Clearing high amounts of debt without defaulting?

Sadmonkey

Has anyone managed to clear large amounts of debt without defaulting? For our jobs, it's not an option, so we have to do this properly. Currently our debt stands at 57k and this needs to go, we are spending £1400 a month on minimum payments right now. I need to know this is doable, with only a couple of hundred spare a month. Help!

HappyMJ

Sadmonkey wrote: »

Has anyone managed to clear large amounts of debt without defaulting? For our jobs, it's not an option, so we have to do this properly. Currently our debt stands at 57k and this needs to go, we are spending £1400 a month on minimum payments right now. I need to know this is doable, with only a couple of hundred spare a month. Help!

It's possible but there does come a time where the bank will say no more and it all falls to bits.

If you've got a house you could re-mortgage the house to secure an unsecured debt. This isn't recommended as most people who attempt that simply run up more unsecured debt. It also costs much more over time despite the lower interest rate.

You've just to keep refinancing your debts on to lower and lower rates and closing the original accounts down. You must be disciplined. Don't use the money for any other purpose.

-taff

Look for snowballing, do an SOA and post back.

lazer-zxr

I started this year with £50k that needed to go. Think how snowballing will help, and go for it. We can do this.

Sadmonkey

lazer-zxr wrote: »

I started this year with £50k that needed to go. Think how snowballing will help, and go for it. We can do this.

Thank you. My soa is where I'm happy with it, but shall have a look at the snowballing site as think that paying off things wisely will free up more money to throw at other debts quicker. We have a loan finishing next spring, which will also free up some extra money. Thanks for the reply!

kindofagilr

We started out with just under £46k debt, so depending on your income it is do able (our combined income is 35k)
At the start for us all of ours was on rubbish apr's but just this last month we've been able to shift some to 0% and low lifetime balance cards so 50/50 on good cards and rubbish cards lol, so now it's gonna start getting paid off quicker for us than it was, we haven't managed to pay loads off yet, but we are getting there.
Good luck xx

National_Debtline

Hi Sadmonkey


If you're likely to be a regular visitor/poster on these forums, why not add a running debt total to your signature (as lazer-zxr has done -see above). It can be quite a powerful motivational tool - a bit like stepping on the scales every so often!


Can only reiterate the advice others have given re: SOA/snowball calculator. Good luck


Dennis
@natdebtline

Playing_with_Fire_2

Sadmonkey, just a note to say this can be done. I cleared over £100k worth of debt without defaulting or getting interest frozen/reducing payments etc. It was really hard work at first but can be done.

This is what I learnt:

Initial progress is really slow, just making the minimum payments on most and small overpayments. I paid off the highest interest rate first. This meant that I paid the minimum in interest, and the overall balance was cleared more quickly. (slightly different for 0% BT cards). It gets quicker and quicker once you have fewer payments to make and are paying off more capital. Use the snowball calculator to see how much time and money you'll save.

I applied for cheap 0% BT cards and shuffled the debt to reduce interest. I generally applied for all the offers I could on the same day, and then left it for a few months and didn't have any problems with too many credit checks.

It is so important to make all of the payments on time. As soon as lenders get wiff of a missed payment they will pull credit limits and overdrafts and can raise interest rates on some accounts. I used direct debits for the minimum payment and made all others manually.

I found an article called 'Newsflash: your debt is an emergency!" which explained that if you have debt and spend £1 on a chocolate bar while you have 18% debt that will take 5 years to pay off, you are actually paying £2.29 by buying the chocolate and not putting it toward the debt today. I used this to explain to the OH why it was important that we were thoughtful with our spending.

I had a wall chart where I coloured in every £10 that I paid off (I worked out how much capital and interest I would pay if I made no overpayments, so paying £100 meant I sometimes coloured off 15 squares).

Cut every monthly cost you possibly can (switch utilities and ditch anything that isn't essential). I thought I needed Sky, so promised myself that I'd get it back when the debt was paid off but it turns out I didn't miss it that much.

Cut as many discretionary costs as possible. Put the money into the overpayment fund. Any pay rises, bonuses or extra money you make go straight to the OP fund.

Have a clear out and see what you no longer need and can sell. If you think you need to buy anything then try to buy second hand rather than new.

HappyMJ

Playing_with_Fire wrote: »

I found an article called 'Newsflash: your debt is an emergency!" which explained that if you have debt and spend £1 on a chocolate bar while you have 18% debt that will take 5 years to pay off, you are actually paying £2.29 by buying the chocolate and not putting it toward the debt today. I used this to explain to the OH why it was important that we were thoughtful with our spending.

I say that when I'm in the pub. The pint I'm buying costs £3.00. It's not much. I put it on the 0% on purchases credit card and pay the minimum payment...1%. It costs me 3p per month for that pint but after the 12 months the 0% on purchases rate has expired and to avoid paying 18% interest I need to open a 0% on balance transfers card to pay it off. It has a fee of 3% on balance transfers which I add to the debt and continue to pay off the balance at 1% per month. Basically this goes on forever until I die, the house is sold and the credit card paid off.

Brightspark87

Hi my debt affected my job and if you see my diary you will see I have managed to nearly pay it all off! You can do this! x

Sadmonkey

Thanks all. I'm planning on putting everything into the snowball calculator to see where to start.