On the road out of Debt Town?

LightbulbFlashing

Hi all,

I'm new to the forum, though I have dropped in and out of the forums before and bit of a fan of Martin Lewis when he crops up now and again on the telly.

I've just come on here to firstly gauge opinion on whether what I am doing is right, wrong or ok, and secondly to gain some extra advice and info from you guys - about getting myself out of debt.

I think it's best if I give my circumstances first, before explaining what I am doing/want to do.

I am 30 in a good paying job (around 30K a year), and it's stable. I am in a relationship but my g/f has own place, we don't live together but have started to discuss it, no children. I live in the south west for what that matters. I also have an ISA that I now pay £40 a month to (to save for Xmas etc) and I have a 10 year regular savings plan through work which comes out before I get my wages. I have one of the better public sector pensions - so that's not an issue. A few years ago, I saved enough up for a deposit and bought a house for a good amount, though I did have to skin myself like a lot of people do to get on the property ladder, which for me was a must. I paid a big mortgage at first, but this was reduced at the end of my fixed term and sits in in the 400s. I built up an overdraft however, and up until recently racked up a hefty £3k on it, which I would sometimes go over, and then I got looped into a credit card and spent a lot on there, owing nearly a grand. I do earn more than what I spend (now).

I left it and ignored it and it got worse, to the point that I would even have an unplanned overdraft on my o/d. All my overtime got swallowed up and lost in the overdraft mire, and appeared to make no difference.

Anyway, I bit the bullet and decided to face it and get it sorted.

I took out a personal loan from a reputable High Street bank to cover what I owe and have structured repayments over 2.5 years. I have therefore 'paid' off my credit card and overdraft, but of course still have the loan to pay off.

I did this as:

I no longer pay interest on my O/D and Credit Card (but still do of course of on my loan)

I now know what's going in and out.

I've started budgeting.

I'm back (KIND OF) in the black.

And figured I owe that amount anyway so I can put all my payments together and know when it will be paid off.

I've started to read more about money and finance and visit this site everyday!


More so -

I have cut back on what I can, and am budgeting better, checking my account everyday.

I have also set up an unofficial extra repayment scheme. I get overtime through my job, so what ever I get as overtime I will take 50% from it and pay it to towards the loan. I know it won't reduce the amount I pay each month, but surely it will reduce the amount of time I take to pay it off?

What I am asking is, and I appreciate I have already committed myself to some things:

Have I messed up big time with what I am doing?

Can you offer anything additional I can do?

Has anyone done anything similar, and if so, what was the result.

I still intend to save a little, to pay for things like Xmas/emergencies etc, is this ok or worth being put towards the loan?

I have set up my objective to be debt free in 2 1/2 years.

Thanks all!

orcocan

hi there,
sounds like you're on the right track, however you might want to draft (and maybe post) your SOA so that we can see a fuller picture of your situation

the key question whenever someone consolidates their debt is: have you cancelled your credit cards and overdraft? Are you comfortable that you've addressed the key underlying issue (i.e. your overspending, not the credit cards/overdraft) and that you can stick to your budget in future?

best of luck

LightbulbFlashing

Thanks, I take it SOA means Statement of Affairs/Accounts? I've used the budget on this website to give an idea (I've only included what is relevant). I have also not given myself the benefit of the doubt, and have rounded everything up and been a little bit harsher on myself rather than lenient (so if it could be a little lower, I don't always spend £15 on the garden etc)) to give an idea. It does seem about right, I do seem to earn more than I spend, I just kept losing what extra I had into thin air, as I until now never budgeted. I've love to save more, please have a look. My wages are after tax naturally, and my pension/savings plan comes out before I get it. Some of the money I spend goes to saving.


Mobile Phone(s) £38.00 (orange)
TV Licence £ 12.12
Home Phone £ 42.00 (BT)
Cleaning Products/Cleaner £5.00
Garden Maintenance £ 15.00
Household Maintenance £ 15.00
Electricity + Gas £66 (NPower)
Water £22
Council Tax £79.00
Bank Account Fee £25.00
Home Insurance £30.98
Mortgage/Rent £476.00
Mortgage Life Insurance £27.07
Life Insurance £ 35.41
Food and Household Shopping £85
Drinks for Home £ 15.00


Petrol/Diesel £ 60.00
Car Tax £14.75
Car Insurance £49.00


Personal Loan Repayments £169

Mini Cash ISAs £40.00
Regular Saving £20.00

Cinema/Theatre Trips £10.00
Shopping for Fun £30.00

Drinking Out £30.00
Eating Out £60.00
Haircuts £10.00
New Clothes £20.00

Birthdays £8.33
Summer Holiday£12.50
Christmas £12.50

Coffees/Sandwiches/Snacks £10.00
Newspapers & Magazines £2.00

Monthly: £1,600.00 Yearly: £19,200.00
Monthly £1,475.19 Yearly: £17,702.32

Your monthly underspend is £125.

[Deleted User]

LightbulbFlashing wrote: »

Thanks, I take it SOA means Statement of Affairs/Accounts? I've used the budget on this website to give an idea (I've only included what is relevant). I have also not given myself the benefit of the doubt, and have rounded everything up and been a little bit harsher on myself rather than lenient (so if it could be a little lower, I don't always spend £15 on the garden etc)) to give an idea. It does seem about right, I do seem to earn more than I spend, I just kept losing what extra I had into thin air, as I until now never budgeted. I've love to save more, please have a look. My wages are after tax naturally, and my pension/savings plan comes out before I get it. Some of the money I spend goes to saving.


Mobile Phone(s) £38.00 (orange)way too much can u swap to payg?
TV Licence £ 12.12
Home Phone £ 42.00 (BT)also high,have you tried option 3 for calls?
Cleaning Products/Cleaner £5.00
Garden Maintenance £ 15.00
Household Maintenance £ 15.00
Electricity + Gas £66 (NPower)
Water £22
Council Tax £79.00
Bank Account Fee £25.00is this essential?
Home Insurance £30.98 again shop around
Mortgage/Rent £476.00
Mortgage Life Insurance £27.07
Life Insurance £ 35.41 is this the best deal?
Food and Household Shopping £85
Drinks for Home £ 15.00


Petrol/Diesel £ 60.00
Car Tax £14.75
Car Insurance £49.00


Personal Loan Repayments £169

Mini Cash ISAs £40.00
Regular Saving £20.00

Cinema/Theatre Trips £10.00
Shopping for Fun £30.00

Drinking Out £30.00
Eating Out £60.00
Haircuts £10.00
New Clothes £20.00

Birthdays £8.33
Summer Holiday£12.50
Christmas £12.50

Coffees/Sandwiches/Snacks £10.00
Newspapers & Magazines £2.00

Monthly: £1,600.00 Yearly: £19,200.00
Monthly £1,475.19 Yearly: £17,702.32

Your monthly underspend is £125.

just a few comments

chevalier

My comments are in blue

LightbulbFlashing wrote: »

Mobile Phone(s) £38.00 (orange) Can you downgrade your contract or go PAYG?
TV Licence £ 12.12
Home Phone £ 42.00 (BT) Is this broadband as well? If it ins't then this is very high. Even if it does include broadband it is pretty high.
Cleaning Products/Cleaner £5.00 Start working through the cleaning products you have and don't buy any more. Have a look on the moneysaving oldstyle board for alternatives.
Garden Maintenance £ 15.00
Household Maintenance £ 15.00 Does any of this NEED doing? If not lay off for a bit and save this.
Electricity + Gas £66 (NPower) Is this just for you? If so then you could probably shave a bit off the heating part here, by turning the thermostat down and wearing jumpers!
Water £22
Council Tax £79.00 Am assuming this includes the single persons discount? You could ask to spread it over 12 months if you think it will help you budget better.
Bank Account Fee £25.00 What do you get for this? Have you used the services in the past year? If not then down grade to a none fee paying account.
Home Insurance £30.98 Is this building and contents? Still pretty high. Check round the comparison websites to see if you can get a cheaper deal. If you can see if you can get cash back via sites like Quidco, or Topcashback.
Mortgage/Rent £476.00
Mortgage Life Insurance £27.07 Is this the cheapest you can get?
Life Insurance £ 35.41 Why do you need this? If you have no dependants who would get the payout?
Food and Household Shopping £85 Not bad, but then see below.
Drinks for Home £ 15.00


Petrol/Diesel £ 60.00
Car Tax £14.75
Car Insurance £49.00 Pretty high can you get it lower? Also what about putting money away for car servicing, maintenance and MOT?


Personal Loan Repayments £169 What APR is this? You mentioned about overpaying this, have you checked that you can?

Mini Cash ISAs £40.00
Regular Saving £20.00

Cinema/Theatre Trips £10.00
Shopping for Fun £30.00 Really do you NEED to do this. Really your loan is paying for this spending.

Drinking Out £30.00
Eating Out £60.00 And here is the rest of the grocery budget! This is quite high, can you invite girlfriend around for meals and save this. Or use 2 for 1 offers to shave the cost down?
Haircuts £10.00 Stretch this a bit so you go longer between cuts.
New Clothes £20.00 Do you NEED new clothes every month. Try making do with what you have for now.

Birthdays £8.33
Summer Holiday£12.50
Christmas £12.50 You have the ISA I thought to pay for this?

Coffees/Sandwiches/Snacks £10.00 Take pack ups to work and save this?
Newspapers & Magazines £2.00

Monthly: £1,600.00 Yearly: £19,200.00
Monthly £1,475.19 Yearly: £17,702.32

Your monthly underspend is £125.

You seem to have 125 left over each month, but do you really? If not then start a spending diary to see where this money is going.

You also haven't budgetted anything for prescriptions, dental, optical?

good luck
chev

LightbulbFlashing

Guys, thank you very much for the advice so far.

Just to clarify some points.

The phone includes internet.

I have been exceptionally brutal on myself, the cleanign products etc is probably about right, but I've bumped into to £5. SO yeah, I do technically end on a surplus.

I think that I was just spending the surplus on crap. I went through my spending on my Credit Card over the last year, this in turn built that up and also the interest. I was then of course spending £45 a month (well above the minimum payment) paying this off, but not really making much in roads.

I've gone over the last month of my account, and looked at all the surplus stuff I did not need to spend at all, and was simply surplus cash being spent. In this I have included impulse trips to the supermarket (so not my weekly main shop), buying plants for the garden, big nights out on the town or impulse meals out when I had food in the fridge etc,

I've pinpointed that I spent at least an additional £259.54 on pretty much nothing!

In July I spend £223.55 on pretty much nothing.

In June £149.75.

In total, out of three months alone, I have estimated that I have spent £632.84 on pretty much worthless stuff! That's approximately over 15% of what I owe!

I have not even included what I was paying monthly on:

Overdraft usage fee - £5
Unplanned overdraft usage fees - £15
Overdraft interest - (on average) £20.

So that's another approx. £40 spent frittered away too!

I've cut all that out now though, so I'm hoping to see some results!

What a fool I have been!