Considering DMP - SOA advice please

AliceBanned

Thanks - that was my plan - really cutting down this winter and getting on top of things. I think my lightbulb moment is now. I am really upset about it all.


The problem sometimes is 'free' credit - for me anyway. eg Littlewoods have given me interest free credit for a year- they did offer me up to £1000 but I asked them to reduce it. There are things I'd like that I could have ordered but I got the availability reduced as I didn't like them throwing credit at me. I am throwing away brochures etc from La Redoute and others so that I am not tempted to buy. I feel a bit scruffy at work sometimes compared to other people but they are all in relationships and living on your own is much harder financially. I know I need to prioritise the debt repayments - I am usually ok until I get more on top of it and then my habit has been borrow again rather than the long slog to complete repayment.


Today I've asked for paper statements from all my credit cards as this will help me be more organised and stop burying my head in the sand.

rockm87

Great work!

and I didnt want to be mean about it, you'll be greatful to yourself for all the times you thought you looked scruffy if one day you are debt free!

You'll look at others who are in debt to the eye balls....but they look good....and you'll see how screwed up that is!

I always try to encourage people to get inspired, I love the Mr Money Mustache blog (and forum)..here's a good place to start

http://www.mrmoneymustache.com/?s=debt+is+emergency

But I've read ALL the articles and feel so much better, and it really helped me stop making excuses and turn my money around.

Best of luck!!

AliceBanned

HappyMJ wrote: »

Payday loans should never be used more than once and only in the most dire of emergencies. As soon as you are paid pay all the minimum's even if it leaves you with virtually nothing that's what you have to spend in the next month do not get another payday loan unless a dire emergency pops up but as you've just had your car repaired that shouldn't happen again for a while. You've only got £600 of minimum repayments and £2,000 of income so you've got more than enough left each month. There's no need to destroy your credit rating with so much left over.

It's obvious your excess money is going somewhere else apart from the minimum payments that you should be making so it's essential you get the SOA as accurate as you can. Keep a spending diary.

I don't pay my water bill by DD. I don't pay it at all. There is nothing they can do in regards to late payment so it can be one of the last bills you pay and worry about it (much) later. They don't charge late fees, they don't report to credit reference agencies and they can't cut you off so get your minimum repayments sorted first.

Thanks but my income is £1919 per month after pension payment and my outgoings are high - at least £1300 just to pay the bills and travel. So it isn't as easy as you make it sound - there is certainly no money disappearing or being spent on things that I haven't listed, though admittedly for the past month I have treated myself to a volunteering hol and a camping hol as I think it's important once a year to get away.


Thanks for the tip about the water bill. I'll hold on to it. I've also cancelled a £20 dd for specsavers for contact lenses as I have bought a few up front and I can wear glasses too. The contact lenses are for the screen at work so not essential as I alternate between these and glasses. I am going to cancel anything else I can and have already reduced my mobile phone bill and mortage - just last month so this will start to have an impact over the next few months. It has been a long slog just to this point which is why I feel a bit demoralised - just gets hard over time until you start to see the light at the end of the tunnel.

AliceBanned

rockm87 wrote: »

Great work!

and I didnt want to be mean about it, you'll be greatful to yourself for all the times you thought you looked scruffy if one day you are debt free!

You'll look at others who are in debt to the eye balls....but they look good....and you'll see how screwed up that is!

I always try to encourage people to get inspired, I love the Mr Money Mustache blog (and forum)..here's a good place to start

http://www.mrmoneymustache.com/?s=debt+is+emergency

But I've read ALL the articles and feel so much better, and it really helped me stop making excuses and turn my money around.

Best of luck!!

I'll check that out, thanks. And thanks for the words of encouragement. I do feel I'm making sacrifices already but I just need to get the momentum going a bit more. I'll read some of this to hopefully inspire me. :A

AliceBanned

What I'm saying is I go through waves of frugal living and some spending. My 'friend' recently said my flat could be great 'if you did something with it'. He comes from a highly privileged background and his mum still funds his lifestyle, at age 47. Cheeky sod! At least I have struggled and survived off my own steam, no handouts. His uncle gave him £10000 just to 'play' at spreadbetting so his parents must have given him far more.


And he's the tightest person I know. . The number of times I've stood him a cappuccino..


Obviously I'd love fitted wardrobes (or any storage really lol) and a power shower, new carpets and some living room curtains. :rotfl:

HappyMJ

AliceBanned wrote: »

Thanks but my income is £1919 per month after pension payment and my outgoings are high - at least £1300 just to pay the bills and travel. So it isn't as easy as you make it sound - there is certainly no money disappearing or being spent on things that I haven't listed, though admittedly for the past month I have treated myself to a volunteering hol and a camping hol as I think it's important once a year to get away.


Thanks for the tip about the water bill. I'll hold on to it. I've also cancelled a £20 dd for specsavers for contact lenses as I have bought a few up front and I can wear glasses too. The contact lenses are for the screen at work so not essential as I alternate between these and glasses. I am going to cancel anything else I can and have already reduced my mobile phone bill and mortage - just last month so this will start to have an impact over the next few months. It has been a long slog just to this point which is why I feel a bit demoralised - just gets hard over time until you start to see the light at the end of the tunnel.

You have income as £2040 I can't see pension contributions as an expense.

Personally though....your pension (no pension at all not just yours) will be earning you much less than 20% per year even considering you are paying into it using before tax money. I'd stop paying into a pension for the next few years until you've got all the high interest debt repaid then after that double your pension contributions to make up for this period of no contributions.

You'll save more in the long run paying off debt charging you in excess of 20% interest with savings even if those savings are your retirement savings. You can fix it in the future by using the money that you used to overpay your debts to make bigger contributions.

AliceBanned

HappyMJ wrote: »

You have income as £2040 I can't see pension contributions as an expense.

Personally though....your pension (no pension at all not just yours) will be earning you much less than 20% per year even considering you are paying into it using before tax money. I'd stop paying into a pension for the next few years until you've got all the high interest debt repaid then after that double your pension contributions to make up for this period of no contributions.

You'll save more in the long run paying off debt charging you in excess of 20% interest with savings even if those savings are your retirement savings. You can fix it in the future by using the money that you used to overpay your debts to make bigger contributions.

No that's incorrect. my employer makes a huge contribution too so I end up with £400 a month going into my pension pot. Oh and the extra tax I would pay as the deductions are pre-tax so I actually pay in around £90 pm.

AliceBanned

I thought I'd be able to close my Littlewoods account and repay the balance over time - £125. They won't let me close it. So I'm asking them to reduce my credit limit to £125 and stop sending me bumpf..

HappyMJ

AliceBanned wrote: »

No that's incorrect. my employer makes a huge contribution too so I end up with £400 a month going into my pension pot. Oh and the extra tax I would pay as the deductions are pre-tax so I actually pay in around £90 pm.

Part of the point of my post is that it isn't on your SOA. You have £2,040 of income written down yet haven't made provision for your pension contributions and then state in a further post your income is now only £1,919. Accuracy with the SOA is very very important. If you are showing an excess my advice is as it stands to make your minimum repayments and do everything possible to avoid a DMP but if you are showing no excess then the advice is different.

If you do go onto a DMP you could find your mortgage interest will increase by much more than the £310 a month that you are saving by making £90 of contributions so it's important you avoid a DMP. You're on a very good rate of 1.99%. When that expires you won't be able to remortgage with a DMP and will be at the mercy of whatever the bank wants to charge you which is usually the SVR at 4.5%.

AliceBanned

Thanks. I will re-do the SOA I think. I was a bit confused about how to add in the pension, and thought I had done it.


I have just checked my service charge and buildings insurance account and it is £195 in credit!! They are refunding in the next four weeks and have reduced my DD as it was £38pm overpaying since April!:eek:. I didn't catch on as the DD increased in April (rent and service charge for my flat so I assumed it was just a steep increase).


Woo hoo! £300 extra this month when the two payments come through, so I can meet more than the min payments.


I've been struggling more and more so am getting a bit more firm with all these companies - I should have my money rather than overpaying them!!