Recently returned to UK, time to sort out the mess

edpvito

I have been living in Sweden for 3 years and struggled with finding work, although i did find work for the last year and a half. I found that i couldnt really survive without using my UK credit facilities - two credit cards, bank overdraft, mortgage overdraft. I made the decision to find work in the UK and come back which i have now done. Been in new job for 3 weeks. Luckily I had someone paying my mortgage for the last 3 years so I am probably marginally financially in the plus over the 3 years but I am paying lots of charges for the credit I have been using, so I need to sort that out. I have paid off one of the credit cards and closed this month but I am left with 1200 on a credit card thats 2.21 interest per month, an ovedraft with Santander that fluctuates between a few hundred in the black to a 1000 in the red depending on how close to pay day, which i will soon be paying 25 - 30 pounds a month for. I also have a loan I took out with Northern Rock a few years ago and that has a settlement figure of 3000. My mortgage reserve has a few thousand debt but my house equity is good so I am not worrying about that too much at the moment. I have been taking guests from airbnb since i returned but this has mostly just paid for a few things that needed doing on the house. Hoping to be debt free by Christmas. No credit card, no northern rock loan, not using the overdraft facility. Unfortunately whilst living abroad some of my admin skills went astray and I missed some payments here and there and therefore my credit rating is not too good so I cant really move my debt around to a better deal.

edpvito

+ £500 to the Swedish tax authority.

edpvito

So the strategy should be to pay off those creditors who cost the most. I strayed from that path by paying off a small credit card debt with MBNA. I had missed a couple of payments and they actually closed the account so I felt I just wanted to get it out of the way and also to reduce the list of people I have to deal with every month. My next step was to set up a direct debit for my AMEX card paying £40 a month. At £1283 I am paying around £28 a month interest so its roughly the most expensive debt along side my overdraft which is currently costing me £20 a month, sometimes more as I sometimes go slightly over the limit. So my strategy is to pay a lump sum off of the AMEX card - hopefully £300 - before pay day and then it will be the second most expensive debt with interest at around £18 a month. The £40 will pay some of the capital and the interest. Then I intend to start reducing the amount that comes out of my building society account so that I am moving towards being in the black for most of the month. I figure if i can reorganise some payments to come out closer to pay day then i will be in the red for less days. I also hope to pay £100 to the loan and £100 to the AMEX card if I can afford it. Unfortunately I dont have much to sell of any value. I am considering selling my van which I could probably get £1000 for. I also have a nice mountain bike worth around £600. If I sold those then i would be a lot closer but also without any transport!

chevalier

Welcome to the boards. have a look at the snowball calculator to see which is the best order to pay off your debts
chev

edpvito

I have managed to pay off £300 off my amex card. I have been renting a room out through airbnb which whilst making home life less convenient it is making my debt free goals a lot more realistic. (yes i will be declaring my income before someone ELSE gets on their high horse!). A good percentage of the airbnb income is going towards some jobs on the house, which needed doing anyway, and various bits and pieces that i need to be able to offer the service with a level of professionality. I have about £500 left until payday in just over two weeks and all bills have been paid for the month. It would be great if i could hit payday with £200 to spare (although still in overdraft). Planning to pay another £300 next month to AMEX and £100 to the Swedish tax office. First council tax bill in next month but no water rates to pay, a much smaller broadband bill than the first month and a little wiser about phoning 0844 numbers from my supposedly capped EE mobile!

Amex free by October, overdraft free by Christmas, Swedish tax bill paid by January. 2015 pay off the remains of my Northern Rock loan. During 2016 I am hoping to cash in my home equity and buy whatever i can with that.

edpvito

I have 13 airbnb bookings for the months of July and August! About £1000 extra money coming in. I have good references, its cheap and the room is nice. Its quite a lot of extra work though having to wash sheets and properly clean every other day but its an enjoyable thing to do and to get paid for. I've got some jobs to do on the house and I need to sort out my car so unfortunately i cant throw it all directly at the debts but at least it means I can use a bit more of my usual income. I'm definitely on target to get through the smaller debts by the end of the year.

edpvito

My AMEX debt has halved in 3 months and is now at a position where the monthly interest cost is less than my overdraft cost. I now owe £730 which will be down to £640 in two weeks. The interest on that is less than £20 a month, hopefully more like £15. My Santander current account overdraft has been costing me a lot more and the rates are going up in August. Last month I got stiffed for 2 x £25 payment fees, £20 arranged fee and £10 arranged fee, plus I transferred £20 to my Swedish account as a test and got stung for £25! So thats over £100 in charges in a month and I must have been less than £10 over my limit. I would bemoan the fact that many payments seem to take two or three days to end up on my balance but ultimately I know what these organisations are like and its down to me to budget better....YNAB...what a find, what a great piece of software, well worth $60. This month at pay day I was nearly £200 under my overdraft limit and its been a long while since I didnt treat my £1200 overdraft as my total spending money. Hopefully my charges this month will only be £20, which means that the overdraft is on a par with the AMEX card. I'm going to reduce them concurrently as if I start clearing the AMEX card above the overdraft I am sure to be paying more for the overdraft. I think i will be concentrating solely on my Northern Rock loan by October - which will be by then about £2600. Onwards and upwards.

edpvito

Loving YNAB and realising that Im wasting a couple of hundred a month on bad food shopping. Ive cut my overdraft almost in half, and within a week I will be only £250 in debt to Amex and £250 in debt to the Swedish tax man. Depending on how abnb bookings go I might have those sorted before next pay day. Then I'm going to start chipping away at the Northern Rock loan. I dont know, does it make sense to use my overdraft to pay off the loan? Not sure, havent worked that out yet. My bank wrote to tell me that I have had £450 in bank charges in the last year and did i realise i was a financial moron. Thanks for that. You're not getting that this year, Senor.

edpvito

250 left on amex, 200 left to the Swedish tax man. These will be gone by the end of September!!! And then its on to the overdraft which I am hoping will be at 0 before payday by payday in November. Then I am going to take my house and bed back from airbnb guests and start to sort out the jobs that need doing. My body is in a bad way, too much stress drinking, bad eating and i need to sort that out. Its not helped by sleeping on a sofa bed most nights as my bedroom is mostly used by paying guests. 4 more bookings and then i will be free from all but my northern rock loan which i am starting to think is just going to come down slowly as it has been doing the past 5 years. At this point I am not going to save a huge amount of interest, I think the maximum i could save in interest if i paid it off in full right now is about £225 so im going to cut myself some slack, keep paying the monthly payments and forget about it.

NoOneAround

You're doing really well!


Thank you for posting on my diary, and your support.


Just wanted to check with you about airbnb? is it easy to get good guests?


I take in students when I can but to be honest I'm not sure how much profit it makes as it is full board plus heating costs go through the roof. If it was just Bed and breakfast it might be better? might be something I need to explore.

edpvito

Hi NoOneAround. I have found it easy, I live quite central in Bristol though - well half an hour walk. I tend to get the same sort of people - people in their twenties/early thirties, couples mainly or two friends, I charge £30 per night which makes it quite a bit cheaper than a hostel in Bristol. 95% are nice people, some people seem to treat it like a cheap doss house but very few! My house is small so I sometimes feel a bit like there is an 'uncomfortable presence', I also work full time and it tends to require about 3 or 4 hours extra work per booking.

I think the idea is start cheap and get a few references. Some people seem to do very well on it - if you can make a space that provides a nice experience for a trip then i think you can do very well. I tend to be a cheap place to stay which is never going to be very lucrative but for the moment its a god send and im rattling through my debts.