aside today, not a lot I know, but even a little each month might add up in time?

Please re-assure me. This might be a LONG drawn out 2 years. I can't manage money and I'm desperate to sort it. Is there any hope for me?

davek1

I think you have done the right thing. So long as you have cancelled your cards you can't be tempted to use them and run up a debt again. The apr for your loan is well below what you would pay on a credit card. The only thing i would do slightly differently is apply for a very low credit limit card just for emergencvies ( say £500) that way you have a fall back if needed but you aren't going to run up a massive debt.

Relax and enjoy your holiday

Ames

Usually consolidation is a really bad idea, mainly because people tend to run up the credit cards again. You've done a couple of things right though - only taking out what you needed was a good move, a lot of people round it up by a thousand or so, which proves they haven't learnt anything. And cutting up the cards and closing the account is definitely the way to go.

I am concerned that you say you can 'just about live on' 1.1k when you live with your parents. You really need to take a look at all your finances. Get a little notebook and write down everything you buy, even if it's just 10p. Then you should be able to see where things are going. Once you've done that you can adjust your spending. Starbucks used to be a big one of mine, so I got their loyalty card and paid x amount a month onto it, when it was gone it was gone, and it was built into my budget.

Ames

I'm afraid I disagree with DaveK about the card. As you live with parents you shouldn't have any big emergencies, and if you can put a couple of hundred away every month (which should be easy) then you'll soon build up a good emergency fund.

NorthernLas

I would also get a basic account and move your spends money into it. The advantage of this is that you won't see any overdraft as yours to spend.

bluebag

Ooops, have we been on a bit of a spender bender? It's easy when your living at home to say you can afford it because you don't have a mortgage/kids/boring insurance etc.

You know yourself that you have to change your ways, and you've made a good start by ripping up the cards, but they are obviously a slippery slope for you. I think if you get another card it will be easy for you to find a 'reason' to use it and you could easily end up worse than you have been ( I know this coz I've been there!!!)

I would start a spending diary to see where it's all going. A regular saving of a small amount of emergency fund that you don't touch unless you need to buy a kidney or lung.

I find making all the butties for a week and freezing them helped me, because I just couldn't be fagged making butties every night, I can steel myself for a once a week tilt at it though!

My daughter invested in a £2 travel mug, a £12 coffee maker and a £4 timer. set the timer the night before to turn the coffee maker on just after you get up .. make two mugs, one to take to work (the travel mug is insulated and keeps hot for quite some time.) and one to bring you to life.

You could save maybe £20 a week right there with just those two moves... £1040 a year, nice holiday for that without ever looking at a credit card.

Have a good look round all these boards for ways to save, it's amazing.
Good luck and keep coming on here for support and help.
bb

Ames

Or if you've got access to hot water at work you could get a little cafetiere and take nice filter coffee. If you like flavoured coffee's then you can either get flavoured coffee to make up, or buy bottles of the syrup to add in.

I'm sure if you tell us your other 'vices' then we can come up with cheap versions for you.

MFWannabe

j19842 wrote: »

In a nutshell, I ran up £10,600 of debt.

Comprising of overdraft and credit cards.

My salary is £25,400 and I am 26, living at home, with next to no expenditure apart from running my car and food for me, and social stuff with my girlfriend.

I have taken out a Santander loan, for the £10,600, at an APR of 9.3% over 24 months, which was the best deal I could get.

I have paid off, and cancelled ALL of my cards with the funds, as soon as I got them. So I no longer own a credit card.

This repayment is £483 a month. This is going on until August 2012.

I earn £1625 a month after tax, so I am left with £1,142 after my loan payment, which I can just about live on.

(Bad, I know, I spend SO much, on little things like coffees, drinks out, lunches)

I am SCARED STUPID about my debt... I am going on a holiday (already paid on the cards some time ago) in September with my girlfriend, for which I will use money from my salary as spending money, but other than that, I plan to be more careful and start saving. I started by putting £50 aside today, not a lot I know, but even a little each month might add up in time?

Please re-assure me. This might be a LONG drawn out 2 years. I can't manage money and I'm desperate to sort it. Is there any hope for me?

Hi
There is definite hope for you; you've faced up to how much you owe and made steps in the right direction to becoming debt free :T
Well done for cutting up your cards; definitely a move in the right direction. Do not get another card; you will be too easily tempted.
You need to sit down and do an soa so that you can see in black and white where your money goes. Stop buying coffees and lunches; this really mounts up!! I bet you spend at least £5 a day; that's £150 per month which you could easily put into a savings account. Set up a savings account and set up a standing order to move x amount of money every month into that account; then the money you have left in your current account is for direct debits and to live on for the month.
If you want more help and advise about cutting costs then post your soa on here and people will give you very good advise; somethimes other people can see what you can't.

Hope this helps:)

j19842

Thanks a million to you all for your replies.

ALL of my cards are paid up, cut up, and cancelled.

I don't have access to a CC anymore, and I sure as hell won't apply for another.

I have learnt the error of my ways. This is my lightbulb moment.

I now just have to pay back £10k, and manage my current account better... building a buffer...

beanielou

HOw amazing that you have over £1000 left per month.
Im sure you can do this.

theoretica

Your loan repayments are less than lots of people pay for rent, council tax and utilities, so if you are interested in moving out then getting used to surviving on less will be a benefit.

I suggest you work out very honestly with yourself where the money went- so you can stop that happening again. Then I think you need the structure and security of a financial framework so you know what you can afford and the important things don't get buried behind lots of spur of the moment spending.

Think about large expenses which you can see coming up in the next 5 years or so so you can save for them and not get into debt again. Instead of just saving because it is a 'good' thing.

If you want to spend £600 on a holiday every summer you will need to put £50 aside every month. Maybe you think you will want a new car in 3 years and like the look of £5000k used ones- another £140 a month. Car insurance, repairs, deposit and first months rent if you ever move out, round the world trips... what do you want to be able to do?