Best Way to Reduce Debt?

TheMoney

Hi,
I'm just looking for advice on the best way to go about reducing my outgoings...

I have had many circumstancial changes recently, and my situation is as follows:
I'm currently unemployed, but will begin employment in August with a salary of around £15,500.
My current debts/outgoings:
Car finance £350pm
Loan £200pm
3 credit cards, £1500 on one at 29.9%, £800 on one at 19.9% and £1000 on one at 0% for about another 6 months.
I also pay roughly £15 each month for broadband and phone line, and £30 for my phone contract.

I want to get to the point where I don't have committed outgoings above roughly £300pm in an ideal world.

Any help much appreciated

My salary - £15,500

Total Income - £15,500

Monthly Outgoings:

Mortgage/Rent - £0
Council Tax - £0
Gas - £0
Electric - £0
TV License - £0
Sky £15
Phone - £30
Food - £maybe £300
Car Insurance - Paid annually
Petrol - £250
Life Insurance £0

Total: £595.00

Credit Card 1 – Balance £1500 (limit £1,500) APR 29.9% - making min payment

Credit Card 2 – Balance £800 (limit £800) APR 19.9% - making min payment

Credit Card 3 - Balance £1000.00 (limit £1000.00) APR 0% for another 6 months - making min payment

Overdraft - £0 (limit £500) APR 18.9%

Car Finance - 48 month term, taken in December 2013, £350 per month. APR 8% Remaining Balance £14,000

Bank Loan - 60 month term, taken in April 2013, £200 per month. APR 8% Remaining Balance £8500

moohound

Well done on deciding to deal with this now

Need a bit more information to give good advice really, might be an idea to post an SOA.

Car loan is high, was you previous job on a higher salary?

How long is there left on the car loan and the other loan, what did you use the money for ( I am asking if it was for consolidation, anything else is your own business )

You need to look at how you overspent in the first place, were the debts accumulated when you were out of work or did they start before then? Any action you take will only be as good as your commitment to live within your means in the future.

What is the APR on the car and the other loan?

Do you normally pay much more than the minimums on the cards?

The Snowball method is a good way of dealing with debt, where the highest interest borrowing is paid off first, then the next and so on.

R_P_W

TheMoney wrote: »

Hi,
I'm just looking for advice on the best way to go about reducing my outgoings...

I have had many circumstancial changes recently, and my situation is as follows:
I'm currently unemployed, but will begin employment in August with a salary of around £15,500.
My current debts/outgoings:
Car finance £350pm
Loan £200pm
3 credit cards, £1500 on one at 29.9%, £800 on one at 19.9% and £1000 on one at 0% for about another 6 months.
I also pay roughly £15 each month for broadband and phone line, and £30 for my phone contract.

I want to get to the point where I don't have committed outgoings above roughly £300pm in an ideal world.

Any help much appreciated

What about rent? Fuel? Eating?

TheMoney

I haven't got exact figures at the minute as I don't have the finance agreement number to check the remaining balance, and admittedly I avoid checking as it's easier to not know sometimes.
I took the finance in December 2013 of around £16,000 at around 7%, and the loan in April 2013 of £10,000 at 8%.
Both were used together for a car purchase. My previous job did pay slightly higher, but not hugely.
It was basically a situation where I was working, credit was available, and I took it to buy something nice. I didn't really take into account how little spare cash I would have each month when calculating if I could afford the repayments.
I currently pay the minimum on all cards.
I'm wanting to deal with it now while it's not too far gone, as if I can manage to reduce it to a more managebale amount without defaults it will greatly improve my credit record for when I look at mortgages.

I'm looking mainly at when I begin emplyment again, as I haven't earnt much this tax year, most of the salary I receive should be untaxed. Realistically, when I add things like food, diesel etc I'm hoping for around £200pm left over, and wondering where is best to put that.

TheMoney

R_P_W wrote: »

What about rent? Fuel? Eating?

I have tried to factor these in to my own caluclations. I don't pay rent, but in all honesty I do eat out alot rather than cooking at home

moohound

Wow, that is a lot of money to spend on a car, but its done now and needs to be dealt with.

You need a proper SOA and a budget, guessing and hoping will not help get the debt down, getting control of it rather than it controlling you is as import and as the £ and p.

The 29.9% card is the place to start, I would say, and pay as much as you can off this each month and the minimums on the others.

Do you have money to live on until you get your first pay cheque at your new post?

tlc678910

If you sold the car could you settle the finance and have 1 or 2K left to buy a cheap car? - that would free up £350 a month straight away. If there would be more than that left over you could pay off some credit card debt too?

Is it worth struggling every month to drive an expensive car? My own opinion is no.

TheMoney

I have money to last until I start getting paid. I am open to the possibility of selling the car, but I'm not going to make another stupid decision and sell it for less than it's worth. I do have it for sale but I'm holding out for the right price