Debt/Money Management Advice

Duk

Hi All.

Firstly I have decided to take the step to become debt free ASAP and try and enjoy more of my life. But I would like some advice. I am not currently in Debt Crisis.

I am not very good when it comes to money... (Not at the moment anyway) I need to stop these habits. To me, if money is available (Overdraft) I WILL use it.

I will post a statement of finances later (Do not currently have time)

But I am wondering if anyone could help me with the following questions.

I am taking home £2370 PCM. I currently have the following debts that I want to pay off.

Wonga - £1420
Overdraft, Natwest - £3640
Santander Personal Loan - £560
Pounds2Pocket Loan - £480
Motonovo HP - £7780

I am not too bothered about the HP, As this is manageable (All my debts are really, This is just about comfort.

So I am wondering the following things.

1) Is it worth me opening a New BASIC bank account without an overdraft facility and getting my money paid in there and come to an agreement with Natwest about my Overdraft?

2) I am thinking about asking Wonga about a Repayment agreement so it doesn't take up over 50% of my wage this month.

I know some of these habits are ridiculous (What Am I thinking right?!) But I really want to get out of these habits now. Realising how bad its got is the first step I guess.

Thanks for any advice.

YoYoY

Duk wrote: »

Hi All.

Firstly I have decided to take the step to become debt free ASAP and try and enjoy more of my life. But I would like some advice. I am not currently in Debt Crisis.

I am not very good when it comes to money... (Not at the moment anyway) I need to stop these habits. To me, if money is available (Overdraft) I WILL use it.

I will post a statement of finances later (Do not currently have time)

But I am wondering if anyone could help me with the following questions.

I am taking home £2370 PCM. I currently have the following debts that I want to pay off.

Wonga - £1420
Overdraft, Natwest - £3640
Santander Personal Loan - £560
Pounds2Pocket Loan - £480
Motonovo HP - £7780

I am not too bothered about the HP, As this is manageable (All my debts are really, This is just about comfort.

So I am wondering the following things.

1) Is it worth me opening a New BASIC bank account without an overdraft facility and getting my money paid in there and come to an agreement with Natwest about my Overdraft?

2) I am thinking about asking Wonga about a Repayment agreement so it doesn't take up over 50% of my wage this month.

I know some of these habits are ridiculous (What Am I thinking right?!) But I really want to get out of these habits now. Realising how bad its got is the first step I guess.

Thanks for any advice.

1. Overdrafts are repayable on demand. If you stop paying in your usual income into your NatWest current account, they may withdraw your OD facility.

2. Wonga? If the current borrowings take up 50% of your monthly income, then I hate to think how much it'll cost you with Wonga and their representative 4214% APR (yes that's not a mistake, representative APR 4214% !!!)

bargainbetty

If you can afford to let Wonga take the money, then let them take it. If you enter a debt repayment programme with them, they can put a note on your credit file, and pay day loans look bad enough when paid back, let alone not properly paid back.

Honestly, I think you do have a financial crisis. You say that if there is money you will spend it - if you are taking out payday loans to do this, or worse still, to cover your bills when the other money is gone, then you do have a reasonable problem.

Once you have completed your statement of affairs (include everything you should pay this month) you will have a better picture of things. If you can clear Wonga and the other payday loans using your salary without negotiating, you can sort them, then use the extra money to bring down your overdraft each month - just call the bank and have them reduce it. They can and will do this, although they tend to whinge a bit.

You might still consider having the overdraft-free account set up. When you get paid each month, transfer your disposable income into it. Leave all your bill money in the other one, and destroy the card for it. What you have to spend is yours, but your bills are paid. Learn to live within your means, and please stop taking out PDL - they will wreck your credit rating.

The most important thing is to learn your budgets and start living within them. I consolidated loans twice and paid thousands in interest on loans and cards before I woke up! I'm debt-free now, and the feeling is wonderful!

Best of luck

nfollows1982

I agree with the above regarding Wonga, but I will say that they are very accomdating to setting up a payment plan and they will freeze all interest and charges, you will probably have to pay a lump sum and make an offer on the balance.

They won't lend to you again though, so it may be a positive thing to have that facility removed.

Duk

Hi All, Thank you for the advice.

Here is my SOA, Maybe it doesn't look so good.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2330
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2330

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 200
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 36
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 20
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 90
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 911


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 7110
Other assets............................ 0
Total Assets............................ 7110


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 7780.....(200)......0
Total secured & HP debts...... 7780......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Santander Loan.................560.......160.......0
Pounds2Pocket Loan.............480.......110.......0
Wonga..........................1420......1420......0
Natwest Overdraft..............3640......0.........0
Total unsecured debts..........6100......1690......-


Monthly Budget Summary
Total monthly income.................... 2,330
Expenses (including HP & secured debts). 911
Available for debt repayments........... 1,419
Monthly UNsecured debt repayments....... 1,690
Amount short for making debt repayments. -271

Personal Balance Sheet Summary
Total assets (things you own)........... 7,110
Total HP & Secured debt................. -7,780
Total Unsecured debt.................... -6,100
Net Assets.............................. -6,770

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Tixy

There seem to be a lot of costs missing from your soa, do you live at home with your parents still? and if so is the £200 rent board and does it cover all your food etc?
If you own a car then you really need to budget for tax and maintenance costs such as MOTs, new tyres etc.

What is the overdraft limit on your current account? As others have said you if you can get the wonga loan cleared - even if that means no socialising/entertainment this month or means your overdraft increase (as long as its within limit). Maybe even ask your parents if you can pay no board this month, and 2 lots next month. Anything you can do to pay it off really.
As soon as Wonga is repaid your will be in a manageable situation and able to repay the other payday loan next month.

After that it looks like you should be able to afford to start to put some emergency savings aside so you never needs to resort to payday loans again, and then you can start making a dent in your overdraft debt.

Duk

Tixy wrote: »

There seem to be a lot of costs missing from your soa, do you live at home with your parents still? and if so is the £200 rent board and does it cover all your food etc?
If you own a car then you really need to budget for tax and maintenance costs such as MOTs, new tyres etc.

What is the overdraft limit on your current account? As others have said you if you can get the wonga loan cleared - even if that means no socialising/entertainment this month or means your overdraft increase (as long as its within limit). Maybe even ask your parents if you can pay no board this month, and 2 lots next month. Anything you can do to pay it off really.
As soon as Wonga is repaid your will be in a manageable situation and able to repay the other payday loan next month.

After that it looks like you should be able to afford to start to put some emergency savings aside so you never needs to resort to payday loans again, and then you can start making a dent in your overdraft debt.

Living with my Partners Parents, I have asked, But they are struggling themselves as her dad has just lost his job. So my £200 rent is really needed. This pays for food etc (Just to add, My Partner is at Uni and usually depends on me)

I bought my car in March, It has tax until March 2013, MOT/Service I have 2 years free with the dealer (Ford)

Overdraft is at its Max, Though that is applied for online... Do you think its worth calling the Bank to see if I can get an increase?

Thanks for the help

kerri_gt

Duk wrote: »

Hi All, Thank you for the advice.

Here is my SOA, Maybe it doesn't look so good.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2330
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2330

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 200
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 36 are you on a fixed contract? Feel this could be reduced to a cheaper contract
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 20 this is high, could you look at bundling with the landline / sky or cable if your partners parents have this? even standalone you should be able to get this cheaper
Groceries etc. ......................... 0 nothing, not even any toiletries?
Clothing................................ 0 never buy any clothes at all?
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 90
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 none ever?
Haircuts................................ 0 never?
Entertainment........................... 150 is this truly accurate
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 911


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 7110
Other assets............................ 0
Total Assets............................ 7110


Secured & HP Debts you need to put the APRS in to get a true reflection of your debts and what should be paid first
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 7780.....(200)......0
Total secured & HP debts...... 7780......-.........-

Unsecured Debts - you need to put the APRS in to get a true reflection of your debts and what should be paid first
Description....................Debt......Monthly...APR
Santander Loan.................560.......160.......0
Pounds2Pocket Loan.............480.......110.......0
Wonga..........................1420......1420......0
Natwest Overdraft..............3640......0.........0
Total unsecured debts..........6100......1690......-


Monthly Budget Summary
Total monthly income.................... 2,330
Expenses (including HP & secured debts). 911
Available for debt repayments........... 1,419
Monthly UNsecured debt repayments....... 1,690
Amount short for making debt repayments. -271

Personal Balance Sheet Summary
Total assets (things you own)........... 7,110
Total HP & Secured debt................. -7,780
Total Unsecured debt.................... -6,100
Net Assets.............................. -6,770

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Just looking at your SOA, there seem to be some glaring omissions, even if you do live with your partners parents and most costs of living are included, which btw, you are in a very fortunate position - overall your rent is next to nothing vs what you would pay even to share a room in a house. You say your debts are manageable but you do need to get those sorted asap while you're in such a fortunate position, otherwise you may never be in a position to move out.

Also i would suggest keeping a spending diary, as said, there seem to be a lot of 0's on your SOA and I highly suspect you spend more than you think.

Once you get a true picture of your income / outgoings can you then look at your options.

Duk

Thanks Kerri,

I guess you are right with the extra spending, I do however Cut my own hair.

As for clothes I may buy 1 pair of jeans and a top in 3 months, I wear very in-expensive clothing, Thats why I have not put it down. Over the year prob less that £80 - £100.

I guess I spend £10 - £20 a month on Toiletries, Especially for my partner.

I have put in internet services with inclusion of Hosting needed for my partners Uni work project. Hosting costs £5 a month. This is the cheapest I could find for what I needed.

Mobile Phone, Fixed Contract. This will be unable to change. Once this wonga loan is sorted I can afford this. So I dont want to go changing stuff with this.

The figures I put in are settlement figures currently. I eventually want to get my HP loan onto another provider if my Credit Improves. Due to it being such a high rate.

I have spoken to Wonga and they have said that they can Span this over 2 months. take 700 this month and 700 next, As I have a high trust rating with them.

I asked if my credit rating would have any DMP/IVA statements and they said. No, it wouldn't cause any adverse effects to my credit rating.

bargainbetty

Get it in writing, and accept the deal - if they are prepared to promise not to put anything on your credit file, then go for it!

Tixy

Duk - this really is not a criticism/judement but just something for you to think about to make sure you are being realistic.

You say your spending in many areas is very low, your statement of affairs shows that without payday loans you should have £1200 surplus a month for these little spends on the items not listed such as the clothes toiletries etc.

If you really had that surplus and very little spending - why have you ended up with no savings and being over £6k in unsecured debt, and a good chunk of that on payday loans?

It does look as though you are spending not only all the £1200 surplus each month but a good chunk more on top of that.

Of course there may be one big thing you can attribute this level of debt to, and you don't need to justify it on here - but if not then you maybe need a rethink of what you are really spending.