19 year old, in 5 grand of debt - help!

theboys

Hi all I was directed here by a friend after I counted up my debts for the first time and panicked! I am in almost £5000 worth of debt all of which has only been accumulated since the end of March this year. I have an overdraft, 3 credit cards, 5 catalogues and 3 payday loans. It sounds silly and I am humiliated to admit it but I really did not realise they had added up to this amount. I have been nieve and borrowed money on behalf of other people which I have never seen again. At the moment it is not unmanagable and I can still make all the minimum payments without an issue but I do not want to live my life like this. My debts look like this:

O/D Lloyds TSB bank - £250.
Credit Card Lloyds TSB bank - £975
Lending Stream payday loan - £280 - PAID 21/12/2012
Wage Day Advance payday loan - £380
Peachy payday loan - £200
Aqua credit card - £200
Vanquis credit card - £220
Littlewoods - £935
Very - £531
KandCo - £488
Woolworths - £96
Next - £222

I recently paid the Lending Stream payday loan off. I was planning to pay the Wage Day Advance one off at the end of January at the latest. I owe to £100 payments to Peachy which will clear it by the beginning of February. After that I was planning to plough any extra cash into my Aqua and Vanquis credit cards to clear them off. Then attempt to pay a decent some a month to my Lloyds TSB credit card - say between £100 and £200 - and try and pay more than the minimum payment to my catalogues. I do not intend to ever take out another pay day loan, I also intend to cancel my Vanquis and Aqua cards when I clear them and close down 3 catalogue accounts. That would only leave me with my O/D, 2 catalogue accounts (probably Next and Very) and my Lloyds TSB credit card for emergencies. Do you think this is the best way to go about it?

Just for background information I maxed out my credit cards paying for driving lessons and my two driving tests that I took before passing. The payday loans were needed after I lent others money and they never returned it which left me completely skint. My catalogues were for my sons pram, car seat, cot etc and the Next one was mostly clothes for him - over all though they were just stupidity where I bought stuff I probably didn't need and what I did need I would have got cheaper in the shops.

dancingfairy

5,000 is a lot but if you'd left it it could be 20k, 25k...etc etc. It's good you are getting a grip of it now.
The only things I might suggest is seeing if you can extend your overdraft or borrow from a credit union just to ensure you get shot of the payday loans as these are the things that willcripple you. Borrowing money to repay more debt is not usually a good thing but you need to get rid of those payday loans. Apart from that your plan sounds good.
Can you do any overtime at work?
Anything you can sell to get the debts down faster?
Best of Luck
df

theboys

Thanks alot for the reply Dancing Fairy. It is just scary as I really did not realise just how much it had all added up to! I have always said I will only get myself into debt for a car or a house so I could kick myself. I don't think I can extend my overdraft as my credit score is terrible due to having too many searches on my account and opening too many accounts in a short space of time. Something i'm hoping will rectify itself by paying it all off! I am hoping to just pay the other two pay day loans off without taking out more debt if I can but if I can't I will have a look at going to a credit union. I have started doing overtime in work (double time thankfully!) to help pay it off. I am working boxing day and new years day at a good hourly rate and have cancelled a break away in January to try and get the pay day loans cleared. After Christmas I am going to have a good look through all my sons toys aswell as he has just had his first birthday and got loads there and will get more for Christmas so I think I will eBay some of the older things he doesn't play with anymore. Thanks for your advice!

opinions4u

Okay, while the payments remain "manageable" the approach is quite straight forward.

1. Maintain the minimum payments plus £1 on all the commitments.

2. Identify the rate on each debt and throw any spare cash at the most expensive one until it's cleared. Then move on to the next most expensive debt. The PDLs are likely to be the ones to get rid of fastest.

3. Stop spending on non-essentials until you've paid off the last penny. A statement of affairs (SOA) can help you identify where your money goes. Www.makesenseofcards.co.uk

4. No new cards, catalogues or loans.

There are a couple of other issues to look at as well. First is to stop being so damned nice to other people. Lending them money seems to be a good way to lose "friends".

Second one is to try and understand why you've overspent. Spoiling a child? Trying to have everything you had before as well as the expense of a child? An unhappiness in your life?

If you can understand and deal with the cause you may find it easier to get out of debt. Please don't assume a consolidation loan will solve everything.

Good luck.

DCFC79

Can you sell any of the items you bought to recoup some of the money ?

Id complete and SOA and post it up on here, you have done the right thing whilst its a low amount, well its low compared to say £10k or 15/20k. Its doable if you have the right head on an are committed to paying the debts off. As O4U says you need to understand why you overspent, looks like most of it was stuff not needed.

theboys

Thanks for the replies! I definately do not intend to buy anything else at all from the catalogues. I think the reason it has got to this point is the fact I bought alot of Christmas presents for other people through the catalogues - I just kept thinking I would buy it now and then pay it off before Christmas but I just kept thinking 'next month'. I also did overly spoil my son for his first birthday and Christmas. I completely underestimated what other people would get him. I got him tonnes of clothes, books and toys when in reality I could have just got him a few things and that would have been plenty. I think I have to stop buying other people so much. I have bought everyone tonnes of great things for Christmas when I personally deep down think Christmas is about who you spend it with not about the presents. I will definately start on the £1 extra thing from my next payments. I calculated again tonight what I owe taking into account the payments I have made from this months wage and it is £4495. It makes me feel a bit better to see it going down already. How do I go about doing a SOA? Thanks again.

Angelina1

Very good advise from opinions4u. Pay off the highest interest rate first and then move on to the next highest one.

When it comes to friends/family asking for money. I always say something like....oh, I really wish I could help, but unfortunatly, I am stoney broke. Just keep saying something like that and they will soon stop asking you.

Sagz_2

Congratulations on your light bulb moment! OK it's a big debt, but it's smaller now than if you'd have stopped spending tomorrow, and lots smaller than if you had stopped spending next month.

Get your SOA done so you can see what you are spending and where you can make savings so that you can throw all you can at your debt and get rid of it ASAP.
SOA Calculator

theboys

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1000
Partners monthly income after tax....... 0
Benefits................................ 150
Other income............................ 0
Total monthly income.................... 1150

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 55
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 230
Clothing................................ 0
Petrol/diesel........................... 40
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 74
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
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........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 424


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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds TSB CC..................975.......30........0
WDA PDL........................380.......85........0
Peachy PDL.....................200.......100.......0
Bank account fee/OD ...........0.........16........0
Next...........................222.......25........0
Woolworths.....................96........7.........0
K and Co.......................488.......25........0
Very...........................531.......10........0
Littlewoods....................935.......100.......0
Aqua...........................200.......25........0
Vanquis........................220.......16........0
Total unsecured debts..........4247......439.......-


Monthly Budget Summary
Total monthly income.................... 1,150
Expenses (including HP & secured debts). 424
Available for debt repayments........... 726
Monthly UNsecured debt repayments....... 439
Amount left after debt repayments....... 287

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,247
Net Assets.............................. -4,247

Created using the SOA calculator .
Reproduced on Moneysavingexpert with permission, using other browser.[/font


I have put what my basic wage is. I do overtime at double time or more regularly and I get bonus depending on my performance which is paid on a monthly basis. For example this month I earned £1475 after tax due to a good bonus and overtime. I forgot to add on that I pay £20 a week to Brighthouse for my laptop and my mums tumble dryer. Plus £35 every other month for dog food. I didn't put the rates as i'm not entirely sure of them.

theboys

I also meant to say that I have not included my partners income as he is a nightmare for giving me any form of money and does not contribute towards our son financially or food shopping etc. We currently live with his parents and I do not pay rent etc here. The £40 for petrol is the max in a month - if we have to go anywhere far and my mum takes us I will always give her petrol money. The other travel is my weekly bus pass which I need to get to work.

valk_scot

Two things here...

You partially going into debt because of buying clothes and equipment for a baby is ludicrous if the employed father is sitting at the other end of the sofa refusing to pay a penny for their child's food or upkeep. I'd be going for what's technically known as a "full and frank domestic discussion" here in our family, which starts off polite but firm and escalates from there. Frying pans at dawn sort of thing tbh...or does he think that his parents allowing you his partner to stay at their house counts as his contribution? Does he pay them rent for the both of you, or just himself?

Secondly it's probably not going to get you far at this time of year but it might be worth going back to the friends you loaned money to and asking for it back now, please. Even some of it might help, no?