My Debt Clearing Strategy

boltneck123

Hi,

So for a year now I have been out of Uni working full time, for the first half of this year on minimum wage keeping a float.

I finished uni with a £1400 overdraft, about £900 on a Halifax card 0% till this October (got this down to about £600 now), £500 on my NatWest student card (cleared), £200ish on an Argos card (Cleared), Apple finance at about £350.

Recently had to buy a new car, in Jan, that is £5000 on Santander finance over 5 years. Had to get one for work there was no alternative, my once faithful Vectra essentially blew up.

Altogether my current debt stands at about £7500.

This is my "plan of attack".

The Halifax card I am leaving as is for now, because the min payment is low each month and it is interest free till October.

The same applies for the overdraft, this is interest free, but is due for a reduction, so I am keeping a close eye on it so I can make sure the funds are there for it. I think it will go to £1000.

The Apple finance is what I am attempting to pay off first, I have reduced this from £500 since late last year and think I can do this quite soon, say by September.

Then in September, I was thinking I could balance transfer the Halifax card to some of these great 12month + 0% cards that are available (if still available) and pay £75 a month off for 8 months on this.

Now the overdraft this will still be interest free at this point (May-ish time)and should still be at around the £1000 limit and I will commit to £100 a month for this for 10 months maybe more if I can.

I do hope to however have moved into my own home by this point though.

Now the car finance, during all of the above even from this month and previous months I am paying £110 a month, this is going to result in my paying back nearly £2k more than what the car was for sale for. I cant get a large enough personal loan to clear this. So I was thinking a credit card money transfer and run that at 0%.

I think this strategy is quite loose, any tips, ideas, I could do with some help. I don't feel like I am drowning, I have got to the point now where I can manage my income to leave me with a bit to pay off some debt each month and I got a better paid job. For me it is all about speed now, pay it off as fast as I possible can, before I start my Masters part time. (i accept i might not clear the car) .

Thanks,

Ben. (excuse spelling and typos, its quite late)

mum2one

The first thing I would say is you seem to have a large amount not in terms of financial money but the creditors, - this may go against you if you apply for a balance transfer, it sounds like your managing ok at the moment, but the car loan is the vice that take the time.

If I was you, I would work out my incomings v outgoingd and see how much I can put towards debt.

Recap - Debts
£1400 - Overdraft
£900 on halifax (0% to October)
£350 - apple
£5k on car loan - 5 yrs

- My 1st thoughts - Overdraft - are you paying a monthly fee for that?
What are the apr on the Natwest card and the Apple

Which ever of the cards (halfifax, over draft natwest, apple) - chuck the most at them, keep the others at the minimum payment, then when that is finished - chuck the money again at the next highest until there cleared.

Your car loan, have you looked into whether there is a penalty for paying back early, or is there only certain points in the loan you can pay back.

You say you want to do your masters, (part time) so i'm guessing you may be reducing your working hours??

----
Look at making extra money

is there anything you can ebay, car boot, -

Look at making money from the net, cashback sites, sites that you earn vouchers from, writing reviews such as Dooyoo.

Its brilliant having a plan for the future, but take one day at a time, and look at reducing what you have then you can concentrate on the masters and not have to worry,

I know you have brought the car, but you need to take into account servicing, breakdown, car insurance, tax etc xx

boltneck123

Hi thanks for the reply,

No monthly fee for the overdraft it is interest free, but the amount available that is interest free is set to reduce soon. I have managed to put £400 into it this month ready for its first limit reduction. I have set aside cash to last me until my next pay day less than two weeks from now, so my overdraft will stand at around £900.

My Halifax card is now down to £753.60, and my Apple finance is now at around the £300 mark I paid an additional £25 off it this month.

I have looked into my car loan, I can make over payments or clear it in full without penalty.

Yes I will be doing my masters part time and I will reduce my working hours, however my income will still be enough to cover basic expenses. I am going to apply for a career development loan and what I do get I will put aside into the best interest account I can find and only use it for emergencies. I plan to increase my working hours in the summer between the end of my first year and the start of my second year. I have a very flexible job, in the summer I could potentially increase my monthly income by 50-75%.

In regards to the car up keep, I have worked out a over estimate of for the annual insurance, MOT, service and TAX costs and I now save a monthly amount out the way for that. Petrol costs are already worked into my current monthly budget.

I have registered with INBOX Pounds recently and I have £1.62 so far .

It is a bit of a mess, I was a bit ignorant when I was at Uni about my finances, I needed the cash to get to Uni, get books, live etc and just thought f-it because I wanted to focus solely on my studies and not think about it.

So I feel like I am trying to become a good money saver now but hitting the ground running.

foxgloves

But, at least you're doing it! My bad financial habits also started at university. I was just about solvent for the first two terms, then lived outside my income for the rest of my studies, my post-grad degree also, and my failure to budget & overspending my income continued right through my career until my early 40s when the LBM struck big-time. Debt-free now, but can't help thinking how great it would have been to tackle it earlier. Keep at it. It's the budgeting that is absolutely key & while we all need a treat now & again, recognising the difference between a 'want' & a 'need' is also important. Good luck with it all. If I had sorted my finances out earlier, I would probably be mortgage free by now. Hindsight is a wonderful thing......

boltneck123

Hi,

Thank you for the words of encouragement.

One factor that has also changed is I have met someone who is very frugal and supports me . So I am getting more confident about everything. Will update my progress in a month.

Thanks.

Candy53

What a great thread 'boltneck'.

Enjoyed reading it. You have some good plans there, and you're enthusiasm, and ability to pay off your debts will make it a good journey.

In our bad debt years, I used to dream about being in your position, but sadly wasn't and it was a living hell.

So, if you keep to your plan you 'will' do it.

I look forward to your update.

Best wishes.



Candy

boltneck123

Hi,

Back again lol. Earlier than I had said I would be, about two weeks I think since I posted in my thread.

I have decided to post to coincide with pay-day and this is tomorrow, so now I can update progress of previous month and talk plan going forward.

Unfortunately the £400 I reduced my overdraft by took a £50 hit, my budget ran out because I did not fore see the dentist!! Dumb! Ahh, but this will not cost anymore now so I can relax and on a plus point kocked another £20 off the Halifax card.

Got hammered last pay day on my tax, I withdrew on my holiday fund for the week off I had, when I should of had it paid in tomorrow instead; because tomorrow I will only receive one weeks pay instead of the normal two for the month I would get.

So I need to find away to make £700 last me till the 7th of August.

£250 toward my half of house I am in the process of buying (got to go in the joint account for first mortgage payment, bills, any unforeseen costs etc)

£110 for my car payment

£18 for my phone

£80-£100 of fuel for the month (I do think I can reduce this to £60 if careful, prefer to over estimate for safety)

£100 for food for the month, (may be able to achieve £60)

£70 budget for me and my GF's one year anniversary celebration ( I have to do this, I love her to much)

£34 for car insurance payment (not to worried about interest, costing me £30 ish extra for monthly payment method)

So money remaining is £118, hopefully there wont be any other costs that pop up, I will be holding on to what is left till next pay day and if it is still there then it can go towards the iPhone payment .

Hope everyone else trying to reduce debt is doing well

boltneck123

Also updated my signature now.

I like how every time I will post from now on I can see my debt and what has been paid off (or not paid off) for motivation.

Also registered with Textbroker tonight and sent off my sample text for review, hopefully I can make some extra pennies for debt reduction.

fyggy

Well done on your progress so far. You sound to have it all worked out budget wise. So does being a weeks pay short as such mean you can't put anything towards your debts (overpayment wise)?

What're you planning for your anni? Congrats on that and the house buying

boltneck123

Well I get paid 2 weeks out of 4, I work a week on then have a week off (unpaid), I took my holiday when it would have been my week on, this is unpaid. But I drew my holiday fund to make up the shortfall, however after the tax man had his way and my student loan repayment, I was left with £50 for essentially a weeks pay. So because I had that week off, this pay day I will get my weeks pay prior to my holiday, am I making sense?

So I will only have £700 in all till the 7th of August (next payday), then I will get 2 weeks pay of £1400, £1300ish after tax, paid quite a lot of tax last month, so hoping it should average out ok.

Going to my GF's student flat in Lincoln for two nights and out for a meal at Ask (got a 25% off voucher), drinks and maybe the cinema, going to get her a gift out of that budget as well.

Thanks for your words of encouragement .

ValHaller

Hmm. Conventional advice is to list your debts in descending order of APR pay minimums on all and with your surplus cash hit them from the top down. If things are tight, hit the smallest first, to get some slack quickly.

But the overdraft can be a loose cannon. It can be recalled with no notice and if you don't settle it in full, you can be put into default - or if you agree a payment schedule, you may gain arrangement to pay markers.

Given the situation with your income and the fact that the overdraft is being reduced, I suggest you get this one cleared as your first priority