Wake up call time

Broke_Kitty

My debt situation has come about through a mixture of being young and stupid, and not knowing any different. Being talked into credit cards and consolidation loans (three times) by my bank manager.

Basically I was encouraged to get a credit card (in fact it was implied that I was being irresponsible not having one) when I was on a zero hour contract which blew up in my face a few months later and left me running up bills. I've been in debt literally ever since I was old enough to take on debts, and although I've tried to tackle the problem before, I stupidly thought the best place to go for this was my bank, but in retrospect I think I was just being driven into the ground for their profits. I'm really glad I've found this site as I am hoping I will be able to be supported and bullied out of debt. I honestly had no real clue how any of it worked until I started reading this site at the end of last month, which is shameful. I pretty much had my head in the sand and didn't know what my options were.

At the beginning of last month I had:
Credit card 1: £1216 23.95% APR
Credit card 2: £1428 15.9% APR
Loan 1: £4690 22.8% APR
Loan 2: £597.64 29.93% APR
Remaining dental loan: £2493.26 0% APR

My very kind father has allowed me to stop paying back the rest of the money I owe him for the car he bought me (I intend to pay him back when I am out of this mess, even though he said it will be a gift).

So total debts at the beginning of October: £10424.90
Plus an overdraft of £500 which I'm not counting because it is interest free, and I basically don't have to worry about it unless I downgrade my current account.

£11k of debt isn't THAT bad, I know a lot of people have it much much worse, but I'm 23 years old, and I'd like to be debt free and working on moving out of my mother's house by the time I'm 25... but I'm 24 in January so we shall see...

I got a pay rise this month, which has taken the strain off me a little bit, and allowed me to stop running up any more debt providing I'm really frugal, which is key, because until this month I was still having to spend on credit cards and spending beyond my means. I've taken some positive steps (transferred cards to 0% deals as of this month, paid off the smallest loan using said 0% deals as the APR was highest).

I'm really hoping to get a kick up the bum and some helpful advice, I think if I become obsessed with paying off debts I can do this, I just need a bit of help figuring out how. I'd keep talking about the steps I've already taken but this post is getting waaaaaay too long.

Tixy

Hi and welcome to the forum.

Have you seen the snowball calculator?
http://www.whatsthecost.com/snowball.aspx
that might be useful to you to see how quickly you can clear these debts (and hopefully hit that 25 target).
If you enter your debt balances, APRs in to the snowball calculator and how much you can afford in total towards them then it shows you how long it will take to get debt free (and the best order to repay your debts).

You can then also see how much difference paying a bit extra a month can help (very good for becoming obsessive!)

Regarding the bank account / overdraft - are you paying a fee and if so are you using the benefits of it? is it working out cost effective overall?

Broke_Kitty

Thank you for the welcome!

I might give the snowball calculator another go, last time I tried it it said it couldn't calculate because there wasn't enough money available to make any payments... embarrassing. That was pre payrise, importing the figures from the SOA (which I now have in spreadsheet form).

I'm paying a £25 a month fee, which covers me for phone insurance, home insurance, and breakdown cover (I have used the home and breakdown cover multiple times). It also means I don't pay interest on the overdraft, and don't get any charges unless I do go over (which I did last month, but they said that since I've never done that before, I can claim back the £6 charge if I give them another ring... which I have been meaning to do all week).

I guess I've never really looked into getting separate breakdown cover or phone cover, but I have always felt like the benefit of not having to pay interest on my overdraft combined with those benefits which I do genuinely use, seems quite good?

Broke_Kitty

Reserved for SOAs, information etc.

R_P_W

Sorry to say but 11k debt at 23 on your salary is huge.

Looking at you soa you don't really have any living costs apart from your car. Most of your spend is socialising. You could cut this back and pay your debt off quicker.

You need to include your overdraft. It might be interest free but it can be recalled by the bank for payment with very little notice.

Was the dental work private?

Katzen

Firstly that 13k of debt which is roughly one year's take home pay. Secondly your monthly payments on the two cards a most likely wrong. In my experience the min on a 0%card is 2% of the balance making them £54 &£64 respectively, meaning your SoA is no longer in credit, so you're going to have to do some cutting back.
Looking at your SoA you have very few necessities on there so, if you could claw back a good chunk and clear debts sooner. E.g as a single person you spend £220 on food each month. For my 2person house we spend £150 including all cleaning products, which is still more than some people on here. And £130 on drinking whilst in that level of debt is frankly a little.mind boggling! I know you're 23 and need a life but if you could cut those two bills by something like half in total you would be £170 a month better off. Try putting that in a snowball calculator and seeing what it does to the figures!

pelirocco

Broke_Kitty wrote: »

Thank you for the welcome!

I might give the snowball calculator another go, last time I tried it it said it couldn't calculate because there wasn't enough money available to make any payments... embarrassing. That was pre payrise, importing the figures from the SOA (which I now have in spreadsheet form).

I'm paying a £25 a month fee, which covers me for phone insurance, home insurance, and breakdown cover (I have used the home and breakdown cover multiple times). It also means I don't pay interest on the overdraft, and don't get any charges unless I do go over (which I did last month, but they said that since I've never done that before, I can claim back the £6 charge if I give them another ring... which I have been meaning to do all week).

I guess I've never really looked into getting separate breakdown cover or home cover, but I have always felt like the benefit of not having to pay interest on my overdraft combined with those benefits which I do genuinely use, seems quite good?

If you are living at home why do you need home insurance?

fatbelly

You have no housing costs and only spend £90 per month on groceries. That's good, and so even with travel costs you have nearly £500 per month to throw at your debts.

You would be nearer £800 available if you could address this little lot:

Bank Account Fee........................ 25
Meals at work........................... 65
Cinema.................................. 25
Drinking Out............................ 130
Eating Out.............................. 65

Loosepockets

Hi there. As well as trying to trim your outgoings down, as others have said above, have you considered trying to get some extra money in?

The first thing that springs to mind would be maybe a part time job a couple of evenings a week?

Or there are websites you can use to earn a little more? I signed up to dooyoo and slice the pie about a month ago and get about £10 a week from those which helps?? Let me know if you want details but that could be money that you throw straight at your debt?

Good luck x

Tixy

What is the extra £2k you are planning to spend soon? is it more dental work? If so is it really essential to have it done now and definitely not something you can get through the NHS?

To be honest you really cannot afford to take on more debt at the moment. As it is you are barely able to afford the repayments on your debts and if you take on more credit then you won't be able to.

I would have a really careful think before you commit to any more large spending.

You say you were hoping to move out by 25. At the moment if you just pay the £472 towards your debts it is likely to take you 2.5 years to clear your debts (plus the overdraft you haven't listed).
Obviously if you take on another £2k debt then that is going to increase even further.

I would put something in your SoA for car maintenance, at the moment you have nothing for servicing/new tyres etc that you will need at some point, and if you don't budget for it you will end up taking on more debt to pay for it.

As you asked for a kick up the bum, I would recommend you don't pay out the extra £2k, and that you at least halve the £302 you are currently spending on entertainment/lottery etc.

Broke_Kitty

pelirocco wrote: »

If you are living at home why do you need home insurance?

I live with my mother but she is often away and in her absence I obviously foot the bill of anything that goes wrong. I've had a few cases of blocked drains and burst pipes and things I would otherwise have had to foot the bill so I've been very grateful for it.

Katzen wrote: »

Firstly that 13k of debt which is roughly one year's take home pay. Secondly your monthly payments on the two cards a most likely wrong. In my experience the min on a 0%card is 2% of the balance making them £54 &£64 respectively, meaning your SoA is no longer in credit, so you're going to have to do some cutting back.
Looking at your SoA you have very few necessities on there so, if you could claw back a good chunk and clear debts sooner. E.g as a single person you spend £220 on food each month. For my 2person house we spend £150 including all cleaning products, which is still more than some people on here. And £130 on drinking whilst in that level of debt is frankly a little.mind boggling! I know you're 23 and need a life but if you could cut those two bills by something like half in total you would be £170 a month better off. Try putting that in a snowball calculator and seeing what it does to the figures!

The minimum payments aren't good news, but I do agree that I spend too much on food. Survival wise I don't need to, it's all just food when I'm not at home that trips me up. I've got really bad at making my own dinners at work since summer ended and I got sick of salads. I need to get back on the food prep bandwaggon and I know it.

I will have a word with my boyfriend again about not getting food at the weekends when we could be eating at home, I did have this conversation with him a few weeks ago but since he can afford to do that himself, he obviously doesn't need to change anything. I might literally have to spend less time with him to save money.

I am willing to cut the amount of money I spend socialising, but not willing to stop socialising. It's difficult to draw the line but I think if I just cut my budget by £5 per night I go out that should hopefully make a difference.

R_P_W wrote: »

Sorry to say but 11k debt at 23 on your salary is huge.

Looking at you soa you don't really have any living costs apart from your car. Most of your spend is socialising. You could cut this back and pay your debt off quicker.

You need to include your overdraft. It might be interest free but it can be recalled by the bank for payment with very little notice.

Was the dental work private?

Perhaps I should make cutting my overdraft down a priority and then ask them to cancel it? I have been in it for the past 5 years with no consequence so I don't even think of it if I'm honest.