I'm new and on a mission to become debt free - any help appreciated!!

DitchTheDebt

Hi,

We are in debt, we owe £14,000 we have 2 credit cards (on 0% until Nov then Jan 13) a bank loan £6,500 (13.9% paying £100 a month interest) a stundent loan (approx £750) due to end in December costing £92 a month, a small loan of £500 (0% being paid off at £30 a month)

We have recently been gifted £1000 from family which will go towards paying some debt off.

We bring in approx £4,000 a month, have 2 dc's, a car each - I'm SE and both cars are essential for working, we have considered other options but it isn't workable.

We always pay our debts on time, it doesn't worry me as such just that it's a weight I could do without, we have been swimming through treacle for about 10 years now, the last time we upped our bank loan we swore it was the last time and it was, that was 4 and a half years ago and it was for £14,000. Now we want to be debt free so we can save up and buy a house, we aren't getting any younger!

I have heard of snow balling so am I right in thinking this is where you pay one credit card off as fast as you can whilst paying the minimum on the rest? I'm also considering us changing the bank loan for one with a lower rate over less time, it's due to end in sept 2014 but we'd like to be debt free in 2 years.

We have already done all the changing bills and haggling to get prices down etc so what's left to do now is to pull our belts in and work out who to pay and how much to pay them and also what to do about our loan I suppose?

All advice is gratefully received.

rising_from_the_ashes

Hi Ditch - welcome to the boards ... loads of support and advice available:D

Best place to start would be to complete a Statement of Affairs using the following link http://www.makesenseofcards.com/soacalc.html

This lists your income / outgoings / debts (incl amounts/aprs etc) / people/cars in house etc etc

You'll get loads of advice on where savings may be possible / what to pay first etc if you do this - we may think we're getting a good deal on something and it's often only when someone else goes ":eek: how much?" (:D) that we realise we're not!

anna_d_2

I agree a SOA is vital. It helped me realise things weren't quite as dire as I thought (hence consolidation at a lower rate instead of DMP or similar). You may suddenly see savings yourself when you put it all down.

But a big part of this process is, simply, going to be cutting back. For me that's no lunches bought in work, fewer bottles of wine, looking at second hand clothes on Ebay for my kids (esp the younger one) and being as determined as I can be to not pay full price for anything!

DitchTheDebt

It wont let me post with the SOA because I'm a new user?

anna_d_2

I think you can copy and paste?

rising_from_the_ashes

Choose the MSE option and then copy & paste HTH:)

DitchTheDebt

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 4000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4000

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 470
Management charge (leasehold property).. 0
Council tax............................. 136
Electricity............................. 96
Gas..................................... 60
Oil..................................... 0
Water rates............................. 56
Telephone (land line)................... 0
Mobile phone............................ 39
TV Licence.............................. 13
Satellite/Cable TV...................... 45
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 40
Petrol/diesel........................... 400
Road tax................................ 35
Car Insurance........................... 125
Car maintenance (including MOT)......... 70
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 120
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 23
Life assurance ......................... 11
Other insurance......................... 7
Presents (birthday, christmas etc)...... 100
Haircuts................................ 30
Entertainment........................... 700
Holiday................................. 30
Emergency fund.......................... 0
Total monthly expenses.................. 3026


Assets
Cash.................................... 1000
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
credit cards X 2...............5000......85........0
bank loan......................6500......257.......13.9
student loan...................750.......92........NaN
small loan.....................500.......30........0
Total unsecured debts..........12750.....464.......-


Monthly Budget Summary
Total monthly income.................... 4,000
Expenses (including HP & secured debts). 3,026
Available for debt repayments........... 974
Monthly UNsecured debt repayments....... 464
Amount left after debt repayments....... 510

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -12,750
Net Assets.............................. -9,750

DitchTheDebt

Ah done it thanks, it was because I had also copy and pasted the link at the bottom of the page.

The income I've put there is variable because I'm SE and it will be coming down this year.

I did the snow ball calculator and it said to pay off the small loan but the loan isn't a priority because it's o% interest for as long as it takes and to pay another credit card which has more on it and 0% ends in Jan next year, where as the other credit card's 0% ends in November this year so I think that is the priority.

Hovel_lady

Cut your entertainment costs in half and you'll be debt free in less than 3 years

ETA
Do you know where the £510 goes every month? That could go a long way towards the debts.
Do you keep a spending diary? If not do keep one as it'll show you exactly where the money is going.

tallyhoh

£700 entertainment:eek:Is that a typo:eek:

anna_d_2

£70 per month for car maintenance seems very high.

As for £700 a month for entertainment???
To be able to spend that, cover all bills and expenses and service your debts and still have a further £500 left over... I'd say cutting your debt would be no problem,