Advice on my debts please

avfcmatt123

Hi all.

Just to give you a bit of background I am a 22 year old male in full time employment. I am aware I have made some mistakes with money and therefore have some debts. This is from various cars / holidays and the only benefit is I guess I will have a good credit rating.

I have outlined my situation below if anyone can give any tips on things I should be doing differently / budgeting for the future.

Bank loan £3600 over a remaining 3 years approx. I believe I am being charged about 6 percent interest and my payments are down to just over £100 per month.

Credit card (I have transferred various balances into this card)

£3,200 over 2 years interest free
£1,400 over 18 months interest free

These two come in at around £250 a month and that is paying the latter amount off within 12 months.

I earn approx £1400 and have no savings and am lucky to be living at home. I do have expenses including a car on PCP and some business interests.

I have access to 3 credit cards and obviously need to stop using them now. My goal would be to get all of this debt clear within 18-24 months so I can then seriously start looking at a mortgage on my first property.

Thank you for any advice in advance !

HappyMJ

Deposit is the most important part of buying a house. That's quite a lot of money.

Have you looked at how much you might need as a deposit?

Although you can buy with 5% deposit the interest rates make renting appear worthwhile so a 10% deposit might make the difference tipping the calculation in favour of buying. A £150,000 house would then require £15,000 deposit plus fees and charges. Look at the rate after the introductory period is over when you do a rent/buy calculation and don't forget all the other costs such as insurance and maintenance.

On your low salary I'd suggest renting would be cheaper in most cases.

chrisjdw

Morning
I personally would be trying to pay the loan off as quick as possible as it incurring interest and the credit cards are not.
In terms of everything else it would be a lot easier for any helping if you filled out an soa form. Basically breaking everything down to see where you're frittering it away
http://www.stoozing.com/calculator/soa.php

andyfromotley

Hi Matt and welcome. We need to see an SOA.

But dependant upon your expenses you could shift this debt really quickly. Inside a year should be easily doable for someone single who lives at home.

Post the Soa and you can get some proper advice. Whatever you do you need to start spending less, a lot less, as it sounds as if you are currently adding to your debt each month. Obviously this cannot continue. Effective budgeting will help you do this. Consider YNAB, a brilliant budgeting app.

(oh stop supporting villa too, your life will always be full of disappointment! ;-)

aznlayer

Its great that you have realised that you need to get out of debt at a young age and while your debts are not out of control.


the solution is simple, spend as little as possible and pay as much as possible towards the loan and CC. The less you spend, the quicker you will be debt free and have the option of saving money rather than making monthly payments.


having a goal in mind (i.e deposit for a house) is sensible and given the average age of a first time buyer is late 20s - no doubt you will be able to save what you need to become a homeowner.


Good luck

ReadingTim

First you need to spend a smaller amount every month than you earn. Then you need to work out how to do the following:

• spend less
• earn more

Sort that out, and the rest falls into place.