Lots and Lots of Debt After Uni!!

loubie_lou

Hello

I took out a loan after university to repay my student overdraft (£3000 - barclays bank, ridiculous apr). Like a fool I didn't close the account and have now ran it back up again!
I would dearly love to get rid of this overdraft, but I am unable to take another loan out (because i have too much credit apparently - 8500 personal loan 7.9%, 1000 abbey overdraft - interest free, 350 credit card - 18.9%, phone contract).
I've had this account at -£3000 for about two years now since i left uni, when will they ask for it back? They have not so far so i'm worried they will demand it back in one go!!
I earn 12300 pa and after all my bills go out i only have about £200 disposable income, so paying it back like i already have a loan is not really that feasable!
Any ideas how i should tackle this and the other debts?

Thanks
Loubie-Lou

grumbler

If you do not get enough help here and the Board Guide does not move your post I'd advise you to repeat your post on the 'Debt-Free Wannabe' board...

debtbuster2K5

Hi,

Just so that I understand, You currently have £3000 overdraft with Barclays, £1000 overdraft with Abbey, £8,500 Personal Loan, and £350 on a credit Card. - 12,850 in total.

Could you give some information on your regular monthly outgoings, as generally the best way of tackling your debts are to reduce your outgoings so that you can throw more money per month at the outstanding debt. If you post them to the board we can suggest ways of lowering what you currently spend.

You may also be able to apply for a 0% balance transfer card such as Egg or MBNA that you could transfer the 3k overdraft to.

Unfortunately overdrafts are repayable on demand with most banks, so you are doing the right thing thinking about what your next steps are.

Hope this is helpful
DB2K5

loubie_lou

I earn about £840 per month after tax, i pay £202 for my egg loan, £238 for rent, £35 mobile phone bill, whatever i can afford on my credit card (about £20) £20 for an insurance policy, maybe about £30 on utility bills and about £50 on petrol, not to mention the other little supprise bills, such as car repairs etc, but that was is usually what i pay out every month

N9eav

What's the 8500 personal loan tied up in? There is no real way of magically getting rid of debt. Perhaps a cheaper car? A second job?

debtbuster2K5

Right,
Firstly you need to prepare a very accurate budget for yourself. Use the fantastic tools on this site to help you. http://www.moneysavingexpert.com/budgeting

Work out the cost of the "surprise" bills such as Car repairs because they really are not a surprise, it is part of the territory of running a car. Make sure you include everything like Car Tax etc but break it down monthly and put it aside into a seperate account.

Only then will you get a real picture of what money you have left for your debts.
Based on the figures you have posted you should have £245 per month surplus income, however you havent mentioned food.

Another suggestion would be to use a spending diary to track exactly what you spend because it seems that you do not really know where your money goes to each month.

Post how you get on and we can continue to help
DB2K5

ZoeMarie_2

Hi Loubie-Lou

I can't offer you much more help than whats already been said, but I can empathise with how you are feeling. 18 months ago I was in a very similar situation to you. Earning about £14k, I had personal loans and credit card and overdraft debt to the tune of over £12k. After uni I took a job which didn't pay much, commuted 80 miles a day (over the severn bridge) and managed to sink further and further into debt. The final straw was my car blowing up (well, the tyre, because the suspension was broken). I realised that it would cost more to repair than it was now worth, still owed £1700 on the car loan, and had to pull my head out of the sand and sort myself out.

I moved home, which possibly isn't an option for you, and took a lot of pride swallowing. In the end I got a new job after 9 months, which meant I could afford to move out again. But it gave me the chance to sort out my finances, get the right loans and start tarting my credit card debt around 0% cards, and save enough money to start paying off, rather than just maintaining debt. I am now down to about £7000, which I will pay off in about 2 1/2 years, saving c.£1200 in interest and 2 years of repayments.

It is really easy to fall into a cycle of 'I'm in so much debt now, a little bit more won't hurt', but once you start seeing the total fall, it feels great. You need to monitor your money very closely, I use Microsoft money and input every bank transaction - its a psychological thing, you have to remember and explain to yourself where the money went. Better still, get someone else to do it. I know do this for my boyfriend too, and he cringes every time I do it, not because I tell him off, but he has to justify what he's spent the money on. Have managed to stop him buying cds for a whole 2 months now!

You've made the right step coming on here, just follow the advice and you will get there.

waterbaby

I would like to highlight what debtbuster said about having an account specifically for your car. I have been doing this for a couple of years and it makes life so much easier.

I add up insurance, tax, servicing and MOT for the next year, split it by 12 and pay that amount to a separate instant access (high interest) account.

It can only be an estimate of course, but estimate honestly. Looking at how much things actually cost you last year is a good place to start.

It's great to be able to pay for your service without living off bread and water for the next three months. And it's also good because you can pay your insurance in one lump sum, therefore avoiding the interest that you get charged with pay monthly.

It's not guaranteed to always cover the bills, but it will take a sting out of them if they do turn out big. I budget £200 per service, but in December it was £433. It was certainly easier to find £233 than £433 (tho I did have to borrow from my mum).