Reduce debt - help needed

ease_All

I have been lurking for a while, but I am still struggling to start paying of our debts. We are approximately £30,000 in debt. We are able to meet all the monthly costs, but we desperatly want to buy a house soonish, so before we can save, I want to get rid of some of this debt, getting rid of all of it would be great.

Info to help you:

Loan - £19,000 (6.9%) - 7 years
CC - £2,500 (0%)
Car Loan - £5,000 (7.2%) - 3 years
HP Car Loan - £2,000(approx) + last payment of £1,900 (11%) - 18 months

Other outgoings per month are:
Loan - £371.00
Credit Card payment - £100.00
2 x Car Payments - £280.00
Rent - £350.00
Council Tax - £104.00
Gas, Elec, Water & TV Licence - £59.00
Childcare payments & Pre School - £100.00
Food Shopping - £200.00
Petrol - £150.00
Telephone & TV Subs - £75.00
Insurances - £25.00
Child Savings - £20.00
Mobile (pre pay) - £20.00 (2 phones)

Total Outgoings - £1854.00

Income:
Total monthly Income - £2,000 - soon to increase to approx £2,400.00

Sorry forgot to say we are a family of Four (2 ads & 2 chd)

The bank want us to increase our loan to the maximum £25,000 and pay off the more expensive car HP, but I am not sure I want to do this. I have recently obtained a casual second job, but it doesn't start till April, I need to do casual hours, because of my husband working shifts.

Please give us some pointers we really don't know where to go from here and what to pay off first. Once we have the extra income (dh has got a payrise) we will have an extra £400.00 a month, we want to put this money to good use, not just spend it on things we can live without.

Any advice would be very welcome.
Thanks

mountainofdebt

the website https://www.whatitcosts.com


Use the snowball calculator (full instructions are given on the web site) to see what order they recommend paying off the loans.

Very usefull in my opinion and the person who recommeded this to me is worth their weight in gold.

lady_noluck

Ok, where to start. Firstly can you either consolidate all your debts (or the ones with the highest apr) into one lump sum with a low interest rate? If not concentrate any spare cash you have on the debt with the highest apr.

If you can consolidate your debts into one, make sure the company you use lets you overpay your minimum payment and there're no early repayment clauses. HSBC stitched me up with a loan where I can only pay the minimum each month, no more. Therefore I'm stuck with a stupidly high apr until I save up the full amount to pay it off.

Secondly can you save on any of your bills? Check https://www.uswitch.com for your cheapest "necessity" suppliers ie gas, electric, phone etc and shop around to make sure you have the cheapest insurances too.

Can you reduce your telephone and tv subs spend. I'm guessing you have SKY or similar. Could you live without it for a while until the debts reduce? Even if terrestrial tv is rubbish the money you could save would soon add up.

Lastly food shopping. Shop around for your food and there are substantial saving to be made.
(I used to spend about £200 a month for me and boyf, managed to get it down to about £100 finally!)
Check deals in local shops like Lidl, Farm Foods,Aldi, Kwik Save, Iceland etc... Some food from these shops don't taste that nice but some are the same as big supermarket stuff.
For example, basic items like fruit juices, milk, bread, snacks, cleaners etc are fine from these shops.
Farm foods are good for frozen stuff and other bits and bobs like toilet rolls, crisps, soups etc and you get coupons for money off in their leaflets.
Local butchers usually do good deals on meat and eggs and markets are great for fruit and veg.
Anything else I suggest a supermarket like Tesco, save your clubcard points and they turn into money off vouchers. Look out for money off coupons in magazines and take these with you. Every little helps!!

God, I sound like a right miser! But being £17,000 in debt and threatened with repossesion kinda makes me that way.

Good luck and I hope my waffling may help in some way.

ease_All

Thanks for all the info guys.

Mountainofdebt - I will check out that website, thanks for suggesting it.

Ladynoluck - Thanks for so much help, I really appreciate it I will try and get the shopping bill down a little, but with the 4 of us I am not sure if i can get it down any further. We used to buy a lot of our meat from markets, but we have got out of the habit, it so much easier to pop into ASDA and get it all in one hit. I may start going to the markets again that used to save quite a bit and the meat used to be of a much nicer quality. We don't buy much frozen foods, but I will have a look at Farm Foods, personally i don't think Iceland is any cheaper than ASDA. Thanks for all the advice I have taken it all on board and hopefully I will posting a success story in a few months.

Thanks again

DiggingOut

Be careful in paying off loans early, they may be structured in such a way that you don't really save much by paying them off early. The best way to find out is to find out from them what you would need to pay it off right away, and then look at the total of the remaining payments.

Sometimes, a debt consolidation loan just makes things worse, because you get hit with interest up front on the loans you pay off, and then have to pay interest on the new loan as well. Don't rush into debt consolidation just to make things easier without finding out if it is going to cost you.

Good luck!

margaretclare

ease_All wrote:

Loan - £19,000 (6.9%) - 7 years
CC - £2,500 (0%)
Car Loan - £5,000 (7.2%) - 3 years
HP Car Loan - £2,000(approx) + last payment of £1,900 (11%) - 18 month

The bank want us to increase our loan to the maximum £25,000 and pay off the more expensive car HP, but I am not sure I want to do this. I have recently obtained a casual second job, but it doesn't start till April, I need to do casual hours, because of my husband working shifts.

I think it would be a good idea to concentrate on paying off the most expensive debt first - the car loan and HP loan. But not by increasing your loan to do so!! Of course they want you to do this - they'll have you paying more interest for a longer period, won't they!

Don't fall for this!

Best wishes

ukric

How long is the credit card on 0% for, all very well paying off the immediate debt thats the highest but if that period runs out soon then you'd be paying 14-20% on the full bal of the card

ease_All

DiggingOut wrote:

Be careful in paying off loans early, they may be structured in such a way that you don't really save much by paying them off early. The best way to find out is to find out from them what you would need to pay it off right away, and then look at the total of the remaining payments.

Sometimes, a debt consolidation loan just makes things worse, because you get hit with interest up front on the loans you pay off, and then have to pay interest on the new loan as well. Don't rush into debt consolidation just to make things easier without finding out if it is going to cost you.

Good luck!

Thanks. I am worried about consolidating, we have done it many times before hence the large loan in teh first place. I really don't think that it is teaching us anything about how to buget our money. I feel we need to pick up soem tips about this.

Thanks again

ease_All

margaretclare wrote:

I think it would be a good idea to concentrate on paying off the most expensive debt first - the car loan and HP loan. But not by increasing your loan to do so!! Of course they want you to do this - they'll have you paying more interest for a longer period, won't they!

Don't fall for this!

Best wishes

Thanks, I want to get the Hp car loan paid off especially as we have to find the £1,900 at the end anyway. Also I am pretty sure with this loan there are no penalties if we pay it off early.

Thanks

ease_All

ukric wrote:

How long is the credit card on 0% for, all very well paying off the immediate debt thats the highest but if that period runs out soon then you'd be paying 14-20% on the full bal of the card

Thanks for your reply

The card is interest free till October, but we also have an 0% interest anniversary offer on an egg card that we have kept active, so we will be able to transfer any remaining balance back to this.

beachbeth

Can you not do without your mobiles for a while too and stop topping them up while you pay a few things off? Also, if you are with Bt try the 18866 service to save on your phone bills. If you arent with Bt consider changing to them so that you can use this. All Uk calls are a penny to connect and free after that (not mobiles or premium rate numbers)

http://www.call18866.co.uk/