Where do I start?...

ChristianJones2709

Hi all,

After months of worry and stress, I've finally admitted to myself that I have an issue with debt at 22. It's a long winded story so let me begin...

It all started with a new car purchase in September 2011. Previously I had only bought what I could afford and not used any form of credit. However, it was my 21st Birthday and I decided to take out a loan and buy 'the car of my dreams'. It was nothing like a dream and was in fact more of a nightmare. I had taken a £4,000 loan from LloydsTSB to purchase the car (over 4 years) and spent £2,500 purchasing the car and spending the remaining £1,500 in fixing the damn thing!

In December of that year I was offered a loan from Barclays (£4,500 over 5 years) with a view to settling the existing loan on the vehicle. At this point, I had split with my partner of 4 years, was already suffering from depression and I spent the money (or a large part of it) as 'pity' money buying clothes/electricals to lift my spirits... a stupid move, I know. By this point I was now £8,500 in debt with a car worth less than £3k and less than £5k in the bank...

In July I bought a car on HP @ £220pcm and have less than £400 of that loan left in the bank!

When I finally came to terms with my problem, I had also racked up £2,500 of debt across 3 credit cards!

So, to summarise my monthly payments:

- Car on HP costing £220 (10 months in)
- Loan 1 @ £126 (balance £2700)
- Loan 2 @ £143 (balance £3200)
- Credit Card 1 @ £50 (£1000)
- Credit Card 2 @ Minimum payment (£500)
- Credit Card 3 @ Minimum payment (£1000)
- Phone @ £36
- Road Bike finance @ £25
- Board & Lodge £50


My 'take home' pay per week is £350. Out of this, I pay around £160 through direct debits. I still live at home and so I am lucky in that I don't have rent to pay, only board & lodge. This leaves me with less than £200 a week with travelling expenses costing around £50 per week to go to and from work (no excessive mileage). Food for the week including food in work is around £60. Is all this excessive? Please tell me if so... I'm so confused!

I've yet to tell my partner of my situation (5 months in) and I am quite ashamed of it. My partner is so fiscally responsible that I am too embarrassed to say. Although, I am sure he has guessed given that I am reluctant to go out for food, socialise, buy clothing etc. He will often make remarks such as "With your salary, why are you so tight".

I have thought about IVA's DMP's and have looked a lot into it as well as consolidating my loan through my bank.

I am too afraid to tell anyone in person... I am looking for is some advice on where to go next from people that have been there before.

I do apologise if this is a bit of a bore!

Cheers,
Chris.

Tixy

Hi and welcome

It sounds like you can probably work a way out of this without needing to resort to a DMP or an IVA.

Its a bit confusing with some costs down as monthly and some items weekly. It might be useful to work them all out on a monthly basis to see how much you should have left a month after paying all your essentials.

It would also be useful to find out the APRs on all your debts so you can work out which is costing the most and which to try to focus on paying off first.

Have you just the one car now? did you use the first one as part ex for the second?
And is that a cycle or motorbike you have on finance? and when does that finish?

Whilst you don't have a lot of housing costs / utility costs I think it would probably still be useful if you could complete a statement of affairs using this calculator - http://www.stoozing.com/calculator/soa.php, put your board figure in rent and leave the other house type costs blank but do fill in things like car tax, insurance, servicing etc to get a true picture. If you then select the format for MSE option and post on here it will give people a clearer picture of your finances.

£60 per week on food is quite a bit, its certainly possible to do cheaper anyway.
Do you buy all your own food none included in your board figure? What sort of things are you buying at work? it usually works out a lot cheaper to make things at home and take them with you.

Hopefully with some more info you can work out a plan of action, and you might then find it easier to tell your partner once you can tell him you are tackling your debts and have a plan.

timetogrowup89

ChristianJones2709 wrote: »

- Credit Card 2 @ Minimum payment (£500)
- Credit Card 3 @ Minimum payment (£1000)

Hi, well done on realising you cant go on this way.. Is the above info correct?

harrys_dad

You have taken the first step by coming on here, and now the helpful army of people here are on your side and will help you succeed. Post the SOA as suggested and we can all come up with suggestions as to how to save money and pay your debt down quicker.

UsetheFORCE

timetogrowup89 wrote: »

Hi, well done on realising you cant go on this way.. Is the above info correct?

I am assuming this is £1500 owed between 2 cards being repaid by minumum payment???

theoretica

Adding up your sums I make it that you have £314 a month after everything you have mentioned. However, you have probably got more expenses you haven't mentioned.

What you need to do is to sit down and spend some time working out how much money you have, where it has been going (look through old statements) and where you want it to go in future (and keep a spending diary so you know where it is going). Don't set yourself up for a fall with no treats and luxuries, but do work out which ones you get the most enjoyment out of for cost.

Becoming good with money is work, just like becoming good at anything else, but it is much better paid work than most!

patman99

If you can 'spare' £100 of your left-over earnings each month, over-pay the highest APR CC by this amount in order clear it. This will free-off whatever you were paying to over-pay the next highest CC & so on.

BTW, £8.5k (+ outstanding HP/finance on car/bike) on your salary is quite manageable. I take home £55 a week less than you & manage to service all the debts in my sig. + a large o/draft.
It can be done. I found a program called 'YNAB' which was on offer at the time of purchase. It is a brilliant home accounts program as it allows you to assign each spend to a specific category so you can soon see where your money goes.
I have set up all my Bank accounts on it AND all my loans & cc's so I can watch the debts decrease.