New Debt Free Wannabe

blackdogonline

I've finally done it, finally biten the bullet and worked out how much debt my partner and I are in and wait for it - £34,776.58 (excluding Studentl Loans)!!!

We both earn pretty decent money, around £90,000-95,000per year so I know we have no excuse to be in this mess but it just seems to mount up. We both had credit card debit left over from university and what with buying a house, furntiture, two cars and generally having quite extravagent lifestyles, the debt has just got completely out of hand.

Now we are both determined to get rid of this asap but monthly expenses are very high and can't seem to squeeze any more money out for overpaying the debt.

This is what we are paying now - any advice would be very gratefully received:-

Moneyback Loans - £17,000 (£345pm x 60mths - APR 8.3%) - Just taken this out to repay existing loan which had 112mth left. APR's not great but neither's credit rating.

Abbey Credit Card - £2620.17 (0% until Mar 2008)

Egg Loan - £7646.93 (£405.67pm x 18mths - APR 7.66%)

Citroen Finance - £6309.48 (£259.77 x 24mths - APR 10%)

HSBC Student Overdraft - £1200 (0% until June 2008)

The Egg Loan was to replace my partners car loan from BMW which had a stupid interest rate. As I mentioned before neither of us have a great credit rate so switching providers isn't really an option.

I've just put everything into the snowball page which says we can be debt free in 28 months which would be fantastic but am a little confused. I think that mostly depends on us just making the minimum payment of the Abbey Card and overpaying the Moneyback loan.

However, not sure if they will allow monthly overpayments - the conditions just say it is possible to repay early with one month interest as penalty. As far as I understand if we don't overpay monthly the interest won't come down as quick so repayment will take longer.

So there we go, any advice would be fantastic.

nevadagirl

Hi there,

I'm bumping this for the daytime crew, but in the meantime, a suggestion regarding the Moneyback loan. Put away what the snowball refers to as your overpayment in a high interest savings account, then request a settlement figure from them. You will still need to make your payments in the meantime, but you may be able to close the loan early with a lump sum. Have a look in your agreement and see if there is something in there about paying off your account 1/4 of the way through, 1/2 way through, 3/4s through and see what you have to aim for.

Well done on sitting down and working it all out, and for being determined to do this. Good luck

CLAPTON

all things being equal, the most financially effective way of paying off debts is to pay the minimum on each debt except the one with the highest APR on which you pay the maximum you can afford until it is paid off; the you start on the next highest APR debt.

However, this depends upon your being allowed to make over payments and that they do in fact reduce the interest payable. So the highest APR loan seems to be citreon finance.. but is it effective in making overpayment? You will need to read the T&Cs carefully.. often it isnt worth it. If you can't make overpayments effectively, then its a choice of paying off the debt that you can overpay on or simply saving the money in the best saving a/c you can find until you have enough to settle the debt.

You incomes are very high... if you would like to post a SOA here people might be able to help find some further savings to help reduce the debts faster.

newleaf

You refer in your original post to your 'extravagant lifestyles'. That is the one thing a true DFW is not 'allowed' to have. No pain, no gain I'm afraid. Cutbacks will need to be made and you will have to be brutally honest with yourselves. Read Southernscouser's 'Sticky' at the top of the board,( this one: http://forums.moneysavingexpert.com/showthread.html?t=107280) post up your SOA and we can offer some tips on where cutbacks could be made.
Good luck! The hardest part is admitting to yourselves that you have a problem, and it's amazing how quickly small changes can start to make a big difference.

auntie_brenda

Hi blackdog :hello:.

Can you read Southern Scousers sticky at the top of the DFW board - it will show you how to do a Statement of Affairs and will let people advise you on where you could make some savings to pay things off earlier.

2 thoughts from what you've said though - 1. yes, you're in a lot of debt, however yoru income is v good so this is doable. 2. Do you really NEED 2 cars? If yes, does one of them really NEED to be a BMW? As they hold their resale value you coudl sell this and buy a more economical car and clear some of the debt.

Good luck!