Tackling my growing debt problem

Maddy2k11

Hi Guys,

I've been an avid reader of these forums for a while now and have finally decided to seek advice on my current situation.

I currently have £10,832.32 outstanding on an unsecured personal loan that I took out to pay off my Career development loan (I borrwoed 8000 originally over 3 years but once finished took out a 10,000 to pay off the 8000 + the 1500 I had on a barclaycard + 500 to pay off the guitar I had on finance). The rate for this loan is 9.1%

On top of this I have my Natwest Student account which has an overdraft of £2000 which is almost maxed out (currently balance is -1959). As I graduate tomorrow, according to the terms and conditions of the account I should have another year of the 2000 limit at 0%

I've recently also started a new job but as this was 70 miles away from where I live and public transport is expensive I opted to buy a car on finance (was brand new) (13,300 at 0% interest over 5 years). It was a bit jump in wages which was the main reason I took it (13500 compared to the 23,000 I ean now).

My current plan is to continue to pay the car and the loan with the required payments (£221 and £208 respectively) while trying to bring the natwest overdraft down as soon as possible. Once the car has gotten half way through its payments I plan to excercise the rule of halves and give it back to settle the debt, mainly due to the fact I believe it was mis-sold to me (salesman told me there were no more cars available in the country that he could offer me on the deal I was getting so I had to take an alternative, although after taking delivery, I became aware that other dealerships of the same group did in fact have them in stock).

I currently live with my gf althought this is only for the next few months as I plan to move closer to my work in order to trade the petrol costs for rent.

I was just wondering if anyone had any better ideas for trying to reduce this amount of debt?

rubywhatashmoo

Well the plan sounds good but you need to make sure you stick to it and budget all your other income so you'll know exactly where everything is going or you'll end up adding to your debt rather than reducing it! It's probably too late to do anything about the car now (but might be worth checking!) but buying brand new is VERY expensive, you may have been better getting the same model only 18 months old - is there any likelihood of moving to nearer to where you'll be working now to reduce petrol costs?

Maddy2k11

Just to give you a detailed breakdown of my monthly expenses:

Income after tax: 1420

Payments per month
Loan at 9.5% (51 months remaining): £208
Car (57 months remaining): £221
Petrol £360-400
Overdraft Payment: £30 (this is voluntary as its still in its 0% period for another year)
npower: £13 (have been paying 60 for the last 9 months and was in credit + get the £100 direct debit bonus)
Orange Contract: 35 (15 Months left of 24)
Virgin Media: 35 (1 month left)
Eating out at work: £3-5 per day (this is something I know I can take out if I discipline myself to make my own food for work)
Currys Insurance: £1.99
Food for house hold: 160

This makes my total out goings £1202 (took the biggest number for fuel)

Any ideas how I can gradually bring this down? I've started doing some online surveys at Onepoll, there just doesn't seem to be many. Anything I earn there will go to the natwest overdraft.

I also mentioned that I am looking at moving closer to where I work due to spliting up with my gf, so will be looking for a small flat/ensuite room which will replace the fuel payments I am making every month.

If I kept my payments the way they are here, I will not be debt free until the middle of 2016, which seems like a very long time away. I'm hoping that I can get debt free by december 2013.

Any ideas you guys can give me would be great.

Phelpsie001

I know that you are looking to move closer to work, but in the medium term....do you drive economically? This can cut your fuel spends dramatically!!

You could perhaps not renew your Virgin TV package, but to be honest you don't have masses of outgoings anyway? You need to complete the SOA template on this website, as you aren't accounting for things like road tax, insurance, contents insurance, haircuts, presents etc etc

Tixy

Hi

As phelpsie says it would probably be a good idea to put yoru figures into the calculator here - http://www.makesenseofcards.com/soacalc.html to make sure you account for everything, even things you don't pay out every month like insurances etc. And to split your normal outgoings from your debt repayments.

You currently show as having £218 spare a month, ideally you need to break this down as to where it is being spent, as it may be in those areas there are more places you can save money.

As your fuel is really high it might be worth a read of this to make sure you are getting as many miles as you can for your money -
Cheap Petrol & Diesel Cut your fuel spend by a third


I see you are planning on moving closer to work, before you take on a place then I would factor in all your costs to see if you will be able to afford the new property - whilst you will be getting rid of much of the petrol costs by the time you have rent, council tax, water, utilities, tv licence, contents insurance etc you might well find that the costs are more than what you save in fuel. You might want to see if a house share would be cheaper or lodging with someone.

If you are going to move out then if possible I wouldn't renew the virgin media package at all.

The only other place that looks like you can make much of a dent is in food & groceries. Is the £160 for you and girlfriend? £100 on work lunches is a lot over a month. This should be the easiest place to cut costs, if you make sandwiches and similar at home you should be able to reduce this to well under £1 a day, which will free up a lot of money on your budget.

Are you able to do any paid overtime at work? If not once you have moved closer to work would it be feasible to look for a second job in the evenings/weekends for a while to help you pay more off the debts.