I have a lot to debt to clear... and no idea how to begin!

FinanciallyUnsavvy

Hello fellow debt-free wannabes :wave:

I've just joined the forum, as the time has come where I really must do something - anything - about my dire financial situation. I have no idea where to begin!

I have an overdraft that I've been unable to clear since being a student three years ago, a maxed-out credit card and Littlewoods debt.

The majority of what I earn goes onto repayments and bills (I rent by myself), and the little I do have left I struggle to properly budget.

So, what I'm asking you all is... where on earth do I start?! How do I break the habits of a lifetime and start to slowly but surely clear my debts? What's the first steps I need to take? What are the best threads/articles I can read to help me along my way? Absolutely anything you can tell me will be greatly appreciated.

Thanks,

A very FinanciallyUnsavvy girl!

mr2jay

Hi there and well done seeing the light

Only just come to the same conclusion. Got debts that aren't going away and want to be financially independant. Only way to do that is to clear everything off before making what you have work as hard as possible.

I think the first thing most people will ask for is to do a Statement Of Affairs (sounds scary). That way we can see where your money is going and where you can save to free up cash to pay off debts.

Don't be scared though, we are all here for the same reason - we have had enough of living in the red. Once we know your full situation, some very savvy people on here will point you in the right direction to get shot of this ball and chain

ellesbellesxxx

http://www.makesenseofcards.com/soacalc.html is where you can fill in a Statement of Affairs. We can then look at what to tackle first - you can do this!

GreenSaints

^^^ what she said

It's a wonderful and scary thing get your light bulb moment. We've all had it and we'll help you as much as you can. Oh, and if it's any consolation, I am only now clearing my student overdraft that I had over 6 years ago!

Welcome aboard

slowlyfading

Yep, do a Statement of Affairs (SOA) so we can see if we can help at all the first step is admitting you have a problem and you've done that, so well done!

January20

The above advice is spot on.

I would add: get your hands on your bank statements for the last couple of months and look at what is coming out: DDs, cash withdrawals etc and when.

Do a spending diary to see where you money goes day to day.

Use tools like the demotivator and snowball calculator to give you some motivation.

FinanciallyUnsavvy

Thanks for your responses, folks. I've tried to fill this in as best I can, but I don't have all the information to hand so I've tailored it as best I can to suit me.

I've not included any monthly expenditure outside of direct debits/bills etc. - so stuff like food, clothing, entertainment allowance has to come out of whatever I've got left at the end of the month. I haven't included this because as of yet I don't really know how much I spend each month - I tend to buy dribs and drabs here and there and pay by card and not really keep an accurate tally of what I'm spending/how much I can spend. This is the first thing I need to sort out really - get a set amount that I know I have to spend on food etc. each month, and learn to stick to it.

I also have a £1500 overdraft that I'd like to clear, didn't see a section for this on the balance sheet.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1160
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1160

Monthly Expense Details
Rent.................................... 375
Council tax............................. 65
Electricity............................. 30
Gas..................................... 30
Water rates............................. 19
Telephone (land line)................... 18.5
Mobile phone............................ 41
TV Licence.............................. 25
Satellite/Cable TV...................... 12.50
Internet Services....................... 12
Other travel............................ 87
Cinema.................................. 15
Total monthly expenses.................. 727

I HAVE NO ASSETS!!!

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................2416......60........18.9
Littlewoods BNPL...............1823......50.........?
Total unsecured debts..........4239......60........-

As for the Littlewoods debt - 1823 is the balance including the extortionate interest from Buy Now Pay Later. The actual amount I owe, providing I pay everything off within 12 months, is just short of £1000. £65 is due before June 15 to avoid interest, £250 before December and the rest is March 2013. So I need to factor in a monthly payment - even though I don't HAVE to start paying anything back really until the end of the year.


Monthly Budget Summary
Total monthly income.................... 1,160
Expenses (including HP & secured debts). 727
Available for debt repayments........... 433
Monthly UNsecured debt repayments....... 110
Amount left after debt repayments....... 323

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,239
Net Assets.............................. -4,239

FinanciallyUnsavvy

Oh, and this is all failing to mention the £20,000 student loan I have.. but I, like many people I know, don't actually consider this to be "real" debt - I'm certainly not going to rush to pay it off ever. If they are happy taking £10 a month from me out of my wages that doesn't even cover the interest, then that's fine by me. It'll get wiped when I'm 60 anyways... ha!

gashbag

can you not get a second job to give you more money?

slowlyfading

What is the "other travel" listed? Also, do you go to the cinema every month? Maybe give that a miss for a bit - every little helps in terms of debt repayment.

What you really really need to do now, so that you can get an idea of what you spend on food and going out etc., is to keep a spending diary. Write down every little thing you spend every day, for as long as it takes for you to realise how much you are spending on those items. Then you can see where the shortfall is and how you can make that up. A lot of money gets wasted on food if you're not careful, all those little extras add up!

Just want to say well done for posting your SOA though, it's always a big step!

mr2jay

Well done for taking the plunge and filling in that SOA - it is quite scary to see what you have going in and out...

Right, first piece of advice. You need to set yourself an affordable budget for food and entertainment (including that odd cup of coffee). You have already highlighted you need to do it so no time like the present. Until you have a set figure for all of these things, you can't set aside money to clear the debts

Is it just you or is it a you +1,2,3,4? Makes a huge difference to the budget you need to allow yourself. For example, when I started I had a food budget of £80 a week set aside. I am now looking to reduce this to £60 and possibly further. Once I knew how much I had to spend out, I knew how much I had to clear debts.

The other thing I have done which is a huge help, is I have sat down and worked out a spending diary. I get paid weekly so I have put into my spreadsheet the minimum I get in each week and how I am going to spend it clearing off debts after everything else is paid for. It has surprised me just how quickly these things can snowball meaning your debt gets smaller faster and faster....

Hope this helps