Want to be rid of this debt!

rtho782

So, I've had a bit of a lightbulb moment and decided that with my new job should come repayment of debt.

Up until now I've been living month to month and spending every bit of spare cash, never missed a payment or been late on anything but often hit creditcards or payday loans by month end.

Here's an SOA. Not as bad as many people here I know:

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.................... 2

Monthly Income Details
Monthly income after tax................ 1627
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1627

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 112.5
Rent.................................... 365
Management charge (leasehold property).. 0
Council tax............................. 80
Electricity............................. 120
Gas..................................... 0
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 7
Mobile phone............................ 55
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 20
Petrol/diesel........................... 80
Road tax................................ 30
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 8
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 200
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1252.5


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4900
Other assets............................ 0
Total Assets............................ 4900


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 4612.5...(112.5)....0
Total secured & HP debts...... 4612.5....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................2300......83........24.9
loan...........................930.......55........26.8
loan...........................350.......53.2......25.9
overdraft......................2300......30........0
ccard..........................400.......5.........59.9
ccard..........................900.......10........0
Total unsecured debts..........7180......236.2.....-


Monthly Budget Summary
Total monthly income.................... 1,627
Expenses (including HP & secured debts). 1,252.5
Available for debt repayments........... 374.5
Monthly UNsecured debt repayments....... 236.2
Amount left after debt repayments....... 138.3

Personal Balance Sheet Summary
Total assets (things you own)........... 4,900
Total HP & Secured debt................. -4,612.5
Total Unsecured debt.................... -7,180
Net Assets.............................. -6,892.5


A few notes:

I have a car and a motorbike. The car cost £400 and is rarely used to be honest, it's a boring old 1.9TD, doesn't use much fuel, and is nice and reliable with 80k on the clock. It probably gets 200 miles a month if it's lucky!

The bike is on HP and owned from new, but is a 0% deal. Only had it since Nov 2011 so is currently in negative equity (just). I'd rather not sell this, especially as I don't think there is a desperate need. Replacing the bike with a cheaper bike would only result in some sort of interest bearing finance, and if I were using the car daily I'd want something newer.

Car/Bike Insurance is not listed as for both it is paid for by my annual bonus, I get £2k a year annual bonus and £500 a quarter quarterly bonus, before tax. This means that in annual bonus month (march) I also get a quarterly payment. Obviously bonus isn't a sure thing but nobody here has ever gotten less than 50% bonus, which would still be enough to pay for both.

I don't have sky etc, I use the internet for TV etc. Internet is free for life (long story) I just have to pay for line rental which is with Primus and £6.99 a month. I don't have a phone connected to it so never pay for calls.

Mobile phones are too high, I'm in contract on two, have 10 months left to run on the shorter one.

Smallest loan will have it's last payment in Dec 2012. I have listed my Vanquis card as 59.9% APR but clear it every month even if I re-spend, so don't pay this.

Halifax overdraft limit is 2900. I avoid going over 2500 if I possibly can so I pay £1 a day. This works out a lower APR than my loans so I don't plan to pay this off until my credit cards are done.

Electrcity is high, I'm paying off an arrears balance because my DD was set way too low for a year. It will drop to 65 in Dec.

Any advice/suggestions welcome!

I guess I'm mostly posting this to try to hold myself to paying it all off!

glasgowsaver2011

Sell your mobile phones (both of them).

Put the sim card of the one with the best package in a cheap PAYG style old school phone

tallyhoh

why not get rid of the car, even if insurance etc is paid out of bonus its still wasted money

rtho782

Yes, getting rid of the car is a distinct option. I only actually bought it about 3 months ago, for the two years prior to that I'd just had the bike.

Insurance is paid for the year and the tax/mot run out about a month before, so I'll likely keep it until then (as there will be no additional cost until then and I will gain a years NCD) and then scrap it or sell it cheap.

The only reason I bought the damn thing is that my GF had two kids, so the bike wasn't practical, but we've split up now anyway...

paulmapp8306

Sell the car - or the bike. both have pros and cons, but you only need one form of transport.

How did you end up with 2 contract phones !!!!!. Bad planning there lol. Get rid of one - sell it on incluyding the contract?

Anyway, things you need on your SOA:

1. TV Licence - £12/month. If you dont have one GET one. You need it for live internet streeming as well as standard TV.

2. Realistically, is £20/month engough on clothing? Its fine while trying to reduce debts I guess.

3. Is £200 a little high on entertainment? its not if you have it and are single - but if you want to clear debts you could reduce this a little.

4. Car/Bike Maintenance. You need something here. £40/month for the car/bike combined is reasonable. A set of tyres (yes I know your not using it much) would be £300+ alone. Doesnt hurt to build up a pot for the unexpected big repair bill either.

5. Id list your car/bike insurance. What happens if you loose the job, or the bonus gets cut (quite possible in these times). Budget for it in your SOA - and use your bonus to pay off debts in bulk.

6. Birthdays/Christmas. Seriously? you dont buy anyting for anyone? not even a card? Put a little something here - its the little ammounts that add and mess your budgeting.

7. Emergency fund. You need a little here. Anything can happen at anytime. £20-£30 a month here heklps offset those unseens. As a bonus if you DONT use it - it can build to a nice pot for something.


OK - Debts.

You have - from your SOA £138/month. I susspect once you put every monthly commitment down - and budget for things you omitting this could be £0 - which is why you have the debts? if you really do have money left:

1. Clear the £400 CC ASAP - make the largest payments you can (pay the4 minimum to the others) as its costing you heaps in interest. ** Note you pay this every month. DONT SPEND ANY MORE ON THIS CARD !!!!

2. then aim to clear the loans. you can make early settlements - so its worth putting your spare money in a savingsa ccount until you have enough to pay them off. The £350 one should take long. Clearing that and your expensive CC frees up £58/month and saves in interest.

rtho782

Thanks Paul,

1. I don't stream live TV! Just watch pre-recorded shows, to be honest even this is rare, I mostly play games if I'm honest!

2. Clothing I don't even buy every month, it's more that I'll spend a couple of hundred quid, but once a year if that when I fancy a change.

3. Yeah, £200 is a bit of a guess. My plan for this month is to keep reciepts and itemise everything so I get a clearer picture.

4. The car is unlikely to be kept when it's MOT/Tax/Insurance runs out. Tyres were new for the MOT all round just before I bought it. I do tend to go through bike tyres as they aren't cheap, a rear lasts about 4000 miles and I do 1000 a month easily on it. I'll go with £40 here as per your suggestion.

5. Will do. I'm expecting bike insurance to be about £400 next year, this will come in November. I'm reluctant to start saving for it now however as I'd rather pay down debts, and put the insurance on a credit card when due, at least this way the £400 is "working" for me in the meantime.

6. Seriously... I don't have any family that I have contact with, I bought a present for the GF on her birthday in April, but I'm now single again.... Cats don't need presents!!

7. Surely I'm better off paying off debts than saving, if an emergency comes up I do have a decent amount of availible money on the credit cards/overdraft?

My SOA looks a little unbalanced as until 2 months ago I was earning £300 less a month. I do have free money in it now, hence deciding that rather than increasing spending I'm going to clear debts. I've set a standing order to go from my main current account to my Barclays one (which isn't easy to get access to as I never know where the stupid pinsentry thing is, so puts the money out of all-too-easy reach) on my new payday, meaning I don't see the payrise directly in my bank account and have to live on my old wages.

1. Yes, the Vanquis card really needs to be cut in two. Right now I avoid the APR by clearing and respending every month, again I've felt that I'm better off doing this and carrying debt that is effectively 0% and paying down the loans.

2. Linked to the above, the small loan was £850 last month but I've just paid £500 off it yesterday, which could have cleared the VQ card, but this saves me more in interest. Next month I will clear this loan, then the next priority will be the next smallest loan (which is actually a credit union one so no penalty fees etc.)

paulmapp8306

Valid points all of them.

Personally I would budget for the insurance. Use what you budget to overpay debts, then when insurance is due pay monthly (rather than a one off payment - unless you have it at the time). that way your already budgeting for it.

Using the car and paying it off monthly isnt an iiue - UNTIL something happens and you cant pay it off. That is the only reason why I suggest not using it. You cant use it to pay off other debts - because then you dont have the available funds. Paying it off comes from you money - not other debts. Id still pay it off next month then not use it - a month later you have more/month to pay off everything else.

Paying off debts v saving for an emergency. Two ways of looking at his. YES paying debts v saving is better - provided you have access to funds and a better interest rate than the debts IF you get an emergency. Personally Id build up a little then leave it for now. it doesnt need to be more than £20-£30/month - if you do that until Christmas youll have £180 or so "just in case" without relying on more credit. Ultuimately though - that choice is yours to make.

Finally - if you really dont have anyone - Treat the Cats

paulmapp8306

Sorry - on the Vanquis CC. Your SOA shows paymentws of £5, a ballance of £400 and available cash of £138/month. It seems your currently living on around £260 worth of credit on this card. OK your paying it off every month so not getting interest BUT your remaining income doesnt cover your outgoings without using it. THAT is why I suggest you clear it. Once its cleared your not relying in it.