Drowning In Debt - Advice Please

Knitting_Nora

Hey Lynsey :hello:
You've already had some great advice from other MSE-ers, but I wanted to echo others and say well done for grabbing this by the throat now - total star.

Again, others have mentioned it, but the SOA is living proof that you have loads of scope to sort this - and if my experience of MSE over the last few weeks is anything to go by, you've come to the right place for help and huge levels of support.

I've also found out that there is no such thing as a daft question on this forum (well, there might be - but I haven't found it yet!), so don't be afraid to ask.

I'll stop by every now and then to see how you're doing - but in the meantime, good luck with it all.

Nora.

Knitting_Nora

Sorry - me again! Meant to say that you can find the snowball calculator here: http://www.whatsthecost.com/snowball.aspx

Nora.

Daddy-Spendless

ive been getting fed up with living in the overdraft recently and decided i just want rid, i found that because i bank online (natwest) i can just make a new application online for an overdraft and if i set the required amount to a lesser amount than my current limit it reduces my limit to the new amount.

ive found the best way is to just comit a sum of money while money is their and live with the concequences.

Lynsey_G13

£95 for electricity is because we have no gas in the flat, its just electricity (storage heaters). Its a monthly direct debit and is reviewed every 6mths, it should be reviewed soon and should go down again because we're currently in credit.

Mobile contracts can't be changed or cancelled until August 2012 unless we buy out the remainder of the contracts which isn't an option.

Food bill works out at around £70 a week for the two of us plus costs for dog food, toiletries and cleaning products.

OHs debt repayment plan was for £13677, he started it in July 2008 and pays £194 a month towards it. He doesn't have a bank account, even now 3yrs into his payment plan the bank refuse him a basic bank account so I have two current accounts, my wages go into one and his go into the other which he has the card for. We don't have any joint finances.

We both take lunches to work and make use of the water/tea/coffee provided at work.

The overdraft is an arranged one, it costs £1 for every day I am in it. I know the cards etc are costing me more but I was meaning the overdraft is the main problem because if I didn't have that then I'd have the spare cash to pay to the cards etc


The rent is the total rent. It's a housing association flat.

I think I've covered everyones comments/questions

Thanks

BitterAndTwisted

Have look at the cheap-family-recipes.org website for how you can feed a family of four on £100 a month. Your own current grocery-bill can be cut down by a massive amount with some effort if you're totally committed. That £200 a month for entertainment needs to be drastically reduced or cut out altogether, even if it's only for a few months, so you can throw everything possible at the overdraft or the most expensive debt.

n.b. Your DD for electricity may not be reduced when it's next reviewed: when you're paying the same amount every month you should expect to be quite a lot in credit right before the coldest months of the year kick in.

ms_london

Hello.

I think others have made some helpful comments, so not much more to add, but definitely avoid WONGA - you're better off using your credit card to see you through to pay day than taking out any time of pay day loan!

Keep a spending diary to see where your money is really going..

Regarding saving for a house, you are both on a pretty good wage and lucky to be paying such low rent etc, so once you clear your debt you should be able to save for a deposit in no time. Unfortunately unless you are rich and famous you can't have everything so you need to decide what is important. If a house of your own is important, stop buying all the little things and you will get there. Or if having a holiday is more important, except the fact it will take you longer to reach your dream of having your own house. Even cutting your grocery bill by half, and other small changes will really make a difference. You will get there!!

Sorry to hear about your friend, I completely know where you are coming from, I had this mindset, but then I racked up £19,000 of debt, and when the banks stopped loaning me money, it suddenly dawned on me that I would have to pay it back and although life is too short, it is also bl**dy long and painful when you are paying back someone elses money and spending the best years of your life miserable as sin!! It's all about moderation I guess. But it sounds like you have a lot to be happy for, nothing wrong with living for the moment, but it doesn't necessarily have to cost you much

xx

pinkteapot

I used to live in a 2-bed flat with no gas and our electricity was about £100 a month so I don't think your bill is unnecessarily high. Unfortunately electric heating is really expensive. Our flat was modern, well insulated and top-floor and it still cost that much. We now have a 4-bed detached house and gas and electricity combined are around £100 a month - exactly the same. :eek:

As others have said, key to this is your day to day spending. With a surplus of almost £800 a month (in theory), you should be out of your overdraft in a couple of months and then be able to start repaying the other debts.

First thing to do is to start writing down all your spending. A few years back I had debts and that was when I started keeping detailed accounts. All my spending got recorded in a spreadsheet and for the first time I knew what I was really spending each month.

It's hard to budget simply by looking at your bank account as your pay comes in but half of it is already accounted for (earmarked to go out again) with rent, bills, CC repayments, etc. Your bank balance doesn't tell you how much money you've got left for the month. If you know you have £x per month after rent and bills then you can record your spending and make sure you don't exceed that. Anything left over at the end of the month can be used for extra debt repayments.

The good news is that your rent and bills are low compared to your income so your disposable income is high. With some focus on how much you're spending you should be out of the overdraft by the new year and could be debt-free by the middle of next year and certainly by the end of next year. Then you can start building that house deposit fund and you might not have to wait too long after your original goal of 2014 for the house you want.

GreenSaints

Hi,

I was like you. I was constantly in my overdraft (£1000) and was stung one month with £75 of fees!

The way I got out of it was hard, not easy and required a lot of effort, but I cleared it in 6 months as well as paying off some other debts This is what I did:

• Sold as much stuff as I could
• Took my own lunches to work every day
• Left my purse in the office so I wasn't tempted to spend when I went for a walk
• Went on HOTUKDEALS and clicked on the Freebies section. Have had at least 8 trips to the cinema
• Evaluated before I buy - do I need it, or just want it?
• Stopped going out, but got friends to come round for film night
• Reduced my takeout budget!

I'm nowhere near my DFD, I'm on my way

Hope this help

sydneybean

hi,
Im starting my debt free journey too, and one of the things i do is sit down at the end of the month and review what my outgoings will be for the next month then i go to the bank and take the cash out that i need for food/petrol/other and leave in the bank enough to cover the bills. I have done this today and have also now got envelopes for the other things listed on the soa such as emergency/birthdays/hair etc.

it actually feels really good to know that whilst i havent got loads of money i do have enough to cover the bills and when other money comes in through the month then i know which envelope it will go into.

it is really hard to get into the mindset of this but without a doubt it is worth it. I spend £50 a week on food for me and dd and that is including my cigs (disgusting habit i know!) it can be done i promise!

and tonight i am going out with my friend for a treat but i have saved that money up over the last few weeks and i have a budget of £40 of which i hope to come home with some!

keep you chin up - you can do it! x

Venusflytrap

Just a couple of tips:

My husband and I spend £140 per month on food and toiletries, so very achievable. Though we do not have any pets, we take our own breakfast (oats, fruit, muesli, high energy homemade smoothies) and lunch to work (3 days a week), batch cook: lentil & potato stew, bolognese, couscous with pork & roast vegetables, beef pasties etc and make sure we have enough in the fridge and freezer for the week. It takes discipline, but very doable (and can become obsessive!).

I have a monthly mobile contract which costs max £12 per month (yes!) and get unlimited landline talk time, 600 mob. mins, 300 texts and 500 MB data usage. I have had this deal renewed for the last 30 months by threatening to leave my provider unless, as a loyal customer, I was given a better deal. It has worked so far!

Vain endeavours: I am not much of a shopper (it's more torture than pleasure IMO) but what about leaving your wallet at home if you do not need to buy anything on your way to or back from work on the day? I buy clothes/shoes (mostly) only on offer (at least 50%) or invest in an expensive pair of shoes, a bag and use it for a number of years until ragged. I am still wearing a lovely dress I bought 11 years ago and the lovely comments keep coming! I do my own hair every 2 weeks so spend max £100 per year at a hairdresser. As I love to walk, you can guess how I regularly transport myself around the city.

Entertainment: If my husband and I want to treat ourselves to a movie (every 5 months or so) we go on a Wednesday and benefit from the Orange 2-for-1 deal.

Day to day banking: I have a joint account for household spend (which pays us £5 per month for paying in £1k) so it is clear how well we're sticking to our budget. I have one current account to hold my CC spends waiting to be paid off in full (I move this from my savings a few days before payment is due), and another account for my personal weekly budget/spend. This way I can monitor what I have spent, saved and what is earmarked for CC repayments. Though I have an OD I have only gone over by £10.00 once in 4 years. I cannot spend beyond zero without thinking that I am digging myself a black hole.

In general, if I want something I save up for it. If I cannot afford it, I cannot afford it.

I hope you are able to kickstart a financial renaissance from here on. Bonne chance!