Unsecured Debt

edgebarber

I wrote a piece on tuesday (I think) and was genearlly seeking oppinions regarding an unsecured debt I currently owe, which adds up to a total figure of approxmiately £15000, I was advised by one of the members to look at the Motley Fool, Snowball Calculator, which is very good, however I was wondering what you are supposeed to do, whith the months in Red, as it presents a problem, in my case of approxmiately 14 of the 40 month period the calculator suggests being in red, has any body else a similar experience and what suggestions are there out there?

Thankyou

Edgebarber

happyformonths

Hello Edgebarber,

I owe about the same amount as you (unsecured too) and my first 8 or 9 months on the snowball calculator show up red when I put all the data in.

It's just telling you that the amount of money you told it you want to throw at debts each month won't cover the minimum payments that month. This may only be a question of a shortage of (?) £50 or so, depending on how many debts you've got, what their minimum payments are, and so on.

Add up the amounts it tells you you need to pay towards each of your debts, along the line for the first month. Then compare with what you told it you had to throw at the debts. The difference is the extra you need to find in order to meet those minimum payments for that month.

Sorry if you knew all that - I couldn't tell from your post whether you did or not!

Then we get into what to do about the "red months". Well, you can either try and find some extra money to throw at your debts for those first 14 months (doing the calculation above will show you how much you'll need, and it should be a reducing amount each month), or if that's totally impossible and you're already stretched to the limit, you can try either moving your debts around to reduce minimum payments (potentially complicated, and your debt will take longer to pay) or get in touch with your creditors and offer them what you can (will affect your credit rating, and your debt will take longer to pay).

As you may gather, I'd recommend throwing as much extra money as possible at those debts so that you can meet the required repayments without having to get into complications and difficulties. But others may choose a different route, and, as I say, it just might not be possible for you to find extra money. Personally I'm taking on extra work at least in the short-term (and making sure I get paid for the work I actually do!), so the money is there to throw into the debts. I could move them around, and I probably will in time, but for now, I'm choosing to chip them down a bit before I do that.

Have you done an SOA on this board yet? (Sorry, I didn't read your other post.) If what you need is, say, an extra £50 per month just to cover those red months, there should be many ways of finding that, either by reducing your outgoings or increasing your income (well duh, obviously, but I'm trying to write clearly here!). There are loads of ideas on this board about how to do both - with an SOA it's easier to offer specific ideas for your situation.

Good luck and let's both try and eliminate those red months

HFM