First Post! How best to pay off my debt?

dancingfairy

You owe 26k right now, if you borrowed 15k then in theory you have access to 41k of credit (the banks don't know you won't start spending again). I would be incredibly surprised if they were prepared to lend you 15k on top of the 26k you already have (Especially given the new mortgage affordability tests and the banks being under pressure for miss selling etc I think they will be extremely cautious when it comes to more lending, no matter how good the reasons).
Obviously the first thing to be tackled is to identify where that £700 a month is going and whether the spending is entirely necessary ( I suspect a lot of it isn't). Once you have a better idea of where you stand you can prepare a battle plan
df

dirkio78

Nicp60. You and the others are right. I will put any consolidation/loan changes on the back burner. As you have seen step 1 to reduce some bills to their smallest is underway. Step 2 to account for every penny will now happen starting this month. My gut feel is that 50% of the £700 is necessary but not accounted such as essential clothes, car maintenance, and so on. 50% is luxuries that have to be scaled back and by not accounting I'm giving myself an excuse to let them continue unchecked.

I have never looked at the snowball so I will look into that too. So I have lots to do and am pleased I have taken a step into debt free future. Your fast replies and this active community is motivating as I know Im not alone and the collective wisdom is here to be tapped into for success. Im fortunate that I have an income to tackle silly huge debts. Rest assured the debts were worse two years ago and I a have actually reduced them a good amount before reaching out to you. I got comfortable with shrinking loan balances and increased income and somehow messed up with thinking the good times had come and grew the credit card debt. Reaching your credit card limit is a very good cold slap in the face from reality!!!

nicp60

I would suggest starting a debt free diary. It's great for clarifying your situation and staying accountable.
Good luck!

dirkio78

dancingfairy. Yes you are right Im behaving like Im Manchester United with reckless debt restructuring which isnt sustainable. As you say they dont know my intentions and rightly so as past performance hasnt been the ideal. You might have seen in my replies to the others, I am focussing on bill reductions and finding where that £700 goes. Every month that passes my overall debt reduces by £1000ish so in 6-9 months which is not very long Im hoping to have brought down my credit card debt also by old fashioned frugalness and may have some more options to tart and continue to bring down all the debt through smart decisions and not consolidation.

The funny thing is I was within a few days of applying for consolidation but a little voice inside spoke sense and told me to join this forum and do a post. Glad I listened to it and you all

dirkio78

Love the snowball calculator. Having input my debt figures and affordable repayments it has set me a 27 month route to debt free and most importantly of course this is without that dirty word *consolidation*. 27 month is not that bad and I should in that time get some healthy OT months which can all be lumped onto the priority debt and pull 27 months a little nearer. I'll get a diary and a ticker up and running also.

Liliyanna

Hi there Dirkio,

2.5 years or so ago I stood in your shoes, with determination and the help of the excellent advice from fellow forumities I am finally debt free, hopefully to stay that way.

I see you have made excellent strides in addressing your debt so far but I fear you are missing/overlooking a vital area of your situation...the actions/mindset which resulted in your predicament in the first place. I fear you will clear your debt but simply accrue more over time as the bad practices have not been addressed.

The information provided so far gives some indication as to your household and lifestyle and I base my post on this, I appreciate I may be off the mark but if I am it's not meant in a mean spirited way!!

I have the picture of you and your wife bringing up your first child together. You are the main wage earner and your wife may well be part time due to family/childcare reasons. You are responsible for the finances which is why you are questioning the best ways to get out of debt.

It is clear you are not fully aware of where every penny goes and are looking to address this but several comments stand out for me.

Your wife assures you £50 a month is standard/cheap for hair care. I'm sorry but I can't agree. Averaging out I used to spend this a month, I had short hair with two sets of highlights in. I now have one colour which I apply at home and have my hair cut every 6-8 weeks, average cost £20 per month. £600 a year on a hairstyle whilst you have this level of debt is worrying. Does your wife have the same mindset in relation to her perfume/make up?

'£450 is an acceptable amount to spend on groceries because you have a growing child', how much does your child eat!!! When you next do a full shop stand in front of your fridge/freezer and ask yourself how much of what you see are branded products, if there are a high % ask yourself why? Have you tried cheaper alternatives, if not why not? If there are processed meals have you tried making them yourselves from scratch (cheaper and better for you). How much do you throw away as spoiled/unused/out of date? Are you a busy family?, is convenience food a staple to fit in around your lifestyle? Cooking from scratch is time consuming but batch cooking is your friend here, spend a weekend morning making large batches of everything and freeze the portions, take them out the night before and tea will be ready for heating through when you get home.

£50 per month for essential clothing. Who's essential clothing?. As adults we have pretty much all the clothing we need, we don't really grow any more so don't really require any essential new clothing, we would like them for fashion reasons sure but this doesn't make them essential. I appreciate children have growth spurts and can change from one month to the next but £50 per month would be excessive on one child surely?


Have you discussed your financial position with your wife? Is she aware of the true picture? I can understand as a male the need to provide for a family and shelter them from certain worries but this is a journey best taken together to ensure long term success.

The bottom line here is the psychology of debt, you are addressing the result but not the mechanisms which accrued the debt in the first place. To clear debt and stay debt free takes a fundamental shift in your thought processes otherwise you'll find yourself back to square one in months or years to come.

There are many sweeping statements here and I apologise if any have caused offence. I do not want you to post answering all the questions I've raised but please use this as something to mull over and see if it applies to your situation.

Good luck for the future

Lily x x

Shelbi

Hi Dirkio78 and everyone else thats posted!

I just wanted to say welcome to MSE, as you can see your in the best place for advise, these guys know their stuff and were all happy to help support and motivate you on youre journey! I know it may seem alot now but I promise it gets easier, best of all weve all been or are in the same position...were here to help!

For my part id advise not to take the loan- only do so if its swapping for the same/less debt with 0% apr (if possible).

Id check YNAB (really helpful), the challenges- they really keep you focused and motivated. Id read Dave Ramsey's total money makeover (free audio book on youtube) that really helped me loads!! Erm what else...and snoop others diaries for motivation and inspiration, meal plans are great, lunches to work, no spend day challenges. Home haircuts or trainee/group on discounts on them..can make massive savings. There's a savvy bunch of MSE/DFW's here... most have frugal living down to an art! You're really in the best place, you'll be debt free before you know it...

Best of luck on your journey, Ill be subscribing to see how you get on... You can do this!!... Have a great day x

thegreenone

Hi
My initial thought: as you are paying off your Creation loan (£169) divide that amount by three and send manual payments of £56 per month to each of your ccs. This won't cover all interest but will have an impact and no consolidation.


Thanks to this forum, I have started skimming my bank account every day to a loan. Officially we have 18 months left to pay, I reckon now, it should be gone in five months or less.

runforlife

Your wife could get her hair cut at Toni and Guy for half the price she's paying now (and get a free coffee in the bargain). She can volunteer as a 'model' for the student hairdressers. It takes a lot longer but is considerably cheaper than a stylist cut. Why not suggest it?

dirkio78

Thanks for the latest replies. I have setup ynab. Was using GoodBudget for last few months which is same principle but not as good software so I will fully commit to ynab and purchase it after the trial. Also I have budgeted for every penny as opposed to leaving a large black hole of miscellaneous.

I do love batch cooking and made a morrocan lamb slow cooker stew today that did three meals and will do another three this week. I'm also pretty good at using up leftovers and cobbling together a cheap tea from the cupboard. The food budget does include some eating out which I now see needs to end as I don't have enough money for that. Am pretty pleased with the momentum gained in the last week and have definitely taken some positive steps forward.